Document:

MASTER SETTLEMENT AND MUTUAL RELEASE AGREEMENT

 

Exhibit 4.5

EXECUTION COPY

MASTER SETTLEMENT AND MUTUAL RELEASE AGREEMENT

among

PETRÓLEO BRASILEIRO S.A.

PETROBRAS ENERGÍA S.A.,

PETROBRAS HISPANO ARGENTINA S.A.,

ENRON CORP.,

ENRON ARGENTINA CIESA HOLDING S.A.,

ENRON PIPELINE COMPANY ARGENTINA S.A.,

and

PONDEROSA ASSETS, L.P.

Dated as of April 16, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	Article 1	 	TRANSACTIONS	 	 	3	 
	 
	 	1.1	 	Releases	 	 	3	 
	 
	 	1.2	 	Amendment to Owners Agreement	 	 	5	 
	 
	 	1.3	 	First Swap Closing Date Transactions	 	 	6	 
	 
	 	1.4	 	Conditions to First Swap Closing Date Transactions	 	 	7	 
	 
	 	1.5	 	Second Swap Closing Date Transactions	 	 	9	 
	 
	 	1.6	 	Conditions to Second Swap Closing Date Transactions	 	 	10	 
	Article 2	 	REPRESENTATIONS AND WARRANTIES	 	 	11	 
	 
	 	2.1	 	General Representations	 	 	11	 
	 
	 	2.2	 	Additional Representation and Warranty Concerning the Equity Interests	 	 	12	 
	Article 3	 	TERMINATION	 	 	14	 
	 
	 	3.1	 	Termination of Agreement	 	 	14	 
	 
	 	3.2	 	Effect of Termination	 	 	14	 
	Article 4	 	COVENANTS	 	 	15	 
	 
	 	4.1	 	Management Fee	 	 	15	 
	 
	 	4.2	 	Technical Assistance Agreement	 	 	16	 
	 
	 	4.3	 	ENARGAS Release	 	 	17	 
	 
	 	4.4	 	Shareholders Agreement	 	 	18	 
	 
	 	4.5	 	CIESA Restructuring	 	 	19	 
	 
	 	4.6	 	Trust Formation and New Shareholders Agreement	 	 	19	 
	 
	 	4.7	 	Appropriate Actions; Filings	 	 	19	 
	 
	 	4.8	 	Limitation of Mutual Release	 	 	20	 
	 
	 	4.9	 	Operation of TGS/CIESA in the Ordinary Course	 	 	20	 
	 
	 	4.10	 	Transition Services; Continued Support	 	 	20	 
	 
	 	4.11	 	Further Assurances	 	 	20	 
	 
	 	4.12	 	Filing of the Motion	 	 	20	 
	 
	 	4.13	 	No Objections	 	 	21	 

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TABLE OF CONTENTS
 (continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	4.14	 	Indemnification	 	 	21	 
	 
	 	4.15	 	CIESA Bankruptcy	 	 	21	 
	Article 5	 	MISCELLANEOUS	 	 	21	 
	 
	 	5.1	 	Survival of Representations and Warranties	 	 	21	 
	 
	 	5.2	 	Waivers	 	 	21	 
	 
	 	5.3	 	Amendment	 	 	21	 
	 
	 	5.4	 	Expenses	 	 	22	 
	 
	 	5.5	 	Severability	 	 	22	 
	 
	 	5.6	 	Successors and Assigns	 	 	22	 
	 
	 	5.7	 	No Third Party Beneficiaries	 	 	22	 
	 
	 	5.8	 	Counterparts	 	 	22	 
	 
	 	5.9	 	Headings	 	 	22	 
	 
	 	5.10	 	Notices	 	 	22	 
	 
	 	5.11	 	Governing Law	 	 	24	 
	 
	 	5.12	 	Arbitration; Submission to Jurisdiction	 	 	24	 
	 
	 	5.13	 	Final Agreement	 	 	25	 
	 
	 	5.14	 	Compromise and Settlement	 	 	25	 
	 
	 	5.15	 	Joint Drafting	 	 	25	 
	 
	 	5.16	 	Remedies; Specific Performance	 	 	26	 
	 
	 	5.17	 	Conditions to Enron Actions	 	 	26	 
	 
	 	5.18	 	Citibank Comfort Letter	 	 	26	 

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MASTER SETTLEMENT AND MUTUAL RELEASE AGREEMENT

     This MASTER SETTLEMENT AND MUTUAL RELEASE AGREEMENT (this “Agreement”),
dated as of April 16, 2004, is entered into among Petrobras Energía S.A., an
Argentine sociedad anónima (“PESA”) formerly known as Compañía Naviera Perez
Companc S.A.C.F.I.M.F.A. (“Perez Companc”), Petrobras Hispano Argentina S.A., a
Spanish sociedad anónima (“Petrobras Hispano”), Enron Argentina CIESA Holding
S.A., an Argentine sociedad anónima (“EACH”), Enron Pipeline Company Argentina
S.A., an Argentine sociedad anónima (“EPCA”), and Ponderosa Assets, L.P., a
Delaware limited partnership and indirect subsidiary of Enron (“Ponderosa”).
For purposes hereof, “Parties” shall mean PESA, Petrobras Hispano, EPCA, EACH
and Ponderosa collectively, and “Party” shall mean each of such Parties
individually. In addition, (i) Enron Corp., an Oregon corporation (“Enron”),
shall be a “Party” solely for the limited purposes of Sections 1.1, 1.4(c),
1.4(e), 2.1(f), Article 3, 4.2, 4.3, 4.7, 4.8, 4.10, 4.11 and Article 5 and for
the purposes of accepting any right or benefit contained elsewhere under this
Agreement and (ii) Petróleo Brasileiro S.A. (PETROBRAS), a sociedade anônima
organized under the laws of the Federative Republic of Brazil (“Petrobras”),
shall be a “Party” solely for the limited purposes of Sections 1.1, 1.4(i),
2.1(f), Article 3, Sections 4.3, 4.8, 4.11, 4.13 and Article 5 and for the
purposes of accepting any right or benefit contained elsewhere under this
Agreement.

     Capitalized terms used in this Agreement are defined in Appendix A for the
convenience of the reader and in order to eliminate the need for
cross-reference. Appendix A is incorporated herein by reference.

R E C I T A L S :

     A. Each of Petrobras, the Petrobras Parties, Enron, EACH, EPCA and
Ponderosa own, directly or indirectly, collectively 100% of the capital stock
of Compañía de Inversiones de Energía S.A., an Argentine sociedad anónima
(“CIESA”).

     B. CIESA owns (i) 405,192,594 ordinary A shares (the “TGS A Shares”) of
Transportadora de Gas del Sur S.A., an Argentine sociedad anónima that engages
in the business of transporting natural gas throughout Argentina, processing
natural gas and marketing liquid petroleum gases (“TGS”), which shares
constitute 100% of the issued and outstanding TGS A Shares and 51% of the total
issued and outstanding capital stock of TGS and (ii) 34,133,200 ordinary B
shares of TGS (the “TGS B Shares”), which shares constitute 4.3% of the total
issued and outstanding capital stock of TGS.

     C. At the time that Enron, through EPCA, and Perez Companc obtained their
indirect ownership interest in TGS through their ownership of CIESA, they and
certain of their Affiliates entered into several agreements, undertakings,
covenants and other obligations relating to the acquisition of such ownership
and the operation of TGS’s business, including, without limitation, (i) the
Owners Agreement, dated as of November 13, 1992, by and among EPCA, Citicorp
Equity Investments S.A. and Perez Companc (as amended, supplemented or modified
from time to time, the “Owners Agreement”), (ii)

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the Shareholders Agreement, dated as of November 13, 1992, by and among
EPCA, Citicorp Equity Investments S.A. and Perez Companc (as amended,
supplemented or modified from time to time, the “Shareholders Agreement”),
(iii) the Technical Assistance Agreement, dated as of November 13, 1992, by and
between TGS and EPCA (as amended, supplemented or modified from time to time,
the “Technical Assistance Agreement”), (iv) the Guaranty, dated as of November
13, 1992 (the “Guaranty”), made by Transwestern Pipeline Company, a Delaware
corporation (“Transwestern”), in favor of the other Owners (as defined under
the Owners Agreement) guaranteeing the performance of the obligations of EPCA
under the Owners Agreement, the Shareholders Agreement and (v) the Bid
Agreement, dated as of November 13, 1992, by and among EPCA, Citicorp Equity
Investments S.A. and Perez Companc (the “Bid Agreement”). The Parties
acknowledge that the Bid Agreement has expired pursuant to its terms prior to
the date hereof and is of no further force or effect.

     D. At the time of the transaction pursuant to which the ownership
interests in TGS were acquired pursuant to the bidding terms for the
privatization of Gas del Estado (the “Pliego”), Transwestern was considered a
member of the “Enron Economic Group” (Conjunto Económico de Enron) that bid for
such acquisition and the License and Enron was the “Controlling Company” for
purposes of such “Enron Economic Group”.

     E. Each of the Parties hereby acknowledges that it is familiar with the
business, operations and management of each of TGS and CIESA.

     F. On December 2, 2001, Enron filed a voluntary petition of relief under
chapter 11 of Title 11 of the United States Bankruptcy Code, 11 U.S.C. § 101,
et. seq. (the “Bankruptcy Code”) in the United States Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”), Case No. 01-16034
(AJG), and is currently operating as a debtor-in-possession. EACH, EPCA and
Ponderosa have not filed such petitions and are not currently debtors in any
proceedings.

     G. On October 17, 2002, Petrobras Participacoes S.A. acquired certain
ownership interests of Petrobras Energía Participaciones S.A., the controlling
entity of PESA which directly and indirectly holds interests in CIESA and TGS,
pursuant to a stock purchase agreement dated as of such date, by and among
Petrobras, Fundación Perez Companc and certain members of the Perez Companc
family, among others. On May 13, 2003, the Comisión Nacional de Defensa de la
Competencia, the Argentine governmental agency which regulates competition (the
“CNDC”), approved such acquisition.

     H. In January 2002, the Argentine government enacted legislation that
adversely and significantly impacted TGS’s financial condition and,
consequently, CIESA’s investment in TGS. As a result, TGS and CIESA have each
undertaken a financial restructuring which may include, among other
alternatives, a renegotiation of their respective obligations with third party
lenders.

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     I. In November 2001, in connection with the events and circumstances
relating to Enron’s filing of its bankruptcy case, Citicorp North America, Inc.
(“CNAI”), as agent for a group of banks under a loan that provided financing
for an affiliate of Enron, delivered a notice to Enron asserting that it had
appointed Citibank, N.A. as a “portfolio manager” with respect to certain
assets of Affiliates of Enron, including Ponderosa’s indirect ownership
interests in CIESA and TGS, and that such portfolio manager has certain rights
with respect to the disposition of such assets. Enron disputes the validity,
effectiveness and scope of CNAI’s asserted appointment. Enron and CNAI are
currently in negotiations to resolve this dispute and determine the methodology
under which Enron, with or without CNAI’s participation, shall manage and
dispose of the assets of Ponderosa, including the indirect ownership interests
in CIESA and TGS.

     J. In February 2004, the bankruptcy of CIESA was requested before a
Commercial Court located in the city of Buenos Aires, by a party who claimed to
hold bonds issued by CIESA for a principal amount of US$10,300,000.

     K. The Parties have engaged in extensive, arm’s length and good faith
negotiations and discussions concerning the subject matter of this Agreement.

     L. The Parties now desire to enter into an agreement to compromise and
settle the matters that are the subject of this Agreement in accordance with
the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises herein contained and for
other good and valuable consideration, the receipt, fairness and sufficiency of
which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE 1

TRANSACTIONS

     1.1 Releases. Subject to and upon the entry of the Final Order, the
following obligations, covenants and agreements shall be simultaneously
effected:

     (a) Petrobras Release. Each of Petrobras and the Petrobras Parties,

for itself and its successors and assigns, agrees to, and shall cause
each of its Affiliates to, irrevocably waive, release and forever
discharge each of Enron, Transwestern, the Enron Parties and each of
their respective Related Parties from any and all Claims under or arising
from or in connection with the Owners Agreement, the Bid Agreement and
the Shareholders Agreement and each of the agreements, covenants and
other undertakings made in respect thereof (including the Guaranty, the
Pliego, the ENARGAS Letters, the Letter Agreements and the Technical
Assistance Agreement) to which Petrobras or any of the Petrobras Parties
or any of their respective Affiliates is a party or beneficiary. The
irrevocable release, waiver and discharge set forth in this subsection
shall, without limitation, extend to Enron, Transwestern, the Enron
Parties and each of their

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respective Related Parties with respect to any and all Claims
arising under, relating to or in connection with:

     (i) their participation in, withdrawal from, or the
termination of their participation in, the “Enron Economic Group”
(Conjunto Económico de Enron) under the Pliego, the ENARGAS
Letters and each of the agreements, covenants and other
undertakings they respectively made in respect of such
participation, withdrawal or termination;

     (ii) any purported “Change of Control” as set forth and
defined in the Shareholders Agreement, the Pliego, the Owners
Agreement, the Technical Assistance Agreement, the Guaranty, the
ENARGAS Letters and the Letter Agreements, as applicable (whether
such “Change of Control” is purported to have occurred prior to,
simultaneously with or subsequent to the execution of this
Agreement), arising in connection with or resulting from Enron’s
filing under chapter 11 of the Bankruptcy Code and the
transactions contemplated by the Enron Plan;

     (iii) the direct or indirect transfer, sale, distribution,
conveyance or any other act that results in a reduction in stock
participation by Enron or any of its Affiliates of shares of, or
any instrument or certificate representing an interest in, capital
stock of Transwestern, Ponderosa, EPCA or EACH, in each case in
connection with the Enron Plan, to the extent such Claims in any
manner relate to, arise out of or in connection with the Enron
Parties’ and their respective Affiliates’ direct or indirect
investment or participation in TGS and/or CIESA;

     (iv) the resolution of the dispute described in paragraph (I)
of the recitals of this Agreement, which resolution may address,
among other things, both the management and disposition of the
assets held by Ponderosa, to the extent such Claims in any manner
relate to, arise out of or in connection with the Enron Parties’
and their respective Affiliates’ direct or indirect investment or
participation in TGS and/or CIESA; and

     (v) any actions taken by ENARGAS, including the termination
of the License, relating to, in connection with or as a result of
(A) any actions described in clauses (i) through (iv) above and/or
(B) any actions taken by Enron or the Enron Parties pursuant to
and in accordance with this Agreement.

Upon execution of this Agreement, each of Petrobras and the Petrobras
Parties shall deliver to Transwestern the fully executed Transwestern
Release. The Parties acknowledge and agree that the Transwestern Release
shall not be effective until entry of the Final Order. The Parties
further acknowledge and agree that in the event of a conflict between the
provisions of this Agreement and the provisions of the Transwestern
Release, the provisions which provide

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Transwestern and the Transwestern Parties the broadest and most
beneficial release of Claims, as determined by Enron in its sole
discretion, shall govern.

     (b) Enron Release. Each of Enron and the Enron Parties, for itself,
its successors and assigns, agrees to, and shall cause each of its
Affiliates to, irrevocably waive, release and forever discharge Petrobras
and the Petrobras Parties and each of their respective Related Parties
from any and all Claims under or arising from or in connection with the
Owners Agreement, the Bid Agreement, the Shareholders Agreement and each
of the agreements, covenants and other undertakings made in respect
thereof (including the Guaranty, the Pliego, the ENARGAS Letters, the
Letter Agreements and the Technical Assistance Agreement) to which Enron
or any of the Enron Parties or any of their Affiliates is a party or
beneficiary, including any and all Claims under or arising from or in
connection with any purported “Change of Control” (as set forth and
defined in the Shareholders Agreement) arising in connection with (a) the
transactions described in recital (G) to this Agreement or (b) any
actions taken by ENARGAS, including the termination of the License,
relating to, in connection with or as a result of any actions taken by
the Petrobras Parties pursuant to and in accordance with this Agreement.

     (c) General Waiver. The consequences of the waivers, releases and
discharges provided in clauses (a) and (b) of this Section 1.1 have been
explained by each of the Parties’ respective legal, tax and financial
advisors. The Parties acknowledge that neither Petrobras nor Enron are
parties to the Operative Agreements, and do not have any express
contractual rights under such agreements to enforce the provisions
thereof against the other parties thereto. Nevertheless, Enron and
Petrobras have agreed to provide each other the waivers, releases and
discharges provided for in clauses (a) and (b) of this Section 1.1, and
each of Petrobras and Enron agrees to be bound by the terms thereof.
Each Party further acknowledges that it may hereafter discover facts
different from, or in addition to, those that it now knows or believes to
be true with respect to any Claims, and agrees that this Agreement and
the releases contained herein shall be and remain effective in all
respects notwithstanding the discovery of such different or additional
facts, except to the extent that the discovery of such facts was delayed
or hindered by dolo (as defined under Argentine law) by a Party. To the
extent that Applicable Law would not otherwise recognize the provisions
of clauses (a) and (b) of this Section 1.1 as constituting an
irrevocable, full and final waiver, release and discharge applying to all
unknown and unanticipated Claims, as well as those now known or
disclosed, the Parties hereby expressly and irrevocably waive all rights
and benefits which any Party may have now or in the future under any such
Applicable Law.

