Exhibit 10.1

SHARE PURCHASE AGREEMENT

by and among

CMS ELECTRIC & GAS, L.L.C.,

CMS ENERGY BRASIL S.A.,

and

CPFL ENERGIA S.A.,

together with

CMS ENERGY CORPORATION

(solely for the limited purposes of Section 8.9)

1

Dated as of April 12, 2007ARTICLE I

SALE AND PURCHASE OF SHARES

     
1.1
1.2
1.3
1.4
  Sale and Purchase of Shares
Purchase Price
Closing
Closing Deliveries

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

     
2.1
2.2
2.3
2.4
2.5
  Organization and Qualification
Title to Shares
Authority; Non-Contravention; Statutory Approvals.
Litigation
Brokers and Finders

ARTICLE IIA

REPRESENTATIONS AND WARRANTIES OF ENERGY

      2.1A Organization and Qualification; Authority 4  

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

  3.1   Organization and Qualification; Authority; Non-Contravention; Statutory
Approvals.  

     
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
  Capitalization.
Financial Statements; Undisclosed Liabilities.
Absence of Certain Changes or Events.
Tax Matters
Litigation
Compliance with Laws.
Employee Benefits.
Permits.
Real Property.
Material Contracts.
Environmental Matters
Labor Matters.
Intellectual Property
Affiliate Contracts
Insurance
Brokers and Finders
Books and Records
Investco S.A. Shareholders Documentation

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     
4.1
4.2
4.3
4.4
  Organization and Qualification
Authority; Non-Contravention; Statutory Approvals.
Financing
Litigation

  4.5   Investment Intention; Sufficient Investment Experience; Independent
Investigation  

     
4.6
4.7
4.8
  Brokers and Finders
Qualified for Permits
No Knowledge of Seller or Company Breach

ARTICLE V

COVENANTS

     
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
  Conduct of Business
Approvals.
Access
Publicity
Tax Matters.
Employee Matters.
Fees and Expenses
[Intentionally left blank.]
Termination of Affiliate Contracts
Further Assurances
[Intentionally left blank.]
Change of Name.
[Intentionally left blank.]
Resignations of Certain Officers and Directors
Tag-Along and Other Shareholder Rights
Releases of Certain Guarantees
[Intentionally left blank.]
Assignment of Certain Obligations
Insurance

ARTICLE VI

CONDITIONS TO CLOSING

     
6.1
6.2
6.3
  Conditions to the Obligations of the Parties
Conditions to the Obligation of Purchaser
Conditions to the Obligation of Seller

ARTICLE VII

TERMINATION

  7.1   Termination  

  7.2   Effect of Termination  

ARTICLE VIII

SURVIVAL; INDEMNIFICATION

  8.1   Survival of Representations, Warranties, Covenants and Agreements;
Exclusive Remedy.  

     
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
  Indemnification of Purchaser by Seller
Indemnification of Seller by Purchaser
Limitations on Seller’s Indemnification.
Special Indemnification by Seller.
Mitigation
General Procedures Applicable to Claims for Indemnification.
Payment
Energy Guarantee.

ARTICLE IX

DEFINITIONS AND INTERPRETATION

     
9.1
9.2
9.3
  Defined Terms
Definitions
Interpretation

ARTICLE X

GENERAL PROVISIONS

     
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
  Notices
Binding Effect
Assignment; Successors; Third-Party Beneficiaries.
Amendment; Waivers; etc
Entire Agreement.
Severability
Counterparts
Governing Law
Arbitration
Limitation on Damages
Enforcement
No Right of Set-Off

      EXHIBITS
Exhibit A
  Seller Disclosure Letter
 
   
Exhibit B
  Company Disclosure Letter
 
   
Exhibit C
  Purchaser Disclosure Letter
 
   

2

      SCHEDULES TO BE INCORPORATED INTO THE DISCLOSURE LETTERS APPENDED AS
EXHIBITS
Schedule 2.2
  Shares
 
   
Schedule 2.3(c)
  Seller Required Statutory Approvals
 
   
Schedule 3.1(c)(i)
  Company Required Consents
 
   
Schedule 3.1(c)(ii)
  Non-Contravention
 
   
Schedule 3.1(d)
  Company Required Statutory Approvals
 
   
Schedule 3.2(b)
  Company Subsidiaries
 
   
Schedule 3.2(c)
  Agreements regarding Shares and Equity Interests
 
   
Schedule 3.3(a)
  Financial Statements
 
   
Schedule 3.3(b)
  Undisclosed Liabilities
 
   
Schedule 3.4(a)
  Absence of Certain Changes or Events
 
   
Schedule 3.5
  Tax Matters
 
   
Schedule 3.6
  Litigation
 
   
Schedule 3.7(a)
  Compliance with Laws
 
   
Schedule 3.8(a)
  Employee Benefits
 
   
Schedule 3.8(b)
  Employee Benefits
 
   
Schedule 3.8(e)
  Employee Benefits
 
   
Schedule 3.9(a)
  Permits
 
   
Schedule 3.10(a)
  Real Property
 
   
Schedule 3.11(a)
  Contracts
 
   
Schedule 3.11(b)(i)
  Contracts
 
   
Schedule 3.11(b)(ii)
  Contracts
 
   
Schedule 3.12
  Environmental Matters
 
   
Schedule 3.13(a)
  Labor Matters
 
   
Schedule 3.13(b)
  Labor Matters
 
   
Schedule 3.15
  Affiliate Contracts
 
   
Schedule 3.16
  Insurance
 
   
Schedule 4.2(b)
  Purchaser Required Consents
 
   
Schedule 4.2(c)
  Purchaser Required Statutory Approvals
 
   
Schedule 4.4
  Purchaser Litigation
 
   
Schedule 9.2(a)
  Company Knowledge Group
 
   
Schedule 9.2(b)
  Seller Knowledge Group
 
   
Schedule 9.2(c)
  Purchaser Knowledge Group

      SCHEDULES TO SHARE PURCHASE AGREEMENT
Schedule 5.1(a)
  Conduct of the Company
 
   
Schedule 5.1(c)
  Conduct of the Company
 
   
Schedule 5.1(d)
  Conduct of the Company
 
   
Schedule 5.1(e)
  Conduct of the Company
 
   
Schedule 5.1(l)
  Conduct of the Company
 
   
Schedule 5.3
  Access
 
   
Schedule 5.7
  Fees and Expenses
 
   
Schedule 5.9
  Termination of Affiliate Contracts
 
   
Schedule 5.14
  Resignations and Terminations
 
   
Schedule 5.16
  Guarantees
 
   
Schedule 5.18
  Assignment of Certain Obligations
 
   
Schedule 5.19
  Insurance
 
   
Schedule 8.5(a)
  Special Seller Indemnification

3

SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (this “Agreement”), dated as of April 12, 2007, is
entered into by and among (i) CMS Electric & Gas, L.L.C., a Michigan limited
liability company (“Seller”), (ii) CMS Energy Brasil S.A., a sociedade anônima
de capital aberto incorporated under the laws of Brazil (the “Company”),
(iii) CPFL Energia S.A., a sociedade anônima de capital aberto incorporated
under the laws of Brazil (“Purchaser”), and (iv) solely for the limited purposes
of Section 8.9, CMS Energy Corporation, a Michigan corporation and the ultimate
parent company of Seller (“Energy”). Each of Purchaser, the Company and Seller
are sometimes referred to individually herein as a “Party” and collectively as
the “Parties”. Certain other terms are defined throughout this Agreement and in
Section 9.2.

W I T N E S S E T H:

WHEREAS Seller owns 94,810,080 units of common shares (each with no par value)
of the Company (the “Common Shares”) and Seller owns 94,810,075 units of
preferred shares (each with no par value) of the Company (the “Preferred
Shares”) and each member of the board of directors of the Company (each a
“Director Shareholder”) owns one Preferred Share (all of the foregoing units of
shares, collectively, the “Shares”); and

WHEREAS Purchaser desires to purchase from Seller, and Seller desires to sell to
Purchaser, all the Shares, upon the terms and subject to the conditions set
forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in this Agreement and of the mutual benefits
to be derived therefrom, the Parties agree as follows:

ARTICLE I

SALE AND PURCHASE OF SHARES

1.1 Sale and Purchase of Shares. Upon the terms and subject to the conditions of
this Agreement, at the Closing (as such term is defined in Section 1.3),
Purchaser shall purchase from Seller, and Seller shall sell to Purchaser, good
and valid title, free and clear of any Liens except those created by Purchaser
arising out of ownership of the Shares by Purchaser, all the Shares (the
“Transaction”).

1.2 Purchase Price. The consideration to be paid by Purchaser to Seller in
respect of the purchase of Shares shall be an amount in cash in the legal
currency of the United States of America (the “Purchase Price”) equal to Two
Hundred Eleven Million One Hundred Forty Four Thousand Dollars
(US$211,144,000.00) and shall be subject to applicable Brazilian withholding tax
on the amount of Seller’s capital gains, as calculated by Seller; provided that,
for the avoidance of doubt, the payment of such withholding tax shall be made by
Purchaser on behalf of Seller.

1.3 Closing. The closing of the Transaction (the “Closing”) shall take place in
New York, New York, at 10:00 a.m., local time, as soon as practicable, but in
any event not later than the second (2nd) Business Day immediately following the
date on which the last of the conditions contained in Article VI is fulfilled or
waived (except for those conditions which by their nature can only be fulfilled
at the Closing, but subject to the fulfillment or waiver of such conditions), or
at such other place, time and date (the “Closing Date”) as the Parties may
agree. The payment of the Purchase Price shall be made by wire transfer of
immediately available funds to the bank account or accounts outside of Brazil
designated by Seller prior to the Closing.

1.4 Closing Deliveries. At the Closing:

(a) Seller shall cause the Company to deliver to Purchaser certificates from
Company’s Depositary Agent attesting that (i) the Common Shares are registered
in the name of the Seller and (ii) the Preferred Shares are registered in the
name of the Seller and of the Director Shareholders.

(b) Seller shall cause the Company to deliver to Purchaser an executed copy of
the communication addressed by Seller and by each Director Shareholder to
Company’s Depositary Agent requiring the unconditional transfer of the Shares to
Purchaser, as well as the confirmation from the Depositary Agent of receipt and
sufficiency of the aforesaid communication.

(c) Seller shall cause each Director Shareholder, at no additional cost to
Purchaser, to assign, convey and transfer in the name of Purchaser the Preferred
Shares held by such Director Shareholder.

(d) Seller shall cause each Director Shareholder, at no additional cost to
Purchaser, to assign, convey and transfer in the name of a Person designated by
Purchaser all Equity Interests in any Company Subsidiary held by any Director
Shareholder.

(e) Purchaser shall pay, or cause to be paid, to Seller an amount in cash equal
to the Purchase Price for the Shares so delivered by Seller, by wire transfer of
immediately available funds to the bank account or accounts outside of Brazil
designated by Seller prior to the Closing.

(f) Each Party shall deliver the certificates, agreements, instruments and other
documents required to be delivered by it pursuant to Article VI.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as otherwise disclosed in the Seller Disclosure Letter attached hereto as
Exhibit A (the “Seller Disclosure Letter”), Seller represents and warrants, as
to itself only, to Purchaser as follows in this Article II:

2.1 Organization and Qualification. Seller is a limited liability company duly
formed and validly existing under the laws of the State of Michigan, and has
full limited liability company power and authority to own, lease and operate its
assets and properties and to conduct its business as presently conducted, except
where the failure to have such power and authority would not reasonably be
expected to have, individually or in the aggregate, a Seller Material Adverse
Effect.

2.2 Title to Shares. Seller and the Director Shareholders are the lawful record
and beneficial owners of the Shares set forth opposite their names in
Schedule 2.2 of the Seller Disclosure Letter, free and clear of any and all
Liens, except for Liens created by this Agreement. The delivery of the Shares to
Purchaser in the manner contemplated under Article I, following the payment by
Purchaser of the Purchase Price to Seller, shall transfer to Purchaser valid
beneficial and legal title to the Shares, free and clear of any and all Liens
except for Liens created by Purchaser. There are no outstanding options,
warrants or other rights of any kind to acquire from Seller any Shares or
securities convertible into or exchangeable for, or which otherwise confer on
the holder thereof any right to acquire from Seller, any Shares, nor is Seller
committed to issue any such option, warrant, right or security.

2.3 Authority; Non-Contravention; Statutory Approvals.

(a) Authority. Seller has full power and authority to enter into this Agreement
and, subject to receipt of the Seller Required Statutory Approvals (as such term
is defined in Section 2.3(c)), to consummate the transactions contemplated
hereby. The execution, delivery and performance by Seller of this Agreement and
the consummation by Seller of the transactions contemplated hereby have been
duly and validly authorized by all requisite action on the part of Seller, and
no other proceedings or approvals on the part of Seller are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and, assuming the
due authorization, execution and delivery hereof by each other Party,
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as limited by applicable Law
affecting the enforcement of creditors’ rights generally or by general equitable
principles.

(b) Non-Contravention. The execution and delivery of this Agreement by Seller do
not, and the consummation of the transactions contemplated hereby will not,
result in any violation or breach of or default (with or without notice or lapse
of time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation under (any such violation, breach, default, right
of termination, cancellation or acceleration is referred to herein as a
“Violation”), or result in the creation of any Lien upon any of the properties
or assets of Seller pursuant to any provision of (i) the Organizational
Documents of Seller; (ii) any lease, mortgage, indenture, note, bond, deed of
trust, or other written instrument or agreement of any kind to which it is a
party or by which it may be bound; or (iii) any Law, Permit or Governmental
Order applicable to it, subject to obtaining the Seller Required Statutory
Approvals; other than in the case of clauses (i), (ii) and (iii) any such
Violation or Lien which would not reasonably be expected to have, individually
or in the aggregate, a Seller Material Adverse Effect.

