Document:

exv10wxqy

EXHIBIT
10(q)

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

CMS INTERNATIONAL VENTURES, L.L.C.,

CMS CAPITAL L.L.C.,

CMS GAS ARGENTINA COMPANY

and

CMS ENTERPRISES COMPANY

and

AEI CHILE HOLDINGS LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(for purposes of the Parent Guarantee)

Dated as of June 1, 2007

 

	 	 	 	 	 
	 	 	ARTICLE I

	 
	 	 	 	 
	 	 	SALE AND PURCHASE OF SHARES AND NOTES

	 
	 	 	 	 
	1.1	 	Sale and Purchase of Shares
	1.2	 	[Intentionally Omitted.]
	1.3	 	Sale and Purchase of Notes
	1.4	 	Purchase Price
	1.5	 	Closing
	1.6	 	Closing Deliveries
	1.7	 	Purchase Agreement Fee
	 
	 	 	 	 
	 	 	ARTICLE II

	 
	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF SELLER AND NOTE HOLDERS

	 
	 	 	 	 
	2.1	 	Representations and Warranties of Seller
	 
	 	 	 	 
	 
	 	2.1.1	 	Organization and Qualification
	 
	 	2.1.2	 	Title to Shares
	 
	 	2.1.3	 	Authority; Non-Contravention; Approvals.
	 
	 	2.1.4	 	Organization and Qualification of Companies and CMS-Inversiones; Capitalization.
	 
	 	2.1.5	 	Brokers and Finders
	 
	 	2.1.6	 	Financial Distress of Companies Subsidiaries
	 
	 	2.1.7	 	No Other Representations and Warranties.
	 
	 	 	 	 
	2.2	 	Representations and Warranties of the Note Holders
	 
	 	 	 	 
	 
	 	2.2.1	 	Organization and Qualification
	 
	 	2.2.2	 	Title to Notes
	 
	 	2.2.3	 	Authority; Non-Contravention; Approvals.
	 
	 	2.2.4	 	Brokers and Finders
	 
	 	2.2.5	 	Financial Distress of Companies Subsidiaries
	 
	 	2.2.6	 	No Other Representations and Warranties.
	 
	 	 	 	 
	 	 	ARTICLE III

	 
	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT TO THE COMPANIES SUBSIDIARIES

	 
	 	 	 	 
	3.1	 	Capitalization and Title.
	3.2	 	3.1.1 Description
	3.3	 	3.1.2 No Consents to Liens
	3.4	 	Financial Statements
	3.5	 	Tax Matters
	3.6	 	Compliance with Laws
	3.7	 	Certain Contracts
	3.8	 	Operating Company Notes
	 	 	Financial Distress of Companies Subsidiaries
	 	 	No Other Representations and Warranties
	 
	 	 	 	 
	 	 	ARTICLE IV

	 
	 	 	 	 
	 	 	REPRESENTATIONS AND WARRANTIES OF PURCHASER 

	 
	 	 	 	 
	4.1	 	Organization and Qualification
	4.2	 	Authority; Non-Contravention; Approvals.
	4.3	 	Financing
	4.4	 	Investment Intention; Sufficient Investment Experience; Independent
Investigation; Financial Distress of Companies Subsidiaries.
	4.5	 	Brokers and Finders
	4.6	 	No Knowledge of Seller or Note Holders Breach

 

	 	 	 	 	 
	 	 	ARTICLE V

	 
	 	 	 	 
	 	 	COVENANTS

	 
	 	 	 	 
	5.1	 	Notification to the CNDC and ENARGAS; Negative Antitrust and ENARGAS
Decision; Transfer of Shares to a Third Purchaser.
	5.2	 	Access
	5.3	 	Publicity
	5.4	 	Fees and Expenses.
	5.5	 	Right of First Offer
	5.6	 	Further Assurances
	5.7	 	Preservation of Records
	5.8	 	Change of Name.
	5.9	 	Resignations of Certain Officers and Directors
	5.10	 	Releases of Certain Guarantees
	5.11	 	Share Transfer
	 
	 	 	 	 
	 	 	ARTICLE VI

	 
	 	 	 	 
	 	 	CONDITIONS TO CLOSING

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

	 
	 	 	 	 
	 	 	TERMINATION

	 
	 	 	 	 
	7.1	 	Termination
	7.2	 	Effect of Termination
	 
	 	 	 	 
	 	 	ARTICLE VIII

	 
	 	 	 	 
	 	 	LIMITS OF LIABILITY; PARENT GUARANTEE

	 
	 	 	 	 
	8.1	 	Non-Survival of Representations, Warranties, Covenants and Agreements.
	8.2	 	Parent Guarantee.
	 
	 	 	 	 
	 	 	ARTICLE IX

	 
	 	 	 	 
	 	 	DEFINITIONS AND INTERPRETATION

	 
	 	 	 	 
	9.1	 	Defined Terms
	9.2	 	Definitions
	9.3	 	Interpretation
	 
	 	 	 	 
	 	 	ARTICLE X

	 
	 	 	 	 
	 	 	GENERAL PROVISIONS

	 
	 	 	 	 
	10.1	 	Notices

 

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

	 	 	 
	EXHIBITS
	 	 
	Exhibit A

	 	Seller Disclosure Letter
	Exhibit B

	 	Note Holders Disclosure Letter

	 	 	 
	SCHEDULES TO THE DISCLOSURE LETTERS APPENDED AS EXHIBITS
	Seller Disclosure Letter
	 	 
	 
	 	 
	Schedule 2.1.2

	 	Title to Shares
	 
	 	 
	Schedule 2.1.3(c)

	 	Seller Required Approvals
	 
	 	 
	Schedule 2.1.3(d)

	 	Other Approvals
	 
	 	 
	Schedule 2.1.4(c)

	 	Agreements in Connection with Shares
	 
	 	 
	Schedule 3.1.1

	 	Title and Capitalization
	 
	 	 
	Schedule 3.1.2

	 	Consents to Liens on Equity Interests of
Companies Subsidiaries
	 
	 	 
	Schedule 3.3

	 	Tax Matters
	 
	 	 
	Schedule 3.4

	 	Compliance with Laws
	 
	 	 
	Schedule 3.5

	 	Certain Contracts
	 
	 	 
	Note Holders Disclosure Letter
	 	 
	 
	 	 
	Schedule 2.2.2

	 	Title to Notes
	 
	 	 
	Schedule 2.2.3(c)

	 	Note Holder Required Approvals

 

	 	 	 
	ADDITIONAL SCHEDULES TO STOCK PURCHASE AGREEMENT
	 
	 	 
	Schedule 5.9 
	 	Resignations of Certain Officers and Directors
	 
	 	 
	Schedule 5.10

	 	Releases of Certain Guarantees
	 
	 	 
	Schedule 9.2(a)

	 	Purchaser Knowledge Group
	 
	 	 
	Schedule 9.2(b)

	 	Seller Knowledge Group

AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT

     This AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (as so amended and restated,
hereinafter also referred to as this “Agreement”), dated as of June 1, 2007, is entered
into by and among (i) CMS International Ventures, L.L.C., a limited liability company organized and
existing under the laws of the State of Michigan (“Seller”), (ii) CMS Capital L.L.C., a
limited liability company organized and existing under the laws of the State of Michigan
(“CMS-Capital”), CMS Gas Argentina Company, a company organized and existing under the laws
of the Cayman Islands (“CMS-Cayman”), and, CMS Enterprises Company, a corporation organized
and existing under the laws of the State of Michigan (“CMS-Enterprises”; each of the
Seller, CMS-Capital, CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note
Holder” and, collectively, the “Note Holders”), (iii) AEI Chile Holdings Ltd., an
exempted company incorporated with limited liability under the laws of the Cayman Islands
(“Purchaser”) and (iv) Ashmore Energy International, an exempted company incorporated with
limited liability under the laws of the Cayman Islands (“Parent”), solely for purposes of
Section 8.2 and the beneficial owner of all of the shares of Purchaser. Each of Purchaser,
Seller and the Note Holders are sometimes referred to individually herein as a “Party” and
collectively as the “Parties”. Certain other terms are defined throughout this Agreement
and in Section 9.2. (This Agreement shall be effective as of the date the board of
directors of CMS Energy Corporation approves this Agreement as contemplated by Section 10.2
(the “Effective Date”)).

WITNESSETH:

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

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

 

     WHEREAS CMS-Cayman currently owns 1% of the Equity Interests of CMS-Inversiones;

     WHEREAS CMS-Cayman shall transfer its Equity Interest in CMS-Inversiones to CMS-Generation
prior to the Closing Date;

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

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

     WHEREAS Governing Company owns 100% of the Equity Interests in Atacama Finance Co.;

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

     WHEREAS the Parties have entered into a Securities Purchase Agreement dated May 31, 2007 under
which Purchaser agreed to purchase from Seller, and Seller agreed to sell to Purchaser, all of
Seller’s Shares, and Purchaser agreed to purchase from the Note Holders, and the Note Holders
agreed to sell to Purchaser, all of the Notes, all of the foregoing upon the terms and subject to
the conditions set forth in such agreement (the “Prior Agreement”); and

     WHEREAS the Parties desire to amend and restate the Prior Agreement in accordance with the
terms hereof;

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

 

 

ARTICLE I

SALE AND PURCHASE OF SHARES AND NOTES

          1.1 Sale and Purchase of Shares. Upon the terms and subject to the conditions of this
Agreement, and simultaneously with the payment of the Purchase Price in accordance with Section 1.6
of this Agreement, at the Closing, Purchaser shall purchase from Seller, and Seller shall sell to
Purchaser, good and valid title, free and clear of any Liens except those created by Purchaser
arising out of ownership of the Shares by Purchaser, all of the Shares (the “Shares
Transaction”).

          1.2 [Intentionally Omitted.]

          1.3 Sale and Purchase of Notes. Upon the terms and subject to the conditions of this
Agreement, and simultaneously with the payment of the Purchase Price in accordance with Section 1.6
of this Agreement, at the Closing (a) Purchaser shall purchase from Seller, and Seller shall sell
to Purchaser, the Seller Note (inclusive of all accrued and unpaid interest prior to the Closing
Date); (b) Purchaser shall purchase from CMS-Capital, and CMS-Capital shall sell to Purchaser, the
CMS-Capital Note (inclusive of all accrued and unpaid interest prior to the Closing Date); (c)
Purchaser shall purchase from CMS-Cayman, and CMS-Cayman shall sell to Purchaser, the CMS-Cayman
Note (inclusive of all accrued and unpaid interest prior to the Closing Date); and (d) Purchaser
shall purchase from CMS-Enterprises (inclusive of all accrued and unpaid interest prior to the
Closing Date), and CMS-Enterprises shall sell to Purchaser, the CMS-Enterprises Note (inclusive of
all accrued and unpaid interest prior to the Closing Date). The transactions with respect to the
Notes contemplated by this Section 1.3 are collectively referred to as the “Notes
Transaction”, and together with the Shares Transaction, the “Transactions”).

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

          1.5 Closing. The closing of the Transactions (the “Closing”) shall take place
in New York, New York, at 10:00 a.m., local time, as soon as practicable, but in any event not
later than the second (2nd) Business Day immediately following the date on which the
last of the conditions contained in Article VI is fulfilled or waived (except for those
conditions which by their nature can only be fulfilled at the Closing, but subject to the
fulfillment or waiver of such conditions), or at such other place, time and date (the “Closing
Date”) as the Parties may agree.

          1.6 Closing Deliveries. At the Closing:

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

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

 

 

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

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

               (e) Purchaser and CMS-Enterprises shall execute and deliver to each other an instrument
pursuant to which CMS-Enterprises transfers all of CMS-Enterprises’ rights and obligations under
the Consortium Agreement, and Purchaser accepts such transfer.

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

          1.7 Purchase Agreement Fee. Within two (2) Business Days of receipt of written notice
that the board of directors of CMS Energy Corporation has approved this Agreement, and in
consideration of the time expended and expense incurred by Seller and the Note Holders in
negotiating and executing this Agreement, Purchaser shall pay to Seller Fifteen Million Dollars
(US$15,000,000) in cash (the aggregate of such amount, plus any interest deemed earned thereon at
the Specified Rate from (and including) the date hereof to (but excluding) the Closing Date or date
of earlier termination of this Agreement, being referred to as the “Purchase Agreement
Fee”), by wire transfer of immediately available funds in United States dollars to the bank
account or accounts that have been designated by Seller. The Purchase Agreement Fee will be deemed
to earn interest at the Specified Rate. Notwithstanding any provision to the contrary contained
herein, the Purchase Agreement Fee shall be nonrefundable by Seller; provided,
however, the Purchase Agreement Fee shall be refundable in the event that this Agreement is
terminated in accordance with Article VII, except Section 7.1(f), in which event Seller
shall pay to Purchaser, no later than five (5) Business Days following the effective date of such
termination, an amount equal to the Purchase Agreement Fee received by it pursuant to this
Section 1.7 by wire transfer of immediately available funds in United States dollars to the
bank account or accounts designated by Purchaser. The Purchase Agreement Fee shall be credited
against (x) the Purchase Price payable at Closing to Seller or any Affiliate designated by Seller
or (y) if this Agreement is terminated (other than pursuant to Section 7.1(a)), the
Damages, if any, owed by Purchaser to Seller arising out of breach of this Agreement by Purchaser.
The Purchase Agreement Fee shall not be deemed to be a liquidated damages payment for any breach by
Purchaser of this Agreement. If Seller fails to refund the Purchase Agreement Fee within five (5)
Business Days of Seller becoming obligated hereunder to make such a refund, the amount thereof
shall bear default interest at a rate equal to LIBOR plus two per cent (2%) per annum.

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER AND NOTE HOLDERS

          2.1 Representations and Warranties of Seller. Except as otherwise disclosed in the
Seller Disclosure Letter attached hereto as Exhibit A (the “Seller Disclosure
Letter”), Seller represents and warrants, as to itself only, and in connection with the Shares Transaction
only, to Purchaser as follows in this Section 2.1:

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

               2.1.2 Title to Shares. As of the Closing Date, Seller will be the lawful record and
beneficial owner of the Shares set forth opposite its name in Schedule 2.1.2 of the Seller
Disclosure Letter, free and clear of any and all Liens, except for Liens created by this Agreement.
The Shares constitute all of the issued and outstanding Equity Interests in the Companies. The
transfer of the Shares to Purchaser in the manner contemplated under Article I,
simultaneously with the payment by Purchaser of the Purchase Price to Seller, shall transfer to
Purchaser valid beneficial and legal title to the Shares. There are no outstanding options,
warrants or other rights of any kind to acquire from Seller or any of its Affiliates any Shares or
securities convertible into or exchangeable for, or which otherwise confer on the holder thereof
any right to acquire from Seller any Shares, nor is Seller committed to issue any such option,
warrant, right or security.

               2.1.3 Authority; Non-Contravention; Approvals.

               (a) Authority. As of the Effective Date Seller has full power and authority to enter
into this Agreement and, subject to receipt of the Seller Required Approvals, to consummate the
transactions to be effected by Seller as contemplated hereby. As of the Effective Date the
execution, delivery and performance by Seller of this Agreement and the consummation by Seller of
the transactions to be effected by Seller as contemplated hereby shall have been duly and validly
authorized by all requisite action on the part of Seller, and no other proceedings or approvals on
the part of Seller shall thereafter be necessary to authorize this Agreement or to consummate the
transactions to be effected by Seller as contemplated hereby. As of the Effective Date this
Agreement shall have been duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery hereof by Purchaser, shall thereafter constitute the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance with its terms,
except as limited by applicable Law affecting the enforcement of creditors’ rights generally or by
general equitable principles.

               (b) Non-Contravention. Except for matters arising with respect to the regulatory or
corporate status of Purchaser, the execution and delivery of this Agreement by Seller do not, and
the consummation of the transactions contemplated hereby will not, result in any violation or
breach of or default (with or without notice or lapse of time or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation under (any such violation,
breach, default, right of termination, cancellation or acceleration is referred to herein as a
“Violation”), or result in the creation of any Lien upon any of the properties or assets of
Seller pursuant to any provision of (i) the Organizational Documents of Seller; (ii) any lease,
mortgage, indenture, note,

 

 

bond, deed of trust, or other written instrument or agreement of any kind to which it or any
of its Affiliates is a party or by which it or any of its Affiliates may be bound; or (iii) any
Law, Permit or Governmental Order applicable to it or any of its Affiliates, subject to obtaining
the Seller Required Approvals; other than in the case of clauses (i), (ii) and (iii) any such
Violation or Lien which would not reasonably be expected to have, individually or in the aggregate,
a Seller Material Adverse Effect.

               (c) Approvals. Except for the filings or approvals (i) set forth in Schedule
2.1.3(c) of the Seller Disclosure Letter (the “Seller Required Approvals”) and (ii) as
may be required due to the regulatory or corporate status of Purchaser, no Consent of any Person is
required to be made or obtained by Seller in connection with the execution and delivery of this
Agreement or the consummation by Seller of the transactions to be effected by Seller as
contemplated hereby, except those which the failure to make or obtain would not reasonably be
expected to have, individually or in the aggregate, a Seller Material Adverse Effect. Schedule
2.1.3(d) sets forth other material consents, approvals, filings and notices that may be necessary,
advisable or appropriate in connection with the transactions contemplated by this Agreement.

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

               (a) Each Company and CMS-Inversiones has been duly formed, is validly existing and is in good
standing (to the extent such concepts are recognized under applicable Law) under the laws of the
jurisdiction of its formation, with full corporate power and authority to own or lease and to
operate its properties and to conduct its business as presently conducted and is duly qualified to
do business in all jurisdictions in which such qualification is necessary under applicable Law as a
result of the conduct of its business or the operation of its properties.

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

               (c) Except as (i) set forth in Schedule 2.1.4(c) of the Seller Disclosure Letter and
(ii) provided for in the Organizational Documents of the Companies and of CMS-Inversiones, there
are no subscriptions, options, warrants, calls, conversion, exchange, purchase right or other
written contracts, rights, agreements or commitments of any kind obligating, directly or
indirectly, the Companies or CMS-Inversiones to issue, transfer, sell or otherwise dispose of, or
cause to be issued, transferred, sold or otherwise disposed of, any Equity Interests of the
Companies or CMS-Inversiones or any securities convertible into or exchangeable for any such Equity
Interests.

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

 

 

               2.1.5 Brokers and Finders. Neither Seller nor any of its Affiliates has entered into
any written agreement or arrangement entitling any agent, broker, investment banker, financial
advisor or other firm or Person to any broker’s or finder’s fee or any other commission or similar
fee payable by Seller, its Affiliates or the Companies in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc.

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

               2.1.7 No Other Representations and Warranties.

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

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

               2.2.1 Organization and Qualification. Each Note Holder is a legal entity duly formed
and validly existing under the laws of the jurisdictions of its formation, and has the power and
authority to own, lease and operate its assets and properties and to conduct its business as
presently conducted, except where the failure to have such power and authority would not reasonably
be expected to have, individually or in the aggregate, a Seller Material Adverse Effect.

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

               2.2.3 Authority; Non-Contravention; Approvals.

 

 

               (a) Authority. As of the Effective Date, each Note Holder has full power and authority
to enter into this Agreement and to consummate the transactions to be effected by the Note Holder
as contemplated hereby. As of the Effective Date, the execution, delivery and performance by each
Note Holder of this Agreement and the consummation by each Note Holder of the transactions to be
effected by the Note Holder as contemplated hereby shall have been duly and validly authorized by
all requisite action on the part of each Note Holder, and no other proceedings or approvals on the
part of a Note Holder shall thereafter be necessary to authorize this Agreement or to consummate
the transactions to be effected by the Note Holder as contemplated hereby. As of the Effective
Date, this Agreement shall have been duly executed and delivered by the Note Holders and, assuming
the due authorization, execution and delivery hereof by Purchaser, shall thereafter constitute the
legal, valid and binding obligation of each Note Holder, enforceable against the Note Holders in
accordance with its terms, except as limited by applicable Law affecting the enforcement of
creditors’ rights generally or by general equitable principles.

               (b) Non-Contravention. Except for matters arising with respect to the regulatory or
corporate status of Purchaser, the execution and delivery of this Agreement by the Note Holders do
not, and the consummation of the transactions contemplated hereby will not, result in any
Violation, or result in the creation of any Lien upon any of the properties or assets of the Note
Holders pursuant to any provision of (i) the Organizational Documents of the Note Holders; (ii) any
lease, mortgage, indenture, note, bond, deed of trust, or other written instrument or agreement of
any kind to which the Note Holders are a party or by which they may be bound; or (iii) any Law,
Permit or Governmental Order applicable to it, subject to obtaining the Note Holders Required
Approvals; other than in the case of clauses (i), (ii) and (iii) any such Violation or Lien which
would not reasonably be expected to have, individually or in the aggregate, a Seller Material
Adverse Effect.

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

               2.2.4 Brokers and Finders. Neither the Note Holders nor any of their Affiliates have
entered into any written agreement or arrangement entitling any agent, broker, investment banker,
financial advisor or other firm or Person to any broker’s or finder’s fee or any other commission
or similar fee payable by any of the Note Holders or their Affiliates in connection with any of the
transactions contemplated by this Agreement, except J.P. Morgan Securities Inc.

               2.2.5 Financial Distress of Companies Subsidiaries. Purchaser acknowledges that the
business, operations and financial condition of the Companies Subsidiaries are subject to
considerable distress, and the bankruptcy of one or more of the Companies Subsidiaries is a
material probability or likelihood. To the extent that Seller or its Affiliates reasonably believes

 

 

upon the advice of counsel such action to be required from a legal standpoint, a bankruptcy
filing for one or more Companies Subsidiaries shall not constitute a breach of this Agreement or an
event that constitutes a failure of a condition to Closing or that gives rise to a right to
terminate this Agreement. For the avoidance of doubt, under no circumstances shall Seller be
required or expected to provide any equity or debt financing to any of the Operating Companies.

               2.2.6 No Other Representations and Warranties.

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER WITH RESPECT

TO THE COMPANIES SUBSIDIARIES

     Except as disclosed in the Seller Disclosure Letter, Seller represents and warrants to
Purchaser as follows in this Article III (provided that each representation and
warranty made by Seller in this Article III is made solely to the Knowledge of Seller):

          3.1 Capitalization and Title.

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

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

          3.2 Financial Statements. The audited balance sheet as at December 31, 2006 and the
related audited statements of income and of cash flows for the year then ended for each Companies
Subsidiary (individually, a “Company Subsidiary Financial Statement” and, collectively, the
“Companies Subsidiaries Financial Statements”) have been provided to Purchaser prior to the
date of this Agreement. As of the respective dates thereof, each Companies Subsidiary Financial
Statement fairly presents in all material respects the financial position of the respective
Companies Subsidiary as of December 31, 2006, and the results of such Companies Subsidiary’s
operations and cash flows for the period indicated (except for normal and recurring year-end
adjustments) in conformity with Chilean GAAP in accordance with the terms thereof);

 

 

provided that no representation is made by Seller with respect to whether any
write-off or other adjustment of asset values would have been appropriate as of any such dates.
From December 31, 2006 through the date of this Agreement, Seller has not approved the incurrence
of any third party debt by any of the Companies Subsidiaries, nor is Seller aware of any such
incurrence during such period.

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

          3.4 Compliance with Laws. Except as set forth in Schedule 3.4 of the Seller Disclosure
Letter, as of the date of this Agreement none of the Company, any Companies Subsidiary or
CMS-Inversiones has received written notice of or has been charged with any violation of, nor is it
under investigation with respect to any violation of, any applicable Law (including any applicable
foreign corrupt practices Law) or applicable Governmental Order, except in each case for violations
which would not reasonably be expected to have, individually or in the aggregate, a Companies
Material Adverse Effect. 

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

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

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

 

 

EXPECTED TO PROVIDE ANY EQUITY OR DEBT FINANCING TO ANY OF THE OPERATING COMPANIES.

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

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

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

          4.2 Authority; Non-Contravention; Approvals.

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

               (b) Non-Contravention. The execution and delivery of this Agreement by Purchaser do
not, and the consummation of the transactions contemplated hereby will not, result in any Violation
or result in the creation of any Lien upon any of the respective properties or assets of Purchaser
pursuant to any provision of (i) the Organizational Documents of Purchaser, as the case may be;
(ii) any lease, mortgage, indenture, note, bond, deed of trust, or other written

 

 

instrument or agreement of any kind to which Purchaser is a party or by which Purchaser may be
bound; or (iii) any Law, Permit or governmental order applicable to Purchaser; other than in the
case of clauses (i), (ii) and (iii) for any such Violation or Lien that would not reasonably be
expected to have, individually or in the aggregate, a Purchaser Material Adverse Effect.