     1.2 Amendment to Owners Agreement. Subject to entry of the Final Order,
EPCA, PESA and their applicable Affiliates shall execute an amendment to the
Owners Agreement providing that PESA shall replace EPCA as the entity that
nominates the General Manager of TGS under Article 4.3 of the Owners Agreement.
Such amendment

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to the Owners Agreement shall be executed simultaneously with the
execution of this Agreement and shall be effective simultaneously with the
effectiveness of the releases set forth in Section 1.1. If PESA exercises its
right to appoint the General Manager of TGS as described in this Section 1.2,
the new General Manager of TGS shall be available for all meetings necessary to
effect the Transactions and shall commit to respond to all reasonable
information requests by Enron and/or Ponderosa to the extent necessary (in
Enron’s sole discretion) to effect the consummation of the Transactions, to
Enron’s and/or Ponderosa’s satisfaction, as soon as practicable but in no case
later than five (5) Business Days following such request, to the extent Enron
and/or Ponderosa, as applicable, has a direct or indirect interest or
participation in TGS.

     1.3 First Swap Closing Date Transactions. On the First Swap Closing Date,
the following obligations, covenants and agreements shall be simultaneously
effected:

     (a) The Trust shall be formed consistent with Section 4.6.

     (b) EACH and EPCA collectively shall transfer and convey to the
Trust or, if the Trust is not formed, such alternative entity or entities
designated by PESA, free and clear of any and all Liens (i) 66,008,813.5
CIESA A Shares, which shares constitute one hundred percent (100%) of the
CIESA A Shares and represent approximately 25.5% of the total issued and
outstanding capital stock of CIESA, and (ii) 37,534,424.5 CIESA B Shares,
which shares represent approximately 14.5% of the total issued and
outstanding capital stock of CIESA, provided, however, that such entity
is permitted under Argentine law to receive the CIESA Shares and is
capable of consummating the Transactions.

     (c) The Petrobras Parties collectively shall transfer and convey to
EPCA, or such Affiliate thereof as it shall designate, 58,410,452
Petrobras B Shares free and clear of any and all Liens, which shares
represent approximately 7.35% of the total issued and outstanding capital
stock of TGS.

     (d) The Shareholders Agreement and Owners Agreement (including all
amendments thereto) shall be terminated and the New Shareholders
Agreement, on terms mutually agreeable to the parties thereto, shall be
executed and delivered to the parties thereto, including the trustee for
the Trust. In addition to the principles for the New Shareholders
Agreement set forth on Appendix C, the New Shareholders Agreement shall
provide, among other things:

     (i) preemptive and tag along rights (except with respect to
the Transactions) for each of the shareholders of CIESA;

     (ii) that, only in the event that Ponderosa, directly or
indirectly, does not have sufficient shareholdings in TGS to elect
at least one director of TGS, Ponderosa shall have the right to
have appointed through CIESA one director of TGS so long as
Ponderosa maintains, directly or indirectly, a 10% or greater
ownership interest in CIESA; provided, however, that

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this right (A) shall be non-transferable, except for a
transfer to (x) any Affiliate of Enron and (y) any Person that is
a party to a resolution of the dispute described in paragraph (I)
of the recitals of this Agreement (excluding a sale, merger or
transfer, either directly or indirectly, to an entity not party to
such resolution), and (B) shall terminate on the Second Swap
Closing Date;

     (iii) that Ponderosa’s direct or indirect ownership interest
and voting interest in CIESA shall not be diluted below 10% of the
outstanding capital stock of CIESA in any respect without the
prior written consent of Ponderosa, such consent not to be
unreasonably withheld; provided, however, that this right (A)
shall be non-transferable, except for a transfer to (x) any
Affiliate of Enron and (y) any Person that is a party to a
resolution of the dispute described in paragraph (I) of the
recitals of this Agreement (excluding a sale, merger or transfer,
either directly or indirectly, to an entity not party to such
resolution), and (B) shall terminate on the Second Swap Closing
Date; and

     (iv) that PESA shall be the entity that nominates the General
Manager of TGS consistent with the same rights granted to PESA
pursuant to the Amendment to the Owners Agreement contemplated by
Section 1.2 of this Agreement.

     1.4 Conditions to First Swap Closing Date Transactions. The respective
obligations of the Parties to consummate the transactions set forth in Section
1.3 are subject to the fulfillment, on or prior to the First Swap Closing Date,
of each of the following conditions:

     (a) No Order issued by any court of competent jurisdiction or
regulatory authority having valid enforcement authority preventing the
consummation of the transactions contemplated under Section 1.3 shall be
in effect, nor shall any material proceeding initiated by any
Governmental Authority of competent jurisdiction having valid enforcement
authority seeking such an Order be pending, nor shall there be any action
taken, or any Law or Order enacted, entered or enforced that has not been
subsequently overturned or otherwise made inapplicable to this Agreement,
that makes the consummation of the transactions contemplated hereby
illegal.

     (b) The Final Order shall have been entered by the Bankruptcy Court.

     (c) The ENARGAS Release shall have been obtained. The Parties
acknowledge and agree that the condition set forth in this Section 1.4(c)
may be waived only with the consent of each of PESA, Ponderosa and Enron,
such consent not to be unreasonably withheld; provided, however, such
consent will not be deemed unreasonably withheld by any Party if any of
the other Parties has

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not exhausted all its respective best efforts to obtain the ENARGAS
Release in accordance with Section 4.3 hereof.

     (d) Any and all Required Consents for the transactions contemplated
under Section 1.3 shall have been obtained.

     (e) The Technical Assistance Agreement shall have been terminated,
assigned or transferred to PESA or a third party designated by PESA, in
either case, upon, and in accordance with, the prior approval of ENARGAS;
provided, that any such termination, assignment or transfer of the
Technical Assistance Agreement shall provide for a full and irrevocable
waiver, release and discharge of Transwestern and the Transwestern
Parties from any and all Claims arising from, relating to or in
connection with the Technical Assistance Agreement and the termination,
assignment or transfer thereof, such release to be in form and substance
satisfactory to Enron in its sole discretion. The Parties agree to use
best efforts to cause TGS to effect such release.

     (f) The transactions described in Sections 1.1 and 1.2 hereof shall
have been consummated.

     (g) With respect to the obligations of the Petrobras Parties to
consummate the transactions set forth in Section 1.3:

     (i) all of the representations and warranties of the Enron
Parties contained herein shall be true and correct in all material
respects on and as of the First Swap Closing Date, except those
representations and warranties of the Enron Parties that speak of
a certain date, which representations and warranties shall have
been true and correct in all material respects as of such date;

     (ii) each of the Enron Parties shall have performed and
complied with their respective obligations and covenants required
by this Agreement to be performed or complied with by it on or
prior to the First Swap Closing Date, in all material respects;
and

     (iii) EPCA and EACH, respectively, shall deliver, or cause to
be delivered, share certificates, duly endorsed or accompanied by
transfer powers (including, without limitation, the notice
required pursuant to Section 215 of Argentine law 19,550 with
signatures of authorized officers, duly notarized and certified as
to their authenticity and powers of signatories), with respect to
the CIESA Shares to be transferred and conveyed in accordance with
Section 1.3(b).

     (h) With respect to the obligations of the Enron Parties to
consummate the transactions set forth in Section 1.3:

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     (i) all of the representations and warranties of each of the
Petrobras Parties contained herein shall be true and correct in
all material respects on and as of the First Swap Closing Date,
except those representations and warranties of the Petrobras
Parties that speak of a certain date, which representations and
warranties shall have been true and correct in all material
respects as of such date;

     (ii) each of the Petrobras Parties shall have performed and
complied with its obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to
the First Swap Closing Date, in all material respects; and

     (iii) each of the Petrobras Parties, respectively, shall
deliver, or cause to be delivered, share certificates, duly
endorsed or accompanied by transfer powers (including, without
limitation, the notice required pursuant to Section 215 of
Argentine law 19,550 with signatures of authorized officers, duly
notarized and certified as to their authenticity and powers of
signatories and complying with the requirements of Caja de
Valores, S.A.), with respect to the Petrobras B Shares to be
transferred and conveyed in accordance with Section 1.3(c).

     (i) Petrobras shall be reasonably satisfied that the consummation of
the Transactions will not result in either CIESA or TGS being deemed a
“subsidiary” of Petrobras within the meaning of any material financing
agreement of Petrobras and Petrobras shall have delivered to PESA (and
PESA shall have given written notice to the Enron Parties of such
delivery) written confirmation of such satisfaction.

     (j) The Parties shall have agreed, in accordance with Section 4.6,
on the final terms and conditions of the trust agreement that will govern
the Trust.

     (k) The Petrobras Parties, the trustee for the Trust and, as
applicable, EACH and EPCA, shall have agreed upon the final terms and
conditions of the New Shareholders Agreement pursuant to the principles
set forth on Appendix C.

     (l) No material proceeding has been initiated by any Argentine
Governmental Authority of competent jurisdiction having valid enforcement
authority seeking an Order preventing the consummation of the
Transactions is pending, nor shall there be any action taken, or any Law
or Order enacted, entered or enforced that has not been subsequently
overturned or otherwise made inapplicable to this Agreement, that makes
the consummation of the Transactions illegal.

     1.5 Second Swap Closing Date Transactions. On the Second Swap Closing
Date, the following obligations, covenants and agreements shall be
simultaneously effected:

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     (a) Subject to the simultaneous transfer of TGS B Shares provided in
Section 1.5(b) free and clear of any and all Liens, EACH and EPCA
collectively shall transfer and convey 25,885,809.5 CIESA B Shares to
such Person or Persons as shall be designated by PESA free and clear of
any and all Liens, which shares constitute one hundred percent (100%) of
the CIESA B Shares held by EACH and EPCA, collectively (after giving
effect to the First Swap Transactions), and represent ten percent (10%)
of the total issued and outstanding capital stock of CIESA as of the date
of this Agreement.

     (b) Each of the Petrobras Parties shall vote their respective equity
interests in CIESA in favor of CIESA transferring and conveying
34,133,200 TGS B Shares to EPCA or such Affiliate thereof as it shall
designate, which shares constitute one hundred percent (100%) of the TGS
B Shares held by CIESA and represent approximately 4.3% of the total
issued and outstanding capital stock of TGS. Enron and the Enron Parties
acknowledge that, notwithstanding the satisfaction by each of the
Petrobras Parties of their respective obligations under Section 4.7, the
Petrobras Parties may fail to obtain the consent of the creditors of
CIESA necessary to effect the transfer described in this Section 1.5(b).

     1.6 Conditions to Second Swap Closing Date Transactions. The respective
obligations of the Parties to consummate the transactions set forth in Section
1.5 are subject to the fulfillment, on or prior to the Second Swap Closing
Date, of each of the following conditions:

     (a) No Order issued by any court of competent jurisdiction or
regulatory authority having valid enforcement authority preventing the
consummation of the transactions contemplated under Section 1.5 shall be
in effect, nor shall any material proceeding initiated by any
Governmental Authority of competent jurisdiction having valid enforcement
authority seeking such an Order be pending, nor shall there be any action
taken, or any Law or Order enacted, entered or enforced that has not been
subsequently overturned or otherwise made inapplicable to this Agreement,
that makes the consummation of the transactions contemplated hereby
illegal.

     (b) Any and all Required Consents for the transactions contemplated
under Section 1.5 shall have been obtained.

     (c) The transactions described under Sections 1.1, 1.2 and 1.3
hereof shall have been consummated.

     (d) With respect to the obligations of each of the Petrobras Parties
to consummate the transactions set forth in Section 1.5:

     (i) all of the representations and warranties of the Enron
Parties contained herein shall be true and correct in all material
respects on

10

 

and as of the Second Swap Closing Date, except those
representations and warranties of the Enron Parties that speak of
a certain date, which representations and warranties shall have
been true and correct in all material respects as of such date;

     (ii) each of the Enron Parties shall have performed and
complied with their respective obligations and covenants required
by this Agreement to be performed or complied with by it on or
prior to the Second Swap Closing Date, in all material respects;
and

     (iii) EPCA and EACH, respectively, shall deliver, or cause to
be delivered, share certificates, duly endorsed or accompanied by
transfer powers (including, without limitation, the notice
required pursuant to Section 215 of Argentine law 19,550 with
signatures of authorized officers, duly notarized and certified as
to their authenticity and powers of signatories), with respect to
the CIESA B Shares to be transferred and conveyed in accordance
with Section 1.5(a).

     (e) With respect to the obligations of the Enron Parties to
consummate the transactions set forth in Section 1.5:

     (i) all of the representations and warranties of each of the
Petrobras Parties contained herein shall be true and correct in
all material respects on and as of the Second Swap Closing Date,
except those representations and warranties of the Petrobras
Parties that speak of a certain date, which representations and
warranties shall have been true and correct in all material
respects as of such date;

     (ii) each of the Petrobras Parties shall have performed and
complied with its obligations and covenants required by this
Agreement to be performed or complied with by it on or prior to
the Second Swap Closing Date, in all material respects; and

     (iii) each of the Petrobras Parties shall cause CIESA to
deliver share certificates, duly endorsed or accompanied by
transfer powers (including, without limitation, the notice
required pursuant to Section 215 of Argentine law 19,550 with
signatures of authorized officers, duly notarized and certified as
to their authenticity and powers of signatories and complying with
the requirements of Caja de Valores, S.A.), with respect to the
TGS B Shares to be transferred and conveyed in accordance with
Section 1.5(b).

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

11

 

     2.1 General Representations. Subject to Section 5.17, each Party
individually represents and warrants to each other Party that the statements
contained in this Section 2.1 are true, correct and complete with respect to
itself as of the date of this Agreement.

     (a) Organization and Authority. Such Party is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its creation, formation or organization. Such Party has
all necessary right, power and authority to execute, deliver and perform
its obligations under this Agreement and each other Settlement Document
to which it is a party. Subject, with respect to the Enron Parties, to
the entry of the Final Order, each Party’s execution, delivery and
performance of this Agreement and each other Settlement Document to which
it is a party have been duly and validly authorized by all necessary
corporate or other proceedings on the part of such Party.

     (b) Enforceability. This Agreement and the other Settlement
Documents to which it is a party have been or, when executed and
delivered will be, duly executed and delivered on behalf of such Party
and constitute or, when executed and delivered will constitute, subject,
with respect to the Enron Parties, to the entry of the Final Order, the
legal, valid and binding obligation of such Party enforceable against it
in accordance with its terms (subject to the terms of the Final Order),
except that such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights generally and (b) equitable principles which
may limit the availability of certain equitable remedies (such as
specific performance).

     (c) No Conflicts. The execution, delivery and performance of this
Agreement and the other Settlement Documents to which it is a party do
not violate, conflict with or result in a breach or a default under (i)
any of the terms and conditions of its Governing Documents or (ii) to the
knowledge and belief of such Party, after due inquiry, (x) subject, with
respect to Enron and the Enron Parties, to the entry of the Final Order,
any Applicable Law or (y) any terms, covenants, conditions or provisions
of any indenture, loan agreement, lease agreement, mortgage, deed of
trust, agreement or instrument to which it is a party or to which it may
be subject (except with respect to such violations, conflicts or breach
or default as would not reasonably be expected to have a Material Adverse
Effect).

     (d) Compliance; Litigation. Such Party is in compliance with each
of its covenants and agreements set forth in this Agreement applicable to
it. There is no action, suit or proceeding pending or, to its knowledge,
threatened (i) that is binding on or otherwise affects in any way this
Agreement or any other Settlement Document or the Transactions or (ii)
that questions the validity of this Agreement or any other Settlement
Document or the rights or remedies of the other Parties thereunder.

12

 

     (e) Approvals; Consents. Except for those Consents set forth on
Schedule 2.1(e), each Party has obtained all Consents that are necessary
for its execution and delivery of this Agreement and each other
Settlement Document to which it is a party and the consummation of the
Transactions.

     (f) Parties-in-Interest. The Parties hereto constitute all of the
relevant and appropriate parties to the Shareholders Agreement and the
Owners Agreement and, except for Transwestern, parties-in-interest to the
Guaranty. Each Party represents and warrants that it is the only Person
who has any interest in any Claims released hereby or as contemplated
hereunder and that none of such Claims, nor any part thereof, have been
assigned, granted or transferred in any way to any Person.

     (g) Confidentiality. Such Party is not in breach in any material
respect of its confidentiality obligations set forth in section 2.5 of
the Shareholders Agreement.

     2.2 Additional Representation and Warranty Concerning the Equity
Interests.

     (a) EACH and EPCA each individually represents and warrants to the
Petrobras Parties that, with respect to itself as of the date of this
Agreement, (i) they are the record and beneficial owner of the CIESA
Shares in the respective share amounts shown on Schedule 2.2(a), and they
each have the requisite organizational power and authority to transfer
the CIESA Shares they respectively own as provided in this Agreement, and
such delivery will convey to the recipient of such transfer pursuant
hereto good and marketable title to such CIESA Shares, free and clear of
any and all Liens thereon; and (ii) the CIESA Shares they respectively
own are validly issued, fully paid and non-assessable, and there is no
existing option, warrant, right, call, commitment or other agreement to
which it, Enron or any Enron Party is a party requiring, and there are no
securities of it, Enron or any Enron Party outstanding which, upon
conversion, would require, the issuance, sale or transfer of any
additional shares of capital stock or other equity interests of CIESA or
other securities convertible into, exchangeable for or evidencing the
right to subscribe for or purchase shares of capital stock or other
equity interests of CIESA.

