**Exhibit 4.22**

 

EXECUTION VERSION

 

SHARE PURCHASE AGREEMENT

 

ThisShare Purchase Agreement dated April 23, 2009 (this “Agreement”) isentered into in the City of Rio de Janeiro, State of Rio de Janeiro, Brazil, byand among:

 

Onone side,

 

CEMIG GERAÇÃO E TRANSMISSÃOS.A., a company dulyincorporated under the laws of Brazil, with head-offices at Av. Barbacena 1200,Santo Agostinho, in the City of Belo Horizonte, State of Minas Gerais, Brazil,enrolled with the Brazilian federal taxpayers’ registry under CNPJNo. 06.981.176/0001-58, herein duly represented in accordance with itsby-laws (the “Buyer”);

 

Onthe other side,

 

TERNA – RETE ELETTRICANAZIONALE S.P.A.,a company duly incorporated under the laws of Italy, with head-offices at ViaArno 64, 00198, Rome, Italy, enrolled with the Brazilian federal taxpayers’registry under CNPJ No. 05.973.996/0001-35, herein duly represented inaccordance with its by-laws (the “Seller”);

 

and,as intervening party,

 

COMPANHIA ENERGÉTICA DE MINASGERAIS – CEMIG, a company duly incorporated under the laws of Brazil, withhead-offices at Av. Barbacena 1200, Santo Agostinho, in the City of BeloHorizonte, State of Minas Gerais, Brazil, enrolled with the Brazilian federaltaxpayers’ registry under CNPJ No. 17.155.730/0001-64, herein dulyrepresented in accordance with its by-laws (“CEMIG”);

 

RECITALS

 

WHEREAS, Terna Participações S.A., a publicly-traded company duly incorporatedunder the laws of Brazil, with head offices at Praça Quinze de Novembro 20, 10th floor, suite No. 1003 (part), in the City of Rio de Janeiro, Stateof Rio de Janeiro, enrolled with the Brazilian federal taxpayers’ registryunder CNPJ No. 07.859.971/0001.30 (the “Company”), controlled bythe Seller, with common and preferred shares listed as units at the São PauloStock Exchange (*Bovespa*), underLevel 2 of Distinguished Practices of Corporate Governance (*Nível 2 de Práticas Diferenciadas de GovernançaCorporativa*);

 

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WHEREAS, the Company, through its subsidiaries, is engaged in theimplementation, operation and maintenance of electricity transmissioninfrastructure and the provision of technical services in Brazil, whichsubsidiaries (other than Terna Serviços Ltda.) hold concessions from theBrazilian Federal Government to provide electricity transmission services inBrazil;

 

WHEREAS, on the date hereof, the total issued and outstanding capital of theCompany is R$1,312,254,675.28, divided into 203,504,353 common shares (the “CommonShares”) and 59,954,480 preferred shares (the “Preferred Shares”and, collectively with the Common Shares, the “Shares”), out of whichthe Seller owns 173,527,113 Common Shares directly (the “Purchased Shares”)and 10,000 Common Shares and 20,000 Preferred Shares under Units of the Company(such Units held by the Seller, the “Seller’s Units”), representingapproximately 85.28% of the voting capital and approximately 65.87% of thetotal issued and outstanding capital of the Company, included in this amountthe Shares received by the members of the Board of Directors of the Company designatedby the Seller to occupy such positions;

 

WHEREAS, the Seller and the Company are parties to an Intercompany Loan, theoutstanding principal amount of which on the date hereof is R$500,000,000.00;

 

WHEREAS, on the basis of the representations and warranties of the Seller andupon reliance thereon, the Buyer wishes to purchase the Purchased Shares fromthe Seller, and the Seller wishes to sell the Purchased Shares to the Buyer,subject to the terms and conditions set forth in this Agreement;

 

WHEREAS, the Buyer is a subsidiary of CEMIG and CEMIG executes this Agreementas guarantor of Buyer’s obligations assumed hereunder to the extent and subjectto the terms and conditions set forth in this Agreement;

 

WHEREAS, the transfer of the Purchased Shares and consequent transfer ofControl of the Company is subject to approval by ANEEL, which approval istherefore a condition precedent to the consummation of such transfer;

 

WHEREAS, the Board of Directors of CEMIG approved on April 23, 2009 allthe terms and conditions of the transaction contemplated by this Agreement,provided that the acquisition of the Purchased Shares by the Buyer shall besubject to ratification by CEMIG’s general shareholders meeting pursuant toArticle 256 of the Brazilian Corporations Law;

 

NOW, THEREFORE, the Parties hereto agree as follows:

 

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ARTICLE I

DEFINITIONS

 

1.1.          Definitions*.  *(a) The following terms, as used herein,shall have the following meanings, whether employed in the singular or pluralor used in different genders or verbal tenses:

 

“Affiliate”means, with respect to any Person, any other Person directly or indirectlyControlling, Controlled by, or under common direct or indirect Control with,such Person from time to time.

 

“Agreement”means this Share Purchase Agreement and the Schedules hereto.

 

“ANEEL”means *Agência Nacional de Energia Elétrica*,the Brazilian Electrical Energy Agency.

 

“Book-EntryRegistrar” means Banco Itaú S.A., book-entry registrar for the Company’sshares.

 

“Bovespa”means BM&FBOVESPA S.A., the São Paulo Stock Exchange.

 

“Brasnorte”means Brasnorte Trasmissora de Energia Elétrica S.A., a company dulyincorporated under the laws of Brazil, with head-offices at Praça Quinze deNovembro 20, 10th floor,suite No. 1003 (part), in the City of Rio de Janeiro, State of Rio deJaneiro, Brazil, enrolled with the Brazilian federal taxpayers’ registry underCNPJ No. 09.274.998/0001-97.

 

“BrazilianCorporations Law” means Law No. 6,404, of December 15, 1976, asamended.

 

“BrazilianGAAP” means generally accepted accounting principles in Brazil, as definedby Brazilian corporate law and applicable CVM regulations and as in effect atthe time any applicable financial statements were prepared.

 

“BusinessDay” means any day other than a day on which the banks are permitted orrequired by Law to be closed in the City of Rio de Janeiro, Brazil or in theCity of Rome, Italy.

 

“CADE”means *Conselho Administrativo de DefesaEconômica*, the Brazilian antitrust agency.

 

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“Claim”means a Direct Claim or a Third Party Claim.

 

“ConcessionAgreements” means the Concession Agreements listed in Schedule 1.1(a)-Ito this Agreement.

 

“Concessions”means the concessions to provide electricity transmission services granted bythe Federal Government to the Group pursuant to the Concession Agreements.

 

“Control”(including any variations thereof, such as the terms “Controlling”, “Controlledby” and “under common Control with”), means, in respect of any Person, theownership of more than 50% of the voting capital of such Person or thepossession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of another Person (whether throughownership of shares, quotas, other securities or other ownership interests, bycontract, shareholders agreement or otherwise), including the ownership,directly or indirectly, of shares, quotas, other securities or other ownershipinterests having the power to elect a majority of the members of the board ofdirectors and/or executive office, or other bodies governing the business andaffairs of such Person.

 

“CorporateDocuments” means, as to any Person, its partnership agreement,incorporation documents, by-laws, articles of association, *estatutos sociais* or *contrato social*, as the case may be.

 

“CVM”means the Brazilian Securities and Exchange Commission (*Comissão de Valores Mobiliários - CVM*).

 

“Damages”means any and all materialized claims and/or liabilities, damages, penalties,judgments, assessments, losses, Liens, costs and expenses, including attorneys’fees, but excluding, losses of profits, indirect, punitive and consequentialdamages, except if such losses of profits, indirect, punitive or consequentialdamages are part of a Third Party Claim.

 

“EffectiveDate” means the date of execution of this Agreement by all Parties hereto.

 

“Employee”means an employee (*empregado*)whether de facto or de juris of a Person. The term “Employment”shall have a correlative meaning.

 

“EnvironmentalLaws” means any Law related to pollution or protection of the environmentor natural resources, including those relating to the use, handling,transportation, treatment, storage, disposal, release or discharge of HazardousMaterials.

 

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“ETAU”means Empresa de Transmissão do Alto Uruguai S.A., a Subsidiary of the Company.

 

“EuroEquivalent” means the amount obtained by converting the relevant amount ofBrazilian Reais into Euro at the rate of the Euro in the free exchange market (*Mercado de taxas livres*) obtained by theproduct USD/BRL exchange rate as provided by the Brazilian Central Bank screenPTAX800 – Option 5 based on the average between the selling and buying ratesand the EUR/USD exchange rate as published on the Reuters page ECB37 at1:15 pm London Time, both the rates being obtained on the Business Dayimmediately preceding the relevant payment date by the Seller from the ForeignExchange Bank and informed in writing by the Seller to the Buyer.

 

“Euros”or “EUR” means the lawful currency of the European Union.

 

“ForeignExchange Bank” means, as provided in Section 2.2(d) below, thebank authorized to carry out foreign exchange transactions in Brazil as theSeller may designate by written notice delivered to the Buyer at least fiveBusiness Days prior to the Closing Date, provided that, in case the ForeignExchange Bank does not accept the designation by the Seller up to such date,the Foreign Exchange Bank shall be a bank authorized to carry out foreignexchange transactions freely selected by the Buyer among the banks having aprevious working relationship with the Buyer or CEMIG.

 

“GovernmentalAuthority” means any court, government or political subdivision ordepartment thereof, any governmental, regulatory or self-regulation bodies,board, bureau, administrative agency or commission or other governmental agencyor instrumentality of competent jurisdiction.

 

“Group”means the Company, its Subsidiaries and each other Person in which the Companydirectly or indirectly holds any equity interest.

 

“HazardousMaterials” means: (i) any petroleum, petroleum products, by-productsor breakdown products, radioactive materials, asbestos-containing materials orpolychlorinated biphenyls or (ii) any chemical, material or substancedefined or regulated as toxic or hazardous or as a pollutant or contaminant orwaste under any applicable Environmental Law.

 

“IFRS”means the accounting principles known as “International Financial Reporting Standards”issued by the Financial Accounting Standards Board.

 

“IntellectualProperty” means all of the following, owned or used by the Seller and/orthe Group in the conduct or exercise of the Group’s business as currently

 

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conducted:(i) trademarks and service marks (registered or unregistered), tradedress, trade names and other names and slogans embodying business or productgoodwill, applications or registrations in any jurisdiction pertaining to theforegoing and goodwill associated therewith; (ii) patentable inventions,discoveries, improvements, know-how, processes, technology, computer programs(including password unprotected interpretive code or source code, object code,development documentation, programming tools, drawings, specifications anddata) and applications and patents in any jurisdiction pertaining to theforegoing, including reissues, continuations, divisions, continuations-in-part,renewals or extensions; (iii) trade secrets; (iv) copyrights inwritings, designs, software, or other works, applications or registrations inany jurisdiction for the foregoing; (v) database rights;(vi) internet websites, domain names and applications and registrationspertaining thereto and all intellectual property used in connection with orcontained in all versions of the Group’s worldwide websites; (vii) booksand records describing or used in connection with the foregoing; and(viii) sales and marketing materials.

 

“IntercompanyLoan” means the loan made by the Seller to the Company under theIntercompany Facility Agreement dated February 16, 2009, due onMay 31, 2010, including principal and accrued interest due pro rata untilthe date of its payment by the Company.

 

“Law”means any applicable federal, provincial, state or local (or other politicalsubdivision) statute, law, ordinance, Order, rule or regulation of aGovernmental Authority.

 

“License”means approvals, consents, rights, certificates, permissions, licenses,franchises, permits, registrations, filings or other similar authorizationsissued, declared, designated, adopted or required by any GovernmentalAuthority.

 

“Lien”means, with respect to any property or asset, any mortgage, lien, pledge,charge, right of first refusal, option, preference, security interest,encumbrance, usufruct, *fideicomissum*,fiduciary transfer, attachment or other adverse claim, restriction orlimitation of any kind in respect of such property or asset.

 

“MaterialAdverse Effect” means any material adverse effect on (i) theoperations, business, properties or condition (financial or otherwise) of theGroup taken as a whole that affect the ability to conduct the activities of theGroup taken as a whole as currently conducted; or (ii) the validity orenforceability of this Agreement.

 

“ONS”means the Transmission System Operator (*OperadorNacional do Sistema*).

 

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“Order”means any judgment, arbitral award, order, injunction, writ, determination,decree or award of, or agreement with, a Governmental Authority, arbitrationtribunal or alternative dispute resolution body.

 

“ParcelaVariável” means the reduction of the annual permitted revenue of aConcession holder imposed pursuant to the respective Concession Agreement andthe applicable Laws as a result of the availability performance of networkelements pertaining to the respective Concession holder.

 

“Party”or “Parties” means the Buyer, CEMIG and the Seller.

 

“Person”means an individual, corporation, limited liability company, partnership,association, trust, fund or other entity or organization, including agovernment or political subdivision or an agency or instrumentality thereof,whether having legal personality or not.

 

“Reais”or “R$” means the lawful currency of Brazil.

 

“ReferenceFinancials” means the audited consolidated financial statements of theCompany as of December 31, 2008, prepared in accordance with BrazilianGAAP, attached hereto as Schedule 1.1(a)-II.

 

“RelatedParty” means, with respect to any Person, any of its Affiliates and therespective directors, officers, managers and other representatives of suchPerson and Affiliates.

 

“SelicRate” means the *taxa referencial doSistema Especial de Liquidação e Custódia*, or, in the event theSelic Rate becomes no longer available, its replacing interest rate used toadjust taxes due to the Brazilian National Treasury.

