Document:

EX-10.1

Exhibit 10.1

SHARE PURCHASE AGREEMENT

by and among

CMS ELECTRIC & GAS, L.L.C.,

CMS ENERGY BRASIL S.A.,

and

CPFL ENERGIA S.A.,

together with

CMS ENERGY CORPORATION

(solely for the limited purposes of Section 8.9)

1

Dated as of April 12, 2007ARTICLE I

SALE AND PURCHASE OF SHARES

	 	 	 
	1.1

1.2

1.3

1.4

	 	Sale and Purchase of Shares

Purchase Price

Closing

Closing Deliveries

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

	 	 	 
	2.1

2.2

2.3

2.4

2.5

	 	Organization and Qualification

Title to Shares

Authority; Non-Contravention; Statutory Approvals.

Litigation

Brokers and Finders

ARTICLE IIA

REPRESENTATIONS AND WARRANTIES OF ENERGY

	 	 	 	2.1A Organization and Qualification; Authority 4	 

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

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

	 	 	 
	3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

3.14

3.15

3.16

3.17

3.18

3.19

	 	Capitalization.

Financial Statements; Undisclosed Liabilities.

Absence of Certain Changes or Events.

Tax Matters

Litigation

Compliance with Laws.

Employee Benefits.

Permits.

Real Property.

Material Contracts.

Environmental Matters

Labor Matters.

Intellectual Property

Affiliate Contracts

Insurance

Brokers and Finders

Books and Records

Investco S.A. Shareholders Documentation

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

	 	 	 
	4.1

4.2

4.3

4.4

	 	Organization and Qualification

Authority; Non-Contravention; Statutory Approvals.

Financing

Litigation

	 	4.5	 	Investment Intention; Sufficient Investment Experience; Independent
Investigation	 

	 	 	 
	4.6

4.7

4.8

	 	Brokers and Finders

Qualified for Permits

No Knowledge of Seller or Company Breach

ARTICLE V

COVENANTS

	 	 	 
	5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

5.10

5.11

5.12

5.13

5.14

5.15

5.16

5.17

5.18

5.19

	 	Conduct of Business

Approvals.

Access

Publicity

Tax Matters.

Employee Matters.

Fees and Expenses

[Intentionally left blank.]

Termination of Affiliate Contracts

Further Assurances

[Intentionally left blank.]

Change of Name.

[Intentionally left blank.]

Resignations of Certain Officers and Directors

Tag-Along and Other Shareholder Rights

Releases of Certain Guarantees

[Intentionally left blank.]

Assignment of Certain Obligations

Insurance

ARTICLE VI

CONDITIONS TO CLOSING

	 	 	 
	6.1

6.2

6.3

	 	Conditions to the Obligations of the Parties

Conditions to the Obligation of Purchaser

Conditions to the Obligation of Seller

ARTICLE VII

TERMINATION

	 	7.1	 	Termination	 

	 	7.2	 	Effect of Termination	 

ARTICLE VIII

SURVIVAL; INDEMNIFICATION

	 	8.1	 	Survival of Representations, Warranties, Covenants and Agreements;
Exclusive Remedy.	 

	 	 	 
	8.2

8.3

8.4

8.5

8.6

8.7

8.8

8.9

	 	Indemnification of Purchaser by Seller

Indemnification of Seller by Purchaser

Limitations on Seller’s Indemnification.

Special Indemnification by Seller.

Mitigation

General Procedures Applicable to Claims for Indemnification.

Payment

Energy Guarantee.

ARTICLE IX

DEFINITIONS AND INTERPRETATION

	 	 	 
	9.1

9.2

9.3

	 	Defined Terms

Definitions

Interpretation

ARTICLE X

GENERAL PROVISIONS

	 	 	 
	10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

	 	Notices

Binding Effect

Assignment; Successors; Third-Party Beneficiaries.

Amendment; Waivers; etc

Entire Agreement.

Severability

Counterparts

Governing Law

Arbitration

Limitation on Damages

Enforcement

No Right of Set-Off

	 	 	 
	EXHIBITS
	Exhibit A

	 	Seller Disclosure Letter
	 
	 	 
	Exhibit B

	 	Company Disclosure Letter
	 
	 	 
	Exhibit C

	 	Purchaser Disclosure Letter
	 
	 	 

2

	 	 	 
	SCHEDULES TO BE INCORPORATED INTO THE DISCLOSURE LETTERS APPENDED AS EXHIBITS
	Schedule 2.2

	 	Shares
	 
	 	 
	Schedule 2.3(c)

	 	Seller Required Statutory Approvals
	 
	 	 
	Schedule 3.1(c)(i)

	 	Company Required Consents
	 
	 	 
	Schedule 3.1(c)(ii)

	 	Non-Contravention
	 
	 	 
	Schedule 3.1(d)

	 	Company Required Statutory Approvals
	 
	 	 
	Schedule 3.2(b)

	 	Company Subsidiaries
	 
	 	 
	Schedule 3.2(c)

	 	Agreements regarding Shares and Equity Interests
	 
	 	 
	Schedule 3.3(a)

	 	Financial Statements
	 
	 	 
	Schedule 3.3(b)

	 	Undisclosed Liabilities
	 
	 	 
	Schedule 3.4(a)

	 	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(b)

	 	Employee Benefits
	 
	 	 
	Schedule 3.8(e)

	 	Employee Benefits
	 
	 	 
	Schedule 3.9(a)

	 	Permits
	 
	 	 
	Schedule 3.10(a)

	 	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)

	 	Company Knowledge Group
	 
	 	 
	Schedule 9.2(b)

	 	Seller Knowledge Group
	 
	 	 
	Schedule 9.2(c)

	 	Purchaser Knowledge Group

	 	 	 
	SCHEDULES TO SHARE PURCHASE AGREEMENT
	Schedule 5.1(a)

	 	Conduct of the Company
	 
	 	 
	Schedule 5.1(c)

	 	Conduct of the Company
	 
	 	 
	Schedule 5.1(d)

	 	Conduct of the Company
	 
	 	 
	Schedule 5.1(e)

	 	Conduct of the Company
	 
	 	 
	Schedule 5.1(l)

	 	Conduct of the Company
	 
	 	 
	Schedule 5.3

	 	Access
	 
	 	 
	Schedule 5.7

	 	Fees and Expenses
	 
	 	 
	Schedule 5.9

	 	Termination of Affiliate Contracts
	 
	 	 
	Schedule 5.14

	 	Resignations and Terminations
	 
	 	 
	Schedule 5.16

	 	Guarantees
	 
	 	 
	Schedule 5.18

	 	Assignment of Certain Obligations
	 
	 	 
	Schedule 5.19

	 	Insurance
	 
	 	 
	Schedule 8.5(a)

	 	Special Seller Indemnification

3

SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (this “Agreement”), dated as of April 12, 2007, is
entered into by and among (i) CMS Electric & Gas, L.L.C., a Michigan limited liability company
(“Seller”), (ii) CMS Energy Brasil S.A., a sociedade anônima de capital aberto incorporated
under the laws of Brazil (the “Company”), (iii) CPFL Energia S.A., a sociedade anônima de
capital aberto incorporated under the laws of Brazil (“Purchaser”), and (iv) solely for the
limited purposes of Section 8.9, CMS Energy Corporation, a Michigan corporation and the
ultimate parent company of Seller (“Energy”). Each of Purchaser, the Company and Seller
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.

