exv10wxsy






Exhibit 10(s)




EXECUTION COPY




SECURITIES PURCHASE AGREEMENT




by and among




CMS INTERNATIONAL VENTURES, L.L.C.,




CMS CAPITAL, L.L.C.,




CMS GAS ARGENTINA COMPANY




and




CMS ENTERPRISES COMPANY




and




PACIFIC ENERGY LLC.




together with




EMPRESA NACIONAL DE ELECTRICIDAD S.A.




Dated as of July 11, 2007




 









 





	 	 	 	 	 	 	 
	ARTICLE I

SALE AND PURCHASE OF SHARES AND NOTES
	 	 
	 
	 	 	 	 	 	 
	1.1	 	Sale and Purchase of Shares	 	2
	1.2	 	[Intentionally Omitted.]	 	2
	1.3	 	Sale and Purchase of Notes	 	2
	1.4	 	Purchase Price	 	3
	1.5	 	Closing	 	3
	1.6	 	Closing Deliveries	 	3
	1.7	 	Purchase Agreement Fee	 	4
	 
	 	 	 	 	 	 
	ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER AND NOTE HOLDERS
	 	 
	 
	 	 	 	 	 	 
	2.1	 	Representations and Warranties of Seller	 	4
	 
	 	2.1.1	 	Organization and Qualification	 	4
	 
	 	2.1.2	 	Title to Shares	 	4
	 
	 	2.1.3	 	Authority; Non-Contravention; Approvals	 	5
	 
	 	2.1.4	 	Organization and Qualification of Companies
and CMS-Inversiones; Capitalization	 	5
	 
	 	2.1.5	 	Brokers and Finders	 	6
	 
	 	2.1.6	 	Financial Distress of Companies Subsidiaries	 	6
	 
	 	2.1.7	 	No Other Representations and Warranties	 	6
	2.2	 	Representations and Warranties of the Note Holders	 	7
	 
	 	2.2.1	 	Organization and Qualification	 	7
	 
	 	2.2.2	 	Title to Notes	 	7
	 
	 	2.2.3	 	Authority; Non-Contravention; Approvals	 	7
	 
	 	2.2.4	 	Brokers and Finders	 	8
	 
	 	2.2.5	 	Financial Distress of Companies Subsidiaries	 	8
	 
	 	2.2.6	 	No Other Representations and Warranties	 	8
	 
	 	 	 	 	 	 
	ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO THE COMPANIES SUBSIDIARIES
	 	 
	 
	 	 	 	 	 	 
	3.1	 	Capitalization and Title	 	9
	 
	 	3.1.1	 	Description	 	9
	 
	 	3.1.2	 	No Consents to Liens	 	9
	3.2	 	Financial Statements	 	9
	3.3	 	Tax Matters	 	9
	3.4	 	Compliance with Laws	 	9
	3.5	 	Certain Contracts	 	10
	3.6	 	Operating Company Notes	 	10
	3.7	 	Financial Distress of Companies Subsidiaries	 	10






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	3.8	 	No Other Representations and Warranties	 	10
	 
	 	 	 	 	 	 
	ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 
	 
	 	 	 	 	 	 
	4.1	 	Organization and Qualification	 	11
	4.2	 	Authority; Non-Contravention; Approvals	 	11
	4.3	 	Financing	 	12
	4.4	 	Investment Intention; Sufficient Investment
Experience; Independent Investigation; Financial
Distress of Companies Subsidiaries	 	12
	4.5	 	Brokers and Finders	 	13
	4.6	 	No Knowledge of Seller or Note Holders Breach	 	13
	 
	 	 	 	 	 	 
	ARTICLE V

COVENANTS
	 	 
	 
	 	 	 	 	 	 
	5.1	 	Notification to the CNDC and ENARGAS; Negative
Antitrust and ENARGAS Decision; Transfer of Shares to
a Third Purchaser	 	13
	5.2	 	Access	 	15
	5.3	 	Publicity	 	16
	5.4	 	Fees and Expenses	 	16
	5.5	 	[Intentionally Omitted.]	 	17
	5.6	 	Further Assurances	 	17
	5.7	 	Preservation of Records	 	17
	5.8	 	Change of Name	 	17
	5.9	 	Resignations of Certain Officers and Directors	 	18
	5.10	 	Releases of Certain Guarantees	 	18
	5.11	 	[Intentionally Omitted.]	 	18
	 
	 	 	 	 	 	 
	ARTICLE VI

CONDITIONS TO CLOSING
	 	 
	 
	 	 	 	 	 	 
	6.1	 	Condition to the Obligations of the Parties—No Injunction	 	18
	6.2	 	Conditions to the Obligation of Purchaser	 	19
	6.3	 	Conditions to the Obligation of Seller	 	19
	 
	 	 	 	 	 	 
	ARTICLE VII

TERMINATION
	 	 
	 
	 	 	 	 	 	 
	7.1	 	Termination	 	20
	7.2	 	Effect of Termination	 	21






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	ARTICLE VIII

LIMITS OF LIABILITY; PARENT GUARANTEE
	 	 
	 
	 	 	 	 	 	 
	8.1	 	Non-Survival of Representations, Warranties, Covenants and Agreements	 	22
	8.2	 	Parent Guarantee	 	23
	 
	 	 	 	 	 	 
	ARTICLE IX

DEFINITIONS AND INTERPRETATION
	 	 
	 
	 	 	 	 	 	 
	9.1	 	Defined Terms	 	24
	9.2	 	Definitions	 	25
	9.3	 	Interpretation	 	29
	 
	 	 	 	 	 	 
	ARTICLE X

GENERAL PROVISIONS
	 	 
	 
	 	 	 	 	 	 
	10.1	 	Notices	 	30
	10.2	 	Binding Effect	 	31
	10.3	 	Assignment; Successors; Third-Party Beneficiaries	 	31
	10.4	 	Amendment; Waivers; etc.	 	31
	10.5	 	Entire Agreement	 	32
	10.6	 	Severability	 	32
	10.7	 	Counterparts	 	32
	10.8	 	Governing Law	 	32
	10.9	 	Arbitration	 	32
	10.10	 	Limitation on Damages	 	33
	10.11	 	Enforcement	 	33
	10.12	 	No Right of Set-Off	 	33
	10.13	 	Several Liability	 	33






EXHIBITS




	 	 	 
	Exhibit A

	 	Seller Disclosure Letter
	Exhibit B

	 	Note Holders Disclosure Letter






SCHEDULES TO THE DISCLOSURE LETTERS APPENDED AS EXHIBITS




	 	 	 
	Seller Disclosure Letter
	Schedule 2.1.2

	 	Title to Shares
	Schedule 2.1.3(d)

	 	Other Approvals
	Schedule 3.1.1

	 	Title and Capitalization
	Schedule 3.3

	 	Tax Matters
	Schedule 3.4

	 	Compliance with Laws
	Schedule 3.5

	 	Certain Contracts






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SCHEDULES TO THE DISCLOSURE LETTERS APPENDED AS EXHIBITS




	 	 	 
	Note Holders Disclosure Letter
	Schedule 2.2.2

	 	Title to Notes






ADDITIONAL SCHEDULES TO STOCK PURCHASE AGREEMENT




	 	 	 
	Schedule 5.9

	 	Resignations of Certain Officers and Directors
	Schedule 5.10

	 	Releases of Certain Guarantees
	Schedule 9.2(a)

	 	Purchaser Knowledge Group
	Schedule 9.2(b)

	 	Seller Knowledge Group







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SECURITIES PURCHASE AGREEMENT




     This SECURITIES PURCHASE AGREEMENT (hereinafter also referred to as this “Agreement”),
dated as of July 11, 2007 (the “Effective Date”), is entered into by and among (i) CMS
International Ventures, L.L.C., a limited liability company organized and existing under the laws
of the State of Michigan (“Seller”), (ii) CMS Capital, L.L.C., a limited liability company
organized and existing under the laws of the State of Michigan (“CMS-Capital”), CMS Gas
Argentina Company, a company organized and existing under the laws of the Cayman Islands
(“CMS-Cayman”), and, CMS Enterprises Company, a corporation organized and existing under
the laws of the State of Michigan (“CMS-Enterprises”; each of the Seller, CMS-Capital,
CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note Holder” and,
collectively, the “Note Holders”), (iii) Pacific Energy LLC., a limited liability company
organized and existing under the laws of the State of Delaware (“Purchaser”) and (iv)
Empresa Nacional de Electricidad S.A., a company organized and existing under the laws of Chile
(“Parent”), solely for purposes of Section 8.2 and the beneficial owner of all of
the shares of Purchaser. Each of Purchaser, Seller and the Note Holders 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.



WITNESSETH:




     WHEREAS Seller owns all the issued and outstanding Equity Interests of (i) CMS Gas
Transmission del Sur Company, a Cayman Islands company (“CMS-Gas”) and (ii) CMS Generation
Investment Company V, a Cayman Islands company (“CMS-Generation”; each of CMS-Gas and
CMS-Generation are sometimes referred to individually herein as a “Company” and
collectively as the “Companies”, and all the issued and outstanding Equity Interests of the
Companies are collectively referred to as the “Shares”);



     WHEREAS CMS-Gas owns (i) 13.94% of the Equity Interests in Inversiones GasAtacama Holding
Limitada, a Chilean limited company (the “Governing Company”); and (ii) 99% of the issued
and outstanding Equity Interests of Compañía de Inversiones CMS Energy Chile Limitada, a Chilean
limited liability entity (“CMS-Inversiones”);



     WHEREAS CMS-Generation currently owns 1% of the Equity Interest of CMS Inversiones;



     WHEREAS CMS-Inversiones owns (i) 36.06% of the Equity Interests in the Governing Company, (ii)
0.001% of the Equity Interests in GasAtacama S.A., a Chilean closed corporation (the “Holding
Company”) and (iii) 0.05% of the Equity Interests in each of the following Chilean closed
corporations: GasAtacama Generación S.A., Gasoducto Atacama Chile S.A., and Gasoducto Atacama
Argentina S.A.;



     WHEREAS Holding Company owns (i) 99.9% of the Equity Interests in GasAtacama Generación S.A.,
(ii) 99.9% of the Equity Interests in Gasoducto Atacama Chile S.A., and (iii) 99.9% of the Equity
Interests in Gasoducto Atacama Argentina S.A.;



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     WHEREAS Governing Company owns 99.9% of the Equity Interests in Atacama Finance Co.;



     WHEREAS Holding Company owns 0.1% of the Equity Interests in Atacama Finance Co.; and



     WHEREAS on March 15, 2006, Atacama Finance Co., a corporation incorporated and existing under
the laws of the Cayman Islands, issued as promissor the following promissory notes (i) to Seller
for fifty-four million sixty-five thousand five hundred ninety-four dollars and forty-nine cents
(U.S.$54,065,594.49) (the “Seller Note”), (ii) to CMS-Capital for eighty-seven million
three hundred seventy-two thousand six hundred seventy-six dollars and twenty-three cents
(U.S.$87,372,676.23) (the “CMS-Capital Note”), (iii) to CMS-Cayman for seven million seven
hundred thirty-four thousand forty dollars and twenty-four cents (U.S.$7,734,040.24) (the
“CMS-Cayman Note”), and (iv) to CMS Enterprises Investment Company I, which subsequently
transferred and assigned to CMS-Enterprises a note for twenty-six million ninety-nine thousand
eight hundred sixty-eight dollars (U.S.$26,099,868.00) (the “CMS-Enterprises Note”; each of
the Seller Note, the CMS-Capital Note, the CMS-Cayman Note and the CMS-Enterprises Note is
individually referred to as a “Note” and, collectively, as the “Notes”);



     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
hereby agree as follows:



ARTICLE I




SALE AND PURCHASE OF SHARES AND NOTES




          1.1 Sale and Purchase of Shares. Upon the terms and subject to the conditions of this
Agreement, and simultaneously with the payment of the Purchase Price in accordance with Section 1.6
of this Agreement, at the Closing, 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 of the Shares (the “Shares
Transaction”).