 

“Seller’sAccount” means the Seller’s account to be informed by the Seller to theBuyer in writing at least five Business Days prior to the Closing Date.

 

“Subsidiaries”means the companies Controlled by the Company.

 

“TaxReturn” means a report, return or other information (including anyamendments) required to be supplied to a Governmental Authority with respect toTaxes including, where permitted or required, combined or consolidated returnsfor any group of entities, the Company or any Affiliate.

 

“Taxes”means all taxes, however denominated, including any deficiencies, assessments,governmental charges, interest, additions to tax or penalties that may becomepayable in respect thereof, imposed by any national, state, provincial,

 

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county,local or foreign Governmental Authority, which taxes shall include, withoutlimiting the generality of the foregoing, all income taxes, capital gain taxes,PIS (*Contribuição para o Programa deIntegração Social*), COFINS (*Contribuiçãopara o Financiamento da Seguridade Social*), CSLL (*Contribuição Social Sobre o LucroLíquido*),IOF (*Imposto Sobre Operações de Crédito, Câmbioe Seguro ou relativas a Titulos ou Valores Mobiliários*), socialcontribution taxes, payroll taxes and employee withholding taxes (INSS -*Instituto Nacional do Seguro Social* andFGTS - *Fundo de Garantia do Tempo de Serviço*),ISS (*Imposto sobre Serviços*),ICMS (*Imposto sobre Circulação deMercadorias e Serviços*), unemployment insurance, social security,sales and use taxes, excise taxes, environmental taxes, franchise taxes, grossreceipts taxes, occupation taxes, real and personal property taxes, stamp taxes,documentary taxes, transfer taxes, withholding taxes, and other obligations ofthe same or of a similar nature.

 

“ThresholdAmount” means R$200,000.00 or its equivalent in any other applicablecurrency.

 

“Units”means the units of the Company listed at Bovespa, each representing one CommonShare and two Preferred Shares.

 

(b)           Each of the following terms is defined in theSection set forth opposite to such term:

 
| **Term**                  | ** ** | **Section** | ** ** |
|---------------------------|------------|-------------|------------|
| BNDES                     |       | Recitals    |       |
| Buyer                     |       | Preamble    |       |
| Cap                       |       | 8.1         |       |
| CEMIG                     |       | Preamble    |       |
| Claim  Notice             |       | 8.4(a)      |       |
| Closing                   |       | 2.3(a)      |       |
| Closing  Date             |       | 2.3(a)      |       |
| Common  Shares            |       | Recitals    |       |
| Company                   |       | Recitals    |       |
| Confidential  Information |       | 6.3         |       |
| Contracts                 |       | 3.15(a)     |       |
| Damages                   |       | 8.1(a)      |       |
| Deductible                |       | 8.3         |       |
| Direct  Claim             |       | 8.4(a)      |       |
| Expatriate                |       | 5.4         |       |
| Filings                   |       | 3.7         |       |
| Financial  Statements     |       | 3.13(a)     |       |
| ICC  Rules                |       | 10.7(b)     |       |
| Indemnified  Party        |       | 8.4         |       |

 

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| **Term**                  | ** ** | **Section** |   |
|---------------------------|------------|-------------|--------|
| Indemnifying  Party       |       | 8.4         |   |
| Indemnity  Guaranty       |       | 8.2         |   |
| Interim  Period           |       | 5.1(a)      |   |
| OPA                       |       | 6.5         |   |
| Preferred  Shares         |       | Recitals    |   |
| Proceeding                |       | 3.5(a)      |   |
| Property  / Properties    |       | 3.16        |   |
| Purchase  Price           |       | 2.2(a)      |   |
| Purchase  Price Per Share |       | 2.2(a)      |   |
| Purchased  Shares         |       | Recitals    |   |
| Representatives           |       | 6.3         |   |
| Seller                    |       | Recitals    |   |
| Seller’s  Units      |       | Recitals    |   |
| Third  Party Claim        |       | 8.4(a)      |   |

 

ARTICLE IIPURCHASE AND SALE

 

2.1.          Purchase and Sale. Upon the terms and subject to theconditions set forth in this Agreement, on the Closing Date the Seller shallsell, assign, transfer and convey to the Buyer, and the Buyer shall purchaseand acquire from the Seller the Purchased Shares, free and clear of any Liens.

 

2.2.          Purchase Price.  (a) Subjectto the adjustments set forth in clause (b) below, the purchase price forall Purchased Shares is R$2,330,469,127.59 (two billion, three hundred thirtymillion, four hundred sixty nine thousand, one hundred twenty seven Reais andfifty nine cents) (the “Purchase Price”), corresponding to R$40.29(forty Reais and twenty nine cents) per Unit and R$13.43 (thirteen reais andforty three cents) per Purchased Share (the “Purchase Price Per Share”).

 

(b)         If Closing does not occur onSeptember 30, 2009 exclusively as a result of any of the conditionsprecedent contemplated in Section 7.1(b), 7.1(h), 7.2(a), 7.2(b) or7.2(c) not being met until such date, the Purchase Price Per Share and, consequently,the Purchase Price shall be increased at a rate equivalent to 103% of the SelicRate from September 30, 2009 to but excluding the Closing Date. ThePurchase Price Per Share shall also be reduced by the amount per Share ofdividends or Share redemptions paid by the Company to the extent permittedunder this Agreement, if any, and, in such event, the Purchase Price shall bereduced accordingly by the amount per Share of such dividends or shareredemptions (as adjusted pursuant to the following sentence, if applicable)multiplied by the number of Purchased Shares. If Closing occurs afterSeptember 30, 2009, the amount of

 

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dividendsdeducted from the Purchase Price in accordance with this Section 2.2(b) shallbe adjusted at a rate equivalent to 103% of the Selic Rate from the date ofsuch payment of dividends or share redemptions until the Closing Date.

 

(c)        Subject to the terms and conditions of this Agreement, the PurchasePrice shall be paid by the Buyer to the Seller in immediately available fundson the Closing Date by means of wire transfer to the Seller’s Account, in aforeign exchange transaction entered into in accordance withSection 2.2(d) below, of the Reais amount set forth inSection 2.2(a) above minus the amount of any fees and costs chargedby the bank closing the foreign exchange transaction and any Taxes and costswhich the Buyer is required by Law to withhold and/or pay in connection withsuch payment and foreign exchange transaction (in which case, a certified copyof the withholding Tax receipt (DARF) shall be delivered by the Buyer to theSeller upon request as promptly as available after payment thereof inaccordance with applicable Law). The withholding income tax shall be calculatedby Seller, who will assume all responsibility before the Buyer and theGovernmental Authorities for the accuracy of such calculation, and must benotified in writing to the Buyer. Notwithstanding anything to the contrarycontained in this Agreement, including, without limitation, any limitationcontained in Article VIII, Seller shall indemnify Buyer in full and holdBuyer harmless from and against any challenge by any Governmental Authority inconnection with such withholding income tax, except in case of fraud or willfulmisconduct of the Buyer.

 

(d)        The foreign exchange transaction contemplated inSection 2.2(c) shall be entered into as follows:

 

(i)         a foreign exchange transaction closed on the Closing Date with aForeign Exchange Bank that agrees to convert the Reais amount set forth inSection 2.2(a) above, after the deductions contemplated inSection 2.2(c), into the Euro Equivalent of the resulting amount; or

 

(ii)        if no Foreign Exchange Bank accepts the designation by the Seller up tothe date set forth in item (i) above to carry out the foreign exchangetransaction as set forth therein, such foreign exchange transaction shall beclosed by the Buyer on the Closing Date with a bank in Brazil freely selectedby the Buyer among the banks having previous relationship with the Buyer orCEMIG, in which case the exchange rate for the remittance of the Reais amountset forth in Section 2.2(a) above, minus the amounts deductedpursuant to Section 2.2(c), shall be the rate obtained by the Buyer fromsuch bank;

 

;in either case, provided that nothing in this Agreement shall require the Buyerto disburse or pay, with respect to payment of the Purchase Price, any amountsin Reais (plus any applicable Selic Rate adjustments) in excess of the amountset forth in 

 

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Section 2.2(a) above.

 

(e)           The Buyer shall have the right, tothe fullest extent permitted by applicable Law, to set off and apply any andall payments due to the Seller under this Agreement against any and all amountsdue by the Seller to the Buyer under this Agreement, including, withoutlimitation, any amounts due by the Seller in accordance with Article VIII.Such right shall be in addition to, and not exclusive of, Buyer’s right topursue all remedies against the Seller (for breach of contract or otherwise) tothe fullest extent provided by applicable Law.

 

2.3.          Closing.  (a) The closing of the purchase and saleof the Purchased Shares hereunder (the “Closing”) shall take place atthe offices of Pinheiro Guimarães – Advogados, in the city of Rio de Janeiro,State of Rio de Janeiro, at Av. Rio Branco 181, 27th floor, at 10:00 a.m. (Rio de Janeirotime) on the later of (i) September 30, 2009 if the conditionsprecedent set forth in Article VII of this Agreement have been satisfiedon or before September 12, 2009; and (ii) the 19th day following satisfaction of all conditionsprecedent set forth in Article VII of this Agreement, or on such otherdate and place as the Buyer and the Seller may agree in writing (“ClosingDate”).

 

(b)           At the Closing:

 

(i)            The Seller shalldeliver to the Buyer a certificate signed by the Seller to the effect ofconfirming that the condition precedent set forth inSection 7.1(a) has been met;

 

(ii)           The Buyer shalldeliver to the Seller a certificate signed by the Buyer and CEMIG to the effectof confirming that the condition precedent set forth inSection 7.2(a) has been met;

 

(iii)          The Seller and theBuyer shall execute any transfer registration forms required by the Book-EntryRegistrar for the transfer of the Purchased Shares to the Buyer;

 

(iv)          The Seller shalldeliver to the Buyer a statement issued by the Book-Entry Registrar evidencingthat the Purchased Shares were duly transferred to the Buyer;

 

(v)           The Seller shallhave caused such members of the board of directors and executive officers ofthe Company and of the other entities of the Group appointed by or at thedirection of the Seller as the Buyer shall have designated in a written noticedelivered to the Seller at least five Business Days prior

 

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tothe Closing Date to deliver to the Buyer resignation letters effective as ofthe Closing Date with a full release and discharge of any obligations of theCompany or any other entity of the Group to such directors and officers, in theform attached hereto as Schedule 2.3(b)(v), and to transfer tothe Buyer or any Person designated by the Buyer any Shares and any otherinterest in any company of the Group;

 

(vi)          The Buyer and CEMIG shall deliver tothe Seller a full release and discharge of the directors and officers of theCompany and of any other entity of the Group, appointed by or at the directionof the Seller, for any of their act or omission prior to the Closing, except inthe case of fault (*culpa*), fraudor willful misconduct or breach of the respective entity’s By-laws inaccordance with Schedule 2.3(b)(vi);

 

(vii)         The Buyer shall execute and deliver toSeller, the Company and Bovespa the *Termo deAnuência dos Controladores* (Statement of Consent from ControllingShareholders) and any other document requested by Bovespa in accordance withthe Level 2 Corporate Governance Rules;

 

(viii)        The Buyer shall pay the Purchase Priceas set forth in Section 2.2 above;

 

(ix)           Subject to Section 6.4 andSection 7.1(f), the Intercompany Loan shall be fully paid to the Seller(principal plus pro rata interest accrued until but excluding the Closing Date)pursuant to Section 6.4;

 

(x)            The Seller shall deliver to theBuyer a full and irrevocable release and discharge of all obligations of theCompany under the Intercompany Loan and of any obligations relating to the useby the Company and any other entity of the Group of Intellectual Property ofthe Seller, including pursuant to the SAP Agreement;

 

(xi)           The Seller shall deliver to the Buyerthe Indemnity Guaranty, duly executed; and

 

(xii)          The Seller, the Buyer and/or theCompany shall execute such other instruments, documents or certificates, ifany, as may be reasonably required to consummate and perfect the transactionscontemplated hereby.

 

2.4.          Deliveries are one SingleTransaction.  All actions andtransactions indicated in Section 2.3 above shall be regarded as a singletransaction so that no action or transaction shall be deemed to have takenplace if and unless all other actions and

 

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transactionsshall have taken place as provided in this Agreement. The Parties acknowledgethe essential nature of this provision.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

TheSeller represents and warrants to the Buyer, as of the date hereof and theClosing Date (or, to the extent that any representation and warranty belowrefers to a specific date, as of such date), that:

 

3.1.          Corporate Existence and Power.  The Company and each other entity of the Groupare duly organized and validly existing under the laws of Brazil and have allcorporate powers and all Licenses required to carry on their respectivebusiness as presently conducted, except where failure to hold such Licensescould not reasonably be expected to have a Material Adverse Effect. The Companyand each other entity of the Group are duly qualified to do business in eachjurisdiction where they conduct business. Except as set forth in Schedule3.1, the Company and each other entity of the Group do not have any equityparticipation in any other Person. The Buyer has been provided with true andcomplete copies of the Corporate Documents of the Company and each other entityof the Group as currently in effect.

 

3.2.          Authority in Relation to thisAgreement.  The execution, deliveryand performance by the Seller of this Agreement are within the powers andcapacity of the Seller and all consents required pursuant to its CorporateDocuments have been obtained and are in full force and effect. Assuming dueauthorization, execution and delivery by the other Parties, this Agreementconstitutes a valid, binding and enforceable agreement of the Seller subject tothe effect of any applicable bankruptcy, reorganization, insolvency, moratorium,fraudulent conveyance or similar laws affecting creditors’ rights generally.