(c) Statutory Approvals. Except for the filings or approvals (i) set forth in
Schedule 2.3(c) of the Seller Disclosure Letter (the “Seller Required Statutory
Approvals”) and (ii) such other filings or approvals as may be required due to
the regulatory or corporate status of Purchaser, no Consent of any Governmental
Entity is required to be made or obtained by Seller in connection with the
execution and delivery of this Agreement or the consummation by Seller of the
transactions contemplated hereby, except those which the failure to make or
obtain would not reasonably be expected to have, individually or in the
aggregate, a Seller Material Adverse Effect or a Company Material Adverse
Effect.

2.4 Litigation. There is no action, claim, suit or proceeding at law or in
equity pending or, to the Knowledge of Seller, threatened against Seller that,
if adversely determined, would reasonably be expected to have, individually or
in the aggregate, a Seller Material Adverse Effect. Subject to obtaining the
Seller Required Statutory Approvals, there are no Governmental Orders of or by
any Governmental Entity applicable to Seller except for such that would not
reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect or a Company Material Adverse Effect.

2.5 Brokers and Finders. Seller has not entered into any written agreement or
arrangement entitling any agent, broker, investment banker, financial advisor or
other firm or Person to any broker’s or finder’s fee or any other commission or
similar fee payable by Seller or the Company in connection with any of the
transactions contemplated by this Agreement, except J.P. Morgan Securities Inc.,
UBS Securities LLC and Unibanco Securities Inc.

ARTICLE IIA

REPRESENTATIONS AND WARRANTIES OF ENERGY

Energy represents and warrants, as to itself only, to Purchaser as follows in
this Article IIA solely for the limited purposes of Section 8.9:

2A.1 Organization and Qualification; Authority.

(a) Organization and Qualification. Energy has been duly incorporated and is
validly existing under the laws of the State of Michigan, and has full corporate
power and authority to own, lease and operate its assets and properties and to
conduct its business as presently conducted, except where the failure to have
such power and authority would not reasonably be expected to have, individually
or in the aggregate, a material adverse effect on Energy.

(b) Authority. Energy has full power and authority to enter into this Agreement
solely for the limited purposes of Section 8.9 of this Agreement. The execution,
delivery and performance by Energy solely for the limited purposes of
Section 8.9 of this Agreement have been duly and validly authorized by all
requisite action on the part of Energy, and no other proceedings or approvals on
the part of Energy are necessary to authorize this Agreement solely for the
limited purposes of Section 8.9. This Agreement has been duly executed and
delivered by Energy and, assuming the due authorization, execution and delivery
by each Party, constitutes the legal, valid and binding obligation of Energy,
enforceable against Energy in accordance with its terms, except as limited by
applicable Law affecting the enforcement of creditors’ rights generally or by
general equitable principles.

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

Except as disclosed in the Company Disclosure Letter attached hereto as
Exhibit B (the “Company Disclosure Letter”), Seller and the Company hereby
severally, and not jointly, represent and warrant to Purchaser as follows in
this Article III (provided that each representation and warranty made by Seller
in this Article III is made solely to the Knowledge of Seller, except for the
representations and warranties in Sections 3.1, 3.2, 3.3, 3.4(a), 3.4(b), 3.6,
3.10, 3.11, 3.12, 3.15, 3.16, 3.17 and 3.18):

3.1 Organization and Qualification; Authority; Non-Contravention; Statutory
Approvals.

(a) Organization and Qualification. The Company has been duly incorporated and
is validly existing as a sociedade anônima de capital aberto and in good
standing under the laws of Brazil, with full corporate power and authority to
own or lease and to operate its properties and to conduct its business as
presently conducted and is duly qualified to do business in Brazil.

(b) Authority. The Company has full corporate power and authority to enter into
this Agreement and, subject to receipt of the Seller Required Statutory
Approvals, to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate action on the part of the Company,
and no other corporate proceedings or approvals on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
each other Party, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
limited by Laws affecting the enforcement of creditors’ rights generally or by
general equitable principles.

(c) Non-Contravention. The execution and delivery of this Agreement by the
Company does not, and the consummation of the transactions contemplated hereby
will not, result in any Violation or result in the creation of any Lien upon any
of the properties of the Company or any Company Subsidiary, pursuant to any
provision of (i) the Organizational Documents of the Company or any Company
Subsidiary, subject to obtaining the third-party Consents set forth in Schedule
3.1(c)(i) of the Company Disclosure Letter (the “Company Required Consents”);
(ii) any lease, mortgage, indenture, note, bond, deed of trust, or other written
instrument or agreement of any kind to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary may be
bound, subject to obtaining the Company Required Consents and except as set
forth in Schedule 3.1(c)(ii) of the Company Disclosure Letter; or (iii) any Law,
Permit or Governmental Order applicable to the Company or any Company
Subsidiary, subject to obtaining the Seller Required Statutory Approvals and the
Company Required Statutory Approvals; other than in the case of clauses (i),
(ii) and (iii) any such Violation or Lien which would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

(d) Statutory Approvals. Except for the filings or approvals (i) set forth in
Schedule 3.1(d) of the Company Disclosure Letter (the “Company Required
Statutory Approvals”) and (ii) such other filings or approvals as may be
required due to the regulatory or corporate status of Purchaser, no Consent of
any Governmental Entity is required to be made or obtained by the Company or any
Company Subsidiary, in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, except those which the failure to make or obtain would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

3.2 Capitalization.

(a) Company. The authorized capital stock of the Company consists of 300,000,000
units of shares (each with no par value), of which 94,810,080 units of common
shares are issued and outstanding and 94,810,080 units of preferred shares are
issued and outstanding. The Shares constitutes all of the issued and outstanding
Equity Interests in the Company.

(b) Company Subsidiaries. Schedule 3.2(b) of the Company Disclosure Letter sets
forth for each Company Subsidiary: (i) its jurisdiction of formation; (ii) its
authorized Equity Interests; (iii) the number of its issued and outstanding
Equity Interests; and (iv) the Equity Interests that are owned, directly or
indirectly, by the Company (and the Company Subsidiary holding such Equity
Interest, if applicable) and the directors of each Company Subsidiary. The
Equity Interests of each Company Subsidiary that are owned, directly or
indirectly, by the Company, as set forth on Schedule 3.2(b) of the Company
Disclosure Letter, are owned free and clear of all Liens, other than Permitted
Liens. All of the issued and outstanding Equity Interests in each Company
Subsidiary that are owned, directly or indirectly, by the Company have been duly
authorized and, to the extent such concepts are recognized under applicable Law,
are validly issued and fully paid.

(c) Agreements with Respect to Shares and Equity Interests of the Company and
the Company Subsidiaries. Except as set forth in Schedule 3.2(c) of the Company
Disclosure Letter, there are no:

(i) subscriptions, options, warrants, calls, conversion, exchange, purchase
right or other written contracts, rights, agreements or commitments of any kind
obligating, directly or indirectly, the Company or any Company Subsidiary to
issue, transfer, sell or otherwise dispose of, or cause to be issued,
transferred, sold or otherwise disposed of, any Equity Interests of the Company
or any Company Subsidiary or any securities convertible into or exchangeable for
any such Equity Interests (other than in connection with any Permitted Lien); or

(ii) shareholder agreements, partnership agreements, voting trusts, proxies or
other written agreements or instruments to which the Company or any Company
Subsidiary is a party, or by which the Company or any Company Subsidiary is
bound.

3.3 Financial Statements; Undisclosed Liabilities.

(a) The Company has provided to Purchaser copies of the audited consolidated
balance sheets of the Company and the Company Subsidiaries as at December 31,
2004, 2005 and 2006 and the related audited statements of operations, cash flows
and stockholders’ equity for the years ended December 31, 2004, 2005 and 2006
(collectively, the “Company Financial Statements”). The consolidated balance
sheet of the Company and the Company Subsidiaries as at December 31, 2006
(including the notes thereto) is hereinafter referred to as the “Balance Sheet”.
The Company Financial Statements fairly present in all material respects the
consolidated assets and liabilities of the Company and the consolidated results
of operations of the Company and the Company Subsidiaries for the periods
indicated, all in accordance with Brazilian GAAP consistently applied over the
periods presented except as provided in the notes to the Company Financial
Statements, except as set forth in Schedule 3.3(a) of the Company Disclosure
Letter.

(b) Neither the Company nor any Company Subsidiary has any Liabilities, other
than (i) Liabilities that will not be applicable to the Company or any Company
Subsidiary after Closing, (ii) Liabilities disclosed on Schedule 3.3(b) of the
Company Disclosure Letter, (iii) Liabilities reserved for or reflected in the
Balance Sheet, (iv) Liabilities incurred in the ordinary course of business
since December 31, 2006 that have not had, or would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect and
(v) such other Liabilities as have not had, or would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

3.4 Absence of Certain Changes or Events.

(a) Since December 31, 2006, except as set forth in Schedule 3.4(a) of the
Company Disclosure Letter, other than in connection with the transactions
contemplated by this Agreement, neither the Company nor, to the Knowledge of the
Company, any Company Subsidiary has taken any of the actions set forth in
Sections 5.1(a) through 5.1(l), that, if taken after the execution and delivery
of this Agreement, would require the consent of Purchaser pursuant to
Section 5.1.

(b) Since December 31, 2006, there has not been any change, event, condition,
circumstance, occurrence or development which has had, or would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.

(c) Subject to Section 5.1, since December 31, 2006, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course of
business.

3.5 Tax Matters. Except as set forth in Schedule 3.5 of the Company Disclosure
Letter:

(a) each of the Company and each Company Subsidiary has (i) filed with the
appropriate Governmental Entity all material Tax Returns required to have been
filed by it and such Tax Returns are accurate and complete in all material
respects and (ii) duly paid in full all Taxes due or payable;

(b) no material audits or other administrative proceedings or court proceedings
are, as of the date hereof, pending with regard to any Taxes or Tax Returns of
the Company or any Company Subsidiary and neither the Company nor any Company
Subsidiary has been informed in writing of the planned commencement of any such
audits or proceedings;

(c) neither the Company nor any Company Subsidiary has waived any statute of
limitations for the assessment or collection of any material Taxes which waiver
is currently in effect;

(d) there are no Liens for Taxes on any assets of the Company or any Company
Subsidiary, except Liens relating to (i) Taxes not yet due and payable or
(ii) Taxes which are being contested in good faith and for which adequate
reserves have been established; and

(e) the Company has made available to Purchaser complete, accurate and correct
copies of all income Tax Returns of the Company and each Company Subsidiary, for
the years 2003, 2004 and 2005, as filed or subsequently amended.

3.6 Litigation. Except as set forth in Schedule 3.6 of the Company Disclosure
Letter, there is no action, claim, suit or other proceeding at law or in equity
pending or, to the Knowledge of the Company, threatened against the Company or
any Company Subsidiary or affecting the assets or properties of the Company or
any Company Subsidiary that, if adversely determined, would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.

3.7 Compliance with Laws.

(a) Except as set forth in Schedule 3.7(a) of the Company Disclosure Letter,
neither the Company nor any Company Subsidiary has received written notice of or
been charged with any violation of, or, to the Knowledge of the Company, is in
violation of or is under investigation with respect to any violation of, any Law
or Governmental Order, except in each case for violations that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

(b) This Section 3.7 does not relate to Tax matters, which are instead the
subject of Section 3.5, employee benefits matters, which are instead the subject
of Section 3.8, Permits, which are instead the subject of Section 3.9, or
environmental matters, which are instead the subject of Section 3.12.

3.8 Employee Benefits.

(a) Schedule 3.8(a) of the Company Disclosure Letter contains a brief
description of all material written employee benefit plans, programs, policies,
arrangements and contracts, including any bonus, incentive or deferred
compensation, pension, retirement, profit-sharing, savings, employment,
consulting, compensation, stock purchase, stock option, phantom stock or other
equity-based compensation, severance pay, termination, change-in-control,
retention, salary continuation, vacation, overtime, sick leave, disability,
death benefit, group insurance, hospitalization, medical, dental, life, loan,
educational assistance, and other fringe benefit plans, programs, written
agreements and arrangements maintained by the Company or any Company Subsidiary
for the benefit of any employee or former employee of the Company or any Company
Subsidiary (collectively, the “Company Plans”).

(b) With respect to each Company Plan, the Company has made available to
Purchaser complete, true and correct copies of the documents, to the extent
applicable, a copy of such Company Plan (including all amendments thereto),
except as set forth in Schedule 3.8(b) of the Company Disclosure Letter, and if
such Company Plan is funded through a trust or any third party funding vehicle,
a copy of the trust or other funding agreement (including all amendments
thereto) and the most recent financial statements.

(c) Each Company Plan has been administered in all material respects in
compliance with its terms and the requirements of applicable Law. Except as set
forth in Schedule 3.6 of the Company Disclosure Letter, there is no pending or,
to the Knowledge of the Company, threatened legal action, suit or claim relating
to the Company Plans (other than routine claims for benefits).

(d) All contributions to each Company Plan required under the terms of such
Company Plan or applicable Law have been timely made. All material Liabilities
and expenses as of December 31, 2006 of the Company or any Company Subsidiary in
respect of the Company’s private pension plan, “Plano de Benefícios CMSPREV”,
have been properly accrued on the audited consolidated financial statements of
the Company for the year ended December 31, 2006 in compliance with Brazilian
GAAP.

(e) Except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and except as set forth in
Schedule 3.8(e) of the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in combination with another event) (i) entitle any
current or former employee, manager, executive officer or director of the
Company or any Company Subsidiary to any payment or result in any payment
becoming due, increase the amount of any compensation due, or result in the
acceleration of the time of any payment due to any such person or (ii) increase
any benefits otherwise payable under any Company Plan or result in the
acceleration of the time of payment or vesting of any benefit under a Company
Plan.

(f) No Company Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees, managers, executive officers and directors of the Company or any
Company Subsidiary beyond their retirement or other termination of service,
other than (i) coverage mandated solely by applicable Law, (ii) deferred
compensation benefits accrued as liabilities on the books of the Company or any
Company Subsidiary or (iii) benefits the costs of which are borne by the current
or former employee or his or her beneficiary.