W I T N E S S E T H:

WHEREAS Seller owns 94,810,080 units of common shares (each with no par value) of the Company
(the “Common Shares”) and Seller owns 94,810,075 units of preferred shares (each with no
par value) of the Company (the “Preferred Shares”) and each member of the board of
directors of the Company (each a “Director Shareholder”) owns one Preferred Share (all of
the foregoing units of shares, collectively, the “Shares”); and

WHEREAS Purchaser desires to purchase from Seller, and Seller desires 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), 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 the Shares (the “Transaction”).

1.2 Purchase Price. The consideration to be paid by Purchaser to Seller in respect of
the purchase of Shares shall be an amount in cash in the legal currency of the United States of
America (the “Purchase Price”) equal to Two Hundred Eleven Million One Hundred Forty Four
Thousand Dollars (US$211,144,000.00) and shall be subject to applicable Brazilian withholding tax
on the amount of Seller’s capital gains, as calculated by Seller; provided that, for the
avoidance of doubt, the payment of such withholding tax shall be made by Purchaser on behalf of
Seller.

1.3 Closing. The closing of the Transaction (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. The payment of the Purchase Price shall be made by wire
transfer of immediately available funds to the bank account or accounts outside of Brazil
designated by Seller prior to the Closing.

1.4 Closing Deliveries. At the Closing:

(a) Seller shall cause the Company to deliver to Purchaser certificates from Company’s
Depositary Agent attesting that (i) the Common Shares are registered in the name of the Seller and
(ii) the Preferred Shares are registered in the name of the Seller and of the Director
Shareholders.

(b) Seller shall cause the Company to deliver to Purchaser an executed copy of the
communication addressed by Seller and by each Director Shareholder to Company’s Depositary Agent
requiring the unconditional transfer of the Shares to Purchaser, as well as the confirmation from
the Depositary Agent of receipt and sufficiency of the aforesaid communication.

(c) Seller shall cause each Director Shareholder, at no additional cost to Purchaser, to
assign, convey and transfer in the name of Purchaser the Preferred Shares held by such Director
Shareholder.

(d) Seller shall cause each Director Shareholder, at no additional cost to Purchaser, to
assign, convey and transfer in the name of a Person designated by Purchaser all Equity Interests in
any Company Subsidiary held by any Director Shareholder.

(e) Purchaser shall pay, or cause to be paid, to Seller an amount in cash equal to the
Purchase Price for the Shares so delivered by Seller, by wire transfer of immediately available
funds to the bank account or accounts outside of Brazil designated by Seller prior to the Closing.

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

ARTICLE II

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,
to Purchaser as follows in this Article II:

2.1 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 limited liability
company 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 Title to Shares. Seller and the Director Shareholders are the lawful record and
beneficial owners of the Shares set forth opposite their names in Schedule 2.2 of the
Seller Disclosure Letter, free and clear of any and all Liens, except for Liens created by this
Agreement. The delivery of the Shares to Purchaser in the manner contemplated under Article
I, following the payment by Purchaser of the Purchase Price to Seller, shall transfer to
Purchaser valid beneficial and legal title to the Shares, free and clear of any and all Liens
except for Liens created by Purchaser. There are no outstanding options, warrants or other rights
of any kind to acquire from Seller 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.

2.3 Authority; Non-Contravention; Statutory Approvals.

(a) Authority. Seller has full power and authority to enter into this Agreement and,
subject to receipt of the Seller Required Statutory Approvals (as such term is defined in
Section 2.3(c)), to consummate the transactions contemplated hereby. The execution,
delivery and performance by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby 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 are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by Seller and, assuming the due authorization, execution and
delivery hereof by each other Party, constitutes 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. 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 is a party or by which it may be bound; or (iii) any Law, Permit or Governmental
Order applicable to it, subject to obtaining the Seller 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 Seller Material Adverse Effect.

(c) Statutory Approvals. Except for the filings or approvals (i) set forth in
Schedule 2.3(c) of the Seller Disclosure Letter (the “Seller 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 Seller in connection with the execution and delivery of this Agreement or the
consummation by 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 Seller
Material Adverse Effect or a Company Material Adverse Effect.

2.4 Litigation. There is no action, claim, suit or proceeding at law or in equity
pending or, to the Knowledge of Seller, threatened against Seller that, if adversely determined,
would reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse
Effect. Subject to obtaining the Seller Required Statutory Approvals, there are no Governmental
Orders of or by any Governmental Entity applicable to Seller except for such that would not
reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect
or a Company Material Adverse Effect.

2.5 Brokers and Finders. 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 Seller or
the Company in connection with any of the transactions contemplated by this Agreement, except J.P.
Morgan Securities Inc., UBS Securities LLC and Unibanco Securities Inc.

ARTICLE IIA

REPRESENTATIONS AND WARRANTIES OF ENERGY

Energy represents and warrants, as to itself only, to Purchaser as follows in this Article
IIA solely for the limited purposes of Section 8.9:

2A.1 Organization and Qualification; Authority.

(a) Organization and Qualification. Energy has been duly incorporated and is validly
existing under the laws of the State of Michigan, and has full corporate 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 material adverse effect on Energy.

(b) Authority. Energy has full power and authority to enter into this Agreement
solely for the limited purposes of Section 8.9 of this Agreement. The execution, delivery
and performance by Energy solely for the limited purposes of Section 8.9 of this Agreement
have been duly and validly authorized by all requisite action on the part of Energy, and no other
proceedings or approvals on the part of Energy are necessary to authorize this Agreement solely for
the limited purposes of Section 8.9. This Agreement has been duly executed and delivered
by Energy and, assuming the due authorization, execution and delivery by each Party, constitutes
the legal, valid and binding obligation of Energy, enforceable against Energy in accordance with
its terms, except as limited by applicable Law affecting the enforcement of creditors’ rights
generally or by general equitable principles.

ARTICLE III

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

Except as disclosed in the Company Disclosure Letter attached hereto as Exhibit B (the
“Company Disclosure Letter”), Seller and the Company hereby severally, and not jointly,
represent and warrant 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, except for the representations and warranties in Sections 3.1,
3.2, 3.3, 3.4(a), 3.4(b), 3.6, 3.10, 3.11,
3.12, 3.15, 3.16, 3.17 and 3.18):

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

(a) Organization and Qualification. The Company has been duly incorporated and is
validly existing as a sociedade anônima de capital aberto and in good standing under the laws of
Brazil, 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 Brazil.

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

(c) Non-Contravention. The execution and delivery of this Agreement by the Company
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 properties of the Company or any
Company Subsidiary, pursuant to any provision of (i) the Organizational Documents of the Company or
any Company Subsidiary, subject to obtaining the third-party Consents set forth in Schedule
3.1(c)(i) of the Company Disclosure Letter (the “Company Required Consents”); (ii) any
lease, mortgage, indenture, note, bond, deed of trust, or other written instrument or agreement of
any kind to which the Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary may be bound, subject to obtaining the Company Required Consents and except as
set forth in Schedule 3.1(c)(ii) of the Company Disclosure Letter; or (iii) any Law, Permit
or Governmental Order applicable to the Company or any Company Subsidiary, subject to obtaining the
Seller Required Statutory Approvals and the Company 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 Company Material Adverse Effect.

(d) Statutory Approvals. Except for the filings or approvals (i) set forth in
Schedule 3.1(d) of the Company Disclosure Letter (the “Company 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 the Company or any Company Subsidiary, in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company 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 Company Material Adverse Effect.