 

3.3.          Governmental Authorization;Consents.  Except as set forth in Schedule3.3, the execution, delivery and performance by the Seller of thisAgreement requires no action by or in respect of, or filing with, or consentfrom any Governmental Authority on the part of any of the Seller, the Companyor any other entity of the Group.

 

3.4.          Non-Contravention.  The execution, delivery and performance ofthis Agreement by the Seller and the transfer of the Purchased Shares inaccordance herewith do not and will not: (a) violate the CorporateDocuments of the Company or any other entity of the Group, (b) assumingcompliance with the matters referred to in Section 3.3, violate anyapplicable Law, (c) except as otherwise set forth in Schedule 3.4(c),require any consent or other action by any Person, constitute a

 

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default,or give rise to any right of acceleration, termination or cancellation of anyConcession, License or contractual right of the Company or any other entity ofthe Group or any contractual or other obligation of the Company or any entityof the Group, except where, other than in respect of obligations involvingamounts in excess of R$200,000.00, failure to obtain such consent or performsuch action could not be reasonably expected to have a Material Adverse Effect,or (d) result in the creation or imposition of any Lien on the PurchasedShares or any asset of the Company or any entity of the Group.

 

3.5.          Litigation.  Except as disclosed in Schedule 3.5(a),there is (a) no judicial or administrative action, suit, claim, demand,investigation, proceeding, arbitration or dispute (it being understood thatwith respect to confidential administrative proceedings or investigations, thisrepresentation is made to the extent of the Seller’s knowledge or to the extentthat any such proceeding or investigation has been served upon or notified tothe Seller, the Company or any other entity of the Group) (“Proceeding”)pending against the Company or any other entity of the Group or any of theirrespective assets before any court or arbitrator or any Governmental Authorityinvolving amounts in excess of the Threshold Amount or which, if determinedadversely to the Company or any such other entity of the Group may have aMaterial Adverse Effect, (b) no Proceeding against the Seller, the Companyor any other entity of the Group which in any manner challenges or seeks toprevent, enjoin, alter or delay the transactions contemplated by this Agreementand no Proceeding seeking any actual, proposed, possible or potentialrevocation, withdrawal, suspension, cancellation or termination of, ormodification to, any Concession.

 

3.6.          Ownership of the Purchased Shares;Corporate Filings; Shareholders’ Agreements.  (a) Schedule 3.6(a) setsforth all of the issued and outstanding shares of capital stock of the Company,a list of all Subsidiaries and the shares of each other entity of the Group asof the date hereof. The Seller and any Affiliates of the Seller, on the ClosingDate, will not directly or indirectly own any shares of the Company or anyother entity of the Group other than the Purchased Shares and the Seller’sUnits. On the Effective Date and the Closing Date, the Purchased Sharesrepresent approximately 65.86% of the total issued and outstanding capital ofthe Company and approximately 85.27% of the Company’s voting capital and arefree and clear of any Lien, and the Seller will transfer and deliver to theBuyer, at the Closing, valid title to the Purchased Shares free and clear ofany Lien. All of the issued and outstanding shares of the Company and eachother entity of the Group are validly issued and fully paid. Upon the sale andtransfer of the Purchased Shares to the Buyer and payment of the IntercompanyLoan, the Seller will have conveyed to the Buyer all its equity and otherinterests in the Company and the Group other than Seller’s Units.

 

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(b)           Except as disclosed in Schedule3.6(b), there are no authorized or outstanding subscriptions, options,conversion rights, warrants, debt instruments, debentures, or other agreements,securities or commitments of any nature whatsoever (whether oral or written andwhether firm or conditional) currently in force obligating the Seller, theCompany or any other entity of the Group to issue, deliver or sell, or cause tobe issued, delivered or sold, any authorized or outstanding shares of thecapital stock, or any securities convertible into or exchangeable for shares ofcapital stock, of the Company or any other entity of the Group or obligatingthe Company or any other entity of the Group to grant, extend or enter into anysuch agreement or commitment.

 

(c)           The Corporate Documents of theCompany and the other entities of the Group and all amendments thereto and allminutes of shareholders’ meetings and board of directors’ meetings have beenduly registered with the Commercial Registry and published in accordance withapplicable Law.

 

(d)           The Seller is not a party to anyshareholders’ agreement in respect of the Company, and there is no othershareholders’ agreement in respect of equity participations of the Company inother entities of the Group other than the agreements listed in Schedule3.6(d).

 

3.7.          Regulatory Filings.  Except as disclosed in Schedule 3.7,the Company and each other entity of the Group have filed all registrations,reports, statements, notices, and other filings required to be filed by them underthe rules issued by any Governmental Authority, including all requiredamendments or supplements to any of the above (collectively, the “Filings”),and such Filings complied with all applicable Laws, except where failure tomake such filings that does not have a Material Adverse Effect.

 

3.8.          No Undisclosed Liabilities.  As of the date hereof, there are no materialliabilities (whether accrued or contingent) from financial transactions of theCompany or any other entity of the Group or under any derivative agreement orhedging transaction (including any swap, forward, option or futurestransactions) or any off-balance sheet transaction, that have not beendisclosed by the Seller to the Buyer expressly in writing or in the ReferenceFinancials.

 

3.9.          Licenses; Concessions.  (a) Except for any License failure ofwhich to obtain could not have a Material Adverse Effect, the Company and eachother entity of the Group have all Licenses necessary for, affecting, orrelating in any way to, the conduct of their respective business as conductedon the date hereof, and each such License is valid and in full force and effectand, assuming compliance with the matters referred to in Section 3.3, noneof the Licenses could be terminated or impaired, in whole or in part, as aresult of the transactions contemplated hereby.

 

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(b)           The Company and each other entity ofthe Group are in compliance with the terms and requirements of each Licensematerial to the conduct of their respective business and each Concession and noevent has occurred or circumstance exists that (with or without notice or lapseof time): (i) constitute or result directly or indirectly in a violationof or a failure to comply with any term or requirement of any such License,except for any violation which could not reasonably be expected to have aMaterial Adverse Effect, or Concession; or (ii) result directly orindirectly in the revocation, withdrawal, suspension, cancellation ortermination of, or any modification to, any such License or Concession.

 

(c)           Neither the Company nor any otherentity of the Group has received any notice or other communication from anyGovernmental Authority or any other Person regarding: (i) any actual,alleged, possible or potential violation of or failure to comply with any termor requirement of any License material to the conduct of its respectivebusiness or any Concession; or (ii) any actual, proposed, possible orpotential revocation, withdrawal, suspension, cancellation or termination of,or modification to, any License material to the conduct of its respectivebusiness or any Concession.

 

3.10.        Foreign Investment Registration.  Schedule 3.10 sets forth the amount ofthe foreign investment of the Seller in the Company registered with the CentralBank of Brazil and correctly represents the actual equity interest held by theSeller in the Company.

 

3.11.        Finders’ Fees.  There is no investment banker, broker, finderor other intermediary or service provider who has been retained by or isauthorized to act on behalf of any of the Seller, the Company or any otherentity of the Group nor is there any other Person who, in each case, might beentitled to any fee or commission payable by the Buyer or any entity of theGroup in connection with or as a result of the transactions contemplated bythis Agreement.

 

3.12.        Intellectual Property.  (a) Except as disclosed in Schedule3.12(a), the Company and each other entity of the Group own all right,title and interest in and to, or have a valid and enforceable license to useall the Intellectual Property used by them and material to their respectivebusiness. The Company and the other entities of the Group are in compliance inall material respects with the contractual obligations relating to theprotection of such Intellectual Property as they use pursuant to license orother agreements, where applicable. There are no conflicts with orinfringements of any Intellectual Property used, owned or licensed by any thirdparty and the conduct of the Group’s business as currently conducted does notconflict with or infringe any proprietary right of any third party, except forany of the foregoing which could not reasonably be expected to have a MaterialAdverse

 

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Effect.There is no Proceeding pending against the Company or any other entity of theGroup: (i) alleging any conflict or infringement with any third party’sproprietary Intellectual Property rights; or (ii) challenging theownership or use of, or the validity or enforceability of any, IntellectualProperty.

 

(b)           The consummation of the transactionscontemplated hereby will not alter or impair any Intellectual Property, exceptwhere it could not reasonably be expected to have a Material Adverse Effect.There are no licenses, sublicenses and other related agreements in which theCompany, any other entity of the Group or any sublicensee of the Company hasgranted to any Person the right to use any such Intellectual Property; andthere are no other consents, indemnification, forbearances to sue, settlementagreements and licensing or cross-licensing arrangements to which the Companyor any other entity of the Group is a party relating to any such IntellectualProperty.

 

(c)           The Company and each other entity ofthe Group own or hold valid licenses to use the operating and applicationscomputer software programs and databases used by them that are material to theconduct of their respective business as presently conducted.

 

3.13.        Financial Information; Accounting. (a) The Reference Financials,attached hereto as Schedule 1.1(a)-II, were made available to the Buyer(the “Financial Statements”).

 

(b)           Except as disclosed in Schedule3.13(b) (and provided that the Seller shall cause the Company to promptlycomply with any determination of the relevant Governmental Authorities,including Bovespa, CVM, *Comitê dePronunciamentos Contábeis* and *Institutodos Auditores Independentes do Brasil* with respect to the mattersdisclosed in such schedule), the Financial Statements complied with allapplicable accounting requirements and with the published rules andregulations of the CVM with respect thereto, have been prepared in accordancewith the then in force Brazilian GAAP consistently applied on a consistent basisthroughout the periods involved (except as may be indicated in the notesthereto), and present fairly and accurately the financial position of theCompany and the other entities of the Group at the respective dates thereof andthe results of their operations for the periods indicated (subject, in the caseof unaudited quarterly statements, to normal year-end audit adjustments, whichwere not and will not be material in amount), and show all indebtedness andother liabilities, direct or contingent, of the Company and the other entitiesof the Group as of the date thereof, including any actual or contingentliabilities under any derivative agreement or hedging transaction to which theCompany or any other entity of the Group is a party (including any swap,forward, option or future transaction).

 

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(c)           Since the date of the ReferenceFinancials and until the date hereof, there has been no event or circumstance,either individually or in the aggregate, that has had or could reasonably beexpected to have a Material Adverse Effect.

 

3.14.        Related Party Transaction.  Except for the Intercompany Loan or asotherwise disclosed in Schedule 3.14, there is not any indebtedness forborrowed money in any amount nor any kind of agreement or transaction involvingany entity of the Group on one side and the Seller or any Affiliate of theSeller (other than any other entity of the Group) on the other side.

 

3.15.        Material Contracts; No Defaults.  (a) Schedule 3.15(a) lists allleases, agreements, licenses, notes, mortgages, indentures, arrangements,contracts and other contractual rights and obligations (collectively, “Contracts”)to which the Company and/or any of its Subsidiaries is a party or by which theCompany and/or any of its Subsidiaries are bound, consisting of:

 

(i)  anyindenture, mortgage, indemnity, loan, promissory note or other Contract underwhich the Company or any of its Subsidiaries has borrowed or may borrow anymoney or issued or may issue any note, bond, indenture or other evidence ofindebtedness for or guaranteed indebtedness for money borrowed by others orunder which any Person has issued or may issue a letter of credit with respectto which the Company has any liability;

 

(ii)  anyContract or series of related Contracts requiring future payments by theCompany or any of its Subsidiaries: (A) in excess of R$200,000.00individually or (B) which in the aggregate with other Contracts (withoutconsidering the Contracts listed pursuant to item (A)) exceeds R$500,000.00;

 

(iii)  anyContract or series of related Contracts for the sale, purchase, lease, licenseor disposition, whether by or to the Company or any of its Subsidiaries, ofmaterials, products or other goods or services or other assets, properties orshares: (A) in excess of R$200,000.00 individually or (B) which inthe aggregate with other Contracts (without considering the Contracts listedpursuant to item (A)) exceeds R$500,000.00;

 

(iv)  anyContract or series of related Contracts that provide for payment or receipt bythe Company or any of its Subsidiaries: (A) in excess of R$200,000.00individually or (B) which in the aggregate with other Contracts (withoutconsidering the Contracts listed pursuant to item (A)) exceeds R$500,000.00;

 

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(v)  anyjoint venture, partnership, shareholders, quotaholders or other Contractinvolving the voting of shares of capital stock or other equity interests of,or a sharing of profits, losses, costs or liabilities by the Company or any ofits Subsidiaries with any other Person;

 

(vi)  anyContract that prohibits or restricts the Company or any of its Subsidiariesfrom engaging in any line of business or from competing with any other Person;

 

(vii)  anyContract entered into by the Company or any of its Subsidiaries with anAffiliate of the Company or of any of its Subsidiaries;

 

(viii)  anyContract entered into by the Company or any of its Subsidiaries with aGovernmental Authority; and

 

(ix)  anyContract that requires the Company or any of its Subsidiaries to indemnify anythird parties in values in excess of R$200,000.00.

 

(b)           Except as set forth on Schedule3.15(b) and except as would not have a Material Adverse Effect,neither the Company nor any of its Subsidiaries is in breach of or in defaultunder, and no event has occurred and is continuing that would constitute adefault by the Company or any of its Subsidiaries under any provision of anyContract, and neither the Company nor any of its Subsidiaries has receivedwritten notice from any other party to any Contract that the Company or any ofits Subsidiaries is in breach of such Contract, which breach has not beenremedied, and, to Seller’s knowledge, no such other party is in breach of ordefault under any material provision of any such Contract.