          1.2 [Intentionally Omitted.]



          1.3 Sale and Purchase of Notes. Upon the terms and subject to the conditions of this
Agreement, and simultaneously with the payment of the Purchase Price in accordance with Section 1.6
of this Agreement, at the Closing (a) Purchaser shall purchase from Seller, and Seller shall sell
to Purchaser, the Seller Note (inclusive of all accrued and unpaid interest prior to the Closing
Date); (b) Purchaser shall purchase from CMS-Capital, and CMS-Capital shall sell to Purchaser, the
CMS-Capital Note (inclusive of all accrued and unpaid interest prior to the Closing Date); (c)
Purchaser shall purchase from CMS-Cayman, and CMS-Cayman shall sell to Purchaser, the CMS-Cayman
Note (inclusive of all accrued and unpaid interest prior to the Closing Date); and (d) Purchaser
shall purchase from CMS-Enterprises (inclusive of all accrued and unpaid interest prior to the
Closing Date), and CMS-Enterprises shall sell to Purchaser, the CMS-Enterprises Note (inclusive of
all accrued and unpaid interest prior to the Closing Date).



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The transactions with respect to the
Notes contemplated by this Section 1.3 are collectively referred to as the “Notes
Transaction”, and together with the Shares Transaction, the “Transactions”).



          1.4 Purchase Price. The consideration to be paid by Purchaser in respect of the
Shares and the Notes shall be an aggregate amount in cash equal to Eighty Million dollars
(US$80,000,000) in the legal currency of the United States of America (the “Purchase
Price”).



          1.5 Closing. The closing of the Transactions (the “Closing”) shall take place
in New York, New York, at 10:00 a.m., local time, on the second Business Day immediately following
the date on which the last of the conditions contained in Article VI are 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), but in any event not before August 1,
2007 or later than August 28, 2007, or at such other place, time and date (the “Closing
Date”) as the Parties may agree.



          1.6 Closing Deliveries. At the Closing:



               (a) Purchaser shall pay, or cause to be paid, to Seller (or any Affiliate designated by Seller
prior to the Closing) an amount in cash equal to the Purchase Price (after application of the
Deposit previously delivered to Seller pursuant to Section 1.7) for the Shares and Notes so
delivered by Seller and the Note Holders, as applicable, by wire transfer of immediately available
funds to the bank account or accounts designated by Seller prior to the Closing.



               (b) Seller shall deliver to Purchaser (i) one or more instruments of transfer in respect of
the Shares, duly executed in proper form for transfer and (ii) evidence of approval by the
directors of each Company for entry in the “Register of Members” of each Company approving the
transfer of the Shares to the respective transferee designated by Purchaser.



               (c) Each Note Holder, as applicable, shall deliver to Purchaser its respective Note, duly
indorsed “Without Recourse” (or accompanied by an instrument duly indorsed “Without Recourse”) in
blank for transfer.



               (d) Seller shall deliver to Purchaser all of the Companies and CMS-Inversiones accounting,
tax, corporate and commercial books and records that are located in Seller’s headquarters offices
in Michigan.



               (e) Empresa Nacional de Electricidad S.A. and CMS-Enterprises shall execute and deliver to
each other an instrument pursuant to which both parties shall terminate the Consortium Agreement
with full releases by each party of any subsequent claims against the other thereunder.



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



3









 





          1.7 Purchase Agreement Fee. On July 3, 2007, the Parent wire transferred in favor of
CMS Enterprises Company Fifteen Million Dollars (US$15,000,000) (the “Deposit”) in cash (the
aggregate of such amount, plus any interest deemed earned thereon at the Specified Rate from (and
including) July 3, 2007 to (but excluding) the date of early termination of the Agreement (except
pursuant to Section 7.1(f)), being referred to as the “Purchase Agreement 
Fee”).. The Purchase Agreement Fee will be deemed to earn interest at the Specified
Rate. Notwithstanding any provision to the contrary contained herein, the Purchase Agreement Fee
shall be nonrefundable by Seller; provided, however, the Purchase Agreement Fee
shall be refundable in the event that this Agreement is terminated in accordance with Article VII,
except Section 7.1(f), in which event Seller shall pay to the Parent, no later than five
(5) Business Days following the effective date of such termination, an amount equal to the Purchase
Agreement Fee received by it pursuant to this Section 1.7 by wire transfer of immediately
available funds in United States dollars to the bank account or accounts designated by the Parent.
The Deposit shall be credited against the Purchase Price payable at Closing to Seller or any
Affiliate designated by Seller. If this Agreement is terminated (other than pursuant to
Section 7.1(a), the Purchase Agreement Fee shall be credited against the Damages, if any,
owed by Purchaser to Seller arising out of breach of this Agreement by Purchaser. The Purchase
Agreement Fee shall not be deemed to be a liquidated damages payment for any breach by Purchaser of
this Agreement. If Seller fails to refund the Purchase Agreement Fee within five (5) Business Days
of Seller becoming obligated hereunder to make such a refund, the amount thereof shall bear default
interest at a rate equal to LIBOR plus two per cent (2%) per annum.



ARTICLE II




REPRESENTATIONS AND WARRANTIES OF SELLER AND NOTE HOLDERS




          2.1 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, and in connection with the Shares
Transaction only, to Purchaser, as follows in this Section 2.1:



               2.1.1 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 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.



               2.1.2 Title to Shares. As of the Closing Date, Seller will be the lawful record and
beneficial owner of the Shares set forth opposite its name in Schedule 2.1.2 of the Seller
Disclosure Letter, free and clear of any and all Liens, except for Liens created by this Agreement.
The Shares constitute all of the issued and outstanding Equity Interests in the Companies. The
transfer of the Shares to Purchaser in the manner contemplated under Article I,
simultaneously with the payment by Purchaser of the Purchase Price to Seller, shall transfer to
Purchaser valid beneficial and legal title to the Shares. There are no outstanding options,
warrants or other rights of any kind to acquire from Seller or any of its Affiliates any Shares or
securities convertible into or exchangeable for, or which otherwise confer on the holder thereof



4









 







any right to acquire from Seller any Shares, nor is Seller committed to issue any such option,
warrant, right or security.



               2.1.3 Authority; Non-Contravention; Approvals.



               (a) Authority. As of the Effective Date Seller has full power and authority to enter
into this Agreement and, to consummate the transactions to be effected by Seller as contemplated
hereby. As of the Effective Date the execution, delivery and performance by Seller of this
Agreement and the consummation by Seller of the transactions to be effected by Seller as
contemplated hereby shall 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 shall thereafter be
necessary to authorize this Agreement or to consummate the transactions to be effected by Seller as
contemplated hereby. As of the Effective Date this Agreement shall have been duly executed and
delivered by Seller and, assuming the due authorization, execution and delivery hereof by
Purchaser, shall thereafter constitute 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. Except for matters arising with respect to the regulatory or
corporate status of Purchaser, 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 or any of its Affiliates is a party or by which it or any of its Affiliates may be
bound; or (iii) any Law, Permit or Governmental Order applicable to it or any of its Affiliates,
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) Approvals. Except for the filings or approvals as may be required due to the
regulatory or corporate status of Purchaser, no Consent of any Person 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 to be effected by Seller as 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. Schedule 2.1.3(d) sets forth other material
consents, approvals, filings and notices that may be necessary, advisable or appropriate in
connection with the transactions contemplated by this Agreement.



               2.1.4 Organization and Qualification of Companies and CMS-Inversiones; Capitalization.



               (a) Each Company and CMS-Inversiones has been duly formed, is validly existing and is in good
standing (to the extent such concepts are recognized under



5









 







applicable Law) under the laws of the
jurisdiction of its formation, 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 all jurisdictions in which such qualification is
necessary under applicable Law as a result of the conduct of its business or the operation of
its properties.



               (b) The authorized capital stock of the Companies consists of (i) for CMS-Gas, 50,000 ordinary
shares, $1.00 par value, of which 100 shares are issued and outstanding, and (ii) for
CMS-Generation, 50,000 ordinary shares, $1.00 par value, of which 100 shares are issued and
outstanding. CMS-Inversiones was initially formed with subscribed capital of CLP 187,650,000,000.



               (c) Except as provided for in the Organizational Documents of the Companies and of
CMS-Inversiones, there are no subscriptions, options, warrants, calls, conversion, exchange,
purchase right or other written contracts, rights, agreements or commitments of any kind
obligating, directly or indirectly, the Companies or CMS-Inversiones to issue, transfer, sell or
otherwise dispose of, or cause to be issued, transferred, sold or otherwise disposed of, any Equity
Interests of the Companies or CMS-Inversiones or any securities convertible into or exchangeable
for any such Equity Interests.



               (d) None of the Companies or CMS-Inversiones has any material third party debt as of the date
of this Agreement. As of the Closing Date, the only assets of the Companies and CMS-Inversiones
will be the Equity Interests set forth on Schedule 3.1.1.



               2.1.5 Brokers and Finders. Neither Seller nor any of its Affiliates 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 Seller, its Affiliates or the Companies in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc.



               2.1.6 Financial Distress of Companies Subsidiaries. The business, operations and
financial condition of the Companies Subsidiaries are subject to considerable distress, and the
bankruptcy of one or more of the Companies Subsidiaries is a material probability or likelihood.
To the extent that Seller or its Affiliates reasonably believes upon the advice of counsel such
action to be required from a legal standpoint, a bankruptcy filing for one or more Companies
Subsidiaries shall not constitute a breach of this Agreement or an event that constitutes a failure
of condition to Closing or that gives rise to a right to terminate this Agreement. For the
avoidance of doubt, under no circumstances shall Seller be required or expected to provide any
equity or debt financing to any of the Operating Companies.