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

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

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

               (a) Purchaser understands that the purchase of the Shares and Notes pursuant to the terms of
this Agreement involves substantial risk. Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the Companies, the Companies Subsidiaries and
the Notes and the merits and risks of an investment in the Shares and the Notes. Purchaser has been
given adequate opportunity to examine all documents provided by, conduct due diligence and ask
questions of, and to receive answers from, Seller, the Companies, the Companies Subsidiaries, the
Note Holders and their respective representatives concerning the Companies, the Companies
Subsidiaries, the Notes and Purchaser’s investment in the Shares and the Notes. Purchaser
acknowledges and affirms that it has completed its own independent investigation, analysis and
evaluation of the Companies, the Companies Subsidiaries and the Notes and that it has made all such
reviews and inspections of the business, assets, results of operations and condition (financial or
otherwise) of the Companies and the Companies Subsidiaries as it has deemed necessary or
appropriate, and that in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby it has relied on its own independent investigation, analysis, and
evaluation of the Companies, the Companies Subsidiaries and the Notes and the representations and
warranties of the Seller and the Note Holders set forth in Articles II and III, as
applicable. Purchaser acknowledges and agrees that it is deemed to have reviewed and have knowledge
of the information made available in the data room, through management meetings and site visits,
and that no such information shall form the basis for a breach or inaccuracy of any representation
or warranty of Seller or the Note Holders set forth in this Agreement.

               (b) Purchaser acknowledges that the business operations and financial condition of the
Companies Subsidiaries are subject to considerable distress, and that the bankruptcy of one or more
of the Companies Subsidiaries is a material probability or likelihood. Purchaser

 

 

further acknowledges that it has had a full opportunity to investigate the business and
affairs of the Companies Subsidiaries with respect to these issues and understands the risks of
their financial failure. Purchaser and its Affiliates have acknowledged and agreed to take all risk
of insolvency and/or bankruptcy of the Companies and the Companies Subsidiaries, including without
limitation, a filing for insolvency by any Company or any of the Companies Subsidiaries or a
declaration of insolvency, or similar Governmental Order, by any Governmental Entity. Any such
declaration or Governmental Order shall, with respect to Seller or any Note Holder, under no
circumstance constitute a breach of any obligation, representation, warranty, covenant or condition
to Closing, nor shall otherwise constitute an event giving rise to the right of Purchaser to modify
or terminate its obligations to close the Transactions pursuant to the Agreement. Purchaser further
agrees that prior to the Closing, to the extent that Seller or its Affiliates reasonably believes
upon the advice of counsel such action to be required from a legal standpoint, Seller and its
Affiliates shall have the right to effect a bankruptcy filing for one or more Companies
Subsidiaries in their sole discretion after consultation with Purchaser, and that such bankruptcy
filings shall not constitute a breach of this Agreement or an event that constitutes a failure of
condition to Closing or an event that gives rise to a right to terminate this Agreement. For the
avoidance of doubt, under no circumstances shall Seller be required or expected to provide any
equity or debt financing to any of the Operating Companies.

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

          4.6 No Knowledge of Seller or Note Holders Breach. Neither Purchaser nor any of its
Affiliates has Knowledge of any breach or inaccuracy, or of any facts or circumstances which may
constitute or give rise to a breach or inaccuracy, of any representation or warranty of Seller or
the Note Holders set forth in this Agreement.

ARTICLE V

COVENANTS

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

               (a) Notification of the Transactions to the CNDC and ENARGAS. Within seven (7) days
from the Closing Date, and at any subsequent date that may be required by instruction of the CNDC
and/or ENARGAS, Seller and Purchaser shall (i) cooperate with one another and file all
notifications, applications, registrations, filings, declarations and reports required under the
Antitrust Law and the Gas Law relating to the Transactions, and (ii) use their reasonable efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to obtain the Argentine Transaction Approvals.

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

 

 

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

          (ii) Purchaser shall be the sole responsible party to perform any and all actions
required by the Negative Antitrust Decision and/or Negative ENARGAS Decision including, but
not limited to, (x) a divesture of Purchaser’s businesses, product lines or assets in favor of
a third party, at its own risk, cost and expense; and (y) appointment of the management of the
Companies following directives by the CNDC or other antitrust authority. Notwithstanding
anything contained herein to the contrary, none of Seller or its Affiliates shall be required
to (A) divest any of its respective businesses, product lines or assets that are not
transferred to Purchaser or (B) take or agree to take any other action or agree to any
limitation that could reasonable be expected to (1) result in a adverse effect on its
business, assets, condition (financial or otherwise) or (2) deprive Seller or any Note Holder,
or any Affiliate of any of them, of any benefit of the Transactions

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

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

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

               (d) [Intentionally Omitted.]

               (e) Indemnification.

          (i) Subject only to the terms and limitations set forth in this Section 5.1, Purchaser
shall indemnify, defend and hold harmless Seller or any of its Affiliates and their respective
directors, officers, employees, successors, permitted assigns, advisors, agents, or
representatives (whether or not also indemnified by any other Person under any other document)
from and against any penalties, fines, administrative sanctions, costs and expenses (including
reasonable attorneys’ fees as provided in Section 5.1(e)(ii) below) which directly relate to,
or arise out of, any of the events provided for in Section 5.1(b), including fines, penalties
and/or administrative sanctions imposed, or handed down, by the

 

 

CNDC, ENARGAS, the Secretariat of Internal Trade and/or any other agency, tribunal or
court because the Transactions is ultimately deemed to breach the Antitrust Law and/or the Gas
Law (a “Claim”).

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

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

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

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

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

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

          5.2 Access. After the date hereof and prior to the Closing, Seller shall exercise the
voting, governance and contractual powers available to it to request (subject to any legal,
contractual, fiduciary, legal or similar obligation of Seller or any of its Affiliates, any
director, officer or employee of Seller or any Seller Affiliate) the Operating Companies to permit
Purchaser and its executive officers, managers, counsel, accountants and other representatives to

 

 

have reasonable access, upon reasonable advance notice, during regular business hours, to the
assets, employees, properties, books and records, businesses and operations relating to the
Operating Companies as Purchaser may reasonably request including cooperating with Purchaser
accounting personnel seeking to prepare U.S. GAAP financials for the Operating Companies;
provided, however, that in no event shall Seller be obligated to provide any access
or information if Seller determines, in good faith after consultation with counsel, that providing
such access or information may be inconsistent with or otherwise violate applicable Law (including
without limitation with respect to bankruptcy or insolvency, or applicable Law affecting creditors’
rights generally or general equitable principles), cause Seller or any Operating Company to breach
a confidentiality obligation to which it is bound, or jeopardize any recognized privilege available
to Seller or any Operating Company. Purchaser agrees to indemnify and hold Seller, any Seller
Affiliate and any director, officer or employee of Seller or any Seller Affiliate harmless from any
and all claims and liabilities, including costs and expenses for loss, injury to or death of any
representative of Purchaser and any loss, damage to or destruction of any property owned by Seller,
any Affiliate of Seller or the Operating Companies or others (including claims or liabilities for
loss of use of any property) resulting directly or indirectly from the action or inaction of any of
the employees, counsel, accountants, advisors and other representatives of Purchaser during any
visit to the business or property sites of the Operating Companies prior to the Closing Date,
whether pursuant to this Section 5.2 or otherwise. During any visit to the business or property
sites of the Operating Companies, Purchaser shall, and shall cause its employees, counsel,
accountants, advisors and other representatives accessing such properties to, comply with all
applicable Laws and all of the Operating Companies’ safety and security procedures and conduct
itself in a manner that could not be reasonably expected to interfere with the operation,
maintenance or repair of the assets of the Operating Companies. Neither Purchaser nor any of its
representatives shall conduct any environmental testing or sampling on any of the business or
property sites of the Operating Companies prior to the Closing Date.

          5.3 Publicity. Except as may be required by applicable Law or by obligations pursuant
to any listing agreement with or rules or regulations of any national securities exchange, prior to
the Closing none of Seller, the Note Holders, Purchaser nor any of their respective Affiliates
shall, without the express written approval of Seller and Purchaser, make any press release or
other public announcements concerning the transactions contemplated by this Agreement, except as
and to the extent that any such Party shall be so obligated by applicable Law or pursuant to any
such listing agreement or rules or regulations of any national securities exchange, in which case
the other Parties shall be advised and the Parties shall use reasonable efforts to cause a mutually
agreeable release or announcement to be issued.

          5.4 Fees and Expenses.

               (a) Except as provided in paragraph (b) below and Section 5.1 of this Agreement, whether or
not the Closing occurs, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement (including, without limitation, any fees and expenses
of investment bankers, brokers, finders, counsel, advisors, experts or other agents, in each case,
incident to or in connection with the negotiation, preparation, execution, delivery and performance
of this Agreement and the consummation of the transactions

 

 

contemplated hereby (whether payable prior to, at or after the Closing Date)) shall be paid by
the Party incurring such expense.

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

          5.5 Right of First Offer. Promptly after this Agreement is approved by the board of
directors of CMS Energy Corporation (but in no event later than the second Business Day after
receipt thereof), Seller shall deliver to Endesa the right of first offer notice in accordance with
the Consortium Agreement. Purchaser shall cooperate promptly with any requests of Seller or Endesa
with respect to this Agreement and the transactions contemplated hereby.

          5.6 Further Assurances. Subject to Section 5.1 of this Agreement, each of Seller and
the Note Holders, as applicable, and Purchaser agrees that, from time to time before and after the
Closing Date, they shall execute and deliver, and take, or cause their respective Affiliates to
take, such other action, as may be reasonably necessary to carry out the purposes and intents of
this Agreement (including without limitation Seller requesting Seller’s Cayman counsel and Chilean
counsel to provide Purchaser the accounting, tax, corporate and commercial books and records of the
Companies and CMS-Inversiones). Purchaser, the Note Holders and Seller agree to use reasonable
efforts to refrain from taking any action which could reasonably be expected to materially delay
the consummation of the Transactions.

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

 

 

agrees to maintain the confidentiality of all information provided by Purchaser or the
Companies Subsidiaries hereunder.

          5.8 Change of Name.

               (a) Notwithstanding anything to the contrary contained herein, within sixty (60) Business Days
after the Closing Date, Purchaser shall have caused the Companies and all entities in which the
Companies directly or indirectly holds an interest that have “CMS” or any similar derivations
thereof in their name to be renamed without reference to “CMS” or any similar derivations thereof.
On or after the Closing Date, Purchaser and its Affiliates shall not use existing or develop new
stationery, business cards and other similar items that bear the name or mark of “CMS” or any
similar derivation thereof in connection with the businesses of the Company or any of the Companies
Subsidiaries.

               (b) The Parties acknowledge that any damage caused to Seller or any of its respective
Affiliates by reason of the breach by Purchaser or any of its Affiliates of Section 5.8(a),
in each case would cause irreparable harm that could not be adequately compensated for in monetary
damages alone; therefore, each Party agrees that, in addition to any other remedies, at law or
otherwise; Seller and any of its respective Affiliates shall be entitled to an injunction issued by
a court of competent jurisdiction restraining and enjoining any violation by Purchaser or any of
its Affiliates of Section 5.8(a), and Purchaser further agrees that it (x) will stipulate
to the fact that Seller or any of its respective Affiliates, as applicable, have been irreparably
harmed by such violation and not oppose the granting of such injunctive relief and (y) waive any
requirement that Seller post any bond or similar requirement in order for Seller to obtain the
injunctive relief contemplated by this Section 5.8(b).

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

          5.10 Releases of Certain Guarantees. Purchaser and Seller shall cooperate to procure
at or prior to the Closing the release by the applicable counterparty of any continuing obligation
of Seller or its Affiliates with respect to any guarantee as set forth on Schedule 5.10
(“Guarantees”); provided that to the extent a release shall not have been obtained
at the time of Closing with respect to any such Guarantee, Purchaser shall provide an indemnity (in
form and substance satisfactory to Seller) to secure the obligations of Seller or its Affiliates
with respect to each such Guarantee; provided, further, that any such indemnity
with Seller, as beneficiary, shall remain in full force and effect for the same period from and
after the Closing as any such corresponding Guarantee shall remain in place.

          5.11 Share Transfer. Seller shall cause CMS-Cayman to transfer its 1% ownership
interest in CMS-Inversiones to CMS-Generation prior to the Closing Date.

 

 

ARTICLE VI

CONDITIONS TO CLOSING

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

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

               (b) Right of First Offer. Seller shall have received a waiver from Endesa of the right
of first offer set forth in the Consortium Agreement, or the waiting period with respect to the
right of first offer thereunder shall have expired without exercise of such right by Endesa.

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

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

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

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

 

 

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

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

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

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

               (c) [Intentionally omitted.]

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

               (e) Acceptance of the Consortium Agreement. Seller shall have received from the
Purchaser a written agreement pursuant to which the Purchaser accepts the terms and conditions of
the Consortium Agreement, consistent with the requirements of the Consortium Agreement.

               (f) Releases of Certain Guarantees. The releases by the applicable counterparty of any
continuing obligation of Seller or any of its Affiliates with respect to each Guarantee shall have
been obtained in accordance with Section 5.10; provided that to the extent a
release shall not have been obtained at Closing with any such Guarantee, Seller shall have received
an indemnity (in form and substance satisfactory to Seller) to secure the obligations of Seller or
its Affiliates with respect to each such Guarantee; provided, further, that any such indemnity with
Seller, as beneficiary, shall remain in full force and effect for the same period from and after
the Closing as any such corresponding Guarantee shall remain in place.

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

 

 

ARTICLE VII

TERMINATION

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

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

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

               (c) by Purchaser, by written notice to Seller, if the Closing Date shall not have occurred on
or before such date that is sixty (60) days following the date hereof (the “Outside Date”)
provided, that the right to terminate this Agreement under this Section 7.1(c)
shall not be available to Purchaser if its failure to fulfill any obligation under this Agreement
shall have caused or resulted in the failure of the Closing Date to occur on or before such
Extended Outside Date;

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

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

               (f) by Seller, so long as Seller or the Note Holders are not then in material breach of any of
their representations, warranties, covenants or agreements hereunder, by written notice to
Purchaser, if there shall have been a material breach of any representation or warranty, or a
material breach of any covenant or agreement of Purchaser hereunder, which breaches would
reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect, and such breach shall not have been remedied within thirty (30) days after receipt by
Purchaser of notice in writing from Seller, specifying the nature of such breach and requesting

 

 

that it be remedied or Seller shall not have received adequate assurance of a cure of such
breach within such thirty-day period; or

               (g) in the event that Endesa exercises its right of first offer under the Consortium
Agreement, upon the effectiveness of such exercise.

          7.2 Effect of Termination. No termination of this Agreement pursuant to Section
7.1 shall be effective until notice thereof is given to the non-terminating Parties specifying
the provision hereof pursuant to which such termination is made. Subject to Section 1.7, if
validly terminated pursuant to Section 7.1, this Agreement shall, subject to Section
8.1, become wholly void and of no further force and effect without liability to any Party or to
any Affiliate, or its respective members or shareholders, directors, officers, employees, agents,
advisors or representatives, and following such termination no Party shall have any liability under
this Agreement or relating to the transactions contemplated by this Agreement to any other Party;
provided that no such termination shall (i) relieve the Parties from liability for fraud or
any willful or intentional breach of any provision of this Agreement prior to such termination or
(ii) relieve Purchaser from any liability for any breach of Purchaser’s representations or
warranties contained in Section 4.3 (whether or not such breach is fraudulent, willful or
intentional). If this Agreement is terminated as provided in Section 7.1, Purchaser shall
redeliver to Seller or the Note Holders, as the case may be, and shall cause its agents to
redeliver to Seller or the Note Holders, as the case may be, all documents, workpapers and other
materials of Seller, the Companies and the Companies Subsidiaries and the Note Holders relating to
any of them and the transactions contemplated hereby, whether obtained before or after the
execution hereof, and Purchaser shall comply with all of its obligations under the Confidentiality
Agreement.

ARTICLE VIII

LIMITS OF LIABILITY; PARENT GUARANTEE

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

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

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

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

 

 

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

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

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

               (v) the covenants and agreements of the Parties contained in Sections 5.1
(Notification to the CNDC and ENARGAS; Negative Antitrust and ENARGAS Decision; Transfer of
Shares to a Third Purchaser), 5.4 (Fees and Expenses), 5.6 (Further
Assurances), 5.7 (Preservation of Records), 5.8 (Change of Name), 5.10
(Release of Certain Guarantee) and 7.2 (Effect of Termination), Article VIII
(Limits of Liability) and Article X (General Provisions) shall survive indefinitely.

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

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

          8.2 Parent Guarantee.

               (a) For value received, Parent hereby fully, unconditionally and irrevocably guarantees to
Seller (the “Parent Guarantee”) (x) the prompt and punctual payment of any amount Purchaser
is required to pay under this Agreement, when and as the same shall become due and payable, subject
as to such payment obligations to the terms and conditions of this

 

 

Agreement, including, without limitation, the payment of the Purchase Price as provided by
Section 1.6, and (y) the prompt and full performance when due by Purchaser of its obligations up to
and through Closing under this Agreement. Parent’s guarantee obligations include the principal,
interest, fines, fees, costs and other amounts that may be due and payable by Purchaser under this
Agreement.

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

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

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

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

ARTICLE IX

DEFINITIONS AND INTERPRETATION

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

	 	 	 
	Defined Term	 	Section Reference
	Agreement

	 	Preamble
	Arbitration Expenses

	 	Section 10.9
	Breach Notice

	 	Section 7.1(e)
	Closing

	 	Section 1.5

 

 

	 	 	 
	Defined Term	 	Section Reference
	Closing Date

	 	Section 1.5
	CMS-Capital

	 	Preamble
	CMS-Cayman

	 	Preamble
	CMS-Gas

	 	Recitals
	CMS-Generation

	 	Recitals
	CMS-Inversiones

	 	Recitals
	Claim

	 	Section 5.1(e)(i)
	Company/Companies

	 	Recitals
	Companies Subsidiaries Financial Statements

	 	Section 3.2
	Dispute

	 	Section 10.9
	Governing Company

	 	Recitals
	Guarantees

	 	Section 5.10
	Holding Company

	 	Recitals
	ICC

	 	Section 10.9
	Note/Notes

	 	Recitals
	Note Holders Disclosure Letter

	 	Section 2.2
	Note Holder Required Approvals

	 	Section 2.2.3(c)
	Note Holders

	 	Preamble
	Notes Transaction

	 	Section 1.3
	Operating Company Notes

	 	Section 3.6
	Outside Date

	 	Section 7.1(c)
	Panel

	 	Section 10.9

 

 

	 	 	 
	Defined Term	 	Section Reference
	Parent

	 	Preamble
	Party/Parties

	 	Preamble
	Prior Agreement

	 	Recitals
	Purchase Agreement Fee

	 	Section 1.7
	Purchase Price

	 	Section 1.4
	Purchaser

	 	Preamble
	Rules

	 	Section 10.9
	Seller

	 	Preamble
	Seller Disclosure Letter

	 	Section 2.1
	Seller Required Approvals

	 	Section 2.1.3(c)
	Seller Termination Date

	 	Section 7.1(d)
	Shares

	 	Recitals
	Shares Transaction

	 	Section 1.1
	Transactions

	 	Section 1.3
	Violation

	 	Section 2.1.3(b)

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

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

     “Affiliate” means, with respect to any Person or group of Persons, a Person that
directly or indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Person or group of Persons.

     “Antitrust Approval” is the approval of the Transactions without undertakings by
the Republic of Argentina Secretariat of Internal Trade, or any agency or tribunal that may

 

 

replace it in the future or that may be declared by a res judicata judgment to be
empowered to issue a final decision on the Transactions, approving the same under the
Antitrust Law.

     “Antitrust Law” as regards the Republic of Argentina means Law No. 25,156 (as
amended), Decree No. 89/2001, Resolution No. 40/2001 of the former Secretariat of Competition
and Consumer Defense, Resolution No. 164/2001 of the former Secretariat of Competition,
Deregulation and Consumer Defense, Resolution No. 26/2006 of the former Secretariat of
Technical Coordination and any other law or regulation, administrative resolution and judicial
decision addressing competition issues, including but not limited to the competition clearance
of mergers, acquisitions or other business combinations.

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

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

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

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

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

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

 

 

     “Confidentiality Agreement” means the Confidentiality Agreement, dated February
22, 2007, between AEI Global Services Ltd., an Affiliate of Purchaser, and J.P. Morgan
Securities Inc., on behalf of an Affiliate of Seller.

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

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

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

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

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

     “Endesa” means Empresa Nacional de Electricidad S.A., a corporation organized and
existing under the laws of the Republic of Chile.

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

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

 

 

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

ARTICLE X

GENERAL PROVISIONS

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

(a) if to Purchaser,

AEI Chile Holdings Ltd.

1221 Lamar, Suite 800

Houston TX 77010

Fax: 713.345.5352

Attention: Miguel Mendoza

with a copy to:

Ashmore Energy International

1221 Lamar, Suite 800

Houston TX 77010

Fax: 713.345.5352

Attention: General Counsel

(b) if to Seller or any Note Holder,

CMS International Ventures L.L.C.

 

 

One Energy Plaza

Jackson, MI 49201

Fax: 517-788-0121

Attention: General Counsel

with a copy to:

CMS Energy

One Energy Plaza

Jackson, MI 49201

Fax: 517-788-0121

Attention: General Counsel

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

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

          10.2 Binding Effect.

               (a) This Agreement amends, restates and supersedes the Prior Agreement in its entirety

               (b) This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective heirs, successors and permitted assigns; provided, however, that notwithstanding any
other provision contained in this Agreement to the contrary (other than this proviso), the Parties
acknowledge and agree that this Agreement shall be binding, in full force and effect, and
enforceable against any Party and its respective heirs, successors and permitted assigns only on
the condition that the execution and delivery of this Agreement by Sellers and the Note Holders,
and the performance of their respective obligations hereunder, have been approved by the board of
directors of CMS Energy Corporation, and if such approval by the board of directors of CMS Energy
Corporation has not occurred on or before June 4, 2007, this Agreement shall be null and void and
be of no further force or effect to and enforceable whatsoever against any Party hereto.

          10.3 Assignment; Successors; Third-Party Beneficiaries.

 

 

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

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

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

          10.4 Amendment; Waivers; etc. No amendment, modification or discharge of this
Agreement, and no waiver under this Agreement, shall be valid or binding unless set forth in
writing and duly executed by the Party against whom enforcement of the amendment, modification,
discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights of the Party
granting such waiver in any other respect or at any other time. The waiver by any of the Parties of
a breach of or a default under any of the provisions of this Agreement, or any failure or delay to
exercise any right or privilege under this Agreement, shall not be construed as a waiver thereof or
otherwise affect any of such provisions, rights or privileges under this Agreement.

          10.5 Entire Agreement.

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

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

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

 

 

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

          10.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to any conflicts of law principles of
such State.

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

          10.10 Limitation on Damages. No Party shall, under any circumstance, have any
liability to any other Party for any special, indirect, consequential or punitive damages claimed
by such other Party under the terms of or due to any breach or non-performance of this Agreement,
including lost profits, loss of revenue or income, cost of capital, or loss of business reputation
or opportunity.

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

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

 

 

made by Purchaser pursuant to this Agreement or any other document or instrument delivered by
Purchaser in connection herewith.

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

	 	 	 	 	 
	CMS INTERNATIONAL VENTURES, L.L.C.

 	 	 
	By: 	/s/ Thomas L. Miller
 	 	 
	 	Name: 	Thomas L. Miller 	 	 
	 	Title: 	Vice President 	 	 
	 
	CMS CAPITAL, L.L.C.

 	 	 
	By: 	/s/ Thomas J. Webb
 	 	 
	 	Name: 	Thomas J. Webb 	 	 
	 	Title: 	President and Chief Executive
Officer 	 	 
	 
	CMS GAS ARGENTINA COMPANY

 	 	 
	By: 	/s/ Thomas L. Miller
 	 	 
	 	Name: 	Thomas L. Miller 	 	 
	 	Title: 	Vice President 	 	 
	 
	CMS ENTERPRISES COMPANY

 	 	 
	By: 	/s/ Thomas J. Webb
 	 	 
	 	Name: 	Thomas J. Webb 	 	 
	 	Title: 	Executive Vice President and Chief
Financial Officer 	 	 
	 
	AEI HOLDINGS CHILE, INC.

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 	 
	 	Name: 	Miguel A. Mendoza 	 	 
	 	Title: 	Authorized Representative 	 	 
	 
	ASHMORE ENERGY INTERNATIONAL 

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 	 
	 	Name: 	Miguel A. Mendoza  	 	 
	 	Title: 	Authorized Representative 	 	 
	 
	 	 	 	 	 
	ASHMORE ENERGY INTERNATIONAL

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 
	 	Name: 	Miguel A. Mendoza 	 
	 	Title: 	Authorized Representative 	 
	 

 

 

EXHIBIT A to

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

SELLER DISCLOSURE LETTER

to

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

CMS INTERNATIONAL VENTURES, L.L.C.,

CMS CAPITAL L.L.C.,

CMS GAS ARGENTINA COMPANY,

CMS ENTERPRISES COMPANY,

AEI CHILE HOLDINGS LTD.

And

ASHMORE ENERGY INTERNATIONAL

Dated as of June 1, 2007

 

 

SELLER DISCLOSURE LETTER

To

AMENDED AND RESTATED

STOCK PURCHASE AGREEMENT

by and among

CMS INTERNATIONAL VENTURES, L.L.C.,

CMS CAPITAL L.L.C.,

CMS GAS ARGENTINA COMPANY,

CMS ENTERPRISES COMPANY,

AEI CHILE HOLDINGS LTD.