     (b) Each of the Petrobras Parties individually represents and
warrants to the Enron Parties that, with respect to itself as of the date
of this Agreement, (i) such Petrobras Party is the record and beneficial
owner of the Petrobras B Shares in the respective share amounts shown on
Schedule 2.2(b), and such Petrobras Party has the requisite
organizational power and authority to transfer their respective Petrobras
B Shares as provided in this Agreement, and such delivery will convey to

EPCA or such Affiliate thereof as it shall designate good and marketable
title to such Petrobras B Shares, free and clear of any and all Liens
thereon; and (ii) the Petrobras B Shares held by such Petrobras Party are
validly issued, fully paid and non-assessable, and there is no existing
option, warrant,

13

 

right, call, commitment or other agreement to which the Petrobras
Parties or any of their respective Affiliates is a party requiring, and
there are no securities of any of the Petrobras Parties or any of their
respective Affiliates outstanding which, upon conversion, would require,
the issuance, sale or transfer of any additional shares of capital stock
or other equity interests of TGS or other securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock or other equity interests of TGS.

     (c) Ponderosa, EACH and EPCA each individually represents and
warrants to the Petrobras Parties that the organizational chart attached
hereto as Schedule 2.2(c) represents in all material respects the
ownership interests in the Enron Parties as of the date of this
Agreement.

     (d) PESA and Petrobras Hispano each individually represents and
warrants to the Enron Parties that the organizational chart attached
hereto as Schedule 2.2(d) represents in all material respects the
ownership interests in the Petrobras Parties as of the date of this
Agreement.

ARTICLE 3

TERMINATION

     3.1 Termination of Agreement. The Parties (including, for all purposes of
this Section 3.1, Enron) agree that this Agreement may be terminated:

     (a) Upon the written agreement of all of the Parties;

     (b) By any Party, if the Final Order has not been entered on or
prior to the ninetieth (90th) day after the Motion has been filed with
the Bankruptcy Court;

     (c) By any Party, after the entry of the Final Order, so long as
such Party is not then in breach of its obligations under this Agreement
in any material respect, if any other Party has materially breached any
of its representations, warranties, covenants or agreements contained in
this Agreement and such breach has not been cured within thirty (30)
Business Days from the date on which the breaching Party (and each other
Party) receives notice thereof from the terminating Party;

     (d) By any Party, if the transactions described in Sections 1.1,
1.2, 1.3 and 1.5 hereof have not been consummated prior to the one
hundred and eightieth (180th) day following the entry of the Final Order;
provided, however, that such 180-day period may be extended only by
written consent of each of the Petrobras Parties, Ponderosa and Enron; or

14

 

     (e) By any Party, after entry of the Final Order, if such Party has
received (i) a written opinion of counsel stating, without qualification,
that the prior approval of the CNDC is required to effect the
Transactions or any material portion thereof or (ii) evidence from
Petrobras reasonably satisfactory to the other Parties that the CNDC has
actually commenced a formal proceeding under Law 25.156 against any of
the Petrobras Parties in connection with the Transactions contemplated by
this Agreement, and in each case the Parties, after negotiating in good
faith for a period of sixty (60) days after the date of such opinion of
counsel or delivery of such evidence, are unable to agree on an amendment
to this Agreement and the structure of the Transactions in a manner that
approval of CNDC is not required.

     3.2 Effect of Termination. No termination of this Agreement pursuant to
Section 3.1 shall be effective until notice thereof shall be given pursuant to
Section 5.10 to the non-terminating Parties specifying the provisions hereof
pursuant to which such termination is made. If validly terminated pursuant to
Section 3.1, the Agreement shall become wholly void and of no further force and
effect without liability to the Parties, except that (i) the releases set forth
in Section 1.1, this Section 3.2 and the obligations of the Parties under such
Sections of Article 1 and Article 4 (including Section 4.10) applicable to the
Transactions that have theretofore been consummated and Article 5 of this
Agreement shall remain in full force and effect and, (ii) the Settlement
Documents (other than this Agreement) executed prior to such termination will
remain in full force and effect in accordance with their terms, and (iii) if
the Agreement is validly terminated pursuant to (A) Section 3.1(c) due to a
breach by any of the Petrobras Parties, (B) Section 3.1(d) due to any of the
conditions precedent set forth in clause (i), (j) or (k) of Section 1.4 not
being satisfied, or (C) Section 3.1(e), the obligations of the Parties under
Sections 4.2 and 4.3 shall remain in full force and effect until the earlier of
(x) the date on which the ENARGAS Release is obtained and (y) the later of (A)
the one hundred and eightieth (180th) day following such termination and (B)
the three hundred and sixty-fifth (365th) day following the date of this
Agreement. Notwithstanding the foregoing, nothing in this Section 3.2 shall be
deemed to release any Party from liability for any breach of its obligations
under this Agreement in any material respect.

ARTICLE 4

COVENANTS

     4.1 Management Fee.

     (a) Subject to the entry of the Final Order, notwithstanding the
terms of the Letter Agreements to the contrary, as of September 15, 2003,
EPCA’s portion of the management fee payable by TGS under the terms of
Section 2.5 of the Technical Assistance Agreement (the “Management Fee”)
shall be fifty-seven percent (57%) and PESA’s portion of the Management
Fee shall be twenty-five percent (25%). The remaining eighteen percent
(18%) portion of such

15

 

Management Fee (the “Management Fee Funds”) shall be held by EPCA in
a segregated bank account (the “Management Fee Account”).

     (b) Within five (5) Business Days following date of entry of the
Final Order, PESA shall deposit by wire transfer of immediately available
funds into the Management Fee Account an amount equal to the product of
(x) the aggregate amount of the Management Fee paid to PESA by EPCA for
the period beginning on September 15, 2003 and ending on the earlier of
(i) the date of entry of the Final Order or (ii) May 15, 2004, multiplied
by (y) a fraction the numerator of which is eighteen (18) and the
denominator of which is forty-three (43).

     (c) The apportionment of the Management Fee described in Section
4.1(a) above shall remain in effect retroactively from September 15, 2003
until the earliest of:

     (i) May 15, 2004, or such later date as may be agreed to
jointly by Ponderosa and Enron in their sole discretion (the “Fee
Termination Date”);

     (ii) the date on which EPCA ceases to be the “Operator” under
the Technical Assistance Agreement; and

     (iii) the date on which a restructuring of TGS’s outstanding
funded indebtedness shall have been consummated.

Upon the earliest to occur of the events described in clauses (i) through
(iii) above, the Management Fee (to the extent that EPCA is still
entitled to receive the Management Fee) will thereafter be apportioned
among EPCA and PESA as provided in the Letter Agreements or any other
agreement existing between EPCA and PESA.

     (d) The Management Fee Funds shall remain in the Management Fee
Account until the earlier of (i) the Second Swap Closing Date, in which
case the Management Fee Funds, and interest accrued thereon, if any,
shall be released and shared equally between PESA and EPCA, and (ii) the
termination of this Agreement in accordance with the provisions of
Section 3.1 hereof, in which case the funds in such account, and interest
accrued thereon, if any, shall be paid to PESA within ten (10) Business
Days from the date of such termination; provided, however, that, with
respect to clause (ii) above, if PESA, Petrobras Hispano or any of their
respective Related Parties are in material breach of any of their
respective representations, warranties, covenants or agreements contained
in this Agreement as of the date of such termination or if the First Swap
Closing Date shall have occurred, such funds shall be released to EPCA
and such funds shall be free from any restrictions or limitations set
forth in this Agreement. If, at the time of distribution of the
Management Fee Funds described herein, the amount in the Management Fee
Account is insufficient to equal eighteen percent (18%) of the

16

 

total Management Fee earned from September 15, 2003 to the Fee
Termination Date due to administrative costs and expenses payable in
respect of the Management Fee Account, then PESA and EPCA shall share
ratably such shortfall.

     4.2 Technical Assistance Agreement. Subject to entry of the Final Order:

     (a) Each of the Petrobras Parties and their respective successors
and assigns, shall, and shall cause their Related Parties to, at the
direction of Enron and in accordance with the principles set forth on
Appendix D (the “ENARGAS Principles”), cause and support the termination
of the Technical Assistance Agreement by TGS under terms for such
termination acceptable to Enron in its sole discretion; provided,
however, that if ENARGAS notifies Enron, EPCA or TGS that in connection
with granting the ENARGAS Release, it will consent to the assignment or
transfer of the Technical Assistance Agreement to PESA or a designee of
PESA, including the right to receive the Management Fee, for no
additional consideration (whether monetary or otherwise) payable by
Enron, Ponderosa, Transwestern or the Enron Parties, the Parties will use
commercially reasonable efforts to achieve such result.

     (b) If the Technical Assistance Agreement is terminated, assigned or
transferred to PESA or a designee of PESA pursuant to Section 4.2(a) and
the ENARGAS Release has been granted, (i) EPCA and PESA agree to amend
the Owners Agreement to, (x) in the event that the Technical Assistance
Agreement is terminated, eliminate any reference to the EPCA criteria
described in section 4.8(b) of the Owners Agreement and, (y) in the event
that the Technical Assistance Agreement is assigned or transferred,
include new criteria, to be determined at PESA’s sole discretion,
relating to PESA and (ii) the Parties acknowledge and agree that from and
after the effective date of such termination, assignment or transfer the
Enron Parties shall not have any rights to receive the Management Fee or
any portion thereof.

     (c) Enron and PESA, at the direction of Enron and in accordance with
the ENARGAS Principles, will jointly, on behalf of TGS, seek any and all
required consents for, prior approvals of and/or provide any and all
required notices in respect of the termination, assignment or transfer of
the Technical Assistance Agreement as described in Section 4.2(a),
including obtaining any required approval or consent of ENARGAS.

     (d) Consistent with the provisions of this Section 4.2, TGS and EPCA
have executed the TGS Letter, which provides EPCA the right to terminate
the Technical Assistance Agreement at any time, subject to the prior
approval of ENARGAS; provided, however, that EPCA hereby agrees not to
exercise its rights under the TGS Letter to terminate the Technical
Assistance Agreement until at least forty-five (45) days after the date
on which the Final Order is entered by the Bankruptcy Court.

17

 

     (e) Notwithstanding any other provision to the contrary contained in
this Agreement, each of the Petrobras Parties and Ponderosa acknowledges
and agrees that the approval of ENARGAS will be required for the
termination, assignment or transfer of the Technical Assistance Agreement
and, in order for ENARGAS to approve such termination, assignment or
transfer and for the Parties to obtain the benefit of the releases set
forth in this Agreement, EPCA’s right to receive the Management Fee may
be terminated and, as a result thereof, neither PESA nor any of its
Affiliates will be entitled to any portion of the Management Fee.

     4.3 ENARGAS Release.

     (a) Subject to entry of the Final Order, in connection with
obtaining the ENARGAS Release, each of the Petrobras Parties and their
respective successors and assigns, shall, and shall cause their
respective Affiliates and their Related Parties to, cooperate with and
use its and their best efforts to promptly assist Enron, Transwestern,
TGS, CIESA and the Enron Parties to:

     (i) promptly prepare and file with the applicable
Governmental Authorities all necessary or advisable documentation
and information of the Petrobras Parties and their Related
Parties, relating to CIESA and TGS, provided, however, with
respect to any documentation and/or information that is deemed
confidential by the Petrobras Parties in connection with their
respective obligations set forth in this Section 4.3(i), the
Parties agree to consult with each other with respect to
disclosure of all or any portion of such documentation and/or
information and the Parties shall take all reasonable actions to
maintain the confidentiality treatment of such documentation
and/or information by the recipient thereof;

     (ii) effect all necessary or advisable applications, notices,
petitions and filings and execute all agreements and documents;

     (iii) obtain all necessary or advisable prior Consents; and

     (iv) take, or to cause to be taken, all other actions, and
to do, or to cause to be done, all other things, including, if
necessary, the termination of the Technical Assistance Agreement
or the right to receive the Management Fee,

in the case of each of the foregoing clauses (i) through (iv), as may be
necessary or advisable under this Agreement, Applicable Law or otherwise
to obtain and otherwise make effective an ENARGAS Release.

     (b) Each of Petrobras and the Petrobras Parties, for itself and its
successors and assigns, shall, and shall cause their applicable Related
Parties to, irrevocably waive, release and forever discharge each of
Enron and the Enron

18

 

Parties and their respective Related Parties from any and all Claims
arising as a result of any actions taken by Enron or any Enron Party
pursuant to this Section 4.3 (except for any actions or inactions that
would constitute a breach of this Section 4.3).

     (c) Each of Enron and the Enron Parties, for itself and its
successors and assigns, shall, and shall cause their applicable Related
Parties to, irrevocably waive, release and forever discharge each of
Petrobras and the Petrobras Parties and their respective Related Parties
from any and all Claims arising as a result of any actions taken by the
Petrobras Parties pursuant to this Section 4.3 (except for any actions or
inactions that would constitute a breach of this Section 4.3).

     4.4 Shareholders Agreement. Each of the Parties agrees that, except as
otherwise provided herein, each of the Owners Agreement and the Shareholders
Agreement and each of the agreements, covenants and other undertakings made in
respect thereof shall remain in full force and effect until the New
Shareholders Agreement is duly executed and delivered by the parties thereto,
upon which the Owners Agreement and the Shareholders Agreement shall terminate
and be of no further force and effect; provided, however, that (i) the
obligations of Transwestern under the Guaranty shall terminate pursuant to the
Transwestern Release and, (ii) subject to entry of the Final Order, the
Petrobras Parties hereby specifically acknowledge and agree that as of the date
of this Agreement none of EPCA, EACH, Transwestern, Ponderosa, Enron or any of
their Affiliates and insurers shall, or shall be obligated to, provide to the
Petrobras Parties or any of their Affiliates and insurers (or TGS, CIESA or
their respective Affiliates) any proceeds or other amounts from or in respect
of any losses, liabilities, damages, claims, expenses or deficiencies
(including interest, penalties, fines, judgments, settlements, costs of
preparation and investigation) arising from any insurance or other risk
protection as described in Section 2.8 of the Owners Agreement. Each of
Ponderosa, EACH, EPCA, and the Petrobras Parties shall use commercially
reasonable efforts to negotiate in good faith the New Shareholders Agreement
and execute and deliver it to each other on the First Swap Closing Date.

     4.5 CIESA Restructuring. Each of Ponderosa, EPCA and EACH agree to
support the CIESA Restructuring to the extent such CIESA Restructuring (i) is
on commercially reasonable terms in light of the present financial condition of
CIESA and (ii) either (x) results in Ponderosa owning, directly or indirectly,
the CIESA B Shares to be transferred pursuant to Section 1.5(b), or (y) does
not dilute Ponderosa’s remaining ten percent (10%) indirect interest in CIESA.
Notwithstanding the foregoing, none of Ponderosa, EPCA, EACH or any of their
respective Affiliates shall be obligated to make any financial contribution,
whether in the form of securities, cash, cash equivalents or otherwise, in
connection with the CIESA Restructuring pursuant to this Section 4.5.

     4.6 Trust Formation and New Shareholders Agreement. The Parties shall
cooperate in good faith to (i) agree on the final terms of the New Shareholders
Agreement in accordance with the principles set forth on Appendix C and (ii)
form the Trust in accordance with the principles set forth on Appendix B,
unless PESA elects not

19

 

to form the Trust and instead designates an alternative entity or entities
to receive the CIESA A Shares and CIESA B Shares pursuant to Section 1.3(b).

     4.7 Appropriate Actions; Filings. Until this Agreement shall be
terminated in accordance with the terms hereof, each of the Parties shall
cooperate with each other and use (and will cause their respective Affiliates
to use) commercially reasonable efforts (i) to take, or to cause to be taken,
all actions, and to do, or to cause to be done, all things reasonably proper or
advisable on its part under this Agreement, Applicable Law or otherwise to
consummate and make effective the Transactions, including (except as prohibited
by Applicable Law or any organizational documents of CIESA) voting any equity
interest in CIESA, (ii) to promptly prepare and to file all necessary
documentation, including the filing of any notices with the Comisión Nacional
de Valores (the Argentine Securities Commission) and the Bolsa de Comercio de
Buenos Aires, (iii) to effect all necessary or advisable applications, notices,
petitions, and filings and to execute all agreements and documents, (iv) to
obtain all necessary approvals, authorizations, consents, licenses, permits or
certificates of all Governmental Authorities (including all Required Consents)
and (v) to obtain all necessary permits, consents, approvals and authorizations
of any Person (including all Required Consents), in the case of each of the
foregoing clauses, in accordance with Applicable Law and this Agreement and as
necessary or advisable to consummate the Transactions; provided, however, that
no Party nor any of their respective Affiliates shall be obligated to pay any
consideration or fees to obtain any consents from third parties or Governmental
Authorities that may be necessary, proper or advisable to consummate the
Transactions; and provided further, that none of the Parties shall be obligated
to make any filing or seek any consent from the Comisión Nacional de Defensa de
la Competencia. In addition, each Party will provide prompt notification to
the other Parties when any such approval, authorization, consent, license,
permit, certificate, action, filing or notice referred to in this Section 4.7
is obtained, taken, made or given, as applicable. Each of the Parties shall
have the right to review in advance all filings to be made under this Section
4.7 by any other Party with any Governmental Authority in connection with the
Transactions, and each Party will make its respective representatives available
to the other Parties to discuss any questions or issues raised with respect to
such filings for a reasonable period prior to making such filings.

     4.8 Limitation of Mutual Release. The Parties hereby acknowledge and
agree that the provisions of Sections 1.1 and 4.3 and the releases provided for
therein (a) shall not be construed as imposing any indemnity or payment
obligation on any Party or on their Affiliates; (b) shall be solely applicable
to the matters described therein; and (c) shall not be interpreted as or
otherwise intended to be a release of any rights, remedies or obligations the
Parties may have against any other Party and/or any Affiliates of the other
Party arising out of, related to or in connection with any contracts,
agreements or other arrangements, other than as expressly provided in Section
1.1 and 4.3 above, respectively.