               2.1.7 No Other Representations and Warranties.



               EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE II (INCLUDING
THE DISCLOSURE SCHEDULES), THE SELLER MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, AND
THE SELLER HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND



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THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.



          2.2 Representations and Warranties of the Note Holders. Except as otherwise disclosed
in the Note Holders Disclosure Letter attached hereto as Exhibit B (the “Note Holders
Disclosure Letter”), each Note Holder severally and not jointly represents and warrants, as to
itself only, and in connection with the Notes Transaction only, to Purchaser, as follows in this
Section 2.2:



               2.2.1 Organization and Qualification. Each Note Holder is a legal entity duly formed
and validly existing under the laws of the jurisdictions of its formation, and has the 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.



               2.2.2 Title to Notes. Each Note Holder is the lawful record and beneficial owner of
each Note set forth opposite its name in Schedule 2.2.2 of the Note Holders Disclosure Letter, free
and clear of any and all Liens. A true and correct copy of each Note, as amended from time to time
through the date of this Agreement, has been made available to Purchaser prior to the date hereof.
From December 31, 2006 through the date of this Agreement, none of the Note Holders have consented
to any waiver of any of its rights under the applicable Notes.



               2.2.3 Authority; Non-Contravention; Approvals.



               (a) Authority. As of the Effective Date, each Note Holder has full power and
authority to enter into this Agreement and to consummate the transactions to be effected by the
Note Holder as contemplated hereby. As of the Effective Date, the execution, delivery and
performance by each Note Holder of this Agreement and the consummation by each Note Holder of the
transactions to be effected by the Note Holder as contemplated hereby shall have been duly and
validly authorized by all requisite action on the part of each Note Holder, and no other
proceedings or approvals on the part of a Note Holder shall thereafter be necessary to authorize
this Agreement or to consummate the transactions to be effected by the Note Holder as contemplated
hereby. As of the Effective Date, this Agreement shall have been duly executed and delivered by
the Note Holders and, assuming the due authorization, execution and delivery hereof by Purchaser,
shall thereafter constitute the legal, valid and binding obligation of each Note Holder,
enforceable against the Note Holders 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. Except for matters arising with respect to the regulatory or
corporate status of Purchaser, the execution and delivery of this Agreement by the Note Holders 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 properties or assets of the Note
Holders pursuant to any provision of (i) the Organizational Documents of the Note Holders; (ii) any
lease, mortgage, indenture, note, bond, deed of trust, or other written instrument



7









 







or agreement of
any kind to which the Note Holders are a party or by which they may be bound; or (iii) any Law,
Permit or Governmental Order applicable to it, subject to obtaining the Note Holders Required
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) Approvals. Except for the filings or approvals as may be required due to the
regulatory or corporate status of Purchaser, no Consent of any Person is required to be made or
obtained by any Note Holder in connection with the execution and delivery of this Agreement or the
consummation by the Note Holders of the transactions to be effected by Note Holders as 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.



               2.2.4 Brokers and Finders. Neither the Note Holders nor any of their Affiliates have
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 of the Note Holders or their Affiliates in connection with any of the
transactions contemplated by this Agreement, except J.P. Morgan Securities Inc.



               2.2.5 Financial Distress of Companies Subsidiaries. Purchaser acknowledges that the
business, operations and financial condition of the Companies Subsidiaries are subject to
considerable distress, and the bankruptcy of one or more of the Companies Subsidiaries is a
material probability or likelihood. To the extent that Seller or its Affiliates reasonably
believes upon the advice of counsel such action to be required from a legal standpoint, a
bankruptcy filing for one or more Companies Subsidiaries shall not constitute a breach of this
Agreement or an event that constitutes a failure of a condition to Closing or that gives rise to a
right to terminate this Agreement. For the avoidance of doubt, under no circumstances shall Seller
be required or expected to provide any equity or debt financing to any of the Operating Companies.



               2.2.6 No Other Representations and Warranties.



               EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE II (INCLUDING
THE DISCLOSURE SCHEDULES), NONE OF THE NOTE HOLDERS MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR
WARRANTY, AND EACH NOTE HOLDER HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY WITH RESPECT TO
THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.



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ARTICLE III




REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT

TO THE COMPANIES SUBSIDIARIES




     Except as disclosed in the Seller Disclosure Letter, Seller represents and warrants 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).:



          3.1 Capitalization and Title.



               3.1.1 Description. Set forth on Schedule 3.1.1 of the Seller Disclosure Letter for
each of the Companies Subsidiaries and CMS-Inversiones is (i) its jurisdiction of formation; (ii)
its authorized Equity Interests; (iii) the number of its issued and outstanding Equity Interests;
and (iv) the names of the owners of its issued and outstanding Equity Interests.



               3.1.2 No Consents to Liens. From December 31, 2006 through the date of this
Agreement, none of Seller, the Governing Company or the Holding Company has consented to the
creation of any Liens on the Equity Interests of any of the Companies Subsidiaries.



          3.2 Financial Statements. The audited balance sheet as at December 31, 2006 and the
related audited statements of income and of cash flows for the year then ended for each Companies
Subsidiary (individually, a “Company Subsidiary Financial Statement” and, collectively, the
“Companies Subsidiaries Financial Statements”) have been provided to Purchaser prior to the
date of this Agreement. As of the respective dates thereof, each Companies Subsidiary Financial
Statement fairly presents in all material respects the financial position of the respective
Companies Subsidiary as of December 31, 2006, and the results of such Companies Subsidiary’s
operations and cash flows for the period indicated (except for normal and recurring year-end
adjustments) in conformity with Chilean GAAP in accordance with the terms thereof);
provided that no representation is made by Seller with respect to whether any write-off or
other adjustment of asset values would have been appropriate as of any such dates. From December
31, 2006 through the date of this Agreement, Seller has not approved the incurrence of any third
party debt by any of the Companies Subsidiaries, nor is Seller aware of any such incurrence during
such period.



          3.3 Tax Matters. Except as set forth in Schedule 3.3 of the Seller Disclosure Letter,
each of the Companies Subsidiaries has, or, in each case, a Person acting on its behalf has as of
the date of this Agreement filed with the appropriate Governmental Entity all material Tax Returns
required to have been filed by it. No material audits or other proceedings are pending, as of the
date hereof, with regard to any material Taxes or Tax Returns.



          3.4 Compliance with Laws. Except as set forth in Schedule 3.4 of the Seller
Disclosure Letter, as of the date of this Agreement none of the Company, any Companies Subsidiary
or CMS-Inversiones has received written notice of or has been charged with any violation of, nor is
it under investigation with respect to any violation of, any applicable Law (including any
applicable foreign corrupt practices Law) or applicable Governmental Order,



9









 







except in each case for violations which would not reasonably be expected to have,
individually or in the aggregate, a Companies Material Adverse Effect. 



          3.5 Certain Contracts. Purchaser has been provided with a true and correct copy of
each contract identified in Schedule 3.5 of the Seller Disclosure Letter. As of the date of this
Agreement, no party to the contracts identified in Schedule 3.5 of the Seller Disclosure Letter is
in breach or default thereunder, except in each case for any breach or default that would not
reasonably be expected to have, individually or in the aggregate, a Companies Material Adverse
Effect.



          3.6 Operating Company Notes. Purchaser has been provided with a true and correct copy
of each promissory note issued by any Operating Company in favor of Atacama Finance Co. as in
effect as of the date hereof (the “Operating Company Notes”). From December 31, 2006
through the date of this Agreement, the Seller has not consented to any waiver of any rights of
Atacama Finance Co. under any of the Operating Company Notes nor is Seller aware of any such waiver
during such period.



          3.7 Financial Distress of Companies Subsidiaries. THE BUSINESS, OPERATIONS AND
FINANCIAL CONDITION OF THE COMPANIES SUBSIDIARIES ARE SUBJECT TO CONSIDERABLE DISTRESS, AND THE
BANKRUPTCY OF ONE OR MORE OF THE COMPANIES SUBSIDIARIES IS A MATERIAL PROBABILITY OR LIKELIHOOD.
TO THE EXTENT THAT SELLER OR ITS AFFILIATES REASONABLY BELIEVES UPON THE ADVICE OF COUNSEL SUCH
ACTION TO BE REQUIRED FROM A LEGAL STANDPOINT, A BANKRUPTCY FILING FOR ONE OR MORE COMPANIES
SUBSIDIARIES SHALL NOT CONSTITUTE A BREACH OF THIS AGREEMENT OR AN EVENT THAT CONSTITUTES A FAILURE
OF CONDITION TO CLOSING OR THAT GIVES RISE TO A RIGHT TO TERMINATE THIS AGREEMENT. FOR THE
AVOIDANCE OF DOUBT, UNDER NO CIRCUMSTANCES SHALL SELLER BE REQUIRED OR EXPECTED TO PROVIDE ANY
EQUITY OR DEBT FINANCING TO ANY OF THE OPERATING COMPANIES.



          3.8 No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE III (INCLUDING THE DISCLOSURE SCHEDULES), THE SELLER MAKES NO
EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE COMPANIES SUBSIDIARIES, AND THE
SELLER HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY WITH RESPECT TO THE COMPANIES
SUBSIDIARIES.



10









 





ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF PURCHASER




     Purchaser represents and warrants to Seller and to the Note Holders as follows in this
Article IV:



          4.1 Organization and Qualification. Purchaser is a limited liability company, duly
formed, validly existing and in good standing under the laws of the State of Delaware. Purchaser
has full power and authority to own, lease and operate its assets and properties and to conduct its
business as presently conducted. Purchaser is duly qualified to do business and in good standing
as a foreign limited liability company in all jurisdictions in which such qualification is
necessary under applicable Law as a result of the conduct of its business or the ownership of its
properties, except for those jurisdictions where failure to be so qualified or in good standing
would not reasonably be expected to have, individually or in the aggregate, a Purchaser Material
Adverse Effect.



          4.2 Authority; Non-Contravention; Approvals.



               (a) Authority. Purchaser has full power and authority to enter into this Agreement
and 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 action on the part of Purchaser, and
no other 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.



               (b) Non-Contravention. 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, as the case may be;
(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; or (iii)
any Law, Permit or governmental order applicable to Purchaser; 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) Approvals. Except for the filings or approvals as may be required due to the
regulatory or corporate status of Seller or any Company, 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



11









 







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, and (iii) to perform all of its other obligations hereunder.



          4.4  Investment Intention; Sufficient Investment Experience; Independent Investigation;
Financial Distress of Companies Subsidiaries.