And

ASHMORE ENERGY INTERNATIONAL

Dated as of June 1, 2007

     This Seller Disclosure Letter is being furnished by CMS International Ventures, L.L.C., a
limited liability company organized and existing under the laws of the State of Michigan
(“Seller”), to AEI Chile Holdings Ltd., an exempted company incorporated with limited
liability under the laws of the Cayman Islands (“Purchaser”) in connection with the Amended
and Restated Securities Purchase Agreement dated as of June 1, 2007 (as so amended and restated,
hereinafter also referred to as this “Agreement”) by and among Seller, CMS Capital L.L.C.,
a limited liability company organized and existing under the laws of the State of Michigan
(“CMS-Capital”), CMS Gas Argentina Company, a company incorporated and existing under the
laws of the Cayman Islands (“CMS-Cayman”), and, CMS Enterprises Company, a corporation
organized and existing under the laws of the State of Michigan (“CMS-Enterprises”; each of
the Seller, CMS-Capital, CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note
Holder” and, collectively, the “Note Holders”) and Purchaser. Unless the context
otherwise requires, all capitalized terms used in this Seller Disclosure Letter shall have the
respective meanings assigned to them in the Agreement.

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

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

 

 

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

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

     This Seller Disclosure Letter shall be deemed to include, and there are incorporated into it
by way of disclosure, all information disclosed in the files and working papers of Sellers,
CMS-Inversiones and the Companies Subsidiaries made available to Purchaser in the virtual data room
on Intralinks under “Project Beta” as of May 31, 2007.

Schedule 2.1.2

Shares

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

Schedule 2.1.3(c)

Approvals

1. ENDESA ROFO right.

Schedule 2.1.3(d)

Approvals

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

 

 

2. Antitrust approval in accordance with Argentine antitrust law.

3. ENARGAS approval in accordance with Argentine gas law.

Schedule 2.1.4(c)

Companies Organization and Qualification; Capitalization

None.

 

 

Schedule 3.1.1

Title and Capitalization

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Issued and	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 	 	Equity	 	 	 	Subscribed	 	 	Paid	 	 	Paid in Capital	 	Validly	 	Good	 	Last
	Name of Company	 	Incorporation	 	Equity Interest	 	Interest	 	Owners of Equity Interest	 	Shares/Rights	 	 	Shares/Rights	 	 	(CLP)	 	Incorporated	 	Standing	 	Capitalization *
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Compania de Inversiones
	 	Chile	 	Derechos Sociales
(Equity Rights)	 	99%	 	CMS Gas Transmission del Sur Company	 	(to be confirmed)	 	 	(to be confirmed)	 	 	(to be confirmed)	 	Yes, 06.03.97	 	(to be confirmed)	 	(to be confirmed)
	 
	 	 	 	 	 	1%	 	CMS Generation Investment Company V **	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Inversiones Gas Atacama Holding Ltda.
	 	Chile	 	Derechos Sociales
(Equity Rights)	 	100%	 	Inversiones Endesa Norte S.A.	 	50	%	 	50	%	 	80,356,939,627	 	Yes, 10.01.03	 	04.19.07	 	01.26.04
	 
	 	 	 	 	 	 	 	Compania de Inversiones CMS	 	36.07	%	 	36.07	%	 	57,967,438,723	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	CMS Gas Transmission del Sur Company	 	13.93	%	 	13.93	%	 	22,389,500,904	 	 	 	 	 	 
	Gas Atacama S.A.
	 	Chile	 	Ordinary Shares	 	100,000,000 ordinary Shares	 	Inversiones Gas Atacama Holding Ltda	 	99,997,706	 	 	99,997,706	 	 	160,709,613,426	 	Yes, 06.13.97	 	04.17.07	 	12.24.03
	 
	 	 	 	 	 	 	 	Compania de Inversiones CMS	 	1,147	 	 	1,147	 	 	1,843,382	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Empresa Nacional de Electricidad S.A.	 	1,147	 	 	1,147	 	 	1,843,382	 	 	 	 	 	 
	Gas Atacama Generacion
	 	Chile	 	Ordinary Shares	 	10,000 ordinary shares	 	Inversiones Endesa Norte S.A.	 	5	 	 	5	 	 	42,502,774	 	Yes, 12.19.96	 	04.17.07	 	12.17.03
	 
	 	 	 	 	 	 	 	Compania de Inversiones CMS	 	5	 	 	5	 	 	42,502,774	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Gas Atacama S.A.	 	9,990	 	 	9,990	 	 	84,920,542,386	 	 	 	 	 	 
	Gasoducto Atacama Chile
	 	Chile	 	Ordinary Shares	 	10,000 ordinary shares	 	Inversiones Endesa Norte S.A.	 	5	 	 	5	 	 	22,544,680	 	Yes, 08.21.96	 	04.18.17	 	12.17.03
	 
	 	 	 	 	 	 	 	Compania de Inversiones CMS	 	5	 	 	5	 	 	22,544,680	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama S.A.	 	9,990	 	 	9,990	 	 	45,044,271,486	 	 	 	 	 	 
	Gasoducto Atacama Argentina S.A.
	 	Chile	 	Ordinary Shares	 	10,000 ordinary shares	 	Inversiones Endesa Norte S.A.	 	5	 	 	5	 	 	37,099,663	 	Yes, 02.27.97	 	04.17.07	 	12.17.03
	 
	 	 	 	 	 	 	 	Compania de Inversiones CMS	 	5	 	 	5	 	 	37,099,663	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Energy Chile Ltda.	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	GasAtacama S.A.	 	9,990	 	 	9,990	 	 	74,125,126,157	 	 	 	 	 	 
	Gasoducto Tal Tal S.A.
	 	Chile	 	Ordinary Shares	 	100,000 ordinary shares	 	Gasoducto Atacama Chile S.A.	 	99,877,365	 	 	99,877,365	 	 	13,819,021,726	 	Yes, 08.20.97	 	04.17.07	 	02.26.04
	 
	 	 	 	 	 	 	 	Gasoducto Atacama Argentina S.A.	 	122,635	 	 	122,635	 	 	16,967,766	 	 	 	 	 	 
	Progas S.A.
	 	Chile	 	Ordinary Shares	 	1,000,000 ordinary shares	 	Gasoducto Atacama Chile S.A.	 	999,000	 	 	999,000	 	 	999,000	 	Yes, 08.30.99	 	04.16.07	 	08.30.99
	 
	 	 	 	 	 	 	 	GasAtacama Generacion S.A.	 	1,000	 	 	1,000	 	 	1,000	 	 	 	 	 	 
	Gasducto Atacama Argentina S.A.
(Argentinean Branch)
	 	Argentina	 	N/A	 	N/A	 	Gasoducto Atacama Argentina S.A.	 	N/A	 	 	N/A	 	 	N/A	 	N/A	 	N/A	 	N/A

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Issued and	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 	 	Equity	 	 	 	Subscribed	 	Paid	 	Paid in Capital	 	Validly	 	Good	 	Last
	Name of Company	 	Incorporation	 	Equity Interest	 	Interest	 	Owners of Equity Interest	 	Shares/Rights	 	Shares/Rights	 	(CLP)	 	Incorporated	 	Standing	 	Capitalization *
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Atalama Finance Co. [to be Provided]
	 	 	 	[to be provided]	 	100%	 	Inversiones Gas Atacama Holding Ltda.	 	[to be Provided]	 	[to be provided]	 	[to be provided]	 	[to be provided]	 	[to be provided]	 	[to be provided]
	Energex Co. [to be provided]
	 	 	 	[to be provided]	 	100%	 	Inversiones Gas Atacama Holding Ltda.	 	to be provided	 	[to be provided	 	[to be provided	 	[to be provided	 	[to be provided	 	[to be provided

 

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

 

 

Schedule 3.1.2

No Consents to Liens

None.

Schedule 3.3

Tax Matters

The Argentine tax authorities as part of an ongoing audit have taken the position that the amounts
paid into the Argentine branch of Gasoducto Atacama Argentina S.A. represented a capital
contribution from the Chilean home office rather than a loan. Accordingly they are proposing to
disallow interest deductions and an f/x loss associated with the devaluation of the Argentine
currency.

Although the issue has not been raised, there is a risk that the Argentine tax authorities could
concede the existence of the loan but argue that the withholding tax should have been 35% rather
than 15% (with Chase) or 12% (with Standard Bank).

Schedule 3.4

Compliance with Laws

1. Disputes between GasAtacama Generación and Pluspetrol and YPF arising under gas supply
arrangements regarding non-deliveries of natural gas, export taxes and claims of economic hardship
made by gas suppliers.

2. See, Schedule 3.3, Tax Matters.

Schedule 3.5

Certain Contracts

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

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

(collectively, the “Taltal Gas Transportation Agreements”)

 

 

EXHIBIT B to

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

NOTE HOLDERS DISCLOSURE LETTER

to

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

CMS INTERNATIONAL VENTURES, L.L.C.,

CMS CAPITAL L.L.C.,

CMS GAS ARGENTINA COMPANY,

CMS ENTERPRISES COMPANY,

AEI CHILE HOLDINGS LTD.

And

ASHMORE ENERGY INTERNATIONAL

Dated as of June 1, 2007

NOTE HOLDERS DISCLOSURE LETTER

To

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

CMS INTERNATIONAL VENTURES, L.L.C.,

CMS CAPITAL L.L.C.,

CMS GAS ARGENTINA COMPANY,

CMS ENTERPRISES COMPANY,

AEI CHILE HOLDINGS LTD.

And

ASHMORE ENERGY INTERNATIONAL

 

 

Dated as of June 1, 2007

     This Note Holders Disclosure Letter is being furnished by CMS International Ventures, L.L.C.,
a limited liability company organized and existing under the laws of the State of Michigan
(“Seller”), to AEI Chile Holdings Ltd., an exempted company incorporated with limited
liability under the laws of the Cayman Islands (“Purchaser”) in connection with the Amended
and Restated Securities Purchase Agreement dated as of June 1, 2007 (as so amended and restated,
hereinafter also referred to as this “Agreement”) by and among Seller, CMS Capital L.L.C.,
a limited liability company organized and existing under the laws of the State of Michigan
(“CMS-Capital”), CMS Gas Argentina Company, a company incorporated and existing under the
laws of the Cayman Islands (“CMS-Cayman”), and, CMS Enterprises Company, a corporation
organized and existing under the laws of the State of Michigan (“CMS-Enterprises”; each of
the Seller, CMS-Capital, CMS-Cayman, and CMS-Enterprises is also referred to herein as a “Note
Holder” and, collectively, the “Note Holders”) and Purchaser.

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

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

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

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

     This Seller Disclosure Letter shall be deemed to include, and there are incorporated into it
by way of disclosure, all information disclosed in the files and working papers of Sellers,
CMS-Inversiones and the Companies Subsidiaries made available to Purchaser in the virtual data room
on Intralinks under “Project Beta” as of May 31, 2007.

 

 

Schedule 2.2.2

Title to Notes

	 	 	 
	Noteholder	 	Principal Amount
	CMS International Ventures, L.L.C.

	 	US $54,065,594.49
	CMS Capital L.L.C.

	 	US $87,372,676.23
	CMS Gas Argentina Company

	 	US $  7,734,040.24
	CMS Enterprises Company

	 	US $26,099,868.00

Schedule 2.2.3(c)

Note Holder Required Statutory Approvals

None.

SCHEDULES TO

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

Schedule 5.9

Resignations of Certain Officers and Directors

CMS GAS TRANSMISSION DEL SUR COMPANY

Directors

Thomas Elward

David W. Joos

Officers

Thomas Elward — President

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

John M. Butler — Senior Vice President

James E. Brunner — Senior Vice President

Carlos A. Isles — Controller/Vice President

Catherine M. Reynolds — Vice President/Secretary

Sharon M. McIlnay — Vice President/General Counsel

Thomas L. Miller — Vice President

Laura L. Mountcastle — Treasurer/Vice President

Joseph P. Tomasik — Vice President

Theodore J. Vogel — Vice President/Chief Tax Counsel

Jane M. Kramer — Assistant Secretary

Beverly S. Burger — Assistant Treasurer

James L. Loewen — Assistant Treasurer

Joyce Norkey — Assistant Secretary

 

 

CMS GENERATION INVESTMENT COMPANY V

Directors

Thomas Elward

David W. Joos

Thomas J. Webb

Officers

Thomas Elward — President/Chief Executive Officer

David W. Joos — Chairman of the Board

John M. Butler — Senior Vice President

James E. Brunner — Senior Vice President

Carlos A. Isles — Controller/Vice President

Catherine M. Reynolds — Vice President/Secretary

Sharon M. McIlnay — Vice President/General Counsel

Thomas L. Miller — Vice President

Daniel B. Dexter — Vice President

Daniel E. Nally — Vice President

Laura L. Mountcastle — Treasurer/Vice President

Joseph P. Tomasik — Vice President

Michael C. Sniegowski — Vice President

Theodore J. Vogel — Vice President/Chief Tax Counsel

Jane M. Kramer — Assistant Secretary

Beverly S. Burger — Assistant Treasurer

James L. Loewen — Assistant Treasurer

Joyce Norkey — Assistant Secretary

INVERSIONES GASATACAMA HOLDING LIMITADA

Directors

	 	 	 
	Regular

	 	Alternate
	 
	 	 
	Tom Miller

	 	David Keyhoe
	Francisco Mezzadri

	 	David Baughman

 

 

	 	 	 
	GASATACAMA S.A.
	 	 
	 
	 	 
	Directors
	 	 
	 
	 	 
	Regular

	 	Alternate
	 
	 	 
	Tom Miller

	 	Thomas Elward
	David Baughman

	 	Sharon McIlnay

	 	 	 
	GASATACAMA GENERACION S.A.
	 	 
	 
	 	 
	Directors
	 	 
	 
	 	 
	Regular

	 	Alternate
	 
	 	 
	David Baughman

	 	Sharon Mcllnay
	Tom Miller

	 	Thomas Elward

	 	 	 
	GASODUCTO ATACAMA CHILE S.A.
	 	 
	 
	 	 
	Directors
	 	 
	 
	 	 
	Regular

	 	Alternate
	David Baughman

	 	Sharon Mcllnay
	Tom Miller

	 	Thomas Elward

	 	 	 
	GASODUCTO ATACAMA ARGENTINA S.A.
	 	 
	 
	 	 
	Directors
	 	 
	 
	 	 
	Regular

	 	Alternate
	David Baughman

	 	Sharon Mcllnay
	Tom Miller

	 	Thomas Elward

ATACAMA FINANCE CO.

Corporate Comment:

[To be provided]

ENERGEX CO.

Corporate Comment:

[To be provided]

GASODUCTO ATACAMA ARGENTINA S.A. (Sucursal Argentine)

Gustavo Roda, as registered agent only.

 

 

Schedule 5.10

Releases of Certain Guarantees

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

Schedule 9.2

Definitions

“Knowledge of Seller”

1. Thomas L. Miller, Vice President of Seller

2. David Baughman, Executive Director Financial Advisory Services and Strategic Planning — CMS
Enterprises Company

“Knowledge of Purchaser”

1. Miguel Mendoza, Ashmore Energy International

2. Gabriel Monroy, Ashmore Energy Internationalexv10wxry

EXHIBIT
10(r)

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

ARTICLE I

SALE AND PURCHASE OF SHARES

	 	 	 	 	 	 	 
	1.1	 	Sale and Purchase of Shares
	 	 	 	 
	1.2	 	Purchase Price
	 	 	 	 
	1.3	 	Closing
	 	 	 	 
	1.4	 	Closing Deliveries
	 	 	 	 
	1.5	 	Purchase Agreement Fee
	 	 	 	 
	1.6	 	Purchase Price Adjustment
	 	 	3	 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

	 	 	 
	2.1	 	Organization and Qualification

	2.2	 	Title to Shares

	2.3	 	Authority; Non-Contravention; Statutory Approvals.

	2.4	 	Litigation

	2.5	 	Brokers and Finders

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO HCE-ROCKFORT AND 

JAMAICA SUBSIDIARIES

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

	3.2	 	Capitalization.

 

 

	 	 	 
	3.3	 	Financial Statements; Undisclosed Liabilities.

	3.4	 	Absence of Certain Changes or Events

	3.5	 	Tax Matters

	3.6	 	Litigation

	3.7	 	Compliance with Laws.

	3.8	 	Employee Benefits.

	3.9	 	Companies Permits.

	3.10	 	Leased Real Property.

	3.11	 	Contracts.

	3.12	 	Environmental Matters

	3.13	 	Labor Matters.

	3.14	 	Intellectual Property

	3.15	 	Affiliate Contracts

	3.16	 	Insurance

	3.17	 	Brokers and Finders

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

	 	 	 
	4.1	 	Organization and Qualification

	4.2	 	Authority; Non-Contravention; Statutory Approvals.

	4.3	 	Financing

	4.4	 	Litigation

	4.5	 	Investment Intention; Sufficient Investment Experience; Independent Investigation

	4.6	 	Brokers and Finders

	4.7	 	Qualified for Permits

	4.8	 	No Knowledge of Sellers Breach

ARTICLE V

COVENANTS

	 	 	 	 	 	 	 
	5.1	 	Conduct of Business
	 	 	 	 
	5.2	 	Approvals.
	 	 	 	 
	5.3	 	Access
	 	 	 	 
	5.4	 	Publicity
	 	 	 	 
	5.5	 	Tax Cooperation
	 	 	 	 
	5.6	 	Employee Matters.
	 	 	 	 
	5.7	 	Fees and Expenses.
	 	 	 	 
	5.8	 	Indemnification of Directors and Officers.
	 	 	 	 
	5.9	 	Affiliate Contracts
	 	 	 	 

 

 

	 	 	 	 	 	 	 
	5.10	 	Further Assurances
	 	 	 	 
	5.11	 	Supplements to Disclosure Letters
	 	 	 	 
	5.12	 	Change of Name.
	 	 	 	 
	5.13	 	Resignations of Certain Officers and Directors
	 	 	 	 
	5.14	 	Tax Indemnity
	 	 	27	 

ARTICLE VI

CONDITIONS TO CLOSING

	 	 	 
	6.1	 	Conditions to the Obligations of the Parties

	6.2	 	Conditions to the Obligations of Purchaser

	6.3	 	Conditions to the Obligations of Sellers

ARTICLE VII

TERMINATION

	 	 	 
	7.1	 	Termination

	7.2	 	Effect of Termination

ARTICLE VIII

LIMITS OF LIABILITY; PARENT GUARANTEE

	 	 	 	 	 	 	 
	8.1	 	Non-Survival of Representations, Warranties, Covenants and Agreements.
	 	 	 	 
	8.2	 	Parent Guarantee.
	 	 	32	 

ARTICLE IX

DEFINITIONS AND INTERPRETATION

	 	 	 
	9.1	 	Defined Terms

	9.2	 	Definitions

	9.3	 	Interpretation

ARTICLE X

GENERAL PROVISIONS

	 	 	 
	10.1	 	Notices

	10.2	 	Binding Effect

	10.3	 	Assignment; Successors; Third-Party Beneficiaries.

	10.4	 	Amendment; Waivers; etc

	10.5	 	Entire Agreement.

	10.6	 	Severability

	10.7	 	Counterparts

 

 

	 	 	 
	10.8	 	Governing Law

	10.9	 	Arbitration

	10.10	 	Limitation on Damages

	10.11	 	Enforcement

	10.12	 	No Right of Set-Off

EXHIBITS

	 	 	 
	Exhibit A

	 	Sellers Disclosure Letter
	 
	 	 
	Exhibit B

	 	Companies Disclosure Letter
	 
	 	 
	Exhibit C

	 	Purchaser Disclosure Letter

SCHEDULES TO BE INCORPORATED INTO THE DISCLOSURE LETTERS APPENDED AS EXHIBITS

	 	 	 
	Schedule 2.2

	 	Title to Shares
	 
	 	 
	Schedule 2.3(b)

	 	Sellers Required Consents
	 
	 	 
	Schedule 2.3(c)

	 	Sellers Required Statutory Approvals
	 
	 	 
	Schedule 2.4

	 	Litigation
	 
	 	 
	Schedule 3.1(b)

	 	Companies Required Consents
	 
	 	 
	Schedule 3.1(c)

	 	Companies Required Statutory Approvals
	 
	 	 
	Schedule 3.2(b)

	 	Power Company
	 
	 	 
	Schedule 3.2(d)

	 	Agreements regarding Shares and Equity Interests
	 
	 	 
	Schedule 3.3(d)

	 	Undisclosed Liabilities
	 
	 	 
	Schedule 3.4

	 	Absence of Certain Changes or Events
	 
	 	 
	Schedule 3.5

	 	Tax Matters
	 
	 	 
	Schedule 3.6

	 	Litigation
	 
	 	 
	Schedule 3.7(a)

	 	Compliance with Laws
	 
	 	 
	Schedule 3.8(a)

	 	Employee Benefits
	 
	 	 
	Schedule 3.8(e)

	 	Employee Benefits

 

 

	 	 	 
	Schedule 3.8(f)

	 	Employee Benefits
	 
	 	 
	Schedule 3.9(a)

	 	Companies Permits
	 
	 	 
	Schedule 3.10(a)

	 	Leased Real Property
	 
	 	 
	Schedule 3.11(a)

	 	Contracts
	 
	 	 
	Schedule 3.11(b)(i)

	 	Contracts
	 
	 	 
	Schedule 3.11(b)(ii)

	 	Contracts
	 
	 	 
	Schedule 3.12

	 	Environmental Matters
	 
	 	 
	Schedule 3.13(a)

	 	Labor Matters
	 
	 	 
	Schedule 3.13(b)

	 	Labor Matters
	 
	 	 
	Schedule 3.15

	 	Affiliate Contracts
	 
	 	 
	Schedule 3.16

	 	Insurance
	 
	 	 
	Schedule 4.2(b)

	 	Purchaser Required Consents
	 
	 	 
	Schedule 4.2(c)

	 	Purchaser Required Statutory Approvals
	 
	 	 
	Schedule 4.4

	 	Purchaser Litigation
	 
	 	 
	Schedule 9.2(a)

	 	Sellers Knowledge Group
	 
	 	 
	Schedule 9.2(b)

	 	Purchaser Knowledge Group

SCHEDULES TO STOCK PURCHASE AGREEMENT

	 	 	 
	Schedule 5.1

	 	Conduct of Business
	 
	 	 
	Schedule 5.3

	 	Access
	 
	 	 
	Schedule 5.9

	 	Affiliate Contracts
	 
	 	 
	Schedule 5.13

	 	Resignations and Terminations
	 
	 	 
	Schedule 5.14

	 	Tax Indemnity
	 
	 	 
	Schedule 6.1(a)

	 	Statutory Approvals

 

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of May 31, 2007, is entered
into by and among (i) HYDRA-CO Enterprises, Inc., a New York corporation (“HCE”), (ii)
HCO-Jamaica, Inc., a New York corporation (“HCO-Jamaica” and, together with HCE, each a
“Seller” and collectively, “Sellers”), (iii) AEI Central America Ltd., an exempted
company incorporated with limited liability under the laws of the Cayman Islands and a wholly owned
subsidiary of Parent (“Purchaser”), and (iv) solely for the limited purposes of Section
8.2, Ashmore Energy International, an exempted company incorporated with limited liability
under the laws of the Cayman Islands (“Parent”). Each of Purchaser, Parent, HCE and
HCO-Jamaica are sometimes referred to individually herein as a “Party” and collectively as
the “Parties”. Certain other terms are defined throughout this Agreement and in Section
9.2.

WITNESSETH:

     WHEREAS HCE owns all the issued and outstanding Equity Interests of HCE-Rockfort Diesel, Inc.
(the “HCE-Rockfort Shares”), a New York corporation (“HCE-Rockfort”);

     WHEREAS HCE-Rockfort owns (i) approximately 42.3% of the Equity Interests in Jamaica Private
Power Company Limited, a Jamaica limited liability company (the “Power Company”), which
represents approximately 46.3% of the voting interest in the Power Company, and (ii) one (1) share
(the “HCE-Rockfort PPO Share”) in Private Power Operators Limited, a Jamaica limited
liability company (“PPO” and together with the Power Company, each a “Jamaica
Subsidiary” and collectively, the “Jamaica Subsidiaries”);

     WHEREAS HCO-Jamaica owns one (1) share in PPO (the “HCO-Jamaica PPO Share”, and
together with the HCE-Rockfort PPO Share, the “PPO Shares”; and the HCO-Jamaica PPO Share
and the HCE-Rockfort Shares, the “Shares”); and

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

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

ARTICLE I

SALE AND PURCHASE OF SHARES

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

 

 

title, free and clear of any Liens except those created by Purchaser arising out of ownership
of the HCO-Jamaica PPO Share by Purchaser, the HCO-Jamaica PPO Share (the “PPO
Transaction”, and together with the HCE-Rockfort Transaction, the “Transactions”)

          1.2 Purchase Price. The consideration to be paid by Purchaser in respect of the
purchase of the Shares shall be an amount in cash equal to US$14,000,000 in the legal currency of
the United States of America (the “Purchase Price”), subject to adjustment under
Section 1.6, which shall be allocated to (a) the HCE-Rockfort Shares in an amount in cash
equal to US$12,750,000 in the legal currency of the United States of America and (b) the
HCO-Jamaica PPO Share in an amount in cash equal to US$1,250,000 in the legal currency of the
United States of America.