3.9 Permits.

(a) Except as set forth in Schedule 3.9(a) of the Company Disclosure Letter,
each of the Company and the Company Subsidiaries has and is in compliance with
all Permits that are necessary for it to conduct its operations in the manner in
which they are presently conducted, other than any such Permits the failure of
which to have would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (collectively, “Company Permits”).
Except as set forth in Schedule 3.9(a) of the Company Disclosure Letter, each
Company Permit held by the Company and any Company Subsidiary is in full force
and effect other than any failure to be in full force and effect that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

(b) This Section 3.9 does not relate to environmental matters, which are instead
the subject of Section 3.12.

3.10 Real Property.

(a) Schedule 3.10(a) of the Company Disclosure Letter lists all material real
property leases to which the Company or any Company Subsidiary is a party (the
“Leased Real Property”). Schedule 3.10(a) of the Company Disclosure Letter lists
all material real property owned by the Company or any Company Subsidiary (the
“Owned Real Property”).

(b) Except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and each Company
Subsidiary have good and marketable title to all Owned Real Property used by it,
in each case free and clear of all Liens, except for Permitted Liens. Except as
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, the Company and each Company Subsidiary has a
valid and binding leasehold interest in all Leased Real Property used by it,
free and clear of all Liens, except for Permitted Liens and as limited by Laws
affecting the enforcement of creditors’ rights generally or by general equitable
principles.

(c) Neither the Company nor any Company Subsidiary has received written notice
from a Governmental Entity of any pending or threatened proceeding to condemn or
take by power of eminent domain or other similar proceedings affecting any of
the Owned Real Property or the Leased Real Property that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.

3.11 Material Contracts.

(a) Set forth in Schedule 3.11(a) of the Company Disclosure Letter is, as of the
date hereof, a list of the following written agreements and contracts to which
the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets are bound, other than any insurance policies
covering the Company, any Company Subsidiary or any of their respective assets
(the written agreements and contracts set forth in Schedule 3.11(a) of the
Company Disclosure Letter are referred to herein as the “Company Material
Contracts” and, as used in this Section 3.11, “Contracting Party” shall refer to
the Company or Company Subsidiary party to such Company Material Contract):

(i) all Operating Contracts providing for the payment by or to the Contracting
Party in excess of R$2,000,000 per year, other than (x) any agreements with the
Company or another Company Subsidiary to document certain intercompany loans or
(y) any agreements between the Company and any Company Subsidiary for the
provision of services and/or payment of costs, which are terminable by either
party thereto upon not more than sixty (60) days’ notice;

(ii) all contracts or agreements (other than Operating Contracts) requiring a
future capital expenditure by the Contracting Party in excess of R$2,000,000 in
any twelve-month period;

(iii) all contracts or agreements under which the Contracting Party is obligated
to sell real or personal property having a value in excess of R$2,000,000 other
than in the ordinary course of business;

(iv) all contracts or agreements under which the Contracting Party (1) created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
indebtedness, (2) granted a Lien on its assets, whether tangible or intangible,
to secure such indebtedness or (3) extended credit or advanced funds to any
Person, in each case, in excess of R$2,000,000;

(v) all executory contracts for the purchase or sale of any business,
corporation, partnership, joint venture, association or other business
organization or any division, assets, operating unit or product line thereof
which have a purchase or sale price in excess of R$2,000,000;

(vi) all contracts or agreements establishing any material joint venture;

(vii) all contracts or agreements that grant a right of first refusal or similar
right with respect to (A) any assets of the Contracting Party having a value in
excess of R$2,000,000 or (B) any direct or indirect economic interest in the
Contracting Party having a value in excess of R$2,000,000;

(viii) all contracts or agreements providing for the use of material
Intellectual Property (as such term is defined in Section 3.14) which has an
annual license payment or fee in excess of R$750,000; and

(ix) any other contract or agreement not covered in clauses (i) through (xi)
above that involves payment by or to the Contracting Party of more than
R$2,000,000 annually or R$6,000,000 in the aggregate under such agreement, other
than those that can be terminated without penalty in excess of R$750,000 to the
Contracting Party upon not more than sixty (60) days’ notice.

(b) Except as set forth in Schedule 3.11(b)(i) of the Company Disclosure Letter,
the Company has made available to Purchaser complete and correct copies of all
Company Material Contracts, together with any material amendments thereto.
Except as set forth in Schedule 3.11(b)(ii) of the Company Disclosure Letter,
each Company Material Contract is (i) in full force and effect and (ii) the
valid and binding obligation of the Company, the Company Subsidiary party
thereto and, to the Knowledge of the Company, of each other party thereto, in
each case (x) except as limited by Laws affecting the enforcement of creditors’
rights generally or by general equitable principles and (y) with such exceptions
as would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except as set forth in Schedule 3.11(b)(ii) of
the Company Disclosure Letter, neither the Company nor any Company Subsidiary is
in breach or default under any Company Material Contract, which breach or
default has not been waived, and, to the Knowledge of the Company, no other
party to any Company Material Contract is in breach or default, except in each
case, for any breach or default that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. This
Section 3.11(b) does not relate to real property matters, which are instead the
subject of Section 3.10.

3.12 Environmental Matters. Except as set forth in Schedule 3.12 of the Company
Disclosure Letter, or as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect:

(a) the Company and each Company Subsidiary is in compliance in all material
respects with all applicable Environmental Laws, including having and complying
with the terms and conditions of all material Permits required pursuant to
applicable Environmental Laws and has timely filed all applications for renewal,
and there are no unresolved prior material violations of Environmental Laws;

(b) neither the Company nor any Company Subsidiary (i) has received from any
Governmental Entity any written notice of violation of, alleged violation of,
non-compliance with, or Liability or potential Liability pursuant to, any
Environmental Law, other than notices with respect to matters that have been
resolved and for which the Company or any Company Subsidiary has no further
obligations outstanding or (ii) is subject to any outstanding Governmental
Order, “consent order” or other written agreement with regard to any violation,
noncompliance or Liability under any Environmental Law;

(c) no judicial proceeding or governmental or administrative action is pending
under any applicable Environmental Law pursuant to which the Company or any
Company Subsidiary has been a party; and

(d) neither the Company nor any Company Subsidiary has received any written
notice, claim or demand from any Person, including any Governmental Entity,
seeking costs of response, damages or requiring remedial action relating to
(i) any Release of Hazardous Substances at, on or beneath the Company’s or any
Company Subsidiary’s current facilities or (ii) a Release of Hazardous
Substances at any third party property to which Hazardous Substances generated
by the Company or any Company Subsidiary were sent for treatment or disposal.

Notwithstanding any of the representations and warranties contained elsewhere in
this Agreement, all environmental matters shall be governed exclusively by this
Section 3.12.

3.13 Labor Matters.

(a) Schedule 3.13(a) of the Company Disclosure Letter contains a list of all
collective bargaining conventions and agreements to which the Company or any
Company Subsidiary is bound.

(b) Except as set forth on Schedule 3.13(b) of the Company Disclosure Letter, no
employees of the Company or any Company Subsidiary are represented by any labor
organization with respect to their employment with the Company or any Company
Subsidiary.

(c) Since January 1, 2006, there have been no material labor strikes, work
stoppages or lockouts against or affecting the Company or any Company
Subsidiary.

3.14 Intellectual Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (a) the
Company and each Company Subsidiary own, or has the right to use, all patents,
patent rights (including patent applications and licenses), know-how, trade
secrets, trademarks (including trademark applications), trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights and
other proprietary intellectual property rights (collectively, “Intellectual
Property”) used in and necessary for the conduct of the businesses of the
Company and the Company Subsidiaries as currently conducted, (b) to the
Knowledge of the Company, the use of the Intellectual Property used in the
businesses of the Company and the Company Subsidiaries as currently conducted
does not infringe or otherwise violate the Intellectual Property rights of any
third party, (c) to the Knowledge of the Company, no third party is challenging,
infringing or otherwise violating any right of the Company and the Company
Subsidiaries in any Intellectual Property necessary for the conduct of the
businesses of the Company and the Company Subsidiaries as currently conducted,
and (d) neither the Company nor any Company Subsidiary has received any written
notice of any pending claim that Intellectual Property used in and necessary for
the conduct of the businesses of the Company and the Company Subsidiaries as
currently conducted infringes or otherwise violates the Intellectual Property
rights of any third party.

3.15 Affiliate Contracts. Schedule 3.15 of the Company Disclosure Letter
contains a true and complete list of each material written agreement or contract
as of the date hereof between (i) the Company or any Company Subsidiary, on the
one hand, and (ii) a Seller or any Affiliate thereof (other than the Company or
any Company Subsidiary), on the other hand (collectively, the “Affiliate
Contracts”).

3.16 Insurance. Set forth on Schedule 3.16 of the Company Disclosure Letter is a
list of all material policies of insurance under which the Company’s or any
Company Subsidiary’s assets or business activities are covered, including for
each such policy the type of policy, the name of the insured, the term of the
policy, a description of the limits of such policy, the basis of coverage and
the deductibles.

3.17 Brokers and Finders. Neither the Company nor any Company Subsidiary has
entered into any written agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any broker’s or
finder’s fee or any other commission or similar fee payable by any Company in
connection with any of the transactions contemplated by this Agreement, except
J.P. Morgan Securities Inc., UBS Securities LLC and Unibanco Securities Inc.,
each of whose fees and expenses are governed by Section 5.7.

3.18 Books and Records. All of the Company’s and Company Subsidiaries’ books of
account, minute books, stock record books and any other book and/or record
legally required under applicable Brazilian Law are in all material respects
complete, correct, accurate and true and have been maintained in accordance with
applicable Brazilian Law and Brazilian GAAP, as applicable.

3.19 Investco S.A. Shareholders Documentation. All written shareholders
agreements or similar shareholder-related contracts entered into by Paulista
Lajeado Energia S.A. with other shareholders of Investco S.A. have been provided
to Purchaser in the “data room” prior to the date hereof.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Except as set forth in the Purchaser Disclosure Letter attached hereto as
Exhibit C (the “Purchaser Disclosure Letter”), Purchaser represents and warrants
to the Company, Seller and Energy as follows in this Article IV:

4.1 Organization and Qualification. Purchaser is a sociedade anônima de capital
aberto, duly formed, validly existing and in good standing under the laws of
Brazil. Purchaser has full corporate power and authority to own, lease and
operate its assets and properties and to conduct its business as presently
conducted. Purchaser is not required to be qualified to do business as a foreign
corporation in any country other than Brazil.

4.2 Authority; Non-Contravention; Statutory Approvals.

(a) Authority. Purchaser has full corporate power and authority to enter into
this Agreement and, subject to receipt of the Purchaser Required Statutory
Approvals, to consummate the transactions contemplated hereby. The execution,
delivery and performance by Purchaser of this Agreement and the consummation by
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Purchaser, and no
other corporate proceedings or approvals on the part of Purchaser are necessary
to authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Purchaser and,
assuming the due authorization, execution and delivery hereof by each other
Party, constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as limited by
applicable Law affecting the enforcement of creditors’ rights generally or by
general equitable principles. Purchaser has delivered to Seller a true, complete
and correct copy of the resolutions or other evidence of corporate proceedings
or approvals adopted by the board of directors of Purchaser, which are in full
force and effect, evidencing its authorization of the execution and delivery of
this Agreement and the consummation by Purchaser of the transactions
contemplated hereby.

(b) Non-Contravention. Except as set forth on Schedule 4.2(b) of the Purchaser
Disclosure Letter, the execution and delivery of this Agreement by Purchaser do
not, and the consummation of the transactions contemplated hereby will not,
result in any Violation or result in the creation of any Lien upon any of the
respective properties or assets of Purchaser pursuant to any provision of
(i) the Organizational Documents of Purchaser; (ii) any lease, mortgage,
indenture, note, bond, deed of trust, or other written instrument or agreement
of any kind to which Purchaser is a party or by which Purchaser may be bound,
subject to obtaining the third-party Consents set forth in Schedule 4.2(b) of
the Purchaser Disclosure Letter (the “Purchaser Required Consents”); or
(iii) any Law, Permit or governmental order applicable to Purchaser, subject to
obtaining the Purchaser Required Statutory Approvals (as such term is defined in
Section 4.2(c)); other than in the case of clauses (i), (ii) and (iii) for any
such Violation or Lien that would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.

(c) Statutory Approvals. Except for the filings or approvals (i) set forth in
Schedule 4.2(c) of the Purchaser Disclosure Letter (the “Purchaser Required
Statutory Approvals”) and (ii) as may be required due to the regulatory or
corporate status of Seller or the Company (as to which Purchaser does not have
knowledge), no Consent of any Governmental Entity is required to be made or
obtained by Purchaser in connection with the execution and delivery of this
Agreement or the consummation by Purchaser of the transactions contemplated
hereby, except those which the failure to make or obtain would not reasonably be
expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect.

4.3 Financing. Purchaser has, and will have at the Closing, available cash
and/or credit capacity, either in its accounts, through binding and enforceable
credit arrangements or borrowing facilities or otherwise, (i) to pay the
Purchase Price at the Closing, (ii) to pay all fees and expenses required to be
paid by Purchaser in connection with the transactions contemplated by this
Agreement, pursuant to Section 5.7 or otherwise, and (iii) to perform all of its
other obligations hereunder.

4.4 Litigation. Except as set forth in Schedule 4.4 of the Purchaser Disclosure
Letter, there is no action, claim, suit or proceeding at law or in equity
pending or, to the Knowledge of Purchaser, threatened against Purchaser or any
of its Subsidiaries or affecting any of its assets or properties that, if
adversely determined, would reasonably be expected to have, individually or in
the aggregate, a Purchaser Material Adverse Effect. There are no Governmental
Orders of or by any Governmental Entity applicable to Purchaser or any of its
Subsidiaries except for such that would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect.