               (a) Purchaser understands that the purchase of the Shares and Notes pursuant to the terms of
this Agreement involves substantial risk. Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the Companies, the Companies Subsidiaries and
the Notes and the merits and risks of an investment in the Shares and the Notes Purchaser
acknowledges and affirms that it has completed its own independent investigation, analysis and
evaluation of the Companies and the Companies Subsidiaries and the Notes and that it has made all
such reviews and inspections of the business, assets, results of operations and condition
(financial or otherwise) of the Companies and the Companies 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 Companies and the Companies Subsidiaries and the Notes and the representations
and warranties of the Seller and the Note Holders set forth in Articles II and III,
as applicable. Purchaser acknowledges and agrees that in its or its Affiliates’ capacity as voting
members of the boards of directors or other governing bodies of the Companies Subsidiaries and as
shareholder or owner of an interest in each of the Companies Subsidiaries it is deemed to have
knowledge of the information made available in the data room, through management presentations and
site visits, and that no such information shall form the basis for a breach or inaccuracy of any
representation or warranty of Seller or the Note Holders set forth in this Agreement.



               (b) Purchaser acknowledges that the business operations and financial condition of the
Companies Subsidiaries are subject to considerable distress, and that the bankruptcy of one or more
of the Companies Subsidiaries is a material probability or likelihood. Purchaser further
acknowledges that it has had a full opportunity to investigate the business and affairs of the
Companies Subsidiaries with respect to these issues and understands the risks of their financial
failure. Purchaser and its Affiliates have acknowledged and agreed to take all risk of insolvency
and/or bankruptcy of the Companies and the Companies Subsidiaries, including without limitation, a
filing for insolvency by any Company or any of the Companies Subsidiaries or a declaration of
insolvency, or similar Governmental Order, by any Governmental Entity. Any such declaration or
Governmental Order shall, with respect to Seller or any Note Holder, under no circumstance
constitute a breach of any obligation, representation, warranty, covenant or condition to Closing,
nor shall otherwise constitute an event giving rise to the right of Purchaser to modify or
terminate its obligations to close the Transaction pursuant to the Agreement. Purchaser further
agrees that prior to the Closing, to the extent that Seller or its



12









 







Affiliates reasonably believes upon the advice of counsel such action to be required from a
legal standpoint, Seller and its Affiliates shall have the right to effect a bankruptcy filing for
one or more Companies Subsidiaries in their sole discretion after consultation with Purchaser, and
that such bankruptcy filings shall not constitute a breach of this Agreement or an event that
constitutes a failure of condition to Closing or an event that gives rise to a right to terminate
this Agreement. For the avoidance of doubt, under no circumstances shall Seller be required or
expected to provide any equity or debt financing to any of the Operating Companies.



          4.5 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.



          4.6 No Knowledge of Seller or Note Holders 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 any representation or warranty of Seller or
the Note Holders set forth in this Agreement.



ARTICLE V




COVENANTS




          5.1 Notification to the CNDC and ENARGAS; Negative Antitrust and ENARGAS Decision;
Transfer of Shares to a Third Purchaser.



               (a) Notification of the Transactions to the CNDC and ENARGAS. No later than seven (7)
days from the Closing Date, and at any subsequent date that may be required by instruction of the
CNDC and/or ENARGAS, Seller and Purchaser shall (i) cooperate with one another and file all
notifications, applications, registrations, filings, declarations and reports required under the
Antitrust Law and the Gas Law relating to the Transactions, and (ii) use their reasonable efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to obtain the Argentine Transaction Approvals.



               (b) Negative Antitrust Decision and/or Negative ENARGAS Decision.




          (i) Purchaser hereby expressly acknowledges and undertakes that the entire risk as to a
Negative Antitrust Decision and/or Negative ENARGAS Decision and/or the issuance of any
resolution, decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, oral or in writing, in each case pursuant to Antitrust Law and/or Gas Law, as the
case may be, that may prohibit, prevent or restrict the consummation of the Transactions
rests exclusively with Purchaser.




          (ii) Purchaser shall be the sole responsible party to perform any and all actions
required by the Negative Antitrust Decision and/or Negative ENARGAS Decision including, but
not limited to, (x) a divesture of Purchaser’s businesses, product lines or assets in favor
of a third party, at its own risk, cost and expense; and (y) appointment of the management
of the Companies following directives by the CNDC or other antitrust authority.
Notwithstanding anything contained herein to the contrary,



13









 







none of Seller or its Affiliates shall be required to (A) divest any of its respective
businesses, product lines or assets that are not transferred to Purchaser or (B) take or
agree to take any other action or agree to any limitation that could reasonable be expected
to (1) result in a adverse effect on its business, assets, condition (financial or
otherwise) or (2) deprive Seller or any Note Holder, or any Affiliate of any of them, of any
benefit of the Transactions




          (iii) Each Party shall promptly give to the other Party notice of all information in
its possession regarding the Negative Antitrust Decision and/or the Negative ENARGAS
Decision or its consequences and promptly transmit to the other Party a copy of all
documents received or sent in that respect. Each Party shall also respond promptly to any
reasonable request for information from the other Party with respect to a Negative Antitrust
Decision and/or Negative ENARGAS Decision or its consequences.




          (iv) In furtherance of the foregoing, Seller shall execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions, as Purchaser may reasonably deem necessary to
permit Purchaser to have complete control of the Companies as from the date hereof.



               (c) Waiver by Purchaser. None of the Seller, its Affiliates or any of their
respective officers, directors or employees shall be held liable for any loss or damage arising out
of any of the events provided for in Section 5.1(b) hereof.



               (d) [Intentionally Omitted.]



               (e) Indemnification.




          (i) Subject only to the terms and limitations set forth in this Section 5.1, Purchaser
shall indemnify, defend and hold harmless Seller or any of its Affiliates and their
respective directors, officers, employees, successors, permitted assigns, advisors, agents,
or representatives (whether or not also indemnified by any other Person under any other
document) from and against any penalties, fines, administrative sanctions, costs and
expenses (including reasonable attorneys’ fees as provided in Section 5.1(e)(ii) below)
which directly relate to, or arise out of, any of the events provided for in Section 5.1(b),
including fines, penalties and/or administrative sanctions imposed, or handed down, by the
CNDC, ENARGAS, the Secretariat of Internal Trade and/or any other agency, tribunal or court
because the Transactions is ultimately deemed to breach the Antitrust Law and/or the Gas Law
(a “Claim”).




          (ii) Within five (5) days following the receipt by Seller of a Claim, Seller shall
promptly give notice of such Claim to Purchaser in writing. Purchaser shall assume and
control the defense of a Claim with counsel of their own choice it being understood,
however, that Seller may retain, at its own cost, separate co-counsel and participate fully
in the defense of the Claim with full access to all relevant information.



14









 






          (iii) If a Claim involves a fine, penalty and/or an administrative sanction to Seller,
then at Seller’s option Purchaser and Parent shall be jointly and severally liable to (i)
pay the amount of the relevant fine, penalty and/or an administrative sanction; or (ii)
deposit in escrow at Seller’s satisfaction the amount of the relevant fine, penalty and/or
an administrative sanction. If Purchaser fails to timely pay or deposit the relevant amount
of the fine, penalty and/or an administrative sanction, the outstanding amount thereof shall
bear default interest at a rate equal to LIBOR plus two per cent (2%) per annum.




          (iv) Notwithstanding Section 5.1(e)(iii), any and all expenses and/or costs incurred by
Seller pursuant to Sections 5.1(b) and 5.1(e) (including, but not limited to, fines,
penalties and/or an administrative sanctions) shall be reimbursed by Purchaser upon request
by Seller within five (5) Business Days from the date of the request. If Purchaser fails to
timely reimburse the expenses and/or costs incurred by Seller, the outstanding amount
thereof shall bear default interest at a rate equal to LIBOR plus two per cent (2%) per
annum.




          (v) If Seller and Purchaser are found jointly liable of any Claim, Purchaser shall be
the sole responsible for the payment and/or settlement of said Claim and Purchaser hereby
waives any right of contribution or other right of recovery it may have against any Seller.




          (vi) This Section 5.1 shall exclusively govern all Claims. For the avoidance of doubt,
survival limitations contemplated in Section 8.1 hereof shall not apply to the indemnity
undertakings assumed by Purchaser in this Section 5.1 regarding any Claim.



               (f) Fees, Costs and Expenses. Except for Purchaser’s obligation to pay all fees, costs
and expenses (including, without limitation, reasonable legal fees) incurred by the parties in
connection with any Claim, each of the parties shall pay all fees, costs and expenses (including,
without limitation, reasonable legal fees) incurred by it in connection with the filings made with
the CNDC and ENARGAS in order to obtain the Antitrust Approval and the ENARGAS Approval.



          5.2 Access. After the date hereof and prior to the Closing, Seller shall exercise the
voting, governance and contractual powers available to it to request (subject to any legal,
contractual, fiduciary, legal or similar obligation of Seller or any of its Affiliates, any
director, officer or employee of Seller or any Seller Affiliate) the Operating Companies to permit
Purchaser and its executive officers, managers, 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
Operating Companies as Purchaser may reasonably request including cooperating with Purchaser
accounting personnel seeking to prepare U.S. GAAP financials for the Operating Companies;
provided, however, that in no event shall Seller be obligated to provide any access
or information if Seller determines, in good faith after consultation with counsel, that providing
such access or information may be inconsistent with or otherwise violate applicable Law (including
without limitation with respect to bankruptcy or insolvency, or applicable Law affecting creditors’
rights



15









 







generally or general equitable principles), cause Seller or any Operating Company to breach a
confidentiality obligation to which it is bound, or jeopardize any recognized privilege available
to Seller or any Operating Company. Purchaser agrees to indemnify and hold Seller, any Seller
Affiliate and any director, officer or employee of Seller or any Seller Affiliate 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,
any Affiliate of Seller or the Operating Companies 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 Operating Companies prior to the Closing Date,
whether pursuant to this Section 5.2 or otherwise. During any visit to the business or property
sites of the Operating Companies, 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 Operating Companies’ 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 Operating Companies. Neither Purchaser nor any of its
representatives shall conduct any environmental testing or sampling on any of the business or
property sites of the Operating Companies prior to the Closing Date.



          5.3 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 Note Holders, Purchaser nor any of their respective Affiliates
shall, without the express written approval of Seller 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.



          5.4 Fees and Expenses.



               (a) Except as provided in paragraph (b) below and Section 5.1 of this Agreement, whether or
not the Closing occurs, 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.



               (b) Notwithstanding anything to the contrary set forth in this Agreement, Purchaser shall pay
(i) any Tax (other than capital gains or general income tax) imposed with respect to the
transactions contemplated by this Agreement and (ii) any out-of-pocket fees, costs and expenses
incurred in connection with obtaining all Argentine Transaction Approvals (other than the Parties’
legal fees and expenses which are the subject of paragraph (a) above).



16









 





          5.5 [Intentionally Omitted.]



          5.6 Further Assurances. Subject to Section 5.1 of this Agreement, each of Seller and
the Note Holders, as applicable, and Purchaser agrees that, from time to time before and after the
Closing Date, they shall execute and deliver, 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 (including without limitation Seller requesting Seller’s Cayman counsel and Chilean
counsel to provide Purchaser the accounting, tax, corporate and commercial books and records of the
Companies and CMS-Inversiones). Purchaser, the Note Holders 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 Transactions.