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

          1.4 Closing Deliveries. At the Closing:

          (a) HCE shall deliver to Purchaser the stock certificate evidencing the HCE-Rockfort Shares,
duly endorsed in blank or accompanied by stock powers duly executed in blank.

          (b) HCO-Jamaica shall deliver to Purchaser the stock certificate evidencing the HCO-Jamaica
PPO Share, together with the instrument of transfer duly executed in blank.

          (c) For the Shares so delivered by Sellers, Purchaser shall pay, or cause to be paid, to HCE
or any Affiliate designated by HCE prior to the Closing, by wire transfer of immediately available
funds to the bank account or accounts outside of Jamaica designated by HCE prior to the Closing, an
amount in cash in the legal currency of the United States of America (the “Closing Purchase
Price”) that represents the Purchase Price (but after application of amounts previously
delivered to HCE pursuant to Section 1.5) (x) plus the PP Adjustment Amount (as
such term is defined in Section 1.6(a)), if a positive number, or (y) minus the PP
Adjustment Amount, if a negative number, in each case, as reasonably estimated by Sellers as of one
(1) Business Day prior to the Closing Date.

          (d) Purchaser shall deliver to Sellers for the benefit of the Power Company the Acknowledgment
and Agreement executed by Purchaser and, to the extent required under the Members’ Agreement, by
Parent in the form attached as Exhibit 2.08 of the Members’ Agreement in accordance with the terms
thereof.

          (e) Purchaser shall deliver to Sellers for the benefit of the Power Company the Acknowledgment
and Agreement executed by Purchaser and, to the extent required under the Members’ Agreement, by
Parent in the form attached as Exhibit 2.09 of the Members’ Agreement in accordance with the terms
thereof.

 

 

          (f) Purchaser shall deliver to Sellers for the benefit of the NIBJ the agreement executed by
Purchaser in accordance with the terms of Section 1.1.2 of the NIBJ Agreement with Initial Members.

          (g) Purchaser shall deliver to Sellers for the benefit of the GOJ the agreement executed by
Purchaser in accordance with the terms of Section 1.1.2 of the GOJ Agreement with Initial Members.

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

          1.5 Purchase Agreement Fee. Within two (2) Business Day following Sellers’ written
notice to Purchaser of satisfaction of the condition set forth in Section 6.3(f), Purchaser
shall pay to HCE One Million Dollars (US$1,000,000) in cash (the aggregate of such amount, plus any
interest deemed earned thereon from (and including) the date hereof to (but excluding) the Closing
Date or date of earlier termination of this Agreement, being referred to as the “Purchase
Agreement Fee”), by wire transfer of immediately available funds in United States dollars to
the bank account or accounts outside of Jamaica that have been designated by HCE. The Purchase
Agreement Fee will be deemed to earn interest at the Specified Rate. The Purchase Agreement Fee
shall be nonrefundable unless this Agreement is terminated in accordance with Section
7.1(a), 7.1(b), 7.1(c), 7.1(d), 7.1(e) or 7.1(g), in
which event HCE shall pay to Purchaser, no later than five (5) Business Days following the
effective date of such termination, an amount equal to such portion of the Purchase Agreement Fee
received by it pursuant to this Section 1.5 by wire transfer of immediately available funds
in United States dollars to the bank account or accounts designated by Purchaser. The Purchase
Agreement Fee received by HCE shall be credited against (x) such portion of the Closing Purchase
Price payable to HCE or any Affiliate designated by HCE in accordance with Section 1.4(c)
or (y) if this Agreement is terminated (other than pursuant to Section 7.1(a),
7.1(b), 7.1(c), 7.1(d), 7.1(e) or 7.1(g)), the Damages, if
any, owed by Purchaser to HCE arising out of breach of this Agreement by Purchaser. The Purchase
Agreement Fee shall not be deemed to be a liquidated damages payment for any breach by Purchaser of
this Agreement.

          1.6 Purchase Price Adjustment.

          (a) The Purchase Price payable on the Closing Date shall be adjusted as contemplated by
Section 1.4(c) as follows:

     (i) upward by an amount, if any, equal to the total combined amount of capital
contributions (other than a capital contribution contemplated by Section 7.1(e))
made by HCE to HCE-Rockfort or from HCO-Jamaica to PPO from December 31, 2006 until the
Closing Date; and

     (ii) downward by an amount, if any, equal to the total combined amount of dividends
or distributions received by HCE from HCE-Rockfort and by HCO-Jamaica from PPO (for the
avoidance of doubt, excluding any payments made under any Operating Contract in the
ordinary course of business) from December 31, 2006 until the Closing Date;

 

 

          with the Purchase Price, plus any upward adjustment provided for in clause (i) above, and
minus any downward adjustment provided for in clause (ii) above, calculated on a daily basis,
accruing interest payable to Sellers at the Specified Rate for the period of time beginning on
January 1, 2007 and ending on the Closing Date (the “PP Adjustment Amount”).

          (b) After the Closing Date, Purchaser shall afford, and shall exercise the voting, governance
and contractual powers available to it to cause, to the extent possible, the Power Company to
afford, to Sellers and any accountants, counsel or financial advisers retained by Sellers in
connection with any adjustment to the Closing Purchase Price contemplated by this Section
1.6 reasonable access to the books, records and employees of HCE-Rockfort, PPO and the Power
Company as is reasonably requested by Sellers in connection with the matters addressed in this
Section 1.6. Within forty-five (45) days after the Closing Date, Sellers shall prepare and
deliver to Purchaser a notice (the “Post-Closing PP Adjustment Notice”) setting forth the
proposed final PP Adjustment Amount calculated as of the Closing Date (the “Post-Closing PP
Adjustment Amount”).

          (c) Purchaser may dispute any amounts reflected in the Post-Closing PP Adjustment Notice;
provided, however, that Purchaser shall have notified Sellers in writing of each
item Purchaser is disputing in good faith, specifying the estimated amount thereof in dispute, if
known or determinable, and setting forth, in reasonable detail, the basis for such dispute by no
later than the tenth (10th) Business Day following Purchaser’s receipt of the
Post-Closing PP Adjustment Notice (the “Objection Notice”). If, within such period after
such tenth Business Day, Purchaser shall not have given Sellers an Objection Notice with respect to
the Post-Closing PP Adjustment Notice, then Purchaser shall be deemed to have accepted such notices
and amounts contained therein as final and binding without amendment or modification and conclusive
upon each of the Parties.

          (d) If Purchaser delivers an Objection Notice, then the items in dispute shall be promptly
submitted by Purchaser (in any event, no later than three (3) Business Days upon receipt by Sellers
of such Objection Notice) to a mutually agreeable accounting firm (and failing agreement, one of
the “Big 4” accounting firms to be determined by lot) (the “Accounting Firm”), which shall,
acting as experts in accounting and not as arbitrators or legal experts, resolve those
disagreements set forth in the Objection Notice. Purchaser and Sellers shall make readily available
to the Accounting Firm all relevant books and records and any work papers, and all other items
reasonably requested by the Accounting Firm. The fees and disbursements of the Accounting Firm
shall be borne equally by Purchaser and HCE. Within twenty (20) Business Days after such
submission, the Accounting Firm shall, and the Parties shall direct the Accounting Firm to,
determine and report to Purchaser and Sellers upon such disputed items, and such report shall be
final, binding and conclusive on the Parties. Upon completion of the foregoing procedures, the
“Final PP Adjustment Amount” shall be deemed to be (i) the Post-Closing PP Adjustment
Amount if Purchaser shall not have objected thereto within the specified time period set forth in
Section 1.6(c) or (ii) as determined or reported by the Accounting Firm in accordance with
this Section 1.6(d).

          (e) Within three (3) Business Days following completion of the foregoing procedures in
Section 1.6(d):

 

 

     (i) if the Final PP Adjustment Amount exceeds the PP Adjustment Amount, then
Purchaser shall pay to HCE an amount equal to the difference between the Final PP
Adjustment Amount and the PP Adjustment Amount;

     (ii) if the Final PP Adjustment Amount is less than the PP Adjustment Amount, then
HCE shall pay to Purchaser an amount equal to the difference between the Final PP
Adjustment Amount and the PP Adjustment Amount; or

     (iii) if the Final PP Adjustment Amount is equal to the PP Adjustment Amount, then
there shall be no further payment under this Section 1.6(e).

          Any payment made pursuant to the foregoing clauses (i)-(ii) shall be made by wire transfer of
immediately available funds in United States dollars in accordance with wire instructions delivered
by Sellers or Purchaser, as the case may be, to the other Party. To the extent any payment required
to be made under this Section 1.6(e) is not made by such third (3rd) Business
Day, the amount payable will bear interest from such third (3rd) Business Day at the
Specified Rate.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Except as otherwise disclosed in the Sellers Disclosure Letter attached hereto as Exhibit
A (the “Sellers Disclosure Letter”), each Seller represents and warrants, severally and
not jointly and as to itself only, to Purchaser as follows in this Article II:

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

          2.2 Title to Shares. Such Seller is the lawful record and beneficial owners of the
Shares set forth opposite its respective name in Schedule 2.2 of the Sellers Disclosure
Letter, free and clear of any and all Liens, except for Liens created by this Agreement. The
delivery of the respective Shares to Purchaser in the manner contemplated under Article I,
following the payment by Purchaser of the Closing Purchase Price to HCE or any Affiliate designated
by HCE, shall transfer to Purchaser valid beneficial and legal title to its respective Shares, free
and clear of any and all Liens except for Liens created by Purchaser and subject to registration of
Purchaser in the Register of Members of PPO. Except as set forth in Schedule 2.2 of the
Sellers Disclosure Letter, there are no outstanding options, warrants or other rights of any kind
to acquire from HCE or HCO-Jamaica any Shares or securities convertible into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire from HCE or HCO-Jamaica, any
Shares, nor is HCE or HCO-Jamaica committed to issue any such option, warrant, right or security.

 

 

          2.3 Authority; Non-Contravention; Statutory Approvals.

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

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

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

          2.4 Litigation. Except as set forth in Schedule 2.4 of the Sellers Disclosure
Letter, there is no action, claim, suit or proceeding at law or in equity pending or, to the
Knowledge of Sellers, threatened against such Seller that, if adversely determined, would
reasonably be

 

 

expected to have, individually or in the aggregate, a Sellers Material Adverse Effect. Subject
to obtaining the Sellers Required Statutory Approvals, there are no Governmental Orders of or by
any Governmental Entity applicable to such Seller except for such that would not reasonably be
expected to have, individually or in the aggregate, a Sellers Material Adverse Effect or a
Companies Material Adverse Effect.

          2.5 Brokers and Finders. Such Seller has not entered into any written agreement or
arrangement entitling any agent, broker, investment banker, financial advisor or other firm or
Person to any broker’s or finder’s fee or any other commission or similar fee payable by such
Seller, HCE-Rockfort or the Jamaica Subsidiaries in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc., whose fees shall be paid by
Sellers.

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO HCE-ROCKFORT

AND JAMAICA SUBSIDIARIES

     Except as disclosed in the Companies Disclosure Letter attached hereto as Exhibit B
(the “Companies Disclosure Letter”) and except for any actions permitted by Section
5.1 of this Agreement, HCE and, solely with respect to PPO, HCO-Jamaica represent and warrant
to Purchaser as follows in this Article III:

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

          (a) Organization and Qualification. Each of HCE-Rockfort, PPO and the Power Company
has been duly formed and is validly existing and in good standing (to the extent such concepts are
recognized under applicable Law) under the laws of the jurisdiction of its formation, with full
power and authority to own or lease and to operate its respective properties and to conduct its
respective business as presently conducted and is duly qualified to do business in all
jurisdictions in which such qualification is necessary under applicable Law as a result of the
conduct of its respective business or the operation of its respective properties.

          (b) Non-Contravention. The execution and delivery of this Agreement by Sellers does
not, and the consummation of the transactions contemplated hereby will not, result in any Violation
or result in the creation of any Lien upon any of the respective properties of HCE-Rockfort, PPO or
the Power Company, pursuant to any provision of (i) the Organizational Documents of HCE-Rockfort,
PPO or the Power Company, subject to obtaining the third-party Consents set forth in Schedule
3.1(b) of the Companies Disclosure Letter (the “Companies Required Consents”); (ii) any
lease, mortgage, indenture, note, bond, deed of trust, or other written instrument or agreement of
any kind to which HCE-Rockfort, PPO or the Power Company is a party or by which HCE-Rockfort, PPO
or the Power Company may be bound, subject to obtaining the Companies Required Consents; or (iii)
any Law, Permit or Governmental Order applicable to each of HCE-Rockfort, PPO or the Power Company,
subject to obtaining the Sellers Required Statutory Approvals and the Companies Required Statutory
Approvals; other than in the case of clauses (i), (ii) and (iii) any such Violation or Lien which
would not

 

 

reasonably be expected to have, individually or in the aggregate a Companies Material Adverse
Effect.

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

          3.2 Capitalization.

          (a) HCE-Rockfort and PPO. The authorized capital stock of HCE-Rockfort consists of 200
shares of capital stock, each with no par value, of which one (1) share is issued and outstanding.
The HCE-Rockfort Shares constitute all of the issued and outstanding Equity Interests in
HCE-Rockfort. The authorized capital stock of PPO consists of 200 shares, each with no par value,
of which two (2) shares are issued and outstanding. The PPO Shares constitute all of the issued and
outstanding Equity Interests in PPO.

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

          (c) No Other Equity Interests. As of the date hereof, HCE-Rockfort does not own,
directly or indirectly, any Equity Interests in any Person other than PPO and the Power Company. As
of the date hereof, HCO-Jamaica does not own, directly or indirectly, any Equity Interests in any
Person other than PPO.

          (d) Agreements with Respect to Shares and Equity Interests of HCE-Rockfort and the Jamaica
Subsidiaries. Except as set forth in Schedule 3.2(d) of the Companies Disclosure Letter
and except as provided for in the Organizational Documents of HCE-Rockfort or any Jamaica
Subsidiary, as applicable, there are no:

     (i) subscriptions, options, warrants, calls, conversion, exchange, purchase right or
other written contracts, rights, agreements or commitments of any kind obligating,
directly or indirectly, HCE-Rockfort or PPO or, to the Knowledge of Sellers, the Power
Company, as applicable, to issue, transfer, sell or otherwise dispose of, or cause to be
issued, transferred, sold or otherwise disposed of, any Equity Interests of HCE-

 

 

Rockfort or any Jamaica Subsidiary, as applicable, or any securities convertible into or
exchangeable for any such Equity Interests (other than in connection with any
Permitted Lien); or

     (ii) partnership agreements, voting trusts, proxies or other written agreements,
instruments or understandings to which HCE-Rockfort, PPO or the Power Company is a party,
or by which HCE-Rockfort, PPO or the Power Company is bound, relating to the voting of
any shares of the Equity Interests of HCE-Rockfort or any Jamaica Subsidiary (other than
in connection with any Permitted Lien), as applicable.

          3.3 Financial Statements; Undisclosed Liabilities.

          (a) Sellers have provided to Purchaser copies of HCE-Rockfort’s unaudited balance sheet as at
December 31, 2006 and the related unaudited statement of operations for the year then ended
(collectively, the “HCE-Rockfort Financial Statements”). The HCE-Rockfort Financial
Statements fairly present in all material respects the assets and liabilities of HCE-Rockfort as of
December 31, 2006 and the results of HCE-Rockfort’s operations for the period indicated (except for
normal and recurring year-end adjustments and for the absence of notes). The HCE-Rockfort Financial
Statements have been prepared in conformity with U.S. GAAP. The unaudited balance sheet of
HCE-Rockfort as at December 31, 2006 is hereinafter referred to as the “HCE-Rockfort Balance
Sheet”.

          (b) The unaudited balance sheet of PPO as at December 31, 2006 (the “PPO Balance
Sheet”) and the related unaudited statement of profit and loss account and statement of cash
flows for the year then ended (collectively, the “PPO Financial Statements”) fairly present
in all material respects the assets and liabilities of PPO as of December 31, 2006 and the income,
expenses and cash flows of PPO for the period indicated (except for normal and recurring year-end
adjustments). The PPO Financial Statements have been prepared in conformity with the International
Financial Reporting Standards (“IFRS”) and the requirements of the Jamaican Companies Act
and have been reconciled to U.S. GAAP to the extent required to prepare the HCE-Rockfort Financial
Statements in conformity with U.S. GAAP.

          (c) The audited balance sheet of the Power Company as at December 31, 2006 (the “Power
Company Balance Sheet” and, together with the HCE-Rockfort Balance Sheet and the PPO Balance
Sheet, collectively, the “Balance Sheets”) and the related audited statement of profit and
loss account, statement of changes in equity and statement of cash flows for the year then ended
(collectively, the “Power Company Financial Statements”) fairly present in all material
respects the assets and liabilities of the Power Company as of December 31, 2006 and the revenues,
expenses, capital and cash flows of the Power Company for the period indicated. The Power Company
Financial Statements have been prepared in conformity with the IFRS and the requirements of the
Jamaican Companies Act and have been reconciled to U.S. GAAP to the extent required to prepare the
HCE-Rockfort Financial Statements in conformity with U.S. GAAP.

          (d) Neither HCE-Rockfort nor any Jamaica Subsidiary has any Liabilities, other than (i)
Liabilities that will not be applicable to HCE-Rockfort or any Jamaica Subsidiary after

 

 

Closing, (ii) Liabilities disclosed on Schedule 3.3(d) of the Companies Disclosure Letter, (iii)
Liabilities reserved for or reflected in the Balance Sheets, (iv) Liabilities incurred in the
ordinary course of business since December 31, 2006 that have not had, or would not reasonably be
expected to have, individually or in the aggregate, a Companies Material Adverse Effect and (v)
such other Liabilities as have not had, or would not reasonably be expected to have, individually
or in the aggregate, a Companies Material Adverse Effect.

          3.4 Absence of Certain Changes or Events. Since December 31, 2006 through the date
hereof, except as set forth in Schedule 3.4 of the Companies Disclosure Letter, other than
in connection with the transactions contemplated by this Agreement, none of HCE-Rockfort, PPO or
the Power Company has taken any of the actions set forth in Sections 5.1(a) through
5.1(k), that, if taken after the execution and delivery of this Agreement, would require
the consent of Purchaser pursuant to Section 5.1.

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

          (a) HCE-Rockfort and each of PPO and the Power Company has, or, in each case, a Person acting
on its behalf has, (A) filed with the appropriate Governmental Entity all material Tax Returns
required to have been filed by it and such Tax Returns are accurate and complete in all material
respects and (B) duly paid in full or made provision in accordance with, with respect to
HCE-Rockfort, U.S. GAAP and, with respect to PPO and the Power Company, IFRS for the payment of all
Taxes shown as due or payable on such Tax Returns or that are otherwise due and payable;

          (b) no written proposed deficiencies, adjustments, written claims for unpaid Taxes, audits or
other administrative proceedings or court proceedings are, as of the date hereof, pending with
regard to any Taxes or Tax Returns of HCE-Rockfort, PPO or the Power Company and none of
HCE-Rockfort or any Jamaica Subsidiary has been informed in writing of the planned commencement of
any such audits or proceedings;

          (c) none of HCE-Rockfort, PPO or the Power Company has waived any statute of limitations for
the assessment or collection of any material Taxes which waiver is currently in effect;

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

          (e) HCE-Rockfort has made available to Purchaser complete and accurate copies of all of its
material income Tax Returns (or, in the case of Tax Returns filed by a consolidated, combined or
unitary group of which HCE-Rockfort is a member, pro forma Tax Returns) and PPO, and HCE-Rockfort
has made available to Purchaser all material Tax information provided to it by the Power Company,
in each case for the years 2004 and 2005, as filed or subsequently amended; and

 

 

          (f) HCE-Rockfort is a member of the CMS Energy Corporation affiliated group filing a
consolidated United States federal income Tax Return but has no liability for the Taxes of any
other Person under Treasury Regulations Section 1.1502-6, as successor, by contract or
otherwise.

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

          3.7 Compliance with Laws.

          (a) Except as set forth in Schedule 3.7(a) of the Companies Disclosure Letter,
HCE-Rockfort and each Jamaica Subsidiary is in compliance with all applicable Law (including any
applicable foreign corrupt practices Law), except for non-compliance and violations that would not
reasonably be expected to have, individually or in the aggregate, a Companies Material Adverse
Effect. Except as set forth in Schedule 3.7(a) of the Companies Disclosure Letter, neither
HCE-Rockfort nor any Jamaica Subsidiary has received any written notice of or been charged with any
violation of or, to the Knowledge of Sellers, is under investigation with respect to any violation
of, any Law or Governmental Order, except in each case for violations that would not reasonably be
expected to have, individually or in the aggregate, a Companies Material Adverse Effect.

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

          3.8 Employee Benefits.

          (a) Schedule 3.8(a) of the Companies Disclosure Letter contains a list of each
material written agreement relating to bonus, incentive or deferred compensation, pension,
retirement, profit-sharing, savings, employment, consulting, compensation, stock purchase, stock
option, phantom stock or other equity-based compensation, severance pay, termination,
change-in-control, retention, salary continuation, vacation, sick leave, disability, death benefit,
group insurance, hospitalization, medical, dental, life, loan, educational assistance, and other
fringe

 

 

benefit plans, programs and arrangements maintained by HCE-Rockfort, PPO and the Power
Company for the benefit of any employee or former employee of HCE-Rockfort, PPO and the Power
Company (collectively, the “Companies Plans”), respectively.

          (b) With respect to each Companies Plan, Sellers have provided or made available to Purchaser
true and complete copies of the documents, to the extent applicable, a copy of such Companies Plan
(including all amendments thereto) and if such Companies Plan is funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the most recent financial statements.

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

          (d) No contributions to any Companies Plan required to be made under the terms of such
Companies Plan or applicable Law have not been made as required. All material liabilities or
expenses of PPO or the Power Company, as the case may be, in respect of any Companies Plan, as
applicable, have been properly accrued on the most recent financial statements of PPO or the Power
Company, as the case may be, in each case in compliance with IFRS.

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

          (f) Except as set forth in Schedule 3.8(f) of the Companies Disclosure Letter, no
Companies Plan provides material benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of HCE-Rockfort or any
Jamaica Subsidiary beyond their retirement or other termination of service, other than (i) coverage
mandated solely by applicable Law, (ii) deferred compensation benefits accrued as liabilities on
the books of HCE-Rockfort or any Jamaica Subsidiary or (iii) benefits the costs of which are borne
by the current or former employee or his or her beneficiary.

          3.9 Companies Permits.

          (a) Except as set forth in Schedule 3.9(a) of the Companies Disclosure Letter, each of
HCE-Rockfort, PPO and, to the Knowledge of Sellers, the Power Company has and is in compliance with
all Permits that are necessary for it to conduct its operations in the manner in which they are
presently conducted, other than any such Permits the failure of which to have or to be in
compliance with would not reasonably be expected to have, individually or in the

 

 

aggregate, a Companies Material Adverse Effect (collectively, “Companies Permits”). Except as
set forth in Schedule 3.9(a) of the Companies Disclosure Letter, each Companies Permit
held by HCE-Rockfort, PPO and, to the Knowledge of Sellers, the Power Company is in full force and
effect other than any failure to be in full force and effect that would not reasonably be expected
to have, individually or in the aggregate, a Companies Material Adverse Effect.

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

          3.10 Leased Real Property.

          (a) Schedule 3.10(a) of the Companies Disclosure Letter lists all material real
property leases to which HCE-Rockfort or any Jamaica Subsidiary is a party (the “Leased Real
Property”). Except as set forth on Schedule 3.10(a), neither HCE-Rockfort nor any
Jamaica Subsidiary (i) now owns, controls or possesses any tangible real property, or interest
therein, and (ii) has ever owned, controlled or possessed any tangible real property, except, in
each case, the Leased Real Property.

          (b) Except as would not reasonably be expected to have, individually or in the aggregate, a
Companies Material Adverse Effect, HCE-Rockfort and each Jamaica Subsidiary has a valid leasehold
interest in (or has analogous property rights under applicable Law) all Leased Real Property used
by it.

          (c) Neither HCE-Rockfort nor any Jamaica Subsidiary has received written notice of a
proceeding in eminent domain or other similar proceedings affecting any of the Leased Real Property
that would reasonably be expected to have, individually or in the aggregate, a Companies Material
Adverse Effect.