     4.9 Operation of TGS/CIESA in the Ordinary Course. During the period from
the date hereof to and through the consummation of the Transactions or the
earlier

20

 

termination of this Agreement in accordance with Section 3.1, except as
contemplated in this Agreement (including in respect of the CIESA Restructuring
and the restructuring of TGS’s outstanding funded indebtedness), the Parties
shall cause, and shall cause each of their respective Affiliates to cause,
CIESA and TGS, consistent with any applicable fiduciary duties, to conduct
their business in all material respects in the Ordinary Course of Business, and
preserve in all material respects their present business operations and
organization.

     4.10 Transition Services; Continued Support. From and after the date the
Final Order is entered by the Bankruptcy Court, for a period of two (2) years,
the Petrobras Parties will cause CIESA and/or TGS to continue to provide the
services set forth on Schedule 4.10 (the “Transition Services”) to the Enron
Parties. The Transition Services shall be performed with a degree of skill,
diligence and prudence with which TGS, its Affiliates and their respective
personnel have performed such services for the Enron Parties prior to the date
of this Agreement and shall be of substantially equivalent quality. In
addition, the Transition Services shall be performed with at least the same
level of skill, diligence, prudence and quality as TGS utilizes in performing
similar services for its Affiliates other than the Enron Parties. As
consideration for the Transition Services the Petrobras Parties will cause to
be provided to the Enron Parties by CIESA and/or TGS pursuant to this Section
4.10, CIESA and/or TGS will be compensated in accordance with the fee structure
set forth on Schedule 4.10. The Petrobras Parties agree to, and shall cause
CIESA and/or TGS to, provide the necessary information requested by Ponderosa
and its Affiliates in connection with any arbitration or similar proceedings
relating to CIESA and/or TGS in which Ponderosa or any of its Affiliates has an
interest.

     4.11 Further Assurances. From time to time, upon request, the Parties
shall, without further consideration, promptly execute, deliver, acknowledge
and file all such further documents, agreements, certificates and instruments,
and do such further acts as the Persons entitled to the benefit of this
Agreement may reasonably require to more effectively evidence or effectuate the
Transactions.

     4.12 Filing of the Motion. Within fifteen (15) Business Days after the
date on which this Agreement is fully executed and delivered by every signatory
hereto unless otherwise extended by agreement among the Parties, Enron shall
file a motion with the Bankruptcy Court seeking the approval of this Agreement,
the other Settlement Documents and the consummation of the Transactions (the
“Motion”), a copy of which shall be provided to PESA prior to filing. Enron
shall submit the form of the Final Order with the Motion.

     4.13 No Objections. None of the Parties shall file any objection to the
Motion.

     4.14 Indemnification. The Petrobras Parties hereby agree to jointly and
severally indemnify and hold harmless each of Enron, the Enron Parties and each
of their respective Related Parties, from and against any and all liabilities
arising out of, relating to or in connection with the formation, operation and
existence of the Trust.

21

 

     4.15 CIESA Bankruptcy. In the event that any involuntary bankruptcy
filing of CIESA is made, the Parties hereto agree to use commercially
reasonable efforts to cooperate with each other in defending CIESA against any
such action; provided, however, that, in connection with such cooperation, (i)
no Party shall be obligated to incur any expense or costs in connection with
such defense other than as may be required under the Owners Agreement or the
Shareholders Agreement, (ii) no Party shall take, or be obligated to take, any
action that could in any way delay, hinder, impede or frustrate the ability of
the Enron Parties to obtain the ENARGAS Release or otherwise limit the
obligations of the Parties under this Agreement to seek and obtain the ENARGAS
Release, and (iii) no Party shall be obligated to undertake or incur any
financial obligation with respect to the satisfaction of any claims asserted by
any Person in connection with such bankruptcy filing.

ARTICLE 5

MISCELLANEOUS

     5.1 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any other agreement executed pursuant
to this Agreement, including, without limitation, any certificate or other
document furnished in connection with the execution of this Agreement, shall
not survive beyond the Second Swap Closing Date or a termination of this
Agreement in accordance with Section 3.1.

     5.2 Waivers. Each Party hereto waives any notice that may be required to
be received by any such Party in order to implement the Transactions
contemplated herein. Each Party hereto hereby waives for purposes of the
Transactions any provision contained in any document, agreement or instrument
that would prohibit or impair the Parties from entering into this Agreement or
the other Settlement Documents or consummating the Transactions as contemplated
herein and therein, including any consent and timing requirements set forth
therein.

     5.3 Amendment. No modification, rescission, waiver, release or amendment
of any provision of this Agreement shall be effective unless in a writing
signed by each of the Parties.

     5.4 Expenses. Each Party agrees to bear all of its own costs and expenses
incurred in connection with the preparation, negotiation and execution of this
Agreement and the other Settlement Documents and the Transactions and any and
all amendments, modifications and supplements thereto.

     5.5 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

22

 

     5.6 Successors and Assigns. No Party may assign its benefits or delegate
its duties under this Agreement without the prior written consent of the other
Parties, which consent shall not be unreasonably withheld. Any attempted
assignment or delegation without such prior consent will be void. This
Agreement is binding upon and shall inure to the benefit of each Party and
their respective successors and permitted assigns.

     5.7 No Third Party Beneficiaries. Except as provided in the following
sentence, this Agreement is solely for the benefit of the Parties and no other
Person will have any right, interest or claim under this Agreement.
Notwithstanding any other provision of this Agreement, the Parties acknowledge
and agree that Transwestern and the Transwestern Parties are third party
beneficiaries under this Agreement and are entitled to all rights, interests
and claims under this Agreement and Applicable Law as if they were a party
hereto. In the case of Transwestern, all of such rights, interests and claims
are acknowledged and accepted by its execution of this Agreement and, in the
case of the Transwestern Parties, all of such rights, interests and claims
shall be deemed acknowledged and accepted by Transwestern’s execution of the
Transwestern Release.

     5.8 Counterparts. This Agreement shall be executed in eight or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. All pages of this Agreement (other than the signature pages) shall
be initialed by, and the applicable signature page shall contain a complete
signature of, an authorized officer of each of the Parties, duly certified by
notary public.

     5.9 Headings. The headings, captions and arrangements used in this
Agreement are for convenience only and shall not effect the interpretation of
this Agreement.

     5.10 Notices. All demands, notices, requests, instructions,
correspondence or other documents to be given hereunder by any Party shall be
in writing and will be considered received (i) upon receipt when transmitted by
facsimile before 5:00 p.m. Houston, Texas time with written confirmation of
such transmittal (transmittals by facsimile received after 5:00 p.m. Houston,
Texas time will be considered to be received on the next Business Day), (ii) on
the next Business Day following actual transmittal when transmitted by an
internationally recognized courier service or (iii) on the fifth Business Day
following actual transmittal when transmitted by certified mail, postage
prepaid, return receipt requested; in each case when transmitted to a Party at
its address set forth below (or to such other address as may be hereafter
notified by the respective Party hereto to the other Parties):

23

 

	 	 	 
	If to Enron or an Enron Party:
	 
	 	 
	 
	 	Enron Corp.
	 
	 	Four Houston Center
	 
	 	1221 Lamar, Suite 1600
	 
	 	Houston, Texas 77010
	 
	 	Attn: General Counsel
	 
	 	Facsimile:  (713) 646-6227
	 
	 	 
	 
	 	and
	 
	 	 
	 
	 	Enron Corp.
	 
	 	Four Houston Center
	 
	 	1221 Lamar, Suite 800
	 
	 	Houston, Texas 77010
	 
	 	Attn:  Miguel A. Mendoza
	 
	 	Facsimile:  (713) 345-5352
	 
	 	 
	With a copy to:
	 
	 	 
	 
	 	Weil, Gotshal & Manges, LLP
	 
	 	767 Fifth Avenue
	 
	 	New York, NY  10153
	 
	 	Attn: Marita A. Makinen
	 
	 	Facsimile:  (212) 310-8007
	 
	 	 
	 
	 	and
	 
	 	 
	 
	 	Transwestern Pipeline Company
	 
	 	Four Houston Center
	 
	 	1331 Lamar, Suite 650
	 
	 	Houston, Texas 77010
	 
	 	Attn:  General Counsel
	 
	 	Facsimile:  (713) 646-2738
	 
	 	 
	 
	 	and
	 
	 	 
	 
	 	Ponderosa Assets, L.P.
	 
	 	C/O Citibank, N.A.
	 
	 	388 Greenwich Street 19th. Floor
	 
	 	New York, NY 10013
	 
	 	Attn: Peter Nathaniel
	 
	 	Facsimile: (212) 816-7737
	 
	 	 
	If to Petrobras, PESA or Petrobras Hispano:

24

 

	 	 	 
	 
	 	Petrobras Energía S.A.
	 
	 	Maipú (C1084ABA)
	 
	 	Buenos Aires, Argentina
	 
	 	Attn:  Corporate Finance
	 
	 	Facsimile:  011-5411-4344-6325
	 
	 	 
	With a copy to:
	 
	 	 
	 
	 	Petróleo Brasiliero S.A.-Petrobras
	 
	 	Avenida Republica do Chile 65
	 
	 	20031-912 Rio de Janiero – RJ
	 
	 	Brazil
	 
	 	Attn:  Ms. Elaine Carbonelli, Gerente Setorial de
	 
	 	Assessoramento Corporativo
	 
	 	Facsimile: 011-5521-2262-3924

     5.11 Governing Law. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY
AND BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE REPUBLIC OF ARGENTINA
(EXCLUDING ANY CONFLICT-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE
INTERNAL LAWS OF ANY OTHER JURISDICTION) APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH JURISDICTION.

     5.12 Arbitration; Submission to Jurisdiction.

     (a) The Parties acknowledge and agree that any dispute, controversy
or Claim arising out of or relating to the agreements or covenants
contained in, or transactions contemplated by, this Agreement, or the
validity, interpretation, breach or termination of any such agreements or
covenants, including Claims seeking redress or asserting rights under any
Law (a “Dispute”), shall be finally settled by binding arbitration in the
City of New York, New York, before a panel of three (3) arbitrators. The
arbitration shall be administered by the International Court of
Arbitration of the International Chamber of Commerce (the “ICC”) under
its Rules of Arbitration as in effect at the time of the Dispute and
shall be conducted in the English language. The Petrobras Parties, on
the one hand, and the Enron Parties, on the other hand, shall each
nominate one arbitrator, and each shall obtain its respective nominee’s
acceptance of such nomination, and deliver written notification of such
nomination and acceptance to the other Parties within thirty (30) days
after delivery of the request for arbitration. In the event a Party
fails to nominate an arbitrator or deliver notification of such
nomination to the other Parties within this time period, upon request of
any party, such arbitrator shall instead be appointed by the ICC within
thirty (30) days of receiving such request. The two arbitrators
nominated in accordance with the above provisions shall nominate the
third arbitrator (who will act as chairman), obtain the nominee’s
acceptance of such nomination and notify the Parties in writing of such

25

 

nomination and acceptance within thirty (30) days of their
nomination. If the first two nominated arbitrators fail to nominate a
third arbitrator or notify the parties of that nomination within this
time period, then, upon request of either party, the third arbitrator
shall be appointed by the ICC within thirty (30) days of receiving such
request. For the sake of clarity, it is expressly understood that the
function of such chair is administrative only and shall not signify that
such chair has greater or different powers as arbitrator from the other
arbitrators. In the event that the arbitrators nominated in accordance
with the above provisions fail to agree upon the selection of a chair
within this time period, upon request of any Party, the chair shall
instead be designated by the ICC within thirty (30) days of receiving
such request. The award of the arbitrators shall be final and binding
upon the Parties, and shall not be subject to any appeal or review. The
Parties agree to submit to the nonexclusive personal jurisdiction of the
federal and state courts sitting in the City of New York, New York for
the purpose of enforcing this agreement to arbitrate.

     (b) Judgment upon the award rendered may be entered in any court
having competent jurisdiction. The Parties hereby expressly consent to
the nonexclusive jurisdiction of the state and federal courts situated in
the City of New York, New York for this purpose and waive objection to
the venue of any proceeding in such court or that such court provides an
inconvenient forum.

     (c) To the extent that the ENARGAS Release has not yet been
obtained, Enron shall participate in any arbitration proceedings in
accordance with this Section 5.12 and shall be deemed a “Party” for
purposes of this Section 5.12.

     5.13 Final Agreement. This Agreement, including the Exhibits and
Schedules hereto, and the other Settlement Documents represents the entire
expression of the parties with respect to the subject matter hereof on the date
this Agreement is executed. This Agreement may not be contradicted by evidence
of prior, contemporaneous or subsequent oral agreements of the Parties. There
are no unwritten oral agreements between the Parties with respect to the
subject matter hereof.

     5.14 Compromise and Settlement. Each of the Parties hereto agrees that
none of the communications (whether oral or in writing) between and/or among
the Parties, their counsel and/or their respective representatives relating to,
concerning or in connection with, nor the execution and delivery of, this
Agreement and the Settlement Documents constitute an admission of any liability
but constitute a compromise and settlement.

     5.15 Joint Drafting. This Agreement is the product of mutual
negotiations, drafting and revisions with the benefit of legal representation
and, as such, shall be construed as jointly drafted by the Parties, and any
rule requiring this Agreement to be construed or interpreted against any Party
shall not apply.

26

 

     5.16 Remedies; Specific Performance. In addition to any other rights or
remedies that any Party may have at law or in equity, any Party is entitled to
seek a court order requiring another Party to perform this Agreement and the
transactions contemplated hereby.

     5.17 Conditions to Enron Actions. Notwithstanding any provision to the
contrary contained herein, all representations, warranties, covenants and
consents given by Enron on its own behalf or on behalf of any other Enron Party
in this Agreement and any other Settlement Documents are conditioned upon the
entry of the Final Order, which shall, among other things, authorize and
approve such representations, warranties, covenants and consents on the part of
Enron.

     5.18 Citibank Comfort Letter. Prior to the date hereof, PESA has received
a duly executed letter from CNAI, in form and substance satisfactory to PESA,
setting forth CNAI’s acknowledgment of this Agreement, the other Settlement
Documents and the Transactions.

[the remainder of page intentionally left blank]

27

 

     IN WITNESS WHEREOF, each of the Parties
have executed and delivered this Agreement as of the date first set forth
above.

	 	 	 	 	 
	 	 	PETRÓLEO BRASILEIRO S.A., solely for the limited
purposes of Sections 1.1, 1.4(i), 2.1(f), Article 3,
Sections 4.3, 4.8, 4.11, 4.13 and Article 5 and for
the purposes of accepting any right or benefit
contained elsewhere under this Agreement.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Alberto Guimarães
	

	 	 	 	
 
	

	 	 	 	Name: Alberto Guimarães
	

	 	 	 	Title: Director
	 
	 	 	 	 
	 	 	PETROBRAS ENERGÍA S.A.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Alberto Guimarães /s/ Rafael Fernandez Morandé
	

	 	 	 	
 
	

	 	 	 	Name: Alberto Guimarães / Rafael Fernandez Morandé
	

	 	 	 	Title: Director          
             
          Apoderado
	 
	 	 	 	 
	 	 	PETROBRAS HISPANO ARGENTINA S.A.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Héctor Daniel Casal /s/ Rafael Fernandez Morandé
	

	 	 	 	
 
	

	 	 	 	Name: Héctor Daniel Casal / Rafael Fernandez Morandé
	

	 	 	 	Title: Director          
             
          Apoderado
	 
	 	 	 	 
	 	 	ENRON CORP., solely for the limited purposes of
Sections 1.1, 1.4(c), 1.4(e), 2.1(f), Article 3, 4.2,
4.3, 4.7, 4.8, 4.10, 4.11 and Article 5 and for the
purposes of accepting any right or benefit contained
elsewhere under this Agreement.
	 
	 	 	 	 
	

	 	By:
	 	/s/ K. George Wasaff
	

	 	 	 	
 
	

	 	 	 	Name: K. George Wasaff
	

	 	 	 	Title: Managing Director and Attorney-in-fact

28

 

	 	 	 	 	 
	

	 	 	 	ENRON ARGENTINA CIESA HOLDING S.A.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Miguel A. Mendoza
	

	 	 	 	
 
	

	 	 	 	Name: Miguel A. Mendoza
	

	 	 	 	Title: Attorney-in-fact
	 
	 	 	 	 
	

	 	 	 	ENRON PIPELINE COMPANY ARGENTINA S.A.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Miguel A. Mendoza
	

	 	 	 	
 
	

	 	 	 	Name: Miguel A. Mendoza
	

	 	 	 	Title: Attorney-in-fact
	 
	 	 	 	 
	

	 	 	 	PONDEROSA ASSETS, L.P.
	 
	 	 	 	 
	

	 	 	 	By: Enron Ponderosa Management
	

	 	 	 	Holdings, Inc., its general partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ K. George Wasaff
	

	 	 	 	
 
	

	 	 	 	Name: K. George Wasaff
	

	 	 	 	Title: Attorney-in-fact

ACKNOWLEDGED AND ACCEPTED

as of the date first written above.