          5.7 Preservation of Records. Purchaser acknowledges and agrees that Seller may, from
time to time, in the normal course of investigating, prosecuting and/or defending various ongoing
matters which may relate to the Companies Subsidiaries or the businesses thereof, and will continue
to have, a need (i) to refer to, and to use as evidence, certain books, records and other data,
including electronic data maintained in computer files, relating to the Companies Subsidiaries
and/or their businesses and (ii) for the support and cooperation of present or former employees of
the Companies Subsidiaries in the event that such Persons’ assistance or participation is needed to
aid in the defense or settlement of the such matters. Purchaser agrees that it shall, at its own
expense, preserve and keep the records held by it relating to the respective businesses of the
Companies Subsidiaries that could reasonably be required after the consummation of the transaction
contemplated in this Agreement by Seller for a period of five (5) years; provided,
however, that upon expiration of such period, as applicable, Purchaser shall give written
notice to Seller if it or the custodian of such books and records proposes to destroy or dispose of
the same. Seller shall have the opportunity for a period of thirty (30) days after receiving such
notice to elect to have some or all of such books and records delivered, at Seller’s expense and
risk, to a location chosen by Seller. In addition, Purchaser shall make such records available to
Seller as may reasonably be required by Seller in connection with, among other things, any
insurance claim, legal proceeding or governmental investigation relating to the respective
businesses of Seller and its Affiliates, including the Companies Subsidiaries. Seller agrees to
maintain the confidentiality of all information provided by Purchaser or the Companies Subsidiaries
hereunder.



          5.8 Change of Name.



               (a) Notwithstanding anything to the contrary contained herein, within sixty (60) Business Days
after the Closing Date, Purchaser shall have caused the Companies and all entities in which the
Companies directly or indirectly holds an interest that have “CMS” or any similar derivations
thereof in their name to be renamed without reference to “CMS” or any similar derivations thereof.
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” or any
similar derivation thereof in connection with the businesses of the Company or any of the Companies
Subsidiaries.



               (b) The Parties acknowledge that any damage caused to Seller or any of its respective
Affiliates by reason of the breach by Purchaser or any of its Affiliates of Section 



17









 




5.8(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 respective 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 5.8(a), and Purchaser further
agrees that it (x) will stipulate to the fact that Seller or any of its respective 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 5.8(b).




          5.9 Resignations of Certain Officers and Directors. Upon the written request of
Purchaser, the Seller shall cause, to the extent allowed by its voting power or any applicable
organizational document, the resignations or removals at the Closing Date of the officers and
directors and other persons set forth on Schedule 5.9 from their position as officer or
director, or other management or employment position, of the Companies, the Companies Subsidiaries
or CMS-Inversiones set forth opposite the name of such officer, director or person on Schedule
5.9 of the Seller Disclosure Letter.



          5.10 Releases of Certain Guarantees. Purchaser and Seller shall cooperate to 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 5.10
(“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 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 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.



          5.11 [Intentionally Omitted.]



ARTICLE VI




CONDITIONS TO CLOSING




          6.1 Condition to the Obligations of the Parties—No Injunction. 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, or the Note Holders as applicable, on or prior to the
Closing Date, of the following condition precedent: except for the Antitrust Approval and the
ENARGAS Approval, 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.



18









 





          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 Note Holders. Each of Seller and the
Note Holders 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 them at or
prior to the Closing.



               (b) Representations and Warranties. The respective representations and warranties of
Seller and the Note Holders 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 Seller Material
Adverse Effect.



               (c) Officer’s Certificate. Purchaser shall have received a certificate from an
authorized officer of Seller and one certificate from an authorized officer of each Note Holder
other than the Seller, dated as of the Closing Date, to the effect that, to each of such officers’
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 and the Note Holders to Purchaser pursuant to Section
1.6.



          6.3 Conditions to the Obligation of Seller. The obligation of Seller and the Note
Holders to effect the Closing shall be subject to the satisfaction or waiver by Seller, or the Note
Holders as applicable, 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



19









 







would not reasonably be expected to have, individually or in the aggregate, a Purchaser
Material Adverse Effect.



               (c) [Intentionally Omitted.]



               (d) Officer’s Certificate. Seller shall have received a certificate from an
authorized 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.



               (e) [Intentionally Omitted.]



               (f) 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 5.10; provided that to the extent a
release shall not have been obtained at Closing with any such Guarantee, Seller shall have received
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 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.



               (g) Closing Deliverables. Seller shall have received all documents and other items
required to be delivered by Purchaser to Seller pursuant to Section 1.6.



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 Note Holders and Seller;



               (b) 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(b)(ii) shall
have used reasonable efforts to remove such order, decree, ruling or injunction;



               (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



20









 







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 Seller, by written notice to Purchaser, if the Closing Date shall not have occurred on
or before August 28, 2007 provided, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to Seller if it has failed to fulfill any obligation
of Seller or the Note Holders under this Agreement and such failure shall have caused or resulted
in the failure of the Closing Date to occur on or before such date;



               (e) 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 material breach of any representation or warranty of Seller or the Note
Holders, or a material breach of any covenant or agreement of Seller or the Note Holders hereunder,
which breaches would be reasonably expected to have, individually or in the aggregate, a Seller
Material Adverse Effect, and such breach shall not have been remedied within thirty (30) days after
receipt by Seller or the Note Holders, as applicable, 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



               (f) by Seller, so long as Seller or the Note Holders are 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 material breach of any representation or warranty, or a
material 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. Subject to Section 1.7,
if validly terminated pursuant to Section 7.1, this Agreement shall, subject to Section
8.1, become wholly void and of no further force and effect without liability to any Party or to
any Affiliate, or its 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 no such termination shall (i) relieve the Parties from liability for fraud or
any willful or intentional breach of any provision of this Agreement prior to such termination or
(ii) relieve Purchaser from any liability for any breach of Purchaser’s representations or
warranties contained in Section 4.3 (whether or not such breach is fraudulent, willful or
intentional). If this Agreement is terminated as provided in Section 7.1, Purchaser shall
redeliver to Seller or the Note Holders, as the case may be, and shall cause its agents to
redeliver to Seller or the Note Holders, as the case may be, all documents, workpapers and other



21









 







materials of Seller, the Companies and the Companies Subsidiaries and the Note Holders 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 confidentiality obligations to Seller and the Note Holders
under all applicable agreements.



ARTICLE VIII




LIMITS OF LIABILITY; PARENT GUARANTEE




          8.1 Non-Survival of Representations, Warranties, Covenants and Agreements.



               (a) Except as expressly provided in Section 8.1(b), none of the representations,
warranties, covenants or agreements of Purchaser, the Note Holders or Seller in this Agreement
shall survive the Closing, and no claim of any sort or on any basis may be made by any Party in
respect of any breach of any such representation, warranty, covenant or agreement after the
Closing, and no breach thereof shall confer any right of rescission of this Agreement. Except in
respect of the representations, warranties, covenants and agreements referred to in Section
8.1(b) that survive the Closing and except as otherwise provided for in this Agreement, the
sole remedy that a Party may have for a breach of any representation, warranty, covenant or
agreement of Purchaser, the Note Holders or Seller in this Agreement shall be to terminate this
Agreement to the extent provided for under, and in accordance with the terms of, this Agreement.



               (b) The representations, warranties, covenants or agreements of Purchaser, Note Holders or
Seller in this Agreement shall survive as follows:




               (i) the representations and warranties of Seller contained in Sections 2.1.2
(Title to Shares) and 2.1.3(a) (Authority) shall survive for one year from the
Closing Date;




               (ii) the representations and warranties of the Note Holders contained in Sections
2.2.2 (Title to Notes) and 2.2.3(a) (Authority) shall survive for six months
from the Closing Date;




               (iii) the representations and warranties of Purchaser contained in Section
4.2(a) (Authority) shall survive for one year from the Closing Date;




               (iv) the representations and warranties of Purchaser contained in Sections 4.4
(Investment Intention; Sufficient Investment Experience; Independent Investigation;
Financial Distress) and 4.6 (No Knowledge of Seller or Note Holders Breach) shall
survive indefinitely; and




               (v) the covenants and agreements of the Parties contained in Sections 5.1
(Notification to the CNDC and ENARGAS; Negative Antitrust and ENARGAS Decision; Transfer of
Shares to a Third Purchaser), 5.4 (Fees and Expenses), 5.6 (Further
Assurances), 5.7 (Preservation of Records), 5.8 (Change of Name),
5.10



22









 







(Release of Certain Guarantee) and 7.2 (Effect of Termination),
Article VIII (Limits of Liability) and Article X (General Provisions) shall
survive indefinitely.


No claim or cause of action arising out of the inaccuracy or breach of any representation,
warranty, covenant or agreement of Seller, the Note Holders or Purchaser may be made following the
termination of the applicable survival period referred to in this Section 8.1(b). The
Parties intend to shorten any statutory limitations applicable to the assertion of claims with
respect to this Agreement, and agree that, after the Closing Date, with respect to Seller, the Note
Holders and Purchaser, any claim or cause of action against any of the Parties, or any of their
respective directors, officers, employees, Affiliates, successors, permitted assigns, advisors,
agents, or representatives based upon, directly or indirectly, any of the representations,
warranties, covenants or agreements contained in this Agreement, or any other written agreement,
document or instrument to be executed and delivered in connection with this Agreement, may be
brought only as expressly provided in this Article VIII.




               (c) The liability of any Party in respect of which a notice of claim is given under this
Agreement shall be (if such claim has not been previously satisfied, settled or withdrawn)
absolutely determined and any claim made therein be deemed to have been withdrawn (and no new claim
may be made in respect of the facts, event, matter or circumstance giving rise to such withdrawn
claim) unless an action in respect of such claim in accordance with the terms contained herein
shall have been commenced within six (6) months of the date of service of such notice (or such
other period as may be agreed by the relevant Parties) and for this purpose actions shall not be
deemed to have commenced unless they shall have been properly issued and validly served upon the
relevant Party.



          8.2 Parent Guarantee.



               (a) For value received, Parent hereby fully, unconditionally and irrevocably guarantees to
Seller (the “Parent Guarantee”) (x) the prompt and punctual payment of any amount Purchaser
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 Agreement, including, without
limitation, the payment of the Purchase Price as provided by Section 1.6, and (y) the prompt and
full performance when due by Purchaser of its obligations up to and through Closing under this
Agreement. Parent’s guarantee obligations include the principal, interest, fines, fees, costs and
other amounts that may be due and payable by Purchaser under this Agreement.



               (b) The Parent Guarantee is a first demand guarantee and shall constitute an autonomous and
independent obligation of Parent not being ancillary to the obligations of Purchaser under this
Agreement. Parent hereby agrees to cause any such payment or performance to be made as if such
payment or payment were made by Purchaser.