          3.11 Contracts.

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

     (i) all Operating Contracts providing for the payment by or to the Contracting Party
in excess of US$100,000 per year, other than (x) any agreements with HCE-Rockfort or any
Jamaica Subsidiary to document certain intercompany loans or (y) any agreements between
HCE-Rockfort and any Jamaica Subsidiary for the provision of services and/or payment of
costs, which are terminable by either party thereto upon not more than sixty (60) days’
notice;

 

 

     (ii) all contracts or agreements (other than Operating Contracts) requiring a future
capital expenditure by the Contracting Party in excess of US$100,000 in any twelve-month
period;

     (iii) all contracts or agreements under which the Contracting Party is obligated to
sell real or personal property having a value in excess of US$100,000 other than in the
ordinary course of business;

     (iv) all contracts or agreements under which the Contracting Party (1) created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness,
(2) granted a Lien on its assets, whether tangible or intangible, to secure such
indebtedness or (3) extended credit or advanced funds to any Person, in each case, in
excess of US$100,000;

     (v) all executory contracts for the purchase or sale of any business, corporation,
partnership, joint venture, association or other business organization or any division,
assets, operating unit or product line thereof which have a purchase or sale price in
excess of US$100,000;

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

     (vii) all contracts or agreements that grant a right of first refusal or similar
right with respect to (A) any assets of the Contracting Party having a value in excess of
US$100,000 or (B) any direct or indirect economic interest in the Contracting Party
having a value in excess of US$100,000;

     (viii) any contract or agreement providing for the use of material Intellectual
Property (as such term is defined in Section 3.14) which has an annual license
payment or fee in excess of US$100,000;

     (ix) any contract or agreement (other than employment contracts involving payments
in any given year in excess of $50,000 or Companies Plans) with any current officer or
director of HCE-Rockfort or a Jamaica Subsidiary; and

     (x) any other contract or agreement not covered in clauses (i) through (ix) above
that involves payment by or to the Contracting Party of more than US$100,000 annually or
US$500,000 in the aggregate under such contract or agreement, other than those that can
be terminated without penalty in excess of US$100,000 to the Contracting Party upon not
more than sixty (60) days’ notice.

          (b) Except as set forth in Schedule 3.11(b)(i) of the Companies Disclosure Letter,
Sellers have made available to Purchaser complete and correct copies of all Companies Material
Contracts. Except as set forth in Schedule 3.11(b)(ii) of the Companies Disclosure Letter,
each Companies Material Contract is (i) in full force and effect and (ii) the valid and binding
obligation of HCE-Rockfort, PPO or the Power Company party thereto and, to the Knowledge of
Sellers, of each other party thereto, in each case (x) except as limited by Laws affecting the
enforcement of creditors’ rights generally or by general equitable principles and (y) with such

 

 

exceptions as would not reasonably be expected to have, individually or in the aggregate, a
Companies Material Adverse Effect. Except as set forth in Schedule 3.11(b)(ii) of the
Companies Disclosure Letter, none of HCE-Rockfort, PPO or, to the Knowledge of Sellers, the Power
Company is in breach or default under any Companies Material Contract, which breach or default has
not been waived, and, to the Knowledge of Sellers, no other party to any Companies Material
Contract is in breach or default, except in each case, for any breach or default that would not
reasonably be expected to have, individually or in the aggregate, a Companies Material Adverse
Effect.

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

          (a) each of HCE-Rockfort, PPO and the Power Company are in compliance in all material respects
with all applicable Environmental Laws, including having and complying with the terms and
conditions of all material Permits required pursuant to applicable Environmental Laws;

          (b) none of HCE-Rockfort, PPO or the Power Company (i) has received from any Governmental
Entity any written notice of violation of, alleged violation of, non-compliance with, or Liability
or potential Liability pursuant to, any Environmental Law, other than notices with respect to
matters that have been resolved and for which HCE-Rockfort, PPO or the Power Company has no further
obligations outstanding or (ii) is subject to any outstanding Governmental Order, “consent order”
or other written agreement with regard to any violation, noncompliance or Liability under any
Environmental Law;

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

          (d) none of HCE-Rockfort, PPO or the Power Company has received any written notice, claim or
demand from any Person, including any Governmental Entity, seeking costs of response, damages or
requiring remedial action relating to (i) any Release of Hazardous Substances at, on or beneath
HCE-Rockfort’s or any Jamaica Subsidiary’s current facilities or (ii) a Release of Hazardous
Substances at any third party property to which Hazardous Substances generated by HCE-Rockfort or
any Jamaica Subsidiary were sent for treatment or disposal.

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

          3.13 Labor Matters.

          (a) Schedule 3.13(a) of the Companies Disclosure Letter contains a list of all
collective bargaining agreements to which HCE-Rockfort, PPO or the Power Company is bound.

 

 

          (b) Except as set forth on Schedule 3.13(b) of the Companies Disclosure Letter, no
employees of HCE-Rockfort, PPO or the Power Company are represented by any labor organization with
respect to their employment with HCE-Rockfort, PPO or the Power Company, as applicable.

          (c) Since January 1, 2006, there have been no material labor strikes or lockouts against or
affecting HCE-Rockfort, PPO or the Power Company.

          3.14 Intellectual Property. Except as would not reasonably be expected to have a
Companies Material Adverse Effect, (a) each of HCE-Rockfort, PPO and the Power Company own, or has
the right to use, all patents, patent rights (including patent applications and licenses),
know-how, trade secrets, trademarks (including trademark applications), trademark rights, trade
names, trade name rights, service marks, service mark rights, copyrights and other proprietary
intellectual property rights (collectively, “Intellectual Property”) used in and necessary
for the conduct of the businesses of HCE-Rockfort, PPO or the Power Company as currently conducted,
(b) the use of the Intellectual Property used in the businesses of HCE-Rockfort, PPO and the Power
Company as currently conducted does not infringe or otherwise violate the Intellectual Property
rights of any third party, (c) to the Knowledge of Sellers, no third party is challenging,
infringing or otherwise violating any right of HCE-Rockfort, PPO and the Power Company in any
Intellectual Property necessary for the conduct of the businesses of HCE-Rockfort, PPO or the Power
Company as currently conducted, and (d) none of HCE-Rockfort, PPO or the Power Company has received
any written notice of any pending claim that Intellectual Property used in and necessary for the
conduct of the businesses of HCE-Rockfort, PPO or the Power Company as currently conducted
infringes or otherwise violates the Intellectual Property rights of any third party.

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

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

          3.17 Brokers and Finders. None of HCE-Rockfort, PPO or the Power Company has entered
into any written agreement or arrangement entitling any agent, broker, investment banker, financial
advisor or other firm or Person to any broker’s or finder’s fee or any other commission or similar
fee payable by HCE-Rockfort or any Jamaica Subsidiary in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc., whose fees and expenses are
governed by Section 5.7.

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

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

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

          4.2 Authority; Non-Contravention; Statutory Approvals.

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

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

 

 

the case of clauses (i), (ii) and (iii) for any such Violation or Lien that would not
reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect.

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

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

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

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

          4.6 Brokers and Finders. Neither Parent nor Purchaser has entered into any written
agreement or arrangement entitling any agent, broker, investment banker, financial advisor or

 

 

other firm or Person to any broker’s or finder’s fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement.

          4.7 Qualified for Permits. Each of Parent and Purchaser is qualified to obtain any
Permits necessary for the operation by Purchaser of HCE-Rockfort and the Jamaica Subsidiaries as of
the Closing in the same manner as HCE-Rockfort and the Jamaica Subsidiaries are currently operated.

          4.8 No Knowledge of Sellers Breach. Except as set forth in the Sellers Disclosure
Letter and the Companies Disclosure Letter, none of Parent, Purchaser nor any of their respective
Affiliates has Knowledge of any breach or inaccuracy, or of any facts or circumstances which may
constitute or give rise to a breach or inaccuracy, of any representation or warranty of Sellers set
forth in Articles II or III.

ARTICLE V

COVENANTS

          5.1 Conduct of Business. After the date hereof and prior to the Closing or earlier
termination of this Agreement, (i) Sellers shall, and HCE shall cause HCE-Rockfort to, cause PPO,
and (ii) with respect to the Power Company, HCE shall cause HCE-Rockfort to exercise the voting,
governance and contractual powers available to it to cause, to the extent possible, the Power
Company, to conduct its respective business in the ordinary and usual course in substantially the
same manner as heretofore conducted. After the date hereof and prior to the Closing or earlier
termination of this Agreement, except as set forth in Schedule 5.1 and except (1) as
contemplated in or permitted by this Agreement, (2) as may be required to comply with any Companies
Material Contract (including any Financing Facility), (3) as required by applicable Law, (4) in the
ordinary and usual course of business, (5) to the extent prohibited by a Financing Facility or (6)
to the extent Purchaser shall otherwise consent, which decision regarding consent shall be made
promptly and which consent shall not be unreasonably withheld, conditioned or delayed, (x) Sellers
shall, and HCE shall cause HCE-Rockfort to, cause PPO not to, and (y) with respect to the Power
Company, HCE shall cause HCE-Rockfort to exercise the voting, governance and contractual powers
available to it to cause, to the extent possible, the Power Company, not to:

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

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

          (c) incur any indebtedness in a maximum aggregate principal amount in excess of US$500,000;

 

 

          (d) make any commitments for or make capital expenditures in excess of US$500,000 individually
or US$1,000,000 in the aggregate;

          (e) make any acquisition of, or investment in, assets or stock of any other Person or entity
in excess of US$500,000 individually or US$1,000,000 in the aggregate;

          (f) sell, transfer or otherwise dispose of any of its assets in excess of US$500,000
individually or US$1,000,000 in the aggregate;

          (g) (x) terminate or amend or modify any material term of a Company Material Contract, (y)
enter into a new Company Material Contract or (z) grant any waiver of any material term under, or
give any material consent with respect to, any Company Material Contract, in each case which
Company Material Contracts involve total consideration throughout the term thereof in excess of
US$500,000 individually or US$1,000,000 in the aggregate;

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

          (i) except as otherwise contemplated in Section 3.6, settle any dispute or claim or
compromise or settle any liability in an amount not covered by insurance or cancel any material
indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value,
in each case having a value in excess of US$1,000,000 in the aggregate;

          (j) declare, pay or set aside for payment any cash or non-cash dividend or other distribution
in respect of any of the Shares or the Equity Interest of HCE-Rockfort or any Jamaica Subsidiary
(other than cash dividends required by applicable Law); or

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

          5.2 Approvals.

          (a) Each Party shall cooperate and use reasonable efforts to obtain as promptly as practicable
all Consents of any Governmental Entity or any other Person, including, without limitation, the
Sellers Required Consents, the Companies Required Consents, the Purchaser Required Consents, the
Sellers Required Statutory Approvals, the Companies Required Statutory Approvals and the Purchaser
Required Statutory Approvals, as applicable, required in connection with, and waivers of any
breaches or violations of any written contracts or agreements, Permits or other documents that may
be caused by, the consummation of the transactions contemplated by this Agreement. In furtherance
of the foregoing, Purchaser shall take all such actions, including, without limitation, (i)
proposing, negotiating, committing to and effecting, by consent decree, hold separate order, or
otherwise, the sale, divestiture or disposition of such assets or businesses of any of Parent,
Purchaser or any of their Subsidiaries or, after the Closing Date, of any of HCE-Rockfort or any of
the Jamaica Subsidiaries and (ii) otherwise taking or committing to take actions that limit or
would limit any of Parent’s, Purchaser’s or their Subsidiaries’ (including, after the Closing Date,
HCE-Rockfort or any of the Jamaica Subsidiaries as Subsidiaries of Parent) freedom of action with
respect to, or its ability to retain, one or more of

 

 

their respective businesses, product lines or assets, in each case as may be required in order
to (x) obtain the Sellers Required Statutory Approvals, the Companies Required Statutory Approvals
and the Purchaser Required Statutory Approvals as soon as reasonably possible or (y) avoid the
entry of, or to effect the dissolution of, any injunction, temporary restraining order, or other
order in any suit or proceeding, which would otherwise have the effect of preventing or materially
delaying the Closing. Purchaser shall (i) respond as promptly as practicable to any inquiries or
requests received from any Governmental Entity for additional information or documentation and (ii)
not enter into any written agreement with any Governmental Entity that would reasonably be expected
to adversely affect the Parties’ ability to consummate the transactions contemplated by this
Agreement, except with the prior consent of the other Parties (which shall not be unreasonably
withheld or delayed).

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

          5.3 Access. After the date hereof and prior to the Closing, Sellers agree that
HCE-Rockfort shall permit, and Sellers shall, and HCE shall cause HCE-Rockfort to, cause PPO to
permit and, with respect to the Power Company, HCE shall cause HCE-Rockfort to exercise the voting,
governance and contractual powers available to it to cause, to the extent possible, the Power
Company to permit (subject in each case to any contractual, fiduciary or similar obligation of
HCE-Rockfort or any Jamaica Subsidiary), Purchaser and its executive officers, managers, counsel,
accountants and other representatives to have reasonable access, upon reasonable advance notice,
during regular business hours, to the assets, employees, properties, books and records, businesses
and operations relating to HCE-Rockfort and the Jamaica Subsidiaries as Purchaser may reasonably
request, including cooperating with accounting personnel of Purchaser seeking to prepare U.S. GAAP
financial statements for PPO and the Power Company; provided, however, that in no
event shall Sellers, HCE-Rockfort or any Jamaica Subsidiary be obligated to provide any access or
information (i) if Sellers determines, in good faith after consultation with counsel, that
providing such access or information may violate applicable Law, cause Sellers, HCE-Rockfort or any
Jamaica Subsidiary to breach a confidentiality obligation to which it is bound, or jeopardize any
recognized privilege available to Sellers, HCE-Rockfort or any Jamaica Subsidiary; or (ii) to the
extent set forth on Schedule 5.3. Purchaser agrees to indemnify and hold Sellers,
HCE-Rockfort and the Jamaica Subsidiaries harmless from any and all claims and liabilities,
including costs and expenses for loss, injury to or death of any representative of Purchaser and
any loss, damage to or destruction of any property owned by Sellers, HCE-Rockfort or the Jamaica
Subsidiaries or others (including claims or liabilities for loss of use of any property) resulting
directly or indirectly from the action or inaction of any of the employees, counsel, accountants,
advisors and other representatives of Purchaser during any visit to the business or property sites
of HCE-Rockfort or the Jamaica Subsidiaries prior to the Closing Date, whether pursuant to this
Section 5.3 or otherwise. During any visit to the business or property sites of
HCE-Rockfort or the Jamaica Subsidiaries, Purchaser shall, and shall cause its employees, counsel,
accountants, advisors and other representatives accessing such properties to, comply with all
applicable Laws and all of HCE-Rockfort’s and the Jamaica Subsidiaries’ safety and security
procedures and conduct itself in a

 

 

manner that could not be reasonably expected to interfere with the operation, maintenance or
repair of the assets of HCE-Rockfort or such Jamaica Subsidiary. Neither Purchaser nor any of its
representatives shall conduct any environmental testing or sampling on any of the business or
property sites of HCE-Rockfort or the Jamaica Subsidiaries prior to the Closing Date. Each Party
shall, and shall cause its Affiliates and representatives to, hold in strict confidence all
documents and information furnished to it by another Party in connection with the transactions
contemplated by this Agreement in accordance with the Confidentiality Agreement.

          5.4 Publicity. Except as may be required by applicable Law or by obligations pursuant
to any listing agreement with or rules or regulations of any national securities exchange, prior to
the Closing none of Sellers, HCE-Rockfort, Purchaser or any of their respective Affiliates shall,
without the express written approval of Sellers, HCE-Rockfort and Purchaser, make any press release
or other public announcements concerning the transactions contemplated by this Agreement, except as
and to the extent that any such Party shall be so obligated by applicable Law or pursuant to any
such listing agreement or rules or regulations of any national securities exchange, in which case
the other Parties shall be advised and the Parties shall use reasonable efforts to cause a mutually
agreeable release or announcement to be issued; provided, however, that nothing contained herein
shall prohibit a Party from (i) disclosing the Transactions or the terms of this Agreement to any
of its Affiliates, executive officers, directors, employees, advisors, partners, shareholders,
agents, investors, lenders, rating agencies and attorneys who reasonably need to know the
information contained herein in accordance with the Confidentiality Agreement, (ii) if required by
applicable Law, filing a copy of this Agreement or a description of the Transactions with any
Governmental Entity having jurisdiction over the Parties or any of its respective activities or
(iii) taking any action permitted by the Confidentiality Agreement.

          5.5 Tax Cooperation. After the Closing Date, each of Sellers and Purchaser shall (and
shall cause their respective Affiliates to):

          (a) provide reasonable assistance in preparing any Tax Returns required to be filed with
respect to HCE-Rockfort, PPO or the Power Company under applicable Law;

          (b) cooperate fully in preparing for and defending any audits of, or disputes with taxing
authorities regarding, any Tax Returns of HCE-Rockfort or PPO;

          (c) make available to the others and to any taxing authority as reasonably requested all
information, records and documents relating to Taxes of HCE-Rockfort and PPO;

          (d) furnish the others with copies of all correspondence received from any taxing authority in
connection with any Tax audit or information request with respect to HCE-Rockfort or PPO; and

          (e) cooperate and consult with each other, including furnishing the others with copies of all
correspondence received from the applicable Governmental Entity, in connection with the assessment
of any stock transfer Tax, stamp Tax or other similar Tax imposed with respect to the transactions
contemplated by this Agreement (including, without limitation, in contesting the assessment
thereof).

 

 

          5.6 Employee Matters.

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

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

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

          5.7 Fees and Expenses.

          (a) Except as provided in paragraph (b) below, whether or not the Closing occurs, all costs
and expenses incurred in connection with this Agreement and the transactions contemplated by this
Agreement (including, without limitation, any fees and expenses of investment bankers, brokers,
finders, counsel, advisors, experts or other agents, in each case, incident to or in connection
with the negotiation, preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (whether payable prior to, at or after the
Closing Date)) shall be paid by the Party incurring such expense; provided that all such
costs and expenses incurred by HCE-Rockfort with respect to the transactions contemplated by this
Agreement on or prior to the Closing Date shall be paid by Sellers.

 

 

          (b) Notwithstanding anything to the contrary set forth in this Agreement, Purchaser, on the
one hand, and Sellers, on the other hand, shall each pay (i) 50% of any Tax (other than capital
gains Tax, withholding Tax and general income Tax, which shall be borne by the Party to which such
Tax is attributable by Law, and other than stock transfer Tax imposed by the GOJ, which shall be
borne exclusively by HCO-Jamaica) imposed with respect to the transactions contemplated by this
Agreement and (ii) any out-of-pocket fees, costs and expenses incurred in connection with obtaining
all Purchaser Required Statutory Approvals, Companies Required Statutory Approvals and Sellers
Required Statutory Approvals (other than the Parties’ legal fees and expenses which are the subject
of paragraph (a) above).

          5.8 Indemnification of Directors and Officers.

          (a) Indemnification. From and after the Closing Date, Purchaser shall cause
HCE-Rockfort and each Jamaica Subsidiary, to the fullest extent permitted under applicable Law, to
indemnify and hold harmless (and advance funds in respect of each of the foregoing) each present
and former director or officer of HCE-Rockfort or a Jamaica Subsidiary (each, together with such
person’s heirs, executors or administrators, an “Indemnified Person” and collectively, the
“Indemnified Persons”), against any costs or expenses (including advancing attorneys’ fees
and expenses in advance of the final disposition of any claim, suit, proceeding or investigation to
each Indemnified Person to the fullest extent permitted by Law), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any actual or threatened
claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or
investigative (an “Action”), arising out of, relating to or in connection with any action
or omission by such Indemnified Person in his or her capacity as a director or officer of
HCE-Rockfort or a Jamaica Subsidiary occurring or alleged to have occurred on or before the Closing
Date (including acts or omissions in connection with such person’s service as an officer, director
or other fiduciary in any entity if such service was at the request or for the benefit of
HCE-Rockfort or any Jamaica Subsidiary). In the event of any such Action, Purchaser shall cooperate
with the Indemnified Person in the defense of any such Action.

          (b) Survival of Indemnification. To the fullest extent not prohibited by Law, from and
after the Closing Date, all rights to indemnification now existing in favor of the Indemnified
Persons with respect to their activities as such prior to, on or after the Closing Date, as
provided in HCE-Rockfort’s and each Jamaica Subsidiary’s respective Organizational Documents or
indemnification agreements in effect on the date of such activities or otherwise in effect on the
date hereof, shall survive the Closing and shall continue in full force and effect for a period of
not less than four (4) years from the Closing Date, provided that, in the event any claim
or claims are asserted or made within such survival period, all such rights to indemnification in
respect of any claim or claims shall continue until final disposition of such claim or claims.

          (c) Successors. If, after the Closing Date, any of Parent or Purchaser or any of their
respective successors or assigns (i) consolidates with or merges into any other Person and shall
not be the continuing or surviving corporation or entity of such consolidation or merger or (ii)
transfers all or a substantial portion of its properties and assets to any Person, then, and in
either such case, proper provisions shall be made so that the successors and assigns of Parent or
Purchaser, as the case may be, shall assume the obligations set forth in this Section 5.8.

 

 

          (d) Benefit. The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Person, his or her heirs, executors or
administrators and his or her other representatives.

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

          5.10 Further Assurances. Each of Sellers and Purchaser agrees that, from time to time
before and after the Closing, they will execute and deliver, and prior to the Closing, Sellers and,
after the Closing, Purchaser shall cause PPO and, with respect to the Power Company, shall cause
HCE-Rockfort to exercise the voting, governance and contractual powers available to it to cause, to
the extent possible, the Power Company, to execute and deliver, or use reasonable efforts to cause
their other respective Affiliates to execute and deliver such further instruments, and take, or
cause their respective Affiliates to take, such other action, as may be reasonably necessary to
carry out the purposes and intents of this Agreement. Purchaser and Sellers agree to use reasonable
efforts to refrain from taking any action which could reasonably be expected to materially delay
the consummation of the Transactions.

          5.11 Supplements to Disclosure Letters. Sellers may, from time to time prior to the
Closing by written notice to Purchaser, supplement the Sellers Disclosure Letter or the Companies
Disclosure Letter or add a schedule or section to the Sellers Disclosure Letter or the Companies
Disclosure Letter with a corresponding reference to be added in this Agreement (such added schedule
to be deemed a supplement hereunder) to disclose any matter which, if occurring prior to the date
hereof, would have been required to be set forth or described on the Sellers Disclosure Letter or
the Companies Disclosure Letter or to correct any inaccuracy or breach in the representations and
warranties made by Sellers in this Agreement. Subject to this Section 5.11, none of such
supplements to the Sellers Disclosure Letter or the Companies Disclosure Letter shall be deemed to
cure any breach or breaches of the representations and warranties to which such matters relate with
respect to satisfaction of the conditions set forth in Section 6.2(b) or otherwise affect
any other term or condition contained in this Agreement; provided, however, that
unless Purchaser shall have delivered a Breach Notice contemplated by Section 7.1(e) (to
the extent Purchaser is entitled to deliver such Breach Notice pursuant to the terms of this
Agreement) within ten (10) Business Days of the receipt by Purchaser of any supplement to the
Sellers Disclosure Letter or the Companies Disclosure Letter pursuant to this Section 5.11,
then Purchaser shall have waived any and all rights to terminate this Agreement, pursuant to
Section 7.1(e) or otherwise, arising out of or relating to the contents of such supplement
and the resulting breach or breaches of the representations and warranties and Purchaser shall be
deemed to have accepted the contents of such supplement for all purposes of this Agreement;
provided, further, that, from and after the Closing, Sellers shall have no
liability pursuant to this Agreement or for any matters arising out of or relating to any of the
matters disclosed on the Sellers Disclosure Letter or the Companies Disclosure Letter, as
supplemented or amended by Sellers, prior to the Closing.

 

 

          5.12 Change of Name.

          (a) Notwithstanding anything to the contrary contained herein, within twenty-five (25)
Business Days after the Closing Date, Purchaser shall have caused HCE-Rockfort Diesel, Inc. to be
renamed. On or after the Closing Date, Purchaser and its Affiliates shall not use existing or
develop new stationery, business cards and other similar items that bear the name or mark of
“HCE-Rockfort Diesel, Inc.” or any similar derivation thereof in connection with the businesses of
HCE-Rockfort or any Jamaica Subsidiary.

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

          5.13 Resignations of Certain Officers and Directors. Sellers shall cause the
resignations or removals at the Closing Date of the officers and directors and other persons set
forth on Schedule 5.13 from their position as officer or director, or other management or
employment position, of HCE-Rockfort or the Jamaica Subsidiaries set forth opposite the name of
such officer, director or person on Schedule 5.13.

          5.14 Tax Indemnity. After the Closing, Sellers shall be liable for and pay, and
Sellers shall indemnify and hold harmless Purchaser and its Affiliates from and against, any and
all Damages due to any Taxes for which HCE-Rockfort may be liable as a result of having been a
member of any affiliated group filing a consolidated United States federal income Tax Return or any
non-United States combined or consolidated Tax Return, under Treasury Regulations Section 1.1502-6,
as successor, by contract or otherwise. Except as set forth in Schedule 5.14, Sellers shall
be liable for and pay, and Sellers shall indemnify and hold harmless Purchaser and its Affiliates
from and against, any and all Damages due to any Taxes imposed on or with respect to HCE-Rockfort
and PPO attributable to any taxable period ending on or before the Closing Date or the pre-Closing
Date portion of any taxable period that begins prior to and ends after the Closing Date.