3.2 Capitalization.

(a) Company. The authorized capital stock of the Company consists of 300,000,000
units of shares (each with no par value), of which 94,810,080 units of common shares are issued and
outstanding and 94,810,080 units of preferred shares are issued and outstanding. The Shares
constitutes all of the issued and outstanding Equity Interests in the Company.

(b) Company Subsidiaries. Schedule 3.2(b) of the Company Disclosure Letter
sets forth for each Company Subsidiary: (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 or indirectly, by the Company (and the Company Subsidiary
holding such Equity Interest, if applicable) and the directors of each Company Subsidiary. The
Equity Interests of each Company Subsidiary that are owned, directly or indirectly, by the Company,
as set forth on Schedule 3.2(b) of the Company Disclosure Letter, are owned free and clear
of all Liens, other than Permitted Liens. All of the issued and outstanding Equity Interests in
each Company Subsidiary that are owned, directly or indirectly, by the Company have been duly
authorized and, to the extent such concepts are recognized under applicable Law, are validly issued
and fully paid.

(c) Agreements with Respect to Shares and Equity Interests of the Company and the Company
Subsidiaries. Except as set forth in Schedule 3.2(c) of the Company Disclosure Letter,
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, the Company or any Company Subsidiary to issue,
transfer, sell or otherwise dispose of, or cause to be issued, transferred, sold or
otherwise disposed of, any Equity Interests of the Company or any Company Subsidiary
or any securities convertible into or exchangeable for any such Equity Interests
(other than in connection with any Permitted Lien); or

(ii) shareholder agreements, partnership agreements, voting trusts, proxies or
other written agreements or instruments to which the Company or any Company
Subsidiary is a party, or by which the Company or any Company Subsidiary is bound.

3.3 Financial Statements; Undisclosed Liabilities.

(a) The Company has provided to Purchaser copies of the audited consolidated balance sheets of
the Company and the Company Subsidiaries as at December 31, 2004, 2005 and 2006 and the related
audited statements of operations, cash flows and stockholders’ equity for the years ended December
31, 2004, 2005 and 2006 (collectively, the “Company Financial Statements”). The
consolidated balance sheet of the Company and the Company Subsidiaries as at December 31, 2006
(including the notes thereto) is hereinafter referred to as the “Balance Sheet”. The
Company Financial Statements fairly present in all material respects the consolidated assets and
liabilities of the Company and the consolidated results of operations of the Company and the
Company Subsidiaries for the periods indicated, all in accordance with Brazilian GAAP consistently
applied over the periods presented except as provided in the notes to the Company Financial
Statements, except as set forth in Schedule 3.3(a) of the Company Disclosure Letter.

(b) Neither the Company nor any Company Subsidiary has any Liabilities, other than (i)
Liabilities that will not be applicable to the Company or any Company Subsidiary after Closing,
(ii) Liabilities disclosed on Schedule 3.3(b) of the Company Disclosure Letter, (iii)
Liabilities reserved for or reflected in the Balance Sheet, (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 Company 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 Company Material Adverse Effect.

3.4 Absence of Certain Changes or Events.

(a) Since December 31, 2006, except as set forth in Schedule 3.4(a) of the Company
Disclosure Letter, other than in connection with the transactions contemplated by this Agreement,
neither the Company nor, to the Knowledge of the Company, any Company Subsidiary has taken any of
the actions set forth in Sections 5.1(a) through 5.1(l), that, if taken after the
execution and delivery of this Agreement, would require the consent of Purchaser pursuant to
Section 5.1.

(b) Since December 31, 2006, there has not been any change, event, condition, circumstance,
occurrence or development which has had, or would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.

(c) Subject to Section 5.1, since December 31, 2006, the Company and the Company
Subsidiaries have conducted their businesses only in the ordinary course of business.

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

(a) each of the Company and each Company Subsidiary has (i) 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 (ii) duly paid in full all Taxes due or
payable;

(b) no material audits or other administrative proceedings or court proceedings are, as of the
date hereof, pending with regard to any Taxes or Tax Returns of the Company or any Company
Subsidiary and neither the Company nor any Company Subsidiary has been informed in writing of the
planned commencement of any such audits or proceedings;

(c) neither the Company nor any Company Subsidiary 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 the Company or any Company Subsidiary,
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; and

(e) the Company has made available to Purchaser complete, accurate and correct copies of all
income Tax Returns of the Company and each Company Subsidiary, for the years 2003, 2004 and 2005,
as filed or subsequently amended.

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

3.7 Compliance with Laws.

(a) Except as set forth in Schedule 3.7(a) of the Company Disclosure Letter, neither
the Company nor any Company Subsidiary has received written notice of or been charged with any
violation of, or, to the Knowledge of the Company, is in violation of or 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 Company 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, 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 Company Disclosure Letter contains a brief description of
all material written employee benefit plans, programs, policies, arrangements and contracts,
including any 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, overtime, sick leave, disability, death benefit, group insurance,
hospitalization, medical, dental, life, loan, educational assistance, and other fringe benefit
plans, programs, written agreements and arrangements maintained by the Company or any Company
Subsidiary for the benefit of any employee or former employee of the Company or any Company
Subsidiary (collectively, the “Company Plans”).

(b) With respect to each Company Plan, the Company has made available to Purchaser complete,
true and correct copies of the documents, to the extent applicable, a copy of such Company Plan
(including all amendments thereto), except as set forth in Schedule 3.8(b) of the Company
Disclosure Letter, and if such Company 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) Each Company Plan has been administered in all material respects in compliance with its
terms and the requirements of applicable Law. Except as set forth in Schedule 3.6 of the
Company Disclosure Letter, there is no pending or, to the Knowledge of the Company, threatened
legal action, suit or claim relating to the Company Plans (other than routine claims for benefits).

(d) All contributions to each Company Plan required under the terms of such Company Plan or
applicable Law have been timely made. All material Liabilities and expenses as of December 31,
2006 of the Company or any Company Subsidiary in respect of the Company’s private pension plan,
“Plano de Benefícios CMSPREV”, have been properly accrued on the audited consolidated financial
statements of the Company for the year ended December 31, 2006 in compliance with Brazilian GAAP.

(e) Except as would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, and except as set forth in Schedule 3.8(e) of the Company
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, manager, executive officer or director of the Company or
any Company 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 Company Plan or result in the
acceleration of the time of payment or vesting of any benefit under a Company Plan.

(f) No Company Plan provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees, managers, executive officers
and directors of the Company or any Company 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 the Company or any Company Subsidiary or (iii)
benefits the costs of which are borne by the current or former employee or his or her beneficiary.

3.9 Permits.

(a) Except as set forth in Schedule 3.9(a) of the Company Disclosure Letter, each of
the Company and the Company Subsidiaries 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 would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect (collectively, “Company
Permits”). Except as set forth in Schedule 3.9(a) of the Company Disclosure Letter,
each Company Permit held by the Company and any Company Subsidiary 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 Company 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 Real Property.

(a) Schedule 3.10(a) of the Company Disclosure Letter lists all material real property
leases to which the Company or any Company Subsidiary is a party (the “Leased Real
Property”). Schedule 3.10(a) of the Company Disclosure Letter lists all material real
property owned by the Company or any Company Subsidiary (the “Owned Real Property”).

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, the Company and each Company Subsidiary have good and marketable
title to all Owned Real Property used by it, in each case free and clear of all Liens, except for
Permitted Liens. Except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and each Company Subsidiary has a valid
and binding leasehold interest in all Leased Real Property used by it, free and clear of all Liens,
except for Permitted Liens and as limited by Laws affecting the enforcement of creditors’ rights
generally or by general equitable principles.