TRANSWESTERN PIPELINE COMPANY

	 	 	 
	By:

	 	/s/ K. George Wasaff
	

	 	
 
	

	 	Name: K. George Wasaff
	

	 	Title: Attorney-in-fact

29

 

APPENDIX A

     For purposes of the Agreement, the following terms shall have the meaning
specified herein:

     “Affiliates” means a Person directly or indirectly controlled by,
controlling or under common control with the other Person. For purposes of
this definition, “control” means, when used with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

     “Agreement” shall have the meaning set forth in the preamble to the
Agreement.

     “Applicable Law” means, with respect to any Person, any Law applicable to
such Person or its business, properties or assets.

     “Bankruptcy Case” means the chapter 11 cases commenced by Enron and
certain of its direct and indirect subsidiaries on or after December 2, 2001,
including any cases commenced after the date of this Agreement, jointly
administered under Case No. 01-16034-(AJG).

     “Bankruptcy Code” shall have the meaning set forth in the recitals to the
Agreement.

     “Bankruptcy Court” shall have the meaning set forth in the recitals to the
Agreement.

     “Bid Agreement” shall have the meaning set forth in the recitals to the
Agreement.

     “Business Day” means a day (other than a Saturday, Sunday or public
holiday) which is a day on which banks are open in New York City or Buenos
Aires.

     “CIESA” shall have the meaning set forth in the recitals to the Agreement.

     “CIESA Restructuring” means any transaction(s) agreed to by and among
CIESA and its creditors that modifies, restructures or refinances, as
applicable, the outstanding debt or shareholdings of CIESA.

     “CIESA A Shares” means the ordinary A shares of CIESA owned of record and
beneficially by EACH and EPCA as indicated on Schedule 2.2(a), as proposed to
be transferred, exchanged and conveyed in accordance with the terms of the
Agreement.

     “CIESA B Shares” means the ordinary B shares of CIESA owned of record and
beneficially by EACH and EPCA as indicated on Schedule 2.2(a), as proposed to
be transferred, exchanged and conveyed in accordance with the terms of the
Agreement.

     “CIESA Shares” means, collectively, the CIESA A Shares and the CIESA B
Shares.

 

 

     “Claims” means any and all past, present and future claims, demands,
debts, losses, obligations, liabilities, expenses, damages, liens, rights of
action, causes of action of any kind or character whatsoever, whether sounding
in contract or tort, whether arising in law or in equity, choate or inchoate,
mature or immature, contingent or fixed, liquidated or unliquidated, known or
unknown, accrued or unaccrued, asserted or unasserted in any litigation, or
otherwise; provided, however, that Claims arising out of related to the
Shareholders Agreement or the Owners Agreement shall only include Claims in any
way arising as a result of, related to, with respect to, in connection with or
based in whole or in part on acts or omissions occurring on or before the date
of this Agreement (except (i) as otherwise contemplated in this Agreement and
(ii) for Claims in any way arising as a result of, related to, with respect to,
in connection with or based in whole or in part on acts or omissions occurring
pursuant to this Agreement).

     “CNAI” shall have the meaning set forth in the recitals to the Agreement.

     “CNDC” shall have the meaning set forth in the recitals to the Agreement.

     “Consents” means a consent, approval, Order, authorization, license,
permit, certificate or waiver from, notice to or declaration, registration or
filing with any Person.

     “Dispute” shall have the meaning set forth in Section 5.12 of the
Agreement.

     “EACH” shall have the meaning set forth in the preamble to the Agreement.

     “ENARGAS” means the Ente Nacional Regulador de Gas, a regulatory agency of
the Argentine government.

     “ENARGAS Letters” means the letters and/or statements dated as of (a)
November 3, 1992, November 4, 1992 and November 9, 1992 from Transwestern to
the Privatization Committee of Gas del Estado; (b) November 4, 1992 from Enron,
EPCA and Transwestern to the Privatization Committee of Gas del Estado; (c)
November 4, 1992 from EPCA, Transwestern, Perez Companc and Citicorp Equity
Investments S.A. to the Privatization Committee of Gas del Estado; (d) November
13, 1992 from EPCA, Perez Companc, Citicorp Equity Investments S.A. and
Argentina Private Development Trust Company to the Privatization Committee of
Gas del Estado; and (e) July 4, 1994, from EPCA and Transwestern to ENARGAS.

     “ENARGAS Principles” shall have the meaning set forth in Section 4.2 of
the Agreement.

     “ENARGAS Release” means the receipt by each of Enron, Transwestern, EACH
and EPCA, in a manner and under terms satisfactory to Enron in its sole
discretion, of the consent or approval or release by or from any and all
Governmental Authorities, including, ENARGAS, from any and all obligations and
Claims, whether past, present or future, related to, arising under or in
connection with, (a) their participation in, withdrawal from or termination of
the participation in (including in connection with the termination, assignment
or transfer of the Technical Assistance Agreement as

Appendix A - Page 2

 

contemplated in the Agreement) the “Enron Economic Group” (Conjunto
Económico de Enron) under the Pliego and the ENARGAS Letters and each of the
agreements, covenants and other undertakings made in respect of such
participation, withdrawal or termination therein, including the ENARGAS
Letters, and (b) any and all restrictions in the Pliego on the direct or
indirect transfer, sale, distribution, conveyance or any other reduction in
stock participation by Enron or any of its Affiliates of shares of, or any
instrument or certificate representing an interest in, capital stock of
Transwestern, Ponderosa, EPCA or EACH.

     “Enron” shall have the meaning set forth in the preamble to the Agreement.

     “Enron Parties” means each of Ponderosa, EPCA and EACH and each of their
respective Affiliates; provided, however, that neither Enron, Transwestern,
CIESA nor TGS shall be an “Enron Party” for purposes of this Agreement.

     “Enron Plan” means the Joint Plan of Affiliated Debtors pursuant to
chapter 11 of the U.S. Bankruptcy Code dated July 11, 2003, filed with the U.S.
Bankruptcy Court in the Bankruptcy Case, as amended, supplemented or modified
from time to time.

     “EPCA” shall have the meaning set forth in the preamble to the Agreement.

     “Fee Termination Date” shall have the meaning set forth in Section 4.1 of
the Agreement.

     “Final Order” means a final and non-appealable order of the Bankruptcy
Court approving this Agreement and the consummation of the Transactions, in
form and substance in all material respects to the form of the order attached
hereto as Exhibit A (except for changes as agreed to by Enron and all the
Parties).

     “First Swap Closing Date” means the date on which all of the conditions
precedent as set forth in Section 1.4 are satisfied or waived by the relevant
Party and the transactions set forth in Section 1.3 shall be consummated (which
in no event shall be later than five (5) Business Days after the day on which
all of such conditions precedent are satisfied or waived).

     “First Swap Transactions” means the transactions set forth in Section 1.3
of the Agreement.

     “Governing Documents” means with respect to a sociedad anonima, the
estatutos sociales; with respect to a partnership, the certificate of
partnership (or limited partnership, as applicable) and partnership agreement,
together with the analogous documents for any corporate or partnership general
partner; with respect to a limited liability company, the certificate of
formation or articles of organization and operating agreement; and in any case,
any other document governing the formation and conduct of business by such
Person.

Appendix A - Page 3

 

     “Governmental Authority” means any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, the Bankruptcy Court, any
governmental authority, agency, department, board, commission or
instrumentality of the Republic of Argentina or the United States, any state of
the Republic of Argentina or the United States or any political subdivision
thereof, and any tribunal, court or arbitrator(s) of competent jurisdiction.

     “Guaranty” shall have the meaning set forth in the recitals to the
Agreement.

     “ICC” shall have the meaning set forth in Section 5.12 of the Agreement.

     “Law” means any federal, national, supranational, state, provincial or
local law (including common or civil law), statute, code, ordinance, rule,
regulation or other requirement enacted, promulgated, issued or entered by a
Governmental Authority.

     “Letter Agreements” means those certain letter agreements, each as dated
December 28, 1992, pursuant to which EPCA agreed to pay a portion of its
management fee to be received under Section 2.5 of the Technical Assistance
Agreement to Perez Companc and Citicorp Equity Investments S.A. in return for
the performance of certain services as specified therein.

     “License” shall have the meaning ascribed to such term in the Technical
Assistance Agreement.

     “Lien” means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction, attachment, medidas precautorias (as defined under
Argentine law), right of set-off, netting, deduction or recoupment under any
shareholder or similar agreement or encumbrance.

     “Management Fee” shall have the meaning set forth in Section 4.1 of the
Agreement.

     “Management Fee Account” shall have the meaning set forth in Section 4.1
of the Agreement.

     “Management Fee Funds” shall have the meaning set forth in Section 4.1 of
the Agreement.

     “Material Adverse Effect” means, as to any Party, any change, circumstance
or event that would materially and adversely affect the ability of such Party
to perform its obligations under the Agreement or any other Settlement Document
or the ability of any other Party to enforce any of such Party’s obligations
under the Agreement or any other Settlement Document.

     “Motion” shall have the meaning set forth in Section 4.12 of the
Agreement.

Appendix A - Page 4

 

     “New Shareholders Agreement” means the shareholders agreement to be
executed and delivered by each of the Petrobras Parties, EPCA, EACH and the
trustee of the Trust in accordance with this Agreement.

     “Operative Agreements” means each of the Owners Agreement, the
Shareholders Agreement and the Technical Assistance Agreement and each of the
agreements, covenants and other undertakings made in respect thereof
(including, without limitation, the Guaranty) as contemplated by or under the
terms of such agreements.

     “Order” means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.

     “Ordinary Course of Business” shall, as to any Person, refer to the
conduct of business by such Person in a manner consistent with past and
historical practice.

     “Owners Agreement” shall have the meaning set forth in the recitals
hereof.

     “Parties” and “Party” shall have the meaning set forth in the preamble to
the Agreement.

     “Perez Companc” shall have the meaning set forth in the preamble to the
Agreement.

     “Person” means any association, bank, business trust, corporation, estate,
general partnership, Governmental Authority, individual or natural person,
joint stock company, joint venture, labor union, limited liability company,
limited partnership, non-profit corporation, professional association,
professional corporation, trust or any other organization or entity.

     “PESA” shall have the meaning set forth in the preamble to the Agreement.

     “Petrobras” shall have the meaning set forth in the recitals to the
Agreement.

     “Petrobras B Shares” means the ordinary B shares of TGS owned of record
and beneficially by the Petrobras Parties as indicated on Schedule 2.2(b), as
proposed to be transferred, exchanged and conveyed in accordance with the terms
of this Agreement

     “Petrobras Hispano” shall have the meaning set forth in the preamble to
the Agreement.

     “Petrobras Parties” means each of PESA and Petrobras Hispano.

     "Pliego” shall have the meaning set forth in the recitals to the
Agreement.

     “Ponderosa” shall have the meaning set forth in the preamble to the
Agreement.

Appendix A - Page 5

 

     “Related Parties” means, as to any Party, all of such Party’s Affiliates,
employees, officers, directors, alternate directors, syndics, alternative
syndics and persons of equivalent authority, agents, predecessors, successors
and assigns and all persons or entities acting by, through, under or in concert
with any of them.

     “Required Consents” means those Consents required to consummate the
transactions contemplated under the Agreement and the Settlement Documents,
including those Consents set forth on Schedule 2.1(e) of the Agreement.

     “Second Swap Closing Date” means the date on which all of the conditions
precedent as set forth in Section 1.6 are satisfied or waived by the relevant
Party and the transactions set forth in Section 1.5 shall be consummated (which
in no event shall be later than two (2) Business Days after the day on which
all of such conditions precedent are satisfied or waived).

     “Settlement Documents” means this Agreement, the New Shareholders
Agreement, the Transwestern Release and the other agreements, documents and
instruments executed and/or delivered by any of the Parties in connection
herewith or therewith to carry out the terms and conditions hereof or thereof
or effect the Transactions, as the same may be amended, supplemented or
otherwise modified from time to time.

     “Shareholders Agreement” shall have the meaning set forth in the recitals
to the Agreement.

     “Technical Assistance Agreement” shall have the meaning set forth in the
recitals to the Agreement.

     “TGS” shall have the meaning set forth in the recitals to the Agreement.

     “TGS A Shares” shall have the meaning set forth in the recitals to the
Agreement.

     “TGS B Shares” shall have the meaning set forth in the recitals to the
Agreement.

     “TGS Letter” means an original copy of a letter agreement, dated as of the
date of the Agreement, duly executed by an authorized officer of TGS and
certified by a notary public, amending the Technical Assistance Agreement to
provide that EPCA may terminate the Technical Assistance Agreement at any time,
in its sole discretion, upon the approval of such termination by ENARGAS.

     “Transactions” means the transactions contemplated by this Agreement and
the other Settlement Documents.

     “Transwestern” shall have the meaning set forth in the recitals to the
Agreement.

     “Transwestern Parties” shall have the meaning set forth in the
Transwestern Release.

Appendix A - Page 6

 

     “Transwestern Release” means a formal and full release of Transwestern and
the Transwestern Parties, in the form attached hereto as Exhibit B.

     “Trust” means a business trust, to be structured as agreed by the Parties
in accordance with Section 4.6 of the Agreement.

     References to “knowledge” or “to the knowledge of” a Person, and similar
terms shall refer to the actual knowledge, after due and reasonable inquiry.

     As used in the Agreement, any reference to any federal, state, local, or
foreign Law will be deemed also to refer to Law as amended and all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
words “include,” “includes,” and “including” will be deemed to be followed by
“without limitation.” Pronouns in masculine, feminine, and neuter genders will
be construed to include any other gender, and words in the singular form will
be construed to include the plural and vice versa, unless the context otherwise
requires. The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to the Agreement as a whole and
not to any particular subdivision unless expressly so limited. The Parties
intend that each representation, warranty and covenant contained in the
Agreement will have independent significance.

Appendix A - Page 7

 

APPENDIX B

Trust Principles

	 	 	 
	Trustee:

	 	Independent professional trustee, acceptable
by EPCA, EACH and PESA.
	 
	 	 
	Settlor:

	 	EPCA, EACH or their respective designees.
	 
	 	 
	Trust Property:

	 	The CIESA A Shares and CIESA B Shares and all
income and proceeds arising out of or in
connection with the trust property, including
dividends and proceeds of sale (if any)
arising therefrom.
	 
	 	 
	Investment/Sale Powers:

	 	Standard conservative powers including, inter
alia, power to (i) sell the CIESA Shares if
and only if CIESA instructs the Trustee that
to sell the CIESA Shares and have the
proceeds of sale thereof available for
transfer to the creditors of CIESA as part of
a restructuring of CIESA’s debt would be
beneficial to CIESA or otherwise as CIESA may
direct and (ii) distribute the assets of the
Trust in the event of a liquidation of Trust
resulting from a liquidation of CIESA.
	 
	 	 
	Voting of CIESA Shares:

	 	Free discretion for the Trustee to vote at
shareholders’ meetings as the Trustee sees
fit, in the interest of CIESA.
	 
	 	 
	Purpose:

	 	To make trust property available for transfer
to the creditors of CIESA or any of them or
class of them pursuant to instructions to be
given by CIESA upon CIESA giving notice to
the Trustee that agreement has been reached
between CIESA and its principal creditors on
the restructuring of CIESA’s indebtedness.
	 	 	 
	Power to appoint directors
of CIESA

	 	The Trustee shall have the power to appoint
directors of CIESA in accordance with the
principles for the New Shareholders Agreement
set forth in Appendix C. Directors appointed
by the Trustee shall be free to vote as they
see fit in the interest of CIESA.
	 
	 	 
	Beneficiary:

	 	CIESA’s creditors or such other party or
parties as CIESA may designate as
beneficiaries (other than Petrobras and/or
the Petrobras Parties), provided, that such
party or parties are permitted under
Argentine law to receive the CIESA Shares (or
the proceeds resulting from a sale thereof)
and are capable of consummating the
Transactions to which

Appendix B - Page 1

 

	 	 	 
	

	 	they are a party.
	 
	 	 
	Governing Law:

	 	The Trust will be created in accordance with
and governed by Argentine Law.

Appendix B - Page 2

 

APPENDIX C

Principles for New Shareholders Agreement

I. Prior to the transfer of CIESA Shares to the Trust pursuant to Section
1.3(b) of the Agreement:

	•	 	EACH, EPCA, PESA and Petrobras Hispano shall be the Owners.

	•	 	PESA shall nominate the General Manager of TGS.

	•	 	Elimination of the Enron criteria.

	•	 	Subsistence of the First Refusal and Tag Along in favor of the Owners.

	•	 	The First Refusal and Tag Along shall not apply to the transfers to the Trust.

	•	 	Subsistence of the same rights for the Board Members designation.

	•	 	Board and Shareholders decisions shall be adopted as today.

II. After the transfer of CIESA A Shares to the Trust but before a CIESA
Restructuring:

	•	 	EPCA, Trust and PESA shall be the Owners.

	•	 	PESA shall nominate the General Manager.

	•	 	The right to nominate the Directors previously nominated by EPCA shall be divided proportionately between EPCA and the
Trust in accordance with their respective ownership interests in CIESA. EPCA shall otherwise have voting rights equal to
those that EPCA currently has under the Shareholders Agreement with respect to the ownership interests in CIESA it
continues to own.

	•	 	EPCA shall dispose of its shares consistent with the terms of the Agreement.

	•	 	The Trust shall dispose of any CIESA Shares pursuant to the terms of the Trust Agreement.

	•	 	If PESA wishes to sell its CIESA Shares, a right of first refusal and tag-along rights in favor of EPCA shall apply.

	•	 	No right of first refusal nor tag-along rights shall be granted in connection with the transfer of the CIESA Shares of the
Trust to CIESA’s creditors.