4.5 Investment Intention; Sufficient Investment Experience; Independent
Investigation. Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the Company and the merits and
risks of an investment in the Shares. Purchaser has been given adequate
opportunity to examine all documents provided by, conduct due diligence and ask
questions of, and to receive answers from, Seller, the Company and their
respective representatives concerning the Company and Purchaser’s investment in
the Shares. Purchaser acknowledges and affirms that it has completed its own
independent investigation, analysis and evaluation of the Company and the
Company Subsidiaries, that it has made all such reviews and inspections of the
business, assets, results of operations and condition (financial or otherwise)
of the Company and the Company Subsidiaries as it has deemed necessary or
appropriate, and that in making its decision to enter into this Agreement and to
consummate the transactions contemplated hereby it has relied on its own
independent investigation, analysis, and evaluation of the Company and the
Company Subsidiaries and Seller’s representations and warranties set forth in
Article II and the Company’s representations and warranties set forth in
Article III.

4.6 Brokers and Finders. Purchaser has not entered into any written agreement or
arrangement entitling any agent, broker, investment banker, financial advisor or
other firm or Person to any broker’s or finder’s fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement, except Citigroup Global Markets Inc., whose fees and expenses will be
paid by Purchaser in accordance with such party’s agreement with such firm.

4.7 Qualified for Permits. Purchaser is qualified to obtain any Permits
necessary for the operation by Purchaser of the Company or any Company
Subsidiary as of the Closing in the same manner as the Company or any Company
Subsidiary are currently operated.

4.8 No Knowledge of Seller or Company Breach. Neither Purchaser nor any of its
Affiliates has Knowledge of any breach or inaccuracy, or of any facts or
circumstances which may constitute or give rise to a breach or inaccuracy, of
(i) any representation or warranty of Seller set forth in Article II or (ii) any
representation or warranty of Seller or the Company set forth in Article III.

ARTICLE V

COVENANTS

5.1 Conduct of Business. After the date hereof and prior to the Closing or
earlier termination of this Agreement, Seller shall exercise the voting,
governance and contractual powers available to it to cause the Company to, and
the Company shall and shall cause the Company Subsidiaries to, conduct its
businesses in the ordinary and usual course in substantially the same manner as
heretofore conducted. After the date hereof and prior to the Closing or earlier
termination of this Agreement, except (i) as contemplated in or permitted by
this Agreement, (ii) as may be required to comply with any Company Material
Contract (including any Financing Facility), (iii) as required by applicable
Law, (iv) in the ordinary and usual course of business, (v) to the extent
prohibited by a Financing Facility or (vi) to the extent Purchaser shall
otherwise consent, which decision regarding consent shall be made promptly and
which consent shall not be unreasonably withheld, conditioned or delayed, Seller
shall not exercise the voting, governance and contractual powers available to it
to cause the Company to, and the Company shall not and shall not cause the
Company Subsidiaries to:

(a) (i) except as set forth in Schedule 5.1(a), amend its Organizational
Documents other than amendments which are ministerial in nature or not otherwise
material; (ii) split, combine or reclassify its outstanding Equity Interests; or
(iii) repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exchangeable or exercisable for any shares of
its capital stock;

(b) issue, sell, or dispose of any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock, other than any
issuance, sale or disposal, solely among any of the Company and/or any Company
Subsidiary;

(c) except as set forth in Schedule 5.1(c), incur any indebtedness in a maximum
aggregate principal amount in excess of R$100,000;

(d) except as set forth in Schedule 5.1(d), make any commitments for or make
capital expenditures in excess of R$1,000,000 individually or R$2,500,000 in the
aggregate;

(e) except as set forth in Schedule 5.1(e), make any acquisition of, or
investment in, assets or stock of any other Person or entity in excess of
R$100,000 individually or R$300,000 in the aggregate;

(f) sell, transfer or otherwise dispose of any of its assets in excess of
R$100,000 individually or R$300,000 in the aggregate;

(g) request, on behalf of the Company and/or any Company Subsidiary, bankruptcy,
reorganization, including, but not limited to, recuperação judicial, recuperação
extrajudicial or any acordo privado in accordance with Federal Law # 11.101/05,
insolvency, moratorium, or preferential transfers, or any other measure subject
to similar Laws relating to or affecting creditors’ rights;

(h) (x) terminate or amend or modify any material term of a Company Material
Contract, (y) enter into a new Company Material Contract or (z) grant any waiver
of any material term under, or give any material consent with respect to, any
Company Material Contract, in each case which Company Material Contract involves
total consideration throughout its term in excess of R$2,000,000;

(i) enter into or amend any material Company Plan or any collective bargaining
or labor agreement (except, in each case, as may be required by applicable Law);

(j) except as may be required to meet the requirements of applicable Law or
changes in Brazilian GAAP, change any accounting policy that would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect;

(k) except as required by the terms of any Company Plan, collective bargaining
agreement or any other existing agreement, increase salaries, remuneration or
aggregate benefits payable to the managers, executive officers and directors of
any Company or Company Subsidiary;

(l) except as set forth in Schedule 5.1(l), declare, pay or set aside for
payment any cash or non-cash dividend or other distribution in respect of any of
the Shares or the Equity Interest of any Company Subsidiary (other than cash
dividends required by applicable Law); or

(m) enter into any written agreement or contract to take any of the actions set
forth in subsections (a)-(l) of this Section 5.1.

5.2 Approvals.

(a) Each Party shall cooperate and use reasonable efforts to obtain as promptly
as practicable all Consents of any Governmental Entity or any other Person,
including, without limitation, the Company Required Consents, the Purchaser
Required Consents, the Seller Required Statutory Approvals, the Company Required
Statutory Approvals and the Purchaser Required Statutory Approvals, as
applicable, required in connection with, and waivers of any breaches or
violations of any written contracts or agreements, Permits or other documents
that may be caused by, the consummation of the transactions contemplated by this
Agreement. In furtherance of the foregoing, Purchaser shall take all such
actions, including, without limitation, (i) proposing, negotiating, committing
to and effecting, by consent decree, hold separate order, or otherwise, the
sale, divestiture or disposition of such assets or businesses of Purchaser or
any of its Subsidiaries or, after the Closing Date, of the Company or any of its
Company Subsidiaries and (ii) otherwise taking or committing to take actions
that limit or would limit Purchaser’s or its Subsidiaries’ (including, after the
Closing Date, the Company’s or any of its Company Subsidiaries as Subsidiaries
of Purchaser) freedom of action with respect to, or its ability to retain, one
or more of their respective businesses, product lines or assets, in each case as
may be required in order to (x) obtain the Seller Required Statutory Approvals,
the Company Required Statutory Approvals and the Purchaser Required Statutory
Approvals as soon as reasonably possible or (y) avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order, or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or materially delaying the Closing. Purchaser shall (i) respond as promptly as
practicable to any inquiries or requests received from any Governmental Entity
for additional information or documentation and (ii) not enter into any written
agreement with any Governmental Entity that would reasonably be expected to
adversely affect the Parties’ ability to consummate the transactions
contemplated by this Agreement, except with the prior consent of the other
Parties (which shall not be unreasonably withheld or delayed).

(b) The Parties shall promptly provide the other Parties with copies of all
filings made with, and inform one another of any communications received from,
any Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.

5.3 Access. After the date hereof and prior to the Closing, Seller and the
Company agree that the Company and the Company Subsidiaries shall permit, and
the Company and the Company Subsidiaries shall exercise the voting, governance
and contractual powers available to any of them to cause (subject to any
contractual, fiduciary or similar obligation of the Company or any Company
Subsidiary), the Company and each Company Subsidiary to permit, Purchaser and
its employees, counsel, accountants and other representatives to have reasonable
access, upon reasonable advance notice, during regular business hours, to the
assets, employees, properties, books and records, businesses and operations
relating to the Company and the Company Subsidiaries as Purchaser may reasonably
request; provided, however, that in no event shall Seller, the Company or any
Company Subsidiary be obligated to provide any access or information (i) if
Seller or the Company determines, in good faith after consultation with counsel,
that providing such access or information may violate applicable Law, cause
Seller, the Company or any Company Subsidiary to breach a confidentiality
obligation to which it is bound, or jeopardize any recognized privilege
available to Seller, the Company or any Company Subsidiary; or (ii) to the
extent set forth on Schedule 5.3. Purchaser agrees to indemnify and hold Seller,
the Company and the Company Subsidiaries harmless from any and all claims and
liabilities, including costs and expenses for loss, injury to or death of any
representative of Purchaser and any loss, damage to or destruction of any
property owned by Seller, the Company or the Company Subsidiaries or others
(including claims or liabilities for loss of use of any property) resulting
directly or indirectly from the action or inaction of any of the employees,
counsel, accountants, advisors and other representatives of Purchaser during any
visit to the business or property sites of the Company or the Company
Subsidiaries prior to the Closing Date, whether pursuant to this Section 5.3 or
otherwise. During any visit to the business or property sites of the Company or
the Company Subsidiaries, Purchaser shall, and shall cause its employees,
counsel, accountants, advisors and other representatives accessing such
properties to, comply with all applicable Laws and all of the Company’s and the
Company Subsidiaries’ safety and security procedures and conduct itself in a
manner that could not be reasonably expected to interfere with the operation,
maintenance or repair of the assets of the Company or such Company Subsidiary.
Neither Purchaser nor any of its representatives shall conduct any environmental
testing or sampling on any of the business or property sites of the Company or
the Company Subsidiaries prior to the Closing Date. Each Party shall, and shall
cause its Affiliates and representatives to, hold in strict confidence all
documents and information furnished to it by another Party in connection with
the transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement.

5.4 Publicity. Except as may be required by applicable Law or by obligations
pursuant to any listing agreement with or rules or regulations of any national
securities exchange, prior to the Closing none of Seller, the Company, Purchaser
or any of their respective Affiliates shall, without the express written
approval of Seller, the Company and Purchaser, make any press release or other
public announcements concerning the transactions contemplated by this Agreement,
except as and to the extent that any such Party shall be so obligated by
applicable Law or pursuant to any such listing agreement or rules or regulations
of any national securities exchange, in which case the other Parties shall be
advised and the Parties shall use reasonable efforts to cause a mutually
agreeable release or announcement to be issued.

5.5 Tax Matters.

(a) With respect to the period prior to January 1, 2008, Purchaser shall make no
election under Section 338 of the Code with respect to the Company or any
Company Subsidiary in connection with the transactions contemplated by this
Agreement.

(b) Following the Closing and prior to January 1, 2008, Purchaser shall not, and
shall cause each of the Company and each of the Company Subsidiaries not to,
(i) sell the Equity Interests of any Company Subsidiary, (ii) sell a substantial
portion of the assets of any Company Subsidiary outside of the ordinary course
of business or (iii) make a non-cash distribution of any of the Equity Interests
or assets of any Company Subsidiary, in each case if such sale or distribution
could reasonably be expected to result in an increase in (x) “Subpart F” income
under Section 951 of the Code or (y) deemed dividends recognized under
Section 1248 of the Code that Seller or any of its Affiliates must report on any
Tax Return; provided, however, that in no event shall this Section 5.5(b) apply
to any sale, transfer or other disposition of the Equity Interest in Jaguari
Geração de Energia S.A. or its Subsidiaries.

5.6 Employee Matters.

(a) For a period of twelve (12) months following the Closing Date, Purchaser and
the Company shall cause the employees of the Company or any Company Subsidiary
who remain in the employment of Purchaser, the Company, their Subsidiaries or
their respective successors (the “Continuing Employees”) to receive compensation
and employee benefits that in the aggregate are substantially no less favorable
than the compensation and employee benefits provided to such employees
immediately prior to the Closing. Nothing contained herein shall be construed as
requiring Purchaser, the Company or any Company Subsidiary to continue or to
cause the continuance of any specific employee benefit plans or to continue or
cause the continuance of the employment of any specific person.

(b) With respect to each benefit plan of Purchaser or any of its Subsidiaries in
which a Continuing Employee participates after the Closing, for purposes of
determining eligibility, vesting and amount of benefits, including severance
benefits and paid time off entitlement (but not for pension benefit accrual
purposes), Purchaser shall cause service with the Company and the Company
Subsidiaries (or predecessor employers to the extent the Company or any Company
Subsidiary provided past service credit) to be treated as service with Purchaser
and its Subsidiaries; provided that such service shall not be recognized to the
extent that such recognition would result in a duplication of benefits or to the
extent that such service was not recognized under an analogous Company Plan.

(c) With respect to any welfare benefit plan maintained by Purchaser or its
Subsidiaries in which Continuing Employees are eligible to participate after the
Closing, Purchaser shall, and shall cause the Company and the Company
Subsidiaries to, (i) waive all limitations as to preexisting conditions and
exclusions with respect to participation and coverage requirements applicable to
such employees to the extent such conditions and exclusions were satisfied or
did not apply to such employees under the Company Plans prior to the Closing and
(ii) provide each Continuing Employee with credit for any co-payments and
deductibles paid prior to the Closing in satisfying any analogous deductible or
out of pocket requirements to the extent applicable under any such plan.

5.7 Fees and Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement (including,
without limitation, any fees and expenses of investment bankers, brokers,
finders, counsel, advisors, experts or other agents, in each case, incident to
or in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (whether payable prior to, at or after the Closing Date))
shall be paid by the Party incurring such expense; provided that all such costs
and expenses incurred by the Company with respect to the transactions
contemplated by this Agreement on or prior to the Closing Date shall be paid by
Seller; provided, further, that, notwithstanding any provision to the contrary
in this Agreement or any other agreement contemplated hereby, any and all
expenses incurred or suffered by or on behalf of the Company or any Company
Subsidiary or any limitation on, or diminution of, any Equity Interest held by
the Company or any Company Subsidiary in connection with the matters described
on Schedule 5.7, including, without limitation, with respect to investigating,
analyzing or defending such matters (whether incurred prior to or after the
Closing) shall be borne, paid and reimbursed by Purchaser to Seller.

5.8 [Intentionally left blank.]

5.9 Termination of Affiliate Contracts. Except as set forth on Schedule 5.9, all
Affiliate Contracts, including any written agreements or understandings (written
or oral) with respect thereto, shall survive the Closing without any further
action on the part of the parties thereto or the Parties.