(c) Neither the Company nor any Company Subsidiary has received written notice from a
Governmental Entity of any pending or threatened proceeding to condemn or take by power of eminent
domain or other similar proceedings affecting any of the Owned Real Property or the Leased Real
Property that would reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.

3.11 Material Contracts.

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

(i) all Operating Contracts providing for the payment by or to the Contracting
Party in excess of R$2,000,000 per year, other than (x) any agreements with the
Company or another Company Subsidiary to document certain intercompany loans or (y)
any agreements between the Company and any Company 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 R$2,000,000 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 R$2,000,000
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 R$2,000,000;

(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 R$2,000,000;

(vi) all contracts or agreements establishing any material 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 R$2,000,000 or (B) any direct or indirect economic interest in the
Contracting Party having a value in excess of R$2,000,000;

(viii) all contracts or agreements 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 R$750,000; and

(ix) any other contract or agreement not covered in clauses (i) through (xi)
above that involves payment by or to the Contracting Party of more than R$2,000,000
annually or R$6,000,000 in the aggregate under such agreement, other than those that
can be terminated without penalty in excess of R$750,000 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 Company Disclosure Letter, the
Company has made available to Purchaser complete and correct copies of all Company Material
Contracts, together with any material amendments thereto. Except as set forth in Schedule
3.11(b)(ii) of the Company Disclosure Letter, each Company Material Contract is (i) in full
force and effect and (ii) the valid and binding obligation of the Company, the Company Subsidiary
party thereto and, to the Knowledge of the Company, 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 Company Material Adverse Effect. Except as set forth in
Schedule 3.11(b)(ii) of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary is in breach or default under any Company Material Contract, which breach or default has
not been waived, and, to the Knowledge of the Company, no other party to any Company 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 Company Material Adverse
Effect. This Section 3.11(b) does not relate to real property matters, which are instead
the subject of Section 3.10.

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

(a) the Company and each Company Subsidiary is 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 and has timely filed all
applications for renewal, and there are no unresolved prior material violations of Environmental
Laws;

(b) neither the Company nor any Company Subsidiary (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 the Company or any Company Subsidiary 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 the Company or any Company Subsidiary has been a
party; and

(d) neither the Company nor any Company Subsidiary 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 the
Company’s or any Company Subsidiary’s current facilities or (ii) a Release of Hazardous Substances
at any third party property to which Hazardous Substances generated by the Company or any Company
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 Company Disclosure Letter contains a list of all
collective bargaining conventions and agreements to which the Company or any Company Subsidiary is
bound.

(b) Except as set forth on Schedule 3.13(b) of the Company Disclosure Letter, no
employees of the Company or any Company Subsidiary are represented by any labor organization with
respect to their employment with the Company or any Company Subsidiary.

(c) Since January 1, 2006, there have been no material labor strikes, work stoppages or
lockouts against or affecting the Company or any Company Subsidiary.

3.14 Intellectual Property. Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (a) the Company and each
Company Subsidiary 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 the Company and the Company Subsidiaries
as currently conducted, (b) to the Knowledge of the Company, the use of the Intellectual Property
used in the businesses of the Company and the Company Subsidiaries as currently conducted does not
infringe or otherwise violate the Intellectual Property rights of any third party, (c) to the
Knowledge of the Company, no third party is challenging, infringing or otherwise violating any
right of the Company and the Company Subsidiaries in any Intellectual Property necessary for the
conduct of the businesses of the Company and the Company Subsidiaries as currently conducted, and
(d) neither the Company nor any Company Subsidiary has received any written notice of any pending
claim that Intellectual Property used in and necessary for the conduct of the businesses of the
Company and the Company Subsidiaries as currently conducted infringes or otherwise violates the
Intellectual Property rights of any third party.

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

3.16 Insurance. Set forth on Schedule 3.16 of the Company Disclosure Letter
is a list of all material policies of insurance under which the Company’s or any Company
Subsidiary’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. Neither the Company nor any Company Subsidiary 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 any Company in connection with any of the transactions contemplated by this
Agreement, except J.P. Morgan Securities Inc., UBS Securities LLC and Unibanco Securities Inc.,
each of whose fees and expenses are governed by Section 5.7.

3.18 Books and Records. All of the Company’s and Company Subsidiaries’ books of
account, minute books, stock record books and any other book and/or record legally required under
applicable Brazilian Law are in all material respects complete, correct, accurate and true and have
been maintained in accordance with applicable Brazilian Law and Brazilian GAAP, as applicable.

3.19 Investco S.A. Shareholders Documentation. All written shareholders agreements or
similar shareholder-related contracts entered into by Paulista Lajeado Energia S.A. with other
shareholders of Investco S.A. have been provided to Purchaser in the “data room” prior to the date
hereof.

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 the Company,
Seller and Energy as follows in this Article IV:

4.1 Organization and Qualification. Purchaser is a sociedade anônima de capital
aberto, duly formed, validly existing and in good standing under the laws of Brazil. Purchaser has
full corporate power and authority to own, lease and operate its assets and properties and to
conduct its business as presently conducted. Purchaser is not required to be qualified to do
business as a foreign corporation in any country other than Brazil.

4.2 Authority; Non-Contravention; Statutory Approvals.

(a) Authority. 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 Purchaser of this
Agreement and the consummation by Purchaser of the transactions contemplated hereby have been duly
and validly authorized by all requisite corporate action on the part of Purchaser, and no other
corporate 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.
Purchaser has delivered to Seller a true, complete and correct copy of the resolutions or other
evidence of corporate proceedings or approvals adopted by the board of directors of Purchaser,
which are in full force and effect, evidencing its authorization of the execution and delivery of
this Agreement and the consummation by Purchaser of the transactions contemplated hereby.

(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 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; (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, 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 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
the Company (as to which Purchaser does not have knowledge), 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, 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 Purchaser or any of its Subsidiaries or affecting
any of its 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 Purchaser or any of its
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 the Company 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, Seller, the Company and their respective representatives
concerning the Company and Purchaser’s investment in the Shares. Purchaser acknowledges and
affirms that it has completed its own independent investigation, analysis and evaluation of the
Company and the Company Subsidiaries, that it has made all such reviews and inspections of the
business, assets, results of operations and condition (financial or otherwise) of the Company and
the Company 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 Company and the Company
Subsidiaries and Seller’s representations and warranties set forth in Article II and the
Company’s representations and warranties set forth in Article III.

4.6 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 Citigroup Global Markets Inc., whose
fees and expenses will be paid by Purchaser in accordance with such party’s agreement with such
firm.

4.7 Qualified for Permits. Purchaser is qualified to obtain any Permits necessary for
the operation by Purchaser of the Company or any Company Subsidiary as of the Closing in the same
manner as the Company or any Company Subsidiary are currently operated.

4.8 No Knowledge of Seller or Company 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 (i) any representation or warranty of Seller
set forth in Article II or (ii) any representation or warranty of Seller or the Company set
forth in Article III.

