EX-10.1






Exhibit 10.1




SALE PURCHASE OF SHARES AND EQUIPMENT AND INDEBTEDNESS REPAYMENT AGREEMENT




The present Sale Purchase of Shares and Equipment and Indebtedness Repayment Agreement (the
“Agreement”), is executed on March 30, 2007, between CMS Energy Corporation, a corporation duly
incorporated in accordance with the laws of the State of Michigan, United States of America (the
“Seller”), represented in this act by Joseph P. Tomasik, who is a citizen of the United States of
America, of legal age, domiciled in the city of Jackson, State of Michigan, and holder of the
Passport of the United States of America number 027671098, and Petróleos de Venezuela, S.A. a
corporation incorporated in accordance with the laws of the Bolivarian Republic of Venezuela,
domiciled in the city of Caracas in the Metropolitan District, originally constituted by Decree N°
1.123 dated August 30th, 1975, published on Extraordinary Official Gazette of the
Republic of Venezuela N° 1.170 on the date before mentioned and registered before the First
Commercial Registry on September 15th, 1975 of the Judicial Circuit of the Federal
District and Miranda State, under No. 23, Volume 99-A, which entry was published on Extraordinary
Municipal Gazette N° 413 of the Federal District on September 25th, 1975 and which
Corporate Charter and Bylaws have been modified by means of Decrees N° 250, 885, 1313, 2184 and
3299 dated August 23rd, 1979; September 24th, 1985; May 21st,
2001; December 10th, 2002 and December 7th, 2004, respectively, the last
decree published on the Official Gazette of the Bolivarian Republic of Venezuela N° 38.081 (the
“Buyer”), represented in this act by its President, the citizen Rafael Ramírez Carreño, who is
Venezuelan citizen, of legal age, of this domicile, and bearer of the Identity Card N° 5.479.706,
duly authorized for this act in accordance with the numeral 4 of the Thirty-Fourth Clause of the
Corporate Charter and By-Laws of the Buyer;



WHEREAS that the Seller is the ultimate owner, through its affiliates of 58.961.700 shares
(the “Shares”) of the Sistema Eléctrico de Nueva Esparta, C.A., a Venezuelan corporation
(“SENECA”), representing seventy per cent (70%) of the issued ordinary shares of SENECA, and eighty
eight and two thousandth per cent (88,002%) of its social capital;



WHEREAS SENECA, in one side, and some of the affiliates of the Seller, are reciprocally
indebted for certain amounts under the concepts described in the Exhibit A, that upon set off
result in a outstanding debt by SENECA to the affiliates of the Seller for an amount of at least
one million nine hundred thousand Dollars of the United States of America (US$ 1.9 millions) (the
“Indebtedness”);



WHEREAS, that the equipment of an affiliate of the Seller, described in Exhibit B of this
Agreement (the “Equipment”) is currently subject to a lease between CMS Enterprises and SENECA (the
“Lease”), which unpaid amount is of fifteen millions six hundred thousand Dollars of the United
States of America (US$ 15,6 millions) including the payment of purchase to the termination;



WHEREAS the Seller and the Government of the Republic celebrated a Memorandum of Understanding
dated February 13th, 2007 (the “MOU”), which provides for: (i) the sale of the Shares by
the Seller to the Buyer, (ii) the repayment of the Indebtedness, and (iii) the transfer in favor of
SENECA of ownership of the Equipment (jointly referred to as the “Transactions”); and



WHEREAS the Seller and the Buyer wish to formalize the Transactions in the terms and
conditions provided in this Agreement.



Based on the above and with the intention of being legally bound by the present Agreement, the
parties of this Agreement (the “Parties”) agree the following:



CLAUSE 1

SALE PURCHASE




Clause 1.1. Sale Purchase of the Shares.