III. After the transfer of CIESA A Shares to the Trust and after a CIESA
Restructuring:

	•	 	So long as EPCA maintains an interest in CIESA, if an Owner wishes to
sell its CIESA Shares, a right of first refusal and tag-along rights
in favor of EPCA shall apply.

	•	 	The Trust shall dispose of any CIESA Shares pursuant to the terms of
the Trust Agreement.

	•	 	If EPCA maintains at least 10% interest in CIESA, EPCA shall not be an
Owner, but shall be granted the right to nominate one Director.

Appendix C - Page 1

 

APPENDIX D

ENARGAS Principles

The following principles will apply to the actions contemplated to be taken
by Enron, the Enron Parties and the Petrobras Parties pursuant to the
Agreement, including pursuant to Sections 4.2 and 4.3 thereto:

	1.	 	Each of Enron and PESA will appoint a main contact person and an
alternate to coordinate activities contemplated by Sections 4.2 and 4.3
of the Agreement. The main contact person (or a designee) (each a
“Representative”) will be entitled to attend all meetings and
participate in all discussions with ENARGAS or any other Governmental
Authority.
	 
	2.	 	The Parties intend on having the initial meeting with
representatives of ENARGAS (the “Initial Meeting”) either concurrent
with or as soon as reasonably practicable after the earlier of (i)
filing the Motion (with the Agreement attached thereto) with the
Bankruptcy Court and (ii) the receipt by the Argentine Securities
Commission (CNV) or the Buenos Aires Stock Exchange of notice of the
execution of the Agreement. A Representative of each of Enron and PESA
will be present at the Initial Meeting unless such Party has previously
waived such right to be present.
	 
	3.	 	The purpose of the Initial Meeting will be to discuss a framework
under which Enron and certain of its Affiliates, including
Transwestern, will be removed as an investor in, operator of, or from
any technical or economic obligation in connection with, TGS. Such
discussion will address, among other things, the following:

	a.	 	Termination, assignment or transfer of the Technical
Assistance Agreement as contemplated by the Agreement; and
	 
	b.	 	Withdrawal from, or the termination of the
participation in, the Enron Economic Group by EPCA, EACH,
Transwestern and Enron.

	 	 	The Parties do not intend that the Initial Meeting will include a
discussion relating to the Trust structure, except if the Parties
agree that such discussion is necessary.
	 
	4.	 	The Parties will not hold any meetings or participate in any
discussions with representatives of ENARGAS without providing the other
Parties reasonable advance notice and the right to participate. With
respect to such meetings and/or discussions, the Parties will agree on
the timing, attendees and proposed agenda.
	 
	5.	 	Each of the Parties may retain a consultant (the “Consultant”) on
this process. Each Party will share with the other Parties all
information and analyses prepared by the Consultant in connection with
the Transactions, including obtaining the ENARGAS Release, as well as
any other reports, materials and/or analyses that the Consultant may
generate in connection therewith.
	 
	6.	 	Each Party commits to ensuring that the other is informed, in a
timely manner, of all correspondence, conversations, information,
feedback, requests, etc., whether written

Appendix D - Page 1

 

	 	 	or oral, from ENARGAS or any other Governmental Authority with regard
to the Transactions.
	 
	7.	 	The Parties agree to cause CIESA and TGS to execute and deliver all
such documents, agreements, certificates or instruments, including
powers of attorney, to evidence or effectuate the authority of Enron,
on behalf of TGS, to seek and take any and all action as is reasonably
required (i) for the termination, assignment or transfer of the
Technical Assistance Agreement and (ii) to obtain the ENARGAS Release.
	 
	8.	 	The Parties agree that Enron and PESA may supplement the above
principles as the circumstances may reasonably require upon the mutual
agreement of Enron and PESA.

Appendix D - Page 2

 

SCHEDULE 2.1(e)

Approvals; Consents

     With respect to the First Swap Closing Date Transactions set forth in
Section 1.3:

     (a) The approval of ENARGAS in form and substance acceptable to the
Parties approving the conveyance of CIESA A Shares to the Trust or such other
Persons as provided in Section 1.3(b).

     (b) No determination by ENARGAS shall have been made providing that PESA
will “control” CIESA as a result of the Transactions.

     With respect to the Second Swap Closing Date Transactions set forth in
Section 1.5:

     (a) The required consent of the creditors of CIESA, including the holders
of CIESA’s US $220,000,000 Floating Rate Notes due April 22, 2002.

     (b) The consent of the shareholders of CIESA, with the affirmative vote
of all shares held by the Petrobras Parties and the Trust.

 

 

SCHEDULE 2.2(a)

CIESA Shares

	 	 	 	 	 	 	 	 	 
	Entity
	 	CIESA A Shares
	 	CIESA B Shares

	EPCA
	 	 	44,000,353.5	 	 	 	42,277,051	 
	EACH
	 	 	22,008,460	 	 	 	21,143,183	 

 

 

SCHEDULE 2.2(b)

Petrobras Shares

	 	 	 	 	 
	Entity
	 	TGS B Shares

	PESA
	 	 	45,146,514	 
	Petrobras Hispano
	 	 	13,263,938	 

 

 

SCHEDULE 2.2(c)

Ownership Interests in the Enron Parties

 

 

SCHEDULE 2.2(d)

Ownership Interests in the Petrobras Parties

 

 

 

 

SCHEDULE 4.10

Transition Services

Entities covered

	1.	 	EACH
	 
	2.	 	EPCA
	 
	3.	 	Enron de Inversiones de Energía S.C.A.
	 
	4.	 	Energía de Argentina Ltd.
	 
	5.	 	Enron Total de Argentina Ltd.
	 
	6.	 	Enron Inversiones de Gas S.R.L.

Scope of Recurring Services

Argentine accountant:

	a)	 	Provide information for Argentine statutory accounting.
	 
	b)	 	Bank statement reconciliation for all Argentine accounts.
	 
	c)	 	Month-end close and SAP entries
	 
	d)	 	Liaison with Tax Department for Argentine tax compliance/planning
and timely payments of appropriate taxes.
	 
	e)	 	Coordinate with Azar y Asociados on year-end audits.
	 
	f)	 	Work with Chilean accountant in updating all accounting entries in
SAP
	 
	g)	 	Work with Argentine legal firm on legal compliance issues.
	 
	h)	 	Cash flow projections for #2 and #1.

Fees:

	 	 	 	 
	 	EPCA:

	 	$5,500 Arg. pesos/ month*
	 	EACH:

	 	$1,500 Arg. pesos/ month*

*To be billed quarterly.

The Petrobras Parties agree to cause CIESA and/or TGS to negotiate on an
arms length basis with Ponderosa with respect to any additional transition
services, any additional entities to receive current or new transition
services, any changes in the nature or scope of transition services to be
provided and the fee for any such services.

 

 

EXHIBIT A

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

	 	 	 	 	 	 	 
	 	 	x	 	 
	

	 	 	 	:	 	 
	In re	 	:	 	Chapter 11
	

	 	 	 	:	 	 
	ENRON CORP., et al.,	 	:	 	Case No. 01-16034 (AJG)
	

	 	 	 	:	 	 
	

	 	 	 	:
	 	Jointly Administered
	

	 	Debtors.
	 	:	 	 
	 	 	x	 	 

ORDER, PURSUANT TO SECTIONS 105 AND 363 OF THE BANKRUPTCY CODE

AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 2002, 6004, 9013 AND 9019,

AUTHORIZING AND APPROVING (A) A MASTER SETTLEMENT AND MUTUAL

RELEASE AGREEMENT AND (B) THE CONSUMMATION OF THE TRANSACTIONS

CONTEMPLATED THEREBY

     Upon
 consideration of the motion, dated April 16, 2004 (the “Motion”),1 by
Enron Corp. (“Enron”), as debtor and debtor in possession, seeking entry of an
order authorizing and approving the Settlement and Release Agreement and the
consummation of the Transactions; and the Bankruptcy Court having jurisdiction
to consider the Motion and the relief requested therein, pursuant to 28 U.S.C.
§§ 157 and 1334; and it appearing that due and proper notice of the Motion and
the relief requested therein having been given, and no other or further notice
need be given; and all parties in interest having been heard or having been
afforded an opportunity to be heard at the Hearing; and the relief requested in
the Motion being an exercise of Enron’s sound business judgment and in the best
interests of Enron, its estate and creditors;

1     Unless otherwise defined herein, any capitalized terms used herein shall have
the meanings ascribed to such terms in the Motion.

 

 

EXHIBIT A

and the Bankruptcy Court having determined that the legal and factual
bases set forth in the Motion establish just cause for the relief granted
herein; and upon the Motion and the Exhibit annexed thereto, and all
proceedings had before the Bankruptcy Court; and after due deliberation and
sufficient cause appearing therefore, it is hereby

     ORDERED that the Motion is granted; and it is further

     ORDERED that all objections, if any, to the Motion or the relief requested
therein that have not been withdrawn, waived or settled, and all reservations
of rights included therein, are overruled; and it is further

     ORDERED that, pursuant to sections 105(a) and 363(b) of the Bankruptcy
Code, (a) the Settlement and Release Agreement is approved, (b) Enron is
authorized to enter into the Settlement and Release Agreement, and (c) Enron is
authorized to perform its obligations, and to cause its direct and indirect
subsidiaries to perform their respective obligations, pursuant to the
Settlement and Release Agreement and to execute such other documents and take
such other actions as are necessary to effectuate the transactions contemplated
by the Settlement and Release Agreement; and it is further

     ORDERED that Enron is authorized to execute, deliver, consummate, and
perform all of its obligations pursuant to the Settlement and Release Agreement
and consummate the Transactions, and it is further

     ORDERED that Enron is authorized to take, or cause to be taken, any such
other actions as are necessary to implement the provisions of, facilitate, and
effectuate the consummation of the Transactions; and it is further

A - 2

 

EXHIBIT A

     ORDERED that the Settlement and Release Agreement and any of the Exhibits,
Appendices or Schedules annexed thereto may be modified, amended or
supplemented by the parties thereto in accordance with the terms thereof
without further order of the Court; provided, however, that, in connection
therewith, the parties shall obtain the prior written consent of the Creditors’
Committee, which consent shall not be unreasonably withheld; and, provided,
further, that any such modification, amendment or supplement shall not be
material in nature or change the economic substance of the Transactions and any
of the Exhibits, Appendices or Schedules annexed thereto; and it is further

     ORDERED that,
 except to the extent required to repay the DIP Obligations2
pursuant to and in accordance with the Final Order (as defined in the DIP
Order) and the Documents, if any, any and all proceeds received by the Debtors
in connection with the consummation of the Settlement and Release Agreement and
the consummation of the Transactions shall be neither used nor disbursed until
the earlier to occur of (i) agreement by and between the Debtors and the
Creditors’ Committee with respect to the release of such proceeds and (ii)
further order of the Court; and it is further

     ORDERED that this order shall be effective immediately upon entry and
shall not be stayed pursuant to Bankruptcy Rule 6004(g); and it is further

2      Capitalized terms used but not defined in this paragraph shall have the
meanings ascribed to such terms in the Final Order Authorizing Debtors to
Obtain Post-Petition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362,
364(c)(1), 364(c)(2) and 364(d)(1), dated July 2, 2002, as supplemented by the
Order Authorizing, Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c)(1),
364(c)(2), 364(c)(3) and 364(d)(1), Amendment of DIP Credit Agreement to
Provide for Extension of Post-Petition Financing, dated May 8,
2003 (the “DIP
Order”).

A - 3

 

EXHIBIT A

     ORDERED that the Court shall retain jurisdiction to hear and determine all
matters arising from the implementation of this Order, the Settlement and
Release Agreement and the consummation of the Transactions.

	 	 	 
	Dated:

	 	New York, New York
	

	 	____________, 2004

	 
	

	HONORABLE ARTHUR J. GONZALEZ

	UNITED STATES BANKRUPTCY JUDGE

A - 4

 

EXHIBIT B

RELEASE

     This RELEASE (this “Release”), dated as of April 16, 2004, is by each of
Petróleo Brasileiro S.A. (PETROBRAS), a sociedade anônima organized under the
laws of the Federative Republic of Brazil (“Petrobras”), Petrobras Energía
S.A., an Argentine sociedad anónima (“PESA”) formerly known as Compañia Naviera
Perez Companc S.A.C.F.I.M.F.A. (“Perez Companc”), and Petrobras Hispano
Argentina S.A., a Spanish sociedad anónima (“Petrobras Hispano”), in favor and
for the benefit of Transwestern Pipeline Company, a Delaware corporation
(“Transwestern”) and the Transwestern Parties (as defined below). Capitalized
terms used herein without definition have the meanings assigned to such terms
in the Master Settlement Agreement (as defined below).

Recitals

     A. Transwestern granted the Guaranty, dated as of November 13, 1992, in
favor of, inter alios, Perez Companc, pursuant to which Transwestern provided
certain undertakings to Perez Companc in respect of the obligations of EPCA
relating to the transaction in which Perez Companc and EPCA acquired ownership
in CIESA and TGS. Transwestern is a subsidiary of Enron.

     B. In addition to the Guaranty, Transwestern was considered a member of
the “Enron Economic Group” (Conjunto Económico de Enron) in the transaction in
which ownership of CIESA and TGS was acquired by, inter alios, EPCA and Perez
Companc.

     C. On December 2, 2001, Enron filed a voluntary petition of relief under
the Bankruptcy Code in the Bankruptcy Court, Case No. 011-16034 (AJG), and is
currently operating as a debtor-in-possession.

     D. In January 2002, the Argentine government enacted legislation that
adversely and significantly impacted TGS’s financial condition and,
consequently, CIESA’s investment in TGS. As a result, TGS and CIESA have each
undertaken a financial restructuring which may include, among other
alternatives, a renegotiation of their respective obligations with third party
lenders.

     E. On October 17, 2002, Petrobras Participacoes S.A. acquired certain
ownership interests of Petrobras Energía Participaciones S.A., the controlling
entity of PESA which directly and indirectly holds interests in CIESA and TGS,
pursuant to a stock purchase agreement dated as of such date, by and among
Petrobras, Fundación Perez Companc and certain members of the Perez Companc
family, among others. On May 13, 2003, the Comisión Nacional de Defensa de la
Competencia, the Argentine governmental agency which regulates competition,
approved such acquisition.

     F. After extensive, arm’s length and good faith negotiations and
discussions, the Parties and the other signatories thereto entered into that
certain Master Settlement and Mutual

 

 

EXHIBIT B

Release Agreement, dated as of the date hereof (the “Master Settlement
Agreement”) pursuant to which, among other things, Petrobras and the Petrobras
Parties agreed to execute and deliver to Transwestern and the Transwestern
Parties this Release on the date hereof.

     G. The Petrobras Parties and Transwestern now desire to compromise and
settle all matters between themselves relating to (i) the Guaranty and (ii) to
the extent not already otherwise validly terminated, to terminate the Guaranty
on the terms hereof and to release each other from all claims, obligations and
liabilities thereunder, all in accordance with the terms and conditions set
forth herein.

     NOW, THEREFORE, in consideration of the premises herein contained and for
other good and valuable consideration, the receipt, fairness and sufficiency of
which are hereby acknowledged, Petrobras, the Petrobras Parties and
Transwestern agree as follows:

ARTICLE I

WAIVER AND RELEASE

     1.1 Release. Subject to entry of the Final Order by the Bankruptcy Court,
each of Petrobras and the Petrobras Parties, for itself and its successors and
assigns, hereby irrevocably waives, releases and forever discharges, and agrees
to cause each of its Affiliates to irrevocably waive, release and forever
discharge, Transwestern, its Affiliates and each of their respective Related
Parties (the “Transwestern Parties”) from any and all Claims under or arising
from or in connection with the Owners Agreement, the Bid Agreement and the
Shareholders Agreement and each of the agreements, covenants and other
undertakings made in respect thereof (including the Guaranty, the Pliego, the
ENARGAS Letters and the Technical Assistance Agreement) to which Petrobras or
any of the Petrobras Parties or any of their respective Affiliates is a party
or beneficiary. The irrevocable release, waiver and discharge set forth in
this section shall, without limitation, extend to Transwestern, Enron, the
other Transwestern Parties and their respective Related Parties with respect to
any and all Claims arising under, relating to or in connection with:

     (i) their participation in, withdrawal from, or the
termination of their participation in, the “Enron Economic Group”
(Conjunto Económico de Enron) under the Pliego, the ENARGAS Letters
and each of the agreements, covenants and other undertakings they
respectively made in respect of such participation, withdrawal or
termination;

     (ii) any purported “Change of Control” as set forth and
defined in the Shareholders Agreement, the Pliego, the Owners
Agreement, the Technical Assistance Agreement, the Guaranty, the
ENARGAS Letters and the Letter Agreements, as applicable (whether
such “Change of Control” is purported to have occurred prior to,
simultaneously with or subsequent to the execution of this
Release), arising in connection with or resulting from Enron’s
filing under chapter 11 of the Bankruptcy Code and the transactions
contemplated by the Enron Plan;

B - 2

 

EXHIBIT B

     (iii) the direct or indirect transfer, sale, distribution,
conveyance or any other act that results in a reduction in stock
participation by Enron or any of its Affiliates of shares of, or
any instrument or certificate representing an interest in, capital
stock of Transwestern, Ponderosa, EPCA or EACH, in each case in
connection with the Enron Plan, to the extent such Claims in any
manner relate to, arise out of or in connection with the Enron
Parties’ and their respective Affiliates’ direct or indirect
investment or participation in TGS and/or CIESA;

     (iv) the resolution of the dispute described in paragraph (I)
of the recitals of the Master Settlement Agreement, which
resolution may address, among other things, both the management and
disposition of the assets held by Ponderosa, to the extent such
Claims in any manner relate to, arise out of or in connection with
the Enron Parties’ and their respective Affiliates’ direct or
indirect investment or participation in TGS and/or CIESA; and

     (v) any actions taken by ENARGAS, including the termination of
the License, relating to, in connection with or as a result of (A)
any actions described in clauses (i) through (iv) above and/or (B)
any actions taken by Enron or the Enron Parties pursuant to and in
accordance with the Master Settlement Agreement.