ARTICLE V

COVENANTS

5.1 Conduct of Business. After the date hereof and prior to the Closing or earlier
termination of this Agreement, Seller shall exercise the voting, governance and contractual powers
available to it to cause the Company to, and the Company shall and shall cause the Company
Subsidiaries to, conduct its businesses 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 (i) as contemplated in or permitted by this Agreement, (ii)
as may be required to comply with any Company Material Contract (including any Financing Facility),
(iii) as required by applicable Law, (iv) in the ordinary and usual course of business, (v) to the
extent prohibited by a Financing Facility or (vi) 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, Seller shall not exercise the voting, governance and contractual
powers available to it to cause the Company to, and the Company shall not and shall not cause the
Company Subsidiaries to:

(a) (i) except as set forth in Schedule 5.1(a), 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 any of the
Company and/or any Company Subsidiary;

(c) except as set forth in Schedule 5.1(c), incur any indebtedness in a maximum
aggregate principal amount in excess of R$100,000;

(d) except as set forth in Schedule 5.1(d), make any commitments for or make capital
expenditures in excess of R$1,000,000 individually or R$2,500,000 in the aggregate;

(e) except as set forth in Schedule 5.1(e), make any acquisition of, or investment in,
assets or stock of any other Person or entity in excess of R$100,000 individually or R$300,000 in
the aggregate;

(f) sell, transfer or otherwise dispose of any of its assets in excess of R$100,000
individually or R$300,000 in the aggregate;

(g) request, on behalf of the Company and/or any Company Subsidiary, bankruptcy,
reorganization, including, but not limited to, recuperação judicial, recuperação extrajudicial or
any acordo privado in accordance with Federal Law # 11.101/05, insolvency, moratorium, or
preferential transfers, or any other measure subject to similar Laws relating to or affecting
creditors’ rights;

(h) (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 Contract involves total consideration throughout its term in excess of
R$2,000,000;

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

(j) except as may be required to meet the requirements of applicable Law or changes in
Brazilian GAAP, change any accounting policy that would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect;

(k) except as required by the terms of any Company Plan, collective bargaining agreement or
any other existing agreement, increase salaries, remuneration or aggregate benefits payable to the
managers, executive officers and directors of any Company or Company Subsidiary;

(l) except as set forth in Schedule 5.1(l), 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 any Company Subsidiary (other than cash dividends required by applicable Law); or

(m) enter into any written agreement or contract to take any of the actions set forth in
subsections (a)-(l) 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
Company Required Consents, the Purchaser Required Consents, the Seller Required Statutory
Approvals, the Company 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 Purchaser or any of its Subsidiaries or, after the
Closing Date, of the Company or any of its Company Subsidiaries and (ii) otherwise taking or
committing to take actions that limit or would limit Purchaser’s or its Subsidiaries’ (including,
after the Closing Date, the Company’s or any of its Company Subsidiaries as Subsidiaries of
Purchaser) 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 Seller Required Statutory Approvals, the Company 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, Seller and the Company
agree that the Company and the Company Subsidiaries shall permit, and the Company and the Company
Subsidiaries shall exercise the voting, governance and contractual powers available to any of them
to cause (subject to any contractual, fiduciary or similar obligation of the Company or any Company
Subsidiary), the Company and each Company Subsidiary to permit, Purchaser and its employees,
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 Company and the Company Subsidiaries as Purchaser may
reasonably request; provided, however, that in no event shall Seller, the Company
or any Company Subsidiary be obligated to provide any access or information (i) if Seller or the
Company determines, in good faith after consultation with counsel, that providing such access or
information may violate applicable Law, cause Seller, the Company or any Company Subsidiary to
breach a confidentiality obligation to which it is bound, or jeopardize any recognized privilege
available to Seller, the Company or any Company Subsidiary; or (ii) to the extent set forth on
Schedule 5.3. Purchaser agrees to indemnify and hold Seller, the Company and the Company
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 Seller, the Company or the Company 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 the Company or
the Company 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 the Company or the Company
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 the
Company’s and the Company 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 the Company or such Company Subsidiary. Neither Purchaser nor any of its
representatives shall conduct any environmental testing or sampling on any of the business or
property sites of the Company or the Company 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 Seller, the Company, Purchaser or any of their respective Affiliates shall,
without the express written approval of Seller, the Company 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.

5.5 Tax Matters.

(a) With respect to the period prior to January 1, 2008, Purchaser shall make no election
under Section 338 of the Code with respect to the Company or any Company Subsidiary in connection
with the transactions contemplated by this Agreement.

(b) Following the Closing and prior to January 1, 2008, Purchaser shall not, and shall cause
each of the Company and each of the Company Subsidiaries not to, (i) sell the Equity Interests of
any Company Subsidiary, (ii) sell a substantial portion of the assets of any Company Subsidiary
outside of the ordinary course of business or (iii) make a non-cash distribution of any of the
Equity Interests or assets of any Company Subsidiary, in each case if such sale or distribution
could reasonably be expected to result in an increase in (x) “Subpart F” income under Section 951
of the Code or (y) deemed dividends recognized under Section 1248 of the Code that Seller or any of
its Affiliates must report on any Tax Return; provided, however, that in no event
shall this Section 5.5(b) apply to any sale, transfer or other disposition of the Equity
Interest in Jaguari Geração de Energia S.A. or its Subsidiaries.

5.6 Employee Matters.

(a) For a period of twelve (12) months following the Closing Date, Purchaser and the Company
shall cause the employees of the Company or any Company Subsidiary who remain in the employment of
Purchaser, the Company, 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 Purchaser, the Company or any Company 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 Purchaser or any of its 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 the Company and the
Company Subsidiaries (or predecessor employers to the extent the Company or any Company Subsidiary
provided past service credit) to be treated as service with Purchaser and its 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 Company Plan.

(c) With respect to any welfare benefit plan maintained by Purchaser or its Subsidiaries in
which Continuing Employees are eligible to participate after the Closing, Purchaser shall, and
shall cause the Company and the Company 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 Company 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. 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 the Company
with respect to the transactions contemplated by this Agreement on or prior to the Closing Date
shall be paid by Seller; provided, further, that, notwithstanding any provision to
the contrary in this Agreement or any other agreement contemplated hereby, any and all expenses
incurred or suffered by or on behalf of the Company or any Company Subsidiary or any limitation on,
or diminution of, any Equity Interest held by the Company or any Company Subsidiary in connection
with the matters described on Schedule 5.7, including, without limitation, with respect to
investigating, analyzing or defending such matters (whether incurred prior to or after the Closing)
shall be borne, paid and reimbursed by Purchaser to Seller.

5.8 [Intentionally left blank.]

5.9 Termination of 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 Seller, the Company and Purchaser agrees that, from
time to time before and after the Closing Date, they will execute and deliver, and the Company
shall cause the Company Subsidiaries 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, the Company 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 Transaction.

5.11 [Intentionally left blank.]

5.12 Change of Name.

(a) Notwithstanding anything to the contrary contained herein, within ninety (90) Business
Days after the Closing Date, Purchaser shall have caused each of the Company, CMS Comercializadora
de Energia Ltda. and CMS Energy Equipamentos, Serviços Indústria e Comércio S.A. to be renamed such
names as Purchaser shall identify by written notice to Seller no later than five (5) Business Days
prior to the Closing. 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 Energy Brasil S.A.”, “CMS Comercializadora de Energia Ltda.” or
“CMS Energy Equipamentos, Serviços Indústria e Comércio S.A.” or any similar derivation
thereof in connection with the businesses of the Company or any Company Subsidiary.

(b) The Parties acknowledge that any damage caused to Seller or any of its 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;
Seller and any of its 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
Seller or any of its 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 5.12(b).

5.13 [Intentionally left blank.]