               (c) Parent hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of a merger or bankruptcy of Purchaser, any right to require a proceeding first
against Purchaser, protest or notice with respect to any amount payable by Purchaser under this
Agreement and all demands whatsoever, and covenants that the Parent Guarantee will not be
discharged except by (i) termination of this Agreement according to its



23









 







terms, (ii) payment in full
of all amounts due and payable under this Agreement, (iii) performance in full of all obligations
due under this Agreement and (iv) payment of any Damages.



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



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



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
	 
	 	 
	Agreement
	 	Preamble
	Arbitration Expenses
	 	Section 10.9
	Breach Notice
	 	Section 7.1(e)
	Closing
	 	Section 1.5
	Closing Date
	 	Section 1.5
	CMS-Capital
	 	Preamble
	CMS-Cayman
	 	Preamble
	CMS-Gas
	 	Recitals
	CMS-Generation
	 	Recitals
	CMS-Inversiones
	 	Recitals
	Claim
	 	Section 5.1(e)(i)
	Company/Companies
	 	Recitals
	Companies Subsidiaries Financial Statements
	 	Section 3.2
	Deposit
	 	Section 1.7
	Dispute
	 	Section 10.9
	Effective Date
	 	Preamble
	Governing Company
	 	Recitals
	Guarantees
	 	Section 5.10
	Holding Company
	 	Recitals
	ICC
	 	Section 10.9






24









 






	 	 	 
	Defined Term	 	Section Reference
	 
	 	 
	Note/Notes
	 	Recitals
	Note Holders Disclosure Letter
	 	Section 2.2
	Note Holders
	 	Preamble
	Notes Transaction
	 	Section 1.3
	Operating Company Notes
	 	Section 3.6
	Panel
	 	Section 10.9
	Parent
	 	Preamble
	Party/Parties
	 	Preamble
	Prior Agreement
	 	Recitals
	Purchase Agreement Fee
	 	Section 1.7
	Purchase Price
	 	Section 1.4
	Purchaser
	 	Preamble
	Rules
	 	Section 10.9
	Seller
	 	Preamble
	Seller Disclosure Letter
	 	Section 2.1
	Seller Termination Date
	 	Section 7.1(d)
	Shares
	 	Recitals
	Shares Transaction
	 	Section 1.1
	Transactions
	 	Section 1.3
	Violation
	 	Section 2.1.3(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:




     “Argentine Transaction Approvals” means the Antitrust Approval and the ENARGAS
Approval.




     “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.




     “Antitrust Approval” is the approval of the Transactions without undertakings
by the Republic of Argentina Secretariat of Internal Trade, or any agency or tribunal that
may replace it in the future or that may be declared by a res judicata judgment to be
empowered to issue a final decision on the Transactions, approving the same under the
Antitrust Law.




     “Antitrust Law” as regards the Republic of Argentina means Law No. 25,156 (as
amended), Decree No. 89/2001, Resolution No. 40/2001 of the former Secretariat of
Competition and Consumer Defense, Resolution No. 164/2001 of the former Secretariat of
Competition, Deregulation and Consumer Defense, Resolution No. 26/2006 of the former
Secretariat of Technical Coordination and any other law or regulation, administrative
resolution and judicial decision addressing competition issues, including




25











 






but not limited to the competition clearance of mergers, acquisitions or other business
combinations.




     “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.




     “Chilean GAAP” means generally accepted accounting principles in Chile, as in
effect from time to time.




     “CLP” means Chilean pesos, the legal currency of Chile;




     “CNDC” shall mean the Argentine Comisión Nacional de Defensa de la Competencia.




     “Companies Material Adverse Effect” means any material adverse effect on the
business properties, financial condition or results of operations of any of the Companies
Subsidiaries; provided, however, that the term “Companies Material
Adverse Effect” shall not include effects that result from or are consequences of (i)
the current and prospective financial position of the Companies Subsidiaries, or the
insolvency or bankruptcy of any of the Companies Subsidiaries, or the other matters
contemplated by Section 4.4 of this Agreement, (ii) 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,
(iii) changes in Law, rule or regulation of, or the effect of any actions taken by, any
Governmental Entity in Chile, Argentina or any other state or municipality in which any of
the Companies Subsidiaries operates, (iv) events or changes that are consequences of
hostility, terrorist activity, acts of war or acts of public enemies, (v) changes in
accounting standards, principles or interpretations, (vi) any delay in the receipt of, or
the failure to receive, the Argentine Transaction Approvals, (vii) breach of agreement, or
failure to perform by any third party under a contract with any of the Companies
Subsidiaries or (viii) actions taken or not taken solely at the request of Purchaser.




     “Companies Subsidiaries” means, collectively, the Governing Company, the
Holding Company and the Operating Companies.




     “Companies Subsidiary” means, individually, each of the Governing Company, the
Holding Company and each of the Operating Companies.




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




     “Consortium Agreement” means the agreement dated as of May 19, 1997, by and
between CMS Enterprises Company, a corporation organized and existing under the laws of the
State of Michigan, and Empresa Nacional de Electricidad S.A., a corporation



26









 






  organized and existing under the laws of the Republic of Chile, as amended from time to
time.




     “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.




     “Damages” means Liabilities, demands, claims, suits, actions, or causes of
action, losses, costs, expenses, damages and judgments, whether or not resulting from third
party claims (including reasonable fees and expenses of attorneys and accountants).




     “ENARGAS Approval” is the approval of the Transactions without undertakings by
the Argentine Ente Nacional Regulador del Gas (ENARGAS), or any agency or tribunal that may
replace it in the future or that may be declared by a res judicata judgment to be empowered
to issue a final decision on the Transactions, approving the same under the Gas Law.




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




     “Gas Law” as regards the Republic of Argentina means Law No. 24,076 (as
amended), Decree No. 1738/1992, Resolution ENARGAS N° 1976/2000 and any other law or
regulation, administrative resolution and judicial decision addressing gas issues in
relation to the Companies.




     “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.




     “Knowledge” when used (i) with respect to Purchaser means the actual knowledge
of any fact, circumstance or condition of those officers of Purchaser or its Affiliates set
forth on Schedule 9.2(a) and to the extent set forth on Schedule 9.2(a); and
(ii) with respect to Seller, means the actual knowledge (without any obligation of inquiry



27









 






or investigation) of any fact, circumstance or condition of those employees of Seller
or its Affiliates set forth on Schedule 9.2(b), and to the extent set forth on
Schedule 9.2(b).




     “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).




     “LIBOR” shall mean the one-month London interbank offered rate for deposits in
the applicable currency as published by the British Bankers Association from time to time.




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




     “Negative Antitrust Decision” shall mean a resolution by the Republic of
Argentina Secretariat of Internal Trade, or any agency or tribunal that may replace it in
the future or that may be declared by a res judicata judgment to be empowered to issue a
final decision on the Transactions, either prohibiting the Shares Transaction and/or Notes
Transaction or conditioning it and/or them to the fulfilment of any unduly burdensome
undertakings, in each case, exclusively based on the Antitrust Law.




     “Negative ENARGAS Decision” shall mean a resolution by the ENARGAS, or any
agency or tribunal that may replace it in the future or that may be declared by a res
judicata judgment to be empowered to issue a final decision on the Transactions, either
prohibiting the Shares Transaction and/or Notes Transaction or conditioning it and/or them
to the fulfilment of any unduly burdensome undertakings, in each case, exclusively based on
the Gas Law.




     “Operating Companies” means, collectively, GasAtacama Generación S.A.,
Gasoducto Atacama Chile S.A., Gasoducto Atacama Argentina S.A., Progas S.A., Gasoducto
Taltal S.A., Gasoducto Atacama Argentina S.A. (Sucursal Argentina), Atacama Finance Co.
(Cayman Is.) and Energex Co. (Cayman Is.).




     “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; and with respect to any other entity, documents of similar
substance to any of the foregoing.



28









 






     “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.




     “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 respective obligations hereunder.




     “Seller Material Adverse Effect” means any material adverse effect on the
ability of Seller or any of the Note Holders to consummate the Transactions contemplated by
this Agreement or perform its obligations hereunder.




     “Specified Rate” means the per annum rate of interest published as the “Prime
Rate” in The Wall Street Journal determined as of the date the obligation to pay interest
arises.




     “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) 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;



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



29









 





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



               (d) 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;



               (e) all accounting terms not otherwise defined herein have the meanings assigned thereto under
Chilean GAAP; and



               (f) 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 or Parent,



Empresa Nacional de Electricidad S.A.

Fax: (562) 3784780

Attention: Rafael Mateo Alcalá



with a copy to:



Empresa Nacional de Electricidad S.A.

Fax: (562) 378 4780

Attention: Carlos Martín Vergara




               (b)      if to Seller or any Note Holder,



CMS International Ventures L.L.C.

One Energy Plaza

Jackson, MI 49201

Fax: 517-788-0121

Attention: General Counsel




30









 







with a copy to:



CMS Energy

One Energy Plaza

Jackson, MI 49201

Fax: 517-788-0121

Attention: General Counsel



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




     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. For the purposes of this Section 10.1, notice to a Company shall not
constitute notice to Seller, and vice versa, and notice to a Note Holder shall not constitute
notice to any other Note Holder or to the Company, and vice versa.



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




          10.3 Assignment; Successors; Third-Party Beneficiaries.




               (a) This Agreement is not assignable by any Party without the prior written consent of all of
the other Parties and any attempt to assign this Agreement without such consent shall be void and
of no effect.



               (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, whether or not so
expressed.



               (c) This Agreement is intended for the benefit of the Parties hereto and does not grant any
rights to any third parties unless specifically stated herein.



          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 Party 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 the Party
granting such waiver in any other respect or at any other time. The waiver by any of the Parties
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.



31









 





          10.5 Entire Agreement.




               (a) This Agreement (including the Exhibits and the Seller Disclosure Letter, the Note Holders
Disclosure Letter and the Purchaser Disclosure Letter referred to in or delivered under this
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 with
respect to their subject matters. Each Party 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 a Party 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,
the Parties 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 the State of New York without giving effect to any conflicts of law principles of
such State.




          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, 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




32









 







on the Parties. 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 the Note Holders, as applicable, 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. No Party shall, under any circumstance, have any
liability to any other Party for any special, indirect, consequential or punitive damages claimed
by 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. The Parties 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 the Parties 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.




          10.13 Several Liability. Purchaser hereby acknowledges and understands that each of
the representations, warranties, covenants and agreements of Seller and each of the Note Holders
are made severally but not jointly.




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




33









 








     IN WITNESS WHEREOF, the Parties have executed this SECURITIES PURCHASE AGREEMENT as of the
date first above written.



	 	 	 	 	 
	 	CMS INTERNATIONAL VENTURES, L.L.C.