Subject to the terms and conditions of the present Agreement, at the moment of the Closing (as
such term is defined below), the Seller shall assure that its affiliate (i) sell and transfer the
Shares to the Buyer, free of all liens, (ii) release the repayment obligation under the
Indebtedness, and (iii) sell and transfer the Equipment to the Buyer, free of all security
interests. The total price that shall be paid by the Buyer to the Seller for the Transactions is
of one hundred five million five hundred thousand Dollars of the United States of America (US$
105,500,000) (the “Price of the Transactions”), which is divided as follows: (a) for the sale
purchase of the Shares, eighty eight million Dollars of the United States of America (US$
88,000,000); (b) for the repayment of the Indebtedness, one million nine hundred thousand Dollars
of the United States of America (US$ 1,900,000); and (c) for the sale purchase of the Equipment,
fifteen millions six hundred thousand Dollars of the United States of America (US$ 15,600,000).
The Price of the Transactions shall be paid at the Closing (as such term is defined below) only and
exclusively in Dollars of the United States of America (with exclusion of any other currency),
though wire transfer in immediately available funds, without any set off, withholding (including
withholding of taxes) deduction or restriction whatsoever, to the account that to such effect the
Seller indicates in writing to the Buyer. The Price of the Transactions constitutes the total
compensation to be paid to the Seller for the transfer of ownership of the Shares and the
Equipment, as well as for the repayment of the Indebtedness. The Seller, on its own behalf and on
behalf of its affiliates, (i) waives, from the Closing, all the claims that has or may have against
the Republic or any of its agencies, dependences, enterprises or other entities (including SENECA),
or any of their respective directors, officers, employees, agents or representatives, in connection
with the Shares, to the announcements or acts of the Republic with respect to the nationalization
of SENECA, or any other matter related to SENECA, being excepted any claim that the Seller may have
under this Agreement and (ii) commits to indemnify to such parties for any claim of its affiliates
related to such matters. The Buyer waives, from the Closing, all claims against the Seller or its
affiliates or its respective directors, officers, employees, agents or representatives, for
reasonable and legal acts of administration of SENECA carried out before the Closing.



Clause 1.2 Closing.



The formalization, perfection and completion of the Transactions shall take place, provided
the conditions precedent that are referred in the Clause 5 of this Agreement have been satisfied,
in a closing (the “Closing”) that shall be held in the offices of the Buyer in Caracas, Venezuela,
on the working day that to such effect the Buyer sets on or before April 30, 2007 (the “Closing
Date”) in the understanding that the Buyer shall notify the Seller of the Closing Date five (5)
working days in advance.



CLAUSE 2




REPRESENTATIONS AND WARRANTIES OF THE SELLER




	 	 	 
	The Seller hereby represents and warrants to the Buyer the following:

	 
	 	 
	Clause 2.1

	 	Incorporation and Authority; Absence of Conflicts.
	
 
	 	 






It is a corporation duly incorporated and existing in accordance with the law of the State of
Michigan, United States of America, and has all the required powers and corporate authority to
enter into this Agreement, comply with its obligations hereunder and to carry out the Transactions.
This Agreement constitutes a valid and legally binding obligation of the Seller and enforceable
against it in accordance with its terms. The Seller is not required to obtain the consent of any
third party for the execution and performance of this Agreement. The execution and performance of
this Agreement by Seller does not (i) constitutes any violation or breach, nor shall it give a
right to the termination or acceleration of any obligation with respect to (a) any constitutive
document of the Seller or of SENECA, or (b) any law to which the Seller or SENECA are subject, nor
(ii) shall it create any security interest on the assets of SENECA.



Clause 2.2. Shares and Capital.



The Shares represent seventy per cent (70%) of the issued ordinary shares of SENECA, and the
eighty eight and two thousandth per cent (88,002%) of its social capital. The affiliates of the
Seller are the registered owners of the Shares, which are free of all security interests of any
nature. Except for the Shares, neither the Seller nor any of its affiliates have any right on the
social or stock capital of SENECA, nor have any other rights or interest on SENECA. The Buyer
shall acquire the legitimate ownership of the Shares, free of all security interests, when the
title to the Shares are delivered at the Closing and its assignment be inscribed on the books of
SENECA. SENECA does not have any affiliate or subsidiary nor has any equity right of any kind on
the social participation of any third party. Upon Closing, the Seller and its affiliates will not
have any outstanding obligations or rights, option rights or other rights, contracts or compromises
of any kind related to SENECA and its capital stock.