5.14 Resignations of Certain Officers and Directors. Upon the written request of
Purchaser, the Company shall cause the resignations or removals at the Closing Date of the
executive officers and directors set forth on Schedule 5.14 from their position as
executive officer or director of the Company or the Company Subsidiaries set forth opposite the
name of such executive officer or director on Schedule 5.14.

5.15 Tag-Along and Other Shareholder Rights. Seller and the Company shall use
reasonable efforts to cause, and Purchaser shall do all things reasonably requested by Seller and
the Company as promptly as reasonably possible to ensure that, all tag-along and other contractual
rights under the shareholders agreements to which the Company or any Company Subsidiary is a party
and the obligations of Seller, the Company or any of their respective Affiliates in connection with
such tag-along and other contractual rights (including, without limitation, such rights and
obligations under the Shareholders Agreement) with respect to the Equity Interests of the Company
and any Company Subsidiary, as the case may be, (i) to cease to be an obligation of Seller, the
Company and such Affiliates, as the case may be, or (ii) to be terminated, including, without
limitation, by paying any amounts that may be required in connection therewith in accordance with
the following sentence. Purchaser agrees that if any holder of Equity Interests of the Company or
any Company Subsidiary (other than Seller, the Company or any Company Subsidiary) exercises any
tag-along or similar contractual or legal right to sell such Equity Interests, Purchaser will agree
to acquire or otherwise pay for such Equity Interests on the applicable contractual or other legal
terms and otherwise on substantially the same terms as set forth in this Agreement (with
appropriate adjustments to the terms and conditions, including, without limitation, the price to be
paid, as are necessary to reflect applicable contractual or other legal terms of the Equity
Interests to be acquired).

5.16 Releases of Certain Guarantees. Purchaser shall 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 5.16
(“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 to Seller, as
beneficiary, in Seller’s sole and absolute discretion, a performance bond or an irrevocable letter
of credit (which, in each case, shall be in form and substance and issued by a financial
institution satisfactory to Seller) or 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 performance bond, irrevocable letter of credit or
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.

5.17 [Intentionally left blank.]

5.18 Assignment of Certain Obligations. Seller, at its option, shall either (i) on or
prior to the Closing Date, cause the applicable Company Subsidiary to assign the obligations under
the agreements set forth on Schedule 5.18 to Seller or one of its Affiliates, which shall
assume such obligations, or (ii) reimburse or cause one of its Affiliates to reimburse amounts paid
by the Company or such Company Subsidiary with respect to such obligations on or after the Closing
Date if such agreements are not assigned and assumed pursuant to the foregoing clause (i)
of the prior sentence. In the latter case, the reimbursement by Seller to Purchaser shall be made
in immediately available funds to the account designated by Purchaser, for all payments made by
Purchaser during a month and reasonably documented, within ten (10) days from the end of such
month. Failure to comply with the payment in accordance with this Section 5.18, shall
cause the payment amount to be duly adjusted by IGP-M, plus interest of one percent (1%) per month
with respect to Losses paid in reais. Payments to Purchaser under this Section 5.18 shall
be made in reais, calculated at the exchange rate on the date or dates Seller makes payment to
Purchaser.

5.19 Insurance. Prior to the Closing, Seller shall cause the Company and/or each
Company Subsidiary, as applicable, to renew the insurance policies to which they are a party as set
forth on Schedule 3.16 of the Company Disclosure Letter and are scheduled to expire on or
before the Closing Date or, with respect to those policies that are not renewable and as set forth
on Schedule 5.19, Seller shall cause the Company and/or each Company Subsidiary, as
applicable, to obtain reasonably comparable replacement policies.

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, on or prior to the Closing Date, of each of the following conditions
precedent:

(a) 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.

(b) ANEEL Consent. The Consent of ANEEL in respect of the transactions contemplated
hereby shall have been obtained at or prior to the Closing.

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 Company. Each of Seller and the
Company 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 Seller and
the Company 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 Company Material Adverse Effect or a Seller
Material Adverse Effect.

(c) Officer’s Certificate. Purchaser shall have received a certificate from an
authorized executive officer of Seller, dated as of the Closing Date, to the effect that, to the
best of such officer’s 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 to Purchaser pursuant to Section 1.4.

6.3 Conditions to the Obligation of Seller. The obligation of Seller to effect the
Closing shall be subject to the satisfaction or waiver by Seller 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) Officer’s Certificate. Seller shall have received a certificate from an
authorized executive 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.

(d) Termination of Certain Company Obligations. Seller shall have received evidence
from Purchaser (which evidence shall be in form and substance satisfactory to Seller) to effect as
promptly as reasonably possible the purchase of or other satisfaction of all shareholder, tag-along
and related contractual or legal rights of any Person and the obligations of Seller, the Company or
any of their respective Affiliates in connection therewith (including, without limitation, such
rights and obligations under the Shareholders Agreement) with respect to the Equity Interests of
the Company and any Company Subsidiary in accordance with Section 5.15.

(e) 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 5.16; provided that to the extent a
release shall not have been obtained at Closing with any such Guarantee, Seller, as beneficiary,
shall have received (in Seller’s sole and absolute discretion) from Purchaser a performance bond or
an irrevocable letter of credit (which, in each case, shall be in form and substance and issued by
a financial institution satisfactory to Seller) or 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 performance bond, irrevocable letter of credit or
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.

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

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 Company and Seller;

(b) [Intentionally left blank.]

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

(d) by Purchaser, by written notice to Seller, if the Closing Date shall not have occurred on
or before such date that is two hundred ten (210) days following the date hereof (the “Outside
Date”); provided, however, that the right to terminate this Agreement under
this Section 7.1(d) 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 the Outside Date;

(e) by Seller, by written notice to Purchaser, if the Closing Date shall not have occurred on
or before the Outside Date; provided, however, that the right to terminate this
Agreement under this Section 7.1(e) shall not be available to Seller if its failure to
fulfill any of its material obligations under this Agreement shall have caused or resulted in the
failure of the Closing Date to occur on or before such date;

(f) 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 breach of any representation or warranty of Seller or the Company, or a
breach of any covenant or agreement of Seller or the Company hereunder, which breaches would
reasonably be expected to have, individually or in the aggregate, a Company Material Adverse
Effect, and such breach shall not have been remedied within thirty (30) days after receipt by
Seller and the Company 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 Seller shall not have
made a capital contribution to the Company in an amount equal to the expected damages from such
breach, provided that Seller shall have no obligation to make any such capital contribution
pursuant to this Section 7.1(f); or

(g) by Seller, so long as Seller or the Company is 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 breach of any representation or warranty, or a breach of any covenant or
agreement of Purchaser hereunder, which breaches would reasonably be expected to have, individually
or in the aggregate, a Purchaser Material Adverse Effect, and such breach shall not have been
remedied within thirty (30) days after receipt by Purchaser of notice in writing from Seller,
specifying the nature of such breach and requesting that it be remedied or Seller shall not have
received adequate assurance of a cure of such breach within such thirty-day period.