 

3.16.        Properties and Other Assets.  (a) The Company and the other entities ofthe Group are the legal owners of, or in the case of leased property have avalid leasehold interest in all property and assets (whether real or personal,tangible or intangible) used by them in their respective business (the “Properties”and each a “Property”). The Seller does not own nor has any rights overany such Properties. Except as disclosed in Schedule 3.16(a), none ofsuch Properties that has a book value of at least R$1,000,000.00 is subject toany Lien.

 

(b)           As to each Property:

 

(i)            the Company orother relevant entity of the Group, as the case may be, has under its controlall title, deeds and documents necessary to prove its title to the Propertywith a book value of at least R$1,000,000.00 including all necessary consentsfor the grant of the leases;

 

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(ii)           all such leases arein full force and effectand no written notice of any alleged breach of any of the terms of the leaseshas been served by any landlord; and

 

(iii)          the existing use ofthe Property is a lawfulpermitted use and all necessary consents to such existing uses have beenobtained.

 

3.17.        Labor Matters.  (a) The Company and each other entity ofthe Group are in compliance, in all material respects, with all applicable Lawsrespecting employment and employment practices, terms and conditions ofemployment, collective bargaining agreements and wages and hours relating totheir business. Schedule 3.17(a) sets forth a true and completelist of all Employees of the Group who have been dismissed or whose employmentcontracts have been otherwise terminated in the last five years, and alldismissals or termination of employment contracts of Employees and terminationof service contracts of other Persons in the past five years were made inaccordance with all applicable Laws. Except as disclosed in Schedule 3.17(a),there is no labor, service contract or corporate complaint pending against theCompany or any other entity of the Group before any courts or GovernmentalAuthority in Brazil or elsewhere involving amounts in excess of the ThresholdAmount or which, if determined adversely to the Company or any such otherentity of the Group may have a Material Adverse Effect.

 

(b)           Except as disclosed in Schedule3.17(b), no entity of the Group is a party to any collective bargainingagreement with any labor organization, nor has any such entity of the Groupagreed in writing to recognize any union or other collective bargaining unitnor has any union or other collective bargaining unit been certified asrepresenting any of the Employees of the Company or any other entity of theGroup.

 

(c)           There has not occurred any strike,slow downs, picketing, work stoppages, concerted refusals to work overtime orother similar labor activities with respect to Employees of the Company or anyother entity of the Group. No grievance or arbitration or other proceedingarising out of or under any collective bargaining agreement is pending againstthe Company or any other entity of the Group.

 

(d)           Except as disclosed in Schedule3.17(d), none of the Employees of the Company and the other entities of theGroup is entitled to stability under applicable Law.

 

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3.18.        Employment and Other Matters.  (a) Except as set forthin Schedule 3.18(a), there are no pension, profit-sharing, incentive,deferred compensation, bonus, stock option, stock purchase, restricted stock,share appreciation right, supplemental retirement, employment, termination,severance or other similar contract, arrangement or agreement, including,without limitation, any contract, arrangement or agreement that sets forth aterm of employment or guarantees any level of compensation or benefits to anyEmployee, director, officer, manager or other service provider of the Companyor any other entity of the Group, any group or individual health, dental,medical, or life insurance, retiree medical or life insurance, survivorbenefit, car allowance, reimbursement account, or similar plan, policy orarrangement, whether formal or informal, which is contributed to, sponsored, ormaintained for the benefit of any Employee of the Company or any other entityof the Group or for which the Company or any other entity of the Group has anyliability contingent or otherwise.

 

(b)           Neither the execution and delivery of this Agreement nor theconsummation of the transactions contemplated hereby, either alone or togetherwith another event, will (i) result in any payment (including, withoutlimitation, severance, unemployment compensation, golden parachute orotherwise) becoming due under any agreement described in Section 3.18(a),(ii) increase any benefits otherwise payable under any agreement describedin Section 3.18(a), or (iii) result in the acceleration of the timeof payment, vesting or funding of any benefits.

 

3.19.        Tax Matters.  (a) Except as disclosed in Schedule3.19 herein:

 

(i)            (A) theCompany and each other entity of the Group have timely filed all Tax Returnsrequired to be filed by applicable Law and (B) all Taxes shown to bepayable on such Tax Returns have been paid or will be paid when due, except forany Taxes which are being contested in good faith before the appropriateGovernmental Authority and for which appropriate provisions have been made bythe Company or other entity of the Group, as the case may be, and an adequateaccrual has been made, in accordance with Brazilian GAAP, in their respectivefinancial statements for Taxes which are not yet due and payable; all such TaxReturns are true, correct and complete in all material respects and set forthall items to the extent required to be reflected or included in such TaxReturns by the applicable Laws;

 

(ii)           asof the date hereof, there are no Liens with respect to any Taxes, except forLiens for Taxes not yet due or being contested in good faith and in respect ofwhich appropriate reserves have been made in the financial statements of theCompany or any other entity of the Group, as the case may be;

 

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(iii)          theCompany and each other entity of the Group have, in all material respects, paidin full all Taxes for the periods covered by such Tax Returns, as well as allother Taxes that have become due or payable (including, without limitation, ifapplicable, all Taxes that they are obligated to withhold from amounts paid orpayable to or benefits conferred upon Employees, creditors and third parties),except for any Taxes which are being contested in good faith before theappropriate Governmental Authority and for which appropriate provision havebeen made by the Company or other entity of the Group, as the case may be; and

 

(iv)          noissues have been raised by (and are currently pending) any GovernmentalAuthority with taxing authority in connection with any of the Tax Returns.

 

(b)           The Company and the other entities of theGroup have maintained, in all material respects, updated and in proper form,the books and records required to be maintained pursuant to the Laws of theGovernmental Authorities wherein it is required to file Tax Returns and otherreports relating to Taxes.

 

3.20.        Books and Records.  The Company and the other entities of theGroup maintain all books, Tax Returns and records which are necessary to theirregular existence and to regularly carry out their business and all of suchrecords are in proper order and are kept in a proper format and updated, asrequired by applicable Law.

 

3.21.        Environmental Matters. (a) The Company and each otherentity of the Group are in compliance with all Environmental Laws applicable totheir business, except where failure to comply with such Environmental Lawscould not reasonably be expected to have a Material Adverse Effect.

 

(b)           The Company and the other entities of theGroup have all environmental approvals, consents, rights, certificates,permissions, licenses, franchises, permits, registrations, filings or othersimilar authorizations required under Environmental Laws for the conduction oftheir respective business and such Licenses are listed in Schedule 3.21(b).

 

(c)           There are no Proceedings pending or, to thebest knowledge of the Seller, threatened against the Company or any otherentity of the Group that could reasonably be expected to result in the failureto obtain or renew, suspension, cancellation or termination of any of theLicenses referred to in clause (b) above.

 

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3.22.        Insurance.  The Group’s insurance policies cover suchrisks and contain such policy limits, types of coverage and deductiblescustomary to insure against risks to which the Company and the other entitiesof the Group, and their respective Employees, business, properties and otherassets would reasonably be expected to be exposed in the operation of theirbusiness as currently conducted, and such policies are in accordance withcustomary market practices in the type of business in which the Group isengaged. All of the Group’s insurance policies are valid and enforceable policies,all premiums due and payable under all such policies and bonds have been paidand the Group is otherwise in compliance in all material respects with theterms of such policies and bonds. Except as set forth in Schedule 3.22,the Seller has no knowledge or belief, after due inquiry, of any threatenedtermination of the insurance policies or any facts or actions that may causethe non-payment of the premiums pursuant to the insurance policies.

 

3.23.        Full Disclosure.  No report, financial statement or certificatefurnished in writing by or on behalf of the Seller or the Group to the Buyer,CEMIG or their respective representatives in connection with the Group’sbusiness, assets and liabilities, the transactions contemplated hereby and thenegotiation of this Agreement or delivered hereunder contains any materialmisstatement of a fact or, taken as a whole, omits to state any material factnecessary to make the statements therein, in the light of the circumstancesunder which they were made, not misleading.

 

3.24.        Compliance with Laws. (a) The Company and each otherentity of the Group are in compliance in all material respects with therequirements of all Laws applicable to them or to the conduct or operation oftheir business and the ownership or use of their Properties and, with respectto the Company, with the Level 2 of Distinguished Practices of CorporateGovernance (*Nível 2 de PráticasDiferenciadas de Governança Corporativa*).

 

(b)           No event has occurred or circumstance existsthat (with or without notice or lapse of time): (i) may constitute orresult in a material violation by the Company or any other entity of the Groupof, or a failure on the part of the Company or any other entity of the Group tocomply with, any Law; or (ii) may give rise to any material obligation onthe part of the Company or any other entity of the Group to undertake or tobear all or any portion of the cost of any remedial action of any nature.

 

(c)           Neither the Company nor any other entity ofthe Group has received any notice or other communication (whether oral orwritten) from any Governmental Authority or any other Person regarding:(i) any actual, alleged, possible or potential violation of, or failure tocomply with, any Law in any material respect; or (ii) any actual, alleged,possible or potential obligation on the part of the

 

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Companyor any other entity of the Group to undertake or to bear all or any portion ofthe cost of any remedial action of any nature.

 

3.25.        Powers-of-Attorney.  Schedule 3.25 contains a list of allpowers-of-attorney granted by the Company and the other entities of the Groupgranting powers to attorneys-in-fact to carry out general managementactivities, execute agreements, issue promissory notes or other debtinstruments, incur indebtedness, transfer, pledge or mortgage properties of theCompany or any other entity of the Group.

 

3.26.        Guarantees.  Neither the Company nor any of itsSubsidiaries is a guarantor or otherwise is responsible for any liability ofobligation (including indebtedness) of any other Person, except for theguarantees mentioned in Schedule 3.26.

 

3.27.        Bankruptcy.  The Company and the Seller are not subject toany bankruptcy, liquidation or similar procedure, including judicial orout-of-court creditors reorganization.

 

ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE BUYER AND CEMIG

 

Eachof CEMIG and the Buyer, jointly and severally, represents and warrants to theSeller as of the date hereof and the Closing Date (or, to the extent that anyrepresentation and warranty below refers to a specific date, as of such date)that:

 

4.1.          Corporate Existence and Power.  Itis a company duly organized and validly existing under the laws of Brazil andhas all corporate powers and all material Licenses required to carry on itsbusiness as presently conducted.

 

4.2.          Corporate Authorization.  Theexecution, delivery and performance by it of this Agreement is within itscorporate powers and capacity and, except for the approval or ratification byCEMIG’s shareholders required in accordance with Article 256 of theBrazilian Corporations Law, all consents required pursuant to its CorporateDocuments have been obtained and are in full force and effect. Assuming dueauthorization, execution and delivery by the other Parties hereto, thisAgreement constitutes its valid, binding and enforceable agreement, subject tothe effect of any applicable bankruptcy, reorganization, insolvency,moratorium, fraudulent conveyance or similar laws affecting creditors’ rightsgenerally.

 

4.3.          Non-Contravention.  Theexecution, delivery and performance of this Agreement by the Buyer and by CEMIGdo not and will not: (a) violate the Corporate Documents of the Buyer andCEMIG, as long as this transaction is ratified by CEMIG’s shareholders inaccordance with Article 256 of the Brazilian

 

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CorporationsLaw, (b) violate any applicable Law, (c) except as set forth in Schedule3.3, require any consent or other action by any Person, constitute adefault, or give rise to any right of acceleration, termination or cancellationof any contractual right of the Buyer and CEMIG or any contractual or otherobligation thereof, or (d) result in the creation or imposition of any Lienon any material asset of the Buyer or CEMIG.

 

4.4.          Governmental Authorization; Consents.  Exceptas set forth in Schedule 3.3, the execution, delivery and performance bythe Buyer and CEMIG of this Agreement requires no action by or in respect of,or filing with, or consent from any Governmental Authority on the part of anyof the Buyer and CEMIG.

 

4.5.          Financing.  Buyer and CEMIG have, or haveaccess to, sufficient cash resources to pay any and all amounts necessary toconsummate the payments and transactions contemplated hereby.

 

4.6.          Bankruptcy.  The Buyer and CEMIG are notsubject to any bankruptcy, liquidation or similar procedure, including judicialor out-of-court creditors reorganizations.

 

4.7.          Forward-Looking Statements.  Notwithstandinganything contained in this Agreement to the contrary, each of the Buyer andCEMIG acknowledges and agrees that Seller, the Company and the entities of theGroup are not making any representations or warranties whatsoever, express orimplied, as to projections, forecasts or forward-looking statements provided toBuyer or CEMIG.

 

4.8.          Finders’ Fees.  Thereis no investment banker, broker, finder or other intermediary or serviceprovider who has been retained by or is authorized to act on behalf of eitherthe Buyer or CEMIG nor is there any other Person who, in each case, might beentitled to any fee or commission payable by the Seller in connection with oras a result of the transactions contemplated by this Agreement.