Clause 2.3 Equipment and Indebtedness.



An affiliate of the Seller is the owner of all the Equipment, free of all security interests.
On the Closing, the Buyer shall acquire the legitimate ownership of the Equipment, free of liens of
any nature. The Indebtedness is the only obligation of any nature of SENECA to the Seller or any
of its affiliates, and from the Closing, SENECA shall cease to have any obligation with respect
thereto.



Clause 2.4 Financial Statements.



The Appendix 2.4 contains a truthful copy of the financial statements and complementary
information of SENECA, duly audited, which include the balance sheet, the profits and losses and
cash flow reexpressed values, as of December 31st, 2006 (the “Financial Statements”), in
the understanding that the complementary information of the Financial Statements includes as well
historical values. The Financial Statements were prepared in accordance with the general accepted
accounting principles in the Republic, and present in an accurate form all the relevant aspects to
the financial condition of SENECA to such date and the result of its operations during the exercise
that has concluded.



Clause 2.5 Conduct of Business and Inexistence of Hidden Liabilities.



From the date of the issuance of the Financial Statements until the date of the present
Agreement (i) SENECA has, in all the relevant aspects, carried out its business and operations
within the ordinary course of the business in a manner consistent with its past commercial
practices, (ii) neither the Seller, nor SENECA, has taken any action that, if taken after the
execution of this Agreement, may constitute a breach to the provisions of Clauses 4.2 and 4.4
(neither has authorized, nor has proposed, nor has executed any contract with aims to take that
action), and (iii) in the best knowledge of the Seller, no material adverse effect has occurred in
relation with SENECA; provided that, the Seller has disclosed the matters referred to in Appendix
4.1 in connection with the activities of SENECA. Furthermore, except for liabilities incurred after
December 31, 2006 in the ordinary course of business consistent with past practice or any matter
described in the Appendices hereof, SENECA does not have material obligations or liabilities
different from the obligations and liabilities mentioned in the Financial Statements.



Clause 2.6 Taxes.



Except as provided in the Appendix 2.6, (i) all the tax returns have been filed with relation
to SENECA and all taxes, fines and recharges that SENECA has to pay in accordance with the
applicable laws have been paid or have been reserved for on SENECA’s financial statements, and (ii)
SENECA has received no notification of a material tax assessments that may affect the valuation of
the Shares.



Clause 2.7 Litigation and Proceedings.



There is no existing material litigation, whether civil, criminal, administrative or
regulatory, nor relevant arbitral proceedings or alternative dispute resolution proceedings or
similar proceedings, nor relevant pending investigations, demands, actions or denounces, or to the
best knowledge of the Seller, threaten or announced, against or by SENECA, except to those that are
described in the Financial Statements or in Appendix 2.7 of this Agreement.



Clause 2.8 Compliance with the Law.



Except for the obligation established in the article 6 of the Organic Law of Electric Service
related to the separation of activities, SENECA complies in all material respects with all the laws
or governmental orders that are applicable to it or to any of its properties or assets.



Clause 2.9 Transactions with Related Parties.



Except for the Lease and related letter agreements, there are no agreements currently in
effect between SENECA and the Seller, and/or any of its affiliates, shareholders, directors or
officers. Except for the property of the Equipment neither the Seller, nor its affiliates or
shareholders, directors or officers are the owners or have any right related to the assets,
properties or rights used by SENECA.



Clause 2.10 Property Title and Absence of Security Interests.



Except as set forth in Appendix 2.10, SENECA is the only and exclusive owner and holder, and
has ownership title to all the real property and other assets, including plants, equipment,
turbines, rights of way and servitudes, free of all security interests or domain limitation.



Clause 2.11 Assets Conditions.



Except as set forth in Appendix 2.11, the assets and properties of SENECA, including plants
and equipment, are in reasonable operating condition (excluding the normal wear and tear for use
and for limitations imposed to avoid rationing on SENECA’s distribution system) and have received
maintenance in accordance with the industry prudent practices .