7.2 Effect of Termination. No termination of this Agreement pursuant to Section
7.1 shall be effective until notice thereof is given to the non-terminating Parties specifying
the provision hereof pursuant to which such termination is made. If validly terminated pursuant to
Section 7.1, this Agreement shall become wholly void and of no further force and effect
without liability to any Party or to any Affiliate, or their 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 if this Agreement is terminated by a
Party because of a breach of this Agreement by the other Party then no such termination shall
relieve the other Party from liability for fraud or any willful or intentional breach of any
material provision of this Agreement occurring prior to such termination. If this Agreement is
terminated as provided in Section 7.1, Purchaser shall redeliver to Seller or the Company,
as the case may be, and will cause its agents to redeliver to Seller or the Company, as the case
may be, all documents, workpapers and other materials of Seller, the Company and the Company
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

SURVIVAL; INDEMNIFICATION

8.1 Survival of Representations, Warranties, Covenants and Agreements; Exclusive
Remedy.

(a) The representations and warranties in this Agreement shall survive the Closing and shall
terminate and expire on the date which is the first anniversary of the Closing Date (“Survival
Period Termination Date”) and shall not constitute after such date the basis for any claim for
indemnification under this Agreement, except for:

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

(ii) the representations and warranties of the Seller with respect to the
Company contained in Sections 3.1(a) (Organization and Qualification),
3.1(b) (Authority) and 3.2 (Capitalization), that shall survive
indefinitely;

(iii) the representations and warranties of Purchaser contained in Sections
4.2(a) (Authority) and 4.8 (No Knowledge of Seller or Company Breach),
that shall survive indefinitely; and

(iv) 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), 5.16 (Releases of Certain
Guarantees) and 7.2 (Effect of Termination) and Article VIII
(Indemnification) that shall survive according with their terms.

(b) The Parties agree that, from and after the Closing Date to and including the date on which
such claim or cause of action against any of the Parties is based upon, directly or indirectly, a
breach of any of the representations, warranties, covenants or agreements contained in this
Agreement may be brought only, as expressly provided in, this Article VIII, and the
indemnification provided for in this Article VIII shall be the sole and exclusive remedy
(except in the case of fraud) for Losses related to or in connection with such breach.

8.2 Indemnification of Purchaser by Seller. Subject to the terms and conditions of
this Article VIII, and except when the Loss arises from Purchaser’s negligence or willful
misconduct or the matters contemplated by Section 8.5, from and after the Closing Date the
Seller shall, subject to Section 8.4, indemnify, defend and hold Purchaser and each of
Purchaser’s Affiliates, directors, officers and employees and the successors and assigns of any of
them (including, without limitation, the Company) (collectively, the “Purchaser Group”)
harmless from and against all Losses, arising from any claim resulting from, imposed upon or
incurred by any member of the Purchaser Group, directly or indirectly, by reason of or resulting
from any misrepresentation or inaccuracy of any representation or warranty of the Seller contained
in or made pursuant to Articles II or III of this Agreement and/or any breach by
Seller of any of its covenants, agreements or obligations contained in or made pursuant to this
Agreement. Payments to Purchaser under this Section 8.2 shall be made in reais, calculated
at the exchange rate on the date or dates Seller makes payment or payments to Purchaser.

8.3 Indemnification of Seller by Purchaser. Subject to the terms and conditions of
this Article VIII, and except when the Loss arises from Seller’s negligence or willful
misconduct, from and after the Closing Date Purchaser shall indemnify, defend and hold Seller, its
Affiliates and each of their respective officers, directors, employees, agents and representatives
(the “Seller Group”) harmless from and against all Losses arising from any claim resulting
from, imposed upon or incurred by Seller, directly or indirectly, by reason of or resulting from
any misrepresentation or inaccuracy of any representation or warranty of Purchaser contained in or
made pursuant to Article IV of this Agreement; and/or any breach by Purchaser of any of its
covenants, agreements or obligations of Purchaser contained in or made pursuant to this Agreement
(including, without limitation, the matters contemplated by the proviso of the last sentence of
Section 5.7). Payments to Seller under this Section 8.3 shall be made in U.S.
currency, calculated at the exchange rate on the date or dates Purchaser makes payment or payments
to Seller or any other member of the Seller Group.

8.4 Limitations on Seller’s Indemnification.

(a) Limitations. Claims for indemnification under Section 8.2 shall be made
by Purchaser or by any other Person of the Purchaser Group in accordance with the following limits:

(i) if such claim involves Losses equal to or in excess of US$50,000 (the
“Mini-Basket Amount”); and

(ii) if such Losses with respect to the claims permitted to be made pursuant to
the foregoing clause (i) exceed in the aggregate an amount equal to
US$500,000 (the “Deductible Amount”), and then only to the extent such
Losses exceed the Deductible Amount.

(b) Losses Below the Deductible Amount. Notwithstanding the provisions of this
Section 8.4, if claims made prior to the Survival Period Termination Date do not reach the
Deductible Amount, Seller agrees to pay to Purchaser the aggregate amount of the Losses related to
such claims meeting the Mini-Basket Amount definition and made until the Survival Period
Termination Date.

(c) Indemnification Cap. The aggregate amount of Losses payable by Seller under this
Agreement shall not exceed US$10,000,000 (the “Indemnification Cap”) in the aggregate.

(d) Calculation of Losses. The amount of any Loss subject to indemnification under
Section 8.2 or 8.3 shall be calculated net of any insurance proceeds (net of direct
collection expenses, deductibles and co-pays) or any indemnity, contribution or other similar
payment received by Indemnitee from any third party with respect thereto. To the extent a Loss is
reasonably expected to be covered by such policies, Indemnitee shall use commercially reasonable
efforts to recover under its insurance policies covering such Loss to the same extent as they would
if such Loss were not subject to indemnification hereunder; provided, however, that
nothing in this Section 8.4(d) shall prevent Indemnitee from also seeking to recover such
Loss from Indemnitor while such insurance claim is pending. In the event that an insurance or
other recovery is made by Indemnitee with respect to any Loss for which any such Person has been
indemnified hereunder, then a refund equal to the aggregate amount of the recovery (not to exceed
the amount of the applicable indemnification payment made to it) shall be made promptly to Seller.
Indemnitor shall be subrogated to all rights of Indemnitee and its Affiliates in respect of any
Losses indemnified by Indemnitor.

8.5 Special Indemnification by Seller.

(a) General. Notwithstanding any provision to the contrary in this Agreement or any
other agreement contemplated hereby, from and after the Closing Date, Seller shall indemnify
Purchaser against and hold it harmless from any Losses that result from or arise out of the matters
set forth on Schedule 8.5(a), which shall be excluded from the Seller’s indemnification
obligations and limits under Sections 8.2, 8.4(a), 8.4(b) and
8.4(c).

(b) Special Seller Indemnification Cap. In no event shall the aggregate amount of
Losses payable by Seller under Section 8.5 exceed US$8,800,000 (the “Special Seller
Indemnification Cap”) in the aggregate.

(c) Expiration. With respect to the claim noted in item 4 of Schedule 8.5(a),
the Seller’s obligations under this Section 8.5(c) shall expire on October 27, 2009, unless
a Third Party Claim (as defined in Section 8.7(a)) based on a Promissory Note is made with
respect thereto prior to such date; provided that, if the enforceability of such a
Promissory Note is tolled prior to the making of such Third Party Claim, the expiration date of
Seller’s obligation with respect to such Promissory Note under this Section 8.5(c) shall be
extended for a number of days equal to the number of days during which such enforceability was
tolled. With respect to the other matters noted in Schedule 8.5(a), Seller’s obligations
under this Section 8.5(c) shall expire on the fifteenth anniversary of the Closing Date.

(d) Payments. Payments to Purchaser under this Section 8.5 shall be made in
reais, calculated at the exchange rate on the date or dates Seller makes payment or payments to
Purchaser.

8.6 Mitigation. Each Person entitled to indemnification hereunder shall take
commercially reasonable steps to mitigate all Losses after becoming aware of any event that could
reasonably be expected to give rise to any Loss that is subject to indemnification hereunder.