ARTICLE VI

CONDITIONS TO CLOSING

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

 

 

          (a) Statutory Approvals. The Sellers Required Statutory Approvals and the Purchaser
Required Statutory Approvals set forth on Schedule 6.1(a) of the Sellers Disclosure
Schedules shall have been obtained at or prior to the Closing Date.

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

          (c) Power Purchase Agreement. The Jamaica Public Service Company Limited shall not
have timely exercised or shall have waived its right of first refusal under the Power Purchase
Agreement in accordance with the terms and conditions thereof and, in the case of a waiver of such
right, on terms reasonably satisfactory to Sellers and Purchaser; provided, that if such
right is exercised but the GOJ refuses to approve the purchase of HCE-Rockfort’s interest in the
Power Company by the Jamaica Public Service Company Limited, then such right shall be deemed not to
have been timely exercised. Purchaser shall have complied with all of the terms and conditions
under Section 17.3.5 of the Power Purchase Agreement.

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

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

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

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

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

 

 

          (e) Approvals. The board of directors of CMS Energy Corporation shall have approved
the execution and delivery of the Securities Purchase Agreement dated as of May 31, 2007 by and
among CMS International Ventures, L.L.C., CMS Capital L.L.C., CMS Gas Argentina Company, CMS
Enterprises Company, AEI Chile Holdings Ltd. and Ashmore Energy International.

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

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

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

          (c) Consents. The Purchaser Required Consents, the failure of which to obtain would
reasonably be expected to have, individually or in the aggregate, a Purchaser Material Adverse
Effect, shall have been obtained. The Sellers Required Consents, the failure of which to obtain
would reasonably be expected to have, individually or in the aggregate, a Sellers Material Adverse
Effect, shall have been obtained. The Companies Required Consents, the failure of which to obtain
would reasonably be expected to have, individually or in the aggregate, a Companies Material
Adverse Effect or a Purchaser Material Adverse Effect, shall have been obtained.

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

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

          (f) Approvals. Sellers shall have received the corporate approvals of their respective
boards of directors for the execution and delivery of this Agreement and the performance of their
respective obligations hereunder.

 

 

ARTICLE VII

TERMINATION

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

          (a) by the mutual written agreement of Parent, Purchaser and Sellers;

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

          (c) by Purchaser, by written notice to Sellers, if the Closing Date shall not have occurred on
or before such date that is one hundred eighty (180) days following the date hereof (the
“Outside Date”); provided, however, that if, on or prior to the Outside
Date, the condition specified in Section 6.1(a) has not been satisfied and such failure to
satisfy such condition, in Sellers’ reasonable determination, has not been the result of
Purchaser’s failure to comply with its obligations under Section 5.2, then the Outside Date
shall be extended automatically for an additional one hundred eighty (180) days (the “Extended
Outside Date”); provided, further, that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to Purchaser if its failure to fulfill any
obligation under this Agreement shall have caused or resulted in the failure of the Closing Date to
occur on or before such Extended Outside Date;

          (d) by Sellers, by written notice to Purchaser, if the Closing Date shall not have occurred on
or before such date that is ninety (90) days following the date hereof (the “Seller Termination
Date”); provided, however, that if on or prior to such date that is ninety (90)
days following the date hereof, the condition specified in Section 6.1(a) has not been
satisfied and such failure to satisfy such condition has not been the result of Purchaser’s failure
to comply with its obligation under Section 5.2, then such date shall be extended for an
additional ninety (90) days; provided, further, that the right to terminate this
Agreement under this Section 7.1(d) shall not be available to Sellers if it has failed to
fulfill any obligation of Sellers under this Agreement and such failure shall have caused or
resulted in the failure of the Closing Date to occur on or before such date;

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

 

 

of such breach within such thirty-day period or Sellers shall not have made a capital contribution to HCE-Rockfort in an amount equal to the expected damages, as reasonably estimated by the
Parties, from such breach, provided that Sellers shall have no obligation to make any such capital
contribution pursuant to this Section 7.1(e);

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

          (g) by Purchaser or Sellers, if the board of directors of either Seller shall have failed, by
June 4, 2007, to approve the execution and delivery of this Agreement by such Seller and the
performance of its respective obligations hereunder.

          7.2 Effect of Termination. No termination of this Agreement pursuant to Section
7.1 shall be effective until notice thereof is given to the non-terminating Parties specifying
the provision hereof pursuant to which such termination is made. Subject to Section 1.5, if
validly terminated pursuant to Section 7.1, this Agreement shall, subject to Section
8.1, become wholly void and of no further force and effect without liability to any Party or to
any Affiliate, or its respective members or shareholders, directors, officers, employees, agents,
advisors or representatives, and following such termination no Party shall have any liability under
this Agreement or relating to the transactions contemplated by this Agreement to any other Party;
provided that no such termination shall (i) relieve the Parties from liability for fraud or
any willful or intentional breach of any provision of this Agreement prior to such termination or
(ii) relieve Purchaser from any liability for any breach of Purchaser’s representations or
warranties contained in Section 4.3 (whether or not such breach is fraudulent, willful or
intentional). If this Agreement is terminated as provided in Section 7.1, Purchaser shall
redeliver to Sellers and will cause its agents to redeliver to Sellers all documents, workpapers
and other materials of Sellers, HCE-Rockfort and the Jamaica Subsidiaries relating to any of them
and the transactions contemplated hereby, whether obtained before or after the execution hereof,
and Purchaser shall comply with all of its obligations under the Confidentiality Agreement.

ARTICLE VIII

LIMITS OF LIABILITY; PARENT GUARANTEE

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

          (a) Except as expressly provided in Section 8.1(b), none of the representations,
warranties, covenants or agreements of Purchaser or Sellers in this Agreement shall survive the
Closing, and no claim of any sort or on any basis may be made by any Party in respect of any breach
of any such representation, warranty, covenant or agreement after the Closing, and no

 

 

breach
thereof shall confer any right of rescission of this Agreement. Except in respect of the
representations, warranties, covenants and agreements referred to in Section 8.1(b)
that survive the Closing and except as otherwise provided for in this Agreement, including
Sections 8.1(d), 8.1(e) and 8.2, the sole remedy that a Party may have for
a breach of any representation, warranty, covenant or agreement of Purchaser or Sellers in this
Agreement shall be to terminate this Agreement to the extent provided for under, and in accordance
with the terms of, this Agreement.

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

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

     (ii) the representations and warranties of Sellers contained in Sections
3.1(a) (Organization and Qualification) and 3.2(a) (HCE-Rockfort and PPO)
shall survive until the date that is the second anniversary of the Closing Date;

     (iii) the representations and warranties of Sellers contained in Sections
3.3 (Financial Statements; Undisclosed Liabilities), 3.5 (Tax Matters) and
3.11 (Contracts) shall survive until the date that is twelve (12) months
following the Closing Date;

     (iv) the representations and warranties of Purchaser contained in Sections
4.2(a) (Authority) and 4.8 (No Knowledge of Sellers Breach) shall survive
until the date that is the second anniversary of the Closing Date;

     (v) the covenants and agreements of Purchaser and Sellers contained in Sections
5.5 (Tax Cooperation), 5.6 (Employee Matters) and 5.8
(Indemnification of Directors and Officers) shall survive in accordance with their terms;

     (vi) the covenants and agreements of the Parties contained in Sections 5.3
(Access), 5.7 (Fees and Expenses), 5.10 (Further Assurances),
5.12 (Change of Name), 7.2 (Effect of Termination) and 8.1
(Non-Survival of Representations, Warranties, Covenants and Agreements) and Article
X (General Provisions) shall survive indefinitely; and

     (vii) the covenants and agreements of Parent contained in Section 8.2
(Parent Guarantee) shall survive until the date that is twelve (12) months following the
Closing Date.

No claim or cause of action arising out of the inaccuracy or breach of any representation,
warranty, covenant or agreement of Sellers or Purchaser may be made following the termination
of the applicable survival period referred to in this Section 8.1(b). The Parties
intend to shorten the statutory limitations and agree that, after the Closing Date, with
respect to Sellers and Purchaser, any claim or cause of action against any of the Parties, or
any of their respective directors, officers, employees, Affiliates, successors, permitted

 

 

assigns, advisors, agents, or representatives based upon, directly or indirectly, any of the
representations, warranties, covenants or agreements contained in this Agreement, or any other
written agreement, document or instrument to be executed and delivered in connection with this
Agreement, may be brought only as expressly provided in this Article VIII.

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

          (d) No Party shall be entitled to recover damages for any breach of any representation or
warranty contained in this Agreement (excluding claims arising from fraud, or claims arising from
or related to a breach of any representation or warranty under Section 2.2, 2.3(a)
or 4.2(a)), unless such damages exceed one percent (1%) of the Purchase Price (the
“Deductible”).

          (e) A Party shall be entitled to recover damages in excess of the Deductible for any breach of
any representation or warranty contained in this Agreement (excluding claims arising from fraud, or
claims arising from or related to a breach of any representation or warranty under Section
2.2, 2.3(a) or 4.2(a), for which damages may be recovered in an amount not in
excess of the Purchase Price), but only in an amount not in excess of fifteen percent (15%) of the
Purchase Price.

          8.2 Parent Guarantee.

          (a) For value received, Parent hereby fully, unconditionally and irrevocably guarantees to
Sellers (the “Parent Guarantee”) (x) the prompt and punctual payment of any amount
Purchaser is required to pay under this Agreement, when and as the same shall become due and
payable, subject as to such payment obligations to the terms and conditions of this Agreement,
including, without limitation, the payment of the Purchase Price as provided by Article I,
and (y) the prompt and full performance when due by Purchaser of its obligations under this
Agreement. Parent’s guarantee obligations include the principal, interest, fines, fees, costs and
other amounts that may be due and payable by Purchaser under this Agreement.

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

          (c) Parent hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of a merger or bankruptcy of Purchaser, any right to require a proceeding first
against Purchaser, protest or notice with respect to any amount payable by Purchaser under this
Agreement and all demands whatsoever, and covenants that the Parent

 

 

Guarantee will not be
discharged except by (i) termination of this Agreement according to its
terms, (ii) payment in full of all amounts due and payable under this Agreement or (iii)
performance in full of all obligations due under this Agreement.

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

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

ARTICLE IX

DEFINITIONS AND INTERPRETATION

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

	 	 	 	 	 
	Defined Term	 	Section Reference	 
	Accounting Firm
	 	Section 1.6(d)
	Action
	 	Section 5.8(a)
	Affiliate Contracts
	 	Section 3.15
	Agreement
	 	Preamble
	Arbitration Expenses
	 	Section 10.9
	Balance Sheets
	 	Section 3.3(d)
	Breach Notice
	 	Section 7.1(e)
	Closing
	 	Section 1.3
	Closing Date
	 	Section 1.3

 

 

	 	 	 	 	 
	Defined Term	 	Section Reference	 
	Closing Purchase Price
	 	Section 1.4(c)
	Companies Disclosure Letter
	 	Article III
	Companies Material Contracts
	 	Section 3.11(a)
	Companies Permits
	 	Section 3.9(a)
	Companies Plans
	 	Section 3.8(a)
	Companies Required Consents
	 	Section 3.1(b)
	Companies Required Statutory Approvals
	 	Section 3.1(c)
	Continuing Employees
	 	Section 5.6(a)
	Contracting Party
	 	Section 3.11(a)
	Deductible
	 	Section 8.1(d)
	Dispute
	 	Section 10.9
	Extended Outside Date
	 	Section 7.1(c)
	Final PP Adjustment Amount
	 	Section 1.6(d)
	HCE
	 	Preamble
	HCE-Rockfort
	 	Recitals
	HCE-Rockfort Balance Sheet
	 	Section 3.3(a)
	HCE-Rockfort Financial Statements
	 	Section 3.3(a)
	HCE-Rockfort PPO Share
	 	Recitals
	HCE-Rockfort Shares
	 	Recitals
	HCE-Rockfort Transaction
	 	Section 1.1
	HCO-Jamaica
	 	Preamble

 

 

	 	 	 	 	 
	Defined Term	 	Section Reference	 
	HCO-Jamaica PPO Share
	 	Recitals
	ICC
	 	Section 10.9
	IFRS
	 	Section 3.3(b)
	Indemnified Person
	 	Section 5.8(a)
	Indemnified Persons
	 	Section 5.8(a)
	Intellectual Property
	 	Section 3.14
	Jamaica Subsidiaries
	 	Recitals
	Jamaica Subsidiary
	 	Recitals
	Leased Real Property
	 	Section 3.10(a)
	Objection Notice
	 	Section 1.6(c)
	Outside Date
	 	Section 7.1(c)
	Panel
	 	Section 10.9
	Parent
	 	Preamble
	Parent Guarantee
	 	Section 8.2
	Parties
	 	Preamble
	Party
	 	Preamble
	Post-Closing PP Adjustment Amount
	 	Section 1.6(b)
	Post-Closing PP Adjustment Notice
	 	Section 1.6(b)
	Power Company
	 	Recitals
	Power Company Balance Sheet
	 	Section 3.3(c)
	Power Company Financial Statements
	 	Section 3.3(c)

 

 

	 	 	 	 	 
	Defined Term	 	Section Reference	 
	PP Adjustment Amount
	 	Section 1.6(a)
	PPO
	 	Recitals
	PPO Balance Sheet
	 	Section 3.3(b)
	PPO Financial Statements
	 	Section 3.3(b)
	PPO Shares
	 	Recitals
	PPO Transaction
	 	Section 1.1
	Purchase Agreement Fee
	 	Section 1.5
	Purchase Price
	 	Section 1.2
	Purchaser
	 	Preamble
	Purchaser Disclosure Letter
	 	Article IV
	Purchaser Required Consents
	 	Section 4.2(b)
	Purchaser Required Statutory Approvals
	 	Section 4.2(c)
	Rules
	 	Section 10.9
	Seller
	 	Preamble
	Sellers
	 	Preamble
	Sellers Disclosure Letter
	 	Article II
	Sellers Required Consents
	 	Section 2.3(b)
	Sellers Required Statutory Approvals
	 	Section 2.3(c)
	Seller Termination Date
	 	Section 7.1(d)
	Shares
	 	Recitals
	Transactions
	 	Section 1.1
	Violation
	 	Section 2.3(b)

 

 

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

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

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

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

 

 

     “Confidentiality Agreement” means the Confidentiality Agreement, dated February
22, 2007, between AEI Global Services Ltd., an Affiliate of Parent, and J.P. Morgan Securities
Inc., on behalf of an Affiliate of HCE.

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

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

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

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

     “Financing Facility” means an obligation of HCE-Rockfort or any Jamaica
Subsidiary for borrowed money.

     “GOJ” means the Government of Jamaica.

     “GOJ Agreement with Initial Members” means the Agreement with Initial Members
dated October 10, 1994 among the GOJ, HCE-Rockfort, IEP Jamaica Investments I, L.L.C. and
USEC-Precursor, Inc., as amended, restated or supplemented from time to time.

     “Governmental Entity” means any federal, state, municipal or local governmental
or quasi-governmental or regulatory authority, agency, court, commission or other similar
entity in the United States or any non-U.S. jurisdiction, including, without limitation, the
GOJ.

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

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

     “Knowledge” when used with respect to: (i) Sellers, means the actual knowledge of
any fact, circumstance or condition of those officers of Sellers or its respective Affiliates
set

 

 

forth on Schedule 9.2(a) and to the extent set forth on Schedule 9.2(a);
and (ii) Purchaser, means the actual knowledge of any fact, circumstance or condition of those
officers of
Parent, Purchaser or its respective Affiliates, as the case may be, set forth on
Schedule 9.2(b) and to the extent set forth on Schedule 9.2(b).

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

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

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

     “Members’ Agreement” means the Members’ Agreement dated as of October 10, 1994 by
and among the Power Company and certain members signatories thereto, as amended, restated or
supplemented from time to time.

     “NIBJ” means the National Investment Bank of Jamaica Limited.

     “NIBJ Agreement with Initial Members” means the Agreement with Initial Members
dated October 10, 1994 among NIBJ, HCE-Rockfort, IEP Jamaica Investments I, L.L.C. and
USEC-Precursor, Inc., as amended, restated or supplemented from time to time.

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

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

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

     “Permitted Liens” means (a) Liens for Taxes (i) not due and payable or (ii) which
are being contested in good faith by appropriate proceeding and for which adequate reserves
have been established, (b) Liens of warehousemen, mechanics and materialmen and other

 

 

similar
statutory Liens incurred in the ordinary course of business, (c) any Liens that do not
materially detract from the value of any of the applicable property, rights or assets of the
businesses or materially interfere with the use thereof as currently used, (d) zoning,
entitlement, conservation, restriction or other land use or environmental regulation by any
Governmental Entity, (e) any Lien arising under (i) the Organizational Documents of
HCE-Rockfort and each Jamaica Subsidiary or (ii) any shareholders or similar agreement to
which of HCE-Rockfort or any Jamaica Subsidiary is a party or by which it is bound and (f) any
Lien in connection with or permitted by a Financing Facility or any refinancing thereof.

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

     “Power Purchase Agreement” means the Power Purchase Agreement dated as of October
10, 1994 between The Jamaica Public Service Company Limited and the Power Company, as amended,
restated or supplemented from time to time.

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

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

     “Sellers Material Adverse Effect” means any material adverse effect on the
ability of HCE or HCO-Jamaica to consummate the transactions contemplated by this Agreement or
perform its respective obligations hereunder.

     “Specified Rate” means the interest rate published as the “Money market, annual
yield” in The Wall Street Journal determined as of the date the obligation to pay interest
arises or, if applicable, as of the first Business Day succeeding such date.

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

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

 

 

any kind whatsoever, together with any interest or penalty, imposed by any
Governmental Entity.

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

     “U.S. GAAP” means United States generally accepted accounting principles.

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

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

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

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

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

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

          (f) all accounting terms not otherwise defined herein have the meanings assigned thereto under
U.S. GAAP, unless the context suggests otherwise; and

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

ARTICLE X

GENERAL PROVISIONS

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

          (a) if to Purchaser,

AEI Central America Ltd.

c/o Ashmore Energy International

 

 

1221 Lamar, Suite 800

Houston, TX 77010

Fax: (713) 345-5352

Attention: General Counsel

with a copy to:

King & Spalding LLP

1100 Louisiana, Suite 4000

Houston, TX 77002

Fax: (713) 751-3290

Attention: George Crady

          (b) if to Parent,

Ashmore Energy International

1221 Lamar, Suite 800

Houston, TX 77010

Fax: (713) 345-5352

Attention: Miguel A. Mendoza

with a copy to:

King & Spalding LLP

1100 Louisiana, Suite 4000

Houston, TX 77002

Fax: (713) 751-3290

Attention: George Crady

          (c) if to HCE,

HYDRA-CO Enterprises, Inc.

c/o CMS Enterprises Company

One Energy Plaza

 

 

Jackson, MI 49201

Fax: (517) 788-0121

Attention: President

with copies to:

HYDRA-CO Enterprises, Inc.

c/o CMS Enterprises Company

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-0121

Attention: General Counsel

Sidley Austin LLP

One South Dearborn

Chicago, IL 60603

Fax: (312) 853-7036

Attention: Andrew H. Shaw

          (d) if to HCO-Jamaica,

HCO-Jamaica, Inc.

c/o CMS Enterprises Company

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-0121

Attention: President

with copies to:

HCO-Jamaica, Inc.

c/o CMS Enterprises Company

One Energy Plaza

 

 

Jackson, MI 49201

Fax: (517) 788-0121

Attention: General Counsel

Sidley Austin LLP

One South Dearborn

Chicago, IL 60603

Fax: (312) 853-7036

Attention: Andrew H. Shaw

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

     All such notices, requests, demands, waivers and other communications shall be deemed to have
been received, if by personal delivery, certified or registered mail or next-day or overnight mail
or delivery, on the day delivered or, if by fax or telegram, on the next Business Day following the
day on which such fax or telegram was sent, provided that a copy is also sent by certified or
registered mail.

          10.2 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective heirs, successors and permitted assigns; provided,
however, that notwithstanding any other provision contained in this Agreement to the
contrary, the Parties acknowledge and agree that this Agreement (other than this proviso) shall be
binding, in full force and effect, and enforceable against each Party and its respective heirs,
successors and permitted assigns only on the condition that the execution and delivery of this
Agreement by Sellers, and the performance of their respective obligations hereunder, have been
approved by the board of directors of CMS Energy Corporation, and if such approval by the board of
directors of CMS Energy Corporation has not occurred on or before June 4, 2007, this Agreement
shall be null and void and not be of any further force or effect as to or enforceable whatsoever
against any Party hereto.

          10.3 Assignment; Successors; Third-Party Beneficiaries.

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

 

 

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

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

          10.4 Amendment; Waivers; etc. No amendment, modification or discharge of this
Agreement, and no waiver under this Agreement, shall be valid or binding unless set forth in
writing and duly executed by the Party against whom enforcement of the amendment, modification,
discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights of the Party
granting such waiver in any other respect or at any other time. The waiver by any of the Parties of
a breach of or a default under any of the provisions of this Agreement, or any failure or delay to
exercise any right or privilege under this Agreement, shall not be construed as a waiver thereof or
otherwise affect any of such provisions, rights or privileges under this Agreement.

          10.5 Entire Agreement.

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

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

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

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

 

 

          10.8 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to any conflicts of law principles of
such State.

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

          10.10 Limitation on Damages. No Party shall, under any circumstance, have any
liability to any other Party for any special, indirect, consequential or punitive damages claimed
by such other Party under the terms of or due to any breach or non-performance of this Agreement,
including lost profits, loss of revenue or income, cost of capital, or loss of business reputation
or opportunity.

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

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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

	 	 	 	 	 
	HYDRA-CO ENTERPRISES, INC.

 	 	 
	By: 	/s/ Thomas L. Miller
 	 	 
	 	Name:  	Thomas L. Miller 	 	 
	 	Title:  	Vice President 	 	 
	 
	HCO-JAMAICA, INC.

 	 	 
	By: 	/s/ Sharon A. McIlnay
 	 	 
	 	Name:  	Sharon A. McIlnay 	 	 
	 	Title:  	Vice President and General Counsel 	 	 
	 
	AEI CENTRAL AMERICA LTD.

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 	 
	 	Name:  	Miguel A. Mendoza 	 	 
	 	Title:  	Authorized Representative 	 	 
	 
	ASHMORE ENERGY INTERNATIONAL 

(solely for the limited purposes of Section 8.2)

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 	 
	 	Name: 	Miguel A. Mendoza  	 	 
	 	Title: 	Authorized Representative 	 	 
	 
	ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

 	 	 
	By: 	/s/ Miguel A. Mendoza
 	 	 
	 	Name: 	Miguel A. Mendoza 	 	 
	 	Title: 	Authorized Representative 	 	 
	 

 

 

EXHIBIT A to STOCK PURCHASE AGREEMENT

SELLERS DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

 

 

SELLERS DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

     This Seller Disclosure Letter is being furnished by HYDRA-CO Enterprises, INC. (“HCE”)
and HCO-Jamaica, Inc. (“HCO-Jamaica” and together with HCE, each a “Seller” and
collectively “Sellers”) to AEI Central America Ltd. (“Purchaser”) and Ashmore
Energy International (“Parent”) in connection with the Stock Purchase Agreement dated as of
May 31, 2007 (the “Agreement”) by and among Sellers, Purchaser and, solely for the limited
purposes of Section 8.2, Parent. Unless the context otherwise requires, all capitalized terms used
in this Sellers Disclosure Letter shall have the respective meanings assigned to them in the
Agreement.

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

     Nothing in this Sellers Disclosure Letter shall constitute an admission that any information
disclosed, set forth or incorporated by reference in this Seller Disclosure Letter, either
individually or in the aggregate, is material, or would result in a Sellers Material Adverse Effect
or Companies Material Adverse Effect. No disclosure made in this Sellers Disclosure Letter (i)
shall be deemed to modify in any respect the standard of materiality or any other standard for
disclosure set forth in the Agreement or (ii) relating to any possible breach or

 

 

violation of any agreement, contract, Law or Governmental Order shall be construed as an
admission or indication that any such breach or violation exists or has actually occurred.

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

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

     This Sellers Disclosure Letter shall be deemed to include, and there are incorporated into it
by way of disclosure, all information disclosed in the files and working papers of Sellers and the
Jamaica Subsidiaries made available to Purchaser in the virtual data room on Intralinks under
“Project Beta” as of May 31, 2007.

 

 

Schedule 2.2

Title to Shares

Private Power Operators Limited

	 	 	 	 	 	 	 	 	 
	 	 	Shares
	Shareholders	 	No. of Shares	 	% Ownership
	HCO-Jamaica, Inc.
	 	 	1	 	 	 	50	%
	HCE-Rockfort Diesel, Inc.
	 	 	1	 	 	 	50	%
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total
	 	 	2	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 

HCE-Rockfort Diesel, Inc.