5.10 Further Assurances. Each of Seller, the Company and Purchaser agrees that,
from time to time before and after the Closing Date, they will execute and
deliver, and the Company shall cause the Company Subsidiaries to execute and
deliver, or use reasonable efforts to cause their other respective Affiliates to
execute and deliver such further instruments, and take, or cause their
respective Affiliates to take, such other action, as may be reasonably necessary
to carry out the purposes and intents of this Agreement. Purchaser, the Company
and Seller agree to use reasonable efforts to refrain from taking any action
which could reasonably be expected to materially delay the consummation of the
Transaction.

5.11 [Intentionally left blank.]

5.12 Change of Name.

(a) Notwithstanding anything to the contrary contained herein, within ninety
(90) Business Days after the Closing Date, Purchaser shall have caused each of
the Company, CMS Comercializadora de Energia Ltda. and CMS Energy Equipamentos,
Serviços Indústria e Comércio S.A. to be renamed such names as Purchaser shall
identify by written notice to Seller no later than five (5) Business Days prior
to the Closing. On or after the Closing Date, Purchaser and its Affiliates shall
not use existing or develop new stationery, business cards and other similar
items that bear the name or mark of “CMS Energy Brasil S.A.”, “CMS
Comercializadora de Energia Ltda.” or “CMS Energy Equipamentos, Serviços
Indústria e Comércio S.A.” or any similar derivation thereof in connection with
the businesses of the Company or any Company Subsidiary.

(b) The Parties acknowledge that any damage caused to Seller or any of its
Affiliates by reason of the breach by Purchaser or any of its Affiliates of
Section 5.12(a), in each case would cause irreparable harm that could not be
adequately compensated for in monetary damages alone; therefore, each Party
agrees that, in addition to any other remedies, at law or otherwise; Seller and
any of its Affiliates shall be entitled to an injunction issued by a court of
competent jurisdiction restraining and enjoining any violation by Purchaser or
any of its Affiliates of Section 5.12(a), and Purchaser further agrees that it
(x) will stipulate to the fact that Seller or any of its Affiliates, as
applicable, have been irreparably harmed by such violation and not oppose the
granting of such injunctive relief and (y) waive any requirement that Seller
post any bond or similar requirement in order for Seller to obtain the
injunctive relief contemplated by this Section 5.12(b).

5.13 [Intentionally left blank.]

5.14 Resignations of Certain Officers and Directors. Upon the written request of
Purchaser, the Company shall cause the resignations or removals at the Closing
Date of the executive officers and directors set forth on Schedule 5.14 from
their position as executive officer or director of the Company or the Company
Subsidiaries set forth opposite the name of such executive officer or director
on Schedule 5.14.

5.15 Tag-Along and Other Shareholder Rights. Seller and the Company shall use
reasonable efforts to cause, and Purchaser shall do all things reasonably
requested by Seller and the Company as promptly as reasonably possible to ensure
that, all tag-along and other contractual rights under the shareholders
agreements to which the Company or any Company Subsidiary is a party and the
obligations of Seller, the Company or any of their respective Affiliates in
connection with such tag-along and other contractual rights (including, without
limitation, such rights and obligations under the Shareholders Agreement) with
respect to the Equity Interests of the Company and any Company Subsidiary, as
the case may be, (i) to cease to be an obligation of Seller, the Company and
such Affiliates, as the case may be, or (ii) to be terminated, including,
without limitation, by paying any amounts that may be required in connection
therewith in accordance with the following sentence. Purchaser agrees that if
any holder of Equity Interests of the Company or any Company Subsidiary (other
than Seller, the Company or any Company Subsidiary) exercises any tag-along or
similar contractual or legal right to sell such Equity Interests, Purchaser will
agree to acquire or otherwise pay for such Equity Interests on the applicable
contractual or other legal terms and otherwise on substantially the same terms
as set forth in this Agreement (with appropriate adjustments to the terms and
conditions, including, without limitation, the price to be paid, as are
necessary to reflect applicable contractual or other legal terms of the Equity
Interests to be acquired).

5.16 Releases of Certain Guarantees. Purchaser shall procure at or prior to the
Closing the release by the applicable counterparty of any continuing obligation
of Seller or its Affiliates with respect to any guarantee as set forth on
Schedule 5.16 (“Guarantees”); provided that to the extent a release shall not
have been obtained at the time of Closing with respect to any such Guarantee,
Purchaser shall provide to Seller, as beneficiary, in Seller’s sole and absolute
discretion, a performance bond or an irrevocable letter of credit (which, in
each case, shall be in form and substance and issued by a financial institution
satisfactory to Seller) or an indemnity (in form and substance satisfactory to
Seller) to secure the obligations of Seller or its Affiliates with respect to
each such Guarantee; provided, further, that any such performance bond,
irrevocable letter of credit or indemnity with Seller, as beneficiary, shall
remain in full force and effect for the same period from and after the Closing
as any such corresponding Guarantee shall remain in place.

5.17 [Intentionally left blank.]

5.18 Assignment of Certain Obligations. Seller, at its option, shall either
(i) on or prior to the Closing Date, cause the applicable Company Subsidiary to
assign the obligations under the agreements set forth on Schedule 5.18 to Seller
or one of its Affiliates, which shall assume such obligations, or (ii) reimburse
or cause one of its Affiliates to reimburse amounts paid by the Company or such
Company Subsidiary with respect to such obligations on or after the Closing Date
if such agreements are not assigned and assumed pursuant to the foregoing clause
(i) of the prior sentence. In the latter case, the reimbursement by Seller to
Purchaser shall be made in immediately available funds to the account designated
by Purchaser, for all payments made by Purchaser during a month and reasonably
documented, within ten (10) days from the end of such month. Failure to comply
with the payment in accordance with this Section 5.18, shall cause the payment
amount to be duly adjusted by IGP-M, plus interest of one percent (1%) per month
with respect to Losses paid in reais. Payments to Purchaser under this
Section 5.18 shall be made in reais, calculated at the exchange rate on the date
or dates Seller makes payment to Purchaser.

5.19 Insurance. Prior to the Closing, Seller shall cause the Company and/or each
Company Subsidiary, as applicable, to renew the insurance policies to which they
are a party as set forth on Schedule 3.16 of the Company Disclosure Letter and
are scheduled to expire on or before the Closing Date or, with respect to those
policies that are not renewable and as set forth on Schedule 5.19, Seller shall
cause the Company and/or each Company Subsidiary, as applicable, to obtain
reasonably comparable replacement policies.

ARTICLE VI

CONDITIONS TO CLOSING

6.1 Conditions to the Obligations of the Parties. The obligations of the Parties
to effect the Closing shall be subject to the satisfaction or waiver (to the
extent permitted by Law) by Purchaser and Seller, on or prior to the Closing
Date, of each of the following conditions precedent:

(a) No Injunction. No statute, rule or regulation shall have been enacted or
promulgated by any Governmental Entity which prohibits the consummation of the
transactions contemplated hereby and there shall be no order or injunction of a
court of competent jurisdiction in effect precluding or prohibiting the
consummation of the transactions contemplated hereby; provided, however, that
should any such order or injunction be entered into or in effect, the Parties
shall use reasonable efforts to have any order or injunction vacated or lifted.

(b) ANEEL Consent. The Consent of ANEEL in respect of the transactions
contemplated hereby shall have been obtained at or prior to the Closing.

6.2 Conditions to the Obligation of Purchaser. The obligations of Purchaser to
effect the Closing shall be subject to the satisfaction or waiver by Purchaser
on or prior to the Closing Date of each of the following conditions:

(a) Performance of Obligations of Seller and the Company. Each of Seller and the
Company shall have performed in all material respects its respective agreements
and covenants contained in or contemplated by this Agreement which are required
to be performed by it at or prior to the Closing.

(b) Representations and Warranties. The representations and warranties of Seller
and the Company set forth in this Agreement shall be true and correct (i) on and
as of the date hereof and (ii) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time which need only be true and correct as of
such date or time) except in each of cases (i) and (ii) for such failures of
representations and warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) that would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect or a Seller Material Adverse
Effect.

(c) Officer’s Certificate. Purchaser shall have received a certificate from an
authorized executive officer of Seller, dated as of the Closing Date, to the
effect that, to the best of such officer’s knowledge, the conditions set forth
in Sections 6.2(a) and 6.2(b) have been satisfied.

(d) Closing Deliverables. Purchaser shall have received all documents and other
items required to be delivered by Seller to Purchaser pursuant to Section 1.4.

6.3 Conditions to the Obligation of Seller. The obligation of Seller to effect
the Closing shall be subject to the satisfaction or waiver by Seller on or prior
to the Closing Date of each of the following conditions:

(a) Performance of Obligations of Purchaser. Purchaser shall have performed in
all material respects its respective agreements and covenants contained in or
contemplated by this Agreement which are required to be performed by it at or
prior to the Closing.

(b) Representations and Warranties. The representations and warranties of
Purchaser set forth in this Agreement shall be true and correct (i) on and as of
the date hereof and (ii) on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time which need only be true and correct as of
such date or time) except in each of cases (i) and (ii) for such failures of
representations and warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) that would not reasonably be expected to have, individually or
in the aggregate, a Purchaser Material Adverse Effect.

(c) Officer’s Certificate. Seller shall have received a certificate from an
authorized executive officer of Purchaser, dated as of the Closing Date, to the
effect that, to the best of such officer’s knowledge, as applicable, the
conditions set forth in Sections 6.3(a) and 6.3(b) have been satisfied.

(d) Termination of Certain Company Obligations. Seller shall have received
evidence from Purchaser (which evidence shall be in form and substance
satisfactory to Seller) to effect as promptly as reasonably possible the
purchase of or other satisfaction of all shareholder, tag-along and related
contractual or legal rights of any Person and the obligations of Seller, the
Company or any of their respective Affiliates in connection therewith
(including, without limitation, such rights and obligations under the
Shareholders Agreement) with respect to the Equity Interests of the Company and
any Company Subsidiary in accordance with Section 5.15.

(e) Releases of Certain Guarantees. The releases by the applicable counterparty
of any continuing obligation of Seller or any of its Affiliates with respect to
each Guarantee shall have been obtained in accordance with Section 5.16;
provided that to the extent a release shall not have been obtained at Closing
with any such Guarantee, Seller, as beneficiary, shall have received (in
Seller’s sole and absolute discretion) from Purchaser a performance bond or an
irrevocable letter of credit (which, in each case, shall be in form and
substance and issued by a financial institution satisfactory to Seller) or an
indemnity (in form and substance satisfactory to Seller) to secure the
obligations of Seller or its Affiliates with respect to each such Guarantee;
provided, further, that any such performance bond, irrevocable letter of credit
or indemnity with Seller, as beneficiary, shall remain in full force and effect
for the same period from and after the Closing as any such corresponding
Guarantee shall remain in place.

(f) Closing Deliverables. Seller shall have received all documents and other
items required to be delivered by Purchaser to Seller pursuant to Section 1.4.

ARTICLE VII

TERMINATION

7.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:

(a) by the mutual written agreement of Purchaser, the Company and Seller;

(b) [Intentionally left blank.]

(c) by Purchaser or Seller, if (i) a statute, rule, regulation or executive
order shall have been enacted, entered or promulgated prohibiting the
consummation of the transactions contemplated hereby or (ii) an order, decree,
ruling or injunction shall have been entered permanently restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby, and such order, decree, ruling or injunction shall have become final and
non-appealable and the Party seeking to terminate this Agreement pursuant to
this Section 7.1(c)(ii) shall have used reasonable efforts to remove such order,
decree, ruling or injunction;

(d) by Purchaser, by written notice to Seller, if the Closing Date shall not
have occurred on or before such date that is two hundred ten (210) days
following the date hereof (the “Outside Date”); provided, however, that the
right to terminate this Agreement under this Section 7.1(d) shall not be
available to Purchaser if its failure to fulfill any obligation under this
Agreement shall have caused or resulted in the failure of the Closing Date to
occur on or before the Outside Date;

(e) by Seller, by written notice to Purchaser, if the Closing Date shall not
have occurred on or before the Outside Date; provided, however, that the right
to terminate this Agreement under this Section 7.1(e) shall not be available to
Seller if its failure to fulfill any of its material obligations under this
Agreement shall have caused or resulted in the failure of the Closing Date to
occur on or before such date;

(f) by Purchaser, so long as Purchaser is not then in material breach of any of
its representations, warranties, covenants or agreements hereunder, by written
notice to Seller, if there shall have been a breach of any representation or
warranty of Seller or the Company, or a breach of any covenant or agreement of
Seller or the Company hereunder, which breaches would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect, and
such breach shall not have been remedied within thirty (30) days after receipt
by Seller and the Company of notice in writing from Purchaser (a “Breach
Notice”), specifying the nature of such breach and requesting that it be
remedied or Purchaser shall not have received adequate assurance of a cure of
such breach within such thirty-day period or Seller shall not have made a
capital contribution to the Company in an amount equal to the expected damages
from such breach, provided that Seller shall have no obligation to make any such
capital contribution pursuant to this Section 7.1(f); or

(g) by Seller, so long as Seller or the Company is not then in material breach
of any of their representations, warranties, covenants or agreements hereunder,
by written notice to Purchaser, if there shall have been a breach of any
representation or warranty, or a breach of any covenant or agreement of
Purchaser hereunder, which breaches would reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect, and such
breach shall not have been remedied within thirty (30) days after receipt by
Purchaser of notice in writing from Seller, specifying the nature of such breach
and requesting that it be remedied or Seller shall not have received adequate
assurance of a cure of such breach within such thirty-day period.