 

ARTICLE VCOVENANTS OF THE SELLER AND THE COMPANY

 

TheSeller agrees, for itself and for the Company, that:

 

5.1.          Conduct of the Business of the Group.  (a) From the Effective Date until theClosing Date (the “Interim Period”), and subject to the terms hereof,the Seller, to the extent applicable, shall cause the Company to conduct itsbusiness and cause the other entities of the Group to conduct their business inthe ordinary course consistent with past practice and preserve intact thebusiness organizations and the relationships of the Group with third partiesand to keep available the services of

 

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presentdirectors, officers and Employees of the Group (except for any dismissals forcause – *justa causa –* andunilateral termination by Employees). Without limiting the generality of theforegoing, from the Effective Date until the Closing Date, the Seller shall notpermit the Company or any entity of the Group, except by written consent dulysigned by the authorized representatives of the Buyer (provided that, withrespect to items (vii), (viii), (xii), (xiv), (xvi) and (xvii) below suchconsent shall be deemed granted if the Buyer does not manifest its denial(which denial for the purposes of this provision may also be manifested bymeans of an email) within three Business Days from its receipt of a duly signedand delivered written request from the Seller), to:

 

(i)            adopt or propose any change in its CorporateDocuments;

 

(ii)           acquire, or otherwise invest in, by merger,consolidation or other similar business combination, any corporation,partnership or other business organization, division or substantially all ofthe assets thereof, or any public concession, authorization or permit, or enterinto, directly or through any consortium, joint venture or otherwise, any newbusiness, or be the subject of any merger or consolidation with any Person;

 

(iii)          purchase, acquire, sell, lease, license orotherwise dispose of any material assets or Property, including, withoutlimitation, Intellectual Property and software, except with respect toProperties other than real property, in the ordinary course consistent withpast practice;

 

(iv)          issue, deliver or sell, or authorize orpropose the issuance, amalgamation or split of shares or the payment of sharebonus, combine or reclassify, or purchase or redeem any shares of, or take anyother similar action with respect to any of, its capital stock or any optionsor warrants relating thereto or any other securities or instruments convertibleinto or giving the right to subscribe or acquire shares of its capital stock;

 

(v)           authorize, recommend, propose or announce anintention to adopt a plan of complete or partial liquidation or dissolution orenter, declare or file for bankruptcy or judicial or extrajudicialreorganization;

 

(vi)          incur, renew, extend, assume or guarantee anyindebtedness for borrowed money with a term to maturity of over 90 days or inan amount exceeding R$200,000.00 for each transaction or series of relatedtransactions or R$500,000.00 in the aggregate of all transactions since theEffective Date;

 

(vii)         mortgage, pledge, assign or transfer ascollateral any of its properties, or otherwise create or grant any other Lienthereon, except for the cash

 

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collateralwhich may be granted by Novatrans Energia S.A. in favor of the syndicate ofbanks listed in Schedule 3.4(c)(vii) in order to replace the corporateguarantee issued by the Company with respect to the obligations of NovatransEnergia S.A.;

 

(viii)        discharge or satisfy any Lien or pay orsatisfy any material obligation or liability (fixed or contingent) except ontheir respective due date and in the ordinary course of business consistentwith past practice;

 

(ix)           make any change in its accounting proceduresor practices, except as required by changes in Brazilian GAAP or applicableLaw;

 

(x)            assume, guarantee, endorse or otherwisebecome liable or responsible for any liabilities of any other Person;

 

(xi)           except as necessary to file any Tax Returnswhen due or as is consistent with past practice, make any Tax election orsettle or compromise any material Tax liability;

 

(xii)          settle or agree to settle any Proceeding(including any Proceeding relating to this Agreement or the transactionscontemplated hereby, in such case regardless of the amount involved) with avalue of R$200,000.00 individually or R$500,000.00 in the aggregate until theClosing Date or pay, discharge or satisfy or agree to pay, discharge or satisfyany claim or liability with a value of R$200,000.00 individually orR$500,000.00 in the aggregate until the Closing Date, other than the payment,discharge or satisfaction, on the due date thereof, of liabilities reflected inthe Reference Financials or incurred in the ordinary course of business consistentwith past practice;

 

(xiii)         enter into any agreement with RelatedParties, including any direct or indirect shareholders and/or Affiliates;

 

(xiv)        enter into any agreement involving amountsthat exceed R$200,000.00 for each agreement or series of related agreements orR$500,000.00 in the aggregate of all agreements since the Effective Date;

 

(xv)         declare or make any distribution on its sharecapital, including by way of dividends, interest on capital or otherwise, orpurchase, redeem or otherwise acquire any shares of its capital or any optionover such shares, or otherwise make any other payment to its shareholders,except: (A) for dividends (which, for the avoidance of doubt, shall not beconstrued to include interest on capital – *jurossobre capital próprio*) or redemption of redeemable shares (it beingunderstood that any such redemption shall not have any actual or potentialadverse impact on or cause any actual or contingent liability to the Company orto any

 

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Subsidiary)to be distributed and paid on September 29 or September 30, 2009 (butnot on any other date) from: (x) profit reserves (other than any reservescreated from tax benefits) existing in the end of the fiscal year 2008 and (y) interimdividends in respect of the fiscal year of 2009, in each case as verified inthe Company’s audited or auditor-revised financial statements for the relevantperiod, prepared in accordance with Section 3.13(b); and (B) ifClosing occurs after the end of the fiscal year 2009, for any mandatorydividends declared at the Annual General Shareholders Meeting in respect ofsuch fiscal year which the Company is required to distribute in 2010 inaccordance with the Brazilian Corporations Law and its by-laws; provided that,in any event, immediately after Closing (considering payment of any suchdeclared dividends or share redemptions) the Company and the other entities ofthe Group shall have cash and cash equivalents (*disponibilidades*) of at least R$20,000,000.00 in theaggregate on a consolidated basis and allocated R$ 1,000,000.00 to the Companyand the remainder among the entities of the Group proportionally to therespective Permitted Annual Revenue (*ReceitaAnual Permitida*) of each entity of the Group, in any case notsubject to any restriction or Lien and that no indebtedness shall be incurredin order to pay such dividends and any distribution of such dividends cannot bemade in breach of applicable Law or any covenant of the Company or any entityof the Group.

 

(xvi)        hire any new directors, officers or Employeesor enter into or modify any existing employment or service contract with adirector, officer or Employee; provided that the Company and other entities ofthe Group may hire Employees for positions other than senior management in theordinary course of business consistent with past practice;

 

(xvii)       dismiss any director, officer or Employee,except for the dismissal of any Employee in the ordinary course of business andin accordance with applicable Law and the provisions of this Agreement;

 

(xviii)      (A) grant to any of its directors,officers or Employees any increase in compensation (including by means of bonusor dividend), or (B) grant to any of its directors, officers or Employeesany increase in severance or termination pay, except to the extent required byLaw;

 

(xix)         adopt, amend, terminate or increase anybenefit, retention, bonus or other compensation plan or arrangement withrespect to any director, officer or Employee, except to the extent required byLaw, except for payments until the Closing Date due under the retention plandescribed in Schedule 5.1(xix), limited to the aggregate amount ofR$2,000,000.00;

 

(xx)          enter into any lease agreement with respectto any of its Properties;

 

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(xxi)         enter into any other agreement or obligation,or otherwise incur any expenses other than in the ordinary course of businessconsistent with past practice;

 

(xxii)        enter into any amendment or refinancing ofthe Intercompany Loan, except as set forth in Section 7.1(f); and/or

 

(xxiii)       agree or commit to do any of the foregoing ortake any action that would reasonably be expected to make any representation orwarranty in this Agreement untrue or incorrect as of the date when made or asof a future date and that would result in any of the conditions set forth inthis Agreement not being capable of being satisfied prior to the Closing.

 

(b)           For the avoidance of doubt, the followingshall be considered within the ordinary course of business and shall not, as aconsequence, be considered as falling within the scope of paragraphs(a) (i) to (xxii) above and shall be considered permitted under thisAgreement:

 

(i)            all actions, transactions and matters(including capital expenditures) provided or contemplated under any agreementto which the Company or any of its Subsidiaries is a party on the date hereof,or which are necessary to comply with any obligation under such licenses or theagreements and documents related thereto or under applicable Laws; and

 

(ii)           all agreements with customers, suppliers and the ONS related to themaintenance, use or operation, or development of, or access to, thetransmission grid.

 

(c)           During the Interim Period, the Buyer shall designate three representativesto form a transition committee which will work together with the Seller inconnection with the day-to-day business of the Group and mediate therelationship between the Seller and the Buyer with respect to any mattersrequiring approval from the Buyer in accordance with Section 5.1(a). Thetransition committee shall be granted full access to documents and informationrelating to the business of the Group in accordance with Section 5.2below.

 

(d)           The provisions of this Section 5.1 shall apply also to ETAU and Brasnorte,and the Seller agrees to exercise its voting rights and power (and to cause theCompany to exercise its shareholder rights and power) in respect of suchSubsidiaries in a manner as to cause the provisions herein to be complied withby such Subsidiaries to the extent such exercise of voting rights and powerdoes not contravene the provisions of the by-laws and shareholders’ agreementsof such

 

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Subsidiaries,and considering the limitation of rights and power of the Company as one of themembers of the controlling group of such companies.

 

5.2.          Access to Information.  Fromthe Effective Date until the Closing Date, with the purpose that anuninterrupted and efficient transfer of the Purchased Shares may beaccomplished, the Seller shall cause the Company and the other entities of theGroup to, except that with respect to ETAU and Brasnorte this obligation islimited to the extent of the access of the Company or any director or officerappointed by or at the direction of the Company or the Seller to such relevantinformation, upon reasonable request: (i) give Buyer, its counsel,financial advisors, auditors and other authorized representatives access to theoffices, properties, books and records of the Company and the other entities ofthe Group, (ii) furnish to the Buyer, its counsel, financial advisors,auditors and other authorized representatives copies of such financial andoperating data, Contracts and other information relating to the Group and theirbusiness as such Persons may request and (iii) instruct the Employees,counsel and financial advisors of the Seller and of the Group to cooperate withthe Buyer in its investigation of the business of the Group. All such accessshall be granted during normal business hours, shall be subject to the normalsafety regulations and confidentiality obligations and limitations set forth inapplicable Law, and shall be granted under conditions which will not materiallyinterfere with the business and operations of the Group. No investigation bythe Buyer or other information received by the Buyer shall operate as a waiveror otherwise affect any representation, warranty or agreement given or made bythe Seller hereunder.

 

5.3.          Notices of Certain Events.  Fromthe Effective Date until the Closing Date, the Seller shall (and shall causethe Company to) notify the Buyer in writing of:

 

(a)           any communication from any Person allegingthat the consent of such Person is or may be required in connection with thetransactions contemplated by this Agreement;

 

(b)           any notice or other communication from anyGovernmental Authority in connection with the transactions contemplated by thisAgreement or with any Filings;

 

(c)           any Proceedings commenced or threatened inwriting against, relating to or involving or otherwise affecting the Company orany other entity of the Group that, if pending on the date of this Agreement,would have been required to have been disclosed hereby or that relate to theconsummation of the transactions contemplated by this Agreement;

 

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(d)         anymaterial change in the condition (financial or otherwise), properties,liabilities or operations of the Company or any other entity of the Group,other than in the ordinary course of business consistent with past practice;and

 

(e)          anyfact that renders any representation or warranty made by the Seller hereunderfalse, incomplete, misleading or incorrect on the Closing Date.

 

5.4.          ForeignEmployees.  Notwithstanding anythingto the contrary contained in this Agreement, the Seller shall be responsiblefor, and hereby undertakes all liabilities in connection with, all mattersrelated to the Employment or services contract of any foreign Employee of theGroup or any foreign individual not formally retained by the Group under theBrazilian *Consolidação das Leis do Trabalho*who provides services to any entity of the Group (any such foreign Employee orforeign individual, an “Expatriate”) and any termination thereof, andshall otherwise be responsible, and undertakes all liabilities in connectionwith, and agrees to indemnify, hold harmless and defend the Buyer, CEMIG, theCompany, the other entities of the Group and their respective Affiliates, fromand against any and all claims and/or liabilities, damages, penalties,judgments, assessments, losses, Liens, Taxes, costs and expenses, includingattorneys’ fees, demanded by any Expatriate or otherwise payable in connectionwith the relationship of the Company or any other entity of the Group with anysuch Expatriate.

 

5.5.          Transferof Information Recorded in Seller’s Server and SAP System.  The Seller shall, at Closing, provide theBuyer with a backup and otherwise transfer to the Buyer any informationrecorded in its servers and in the Seller’s SAP system relating in any mannerto the Company and the other entities of the Group.

 

5.6.          Acknowledgment ofCompany’s Required Actions.  The Seller shalldeliver to the Buyer, within five Business Days following the Effective Date,copy of a written notice duly acknowledged by the Company’s authorizedrepresentatives, informing the Company of the undertakings hereunder withrespect to the conduction of the Group’s business and other matters whichrequire action from the Company in accordance with this Agreement.

 

ARTICLE VICOVENANTS OF THE BUYER, CEMIG, THE SELLER AND OPA

 

The Buyer, CEMIG and the Seller each agrees that:

 

6.1.          FurtherAssurances.  Subject to the terms andconditions of this Agreement, the Buyer, CEMIG and the Seller shall (and theSeller shall cause the Company and CEMIG shall cause the Buyer to): (a) usetheir reasonable best efforts to satisfy or

 

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cause the satisfaction of the conditions precedentcontained in Article VII; (b) take, or cause to be taken, all actionsand to do, or cause to be done, all things necessary or desirable underapplicable Laws and regulations to consummate the transactions contemplated bythis Agreement, including for the purpose of making the filings and obtainingthe approvals and consents contemplated in Section 3.3; and (c) complywith all their respective covenants, obligations and undertakings under thisAgreement. The Seller prior to the Closing, and the Buyer, after the Closing,agree to cause the Company to execute and deliver such other documents,certificates, agreements and other writings and to take such other actions asmay be necessary or desirable in order to consummate or implement expeditiouslythe transactions contemplated by this Agreement.