	 	 	 	 	 	 	 	 	 
	 	 	Shares
	Shareholders	 	No. of Shares	 	% Ownership
	Hydra-Co Enterprises, Inc.
	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Total
	 	 	1	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 

Stock Purchase Option Agreement. Pursuant to the Stock Purchase Option Agreement dated as
of October 10, 1994 by and among PPO, HCE, CMS Operating (formerly HYDRA-CO Operations
Inc.), HCO-Jamaica, HCE-Rockfort, IEP, UPI, UPM, Rockfort Power, WIDC, EIF and Randall I.
Phelps, HCO-Jamaica granted an option to purchase all of the Equity Interests owned by it in
PPO upon the occurrence of certain events, including any sale of CMS Operating or
HCO-Jamaica separately from the sale of HCE.

 

 

Schedule 2.3(b)

Sellers Required Consents

	1.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of
October 10, 1994 between GOJ and the Power Company, prior written consent of the GOJ
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.
	 
	2.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial
Members, prior written consent of the GOJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	3.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with
Initial Members, prior written consent of the NIBJ will be required in connection with
the transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	4.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior
written consent of the GOJ will be required in connection with the transactions
contemplated by the Agreement. Such consent shall not be unreasonably withheld.
	 
	5.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent
and approvals required under the Power Purchase Agreement and the Implementation
Agreement may be required in connection with the transactions contemplated by the
Agreement.
	 
	6.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the
Multilateral Investment Guarantee Agency (MIGA) (as amended). Pursuant to General
Conditions of Guarantee for Equity Investments prior written consent of MIGA will be
required in connection with the transactions contemplated by the Agreement. Such
consent shall not be unreasonably withheld.*
	 
	7.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment
Guarantee Agency (MIGA) (assigned to Hydra-Co Enterprises, Inc) (as amended). Pursuant
to General Conditions of Guarantee for Equity Investments prior written consent of MIGA
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.*
	 
	8.	 	Fund Loan Agreement between the Power Company and NIBJ, dated October 10, 1994.
Pursuant to the Fund Loan Agreement, prior written consent of NIBJ will be required
with respect to a change of the Operator Manager in connection with the transactions
contemplated by the Agreement.
	 
	9.	 	See Schedule 3.2(d) of the Companies Disclosure Letter.

 

 

 

			
	*	 	Pursuant to the Insurance Coordinating Agreement dated as of October 10, 1994 among
HCE-Rockfort, IEP Jamaica Investments 1, L.L.C., USEC-Precursor, Inc., Rockfort Power Associates
Inc., EIF and JPPC, (i) the members of JPPC covenanted and agreed to maintain the MIGA insurance
policies during the term of such agreement and (ii) JPPC agreed to pay the premiums on such
policies on behalf of such members.

 

 

Schedule 2.3(c)

Sellers Required Statutory Approvals

	1.	 	The Notification of Self-Certification of Foreign Utility Company Status with
the Federal Energy Regulatory Commission (“FERC”) has been filed with respect
to the Power Company and PPO. Sixty days after submitting this Notification of
Self-Certification of Foreign Utility Company Status, unless FERC issues an order to
the contrary, “Foreign Utility Companies” status will be deemed to have been granted to
the Power Company and PPO by operation of FERC’s regulations. As a result, an
application to the FERC for authorization under Section 203 of the Federal Power Act is
not required.
	 
	2.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of
October 10, 1994 between GOJ and the Power Company, prior written consent of the GOJ
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.
	 
	3.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial
Members, prior written consent of the GOJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	4.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with
Initial Members, prior written consent of the NIBJ will be required in connection with
the transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	5.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior
written consent of the GOJ will be required in connection with the transactions
contemplated by the Agreement. Such consent shall not be unreasonably withheld.
	 
	6.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent
and approvals required under the Power Purchase Agreement and the Implementation
Agreement may be required in connection with the transactions contemplated by the
Agreement.
	 
	7.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the
Multilateral Investment Guarantee Agency (MIGA) (as amended). Pursuant to General
Conditions of Guarantee for Equity Investments prior written consent of MIGA will be
required in connection with the transactions contemplated by the Agreement. Such
consent shall not be unreasonably withheld.
	 
	8.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment
Guarantee Agency (MIGA) (assigned to Hydra-Co Enterprises, Inc) (as amended). Pursuant
to General Conditions of Guarantee for Equity Investments prior written consent of MIGA
will be required in connection with the transactions contemplated by the Agreement. Such consent shall not be unreasonably withheld.

 

 

Schedule 2.4

Litigation

	1.	 	Sellers have received verbal threats of litigation from the other members
regarding the proposed sale of the shares in the Power Company by HCE Rockfort
contemplated by the Agreement. Sellers received a letter dated May 3, 2007 from
Rockfort Power (Belize), Inc. requesting Sellers’ position on certain language under
the Members’ Agreement dated as of October 10, 1994. Sellers delivered a letter to
Rockfort Power (Belize) Inc. in response to such letter.

 

 

Schedule 9.2(a)

Sellers Knowledge Group

	1.	 	Thomas J. Allen
	 
	2.	 	Douglas E. Detterman
	 
	3.	 	Timothy L. Mehl

 

 

EXHIBIT B to STOCK PURCHASE AGREEMENT

COMPANIES DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

 

 

EXHIBIT A to STOCK PURCHASE AGREEMENT

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	Schedule 2.2 Title to Shares
	 	 	4	 
	 
	 	 	 	 
	Schedule 2.3(b) Sellers Required Consents
	 	 	5	 
	 
	 	 	 	 
	Schedule 2.3(c) Sellers Required Statutory Approvals
	 	 	7	 
	 
	 	 	 	 
	Schedule 2.4 Litigation
	 	 	9	 
	 
	 	 	 	 
	Schedule 9.2(a) Sellers Knowledge Group
	 	 	10	 
	 
	 	 	 	 
	Certain Defined Terms Used Herein
	 	 	6	 
	 
	 	 	 	 
	Schedule 3.1(b) Companies Required Consents
	 	 	4	 
	 
	 	 	 	 
	Schedule 3.1(c) Companies Required Statutory Approvals
	 	 	6	 
	 
	 	 	 	 
	Schedule 3.2(b) Power Company
	 	 	8	 
	 
	 	 	 	 
	Schedule 3.2(d) Agreements regarding Shares and Equity Interests
	 	 	9	 
	 
	 	 	 	 
	Schedule 3.3(d) Undisclosed Liabilities
	 	 	10	 
	 
	 	 	 	 
	Schedule 3.4 Absence of Certain Changes or Events
	 	 	11	 
	 
	 	 	 	 
	Schedule 3.5 Tax Matters
	 	 	12	 
	 
	 	 	 	 
	Schedule 3.6 Litigation
	 	 	13	 
	 
	 	 	 	 
	Schedule 3.7(a) Compliance with Laws
	 	 	14	 
	 
	 	 	 	 
	Schedule 3.8(a) Employee Benefits
	 	 	15	 
	 
	 	 	 	 
	Schedule 3.8(e) Employee Benefits
	 	 	16	 
	 
	 	 	 	 
	Schedule 3.8(f) Employee Benefits
	 	 	17	 
	 
	 	 	 	 
	Schedule 3.9(a) Companies Permits
	 	 	18	 
	 
	 	 	 	 
	Schedule 3.10(a) Leased Real Property
	 	 	19	 
	 
	 	 	 	 
	Schedule 3.11(a) Contracts
	 	 	20	 
	 
	 	 	 	 
	Schedule 3.11(b)(i) Contracts
	 	 	23	 
	 
	 	 	 	 
	Schedule 3.11(b)(ii) Contracts
	 	 	24	 
	 
	 	 	 	 
	Schedule 3.12 Environmental Matters
	 	 	25	 

 

 

	 	 	 	 	 
	 	 	 	Page	 
	 
	 	 	 	 
	Schedule 3.13(a) Labor Matters
	 	 	26	 
	 
	 	 	 	 
	Schedule 3.13(b) Labor Matters
	 	 	27	 
	 
	 	 	 	 
	Schedule 3.15 Affiliate Contracts
	 	 	28	 
	 
	 	 	 	 
	Schedule 3.16 Insurance
	 	 	29	 

 

 

COMPANIES DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

     This Companies Disclosure Letter is being furnished by HYDRA-CO Enterprises, Inc.
(“HCE”) and HCO-Jamaica, Inc. (“HCO-Jamaica” and together with HCE, each a
“Seller” and collectively “Sellers”) to AEI Central America Ltd.
(“Purchaser”) and Ashmore Energy International (“Parent”) in connection with the
Stock Purchase Agreement dated as of May 31, 2007 (the “Agreement”) by and among Sellers,
Purchaser and, solely for the limited purposes of Section 8.2, Parent. Unless the context
otherwise requires, all capitalized terms used in this Companies Disclosure Letter shall have the
respective meanings assigned to them in the Agreement.

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

     Nothing in this Companies Disclosure Letter shall constitute an admission that any information
disclosed, set forth or incorporated by reference in this Companies Disclosure Letter, either
individually or in the aggregate, is material, or would result in a Companies Material Adverse
Effect or Sellers Material Adverse Effect. No disclosure made in this Companies Disclosure Letter
(i) shall be deemed to modify in any respect the standard of materiality or any

 

 

other standard for disclosure set forth in the Agreement or (ii) relating to any possible
breach or violation of any agreement, contract, Law or Governmental Order shall be construed as an
admission or indication that any such breach or violation exists or has actually occurred.

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

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

     This Companies Disclosure Letter shall be deemed to include, and there are incorporated into
it by way of disclosure, all information disclosed in the files and working papers of Sellers and
the Jamaica Subsidiaries made available to Purchaser in the virtual data room on Intralinks under
“Project Beta” as of May 31, 2007.

 

 

Certain Defined Terms Used Herein

	 	 	 
	CDC

	 	Commonwealth Development Corporation
	EIF

	 	EIF Jamaica, L.L.C.
	HCE

	 	Hydra-Co Enterprises, Inc.
	HCE-Rockfort

	 	HCE-Rockfort Diesel, Inc.
	HCO Operations

	 	Hydra-Co Operations, Inc.
	HCO-Jamaica

	 	HCO-Jamaica, Inc.
	IEP

	 	IEP Jamaica Investments 1, L.L.C.
	JPPC

	 	Jamaica Private Power Company
	JPS

	 	Jamaica Public Service Company Limited
	MIGA

	 	Multilateral Investment Guarantee Agency
	NIBJ

	 	National Investment Bank of Jamaica Limited
	Power Company

	 	Jamaica Private Power Company Limited
	PPO

	 	Private Power Operators, Ltd.
	Rockfort Power

	 	Rockfort Power Associates Inc.
	UPI

	 	USEC-Precursor, Inc.
	UPM

	 	USEC-Precursor Management, Inc.
	WIDC

	 	West Indies Development Corporation Limited

 

 

EXHIBIT A to STOCK PURCHASE AGREEMENT

Schedule 3.1(b) 

Companies Required Consents

	4.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of
October 10, 1994 between GOJ and the Power Company, prior written consent of the GOJ
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.
	 
	5.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial
Members, prior written consent of the GOJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	6.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with
Initial Members, prior written consent of the NIBJ will be required in connection with
the transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	7.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior
written consent of the GOJ will be required in connection with the transactions
contemplated by the Agreement. Such consent shall not be unreasonably withheld.
	 
	8.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent
and approvals required under the Power Purchase Agreement and the Implementation
Agreement may be required in connection with the transactions contemplated by the
Agreement.
	 
	9.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the
Multilateral Investment Guarantee Agency (MIGA) (as amended). Pursuant to General
Conditions of Guarantee for Equity Investments prior written consent of MIGA will be
required in connection with the transactions contemplated by the Agreement. Such
consent shall not be unreasonably withheld.*
	 
	10.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment
Guarantee Agency (MIGA (assigned to Hydra-Co Enterprises, Inc)(as amended). Pursuant to
General Conditions of Guarantee for Equity Investments prior written consent of MIGA
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.*
	 
	11.	 	Fund Loan Agreement between the Power Company and NIBJ, dated October 10, 1994.
Pursuant to the Fund Loan Agreement, prior written consent of NIBJ will be required
with respect to a change of the Operator Manager in connection with the transactions
contemplated by the Agreement.
	 
	12.	 	See Schedule 3.2(d).

4

 

 

			
	*	 	Pursuant to the Insurance Coordinating Agreement dated as of October 10, 1994 among
HCE-Rockfort, IEP Jamaica Investments 1, L.L.C., USEC-Precursor, Inc., Rockfort Power Associates
Inc., EIF and JPPC, (i) the members of JPPC covenanted and agreed to maintain the MIGA insurance
policies during the term of such agreement and (ii) JPPC agreed to pay the premiums on such
policies on behalf of such members.

5

 

Schedule 3.1(c)

Companies Required Statutory Approvals

	 	1.	 	The Notification of Self-Certification of Foreign Utility Company Status with
the Federal Energy Regulatory Commission (“FERC”) has been filed with respect
to the Power Company and PPO. Sixty days after submitting this Notification of
Self-Certification of Foreign Utility Company Status, unless FERC issues an order to
the contrary, “Foreign Utility Companies” status will be deemed to have been granted to
the Power Company and PPO by operation of FERC’s regulations. As a result, an
application to the FERC for authorization under Section 203 of the Federal Power Act is
not required.1
	 
	 	2.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of
October 10, 1994 between GOJ and the Power Company, prior written consent of the GOJ
will be required in connection with the transactions contemplated by the Agreement.
Such consent shall not be unreasonably withheld.
	 
	 	3.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial
Members, prior written consent of the GOJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	 	4.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with
Initial Members, prior written consent of the NIBJ will be required in connection with
the transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	 	5.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior
written consent of the GOJ will be required in connection with the transactions
contemplated by the Agreement. Such consent shall not be unreasonably withheld.
	 
	 	6.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent
and approvals required under the Power Purchase Agreement and the Implementation
Agreement may be required in connection with the transactions contemplated by the
Agreement.
	 
	 	7.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the
Multilateral Investment Guarantee Agency (MIGA) (as amended). Pursuant to General
Conditions of Guarantee for Equity Investments prior written consent of MIGA will be
required in connection with the transactions contemplated by the Agreement. Such
consent shall not be unreasonably withheld.

 

			
	1	 	If the Purchaser is a “public utility” under FERC’s
regulations, this language may have to be modified as appropriate.

6

 

	 	8.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment
Guarantee Agency (MIGA)(assigned to Hydra-Co Enterprises, Inc) (as amended).
Pursuant to General Conditions of Guarantee for Equity Investments prior written
consent of MIGA will be required in connection with the transactions contemplated by
the Agreement. Such consent shall not be unreasonably withheld.

7

 

Schedule 3.2(b) 

Power Company

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Class A Shares	 	Class B Shares
	 	 	 	 	 	 	% Ownership of A	 	 	 	 	 	% Ownership of B
	Shareholders	 	No. of Shares	 	Shares	 	No. of Shares	 	Shares
	HCE-Rockfort Diesel, Inc.
	 	 	1,941	 	 	 	87.9	 	 	 	2,994	 	 	 	31.6	 
	IEP Jamaica Investments 1,
L.L.C.
	 	 	267	 	 	 	12.1	 	 	 	 	 	 	 	 	 
	West Indies Development
Corp. Ltd.
	 	 	 	 	 	 	 	 	 	 	1,816	 	 	 	19.2	 
	EIF Jamaica, L.L.C
	 	 	 	 	 	 	 	 	 	 	1,835	 	 	 	19.4	 
	Rockfort Power “Belize” Inc.
	 	 	 	 	 	 	 	 	 	 	2,809	 	 	 	29.8	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	2,208	 	 	 	100	%	 	 	9,454	 	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

Jurisdiction of formation of the Power Company: Jamaica

Authorized share capital of the Power Company: 3,245 Class A shares, 9,454 Class B shares

8

 

Schedule 3.2(d)

Agreements regarding Shares and Equity Interests

	 	1.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, the
Jamaica Public Service Company Limited may have an exclusive right of first refusal to
acquire the approximately 42.3% of the Equity Interests in the Power Company owned by
HCE-Rockfort in connection with the transactions contemplated by the Agreement.
	 
	 	2.	 	Stock Purchase Option Agreement. Pursuant to the Stock Purchase Option
Agreement dated as of October 10, 1994 by and among PPO, HCE, CMS Operating (formerly
HYDRA-CO Operations Inc.), HCO-Jamaica, HCE-Rockfort, IEP, UPI, UPM, Rockfort Power,
WIDC, EIF and Randall I. Phelps, HCO-Jamaica granted an option to purchase all of the
Equity Interests owned by it in PPO upon the occurrence of certain events, including
any sale of CMS Operating or HCO-Jamaica separately from the sale of HCE.
	 
	 	3.	 	Members’ Agreement. Pursuant to the Members’ Agreement, HCE-Rockfort, among
other things, agrees to take all actions necessary to call or cause the Power Company
and the appropriate officers of the Power Company to call a special or annual meeting
of the members and to vote the shares in the Power Company owned by HCE-Rockfort upon
all matters submitted to a vote of the members of the Power Company in conformity with
the specific terms and provisions of the Companies Act of Jamaica, the Memorandum of
Association and the Articles of Association of the Power Company or the Members’
Agreement.
	 
	 	4.	 	GOJ Agreement with Initial Members
	 
	 	5.	 	NIBJ Agreement with Initial Members

9

 

Schedule 3.3(d)

Undisclosed Liabilities

	 	1.	 	Outstanding payroll payments due to HEART Trust NTA in the sum of approximately
J$2.5 million due to an error which the parties have agreed can be repaid throughout
the year.
	 
	 	2.	 	No provision has been made in any of the PPO Financial Statements and the Power
Company Financial Statements in respect of any of the matters listed in Schedules 3.5
and 3.12.

10

 

Schedule 3.4

Absence of Certain Changes or Events

	 	1.	 	The Power Company has entered into a Contract for Construction between the
Power Company and Construction and Dredging (2005) Limited, dated March 14, 2007.
	 
	 	2.	 	The Power Company issued a purchase order to ABB, Inc. for a turbocharger
casing, dated April 26, 2007.
	 
	 	3.	 	The Power Company issued a purchase order to KIC for the inspection and repair
of HRSG #2, dated May 21, 2007.
	 
	 	4.	 	The Power Company issued a purchase order to Tampa Armature Works for removal
and installation of a new tap changer inside Unit#2 Transformer.
	 
	 	5.	 	The Power Company will be entering into a renewal contract with GE BETZ.
	 
	 	6.	 	The Power Company has affirmed the appointment of PricewaterhouseCoopers
Jamaica as its auditor for the fiscal year 2007
	 
	 	7.	 	Amendment to Management Services Contract between HCO-Jamaica and PPO, dated
October 10, 1994.

11

 

Schedule 3.5

Tax Matters

	 	1.	 	The statute of limitations for the U.S. federal income tax returns for
HCE-Rockfort with respect to the 1992 to 2001 taxable years has been extended through
December 31, 2007 and the statute of limitations for the U.S. federal income tax
returns prepared for HCE-Rockfort with respect to the 2002 to 2004 taxable years has
been extended through December 31, 2008.
	 
	 	2.	 	Pursuant to the Implementation Agreement between the Government of Jamaica and
the Power Company dated October 10, 1994, the Power Company was exempted from liability
for taxes on income in Jamaica for a period of seven years from that date.
	 
	 	3.	 	Pursuant to the Implementation Agreement between the Government of Jamaica and
the Power Company dated October 10, 1994, the Power Company was entitled to import and
export certain items of plant and machinery without payment of customs duty, stamp
duties or general consumption tax.
	 
	 	4.	 	With the exception of the Pollution Liability insurance policy, the Power
Company has utilized insurance brokers located in the USA and insurance companies
located off the island of Jamaica for certain insurance policies. Pollution Liability
insurance policy was issued by an insurer in Jamaica. General Consumption Tax is
chargeable in respect of services rendered locally as well as imported services.
Except, however for the payment of General Consumption Tax in respect of the Pollution
Liability insurance policy in 2005 and 2006, no General Consumption Tax has been paid
in respect of the insurance policies. In addition, the Insurance Regulations (Jamaica)
provides for the payment of a surcharge on any insurance placed in a country other than
Jamaica. No surcharge has been paid by the Power Company based on advice received from
Price Waterhouse Coopers that the Insurance Act only regulates insurance companies,
brokers and agents and any other person governed by the Act. Since the Power Company
does not fall under the scope of people governed by the Act and there is no mechanism
in place to enforce the surcharge against persons who do not fall within the ambit of
the Insurance law, the advice received was that the Power Company would have no tax
liability in this regard.
	 
	 	5.	 	The Power Company files its Tax Returns on the basis of U.S. dollar. The
Jamaican authority has reviewed such filed Tax Returns, but to date, to the Knowledge
of Sellers, has not completed its review.
	 
	 	6.	 	Certain Jamaican Tax consequences may arise in connection with the execution of
the amendment to the Management Services Contract between HCO-Jamaica and PPO, dated
October 10, 1994.

12

 

Schedule 3.6

Litigation

	 	 	Seller has received verbal threats of litigation from the other members regarding the
proposed sale of the shares in the Power Company by HCE Rockfort contemplated by the
Agreement. Seller received a letter dated May 3, 2007 from Rockfort Power (Belize), Inc.
requesting Seller’s position on certain language under the Members’ Agreement dated as of
October 10, 1994. Seller delivered a letter to Rockfort Power (Belize) Inc. in response to
such letter.

13

 

Schedule 3.7(a)

Compliance with Laws

	 	1.	 	Filing of 2006 Annual Returns for Power Company and PPO.

14

 

Schedule 3.8(a)

Employee Benefits

	 	1.	 	Occupational Health and Safety Guidelines by The World Bank, Environment
Department, dated September 1988.
	 
	 	2.	 	PPO Employee Incentive Program 2007.
	 
	 	3.	 	Group Health Insurance
	 
	 	4.	 	Group Life Insurance
	 
	 	5.	 	Employment Agreements for each employee
	 
	 	6.	 	Staff Revolving Loan Scheme for National Workers Union represented employees of
PPO
	 
	 	7.	 	Collective Bargaining Agreement between the National Workers Union and PPO
dated June 9, 1999
	 
	 	8.	 	Heads of Agreement between the National Workers Union and PPO dated January 30,
2006
	 
	 	9.	 	Heads of Agreement between the National Workers Union and PPO dated October 3,
2003
	 
	 	10.	 	Settlement of Dispute between PPO and National Workers Union and the Award IDT
Division dated January 6, 2003
	 
	 	11.	 	Trust Deed and Rules for the Pension Plan for Employees of PPO dated July 1,
1996
	 
	 	12.	 	Annual Christmas Gift Programme (unwritten). In 2006, the Power Company
incurred an expense in the amount of US$43,315.00 in connection with said programme.
	 
	 	13.	 	Costs and expenses related to the payment of certain income and other payments
paid to the general manager of the Power Company by an Affiliate of Sellers in respect
of secondment arrangements (unwritten).

15

 

Schedule 3.8(e)

Employee Benefits

	 	 	None.

16

 

Schedule 3.8(f)

Employee Benefits

	 	 	See item 11 in Schedule 3.8(a).

17

 

Schedule 3.9(a)

Companies Permits

	 	1.	 	License No. 005L97a Trade effluent discharge license (expired, renewal applied
for)
	 
	 	2.	 	License No. 005L97b Sewage effluent discharge license (expired, renewal applied
for)
	 
	 	3.	 	Certificate of Re-registration (under the Factories Act) (expires June 2007,
renewal to be then obtained)

18

 

Schedule 3.10(a)

Leased Real Property

	 	1.	 	Lease between JPS and Urban Development Corporation, as Lessors, and the Power
Company, as Lessee, dated October 10, 1994 in respect of lands registered at Volume
1094 Folio 862, Volume 1256 Folio 654, Volume 943 Folio 88 and Volume 1178 Folio 324 of
the Register Book of Titles.
	 
	 	2.	 	Grant of Right of Way between Urban Development Corporation, as Grantor, and
the Power Company, as Grantee dated October 10, 1994.
	 
	 	3.	 	Grant of Access over and through all real property owned or controlled by the
GOJ as is necessary for the purpose of designing, financing, constructing, owning,
operating and maintaining the Complex (as defined in the Implementation Agreement).
	 
	 	4.	 	Lease for General Manager’s House at 13 Norbrook Road, Kingston 8, St. Andrew
by the Power Company.

19

 

Schedule 3.11(a)

Contracts

	 	I.	 	LOAN AGREEMENTS
	 
	 	1.	 	Reimbursement and Loan Agreement between the Power Company, BOT Financial
Corporation, Nationsbank of FMRIDA, N.A., Deutsche Bank AG, New York branch, dated
October 10, 1994.
	 
	 	2.	 	Trust Deed between the Power Company and BOT Financial Corporation, dated
October 10, 1994.
	 
	 	3.	 	Mortgage between the Power Company, BOT Financial Corporation, JPS and Urban
Development Corporation, dated October 10, 1994.
	 