7.2 Effect of Termination. No termination of this Agreement pursuant to Section
7.1 shall be effective until notice thereof is given to the non-terminating
Parties specifying the provision hereof pursuant to which such termination is
made. If validly terminated pursuant to Section 7.1, this Agreement shall become
wholly void and of no further force and effect without liability to any Party or
to any Affiliate, or their respective members or shareholders, directors,
officers, employees, agents, advisors or representatives, and following such
termination no Party shall have any liability under this Agreement or relating
to the transactions contemplated by this Agreement to any other Party; provided
that if this Agreement is terminated by a Party because of a breach of this
Agreement by the other Party then no such termination shall relieve the other
Party from liability for fraud or any willful or intentional breach of any
material provision of this Agreement occurring prior to such termination. If
this Agreement is terminated as provided in Section 7.1, Purchaser shall
redeliver to Seller or the Company, as the case may be, and will cause its
agents to redeliver to Seller or the Company, as the case may be, all documents,
workpapers and other materials of Seller, the Company and the Company
Subsidiaries relating to any of them and the transactions contemplated hereby,
whether obtained before or after the execution hereof, and Purchaser shall
comply with all of its obligations under the Confidentiality Agreement.

ARTICLE VIII

SURVIVAL; INDEMNIFICATION

8.1 Survival of Representations, Warranties, Covenants and Agreements; Exclusive
Remedy.

(a) The representations and warranties in this Agreement shall survive the
Closing and shall terminate and expire on the date which is the first
anniversary of the Closing Date (“Survival Period Termination Date”) and shall
not constitute after such date the basis for any claim for indemnification under
this Agreement, except for:

(i) the representations and warranties of Seller contained in Sections 2.2
(Title to Shares) and 2.3(a) (Authority), that shall survive indefinitely;

(ii) the representations and warranties of the Seller with respect to the
Company contained in Sections 3.1(a) (Organization and Qualification), 3.1(b)
(Authority) and 3.2 (Capitalization), that shall survive indefinitely;

(iii) the representations and warranties of Purchaser contained in Sections
4.2(a) (Authority) and 4.8 (No Knowledge of Seller or Company Breach), that
shall survive indefinitely; and

(iv) the covenants and agreements of the Parties contained in Sections 5.3
(Access), 5.7 (Fees and Expenses), 5.10 (Further Assurances), 5.12 (Change of
Name), 5.16 (Releases of Certain Guarantees) and 7.2 (Effect of Termination) and
Article VIII (Indemnification) that shall survive according with their terms.

(b) The Parties agree that, from and after the Closing Date to and including the
date on which such claim or cause of action against any of the Parties is based
upon, directly or indirectly, a breach of any of the representations,
warranties, covenants or agreements contained in this Agreement may be brought
only, as expressly provided in, this Article VIII, and the indemnification
provided for in this Article VIII shall be the sole and exclusive remedy (except
in the case of fraud) for Losses related to or in connection with such breach.

8.2 Indemnification of Purchaser by Seller. Subject to the terms and conditions
of this Article VIII, and except when the Loss arises from Purchaser’s
negligence or willful misconduct or the matters contemplated by Section 8.5,
from and after the Closing Date the Seller shall, subject to Section 8.4,
indemnify, defend and hold Purchaser and each of Purchaser’s Affiliates,
directors, officers and employees and the successors and assigns of any of them
(including, without limitation, the Company) (collectively, the “Purchaser
Group”) harmless from and against all Losses, arising from any claim resulting
from, imposed upon or incurred by any member of the Purchaser Group, directly or
indirectly, by reason of or resulting from any misrepresentation or inaccuracy
of any representation or warranty of the Seller contained in or made pursuant to
Articles II or III of this Agreement and/or any breach by Seller of any of its
covenants, agreements or obligations contained in or made pursuant to this
Agreement. Payments to Purchaser under this Section 8.2 shall be made in reais,
calculated at the exchange rate on the date or dates Seller makes payment or
payments to Purchaser.

8.3 Indemnification of Seller by Purchaser. Subject to the terms and conditions
of this Article VIII, and except when the Loss arises from Seller’s negligence
or willful misconduct, from and after the Closing Date Purchaser shall
indemnify, defend and hold Seller, its Affiliates and each of their respective
officers, directors, employees, agents and representatives (the “Seller Group”)
harmless from and against all Losses arising from any claim resulting from,
imposed upon or incurred by Seller, directly or indirectly, by reason of or
resulting from any misrepresentation or inaccuracy of any representation or
warranty of Purchaser contained in or made pursuant to Article IV of this
Agreement; and/or any breach by Purchaser of any of its covenants, agreements or
obligations of Purchaser contained in or made pursuant to this Agreement
(including, without limitation, the matters contemplated by the proviso of the
last sentence of Section 5.7). Payments to Seller under this Section 8.3 shall
be made in U.S. currency, calculated at the exchange rate on the date or dates
Purchaser makes payment or payments to Seller or any other member of the Seller
Group.

8.4 Limitations on Seller’s Indemnification.

(a) Limitations. Claims for indemnification under Section 8.2 shall be made by
Purchaser or by any other Person of the Purchaser Group in accordance with the
following limits:

(i) if such claim involves Losses equal to or in excess of US$50,000 (the
“Mini-Basket Amount”); and

(ii) if such Losses with respect to the claims permitted to be made pursuant to
the foregoing clause (i) exceed in the aggregate an amount equal to US$500,000
(the “Deductible Amount”), and then only to the extent such Losses exceed the
Deductible Amount.

(b) Losses Below the Deductible Amount. Notwithstanding the provisions of this
Section 8.4, if claims made prior to the Survival Period Termination Date do not
reach the Deductible Amount, Seller agrees to pay to Purchaser the aggregate
amount of the Losses related to such claims meeting the Mini-Basket Amount
definition and made until the Survival Period Termination Date.

(c) Indemnification Cap. The aggregate amount of Losses payable by Seller under
this Agreement shall not exceed US$10,000,000 (the “Indemnification Cap”) in the
aggregate.

(d) Calculation of Losses. The amount of any Loss subject to indemnification
under Section 8.2 or 8.3 shall be calculated net of any insurance proceeds (net
of direct collection expenses, deductibles and co-pays) or any indemnity,
contribution or other similar payment received by Indemnitee from any third
party with respect thereto. To the extent a Loss is reasonably expected to be
covered by such policies, Indemnitee shall use commercially reasonable efforts
to recover under its insurance policies covering such Loss to the same extent as
they would if such Loss were not subject to indemnification hereunder; provided,
however, that nothing in this Section 8.4(d) shall prevent Indemnitee from also
seeking to recover such Loss from Indemnitor while such insurance claim is
pending. In the event that an insurance or other recovery is made by Indemnitee
with respect to any Loss for which any such Person has been indemnified
hereunder, then a refund equal to the aggregate amount of the recovery (not to
exceed the amount of the applicable indemnification payment made to it) shall be
made promptly to Seller. Indemnitor shall be subrogated to all rights of
Indemnitee and its Affiliates in respect of any Losses indemnified by
Indemnitor.

8.5 Special Indemnification by Seller.

(a) General. Notwithstanding any provision to the contrary in this Agreement or
any other agreement contemplated hereby, from and after the Closing Date, Seller
shall indemnify Purchaser against and hold it harmless from any Losses that
result from or arise out of the matters set forth on Schedule 8.5(a), which
shall be excluded from the Seller’s indemnification obligations and limits under
Sections 8.2, 8.4(a), 8.4(b) and 8.4(c).

(b) Special Seller Indemnification Cap. In no event shall the aggregate amount
of Losses payable by Seller under Section 8.5 exceed US$8,800,000 (the “Special
Seller Indemnification Cap”) in the aggregate.

(c) Expiration. With respect to the claim noted in item 4 of Schedule 8.5(a),
the Seller’s obligations under this Section 8.5(c) shall expire on October 27,
2009, unless a Third Party Claim (as defined in Section 8.7(a)) based on a
Promissory Note is made with respect thereto prior to such date; provided that,
if the enforceability of such a Promissory Note is tolled prior to the making of
such Third Party Claim, the expiration date of Seller’s obligation with respect
to such Promissory Note under this Section 8.5(c) shall be extended for a number
of days equal to the number of days during which such enforceability was tolled.
With respect to the other matters noted in Schedule 8.5(a), Seller’s obligations
under this Section 8.5(c) shall expire on the fifteenth anniversary of the
Closing Date.

(d) Payments. Payments to Purchaser under this Section 8.5 shall be made in
reais, calculated at the exchange rate on the date or dates Seller makes payment
or payments to Purchaser.

8.6 Mitigation. Each Person entitled to indemnification hereunder shall take
commercially reasonable steps to mitigate all Losses after becoming aware of any
event that could reasonably be expected to give rise to any Loss that is subject
to indemnification hereunder.

8.7 General Procedures Applicable to Claims for Indemnification.

(a) Third Party Claim. Any request for indemnification by a party under this
Article VIII shall be valid only if the party making the request (“Indemnitee”)
notifies the other party in writing (“Indemnitor”) as promptly as reasonably
practicable by written notice in accordance with Section 10.1 regarding a claim
or demand made by any Person (other than a Party or Affiliate thereof) (“Third
Party Claim”). Notice shall specify the nature of the Third Party Claim, the
applicable provision(s) of this Agreement under which the Third Party Claim
arises and, if possible, the amount of, or an estimated amount of, the Loss and
such other information as Indemnitor may reasonably request. No failure or delay
in giving a Third Party Claim Notice and no failure to include any specific
information or any reference to any provision of this Agreement or other
instrument under which the Third Party Claim arises shall affect the rights of
Indemnitee hereunder, except to the extent that such failure or delay materially
adversely affects the ability of Indemnitor to defend, settle or satisfy the
Third Party Claim.

(b) Right of Indemnitor to Assume Defense of Claim; Control of the Defense.
Indemnitor, at its sole cost and expense, shall have the right, upon written
notice to Indemnitee to assume the defense of the Third Party Claim if in such
written notice Indemnitor acknowledges in writing that the Third Party Claim is
covered by the indemnification obligations under this Article VIII and all
Losses incurred by Indemnitor shall be included in the calculation of the
maximum amount of indemnification set forth in Section 8.4(c). If Indemnitor
assumes the defense of the Third Party Claim, it shall select reputable counsel
reasonably acceptable to Indemnitee to conduct the defense of the Third Party
Claim and shall defend or settle the same. The contest of the Third Party Claim
may be conducted in the name and on behalf of Indemnitor or Indemnitee, as the
case may be appropriate. If Indemnitor assumes the defense of such claim,
Indemnitor shall have full authority, in consultation with Indemnitee, to
determine all action to be taken with respect to the Third Party Claim, except
that Indemnitor may consent to a settlement or compromise of, or the entry of
any monetary judgment arising from, the Third Party Claim only with the prior
written consent of Indemnitee provided that, the proposed settlement, compromise
or entry: (A) does not contain an admission of guilt or wrongdoing on the part
of Indemnitee, and (B) does not provide for any remedy or sanction against
Indemnitee other than the payment of money that is required to be and is timely
paid by Indemnitor. Should Indemnitor so elect to assume the defense of such
Third Party Claim, Indemnitor will not be liable to Indemnitee for legal
expenses subsequently incurred by Indemnitee in connection with the defense
thereof, unless the Third Party Claim involves potential conflicts of interest
between Indemnitee and Indemnitor. Indemnitor will be liable for the fees and
expenses of counsel employed by Indemnitee for any period during which
Indemnitor has not assumed the defense thereof.

(c) Cooperation in Defense. If requested by Indemnitor, Indemnitee shall
cooperate with Indemnitor and its counsel, including permitting reasonable
access to books and records, in contesting any Third Party Claim that Indemnitor
elects to contest or, if appropriate, in making any counterclaim against the
Person asserting the Third Party Claim or any cross-complaint against any
Person, but Indemnitor shall reimburse Indemnitee for reasonable out-of-pocket
costs incurred by Indemnitee in so cooperating. With respect to any claims
arising out or relating to Section 8.5, Purchaser shall, and shall cause its
Affiliates to, provide Seller with such assistance as may reasonably be
requested by Seller in connection with any indemnification or defense with
respect to the matters provided for in Section 8.5, including, without
limitation, providing Seller with such information, documents and records and
reasonable access to the services of and consultations with such personnel of
Purchaser or its Affiliates as Seller shall deem reasonably necessary.

(d) Failure of Indemnitor to Assume Defense. If Indemnitor does not inform
Indemnitee in writing that it will assume the defense of the Third Party Claim
in accordance with the terms hereof within one third of the legal term for
defense or five (5) calendar days, whichever is less, after the receipt of
notice thereof, Indemnitee may, but not in any means shall be obliged to, at
Indemnitor’s sole expense, defend against the Third Party Claim in such manner
as it may deem appropriate, and the expense of such defense shall constitute an
indemnifiable Loss, which amounts shall be included in the calculation of the
maximum amount of indemnification set forth in Section 8.4(c). Indemnitor shall
have the right, and Indemnitee shall use its reasonable efforts to afford
Indemnitor, to have its counsel attend, observe and participate in all
administrative and judicial meetings, conferences, hearings and other
proceedings in connection with such defense and to be provided with copies of,
or reasonable access to, all pleadings, notices and other filings in connection
with such defense.

(e) Dispute Resolution. In the event that Indemnitee should have a claim against
Indemnitor under this Article VIII, Indemnitee shall notify Indemnitor in
writing, and in reasonable detail, of such claim as promptly as reasonably
practicable, including (i) the reason why Indemnitee believes that Indemnitor is
or will be obligated to indemnify Indemnitee, (ii) the Loss amount and (iii) the
basis on which Indemnitee has calculated such Loss amount (such notice shall be
referred to as the “Notice of Claim”). If, within twenty (20) Business Days upon
receipt of the Notice of Claim, Indemnitor does not deliver a notice in writing
disputing in good faith such Notice of Claim, then Indemnitor shall be deemed to
have accepted such claim and the Loss amount as final and binding without
amendment or modification and conclusive upon the parties. For ten (10) Business
Days after the receipt of the Notice of Claim, Indemnitor and Indemnitee shall
use reasonable efforts to engage in negotiations and discussions relating to any
matters arising out of or concerning the Notice of Claim. If Indemnitor and
Indemnitee shall fail to resolve any such dispute during the 10-Business Day
period, then the claim in dispute shall be promptly submitted by Indemnitor (in
any event, no later than five (5) Business Days after the 10-Business Day
period) to the Panel in accordance with Section 10.9 of this Agreement.
Indemnitor and Indemnitee shall make readily available to the Panel all relevant
books and records, notices and documents, and all other items reasonably
requested by the Panel. Section 10.9 shall govern the resolution of
disagreements among the Parties under this Article VIII.