 

6.2.          PublicAnnouncements.  The Buyer, CEMIG andthe Seller agree to consult and agree with each other before issuing any pressrelease or making any public statement with respect to this Agreement or thetransactions contemplated hereby and, except as may be required by applicableLaw, any listing agreement with any national securities exchange or anyGovernmental Authority, will not issue any such press release or make any suchpublic statement without prior written approval of the other Party, which shallnot be unreasonably withheld, including with respect to the content and timingof any such release or statement.

 

6.3.          Confidentiality. Each Party and its respective officers,directors, Employees, accountants, counsel, consultants, advisors and agents(the “Representatives”) shall hold confidential all information obtainedin connection with this Agreement and the transactions contemplated hereby and,with respect to the Seller and its Representatives, also all information inconnection with the Group’s business, assets and activities, which is nototherwise public knowledge, not independently known or developed, not receivedfrom a third party who is not subject to an obligation of confidentiality ornot in the public domain through no fault of the receiving party (“ConfidentialInformation”). Even after a copy of this Agreement has been filed with anyGovernmental Authority (if so required by applicable Law or such GovernmentalAuthority), each Party shall refrain from disclosing, and shall holdconfidential, the Confidential Information and the terms and conditions of thisAgreement, except to the extent that disclosure of any such information isnecessary or desirable for consummation of the transactions contemplatedhereby, demanded by any Governmental Authority, required by applicable Law orstock exchange regulations to which a Party is subject, or with the consent ofall other Parties hereto.

 

6.4.          IntercompanyLoan.  (a) Subject to Section 7.1(f),the Buyer shall cause the Company to fully repay the Intercompany Loan(principal and pro rata interest accrued until its payment by the Company) onthe Closing Date. In order for such repayment to be made, the Buyer agrees to,simultaneously with the Closing and subject to Closing occurring, grant orprocure that a third-party financial institution

 

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grant to the Company, on the Closing Date, a new loan inthe amount corresponding to the outstanding amount of the Intercompany Loan onthe Closing Date, at such terms and conditions as the Company and the Buyer orsuch third-party financial institution shall negotiate. The Seller shall causethe Company to incur such new loan on the terms set forth herein and use theproceeds thereof to fully repay the Intercompany Loan.

 

(b)             TheSeller hereby agrees to cooperate with the Buyer and the Company and to executeall such documents and take all such further action as necessary or asreasonably requested by the Buyer to procure that the Company obtain financingfrom a third-party financial institution, in the terms negotiated by the Buyer,in order to repay and substitute the Intercompany Loan in accordance with this Section 6.4;provided that the Buyer shall keep the Seller, the Company and their managersharmless from any obligation or liability arising out of the contracting andperformance of such third-party financing in accordance with the Buyer’sinstructions, except in case of fraud or willful misconduct of the Seller orthe Company.

 

6.5.          PublicAcquisition Offer (OPA).  (a) Thetransfer of the Purchased Shares by the Seller to the Buyer shall impose on theBuyer the obligation to make a public offer for the acquisition of the Units ofthe non-controlling shareholders of the Company (“OPA”) within the termand in accordance with the provisions of applicable Law, the CorporateDocuments of the Company and the Bovespa Level 2 Distinguished Practices ofCorporate Governance (*Práticas Diferenciadasde Governança Corporativa Nível 2*). Failure to effect such OPA inaccordance herewith shall be construed as a condition subsequent (*condição resolutiva*). Forthwith afterClosing, the Buyer agrees to take all actions necessary to carry out such OPAin order to satisfy the condition set forth herein, including: (a) thepayment of any applicable registration fees; (b) satisfaction of therequirements made by the CVM with respect to the registration of the OPA; (c) engagementof a financial institution to coordinate the OPA; and (d) consummation ofthe OPA and the payment to non-controlling shareholders of the Company requiredthereunder. Should the transaction contemplated hereby be resolved as a resultof the failure of the Buyer to launch and consummate the OPA, with the returnof the Purchased Shares to the Seller and the return of the Purchase Price tothe Buyer, the Seller shall be entitled to liquidated damages (*multa compensatória*) in the total amountof EUR 100,000,000.00 payable by means of deduction from the Purchase Price tobe returned by the Seller to the Buyer. The liquidated damages contemplatedherein shall not be cumulative with any other penalty under this Agreement.

 

(b)             TheSeller agrees to accept the OPA and sell all the Seller’s Units at the OPAfiled by the Buyer in accordance with clause (a) above.

 

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6.6.          ANEELand CADE Filing.  Forthwith after theEffective Date the Parties shall jointly prepare all forms and documentsnecessary to submit the transaction contemplated hereby to ANEEL and CADE forapproval of the transfer of the Purchased Shares, submit such documents toANEEL and CADE within the term set forth in applicable Law and otherwiseexecute all necessary documents and cooperate with each other in order toobtain the approval of ANEEL and CADE. The ANEEL and the CADE filings shall beconducted by the Buyer; provided that the Seller shall provide to the Buyer alldocuments and information and execute all documents and otherwise take allfurther action as necessary or reasonably requested by the Buyer in connectionwith the ANEEL and the CADE filings. All fees, costs and expenses incurred withthe filing of the transaction contemplated hereby with ANEEL and CADE and theapproval process shall be paid by the Buyer. In the event of any judgment,decision or order by CADE imposing any condition for its approval of thetransfer of the Purchased Shares to the Buyer, Buyer shall have full discretionwith respect to the fulfillment of such conditions and adoption of any measuresin connection therewith and the Seller shall have no responsibility whatsoeverin connection with such judgment, decision or order.

 

6.7.          Changeof Corporate Name and Trademarks.  Subjectto Section 6.10, within 60 days after Closing, the Buyer shall cause theentities of the Group to change their corporate name in order to not use thename “Terna” and shall cause the Group to refrain from using any trademarks,business names, logos or website or internet dominium with the name “Terna” andto, upon request and at the expense of the Seller, cancel or transfer to theSeller any registrations of such name, trademarks and logos with anyintellectual property registration authorities.

 

6.8.          Consummationof the Transactions.  From theEffective Date until the Closing, the Parties will not take, or omit to take(and the Seller will not permit the Company and the other entities of the Groupto take or omit to take) any action that could reasonably be expected to (i) directlyor indirectly cause the transactions contemplated hereby not to be consummatedor (ii) result in a breach of any covenant, agreement, representation orwarranty under this Agreement.

 

6.9.          Noticesof Certain Events by Buyer.  From theEffective Date until the Closing Date, the Buyer shall notify the Seller inwriting of:

 

(a)             anycommunication from any Person alleging that the consent of such Person is ormay be required in connection with the transactions contemplated by thisAgreement;

 

(b)             anynotice or other communication from any Governmental Authority in connectionwith the transactions contemplated by this Agreement; and

 

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(c)           anyfact that renders any representation or warranty made by the Buyer hereunderfalse, incomplete, misleading or incorrect on the Closing Date.

 

6.10.        ClosingShareholders’ Meeting.  The Sellershall cause the Company and the Subsidiaries to call a shareholders’ meeting(or quotaholders’ meeting, as may be applicable) for the Business Day followingthe Closing Date, and the Buyer agrees to carry out such shareholders’ orquotaholders’ meetings, as applicable, to resolve on (A) the appointmentof directors of the Company and the Subsidiaries appointed by or at thedirection of the Buyer, or of the Company, in the case of the Subsidiaries; and(B) amend the Company’s by-laws and Terna Serviços Ltda.’s articles of associationin order to exclude any reference to the name “Terna” therefrom.

 

6.11.        Providedthat it does not or may not constitute or cause a breach of the fiduciaryduties of the Buyer and CEMIG or a breach of Law, Buyer and CEMIG shall refrainfrom exercising their voting rights to cause the Company to file any claimagainst the directors and officers of the Company or of any other entity of theGroup, appointed by or under direction of the Seller, for any of their acts oromissions prior to the Closing, except in cases of fault (culpa), fraud,willful misconduct or breach of Law or of the By-laws.

 

6.12         CEMIG’sGeneral Shareholders’ Meeting to Approve or Ratify this Agreement.  CEMIG agrees to call a General Shareholders’Meeting in accordance with its Corporate Documents in order to approve orratify this Agreement in accordance with Article 256 of the BrazilianCorporations Law, and to take all such further action as necessary to ensurethat such General Shareholders’ Meeting be held in due course and adequatetiming between the Effective Date and the Closing Date.

 

ARTICLE VIICONDITIONS TO CLOSING

 

7.1.          Conditionsto Obligation of the Buyer.  Theobligation of the Buyer to consummate the Closing is subject to thesatisfaction of the following further conditions (any of which may be waived inwriting, in whole or in part, by the Buyer):

 

(a)             (i) theSeller shall have performed all of its material obligations hereunder requiredto be performed by it on or prior to the Closing Date, and (ii) therepresentations and warranties of the Seller contained in Article III ofthis Agreement shall be true and correct as of the Effective Date and on theClosing Date as though restated on and as of such date (except in the case ofany representation or warranty that by its terms is made as of a date specifiedtherein, such representation

 

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or warranty shall be accurate as of such date);

 

(b)             allapprovals and consents required from any Governmental Authority (including ANEEL,but excluding CADE), listed in Schedule 3.3, and any other third partyshall have been obtained and copies of such approvals and consents shall havebeen provided to the Buyer (except for the consent of BNDES and other creditorsfor borrowed money listed in Schedule 3.4(c) under “Other Lenders”,in respect of which consents the condition shall be that a response from BNDESor such other creditors to the consent request shall have been obtained,regardless of such response being a consent or a denial of such consent;provided that the Seller shall have fully cooperated with the Buyer and theCompany and executed all such documents and taken all such further action asnecessary or as reasonably requested by the Buyer, at Buyer’s expense, toobtain such consents or procure that the Company obtain financing from athird-party financial institution, in the terms negotiated by the Buyer, inorder to refinance all debt owed by the Group to BNDES and such othercreditors);

 

(c)             theBuyer shall have received a duly executed legal opinion, dated the ClosingDate, of Italian counsel to the Seller satisfactory to the Buyer, substantiallyin the form of Schedule 7.1(c), as to the valid execution, dueauthorization, authority of the signatories and validity and enforceability ofthis Agreement and the provisions hereof against the Seller, subject tocustomary qualifications agreed upon with the Buyer;

 

(d)             sincethe date of the Reference Financials and until the Closing Date, there shallhave been no event or circumstance, either individually or in the aggregate,that has caused or could reasonably be expected to cause Damages to theCompany, any other entity of the Group, the Buyer, CEMIG and/or theirAffiliates equal to or greater than EUR 70,000,000.00;

 

(e)             theSeller shall have delivered to the Buyer, at least five Business Days prior tothe Closing Date, the latest consolidated financial statements of the Companyrequired to be presented pursuant to CVM regulations;

 

(f)              theIntercompany Loan shall have been amended to the Buyer s satisfaction in orderto clarify that, upon prepayment of the Intercompany Loan, interest shall becalculated on the basis of actual days elapsed until such prepayment and toextend the maturity date to May 31, 2010;

 

(g)             theSeller shall have delivered to the Buyer copy of a waiver duly executed by thelenders the *Contrato de Abertura de Créditono CBG-00185/06*, dated December 15, 2006, among Banco BNPParibas Brasil S.A., Banco Santander Banespa S.A., Banco Citibank S.A.,Novatrans Energia S.A. (“Novatrans”), and the

 

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bank credit bills (*cédulasde crédito bancário*) issued in accordance therewith, with respect tothe failure by Novatrans to grant to the lenders the collateral required undersuch agreement and bank credit bills or evidence satisfactory to the Buyer thatsuch failure has been properly cured; and

 

(h)           theentering by the Buyer into this Agreement shall have been ratified by CEMIG’sshareholders in accordance with Article 256 of the Brazilian CorporationsLaw.

 

7.2.          Conditionsto Obligation of the Seller.  Theobligation of the Seller to consummate the Closing is subject to thesatisfaction of the following further conditions (any of which may be waived inwriting, in whole or in part, by the Seller):

 

(a)             (i) TheBuyer and CEMIG shall have performed all of their respective materialobligations hereunder required to be performed by them at or prior to theClosing Date, and (ii) the representations and warranties of the Buyer andCEMIG contained in Article IV shall be true and correct as of theEffective Date and on the Closing Date as if made at and as of such date(except in the case of any representation or warranty that by its terms is madeas of a date specified therein, such representation or warranty shall beaccurate as of such date);

 

(b)             TheSeller shall have received copies of the Corporate Documents of the Buyer andCEMIG and all other corporate approvals and evidence of the authority of thesignatories to execute and deliver this Agreement on behalf of the Buyer andCEMIG;

 

(c)             allapprovals and consents required from any Governmental Authority (includingANEEL, but excluding CADE), listed in Schedule 3.3, for the executionand delivery of this Agreement and performance of the transactions contemplatedhereby and for the transfer of the Purchased Shares by the Seller to the Buyershall have been obtained and copies of such approvals and consents shall havebeen provided to the Seller.