	 	4.	 	Fund Loan Agreement between the Power Company and NIBJ, dated October 10, 1994.
	 
	 	5.	 	Debenture between the Power Company and NIBJ, dated October 10, 1994.
	 
	 	6.	 	Mortgage between the Power Company, NIBJ, JPS and Urban Development Corporation
dated October 10, 1994.
	 
	 	7.	 	Collateral Agreement between the Power Company and BOT Financial Corporation,
dated October 10, 1994.
	 
	 	8.	 	Supplemental NIBJ Agreement between the Power Company, NIBJ, HCE-Rockfort, IEP,
UPI, WIDC, EIF and Rockfort Power, dated October 10, 1994.
	 
	 	9.	 	Assignment between the Power Company and NIBJ, dated October 10, 1994.
	 
	 	10.	 	Escrow Agreement between the Power Company, BOT Financial Corporation, CDC,
NIBJ and Scotiabank Jamaica Trust and Merchant Bank Limited, dated October 10, 1994.
	 
	 	11.	 	Intercreditor Agreement between BOT Financial Corporation, Nationsbank of
Florida, N.A., Deutsche Bank AG, New York Branch, CDC, NIBJ, Banco Santander S.A., New
York Branch, Scotiabank Jamaica Trust and Merchant Bank Limited, the Bank of Tokyo
Trust Company and the Power Company dated October 10, 1994
	 
	 	12.	 	The Loan Agreements and Security Documents with and in favour of Commonwealth
Development Corporation which loan has been repaid however the security interests have
not as yet been discharged
	 
	 	13.	 	Reserve Account Agreement among the Power Company, BOT Financial Corporation,
CDC, NIBJ and the Bank of Tokyo Trust Company dated October 10, 1994

20

 

	 	14.	 	Political Risk Proceeds Account and Taking Proceeds Account Agreement among the
Power Company, BOT Financial Corporation, CDC, equity participants named therein and
the Bank of Tokyo Trust Company dated October 10, 1994
	 
	 	15.	 	Amended and Restated Blocked Account Agreement between the Bank of Nova Scotia
Jamaica Limited, the Power Company, BOT Financial Corporation and NIBJ dated
15th January, 1995
	 
	 	II.	 	PROJECT AGREEMENTS AND MISCELLANEOUS AGREEMENTS 
	 
	 	1.	 	60 MW Slow Speed Diesel Project Construction Management, Operation and
Maintenance Agreement between the Power Company and PPO, dated October 10, 1994.
	 
	 	2.	 	Management Services Contract between HCO-Jamaica and PPO, dated October 10,
1994 (as amended).
	 
	 	3.	 	Professional Services Contract between Allied Protection Limited and the Power
Company, dated June 16, 2005.
	 
	 	4.	 	Fuel Supply Agreement between Petrojam, Ltd and the Power Company, dated
October 10, 1994.
	 
	 	5.	 	Lubricant Supply Agreement between Esso Standard Oil S.A. Limited and the Power
Company, dated December 14, 2005.
	 
	 	6.	 	Contract for Construction between the Power Company and Construction and
Dredging (2005) Limited, dated March 14, 2007.
	 
	 	7.	 	The Beach Control Law 1955 Licence to Encroach on the Foreshore and the Floor
of the Sea, granted by the Natural Resources Conservation Authority to the Power
Company, dated September 5, 1994.
	 
	 	8.	 	The Jamaica Private Power Company Limited Supply of Electricity Licence 1994,
granted by Robert D. Pickersgill, Minister of Public Utilities, Mining and Energy to
the Power Company, dated 1994.
	 
	 	9.	 	Insurance Coordinating Agreement between HCE-Rockfort, IEP, USP Rockfort Power
Associates Inc, EIF and the Power Company
	 
	 	10.	 	Draft Alternate Fuel Supply Plan prepared by Vernon M. Meikle dated June 3,
1994
	 
	 	III.	 	SHARE PURCHASE AND SHAREHOLDERS AGREEMENTS
	 
	 	1.	 	Stock Purchase Option Agreement between PPO, HCE, HCO Operations, HCO-Jamaica,
HCE-Rockfort, IEP, UPI, UPM, Rockfort Power, WIDC, EIF and Randall I. Phelps, a natural
person, dated October 10, 1994.

21

 

	 	2.	 	GOJ Agreement with Initial Members between GOJ, HCE-Rockfort, IEP and USP,
dated October 10, 1994.
	 
	 	3.	 	NIBJ Agreement with Initial Members between NIBJ, HCE-Rockfort, IEP and USP,
dated October 10, 1994.
	 
	 	4.	 	Implementation Agreement between GOJ and the Power Company, dated as of October
10, 1994.
	 
	 	5.	 	Members’ Agreement between the Power Company and certain members signatories
thereto, dated October 10, 1994.
	 
	 	6.	 	Articles of Association of JPPC.
	 
	 	7.	 	Memorandum of Association of JPPC.
	 
	 	8.	 	Articles of Association of PPO.
	 
	 	9.	 	Memorandum of Association of PPO.
	 
	 	IV.	 	POWER PURCHASE AGREEMENTS
	 
	 	1.	 	Power Purchase Agreement between JPS and the Power Company, dated October 10,
1994, as amended.
	 
	 	2.	 	GOJ Guarantee between GOJ and the Power Company, dated October 10, 1994.
	 
	 	V.	 	EQUITY CONTRIBUTION OBLIGATIONS
	 
	 	1.	 	Equity Purchase Agreement dated October 10, 1994 between the Power Company,
HCE, EIF and Rockfort Power Associates Inc.
	 
	 	2.	 	Equity Participation and Reimbursement Agreement dated October 10, 1994 between
Power Company, Hydra-Co Enterprises Inc., IEF, Precursor Systems Inc. and the Members
of the Power Company.
	 
	 	3.	 	Equity Contribution Agreement dated as of October 10, 1994 among Power Company,
HCE, Banco Santander, New York Branch, CDC and NIBJ.
	 
	 	4.	 	Letter Agreement between WIDC and HCE dated October 10, 1994.
	 
	 	See Schedules 3.2(d), 3.8(a), 3.10(a), 3.11(b)(i),
3.13(a), 3.15 and 3.16.

22

 

Schedule 3.11(b)(i)

Contracts

	 	1.	 	Honeywell Hardware Maintenance Agreement between Honeywell and the Power
Company, dated January 29, 2007.

23

 

Schedule 3.11(b)(ii)

Contracts

	 	1.	 	Certain requirements under the Power Purchase Agreement have not been complied
with, including, without limitation, certain provisions regarding insurance, the
provision of an alternative fuel supply plan, the establishment and maintenance of a
broker bank agreement and the maintenance of a security adjustment account.
	 
	 	2.	 	Certain requirements under the various project and financing agreements,
including, without limitation, the Fund Loan Agreement with NIBJ have not been complied
with, such as establishing an on-shore account for debt service reserve, obtaining the
prior written consent of the NIBJ to change the Operator Manager and obtaining
approvals in respect of budgets and budget amendments.
	 
	 	3.	 	Under the Construction Management, Operation and Maintenance Agreement dated as
of October 10, 1994 between JPPC and PPO, PPO is obligated to provide a performance
bond with a face amount of US$240,000.00. PPO has not provided such performance bond.

24

 

Schedule 3.12

Environmental Matters

	 	1.	 	In a letter dated August 8, 2005, the Jamaican National Environmental &
Planning Agency informed the Power Company of certain non-compliance items with respect
to its water discharge permits as follows: (i) the facility’s industrial discharged
report failed to include the required monitoring information for the pH parameter;
(ii) the facility’s sanitary effluent discharge had poor effluent discharge quality;
and (iii) compliance in 2004 for BOD was 17%, fecal coliform 58% and Phosphate 33% and
the first quarter of 2005 continued to show poor results for BOD, nitrates and Total
Nitrogen. The letter concludes that performance needs to improve or otherwise legal
action may be taken. In a letter from the Jamaican National Environmental & Planning
Agency to the Power Company dated August 14, 2006, the Agency notes that for the second
quarter 2006 attention needs to be paid to sewer effluent because BOD, Total Nitrogen
and fecal coliform levels are too high.
	 
	 	2.	 	In a letter from the Jamaican National Environmental & Planning Agency to the
Power Company dated June 12, 2006, the Jamaican National Environmental & Planning
Agency notes that for the first quarter 2006 the Power Company’s industrial discharge
was significantly above the temperature standard applicable to non-contact cooling
water and states that immediate steps need to be taken to correct this problem. In a
letter from the Jamaican National Environmental & Planning Agency to the Power Company
dated August 14, 2006, the Agency notes that for the second quarter 2006 the Power
Company’s industrial discharge was significantly above the temperature standard
applicable to non-contact cooling water and states that immediate steps need to be
taken to correct this problem.
	 
	 	3.	 	The seawater discharge pipe was damaged during the construction of the new
seawater intake pipe and the plant is currently being operated with a significant leak
in the seawater discharge pipe.
	 
	 	4.	 	The plant has been and is currently being operated with parameters including,
but not limited to nitrates, in excess of those prescribed by the Water Resources
Authority in conjunction with License No. A2006/07 Licence to Abstract and Use Water.
	 
	 	5.	 	The plant has been and is currently being operated with parameters including,
but not limited to nitrates, in excess of those prescribed by the Water Resources
Authority in conjunction with License No. A2006/08 Licence to Abstract and Use Water.
	 
	 	6.	 	The Jamaican Natural Resources Conservation Authority promulgated new Air
Quality regulations in July of 2006 that may be applicable to the facility of the Power
Company but which are not yet being adhered to.

25

 

Schedule 3.13(a)

Labor Matters

	 	1.	 	Collective Labour Agreement between PPO and National Workers Union, dated June
9, 1999
	 
	 	2.	 	Heads of Agreement 2005 to 2007 between PPO The National Workers Union, dated
January 30, 2006
	 
	 	3.	 	Heads of Agreement between the National Workers Union and PPO dated October 3,
2003
	 
	 	4.	 	Settlement of Dispute between PPO and National Workers Union and the Award IDT
Division dated January 6, 2003

26

 

Schedule 3.13(b)

Labor Matters

	 	1.	 	National Workers Union in respect of the following categories of workers:

	 	a.	 	Senior Engineers
	 
	 	b.	 	Second Engineers
	 
	 	c.	 	Third Engineers
	 
	 	d.	 	Electrical Technician 1
	 
	 	e.	 	Electrical Technician 2
	 
	 	f.	 	Repairmen
	 
	 	g.	 	Janitors
	 
	 	h.	 	General Services Supervisor
	 
	 	i.	 	Purchasing Officer
	 
	 	j.	 	Receptionist/Administrative Assistant
	 
	 	k.	 	Driver/Courier
	 
	 	l.	 	Leadman Support Services
	 
	 	m.	 	Results Clerk
	 
	 	n.	 	Instrument Technician

27

 

Schedule 3.15

Affiliate Contracts

	 	1.	 	Management Services Contract between HCO-Jamaica and PPO, dated October 10,
1994 (as amended).
	 
	 	2.	 	Stock Purchase Option Agreement between PPO, HCE, HCO Operations, HCO-Jamaica,
HCE-Rockfort, IEP, UPI, UPM, Rockfort Power, WIDC, EIF and Randall I. Phelps, a natural
person, dated October 10, 1994.
	 
	 	3.	 	MP2 Support Service coordinated by CMS Energy — expires in December and will
not be renewed.
	 
	 	4.	 	See item 13 in Schedule 3.8(a).
	 
	 	5.	 	Purchase Order in the annual amount of US$60,000.00 for offsite controller
referred in the Construction Management, Operation and Maintenance Agreement dated as
of October 10, 1994.
	 
	 	6.	 	HCE-Rockfort is a party to the Amended and Restated Agreement for the
Allocation of Income Tax Liabilities and Benefits, as of January 1, 1994, between CMS
Energy Corporation and certain consolidated (domestic) subsidiaries.

28

 

Schedule 3.16

Insurance

	 	 	 	 	 	 	 	 	 	 	 
	Policy	 	Coverage	 	Insurer/Insured	 	Term	 	Limit of Liability	 	Deductibles
	 
	 	 	 	 	 	 	 	 	 	 
	Property Damage and
Business Interruption
Package Policy

	 	Insures Power
Company against
damage to plant
property and
equipment and
resulting business
interruption from
all risk perils and
boiler and
machinery
breakdown.
	 	Lloyds of London and
various London
insurers/ Power
Company, Private
Power Operators
Limited, and CMS
Resource Development
Company
	 	November 12, 2006
to November 12,
2007
	 	$124,200,000 each
loss $50,000,000
Catastrophe perils
$26,864,000
Business
Interruption
	 	$500,000 PD
$1,000,000 Mach
Breakdown to Diesels
2% of TIV for EQ and
2% of TIV for flood
and wind 45 days for
BI
60 days for BI to
Diesel B&M
	 
	 	 	 	 	 	 	 	 	 	 
	Pollution Legal Liability

	 	Insures legal
liability arising
out of injury or
damage from a
pollution event.
	 	American Home
Insurance Co/Power
Company, Private
Power Operators
Limited, and CMS
Resource Development
Company
	 	November 12, 2006
to November 12,
2007
	 	 	 	$50,000 each incident
	 
	 	 	 	 	 	 	 	 	 	 
	General Liability,
Employers Liability,
Contingent and Non Owned
Auto Liability

	 	Third party
personal injury and
property damage
liability for
occurrences.
	 	Great Northern
Insurance Co/ Power
Company, Private
Power Operators
Limited, and CMS
Resource Development
Company
	 	November 12, 2006
to November 12,
2007
	 	$1,000,000 per
occurrence and
annual aggregate
	 	$50,000 per occurrence
	 
	 	 	 	 	 	 	 	 	 	 
	Umbrella Liability

	 	Excess third party
personal injury and
property damage
liability for
occurrences.
	 	Great Northern
Insurance Co/ Power
Company, Private
Power Operators
Limited, and CMS
Resource Development
Company
	 	November 12, 2006
to November 12,
2007
	 	$10,000,000 per
occurrence and
annual aggregate
	 	Excess of underlying
	 
	 	 	 	 	 	 	 	 	 	 
	Automobile Liability and
Physical Damage

	 	Liability insurance
for local Jamaica
law.
	 	Jamaica
International
Insurance Co
	 	January 1, 2006 to
January 1, 2007
	 	J$5,000,000 BI and

J$5,000,000 PD	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Employers Liability

	 	Insurance coverage.
	 	Jamaica
International
Insurance Co
	 	January I, 2006 to
January 1, 2007
	 	J$5,000,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Employer’s Liability

	 	Insurance coverage
	 	Jamaica
International
Insurance Co
	 	December 6, 2006 to
December 6, 2007
	 	J$60,000,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Group Life Insurance

	 	Insurance coverage
	 	Guardian Life Limited
	 	January 1, 2007 to
December 31, 2007
	 	J$7,400,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Group Personal Accident

	 	Insurance coverage
	 	American Home
Assurance Company
Limited
	 	January 10, 2007 to
January 9, 2007
	 	J$40,000,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Group Health Insurance

	 	Insurance coverage
	 	Life of Jamaica
	 	January 1, 2007 to
December 31, 2007
	 	J$5,000,000	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Commercial Comprehensive
Motor

	 	Insurance coverage
	 	Jamaica
International
Insurance Co
	 	January 1, 2007 to
December 31, 2007
	 	J$7,881,240	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Private Comprehensive
Motor

	 	Insurance coverage
	 	Jamaica
International
Insurance Co
	 	January 1, 2007 to
December 31, 2007
	 	J$5,500,000	 	 

29

 

EXHIBIT C to STOCK PURCHASE AGREEMENT

PURCHASER DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

 

 

PURCHASER DISCLOSURE LETTER

to

STOCK PURCHASE AGREEMENT

by and among

HYDRA-CO ENTERPRISES, INC.

HCO-JAMAICA, INC.

and

AEI CENTRAL AMERICA LTD.

together with

ASHMORE ENERGY INTERNATIONAL

(solely for the limited purposes of Section 8.2)

Dated as of May 31, 2007

     This Purchaser Disclosure Letter is being furnished by AEI CENTRAL AMERICA LTD.
(“Purchaser”) to HYDRA-CO ENTERPRISES, INC. and HCO-JAMAICA, INC. (together,
“Sellers”) in connection with the Stock Purchase Agreement dated as of May 31, 2007 (the
“Agreement”) by and among Sellers, Purchaser, and, solely for the limited purposes of
Section 8.2, Ashmore Energy International (“Parent”). Unless the context otherwise
requires, all capitalized terms used in this Purchaser Disclosure Letter shall have the respective
meanings assigned to them in the Agreement.

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

     Nothing in this Purchaser Disclosure Letter shall constitute an admission that any information
disclosed, set forth or incorporated by reference in this Purchaser Disclosure Letter, either
individually or in the aggregate, is material, or would result in a Purchaser Material Adverse
Effect. No disclosure made in this Purchaser Disclosure Letter (i) shall be deemed to

 

 

modify in any respect the standard of materiality or any other standard for disclosure set forth in
the Agreement or (ii) relating to any possible breach or violation of any agreement, contract, Law
or Governmental Order shall be construed as an admission or indication that any such breach or
violation exists or has actually occurred.

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

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

     This Disclosure Letter shall be deemed to include all information disclosed in the files and
working papers of Parent and Purchaser made available to Sellers in the virtual data room on
Intralinks under “Project Beta” as of May 31, 2007.

 

 

 Schedule 4.2(b)

Non-Contravention

None.

 

 

Schedule 4.2(c)

Statutory Approvals

	1.	 	The Notification of Self-Certification of Foreign Utility Company Status with the Federal
Energy Regulatory Commission (“FERC”) has been filed with respect to the Power
Company and PPO. Sixty days after submitting this Notification of Self-Certification of
Foreign Utility Company Status, unless FERC issues an order to the contrary, “Foreign
Utility Companies” status will be deemed to have been granted to the Power Company and PPO
by operation of FERC’s regulations. As a result, an application to the FERC for
authorization under Section 203 of the Federal Power Act is not required.1
	 
	2.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of October
10, 1994 between GOJ and the Power Company, prior written consent of the GOJ will be
required in connection with the transactions contemplated by the Agreement. Such consent
shall not be unreasonably withheld.
	 
	3.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial Members,
prior written consent of the GOJ will be required in connection with the transactions
contemplated by the Agreement. Such consent shall not be unreasonably withheld.
	 
	4.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with Initial
Members, prior written consent of the NIBJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	5.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior written
consent of the GOJ will be required in connection with the transactions contemplated by the
Agreement. Such consent shall not be unreasonably withheld.
	 
	6.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent and
approvals required under the Power Purchase Agreement and the Implementation Agreement may
be required in connection with the transactions contemplated by the Agreement.
	 
	7.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the Multilateral
Investment Guarantee Agency (MIGA) (as amended). Pursuant to General Conditions of Guarantee
for Equity Investments prior written consent of MIGA will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	8.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment Guarantee Agency
(MIGA) (assigned to Hydra-Co Enterprises, Inc) (as amended). Pursuant to General Conditions of
Guarantee for Equity Investments prior written consent of MIGA
will be required in connection with the transactions contemplated by the Agreement. Such
consent shall not be unreasonably withheld.

 

 

Schedule 4.4

Litigation

None.

 

 

Schedule 9.2(b)

Purchaser Knowledge Group

	 	1.	 	Miguel Mendoza
	 	2.	 	Brian Zatarain

 

 

SCHEDULES TO STOCK PURCHASE AGREEMENT

 

 

Schedule 5.1

Conduct of Business

	 	1.	 	The amendment and restatement of the Trust Deed and Rules in the Pension Plan for
Employees of PPO dated July 1, 1996.
	 
	 	2.	 	HRSG (Heat Recovery Steam Generator) pipe repair.

 

 

Schedule 5.3

Access

None.

 

 

Schedule 5.9

Affiliate Contracts

	1.	 	Management Services Contract between HCO-Jamaica and PPO, dated October 10, 1994 (as
amended).
	 
	2.	 	Stock Purchase Option Agreement between PPO, HCE, HCO Operations, HCO-Jamaica, HCE-Rockfort,
IEP, UPI, UPM, Rockfort Power, WIDC, EIF and Randall I. Phelps, a natural person, dated
October 10, 1994.
	 
	3.	 	See item 5 on Schedule 3.15.
	 
	4.	 	See item 6 on Schedule 3.15.

 

 

Schedule 5.13

Resignations and Terminations

Private Power Operators Limited

	 	1.	 	Directors:

	 	a.	 	Michael C. Sniegowski
	 
	 	b.	 	Daniel E. Nally
	 
	 	c.	 	Thomas J. Allen

	 	2.	 	President: Daniel E. Nally
	 
	 	3.	 	Vice President:

	 	a.	 	Michael C. Sniegowski
	 
	 	b.	 	Timothy L. Mehl

	 	4.	 	Treasurer: Scott J. McFerren
	 
	 	5.	 	Secretary: Thomas J. Allen

Jamaica Private Power Company Limited

	 	1.	 	Director: Timothy L. Mehl
	 
	 	2.	 	President and Managing Agent: Daniel E. Nally
	 
	 	3.	 	Vice President: Michael C. Sniegowski
	 
	 	4.	 	Treasurer: Scott J. McFerren
	 
	 	5.	 	Secretary: Thomas J. Allen

HCE-Rockfort

	 	1.	 	Chairman of the Board: David W. Joos
	 
	 	2.	 	President and Chief Executive Officer: Thomas W. Elward
	 
	 	3.	 	Senior Vice President: James E. Brunner
	 
	 	4.	 	Senior Vice President: John M. Butler
	 
	 	5.	 	Vice President and Controller: Carol A. Isles
	 
	 	6.	 	Vice President and General Counsel: Sharon A. McIlnay
	 
	 	7.	 	Vice President: Thomas L. Miller
	 
	 	8.	 	Vice President and Treasurer: Laura L. Mountcastle
	 
	 	9.	 	Vice President: Daniel E. Nally
	 
	 	10.	 	Vice President and Secretary: Catherine M. Reynolds
	 
	 	11.	 	Vice President: Michael C. Sniegowski
	 
	 	12.	 	Vice President and Chief Tax Counsel: Theodore J. Vogel
	 
	 	13.	 	Assistant Secretary: Jane M. Kramer
	 
	 	14.	 	Assistant Secretary: Joyce H. Norkey
	 
	 	15.	 	Assistant Treasurer: Beverly S. Burger
	 
	 	16.	 	Assistant Treasurer: James L. Loewen

 

 

Schedule 5.14

Tax Indemnity

PPO and HCO-Jamaica entered into that certain Management Services Contract dated October 10,
1994 pursuant to which HCO-Jamaica provided certain services to PPO in exchange for 60% of
certain amounts to be received by PPO from the Power Company. Since January 2002, PPO has been
remitting 100% of such amounts to HCO-Jamaica. In May 2007, PPO and HCO-Jamaica amended the
Management Services Contract, retroactive to January 31, 2002, to clarify that HCO-Jamaica is
entitled to 100% of such amounts. If the retroactive effect of the amendment is not acceptable
to taxing authorities in Jamaica, this matter could give rise to additional Jamaican taxes for
the period from January 2002 through May 2007.

 

 

Schedule 6.1(a)

Statutory Approvals

	 	1.	 	Implementation Agreement. Pursuant to the Implementation Agreement dated as of October
10, 1994 between GOJ and the Power Company, prior written consent of the GOJ will be
required in connection with the transactions contemplated by the Agreement. Such consent
shall not be unreasonably withheld.
	 
	 	2.	 	GOJ Agreement with Initial Members. Pursuant to the GOJ Agreement with Initial
Members, prior written consent of the GOJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	 	3.	 	NIBJ Agreement with Initial Members. Pursuant to the NIBJ Agreement with Initial
Members, prior written consent of the NIBJ will be required in connection with the
transactions contemplated by the Agreement. Such consent shall not be unreasonably
withheld.
	 
	 	4.	 	Power Purchase Agreement. Pursuant to the Power Purchase Agreement, prior written
consent of the GOJ will be required in connection with the transactions contemplated by the
Agreement. Such consent shall not be unreasonably withheld.
	 
	 	5.	 	Members’ Agreement. Pursuant to the Members’ Agreement, prior written consent and
approvals required under the Power Purchase Agreement and the Implementation Agreement may
be required in connection with the transactions contemplated by the Agreement.
	 
	 	6.	 	(A142) Contract of Guarantee between Hydra-Co Enterprises, Inc. and the Multilateral
Investment Guarantee Agency (MIGA) (as amended). Pursuant to General Conditions of
Guarantee for Equity Investments prior written consent of MIGA will be required in
connection with the transactions contemplated by the Agreement. Such consent shall not be
unreasonably withheld.
	 
	 	7.	 	(A213) Contract of Guarantee between UPI and the Multilateral Investment Guarantee
Agency (MIGA) (assigned to Hydra-Co Enterprises, Inc) (as amended). Pursuant to General
Conditions of Guarantee for Equity Investments prior written consent of MIGA will be
required in connection with the transactions contemplated by the Agreement. Such consent
shall not be unreasonably withheld.

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