Clause 2.12 Contracts.



Appendix 2.12 contains a complete list of all material contracts entered into by SENECA for
the correct and good operation and conduction of the business of SENECA or with an amount higher
than two hundred fifty thousand Dollars of the United States of America (US$ 250,000) (the
“Important Contracts”). Each of the Important Contracts is in full force and effect, provided that
the Seller has disclosed to the Buyer what is set forth in Appendix 4.1 in connection with the
possible termination of the reinsurance. SENECA is not in breach in accordance with the Important
Contracts, and the completion of the Transactions will not result in any breach on the part of
SENECA in accordance to the Important Contracts, nor will it give right to the counterpart for
early termination of the same.



Clause 2.13 Environmental Liability.



Except as set forth in Appendix 2.13, in the best knowledge of the Seller there are no
environmental liabilities of SENECA that may affect in an adverse manner the valuation of the
Shares.



Clause 2.14 Absence of Indemnification Obligation to Employees.



Except for payment obligations in accordance with the labor laws that could arise with
relation to Seller’s obligation provided in the Clause 4.3, the execution and performance of this
Agreement by the Seller shall not give any right to any employee, officer or director of SENECA to
receive from SENECA any payment whether arising from the change of control, related with an
obligation derived from termination or by any other reason.



Clause 2.15 Complete Disclose.



The Seller has disclosed to the Buyer all the material information and documentation that may
affect the valuation of the Shares. Furthermore, no written information or documentation provided
or to be provided by the Seller or any of its affiliates (including SENECA) to the Buyer hereunder
or in connection with the Transactions contemplated in this Agreement contains or will contain any
false declaration or information of any material fact, nor will they omit any material fact so that
the representations granted are not misleading in the light of the circumstances under which they
were made.



CLAUSE 3

REPRESENTATIONS AND WARRANTIES OF THE BUYER




The Buyer hereby represents and warrants to the Seller that the Buyer has all the required
powers and corporate authority to enter into this Agreement, comply with its obligations hereunder
and to carry out the Transactions. The execution and performance of this Agreement by the Buyer
and the completion of the Transactions hereunder have been validly and duly authorized by all the
necessary corporate and administrative bodies. This Agreement has been duly and validly executed by
the Buyer and constitutes a valid and legally binding obligation of the Buyer, enforceable in
accordance with its terms.



CLAUSE 4

ADDITIONAL COVENANTS




Clause 4.1 Activities of SENECA.



The Seller warrants that, between the date of execution of this Agreement and the Closing, (i)
the operations of SENECA shall be carry out in the ordinary course of its business in a consistent
manner with its past commercial practices, including maintenance in force of agreement, permits,
consents, leases and insurance policies of such operations, in the understanding that for all the
effects of this Clause 4.1(i), the Seller has revealed to the Buyer the concepts indicated in the
Appendix 4.1, and (ii) shall make its best efforts to maintain the business, operations and good
reputation of SENECA with the clients and providers whose relation is relevant for the business and
operations of SENECA in a consistent manner with its past commercial practices.



Clause 4.2 Access to Information, Transition Committee.



Between the date of execution of this Agreement and the Closing Date, the Seller shall (a)
provide to the Buyer a copy of the financial statements and operative reports received by the
Seller and related, in each case, with the operation of SENECA, as close as possible to the date
issued, and (b) give access to Buyer, during working hours and having received a request, to all
the properties, books and files and administrative personnel of SENECA and to all the information
related thereto. To carry out an organized transmission of the property and management of SENECA,
the Seller will assure that SENECA will cooperate with a transition committee to be designated by
the Seller.



Clause 4.3 Resignations.



The Buyer shall indicate in writing to the Seller the directors of SENECA that the Buyer
desires their resignation before the Closing. The Seller shall cause SENECA to obtain the
resignation of said directors, effective upon Closing.



Clause 4.4 Distribution.