 	 
	 	By:  	/s/ Sharon A. Mcilnay
 	 
	 	 	Name:  	Sharon A. McIlnay 	 
	 	 	Title:  	Vice President and General Counsel 	 
	 
	 	CMS CAPITAL, L.L.C.

 	 
	 	By:  	/s/ James E. Brunner
 	 
	 	 	Name:  	James E. Brunner 	 
	 	 	Title:  	Senior Vice President and
General Counsel 	 
	 
	 	CMS GAS ARGENTINA COMPANY

 	 
	 	By:  	/s/ Sharon A. McIlnay
 	 
	 	 	Name:  	Sharon A. McIlnay 	 
	 	 	Title:  	Vice President and General Counsel 	 
	 
	 	CMS ENTERPRISES COMPANY

 	 
	 	By:  	       /s/ Sharon A. McIlnay
 	 
	 	 	Name:  	Sharon A. McIlnay 	 
	 	 	Title:  	Vice President and General Counsel 	 



S-1









 






	 	 	 	 	 



	 	 	 	 	 
	 	PACIFIC ENERGY LLC

 	 
	 	By:  	/s/ Carlos Martín Vergara
 	 
	 	 	Name:  	Carlos Martín Vergara 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	          /s/ Manuel José Irarrázaval Aldunate
 	 
	 	 	Name:  	Manuel José Irarrázaval Aldunate 	 
	 	 	Title:  	 	 
	 
	 	EMPRESA NACIONAL DE ELECTRICIDAD S.A.

 	 
	 	By:  	/s/ Carlos Martín Vergara
 	 
	 	 	Name:  	Carlos Martín Vergara 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	                                                  /s/ Manuel José Irarrázaval Aldunate
 	 
	 	 	Name:  	Manuel José Irarrázaval Aldunate                                                       	 
	 	 	Title:  	 	 



S-2









 






	 	 	 	 	 



EXHIBIT A to 

SECURITIES PURCHASE AGREEMENT




SELLER DISCLOSURE LETTER




to




SECURITIES PURCHASE AGREEMENT




by and among




CMS INTERNATIONAL VENTURES, L.L.C.,




CMS CAPITAL, L.L.C.,




CMS GAS ARGENTINA COMPANY,




CMS ENTERPRISES COMPANY,




PACIFIC ENERGY LLC.




and




EMPRESA NACIONAL DE ELECTRICIDAD S.A.




Dated as of July 11, 2007




 









 





SELLER DISCLOSURE LETTER




to




STOCK PURCHASE AGREEMENT




by and among




CMS INTERNATIONAL VENTURES, L.L.C.,




CMS CAPITAL, L.L.C.,




CMS GAS ARGENTINA COMPANY,




CMS ENTERPRISES COMPANY,




PACIFIC ENERGY LLC.




and




EMPRESA NACIONAL DE ELECTRICIDAD S.A.




Dated as of July 11, 2007





     This Seller Disclosure Letter is being furnished by CMS International Ventures, L.L.C., a
limited liability company organized and existing under the laws of the State of Michigan
(“Seller”), to Pacific Energy LLC., a limited liability company organized and existing
under the laws of the State of Delaware (“Purchaser”) and to Empresa Nacional de
Electricidad S.A., a company organized and existing under the laws of Chile (“Parent”) in
connection with the Securities Purchase Agreement dated as of July 11, 2007 (hereinafter also
referred to as this “Agreement”) by and among Seller, CMS Capital, L.L.C., a limited
liability company organized and existing under the laws of the State of Michigan
(“CMS-Capital”), CMS Gas Argentina Company, a company incorporated and existing under the
laws of the Cayman Islands (“CMS-Cayman”), and, CMS Enterprises Company, a corporation
organized and existing under the laws of the State of Michigan (“CMS-Enterprises”; each of
the Seller, CMS-Capital, CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note
Holder” and, collectively, the “Note Holders”), Purchaser and Parent. Unless the
context otherwise requires, all capitalized terms used in this Seller Disclosure Letter shall have
the respective meanings assigned to them in the Agreement.



1









 





     The contents of this Seller Disclosure Letter are qualified in their entirety by reference to
the specific provisions of the Agreement, and are not intended to constitute, and shall not be
construed as constituting, representations or warranties of Seller, except as and to the extent
provided in the Agreement.



     Nothing in this Seller Disclosure Letter shall constitute an admission that any information
disclosed, set forth or incorporated by reference in this Seller Disclosure Letter, either
individually or in the aggregate, is material, or would result in a Seller Material Adverse Effect.
No disclosure made in this Seller Disclosure Letter (i) shall be deemed to modify in any respect
the standard of materiality or any other standard for disclosure set forth in the Agreement or (ii)
relating to any possible breach or violation of any agreement, contract, Law or Governmental Order
shall be construed as an admission or indication that any such breach or violation exists or has
actually occurred.



     Notwithstanding anything to the contrary contained in this Seller Disclosure Letter or in the
Agreement, the information and disclosures contained in each schedule hereto shall be deemed to be
disclosed and incorporated by reference in each of the other schedules hereto as though fully set
forth in such other schedules. Purchaser has informed Seller that there are no documents (or copies
of such documents) referred to in this letter as having been disclosed which the Purchaser would
like to see and which have not been supplied or made available to it. There are no matters
referred to in this letter in respect of which Purchaser require further details.



     Headings have been inserted herein for convenience of reference only and shall to no extent
have the effect of amending or changing the express description of this Seller Disclosure Letter as
contemplated by the Agreement or the express description of the Sections of the Agreement.



     This Seller Disclosure Letter shall be deemed to include, and there are incorporated into it
by way of disclosure, all information disclosed in the files and working papers of Seller,
CMS-Inversiones and the Companies Subsidiaries made available to Purchaser in the virtual data room
on Intralinks under “Project Beta” as of July 10, 2007.



2









 





Schedule 2.1.2

Shares




	 	 	 	 	 
	Seller	 	Company	 	No. of Shares
	CMS International Ventures, L.L.C.
	 	CMS Gas Transmission
Del Sur Company	 	100
	 
	 
	CMS International Ventures, L.L.C.
	 	CMS Generation
Investment Company V	 	100






3









 






Schedule 2.1.3(d)

Approvals



1. Antitrust filings that may be required under Chilean Antitrust Laws due to the participation of
the Purchaser in the Chilean energy market.



2. Antitrust approval in accordance with Argentine antitrust law.



3. ENARGAS approval in accordance with Argentine gas law.





4









 








Schedule 3.1.1

Title and Capitalization




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Issued and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 	 	Equity	 	 	 	Subscribed	 	Paid	 	Paid in Capital	 	Validly	 	Good	 	Last
	Name of Company	 	Incorporation	 	Equity Interest	 	Interest	 	Owners of Equity Interest	 	Shares/Rights	 	Shares/Rights	 	(CLP)	 	Incorporated	 	Standing	 	Capitalization*
	Compañía de
	 	Chile	 	Derechos Sociales	 	100%	 	CMS Gas Transmission del Sur	 	 	99	%	 	 	99	%	 	 	50,338,783,883	 	 	Yes, 06.03.97	 	 	05.29.07	 	 	 	10.27.00	 
	Inversiones CMS
	 	 	 	(Equity Rights)	 	 	 	Company	 	 	1	%	 	 	1	%	 	 	508,472,564	 	 	 	 	 	 	 	 	 	 	 	 	 
	Energy Chile Ltda.
	 	 	 	 	 	 	 	CMS Generation Investment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Company V	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inversiones Gas
	 	Chile	 	Derechos Sociales	 	100%	 	Inversiones Endesa Norte S.A.	 	 	50	%	 	 	50	%	 	 	80,356,939,627	 	 	Yes, 10.01.03	 	 	04.19.07	 	 	 	02.26.04	 
	Atacama Holding Ltda.
	 	 	 	(Equity Rights)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Compañia de Inversiones CMS	 	 	36.07	%	 	 	36.07	%	 	 	57,967,438,723	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	CMS Gas Transmisión del Sur	 	 	13.93	%	 	 	13.93	%	 	 	22,389,500,904	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Company	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GasAtacama S.A.
	 	Chile	 	Ordinary Shares	 	100,000,000	 	Inversiones Gas Atacama Holding	 	 	99,997,706	 	 	 	99,997,706	 	 	 	160,709,613,426	 	 	Yes, 06.13.97	 	 	04.17.07	 	 	 	12.24.03	 
	 
	 	 	 	 	 	ordinary shares	 	Ltda	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Compañia de Inversiones CMS	 	 	1,147	 	 	 	1,147	 	 	 	1,843,382	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Empresa Nacional de	 	 	1,147	 	 	 	1,147	 	 	 	1,843,382	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Electricidad S.A.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GasAtacama Generación
	 	Chile	 	Ordinary Shares	 	10,000	 	Inversiones Endesa Norte S.A.	 	 	5	 	 	 	5	 	 	 	42,502,774	 	 	Yes, 12.19.96	 	 	04.17.07	 	 	 	12.17.03	 
	S.A.
	 	 	 	 	 	ordinary shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Compañia de Inversiones CMS	 	 	5	 	 	 	5	 	 	 	42,502,774	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama S.A.	 	 	9,990	 	 	 	9,990	 	 	 	84,920,542,386	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gasoducto Atacama
	 	Chile	 	Ordinary Shares	 	10,000 	 	Inversiones Endesa Norte S.A.	 	 	5	 	 	 	5	 	 	 	22,544,680	 	 	Yes, 08.21.96	 	 	04.18.07	 	 	 	12.17.03	 
	Chile S.A.
	 	 	 	 	 	ordinary shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Compañia de Inversiones CMS	 	 	5	 	 	 	5	 	 	 	22,544,680	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama S.A.	 	 	9,990	 	 	 	9,990	 	 	 	45,044,271,486	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gasoducto Atacama
	 	Chile	 	Ordinary Shares	 	10,000 ordinary	 	Inversiones Endesa Norte S.A.	 	 	5	 	 	 	5	 	 	 	37,099,663	 	 	Yes, 02.27.97	 	 	04.17.07	 	 	 	12.17.03	 
	Argentina S.A.
	 	 	 	 	 	shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Compañia de Inversiones CMS	 	 	5	 	 	 	5	 	 	 	37,099,663	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama S.A.	 	 	9,990	 	 	 	9,990	 	 	 	74,125,126,157	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gasoducto Tal Tal S.A.
	 	Chile	 	Ordinary Shares	 	100,000,000	 	Gasoducto Atacama Chile S.A.	 	 	99,877,365	 	 	 	99,877,365	 	 	 	13,819,021,726	 	 	Yes, 08.20.97	 	 	04.17.07	 	 	 	02.26.04	 
	 
	 	 	 	 	 	ordinary shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Gasoducto Atacama Argentina S.A.	 	 	122,635	 	 	 	122,635	 	 	 	16,967,766	 	 	 	 	 	 	 	 	 	 	 	 	 
	Progas S.A.
	 	Chile	 	Ordinary Shares	 	1,000,000 ordinary	 	Gasoducto Atacama Chile S.A.	 	 	999,000	 	 	 	999,000	 	 	 	999,000	 	 	Yes, 08.30.99	 	 	04.16.07	 	 	 	08.30.99	 
	 
	 	 	 	 	 	shares	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama Generación S.A	 	 	1,000	 	 	 	1,000	 	 	 	1,000	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gasoducto Atacama
	 	Argentina	 	N/A	 	N/A	 	Gasoducto Atacama Argentina S.A.	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 	 	 	N/A	 
	Argentina S.A.
(Argentinean Branch)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Atacama Finance Co.
	 	Cayman Islands	 	Ordinary Shares	 	6,293,700 	 	Inversiones GasAtacama Holding	 	 	6,500,000	 	 	 	6,300,000	 	 	US$	6,300,000	 	 	Yes, 06.24.98	 	 	04.20.07	 	 	 	N/A	 
	 