The Parties hereby acknowledge and agree that the waiver, release and discharge
provided for herein (a) shall not be construed as imposing any indemnity or
payment obligation on any Party or on their Affiliates; (b) shall be solely
applicable to the matters described herein; and (c) shall not be interpreted as
or otherwise intended to be a release of any rights, remedies or obligations
the Parties may have against any other Party and/or any Affiliates of the other
Party arising out of, related to or in connection with any contracts,
agreements or other arrangements, other than as expressly provided herein.

     1.2 Consequences of Release. The consequences of the foregoing
irrevocable waiver, release and discharge have been explained to Petrobras and
the Petrobras Parties by their legal, tax and financial advisors. Petrobras
and each of the Petrobras Parties acknowledges that it may hereafter discover
facts different from, or in addition to, those that it now knows or believes to
be true with respect to the Claims, and agrees that this Release and the
irrevocable waivers, releases and discharges contained herein shall be and
remain effective in all respects notwithstanding the discovery of such
different or additional facts, except to the extent that the discovery of such
facts was delayed or hindered by dolo (as defined under Argentine law) by a
Party. Petrobras and each of the Petrobras Parties agree that in the event of
a conflict between the provisions of this Release and the provisions of the
Master Settlement Agreement, the provisions which provide Transwestern and the
Transwestern Parties the broadest and most beneficial release of Claims, as
determined by Enron in its sole discretion, shall govern.

     1.3 Waiver of Benefit of Conflicting Law. To the extent Applicable Law
would not otherwise recognize the provisions of Section 1.1 as constituting a
full, final and irrevocable waiver, release and discharge applying to all
unknown and unanticipated Claims, as well as those

B - 3

 

EXHIBIT B

now known or disclosed, Petrobras and each of the Petrobras
Parties hereby expressly waives all rights or benefits which it may have now or
in the future under any such Applicable Law.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

     Each of the Petrobras Parties represents and warrants to Transwestern that
the representations and warranties contained in Article 2 of the Master
Settlement Agreement with respect to it (after giving effect to this Release)
are true and correct at and as of the date hereof as if made at and as of the
date hereof (except as the same may expressly relate to an earlier date), and
are hereby incorporated herein by reference as representations and warranties
of it to the same extent as if such representations and warranties were
specifically set forth in full herein and made by it on the date hereof. To
the knowledge and belief of Petrobras and each of the Petrobras Parties, after
due inquiry, no Applicable Law to which it is subject restrains, prevents or
imposes materially adverse conditions upon its execution, delivery and
performance of this Release in accordance with the terms and conditions set
forth herein and in the Master Settlement Agreement. Petrobras and each of the
Petrobras Parties further acknowledges that: (i) it has relied on its own
independent investigation and has not relied on any information or
representations furnished by Transwestern or any of its Related Parties or any
of their respective representatives or agents with respect to the Guaranty or
the Operative Agreements or any other matter in determining whether or not to
execute and deliver this Release; (ii) it has conducted its own due diligence,
including a review of the Guaranty and Applicable Law in connection therewith,
as well as undertaken the opportunity to review information, ask questions and
receive satisfactory answers concerning the Guaranty, the Master Settlement
Agreement and the terms and conditions of this Release; and (iii) it possesses
the knowledge, experience and sophistication to allow it to fully evaluate and
accept the merits and risks of entering into the transactions contemplated by
the Master Settlement Agreement and this Release. Petrobras and each of the
Petrobras Parties represents and warrants that they are the only Persons who,
to its knowledge, has any interest in any Claims released hereby and that none
of such Claims, nor any part thereof, have been assigned, granted or
transferred in any way to any Person.

ARTICLE III

TERMINATION OF GUARANTY

     3.1 Effect. Subject to entry of the Final Order by the Bankruptcy Court,
each of the Petrobras Parties hereby agrees that upon the execution and
delivery of this Release to Transwestern, automatically and immediately without
further action by the Petrobras Parties or Transwestern or any other Party, (a)
the Guaranty and each of the agreements, covenants and other undertakings made
in respect thereof shall be terminated and of no further force or effect, (b)
Transwestern shall have no obligation or liability whatsoever under the
Guaranty and (c) the Transwestern Parties shall be fully and finally
irrevocably released in accordance with Section
1.1 hereof. Simultaneously with the execution of this Release, the
Petrobras Parties shall deliver to Transwestern one original counterpart of the
Guaranty and represent and warrant to the

B - 4

 

EXHIBIT B

Transwestern Parties that it is the
only original counterpart held by them and their Affiliates. Notwithstanding
any provision to the contrary in the Master Settlement Agreement, this Release
shall remain in full force and effect notwithstanding the termination of the
Master Settlement Agreement in accordance with its terms.

ARTICLE IV

MISCELLANEOUS

     4.1 Further Assurances. From time to time, upon request, Petrobras and
each of the Petrobras Parties shall, without further consideration, promptly
execute, deliver, acknowledge and file all such further documents, agreements,
certificates and instruments, as applicable, and do such further acts as the
Persons entitled to the benefit of this Release may reasonably require to more
effectively evidence or effectuate the transactions contemplated by this
Release.

     4.2 Intended Beneficiaries. To the extent that this Release inures to the
benefit of Persons not signatories hereto as set forth in Article I, such
Persons (and only such Persons) shall be deemed to be intended beneficiaries
and this Release is hereby declared to be made in and for their respective
benefits and uses. In the case of the Transwestern Parties, all rights and
benefits under this Release shall be deemed irrevocably acknowledged and
accepted upon execution of this Release by Transwestern. This Release is an
irrevocable, complete and definitive agreement and obligation of Petrobras and
each of the Petrobras Parties, not subject to and not requiring any form of
acceptance by any Transwestern Party that is not a signatory of this Release
and therefore Petrobras and each of the Petrobras Parties irrevocably waives,
releases, surrenders and discharges any right under Applicable Law to revoke,
terminate or otherwise amend this Release with respect to any of the
Transwestern Parties as a result of lack of acceptance to the rights and
benefits arising under this Release. None of Petrobras nor the Petrobras
Parties shall have the right to request from Enron and/or any other Person
(including, without limitation, EPCA) the granting by Enron, Transwestern
and/or any other Person of a new guaranty in replacement of the Guaranty.

     4.3 Governing Law. THIS RELEASE AND THE RIGHTS AND DUTIES HEREUNDER WILL
BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAW
OF THE REPUBLIC OF ARGENTINA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS THAT WOULD REQUIRE THE APPLICATION OF LAWS OF ANOTHER JURISDICTION.

     4.4 Arbitration. The Parties acknowledge and agree that any Dispute shall
be finally settled by binding arbitration in accordance with the provisions set
forth in Section 5.12 of the Master Settlement Agreement.

     4.5 Entire Agreement. This Release and the Master Settlement Agreement
contain the entire agreement among Petrobras, the Petrobras Parties and the
Transwestern Parties with respect to the subject matter hereof and supersede
all prior agreements and understandings, both written and oral, with respect to
the subject matter of this Release.

B - 5

 

EXHIBIT B

     4.6 Severability. In case any provision of this Release shall be
determined to be invalid, illegal or unenforceable for any reason, the
remaining provisions of this Release shall be unaffected and unimpaired
thereby, and shall remain in full force and effect, to the fullest extent
permitted by Applicable Law.

     4.7 Survival of Representations. All representations, warranties,
agreements, covenants and obligations herein are material, shall be deemed to
have been relied upon by Transwestern, and shall survive the Closing Date.

     4.8 Successors and Assigns. This Release shall be binding upon and inure
to the benefit of Petrobras, the Petrobras Parties and each of the Transwestern
Parties, respectively, and their respective successors and assigns.

     4.9 No Admission of Liability. Each of the parties hereto agrees that
none of the communications (whether oral or in writing) between and/or among
the parties, their counsel and/or their respective representatives relating to,
concerning or in connection with, nor the execution and delivery of, this
Release constitute an admission of any liability but constitute a compromise
and settlement.

     4.10 Interpretation. For purposes of interpretation, this Release shall
be deemed to have been jointly drafted by the Parties and no ambiguity in this
Release shall be resolved against any Party by virtue of its participation in
the drafting of this Release.

     4.11 Attorney’s Fees. Petrobras and the Petrobras Parties, on the one
hand, and the Transwestern Parties, on the other hand, shall be responsible for
the payment of (a) their own costs and expenses (including reasonable
attorneys’ fees), and (b) all of their costs and expenses (including reasonable
attorneys’ fees) in connection with the matters referred to in this Release.

     4.12 Captions. The captions of this Release are for convenience only and
are not a part of this Release and do not in any way limit or amplify the terms
and provisions of this Release and shall have no effect on its interpretation.

     4.13 Multiple Copies. This Release may be executed in seven or more
copies, each of which when so executed shall be deemed to be an original but
all of which when taken together shall constitute one and the same agreement.
All pages of this Release (other than the signature pages) shall be initialed
by, and the applicable signature page shall contain a complete signature of, an
authorized officer of each of the Parties, duly certified by a notary public.

[Remainder of Page Intentionally Left Blank]

B - 6

 

     IN WITNESS WHEREOF, the parties hereto have caused a duly authorized
representative to execute and deliver this Release as of the date first set
forth above.

	 	 	 
	

	PETRÓLEO BRASILEIRO S.A.
	 
	 	 
	

	By:	

	

	 	     Name:
	

	 	     Title:
	 
	 	 
	

	PETROBRAS ENERGíA S.A.
	 
	 	 
	

	By:	

	

	 	     Name:
	

	 	     Title:
	 
	 	 
	

	PETROBRAS HISPANO ARGENTINA S.A.
	 
	 	 
	

	By:	

	

	 	     Name:
	

	 	     Title:

ACKNOWLEDGED AND ACCEPTED

as of the date first set forth above.

ENRON CORP.

	 	 
	By:	
 

	 	     Name:

	 	     Title:

i

 

TRANSWESTERN PIPELINE COMPANY

	 	 
	By:	
 

	 	     Name:

	 	     Title:

ENRON ARGENTINA CIESA HOLDING S.A.

	 	 
	By:	
 

	Name:	 

	Title:	 

ENRON PIPELINE COMPANY ARGENTINA S.A.

	 	 
	By:	

	Name: 	 

	Title: 	 

ii<PAGE>
                                                                     EXHIBIT 4.3

           AUTHORIZATION AGREEMENT PVCP/SPV NUMBER 011/2003 - ANATEL

AUTHORIZATION TERM FOR PERSONAL MOBILE SERVICE CELEBRATED BETWEEN THE BRAZILIAN
TELECOMMUNICATIONS AGENCY - ANATEL - AND TELE CENTRO OESTE CELULAR
PARTICIPACOES S.A.

By means of the present Authorization Term, on the one side THE BRAZILIAN
NATIONAL TELECOMMUNICATIONS AGENCY - ANATEL - henceforward referred to as
ANATEL, which is an entity of the federal government according to Federal Law
9472 of July 16, 1997, the General Telecommunications Law (Lei Geral das
Telecomunicacoes - LGT), registered with the Brazilian Tax Roll under number
(CGC/MF) 02.030.715/0001-12 and herein represented by the President of the
Board of Directors of ANATEL Mr. LUIZ GUILHERME SCHYMURA DE OLIVEIRA, in
conjunction with member of the Board of Directors, LUIZ TITO CERASOLI, and on
the other side Tele Centro Oeste Celular Participacoes S.A., registered with
the Brazilian Tax Roll under number (CGC/MF) 02.558.132/0001-69, herein
represented by its acting Chief Executive Officer MR. SERGIO ASSENCO TAVARES
DOS SANTOS, a Brazilian engineer, widowed, General Registry number 131.306
SSP/DF, and by its Director of Administration and Human Resources Mr. GETULIO
NERY CARDOSO, a Brazilian engineer, married, General Registry number 290.486
SSP/DF, henceforward referred to as AUTHORIZEE, celebrate the present
Authorization Term registered with ANATEL under number 53500.000263/2003 and
agree to abide by the following provisions:

                                   CHAPTER I

                 OBJECT, AREA, AND PERIOD OF THE AUTHORIZATION

CLAUSE 1.1 - The present Agreement is the issuance of the Authorization to
exploit the Personal Mobile Service - PMS - provided under a private business
system in the geographical area constituted by the Federal District of Brazil,
Region II of the PGA-SMP.

PARAGRAPH ONE. The Object of this Authorization comprises the Personal Mobile
Services provided under a private business regime, in conformity with Anatel
regulatory requirements and particularly compliant with the provisions of the
PMS Regulation and of the General Authorization Plan for the PMS.

PARAGRAPH TWO. The authorization herein is issued based on article 214,
subsection V of the General Telecommunications Law and on the Rule for the
Adaptation of the Authorization and Concession Instruments from Cellular Mobile
Service - CMS to Personal Mobile Service - PMS (Norma de Adaptacao dos
Instrumentos de Concessao e de Autorizacao do Serico Movel Celular - SMC para o
Servico Movel Pessoal - SMP), approved by Anatel Resolution number 318, of
September 27, 2002 and amended by Anatel Resolution number 326, of November 28,
2002, henceforward referred to as ADAPTATION RULE, replacing CONCESSION
CONTRACT No. 031/97-DOTC-SFO-MC, of November 4, 1997, published in Diario
Oficial da Uniao (Brazilian Federal Official Gazette) on November 5 1997,
henceforward referred to as REPLACED INSTRUMENT.

CLAUSE 1.2 - Personal Mobile Service is the terrestrial mobile
telecommunications service of collective interest which allows communication
among mobile stations and from mobile stations to other stations, observing the
terms of the regulations.

CLAUSE 1.3 - The AUTHORIZEE has the right to exploit the means related to the
rendering of the services, observing the terms of the regulations as well as of
articles 154 and 155 of the General Telecommunications Law.

CLAUSE 1.4 - This authorization is in effect for an indeterminate period of
time.

CLAUSE 1.5 - The service shall be exploited with the use, by the AUTHORIZEE, of
the subrange of radiofrequencies set forth in the REPLACED INSTRUMENT,
designated below:

      Mobile Station Transmission: 824.0 to 835.0 MHz / 845.0 to 846.5 MHz
      Radiobase Station Transmission: 869.0 to 880.0 MHz / 890.0 to 891.5 MHz

<PAGE>
                                                                     Page 2 of 8

CLAUSE 1.6 -  The right to use the radiofrequencies mentioned in the previous
clause will be in effect until July 24, 2006, which corresponds to the
remaining period. This period can be extended only one single time for 15
(fifteen) years, and such extension implies payment by the AUTHORIZEE.

PARAGRAPH ONE. The radiofrequency will be used on a primary basis and such use
will be restricted to the respective Service Area.

PARAGRAPH TWO. The right to use the radiofrequency is conditional upon its
efficient and appropriate use.

PARAGRAPH THREE. The sharing of the radiofrequency may be authorized by Anatel,
provided that such sharing does not imply harmful interference or impose
limitations to the rendering of PMS.

CLAUSE 1.7 - The AUTHORIZEE shall, for the extension of the right to use
radiofrequencies associated to this Authorization, pay a biennial fee during
the extension period, corresponding to 2% (two percent) of its PMS revenues
in the year previous to the payment, net of applicable taxes and social
contributions.

PARAGRAPH ONE. When calculating the amount referred to in the head of this
Clause, the net revenue considered will be that resulting from the application
of the Service, the Basic, and the Alternative plans, object of the
authorization herein.

PARAGRAPH TWO. The percentage referred to in the head of this clause will be
calculated relative to the revenues, net of tax deductions and applicable
contributions, attained between January and December of the previous year and
obtained from the financial statements prepared according to basic accounting
principles approved by the AUTHORIZEE's Administration and audited by
independent auditors, and the payment will be due on April 30 of the year
following the calculation of the fee.

PARAGRAPH THREE. The first installment of the fee will be due on April 30, 2008
and will be computed considering the net income calculated from January 1 to
December 31, 2007. The subsequent installments will be due every 24 (twenty
four) months, and will be calculated based on the previous year's revenues.

PARAGRAPH FOUR. Any delay in paying this fee will imply in payment of a fine of
0.33% (point thirty-three percent) per day of delay, until a maximum limit of
10% (ten percent), added to the SELIC reference fee for federal bonds, which
shall be applied to the amount of the debt considering the total number of days
in which the payment was overdue.

CLAUSE 1.8 - Requirement to extend the right to use radiofrequencies should be
forwarded to Anatel within thirty months prior to the original maturity date.

SOLE PARAGRAPH. The requirement will be refused only if the interested party is
not making rational and appropriate use of the radiofrequencies, if the
interested party has committed repeated infractions in its activities, or if it
is necessary to alter the destination of the use of the radiofrequency.

                                   CHAPTER II

                            VALUE OF THE REPLACEMENT

CLAUSE 2.1 - The value of the replacement of the REPLACED INSTRUMENT by the
AUTHORIZATION TERM herein is R$ 9,000.00 (nine thousand Brazilian reais).