Without prejudice to Seller’s rights provided in the Clause 4.6, the Seller will not allow,
from the date of execution of this Agreement until the Closing Date, SENECA to declare, make or
separate funds for dividends or distributions to its shareholders.



Clause 4.5 Delivery of Documentation.



At the Closing, the relevant entry of the transfer of the Shares in the registry of
shareholders of SENECA and, in each case, the endorsement of the Shares in favor of the Buyer,
shall be made. Furthermore, the Seller shall deliver to the Buyer all the documentation that may
be necessary to evidence the completion of the Transactions, including the documentation that
evidences the transfer of the ownership of the Equipment, the termination of the Lease (and related
letter agreements) and a repayment certificate of the indebtedness owed by SENECA that have been
set off in accordance with Exhibit A of this Agreement, including with respect to the Indebtedness.
By its part, SENECA shall issue a repayment certificate of the indebtedness owed by Seller that
has been set off in accordance with Exhibit A of this Agreement.



Clause 4.6 Pending Lease Payment.



The Parties acknowledge that on December 14, 2006, SENECA delivered to Enelmar S.A., an
affiliate of the Seller, the amount of Bs. 1,961,737,077.50 as guarantee for the payment of the
lease of the fourth quarter of 2006 under the Lease Agreement (the “Pending Lease Payment”). Such
payment is awaiting the governmental authorizations on exchange control to be paid to the Seller or
its affiliate. In the event that SENECA obtains conversion approval from CADIVI not less than five
(5) days before the Closing, SENECA will be able to transfer the amount of the Pending Lease
Payment to the Seller or its affiliate, provided that SENECA has previously received from the
Seller or its affiliate the amount in Bolivars of the Pending Lease Payment. In the event that
SENECA has not obtained the conversion approval from the competent authorities five (5) days prior
to Closing, Buyer shall transfer to Seller at the Closing, only and exclusively in Dollars of the
United States of America the amount of nine hundred twelve thousand four hundred thirty five
Dollars of the United Sates of America and eighty five cents (US$912,435.85) (without interest,
charges, penalties or similar), provided that the Seller or its affiliate transfer, previously or
simultaneously, to SENECA the Pending Lease Payment in Bolivars. Upon receipt from Buyer of the
Pending Lease Payment in Dollars, Seller and its affiliates shall be deemed to have released SENECA
from any liability with respect to the Pending Lease Payment.



CLAUSE 5

CONDITIONS FOR THE CLOSING




Clause 5.1 Conditions to the Obligation of the Buyer.



The obligation of the Buyer to formalize and complete the Transactions is subject to the
following conditions precedent:




	 	a)	 	The Seller shall have complied with all its obligations as set forth herein on
or before the Closing Date, and the representations and warranties of the Seller
contained in this Agreement shall be true and correct in all material respects as of
the date of execution of this Agreement and as of the Closing Date, as if they were
made at that time;






	 	b)	 	No facts or circumstances (including the ones that have arisen during the legal
and financial due diligence carried out by the Buyer in relation to SENECA) shall exist
that have resulted or may reasonably result in a material adverse effect in connection
with the value of the Shares, provided that (i) the Price of the Transactions is based
on the Financial Statements and (ii) the Buyer does not have the intention to challenge
the decisions taken by SENECA prior to the Closing, which have been taken under
reasonable commercial criteria;






	 	c)	 	No material adverse change shall have occurred in the business, financial
condition or the operations of SENECA; and






	 	d)	 	The Buyer shall have received the resignations of the Directors that have to
resign in accordance with the provided in the Clause 4.3.





Clause 5.2 Conditions to the Obligation of the Seller.



The obligation of the Seller to formalize and complete the Transactions is subject to the
warranties and representations of the Buyer contained in this Agreement being true and correct in
all the material aspects as of the date of execution of this Agreement and as of the Closing Date,
as if they were made on that moment.



CLAUSE 6

INDEMNIFICATION





Clause 6.1 Seller Indemnification.