8.8 Payment. Indemnitor shall reimburse Indemnitee for Losses incurred no later
than ten (10) days after the final resolution of a Notice of Claim in accordance
with Section 8.7(e) or, with respect to Losses in relation to Third Party Claims
(other than on-going out-of-pocket costs and expenses with respect thereto), ten
(10) days after Indemnitor receives written notice from Indemnitee reasonably
describing the Loss being claimed (“Loss Payment Date”). Failure to comply with
the Loss Payment Date shall cause the Loss amount to be duly adjusted by IGP-M,
plus interest of one percent (1%) per month with respect to Losses paid in
reais.

8.9 Energy Guarantee.

(a) For value received, Energy hereby fully, unconditionally and irrevocably
guarantees from and after the Closing Date (the “Energy Guarantee”) to Purchaser
the prompt and punctual payment of any amount Seller is required to pay under
this Agreement, when and as the same shall become due and payable, subject as to
such payment obligations to the terms and conditions of this Article VIII.
Energy’s guarantee obligations include the principal, interest, fines, fees,
costs and other amounts that may be due and payable by Seller under this
Agreement.

(b) The Energy Guarantee is a first demand guarantee and shall constitute an
autonomous and independent obligation of Energy not being ancillary to the
obligations of Seller under this Agreement. Energy hereby agrees to cause any
such payment to be made as if such payment were made by Seller. Energy hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of a merger or bankruptcy of Seller, any right to require a
proceeding first against Seller, protest or notice with respect to any amount
payable by Seller under this Agreement and all demands whatsoever, and covenants
that the Energy Guarantee will not be discharged except by (i) termination of
this Agreement according to its terms, (ii) termination or expiration of
Seller’s indemnification obligations under this Agreement or (iii) payment in
full of all amounts due and payable under this Agreement.

(c) Energy expressly waives the benefits set forth in Articles 366, 827, 835,
837, 838 and 839 of the Brazilian Civil Code and Article 595 of the Brazilian
Code of Civil Procedure.

(d) The applicability of the Energy Guarantee shall not be affected or impaired
by any of the following: (i) any extension of time, forbearance or concession
given to Seller; (ii) any assertion of, or failure to assert, or delay in
asserting, any right, power or remedy against Seller; (iii) any amendment of the
provisions of this Agreement; (iv) any failure of Seller to comply with any
requirement of any Law; (v) the dissolution, liquidation, reorganization or any
other alteration of the legal structure of Seller; (vi) any invalidity or
unenforceability of any provision of this Agreement; or (vii) any other
circumstance (other than complete payment by Seller or Energy) which might
otherwise constitute a legal or equitable discharge or defense of a surety or a
guarantor.

(e) Energy shall be subrogated to all rights of Seller against Purchaser based
on and to the extent of any amounts paid to Purchaser by Energy pursuant to the
provisions of the Energy Guarantee.

(f) All notices under this Article VIII from Purchaser or any member of the
Purchaser Group shall be given to Seller and Energy concurrently.

ARTICLE IX

DEFINITIONS AND INTERPRETATION

9.1 Defined Terms. The following terms are defined in the corresponding Sections
of this Agreement:

      Defined Term   Section Reference Affiliate Contracts   Section 3.15
Agreement   Preamble Arbitration Expenses   Section 10.9 Balance Sheet   Section
3.3(a) Breach Notice   Section 7.1(f) Closing   Section 1.3 Closing Date  
Section 1.3
Common Shares
  Recitals
 
   
 
   
Company
  Preamble
 
   
 
   
Company Disclosure Letter
  Article III
 
   
 
   
Company Financial Statements
  Section 3.3(a)
 
   
 
   
Company Material Contracts
  Section 3.11(a)
 
   
 
   
Company Permits
  Section 3.9(a)
 
   
 
   
Company Plans
  Section 3.8(a)
 
   
 
   
Company Required Consents
  Section 3.1(c)
 
   
 
   
Company Required Statutory Approvals
  Section 3.1(d)
 
   
 
   
Continuing Employees
  Section 5.6(a)
 
   
 
   
Contracting Party
  Section 3.11(a)
 
   
 
   
Deductible Amount
  Section 8.4(a)(ii)
 
   
 
   
Director Shareholder
  Recitals
 
   
 
   
Dispute
  Section 10.9
 
   
 
   
Energy
  Preamble
 
   
 
   
Energy Guarantee
  Section 8.9
 
   
 
   
Guarantees
  Section 5.16
 
   
 
   
ICC
  Section 10.9
 
   
 
   
Indemnification Cap
  Section 8.4(c)
 
   
 
   
Indemnitee
  Section 8.7(a)
 
   
 
   
Indemnitor
  Section 8.7(a)
 
   
 
   
Intellectual Property
  Section 3.14
 
   
 
   
Leased Real Property
  Section 3.10(a)
 
   
 
   
Loss Payment Date
  Section 8.8
 
   
 
   
Outside Date
  Section 7.1(d)
 
   
 
   
Owned Real Property
  Section 3.10(a)
 
   
 
   
Mini-Basket Amount
  Section 8.4(a)(i)
 
   
 
   
Notice of Claim
  Section 8.7(e)
 
   
 
   
Panel
  Section 10.9
 
   
 
   
Party
  Preamble
 
   
 
   
Preferred Shares
  Recitals
 
   
 
   
Purchase Price
  Section 1.2
 
   
 
   
Purchaser
  Preamble
 
   
 
   
Purchaser Disclosure Letter
  Article IV
 
   
 
   
Purchaser Group
  Section 8.2
 
   
 
   
Purchaser Required Consents
  Section 4.2(b)
 
   
 
   
Purchaser Required Statutory Approvals
  Section 4.2(c)
 
   
 
   
Rules
  Section 10.9
 
   
 
   
Seller
  Preamble
 
   
 
   
Seller Disclosure Letter
  Article II
 
   
 
   
Seller Group
  Section 8.3
 
   
 
   
Seller Required Statutory Approvals
  Section 2.3(c)
 
   
 
   
Shares
  Recitals
 
   
 
   
Special Seller Indemnification Cap
  Section 8.5(b)
 
   
 
   
Survival Period Termination Date
  Section 8.1(a)
 
   
 
   
Third Party Claim
  Section 8.7(a)
 
   
 
   
Transaction
  Section 1.1
 
   
 
   
Violation
  Section 2.3(b)
 
   

9.2 Definitions. Except as otherwise expressly provided in this Agreement, or
unless the context otherwise requires, whenever used in this Agreement, the
following terms will have the meanings indicated below:

“Affiliate” means, with respect to any Person or group of Persons, a Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person or group of Persons.
“Control” (including the terms “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management policies of a Person, whether through the
ownership of voting securities or other Equity Interests, by contract or credit
arrangement, as trustee or executor, or otherwise. Solely for the purpose of the
preceding sentence, a company is “directly controlled” by another company or
companies holding shares carrying the majority of votes exercisable at a general
meeting (or its equivalent) of the first mentioned company; and a particular
company is “indirectly controlled” by a company or companies (hereinafter called
the “parent company or companies”) if a series of companies can be specified,
beginning with the parent company or companies and ending with the particular
company, so related that each company of the series except the parent company or
companies is directly controlled by one or more of the preceding companies in
the series.

“ANEEL” means Agência Nacional de Energia Elétrica, the Brazilian Electricity
Regulatory Agency.

“Brazilian GAAP” means the Princípios Fundamentais de Contabilidade, the
Brazilian Basic Principles of Accounting, as applied by the CVM and the CFC, in
effect from time to time, consistently applied.

“Business Day” means a day other than a Saturday, a Sunday or any other day on
which banks are not required to be open or are authorized to close in New York,
New York and São Paulo, Brazil.

“CFC” means Conselho Federal de Contabilidade, the Brazilian accounting
authority.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company Material Adverse Effect” means any material adverse effect on the
business, properties, financial condition or results of operations of the
Company and the Company Subsidiaries taken as a whole; provided, however, that
the term “Company Material Adverse Effect” shall not include effects that result
from or are consequences of (i) changes in financial, securities or currency
markets, changes in prevailing interest rates or foreign exchange rates, changes
in general economic conditions, changes in electricity, gas or other fuel supply
and transmission and transportation markets, including changes to market prices
for electricity, steam, natural gas or other commodities, or effects of weather
or meteorological events, (ii) changes in Law, rule or regulation of any
Governmental Entity or changes in regulatory conditions in Brazil or any state
or municipality in which the Company operates, (iii) changes in accounting
standards, principles or interpretations, (iv) events or changes that are
consequences of hostility, terrorist activity, acts of war or acts of public
enemies, (v) the negotiation, announcement, execution, delivery, consummation or
pendency of this Agreement or the transactions contemplated by this Agreement or
any action by Seller or its Affiliates contemplated by or required by this
Agreement or (vi) actions taken or not taken solely at the request of Purchaser.

“Company Subsidiary” means each of the Persons set forth on Schedule 3.2(b).

“Confidentiality Agreement” means the Confidentiality Agreement, dated March 22,
2007, between CPFL Energia S.A. and J.P. Morgan Securities Inc., on behalf of an
Affiliate of Seller.

“Consent” means any consent, approval, authorization, order, filing,
registration or qualification of, by or with any Person.

“CVM” means the Comissão de Valores Mobiliários, which is the functional
equivalent in Brazil of the United States Securities and Exchange Commission.

“Depositary Agent” means Banco Itaú S.A., the financial institution acting as
the depositary of the Shares.

“Environmental Law” means any Brazilian federal, state, or local Law relating to
(a) the treatment, disposal, emission, discharge, Release or threatened Release
of Hazardous Substances or (b) the preservation and protection of the
environment (including natural resources, air and surface or subsurface land or
waters).

“Equity Interests” means shares of capital stock or other equity interests of
any Person, as the case may be.

“Financing Facility” means an obligation of the Company or any Company
Subsidiary for borrowed money.

“Governmental Entity” means any federal, state, municipal or local governmental
or quasi-governmental or regulatory authority, agency, court, commission or
other similar entity in the United States or any non-U.S. jurisdiction.

“Governmental Order” means any order, decree, ruling, injunction, judgment or
similar act of or by any Governmental Entity.

“Hazardous Substance” means (a) any material, substance or waste (whether
liquid, gaseous or solid) that (i) requires removal, remediation or reporting
under any Environmental Law, or is listed, classified or regulated as a
“hazardous waste” or “hazardous substance” (or other similar term) pursuant to
any applicable Environmental Law or (ii) is regulated under applicable
Environmental Laws as being, toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous, (b) any petroleum
product or by-product, petroleum-derived substances wastes or breakdown
products, asbestos or polychlorinated biphenyls, and (c) any ash, scrubber
residue, boiler slag, coal combustion byproducts or waste and flue
desulfurization.

“IGP-M” means Índice Geral de Preços ao Mercado, the general inflation index
calculated by Fundação Getúlio Vargas and used to adjust electricity rates in
Brazil.

“Knowledge” when used with respect to: (i) the Company, means the actual
knowledge of any fact, circumstance or condition of those officers of the
Company set forth on Schedule 9.2(a) of the Company Disclosure Letter;
(ii) Seller, means the actual knowledge of any fact, circumstance or condition
of those officers and employees of Seller and its Affiliates set forth on
Schedule 9.2(b) of the Seller Disclosure Letter; and (iii) Purchaser, means the
actual knowledge of any fact, circumstance or condition of those officers of
Purchaser and its Affiliates, as the case may be, set forth on Schedule 9.2(c)
of the Purchaser Disclosure Letter.

“Law” means any law, statute, ordinance, regulation or rule of or by any
Governmental Entity or any arbitrator.

“Liabilities” means any and all known liabilities or indebtedness of any nature
(whether direct or indirect, absolute or contingent, liquidated or unliquidated,
due or to become due, accrued or unaccrued, matured or unmatured, asserted or
unasserted, determined or determinable and whenever or however arising).

“Lien” means any lien, claim, security interest, encumbrance or other adverse
claim.

“Losses” means all losses and damages amounts, liabilities, costs, expenses,
awards, judgments, whether or not resulting from Third Party Claim (including
reasonable attorney’s and accountants fees and expenses) based, where
applicable, upon a final and/or non-appealable decision or other final
resolution by settlement or otherwise of a demand, claim, suit, action.

“Operating Contract” means any written agreement or contract providing for (i)
the purchase, sale, supply, transportation, disposal or distribution of
electricity, fuel or any byproduct from electricity generation and (ii) the
operation and maintenance of any assets of the Company.

“Organizational Documents” means, with respect to any corporation, its articles
or certificate of incorporation, memorandum or articles of association and
by-laws or documents of similar substance; with respect to any limited liability
company, its articles or certificate of organization, formation or association
and its operating agreement or limited liability company agreement or documents
of similar substance; with respect to any limited partnership, its certificate
of limited partnership and partnership agreement or documents of similar
substance; with respect to a sociedade anônima de capital aberto, its estatuto
social; and with respect to any other entity, documents of similar substance to
any of the foregoing.

“Permits” means all permits, licenses, franchises, registrations, variances,
authorizations, Consents, orders, certificates and approvals obtained from or
otherwise made available by any Governmental Entity or pursuant to any Law.

“Permitted Liens” means (a) Liens for Taxes (i) not due and payable or (ii)
which are being contested in good faith by appropriate proceeding and for which
adequate reserves have been established, (b) Liens of warehousemen, mechanics
and materialmen and other similar statutory Liens incurred in the ordinary
course of business, (c) any Liens that do not materially detract from the value
of any of the applicable property, rights or assets of the businesses or
materially interfere with the use thereof as currently used, (d) zoning,
entitlement, conservation, restriction or other land use or environmental
regulation by any Governmental Entity, (e) any Lien arising under (i) the
Organizational Documents of the Company and each Company Subsidiary or (ii) any
shareholders or similar agreement to which of the Company or any Company
Subsidiary is a party or by which it is bound and (f) any Lien in connection
with or permitted by a Financing Facility.