SOLE PARAGRAPH. Failure to pay any pending installments resulting from
commitments assumed regarding the amounts owed for the Concession or
Authorization of Cellular Mobile Service - CMS, will imply in the forfeiture of
the Authorization herein, regardless of the application of other penalties
established.

                                  CHAPTER III

                   MODE, FORM, AND CONDITIONS OF THE SERVICE

CLAUSE 3.1 - The AUTHORIZEE is obliged to render the services which are object
of the Authorization in such a way as to fully meet the obligations inherent to
the service rendered under a private regime, observing the criteria, formulas,
and parameters defined in this Authorization Term.

PARAGRAPH ONE. Default in meeting the obligations related to the object of this
Authorization Term will ensue the application of the sanctions set forth herein
and allow temporary suspension by Anatel. Additionally, according to the case,
the forfeiture of this Authorization will be declared, as provided by article
<PAGE>
number 137 of the General Telecommunication Law.
                                                                     Page 3 of 8

CLAUSE 3.2 - The AUTHORIZEE will exploit the service object of this
Authorization at its own account and risk, under the regime of broad and fair
competition established in the General Telecommunications Law, and will be paid
by means of prices changed, as determined by this Authorization Term.

PARAGRAPH ONE. The AUTHORIZEE will not be entitled to any type of exclusivity,
or to any assumption of guarantee of financial or economic balance, neither will
it be entitled to claim any right as to the admission of new providers of the
same service.

PARAGRAPH TWO. The AUTHORIZEE will not have any vested right to the maintenance
of the conditions in force after the issuance of the present Authorization or
the start of activities, and shall abide by the new conditions provided by law
and by the applicable regulations.

PARAGRAPH THREE. The rules shall grant a sufficient amount of time for
compliance with the new conditions.

CLAUSE 3.3 - The AUTHORIZEE shall grant free access to public emergency
services, as defined in the regulations.

CLAUSE 3.4 - The Authorizee shall guarantee to its users the free exercise of
their choice of Switched Fixed Telephone Services provider for forwarding the
long-distance messages, in compliance with the provisions under the PMS
regulation, particularly under the Adaptation Rule.

CLAUSE 3.5 - Any alteration in the control of the AUTHORIZEE will be subject to
control by Anatel for purposes of verification of the obligatory conditions for
the issuance and maintenance of the Authorization, in compliance with the
regulations.

SOLE PARAGRAPH. The conditions provided under Paragraph Two of Article 10 of the
General Concession Plan (Plano Geral de Outorgas - PGO), as well as those
established by the General Authorization Plan (Plano Geral de Autorizacoes) of
the PMS, and under Article 133 in the General Telecommunications Law are
obligatory conditions for issuance and maintenance of the Authorization.

CLAUSE 3.6 - The transfer of the Authorization Term will be subject to approval
by Anatel, as provided by Paragraph Two under Article 136 of the General
Telecommunications Law.

SOLE PARAGRAPH. For purposes of subsection I under Article 98 of the General
Telecommunications Law, the operating time of the Cellular Mobile Services
during the term of the REPLACED INSTRUMENT will be considered.

CLAUSE 3.7 - The AUTHORIZEE shall freely establish the rates to be practiced for
the rendering of PMS and define the Service Plans with structures, forms,
criteria, and values that should be reasonable and non-discriminatory, but may
vary as to their technical characteristics, their specific costs, and other
facilities offered to users, as defined in PMS regulations, particularly in the
ADAPTATION RULE.

                                   CHAPTER IV

                             THE SCOPE COMMITMENTS

CLAUSE 4.1 - The scope commitments established in the REPLACED INSTRUMENT shall
be maintained, including obligations regarding service and coverage.

CLAUSE 4.2 - Default in meeting the commitments will subject the AUTHORIZATEE
to the sanctions set forth in this Term and in the regulations, and may result
in the extinction of the authorization.

                                   CHAPTER V

                             QUALITY OF THE SERVICE

CLAUSE 5.1 - The present Authorization is subject to the assumption that the
service provided by the AUTHORIZEE is of adequate quality, considering as such
the service which fully meets the reliability, efficiency, security, currency,
generality, and courtesy conditions.

PARAGRAPH ONE. Reliability is characterized by the continual exploitation of the
service with strict adherence to the regulatory requirements provided by Anatel.

PARAGRAPH TWO. Efficiency is characterized by the fulfillment and preservation

<PAGE>
                                                                     Page 4 of 8

of the parameters provided in this Authorization Term and by the rendering of
assistance and service to users within the time periods set herein.

PARAGRAPH THREE. Security in the exploitation of the service is characterized
by rigorous confidentiality of the data relative to the use of the service by
users, as well as by the strict preservation of secrecy as to the information
transmitted in the scope of its exploitation.

PARAGRAPH FOUR. Currency is characterized by the use of up-to-date equipment,
installations, and techniques used in the exploit of the service, including the
incorporation of technological advances which will definitely bring benefits to
users, in accordance with the provisions set forth herein.

PARAGRAPH FIVE. Generality is characterized by the non-discriminatory provision
of the service to each and every user, and the AUTHORIZEE is obliged to render
the service to whomever requests it, in compliance with the regulations.

PARAGRAPH SIX. Courtesy is characterized by the respectful and immediate
service provided to all users of the authorized service, as well as by the
strict observance of the obligations to promptly inform and meet the needs of
all those, users and non-users, who ask for information from the Authorizee, as
well as any action or any type of request as provided herein.

CLAUSE 5.2 -- The AUTHORIZEE shall meet the quality targets established in the
General Plan for Quality Goals (Plano Geral de Metas de Qualidade - PGMQ) for
the PMS.

SOLE PARAGRAPH. For purposes of the provisions under Paragraph Five of Article
1 of the PGMQ-PMS, commercial activities of the PMS in locations where Cellular
Mobile Services already exists are considered to have started at the date of
publication of the summary of this Term.

CLAUSE 5.3 -- The exploitation of the authorized service can only be suspended
in conformity of the PMS regulations, issued by Anatel.

                                   CHAPTER VI

                                 NUMBERING PLAN

CLAUSE 6.1 -- The AUTHORIZEE agrees to abide by the Numbering Regulations
issued by Anatel and shall guarantee to the user the portability of access
codes, in conformity with the regulations.

                                  CHAPTER VII

                               BILLING THE USERS

CLAUSE 7.1 -- The rates, as well as the form of measurement and the criteria
for billing the services rendered shall be established by the AUTHORIZEE based
on the PMS regulations, in conformity with the provisions under Clause 3.7 of
the present Authorization Term.

                                  CHAPTER VIII

                      RIGHTS AND OBLIGATIONS OF THE USERS

CLAUSE 8.1 -- The rights and obligations if the users are those established in
the General Telecommunications Law and in the regulations, with no harm to the
rights provided for in Law 8078 of September 11, 1990 in the cases ruled by it,
nor to the rights provided for in the PMS contracts.

                                   CHAPTER IX

                    RIGHTS AND OBLIGATIONS OF THE AUTHORIZEE

CLAUSE 9.1 -- The rights and obligations of the AUTHORIZEE are those provided
for in the General Telecommunications Law and in the regulations.

CLAUSE 9.2 -- When obtaining services and when acquiring equipment or supplies
associated to the object of the present Authorization Term, the Authorizee
agrees to consider offers placed by independent suppliers, including the
Brazilian ones, and to base their decisions as to the different offers presented
on the observance of objective criteria regarding cost, delivery conditions, and
technical specifications provided for in the applicable regulations.

SOLE PARAGRAPH. When obtaining the above-mentioned services or supplies, the

<PAGE>
                                                                     Page 5 of 8

procedures set forth in the Standard Procedures for Acquisition of Services,
Equipment and Supplies by Providers of Telecommunications Services (Regulamento
sobre Procedimentos de Contractacao de Servicos e Aquisicao de Equipamentos ou
Materiais pelas Prestadoras de Servicos de Telecomunicacoes), approved by
Anatel Resolution 155, of August 5, 1999.

                                   CHAPTER X

                     OBLIGATIONS AND PREROGATIVES OF ANATEL

CLAUSE 10.1 - In addition to the other prerogatives intrinsic to its role of
regulatory body, and to the other obligations resulting from this Authorization
Term, the following shall constitute responsibilities of Anatel:

I.    to follow and to inspect the exploitation of the service with the purpose
      of meeting the regulations;

II.   to regulate the exploitation of the authorized service;

III.  to apply the penalties established in the regulations of the service,
      particularly in this Authorization Term;

IV.   to provide for the good quality of the service, as well as to receive, to
      address, and to find solutions for complaints placed by the users, giving
      them notice, in no longer than 90 (ninety) consecutive days, of the
      actions taken in order to prevent any violation of its rights;

V.    to pronounce the Authorization terminated in the cases set forth in the
      General Telecommunications Law;

VI.   to provide for guaranteed interconnection, settling any claims arising
      between the Authorizee and the remaining carriers;

VII.  To continuously monitor the relationship between the Authorizee and the
      remaining carriers in order to settle any occasional conflict;

VIII. to repress any conduct by the Authorizee which is contrary to the
      competition regime, in accordance with the provisions of the Brazilian
      Administrative Council on Economic Defense (Conselho Administrativo de
      Defesa Economica - CADE), the regulations, and particularly the provisions
      under Clause 10.2 and Clause 10.3 of this Chapter;

IX.   to perform the inspection of the service in the form established in this
      Authorization Term; and

X.    to collect the fees relative to FISTEL, adopting the procedures provided
      for in the applicable legislation.

CLAUSE 10.2 - Anatel may install a Procedure to Investigate Breaches of
Obligations (Procedimento para Apuracao de Descumprimento de Obrigacoes -
PADO), so as to look into any falsehood or inconsistency of conditions declared
by the AUTHORIZEE relative to its non-participation in the control of other
companies or to any other regulatory impediment regarding economic
concentration whenever there should be any indication of relevant influence on
its part or on the part of any affiliated company, controlled company, or
controlling company on the legal entity providing PMS, as provided for in the
Regulation for Investigation of Control and of Transference of Control in
Providers of Telecommunications Services (Regulamento para Apuracao de Controle
e de Transferencia de Controle em Empresas Prestadoras de Servicos de
Telecomunicacao), approved by Anatel Resolution 101, issued February 04, 1999.

SOLE PARAGRAPH. The presentation of proof, following procedures established
under this Clause, of the existence of any situation which characterizes the
untruthfulness or the inconsistency of the conditions declared by the
Authorizee shall imply the annulment of the present Authorization, as set
forth in Article 139 of the General Telecommunications Law.

CLAUSE 10.3 - Anatel may additionally set up administrative proceedings aimed
to investigate any violation of the economic order, in accordance with the
provisions under Law 8884/94.

                                   CHAPTER XI

                             THE INSPECTION REGIME

CLAUSE 11.1 - Anatel shall perform the inspection of the services in order to
assure full observance of the responsibilities agreed to in this Authorization
Term.

<PAGE>
                                                                     Page 6 of 8

PARAGRAPH ONE. The inspection to be performed by Anatel shall include the
inspection and monitoring of the activities, the equipment, and the
installations of the Authorizee, which implies in free access to all data and
information concerning the Authorizee and third parties.

PARAGRAPH TWO. The information collected during the activities related to the
inspection shall be made public in the Library, with the exception of the
information which, as a result of express request by the Authorizee, is regarded
as confidential by Anatel.

PARAGRAPH THREE. All information considered confidential in the form described
by in Paragraph Two above shall be used exclusively in the procedures correlated
with the present Authorization Term, and it will be the responsibility of Anatel
and of those appointed by Anatel, to account for any form of full or limited
disclosure of the referred to information outside the scope of use specified
above.

CLAUSE 11.2 -- The AUTHORIZER is granted the right to follow each and every
inspection activity performed by Anatel, through its appointed representative;
it cannot however hinder or impede inspection actions, in which case it will be
subject to the penalties provided for in the regulations.

                                  CHAPTER XII

            TELECOMMUNICATIONS NETWORKS AND ACCESS TO VISITING USERS

CLAUSE 12.1 -- The Authorizee shall observe the regulatory provisions as to the
implementation and operations of the telecommunications networks supporting the
rendering of PMS, particularly the provisions in the Telecommunications
Services Regulation issued by Resolution 73 of November 25, 1998, in the
General Interconnection Regulations (Regulamento Geral de Interconexao),
approved by Resolution 40 of July 23, 1998 and in the PMS regulations.

SOLE PARAGRAPH. Changes in technology standards promoted by the AUTHORIZEE
shall not represent any burden placed unilaterally and arbitrarily on the user.
This is also valid regarding the existing conditions of the service provided to
users and visitors.

CLAUSE 12.2 -- The remuneration for the use of the network between the
Authorizee and the remaining carriers of telecommunications services shall
abide by the provisions under Article 152 of the General Telecommunications Law
and by the provisions under the PMS regulations, particularly in the ADAPTATION
RULE.

SOLE PARAGRAPH. The document, provided for under Item 7 of the Adaptation Rule
shall henceforward constitute Annex I of the present AUTHORIZATION TERM.

                                  CHAPTER XIII

                                   SANCTIONS

CLAUSE 13.1 -- The AUTHORIZEE is subject to inspection by Anatel, in conformity
with the applicable legal and regulatory provisions, and shall, whenever
requested, provide statements in the form established in the PMS regulations,
granting free access to its technical resources and accounting records.

CLAUSE 13.2 -- Default in fulfilling conditions or meeting the responsibilities
agreed to in respect to the Authorization will subject the Authorizee to
notification, fines, temporary suspension, or forfeiture, as set forth in the
PMS regulation.

                                  CHAPTER XIV

                        TERMINATION OF THE AUTHORIZATION

CLAUSE 14.1 -- The Authorization shall be considered terminated as a result of
discharge, forfeiture, lapse, resignation, or annulment, as established in
Articles 138 to Articles 144 of the General Telecommunications Law and
according to the procedures described in the regulation.

SOLE PARAGRAPH. The declaration of termination shall not preclude the
application of the corresponding penalties, as provided for herein, for
violations performed by the AUTHORIZEE.

                                   CHAPTER XV

                     LEGAL REGIME AND APPLICABLE DOCUMENTS

<PAGE>
                                                                     Page 7 of 8

CLAUSE 15.1 - The present Authorization is ruled by the General
Telecommunications Law and the resulting regulations, without prejudice to the
Brazilian legal order, the General Telecommunications Law, or the regulations
resulting from it.

CLAUSE 15.2 - The exploitation of the service herein authorized shall observe,
as part of this Authorization Term, the regulations established by Anatel
particularly the documents specified in the PMS regulations.

CLAUSE 15.4 - The interpretation of rules and provisions in this Authorization
Term shall take into consideration, in addition to the documents specified in
this Chapter, the general rules of hermeneutics and the rules and principles
contained in the General Telecommunications Law.

                                  CHAPTER XVI

                             TRANSITORY PROVISIONS

CLAUSE 16.1 - Until the ratification or the agreement on the VU-M rate,
according to the option made by the PMS carrier, both the value for network
compensation and the criteria for processing and transferring values among
entities rendering Cellular Mobile services and Switched Fixed Telephone
Services shall be maintained.

                                  CHAPTER XVII

                                     COURT

CLAUSE 17.1 - Any disputes arising from this Authorization Term shall be
settled by the Forum of the District Count of the Federal Justice of Brasilia,
Federal District of Brazil

                                 CHAPTER XVIII

                                FINAL PROVISIONS

CLAUSE 18.1 - This Authorization Term shall be effective upon the publication
of its summary in the Diario Oficial da Uniao (Brazilian Federal Official
Gazette).

CLAUSE 18.2 - Barring the provisions expressly set forth in this Authorization
Term, all other provisions in the REPLACED INSTRUMENT, referred to in Paragraph
2 of Clause 1.1, are no longer in effect. The parties are aware of the
provisions and conditions in this Authorization Term, and sign it in 3 copies,
of equal meaning and form, in the presence of the witnesses, who also sign the
3 copies, thus rendering it legally and officially effective.

Brasilia, February 03, 2003

PP. ANATEL

--------------------------------
Luiz Guilherme Schymura de Oliveira
President of the Board of Directors

--------------------------------
LUIZ TITO CERASOLI
Member of the Board of Directors

PP. AUTHORIZEE

--------------------------------
SERGIO ASSENCO TAVARES DOS SANTOS
Acting Chairman and President

-------------------------------
GETULIO NERY CARDOSO
Director of Administration and Human Resources

WITNESSES

-------------------------------
JARBAS JOSE VALENTE
<PAGE>
                                                                     Page 8 of 8

CREA-DF 4346

----------------------------------
Nelson Mitsuo Takayanagi
SSP-DF 435023

                                  ATTACHMENT I

                             DECLARATION OF OPTION

In conformity with the provisions under Item 7 of the Adaptation Rule, TELE
CENTRO OESTE CELULAR PARTICIPACOES S.A., registered  with the Brazilian Tax
Roll under number (CNPJ/MF) 02.558.132/0001-69, herein represented by its
acting Chief Executive Officer MR. SERGIO ASSENCO TAVARES DOS SANTOS, a
Brazilian engineer, widowed, General Registry number 131.306 SSP/DF, opts for
submission to Item 5 and its subitems in the Remuneration Criteria Rule for Use
of personal Mobile Service Provider Networks, approved by Resolution 319 of
September 27, 2002, requesting the ratification of the TU-M rate, whose maximum
value should be the maximum value if the initial VU-M rate in its Area of
Coverage.
Brasilia, February 03, 2003.

Sergio Assenco Tavares dos Santos
Acting Chief Executive Officer

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