The Seller shall protect, defend, indemnify and hold the Buyer and its affiliates (including
to SENECA) and to the relevant representatives, successors and assigns of each one of the above
(jointly referred as, the “Indemnified Parties”) harmless of liability for and against all the
losses, damages, liabilities and claims of any nature such Indemnified Party have incurred,
endured, suffered, to the extent they arise or are related to any inaccuracy of any representation
made or warranty granted by the Seller in this Agreement, or with the breach of the Seller to any
obligation provided in this Agreement, with the understanding that to enforce this indemnity, in
relation to the representations of the warranties provided for in the Clauses 2.4, 2.5, 2.6, 2.7,
2.8, 2.9, 2.11, 2.12, 2.13, 2.14 and 2.15, the Buyer shall have notified Seller of the claim within
one year from the date of the Closing.




Clause 6.2 Buyer Indemnification.



The Buyer shall protect, defend, indemnify and hold the Seller harmless of liability from and
against all the losses, damages, responsibilities and claims of any nature such Indemnified Party
have incurred, endured, suffered, to the extent they arise or are related to any inaccuracy of any
representation made or warrant granted by the Buyer in this Agreement, or the breach by Buyer of
any obligation contained in this Agreement.




Clause 6.3 Notice and Third Party Claims.



If any third party notifies Seller or Buyer (as the case may be, an “Indemnified Party”) of
any matter which may give rise to a claim (each, a “Third Party Claim”) for indemnification against
Seller or Buyer (as the case may be, the “Indemnifying Party”), then the Indemnified Party shall
promptly (and in any event within fifteen (15) business days after receiving service of process in
a claim, demand, lawsuit, administrative proceeding or arbitration proceeding with respect to the
Third Party Claim) notify in writing each Indemnifying Party of such circumstance. The Parties
shall cooperate between them and solve any Third Party Claim.



CLAUSE 7

GENERAL DISPOSITIONS




Clause 7.1 Fees and Expenses.



The Party that incurs in fees or expenses in connection with or related to this Agreement or
to the Transactions shall pay and absorb them, whether or not such Transactions are completed, and
SENECA shall not pay fees or expenses of the Seller.



Clause 7.2 Notices.



All the notices and other communications that have to be delivered in accordance with this
Agreement shall be in writing and will have effect when received by the addressee on the address or
fax indicated below:



	 	 	 
	If it is to the Buyer:

	 	Petróleos de Venezuela

Av. Libertador, Edif. Petróleos de Venezuela,

Torre Este, La Campiña – Caracas, D.C.

Venezuela.

Attention: Legal Department

Telephone: +58 (0) 212 708 47 90

Fax: +58 (0) 212 708 46 66
	 
	 	 
	If it is to:

Clause 7.3

	 	CMS Energy Corp.

One Energy Plaza

Jackson, Michigan

Attention: General Counsel

Telephone: (517) 788-0550

Fax: (517) 788-1671

Entire Agreement
	
 
	 	 






This Agreement embodies the entire agreement among the Parties relating to the transactions
contemplated herein. There are no agreements, representations, or warranties among the parties
other than those set forth or provided for herein. This Agreement supersedes any prior agreements,
understandings, or letters of intent between or among the Parties with respect to the subject
matter of it.



Clause 7.4 Applicable Law, Special Domicile and Jurisdiction.



The interpretation, enforceability and performance of this Agreement shall be governed in
accordance with the laws of the Bolivarian Republic of Venezuela and to all legal effects the
Parties select as special domicile the City of Caracas. The Parties agree to resolve any
controversy or dispute that arises between them in connection with the interpretation and
performance of this Agreement in amicable manner and in good faith. In the event that any
controversy or dispute cannot be resolved amicably, the Parties submit to exclusive jurisdiction of
the Court sitting in the City of Caracas.



IN WITHNESS WHEREOF, the Seller and the Buyer execute this Agreement through their duly
authorized officers on the date written in the heading.




CMS ENERGY CORPORATION




By:      /s/ Joseph P. Tomasik     

Vice President





PETRÓLEOS DE VENEZUELA, S.A.




By:      /s/ Rafael Ramirez