 

ARTICLE VIIISURVIVAL; INDEMNIFICATION

 

8.1.          Indemnification. Subject to the provisions of this Article VIIIand to an overall indemnification cap limit (with respect to the total amountto be indemnifiable by each of the Buyer and the Seller, individually) of EUR160,000,000.00 (one hundred-sixty million Euros) (the “Cap”) applicablewith respect to any Damages which shall be indemnified in accordance with thisSection

 

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8.1 other than Damages arising under Section 8.1(a)(iii),which shall not be limited to this Cap,

 

(a)             theSeller agrees to pay and to indemnify fully, hold harmless and defend theBuyer, CEMIG, the Company, the other entities of the Group and their respectiveAffiliates, agents, directors, officers, employees, representatives, successorsand assigns, from and against any and all Damages:

 

(i)              resultingfrom any inaccuracy or breach of any representation or warranty of the Sellercontained in this Agreement or from any acts, claims, contingencies,liabilities, facts or omissions (other than: (x) costs incurred after thedate of the Reference Financials in the ordinary course of the businessconsistent with past practices of the Group and capital expenditures in respectof the construction of Brasnorte’s transmission line and substations inaccordance with the Concession Agreement and the Contracts of Brasnorte ineffect on the Effective Date except for any such capital expenditures incurredin fraud and provided that Third Party Claims relating to such capitalexpenditures are not excluded from indemnification pursuant to this item(i)(x); (y) those contemplated in item (ii) below, which areregulated in such item; and (z) liabilities and contingencies expresslyregistered in the balance sheet contained in the Financial Statements attachedas Schedule1.1(a)-IIup to the amount of such liabilities and contingencies set forth therein)incurred, existing or occurred prior to the Closing Date, irrespective of itbeing disclosed in any annex or schedule to this Agreement; provided that theBuyer delivers a Claim Notice to the Seller until 18 months following theClosing Date; and/or

 

(ii)             resultingfrom acts, facts, claims, contingencies, liabilities or omissions arising outof any inaccuracy or breach of representations and warranties, including on theClosing Date, made in Sections 3.1, 3.2, 3.3, 3.4 and 3.6, irrespective of itbeing disclosed in any annex or schedule to this Agreement and irrespective ofthe date when the Buyer delivers a Claim Notice to the Seller; and/or

 

(iii)            anyclaim, contingency or liability of the Company or any other entity of the Grouparising in connection with: (A) any *Impostosobre Circulação de Mercadorias e Serviços (ICMS)* due with respectto energy transmission operations or services; and/or (B) PIS (*Contribuição para o Programa de Integração Social*)and COFINS (*Contribuição para oFinanciamento da Seguridade Social*) due with respect to the adoptionof the non-cumulative regime for calculation of PIS and COFINS with respect tooperational revenues of the Group, in each case irrespective of it beingdisclosed in any annex or schedule to this Agreement; provided that, in eachcase, the Buyer deliver a Claim Notice to the Seller until 18 months followingthe Closing Date; and/or

 

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(iv)            resultingfrom any breach of any covenant or agreement of the Seller (including anycovenant to cause the Company to take any action or fulfill any obligation)contained in this Agreement (which is not specifically contemplated in (i), (ii) or(iii) above); provided that in any case the imposition of the ParcelaVariável in a percentage not exceeding the average of the last three years inrespect to each network function of each Concession shall not give rise toindemnification hereunder to the extent that it is consistent with the Group’spast practices or the ordinary course of business and not caused by negligenceor willful misconduct of the Seller, the Company or other entity of the Groupand provided further that the imposition of the Parcela Variável with respectto acts, facts or omissions related to events occurred after the Closing Dateshall not give rise to indemnification hereunder; and/or

 

(v)             resultingfrom an inaccuracy or dispute in the amount of the withholding income taxcalculated by Seller pursuant to Section 2.2(c).

 

(b)           Fromand after the Closing, the Buyer agrees to pay and to indemnify fully, holdharmless and defend the Seller and its Affiliates, respective agents,directors, officers, employees, representatives, successors and assigns, fromand against any and all Damages arising out of:

 

(i)              anyinaccuracy or breach of any representation or warranty of the Buyer or CEMIGcontained in this Agreement, provided that Seller delivers a Claim Notice tothe Buyer to that respect on or before the Closing; and/or

 

(ii)             anybreach of any covenant or agreement of the Buyer contained in this Agreement(which is not specifically contemplated in (i) above).

 

; provided that, in either case of (a) and (b) above,the requirement that a Claim Notice is delivered up to a certain date, whereapplicable, means that the respective claim, contingency, liability or risk ofDamage must be identified in the Claim Notice up to such applicable date, butthat, nonetheless, actual materialization of Damage pursuant to Section 8.4below may occur at any time thereafter and provided further that any DirectClaim must be supported by an opinion issued in writing by an expert withrecognized experience with the subject matter of the Direct Claim.

 

(c)             Notwithstandingthe provisions of Section 8.1(a) above, the Seller shall not beliable to the Buyer with respect to any direct adverse accounting impact of theadjustments made to the financial statements of the Group solely andexclusively in connection with the preparation of such financial statements inaccordance with IFRS pursuant to Schedule 3.13(b).

 

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8.2.          IndemnityGuaranty.  Without limiting any otherindemnity rights of the Buyer hereunder, to guarantee any of the Seller’sindemnity obligations hereunder, Seller shall deliver to Buyer on or prior toClosing a stand-by letter of credit issued by a first line bank with operationsin Brazil, containing express waivers of the benefits set forth in Sections364, 366, 827, 834, 835, 837, 838 and 839 of the Brazilian Civil Code and Section 595of the Brazilian Code of Civil Procedure (or comparable laws) and other termsreasonably acceptable to Buyer (the “Indemnity Guaranty”). The IndemnityGuaranty shall be valid and enforceable on a first demand basis within thevalidity term of 18 (eighteen) months following the Closing Date, for theguaranteed amount of R$75,000,000.00 (seventy five million Reais).

 

8.3.          Further Limitations.  An Indemnified Party shallnot be entitled to bring any individual claim until the aggregate amount ofDamages suffered, paid or incurred, including such claim, exceedsR$18,000,000.00 (eighteen million Reais) (the “Deductible”) and anyindemnification hereunder shall be only to the extent of such excess and,except with respect to Damages arising under Section 8.1(a)(iii), subjectto the Cap. For the avoidance of doubt, once the aggregate amount of Damagessuffered, paid or incurred by an Indemnified Party exceeds the Deductible, suchIndemnified Party shall be entitled to indemnification for any and all amountof Damages which, considered jointly with all other Damages suffered, paid orincurred, exceeds the Deductible.

 

8.4.  Method ofAsserting Claims, etc.  The partymaking a claim for indemnification under this Article VIII is, for thepurposes of this Agreement, referred to as the “Indemnified Party” andthe party or parties against whom such claims are asserted under this Article VIIIis, for the purposes of this Agreement, referred to as the “IndemnifyingParty”. All claims by any Indemnified Party under this Article VIIIshall be asserted and resolved as follows:

 

(a)             Inthe event that (i) any Proceeding is asserted, instituted or threatened bythe relevant competent Governmental Authority or Person, in any case other thanthe Parties hereto and their Affiliates which could give rise to Damages forwhich an Indemnifying Party would be liable to an Indemnified Party hereunder(such Proceeding, a “Third Party Claim”) or (ii) any IndemnifiedParty hereunder shall have a claim (including as a result of a potential claimthat may result from facts, liabilities, contingencies or practices of theGroup) to be indemnified by any Indemnifying Party hereunder (such claim, a “DirectClaim”), the Indemnified Party shall, with reasonable promptness, send tothe Indemnifying Party a written notice specifying the nature of such claim ordemand and the amount or estimated amount (which estimate shall not beconclusive of the final amount of such claim and demand) (a “Claim Notice”).

 

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(b)             Inthe event of a Third Party Claim, the Indemnifying Party and the IndemnifiedParty shall agree on a reputable counsel among the leading firms specialized inlitigation and in the matter covered by the Third Party Claim to be retained bythe Indemnifying Party to represent the Indemnified Party and any other Personthe Indemnifying Party may reasonably designate in connection with such ThirdParty Claim and the Indemnifying Party shall pay the fees and disbursements ofsuch counsel and any legal costs, expenses and deposits with regard thereto; provided, however,that in the event the Indemnifying Party and the Indemnified Party fail toagree on counsel as above described within two Business Days, the IndemnifyingParty may appoint within a subsequent period of one Business Day a reputablecounsel among the leading firms specialized in litigation and in the mattercovered by the Third Party Claim and, if the Indemnifying Party does notappoint such counsel within such period, any Indemnified Party is herebyauthorized to retain reputable counsel among the leading firms specialized inlitigation and in the matter covered by the Third Party Claim, whose fees andexpenses, as well as any advances, legal costs, expenses or deposits (includingcourt or judicial deposits) required in any Third Party Claim, shall be at theexpense of the Indemnifying Party to file any motion, answer or other pleadingand take such other action which it shall reasonably deem necessary to protectthe interests of the Indemnified Party and the Indemnifying Party. TheIndemnifying Party shall not, in connection with any Third Party Claim orrelated Proceedings in the same jurisdiction, be liable for the reasonable feesand expenses of more than one such firm for all such Indemnified Parties. TheIndemnified Party agrees not to settle any Third Party Claim without the priorwritten consent of the Indemnifying Party. If requested by the IndemnifyingParty, the Indemnified Party agrees to cooperate with the Indemnifying Partyand its counsel in defending any Third Party Claim which the Indemnifying Partydefends, or, if appropriate and related to the claim in question, in making anycounterclaim against the Person asserting the Third Party Claim or demand, orany cross-complaint against any Person.

 

(c)             Inthe event of a Direct Claim for Damages already materialized, unless theIndemnifying Party notifies the Indemnified Party in writing within thirty (30)days of receipt of a Claim Notice that it disputes such claim, the amount ofsuch claim shall be conclusively deemed a liability of the Indemnifying Partyhereunder and shall be paid to the Indemnified Party immediately. In the eventof a Direct Claim with respect to Damages not yet materialized notified by theIndemnifying Party to the Indemnified Party within the relevant term set forthin Section 8.1, the amount of such claim shall be paid by the IndemnifyingParty to the Indemnified Party within five Business Days following receipt ofwritten notice from the Indemnifying Party informing that the Damages havematerialized.

 

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(d)              Fromand after the delivery of a Claim Notice hereunder, at the reasonable requestof the Indemnifying Party, the Indemnified Party shall grant the IndemnifyingParty and its representatives all reasonable access to the books, records andproperties of the Indemnified Party to the extent reasonably related to thematters to which the Claim Notice relates, except for any of the foregoing thatcontains confidential or privileged information pursuant to applicable Law. TheIndemnifying Party will not, and shall require that its representatives do not,use (except in connection with such Claim Notice) or disclose or make availableto any third Person other than the Indemnifying Party’s representatives (exceptas may be required by applicable Laws) any information obtained pursuant tothis Section which is designated as confidential by the Indemnified Party.All such access shall be granted during normal business hours, shall be subjectto the normal safety regulations of the Indemnified Party, and shall be grantedunder conditions which will not interfere with the business and operations ofthe Indemnified Party.

 

(e)               AnyDamages that are indemnifiable pursuant to this Article VIII shall bepaid: (i) (A) immediately upon definitive resolution of a dispute inconnection with a Direct Claim or (B) upon termination of the 30-day termset forth in Section 8.4(c) in case of an undisputed Claim Notice inaccordance with such provision; or (ii) on the fifth Business Day afterreceipt of written notice that, as the case may be (A) a settlement hasbeen made; or (B) all appeals in connection with the corresponding ThirdParty Claim have been exhausted (*decisãotransitada em julgado*). Any Damages that are indemnifiable pursuantto this Article VIII and are not paid on the due date thereof shall accrueinterest at a rate equivalent to 103% of the Selic Rate from the due date ofthe indemnification until (but excluding) the date when actually paid.

 

(f)               Anyamount of Damages indemnifiable in accordance with this Article VIII whichis recovered by the Indemnified Party from third parties shall: (x) immediatelyupon receipt thereof be deducted from the amounts payable by the IndemnifyingParty, if effectively received prior to payment of such indemnification, or (y) bereimbursed to the Indemnifying Party within five days from receipt thereof ifeffectively received after such Indemnifying Party has effectively paid thefull amount of the indemnification due to the Indemnified Party.

 

(g)              Withoutin any manner limiting the rights of the Buyer under this Agreement, from andafter Closing the Buyer agrees to (and to cause the relevant entities of theGroup to), at the request and at the expense of the Seller, cooperate with theSeller and use reasonable efforts to file (or cause the relevant entity of theGroup to file) the relevant claims with, and fill out the required forms andother documents of, insurance and bank guarantee providers in order to recoverfrom such insurance and bank guarantee providers the amount of Damages

 

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indemnifiable by the Seller in accordance with Section 8.1(a) whichis guaranteed by such insurance or bank guarantee providers, as long as filingsuch claims and taking such other action contemplated herein may not, in thereasonable judgment of the Buyer, be disadvantageous to the Buyer, adverselyinterfere with the Buyer’s relationship with any third party or otherwise causeany Damages to the Buyer; provided that the Seller shall keep the Buyer, theCompany, each other entity of the Group and their managers harmless from anyDamages arising out of the Buyer’s performance of the actions contemplated inthis Section 8.4(g). In any event, for the avoidance of doubt, the Partiesacknowledge that the commitment under this Section 8.4(g) is areasonable effort commitment and that nothing in this clause shall be construedas to require the Buyer to mitigate Damages or seek recovery of such Damagesfrom any third party as a condition to being entitled to any indemnificationrights under this Agreement.