“Person” means any natural person, firm, partnership, association, corporation,
company, joint venture, trust, business trust, Governmental Entity or other
entity.

“Purchaser Material Adverse Effect” means any material adverse effect on (a) the
business, assets, financial condition or results of operations of Purchaser and
its Subsidiaries taken as a whole or (b) the ability of Purchaser to timely
consummate the transactions contemplated by this Agreement or perform its
obligations hereunder.

“Release” means the release, spill, emission, leaking, pumping, pouring,
emptying, escaping, dumping, injection, deposit, disposal, discharge, dispersal,
leaching or migrating of any Hazardous Substance into the environment.

“Seller Material Adverse Effect” means, with respect to Seller, any material
adverse effect on the ability of Seller to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.

“Shareholders Agreement” dated April 20, 2005 between Companhia CMS
Distribuidora Ltda. and Eduardo Dias Roxo Nobre.

“Subsidiary” means, with respect to any Person (for the purposes of this
definition, the “parent”), any other Person (other than a natural person),
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by the parent or by one
or more of its Subsidiaries or by the parent and any one or more of its
Subsidiaries.

“Tax” or “Taxes” means federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, environmental, stamp, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad valorem,
value added, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Entity.

“Tax Returns” means all tax returns, declarations, statements, reports,
schedules, forms and information returns and any amendments to any of the
foregoing relating to Taxes.

9.3 Interpretation. In this Agreement, unless otherwise specified, the following
rules of interpretation apply:

(a) references to Sections, Schedules, Seller Disclosure Letter, Company
Disclosure Letter, Purchaser Disclosure Letter, Exhibits and Parties are
references to sections or sub-sections, schedules in the Seller Disclosure
Letter, the Company Disclosure Letter and Purchaser Disclosure Letter, as the
case may be, the Seller Disclosure Letter, the Company Disclosure Letter,
Purchaser Disclosure Letter, annexes and exhibits of, and parties to, as
applicable, this Agreement;

(b) the section and other headings contained in this Agreement are for reference
purposes only and do not affect the meaning or interpretation of this Agreement;

(c) words importing the singular include the plural and vice versa;

(d) references to the word “including” do not imply any limitation;

(e) the words “hereof”, “herein” and “hereunder” and words of similar import,
when used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement;

(f) all accounting terms not otherwise defined herein have the meanings assigned
thereto under Brazilian GAAP;

(g) references to “R$” refer to Brazilian reais; and

(h) references to “US$” refer to U.S. dollars.

ARTICLE X

GENERAL PROVISIONS

10.1 Notices. All notices, requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given on if (a) delivered personally,
(b) mailed by certified or registered mail with postage prepaid, (c) sent by
next-day or overnight mail or delivery, or (d) sent by fax or telegram, as
follows:

(a) if to Purchaser,

CPFL Energia S.A.

Rodovia Campinas Mogi-Mirim

13088-900 Campinas SP, Brazil

Fax: (55-19) 3756-8111

Attention: Sergio de Britto Pereira Figueira

with a copy to:

Tozzini Freire Teixeira e Silva Advogados

R. Borges Lagoa, 1328

04038-904 São Paulo SP, Brazil

Fax: (55-11) 5086-5111

Attention: José Luis de Salles Freire

Mauro Eduardo Guizeline

(b) if to Seller,

CMS Electric & Gas, L.L.C.

c/o CMS Energy Corporation

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-1671

Attention: General Counsel

with a copy to Seller’s counsel:

Demarest e Almeida Advogados

Av. Pedroso de Moraes, 1201

05419-001 São Paulo SP, Brazil

Fax: (55-11) 2245-1700

Attention: Rogerio Lessa

with a copy to Seller’s U.S. counsel:

Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

Fax: (212) 839-5599

Attention: Lori Anne Czepiel

Jack I. Kantrowitz

(c) if to the Company,

CMS Energy Brasil S.A.

Rua Vigato, 1620

13820-000 Jaguaríúna SP, Brazil,

Fax: (55-19) 3837-4564

Attention: General Counsel

(d) if to Energy,

CMS Energy Corporation

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-1671

Attention: General Counsel

or, in each case, at such other address as may be specified in writing to the
other Parties and Energy.

All such notices, requests, demands, waivers and other communications shall be
deemed to have been received, if by personal delivery, certified or registered
mail or next-day or overnight mail or delivery, on the day delivered or, if by
fax or telegram, on the next Business Day following the day on which such fax or
telegram was sent, provided that a copy is also sent by certified or registered
mail. All notices under this Agreement for Purchaser or any member of the
Purchaser Group shall be given to Seller and to Energy concurrently. For the
purposes of this Section 10.1, notice to the Company shall not constitute notice
to Seller and/or Energy, and vice versa.

10.2 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties, Energy and their respective heirs, successors and
permitted assigns.

10.3 Assignment; Successors; Third-Party Beneficiaries.

(a) This Agreement is not assignable by any Party or Energy without the prior
written consent of all of the other Parties and Energy, as the case may be, and
any attempt to assign this Agreement without such consent shall be void and of
no effect; provided, however, that Purchaser may assign its rights and
obligations hereunder to one or more of its Affiliates (upon prior written
notice to Seller), provided that Purchaser remains irrevocably and
unconditionally liable for all such rights and obligations; provided, however,
that no such assignment shall be permitted if such assignment shall impair,
delay or otherwise adversely affect the consummation of the Transaction and the
other transactions contemplated hereby.

(b) This Agreement shall inure to the benefit of, and be binding on and
enforceable by and against, the successors and permitted assigns of the
respective Parties and Energy, whether or not so expressed.

(c) This Agreement is intended for the benefit of the Parties and Energy and
does not grant any rights to any third parties.

10.4 Amendment; Waivers; etc. No amendment, modification or discharge of this
Agreement, and no waiver under this Agreement, shall be valid or binding unless
set forth in writing and duly executed by the Parties and Energy, as the case
may be, against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of any of the Parties or Energy, as the case may be, granting such waiver
in any other respect or at any other time. The waiver by any of the Parties or
Energy, as the case may be, of a breach of or a default under any of the
provisions of this Agreement, or any failure or delay to exercise any right or
privilege under this Agreement, shall not be construed as a waiver thereof or
otherwise affect any of such provisions, rights or privileges under this
Agreement. The Parties and Energy shall amend this Agreement to make a wholly
owned direct subsidiary of Purchaser a party hereto, provided that Purchaser
agrees to cause any such Affiliate to enter into an amendment to this Agreement
in accordance herewith pursuant to which Purchaser and such Affiliate shall
provide that each of the respective representations, warranties, covenants and
agreements made in this Agreement by Purchaser shall constitute the joint and
several representations, warranties, covenants and agreements of each of
Purchaser and such Affiliate; provided, further, that no amendment shall be
permitted if such amendment shall impair, delay or otherwise adversely affect
the consummation of the Transaction and the other transactions contemplated
hereby and, in any event, after the tenth Business Day following the date
hereof.

10.5 Entire Agreement.

(a) This Agreement (including the Exhibits and the Seller Disclosure Letter,
Company Disclosure Letter and Purchaser Disclosure Letter referred to in or
delivered under this Agreement) and the Confidentiality Agreement contains the
entire agreement between the parties relating to the subject matter of this
Agreement to the exclusion of any terms implied by Law which may be excluded by
contract and supersedes all prior agreements and understandings, both written
and oral, among the Parties and Energy with respect to such subject matters.
Each of Party and Energy acknowledges that it has not been induced to enter this
Agreement by and, in agreeing to enter into this Agreement, it has not relied
on, any representations and warranties except as expressly stated or referred to
in this Agreement.

(b) The liability of any Party or Energy shall be limited or excluded as set out
in this Agreement if and to the extent such limitations or exclusions apply,
except for fraud.

10.6 Severability. Any term or provision of this Agreement that is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is
invalid, void or unenforceable, each of the Parties and Energy agree that the
court making such determination, to the greatest extent legally permissible,
shall have the power to reduce the scope, duration, area or applicability of the
term or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.

10.7 Counterparts. This Agreement may be executed and delivered (including via
facsimile) in several counterparts, each of which shall be deemed an original
and all of which shall together constitute one and the same instrument.

10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Brazil.

10.9 Arbitration. Any dispute, action, claim or controversy of any kind related
to, arising from or in connection with this Agreement or the relationship of the
parties under this Agreement (the “Dispute”) whether based on contract, tort,
common law, equity, statute, regulation, order or any other source of law, shall
be finally settled before the International Chamber of Commerce (“ICC”) under
the Rules of Arbitration (the “Rules”) of the ICC by three (3) arbitrators
designated by the Parties (the “Panel”). Seller (or Energy, to the extent
applicable for the limited purposes relating to Section 8.9), on the one hand,
and Purchaser, on the other hand, shall each designate one arbitrator to serve
on the Panel. The third arbitrator shall be designated by the two arbitrators
designated by such parties. If either party fails to designate an arbitrator
within thirty (30) days after the filing of the Dispute with the ICC, such
arbitrator shall be appointed in the manner prescribed by the Rules. An
arbitration proceeding hereunder shall be conducted in New York, New York, and
shall be conducted in the English language. The decision or award of the Panel
shall be in writing and shall be final and binding on each of the Parties and
Energy. The Panel shall award the prevailing party all fees and expenses
incurred in connection with the arbitration, including, without limitation,
attorneys’ fees and costs, arbitration administrative fees charged by the ICC,
Panel member fees and costs, and any other costs associated with the arbitration
(the “Arbitration Expenses”); provided, however, that if the claims or defenses
are granted in part and rejected in part, the Panel shall proportionately
allocate between Seller (or Energy, to the extent applicable for the limited
purposes relating to Section 8.9), on the one hand, and Purchaser, on the other
hand, the Arbitration Expenses in accordance with the outcomes. The Panel may
only award damages as provided for under the terms of this Agreement and in no
event may punitive, consequential and/or special damages be awarded. In the
event of any conflict between the Rules and any provision hereof, this Agreement
shall govern.

10.10 Limitation on Damages. Noe of the Parties nor Energy, shall, under any
circumstance, have any liability to any of the other parties, for any special,
indirect, consequential or punitive damages claimed by any such other party,
under the terms of or due to any breach or non-performance of this Agreement,
including lost profits, loss of revenue or income, cost of capital, or loss of
business reputation or opportunity.

10.11 Enforcement. Each of the Parties and Energy agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
to be performed in accordance with the terms hereof and that Seller shall be
entitled to specific performance of the terms hereof in addition to any other
remedies at law or in equity.

10.12 No Right of Set-Off. Purchaser, for itself and its successors and
permitted assigns, hereby unconditionally and irrevocably waives any rights of
set-off, netting, offset, recoupment, or similar rights that such Purchaser or
any of its successors and permitted assigns has or may have with respect to the
payment of the Purchase Price or any other payments to be made by Purchaser
pursuant to this Agreement or any other document or instrument delivered by
Purchaser in connection herewith.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

4 IN WITNESS WHEREOF, the Parties and Energy have duly executed this Agreement
as of the date first above written.

          CMS ELECTRIC & GAS, L.L.C.
   
 
       
By:
  /s/ Joseph P. Tomasik  
     

 
  Name:
Title:   Joseph P. Tomasik
Vice President

ACKNOWLEDGMENT

         
State of New York
    )  
 
    )  
County of New York
    )  

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly
appointed Notary Public in and for the County of New York, State of New York,
United States of America, appeared Joseph P. Tomasik, to me known and known to
me to be the Vice President of CMS Electric & Gas, L.L.C., and the person who
executed the foregoing instrument personally acknowledged to me that in this
capacity and with authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

          CMS ENERGY BRASIL S.A.
   
 
       
By:
  /s/ Joseph P. Tomasik  
     

By:
  Name:
Title:
/s/ Rajesh Swaminathan   Joseph P. Tomasik
Chairman

 
             

 
       
 
  Name:   Rajesh Swaminathan

ACKNOWLEDGMENT

         
State of New York
    )  
 
    )  
County of New York
    )  

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly
appointed Notary Public in and for the County of New York, State of New York,
United States of America, appeared Joseph P. Tomasik, to me known and known to
me to be the Chairman of CMS Energy Brasil S.A., and the person who executed the
foregoing instrument personally acknowledged to me that in this capacity and
with authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

          CPFL ENERGIA S.A.
   
 
       
By:
  /s/ Reni Antonio da Silva  
     

 
  Name:
Title:   Reni Antonio da Silva
Strategy and Regulation V.P.
 
        By:   /s/ Jose Antonio de Almeida Filippo
     

 
  Name:
Title:   José Antonio de Almeida Filippo
CFO

ACKNOWLEDGMENT

         
State of New York
    )  
 
    )  
County of New York
    )  

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly
appointed Notary Public in and for the County of New York, State of New York,
United States of America, appeared Reni Antonio da Silva and José Antonio de
Almeida Filippo, to me known and known to me to be the Strategy and
Regulation V.P. and CFO, respectively, of CPFL Energia S.A., and each of the
persons who executed the foregoing instrument personally acknowledged to me that
in this capacity and with authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

5

Acknowledged solely for the limited purposes
of Section 8.9 as of the 12th day of April, 2007:

CMS ENERGY CORPORATION

     
By: /s/ David W. Joos
 
 

Name:
Title:
  David W. Joos
President and Chief Executive
Officer

ACKNOWLEDGMENT

On this 12th day of April, 2007, before me, Joyce H. Norkey, a duly appointed
Notary Public in and for the County of Jackson, State of Michigan, United States
of America, appears David W. Joos, to me known and known to me to be the
President and Chief Executive Officer of CMS Energy Corporation, and the person
who executed the foregoing instrument personally acknowledged to me that in this
capacity and with authority to issue this document he executed the same.

/s/ Joyce H. Norkey

Joyce H. Norkey

Notary Public, Jackson County

Michigan, U.S.A.

My Commission expires September 7, 2012

     
 
   
 
   
Witnessed by:
 

Name:
  Name:
Title:
  Title:
Date:
  Date:
 
   

6