	 	 	 	 	 	(99.9%)	 	Limitada	 	(authorized)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	6,300 (0.1%)	 	GasAtacama S.A.	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Energex Co.
	 	Cayman Islands	 	Ordinary Shares	 	100%	 	Gasoducto Atacama Chile S.A.	 	50,000
 (authorized)	 	 	10,000	 	 	US$	10,000	 	 	Yes, 10.01.97	 	 	04.05.07	 	 	 	N/A	 









 




			
	*	 	According to Chilean Laws, the paid-in capital of all
Chilean Corporations (S.A.s) is automatically restated and adjusted at the end
of each fiscal year (December 31) so as to reflect the variation of Chilean
inflation. All capital figures are in Chilean Pesos (CLP) as of the date of
the last capitalization.




5









 










Schedule 3.3

Tax Matters



None.




6









 








Schedule 3.4

Compliance with Laws



None.




7









 








Schedule 3.5

Certain Contracts



1. Natural gas transport service agreement (Contrato de servicio de transporte de gas natural en
base firme integrados), between ENDESA and Gasoducto Atacama Chile Ltda., predeccessor in interest
to Gasoducto Atacama Chile S.A., dated September 6, 2002 (T1).



2. Natural gas transport service agreement (Contratos de servicio de transporte de gas natural en
base firme integrados), between ENDESA and Gasoducto Atacama Chile Ltda., predeccessor in interest
to Gasoducto Atacama Chile S.A., dated September 6, 2002 (T2).



(collectively, the “Taltal Gas Transportation Agreements”)





8









 








EXHIBIT B to 

SECURITIES PURCHASE AGREEMENT




NOTE HOLDERS DISCLOSURE LETTER




to




SECURITIES PURCHASE AGREEMENT




by and among




CMS INTERNATIONAL VENTURES, L.L.C.,




CMS CAPITAL, L.L.C.,




CMS GAS ARGENTINA COMPANY,




CMS ENTERPRISES COMPANY,




PACIFIC ENERGY LLC.




and




together with




EMPRESA NACIONAL DE ELECTRICIDAD S.A.




Dated as of July 11, 2007




 









 





NOTE HOLDERS DISCLOSURE LETTER




to




SECURITIES PURCHASE AGREEMENT




by and among




CMS INTERNATIONAL VENTURES, L.L.C.,




CMS CAPITAL L.L.C.,




CMS GAS ARGENTINA COMPANY,




CMS ENTERPRISES COMPANY,




PACIFIC ENERGY LLC.




and




together with




EMPRESA NACIONAL DE ELECTRICIDAD S.A.




Dated as of July 11, 2007




     This Note Holders Disclosure Letter is being furnished by CMS International Ventures, L.L.C.,
a limited liability company organized and existing under the laws of the State of Michigan
(“Seller”), to Pacific Energy LLC., a limited liability company organized and existing
under the laws of the State of Delaware (“Purchaser”) and to Empresa Nacional de
Electricidad S.A., a company organized and existing under the laws of Chile (“Parent”), in
connection with



1









 







the Securities Purchase Agreement dated as of July 11, 2007 (hereinafter also referred to as this
“Agreement”) by and among Seller, CMS Capital, L.L.C., a limited liability company
organized and existing under the laws of the State of Michigan (“CMS-Capital”), CMS Gas
Argentina Company, a company incorporated and existing under the laws of the Cayman Islands
(“CMS-Cayman”), and, CMS Enterprises Company, a corporation organized and existing under
the laws of the State of Michigan (“CMS-Enterprises”; each of the Seller, CMS-Capital,
CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note Holder” and,
collectively, the “Note Holders”), Purchaser and Parent. Unless the context otherwise
requires, all capitalized terms used in this Note Holders Disclosure Letter shall have the
respective meanings assigned to them in the Agreement.



     The contents of this Note Holders Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement, and are not intended to constitute, and
shall not be construed as constituting, representations or warranties of Seller or the Note Holder,
except as and to the extent provided in the Agreement.



     Nothing in this Note Holders Disclosure Letter shall constitute an admission that any
information disclosed, set forth or incorporated by reference in this Note Holders Disclosure
Letter, either individually or in the aggregate, is material, or would result in a Seller Material
Adverse Effect. No disclosure made in this Note Holders Disclosure Letter (i) shall be deemed to
modify in any respect the standard of materiality or any other standard for disclosure set forth in
the Agreement or (ii) relating to any possible breach or violation of any agreement, contract, Law
or Governmental Order shall be construed as an admission or indication that any such breach or
violation exists or has actually occurred.



     Notwithstanding anything to the contrary contained in this Note Holders Disclosure Letter or
in the Agreement, the information and disclosures contained in the schedule hereto shall be deemed
to be disclosed and incorporated by reference in each of the other schedules hereto as though fully
set forth in such other schedules. Purchaser has informed the Note Holders that there are no
documents (or copies of such documents) referred to in this letter as having been disclosed which
the Purchaser would like to see and which have not been supplied or made available to it. There
are no matters referred to in this letter in respect of which Purchaser require further details.



     Headings have been inserted herein for convenience of reference only and shall to no extent
have the effect of amending or changing the express description of this Note Holders Disclosure
Letter as contemplated by the Agreement or the express description of the Sections of the
Agreement.



     This Seller Disclosure Letter shall be deemed to include, and there are incorporated into it
by way of disclosure, all information disclosed in the files and working papers of the Note
Holders, CMS-Inversiones and the Companies Subsidiaries made available to Purchaser in the virtual
data room on Intralinks under “Project Beta” as of July 10, 2007.



2









 





Schedule 2.2.2

Title to Notes




	 	 	 	 	 
	Noteholder	 	Principal Amount
	CMS International Ventures, L.L.C.
	 	US $	54,065,594.49	 
	CMS Capital, L.L.C.
	 	US $	87,372,676.23	 
	CMS Gas Argentina Company
	 	US $	7,734,040.24	 
	CMS Enterprises Company
	 	US $	26,099,868.00	 






3









 






SCHEDULES TO 

SECURITIES PURCHASE AGREEMENT





 









 








Schedule 5.9

Resignations of Certain Officers and Directors



CMS GAS TRANSMISSION DEL SUR COMPANY




Directors




Thomas Elward

David W. Joos



Officers




Thomas Elward — President

David W. Joos — Chairman of the Board/Chief Executive Officer

John M. Butler — Senior Vice President

James E. Brunner — Senior Vice President

Carlos A. Isles — Controller/Vice President

Catherine M. Reynolds — Vice President/Secretary

Sharon M. McIlnay — Vice President/General Counsel

Thomas L. Miller — Vice President

Laura L. Mountcastle — Treasurer/Vice President

Joseph P. Tomasik — Vice President

Theodore J. Vogel — Vice President/Chief Tax Counsel

Jane M. Kramer — Assistant Secretary

Beverly S. Burger — Assistant Treasurer

James L. Loewen — Assistant Treasurer

Joyce Norkey — Assistant Secretary




 









 





CMS GENERATION INVESTMENT COMPANY V



Directors




Thomas Elward

David W. Joos

Thomas J. Webb




Officers




Thomas Elward — President/Chief Executive Officer

David W. Joos — Chairman of the Board

John M. Butler — Senior Vice President

James E. Brunner — Senior Vice President

Carlos A. Isles — Controller/Vice President

Catherine M. Reynolds — Vice President/Secretary

Sharon M. McIlnay — Vice President/General Counsel

Thomas L. Miller — Vice President

Daniel B. Dexter — Vice President

Daniel E. Nally — Vice President

Laura L. Mountcastle — Treasurer/Vice President

Joseph P. Tomasik — Vice President

Michael C. Sniegowski — Vice President

Theodore J. Vogel — Vice President/Chief Tax Counsel

Jane M. Kramer — Assistant Secretary

Beverly S. Burger — Assistant Treasurer

James L. Loewen — Assistant Treasurer

Joyce Norkey — Assistant Secretary




INVERSIONES GASATACAMA HOLDING LIMITADA




	 	 	 
	Directors	 	 
	 
	 
	Regular	 	Alternate
	 
	 	 
	Tom Miller 

Francisco Mezzadri

	 	David Keyhoe

David Baughman






2









 






GASATACAMA S.A.




	 	 	 
	Directors	 	 
	 
	 
	Regular	 	Alternate
	 
	 	 
	Tom Miller 

David Baughman

	 	Thomas Elward

Sharon McIlnay






GASATACAMA GENERACION S.A.



Directors




	 	 	 
	Regular	 	Alternate
	 
	 	 
	David Baughman 

Tom Miller

	 	Sharon Mcllnay

Thomas Elward






GASODUCTO ATACAMA CHILE S.A.



Directors




	 	 	 
	Regular	 	Alternate
	 
	 	 
	David Baughman 

Tom Miller

	 	Sharon Mcllnay

Thomas Elward






GASODUCTO ATACAMA ARGENTINA S.A.



Directors




	 	 	 
	Regular	 	Alternate
	 
	 	 
	David Baughman 

Tom Miller

	 	Sharon Mcllnay

Thomas Elward






3









 






ATACAMA FINANCE CO.




Directors




David Baughman

Tom Miller




ENERGEX CO.



Directors




David Baughman

Tom Miller




4









 





Schedule 5.10

Releases of Certain Guarantees



Performance Guarantee Agreement, dated March 13, 2000, made by CMS Enterprises Company in favor of
YPF SOCIEDAD ANONIMA.




5









 








Schedule 9.2

Definitions




“Knowledge of Seller”





	1.	 	Thomas L. Miller, Vice President of Seller
	 
	2.	 	David Baughman, Executive Director Financial Advisory Services and Strategic Planning — CMS
Enterprises Company





“Knowledge of Purchaser”





	1.	 	Manuel José Irarrázabal Aldunate, Chief Financial Officer of Parent






6