 

ARTICLE IXTERMINATION

 

9.1.          Groundsfor Termination.  (a) ThisAgreement may be terminated at any time prior to the Closing:

 

(i)              bymutual written agreement of the Parties;

 

(ii)             bythe Seller or the Buyer, if: (A) the acquisition of the Purchased Sharesby the Buyer in accordance with this Agreement has not been approved orratified by CEMIG’s General Shareholders’ Meeting until May 31, 2009; or (B) theClosing shall not have been consummated within 12 months after the EffectiveDate; provided that, if the Closing has not occurred due to a Party’s breach ofany of the covenants or agreements herein, then such Party shall not have theright to terminate this Agreement pursuant to this Section 9.1 (a)(ii);

 

(iii)            byeither the Seller or Buyer, if there shall be any Law that makes consummationof the transactions contemplated hereby illegal or otherwise prohibited,provided that such Law is not revoked, reversed, suspended or otherwiseovercome within thirty (30) days counted as of the date the Parties becomeaware of its existence;

 

(iv)            bythe Buyer (provided that neither the Buyer nor CEMIG is then in material breachof any of their representations, warranties, covenants or other agreementscontained herein) in case of a breach by the Seller of any of: (A) itsrepresentations and warranties under Sections 3.1, 3.2, 3.3 and 3.6, ormaterial covenants contained in this Agreement, or (B) otherrepresentations and warranties

 

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contained herein in respect of matters that individuallyor in the aggregate may cause Damages to the Company, any entity of the Group,the Buyer, CEMIG and/or their Affiliates equal to or greater than EUR70,000,000.00, which breach, in each case, is not cured within 30 (thirty) daysafter written notice to the Seller specifying in reasonable detail the natureof such breach or occurrence; or

 

(v)           by theSeller (provided that the Seller is not then in material breach of any of itsrepresentations, warranties, covenants or other agreements contained herein) incase of a breach by either Buyer or CEMIG of: (A) any of their respectiverepresentations and warranties under Sections 4.1, 4.2 and 4.4 or materialcovenants contained in this Agreement, or (B) any of their otherrepresentations and warranties contained herein in respect of matters thatindividually or in the aggregate may cause Damages to the Seller and/or itsAffiliates equal to or greater than EUR 70,000,000.00, which breach, in eachcase, is not cured within 30 (thirty) days after written notice to the Buyerspecifying in reasonable detail the nature of such breach or occurrence.

 

(b)           TheParty desiring to terminate this Agreement shall give written notice of suchtermination to the other Parties.

 

9.2.          Effectof Termination.  (a) If thisAgreement is terminated as permitted by Section 9.1(a)(i), 9.1(a)(ii) or9.1(a)(iii) above, this Agreement shall become void and have no effectforthwith as of the date of termination, and such termination shall be withoutliability of any Party (or any shareholder, partner, director, officer,employee, agent, consultant or representative of such Party) to the other Partiesto this Agreement.

 

(b)             Ifthe Buyer terminates this Agreement based on Section 9.1(a)(iv) above,the Seller shall pay to the Buyer, in immediately available and fullytransferable funds, liquidated damages (*multacompensatória*) in the amount of EUR 100,000,000.00 within tenBusiness Days from the termination date. The liquidated damages contemplatedherein shall not be cumulative with any other penalty under this Agreement.

 

(c)             Ifthe Seller terminates this Agreement based on Section 9.1(a)(v) above,the Buyer shall pay to the Seller, in immediately available and fullytransferable funds, liquidated damages (*multacompensatória*) in the amount of EUR 100,000,000.00 within tenBusiness Days from the termination date. The liquidated damages contemplatedherein shall not be cumulative with any other penalty under this Agreement.

 

(d)             Notwithstandinganything to the contrary in this Agreement, the non-occurrence of the GeneralShareholders’ Meeting of CEMIG to ratify this Agreement (for reasons other thanCEMIG’s failure to call such General

 

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Shareholders’ Meeting) or the non-obtaining of suchratification and the termination of this Agreement as a result of such lack ofratification shall not impose on the Buyer, the Guarantor or the Seller anyobligation to pay any penalty, fee, Damages, liquidated damages whatsoever orotherwise impose any other liability on the Buyer, the Guarantor or the Seller.

 

(e)             Theprovisions of Sections 6.2, 6.3, 6.6, 9.1, 9.2, 10.1, 10.3, 10.5, 10.6 and 10.7shall survive any termination hereof pursuant to Section 9.1, above.

 

ARTICLE XMISCELLANEOUS

 

10.1.        Notices. All notices, requests and othercommunications to any Party hereunder shall be in writing (including facsimiletransmission) and shall be provided to the address or facsimile number providedfor such Party on Schedule  10.1hereto or, as directed by any Party, to such other address as shall bedesignated by such Party by written notice to the other Parties in accordanceherewith. All such notices, requests and other communications shall be deemedreceived on the date of receipt by the recipient thereof if received prior to6:00 p.m. in the place of receipt and such day is a Business Day in theplace of receipt. Otherwise, any such notice, request or communication shall bedeemed not to have been received until the next succeeding Business Day in theplace of receipt.

 

10.2.        Amendmentsand Waivers.  (a) Any provisionof this Agreement may be amended or waived prior to the Closing Date if suchamendment or waiver is in writing and is signed, in the case of an amendment,by each Party to this Agreement, or in the case of a waiver, by the Partyagainst whom the waiver is to be effective.

 

(b)           Nofailure or delay by any Party in exercising any right, power or privilegehereunder shall operate as a waiver thereof nor shall any single or partialexercise thereof preclude any other or further exercise thereof or the exerciseof any other right, power or privilege. The rights and remedies herein providedshall be cumulative and not exclusive of any rights or remedies provided bylaw.

 

10.3.        Expenses. Except as otherwise provided herein, allcosts and expenses incurred in connection with this Agreement shall be paid bythe Party incurring such cost or expense.

 

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10.4.        Successorsand Assigns.  The provisions of thisAgreement shall be binding upon and inure to the benefit of the Parties heretoand their respective successors and assigns; provided that no Party may assign,delegate or otherwise transfer any of its rights or obligations under thisAgreement without the written consent of each other Party hereto, except thatthe Buyer may, at its sole discretion and without the need of consent by theSeller, assign this Agreement and its rights and obligations hereunder to anyof its Affiliates or to any Person Controlled or not by the Buyer or CEMIG, aslong as the obligations of such assignee are guaranteed by CEMIG in the sameterms of the guarantee set forth in Section 10.5 hereof.

 

10.5.        ParentGuarantee.  (a) CEMIG herebypersonally, jointly and severally, guarantees all obligations and commitmentsof the Buyer under this Agreement, being obligated and committed hereunder, asprimary obligor and not merely as a surety, to the same extent and under thesame conditions as the Buyer is itself obligated and committed (it beingunderstood that any obligations of the Company under or to pay any amounts dueunder the Intercompany Loan are not guaranteed by CEMIG). For the purposes ofthis Section 10.5, CEMIG irrevocably waives its rights under Section 364,366, 827, 834, 835, 838 and 839 of the Brazilian Civil Code and Section 595of the Brazilian Code of Civil Procedure.

 

10.6.        GoverningLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the FederativeRepublic of Brazil.

 

10.7.        Arbitration. (a) The Parties shall use theirrespective best efforts to settle amicably all disputes, doubts or differencesconcerning the interpretation or application of any provision of thisAgreement, as well as any dispute, doubt or difference related to itsexistence, validity, enforceability, breach or termination. If any suchdispute, doubt or difference is not so settled, each Party shall have the rightto refer it to arbitration for final settlement. In such event, the Partiesshall be obligated to join the arbitration proceeding and to refrain fromsubmitting the dispute to any court.

 

(b)             TheParties agree that all disputes arising out of or in connection with thisAgreement shall be finally settled by arbitration under the Rules ofArbitration of the International Chamber of Commerce then in force (the “ICC  Rules”), by an arbitration panelappointed in accordance with the ICC Rules. The arbitral tribunal shall consistof three arbitrators, one designated by the Seller, one designated by the Buyerand CEMIG jointly and the third, who shall be the chairman of the arbitraltribunal, selected by agreement of the two designated arbitrators. In the eventthe two arbitrators shall fail to agree on the selection of the chairman, thechairman shall be selected in accordance with the ICC Rules.

 

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(c)            Theseat of the arbitration shall be the city of Rio de Janeiro, State of Rio deJaneiro, Brazil. The Portuguese language shall be used throughout thearbitration proceedings. The arbitral award shall be rendered in Brazil, withinsix months after the arbitral tribunal is established. If necessary, such termmay be extended by the arbitral tribunal for an additional six-month period, ora different period in case there is reasonable justification by the arbitraltribunal.

 

(d)             Thearbitral award shall be final, binding and not subject to appeal, judicialhomologation or any remedy from any court, and any judgment upon such award maybe accepted and enforced in any court of competent jurisdiction. The defeatedParty(ies) will indemnify the winning Party(ies) for all their costs and expensesincurred with the arbitration proceeding, including attorneys’ fees.

 

(e)             Eachof the Parties reserves the right to request judicial support in any competentjurisdiction to: (i) compel the institution of arbitration; (ii) obtaintemporary or injunctive relief with respect to urgent matters, without any ofsuch measures being interpreted as a waiver of the foregoing arbitrationprocedures; and (iii) to enforce any arbitrator’s resolution, includingthe final arbitration decision. The Courts of the State of Rio de Janeiro shallhave jurisdiction for the matters contemplated in this clause (e), withoutlimiting each Party’s ability to seek any of these measures in any other courtof competent jurisdiction.

 

(f)              EachParty shall maintain confidential all and any information with respect to anyarbitration proceeding hereunder and shall not disclose any such informationwithout the prior written consent of the other Parties, except to the extent itshall be required by Law, court order or by an administrative or judicialauthority to disclose such information.

 

10.8.        Headings. The descriptive headings contained inthis Agreement are for convenience of reference only and shall not affect inany way the meaning or interpretation of this Agreement.

 

10.9.        ForeignCurrency Denominated Amounts.  Exceptas otherwise set forth in this Agreement, the Reais-equivalent amount of anyamounts expressed in Euros in this Agreement shall be calculated at the averageof the buy and sell rates for Euros, obtained under the Brazilian Central Bankscreen transaction PTAX800 – Option 5 at closing of the Business Dayimmediately preceding the date when such amount is calculated.

 

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10.10.      Severability. If any term or other provision of thisAgreement is invalid, illegal or incapable of being enforced, all other termsand provisions of this Agreement shall nevertheless remain in full force andeffect so long as the economic or legal substance of the transactionscontemplated hereby are not affected in any manner materially adverse to anyParty. Upon such determination that any term or other provision is invalid,illegal or incapable of being enforced, the Parties hereto shall negotiate ingood faith to modify this Agreement so as to effect the original intent of theParties as closely as possible in an acceptable manner in order that thetransactions contemplated hereby are consummated as originally contemplated tothe greatest extent possible.

 

10.11.      RemediesNon-Exclusive.  The remedies providedfor under this Agreement are cumulative and the exercise of one right or remedydoes not preclude any Party from exercising any other right or remedy againstthe other Party, except as otherwise provided in this Agreement. Each Partyshall be entitled to all other remedies available under applicable Law inaddition to the remedies specifically mentioned in this Agreement.

 

10.12.      SpecificPerformance.  The Parties agree thatthe obligations imposed on them in this Agreement are especial, unique and ofan extraordinary character, and that, in the event of breach by any Party,damages would not be an adequate or sufficient remedy and each of the otherParties shall be entitled to specific performance and injunctive relief inaddition to any other remedy to which it may be entitled, at law or in equity;and the Parties hereto further agree to waive any requirement for the securingor posting of any bond in connection with the obtaining of any such injunctiveor other equitable relief. The Parties agree that all of the obligationsundertaken by them hereunder are subject to, and shall enjoy the benefit of,specific performance in accordance with Articles 461, 466-A and 466-B of theCivil Procedure Code of Brazil.

 

10.13.      ThirdParty Beneficiaries.  No provision ofthis Agreement is intended to confer upon any Person other than the Partieshereto and their successors and permitted assignees any rights or remedieshereunder.

 

10.14.      EntireAgreement.  This Agreementconstitutes the entire agreement between the Parties with respect to thesubject matter hereof and supersedes all prior agreements and understandings,both oral and written, between the Parties with respect to the subject matterof this Agreement.

 

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(signature page of the Share Purchase Agreement datedApril 23, 2009, between Terna – Rete Elettrica Nazionale S.p.A., CemigGeração e Transmissão S.A. and Companhia Energética de Minas Gerais – Cemig asintervenig Party)

 

IN WITNESS WHEREOF, the Parties hereto have caused thisShare Purchase Agreement to be duly executed by their respective authorizedofficers as of the day and year first above written.

 

Seller:

 

TERNA – RETE ELETTRICA NAZIONALE S.P.A.

 

|   |   |   |   |
|--------|--------|--------|--------|
|   | Name:  |   | Name:  |
|   | Title: |   | Title: |

 

 

Buyer:

 

CEMIG GERAÇÃO E TRANSMISSÃOS.A.

 

|   |   |   |   |
|--------|--------|--------|--------|
|   | Name:  |   | Name:  |
|   | Title: |   | Title: |

 

 

Intervening party:

 

COMPANHIA ENERGÉTICA DE MINAS GERAIS – CEMIG

 

|   |   |   |   |
|--------|--------|--------|--------|
|   | Name:  |   | Name:  |
|   | Title: |   | Title: |

 

 

Witnesses:

 

|   |   |   |
|--------|--------|--------|
| Name:  |   | Name:  |
| CPF:   |   | CPF:   |

 

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