8.7 General Procedures Applicable to Claims for Indemnification.

(a) Third Party Claim. Any request for indemnification by a party under this
Article VIII shall be valid only if the party making the request (“Indemnitee”)
notifies the other party in writing (“Indemnitor”) as promptly as reasonably practicable by
written notice in accordance with Section 10.1 regarding a claim or demand made by any
Person (other than a Party or Affiliate thereof) (“Third Party Claim”). Notice shall
specify the nature of the Third Party Claim, the applicable provision(s) of this Agreement under
which the Third Party Claim arises and, if possible, the amount of, or an estimated amount of, the
Loss and such other information as Indemnitor may reasonably request. No failure or delay in
giving a Third Party Claim Notice and no failure to include any specific information or any
reference to any provision of this Agreement or other instrument under which the Third Party Claim
arises shall affect the rights of Indemnitee hereunder, except to the extent that such failure or
delay materially adversely affects the ability of Indemnitor to defend, settle or satisfy the Third
Party Claim.

(b) Right of Indemnitor to Assume Defense of Claim; Control of the Defense.
Indemnitor, at its sole cost and expense, shall have the right, upon written notice to Indemnitee
to assume the defense of the Third Party Claim if in such written notice Indemnitor acknowledges in
writing that the Third Party Claim is covered by the indemnification obligations under this
Article VIII and all Losses incurred by Indemnitor shall be included in the calculation of
the maximum amount of indemnification set forth in Section 8.4(c). If Indemnitor assumes
the defense of the Third Party Claim, it shall select reputable counsel reasonably acceptable to
Indemnitee to conduct the defense of the Third Party Claim and shall defend or settle the same. The
contest of the Third Party Claim may be conducted in the name and on behalf of Indemnitor or
Indemnitee, as the case may be appropriate. If Indemnitor assumes the defense of such claim,
Indemnitor shall have full authority, in consultation with Indemnitee, to determine all action to
be taken with respect to the Third Party Claim, except that Indemnitor may consent to a settlement
or compromise of, or the entry of any monetary judgment arising from, the Third Party Claim only
with the prior written consent of Indemnitee provided that, the proposed settlement, compromise or
entry: (A) does not contain an admission of guilt or wrongdoing on the part of Indemnitee, and (B)
does not provide for any remedy or sanction against Indemnitee other than the payment of money that
is required to be and is timely paid by Indemnitor. Should Indemnitor so elect to assume the
defense of such Third Party Claim, Indemnitor will not be liable to Indemnitee for legal expenses
subsequently incurred by Indemnitee in connection with the defense thereof, unless the Third Party
Claim involves potential conflicts of interest between Indemnitee and Indemnitor. Indemnitor will
be liable for the fees and expenses of counsel employed by Indemnitee for any period during which
Indemnitor has not assumed the defense thereof.

(c) Cooperation in Defense. If requested by Indemnitor, Indemnitee shall cooperate
with Indemnitor and its counsel, including permitting reasonable access to books and records, in
contesting any Third Party Claim that Indemnitor elects to contest or, if appropriate, in making
any counterclaim against the Person asserting the Third Party Claim or any cross-complaint against
any Person, but Indemnitor shall reimburse Indemnitee for reasonable out-of-pocket costs incurred
by Indemnitee in so cooperating. With respect to any claims arising out or relating to Section
8.5, Purchaser shall, and shall cause its Affiliates to, provide Seller with such assistance as
may reasonably be requested by Seller in connection with any indemnification or defense with
respect to the matters provided for in Section 8.5, including, without limitation,
providing Seller with such information, documents and records and reasonable access to the services
of and consultations with such personnel of Purchaser or its Affiliates as Seller shall deem
reasonably necessary.

(d) Failure of Indemnitor to Assume Defense. If Indemnitor does not inform Indemnitee
in writing that it will assume the defense of the Third Party Claim in accordance with the terms
hereof within one third of the legal term for defense or five (5) calendar days, whichever is less,
after the receipt of notice thereof, Indemnitee may, but not in any means shall be obliged to, at
Indemnitor’s sole expense, defend against the Third Party Claim in such manner as it may deem
appropriate, and the expense of such defense shall constitute an indemnifiable Loss, which amounts
shall be included in the calculation of the maximum amount of indemnification set forth in
Section 8.4(c). Indemnitor shall have the right, and Indemnitee shall use its reasonable
efforts to afford Indemnitor, to have its counsel attend, observe and participate in all
administrative and judicial meetings, conferences, hearings and other proceedings in connection
with such defense and to be provided with copies of, or reasonable access to, all pleadings,
notices and other filings in connection with such defense.

(e) Dispute Resolution. In the event that Indemnitee should have a claim against
Indemnitor under this Article VIII, Indemnitee shall notify Indemnitor in writing, and in
reasonable detail, of such claim as promptly as reasonably practicable, including (i) the reason
why Indemnitee believes that Indemnitor is or will be obligated to indemnify Indemnitee, (ii) the
Loss amount and (iii) the basis on which Indemnitee has calculated such Loss amount (such notice
shall be referred to as the “Notice of Claim”). If, within twenty (20) Business Days upon
receipt of the Notice of Claim, Indemnitor does not deliver a notice in writing disputing in good
faith such Notice of Claim, then Indemnitor shall be deemed to have accepted such claim and the
Loss amount as final and binding without amendment or modification and conclusive upon the parties.
For ten (10) Business Days after the receipt of the Notice of Claim, Indemnitor and Indemnitee
shall use reasonable efforts to engage in negotiations and discussions relating to any matters
arising out of or concerning the Notice of Claim. If Indemnitor and Indemnitee shall fail to
resolve any such dispute during the 10-Business Day period, then the claim in dispute shall be
promptly submitted by Indemnitor (in any event, no later than five (5) Business Days after the
10-Business Day period) to the Panel in accordance with Section 10.9 of this Agreement.
Indemnitor and Indemnitee shall make readily available to the Panel all relevant books and records,
notices and documents, and all other items reasonably requested by the Panel. Section 10.9
shall govern the resolution of disagreements among the Parties under this Article VIII.

8.8 Payment. Indemnitor shall reimburse Indemnitee for Losses incurred no later than
ten (10) days after the final resolution of a Notice of Claim in accordance with Section
8.7(e) or, with respect to Losses in relation to Third Party Claims (other than on-going
out-of-pocket costs and expenses with respect thereto), ten (10) days after Indemnitor receives
written notice from Indemnitee reasonably describing the Loss being claimed (“Loss Payment
Date”). Failure to comply with the Loss Payment Date shall cause the Loss amount to be duly
adjusted by IGP-M, plus interest of one percent (1%) per month with respect to Losses paid in
reais.

8.9 Energy Guarantee.

(a) For value received, Energy hereby fully, unconditionally and irrevocably guarantees from
and after the Closing Date (the “Energy Guarantee”) to Purchaser the prompt and punctual
payment of any amount Seller 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
Article VIII. Energy’s guarantee obligations include the principal, interest, fines, fees,
costs and other amounts that may be due and payable by Seller under this Agreement.

(b) The Energy Guarantee is a first demand guarantee and shall constitute an autonomous and
independent obligation of Energy not being ancillary to the obligations of Seller under this
Agreement. Energy hereby agrees to cause any such payment to be made as if such payment were made
by Seller. Energy hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of a merger or bankruptcy of Seller, any right to require a proceeding first
against Seller, protest or notice with respect to any amount payable by Seller under this Agreement
and all demands whatsoever, and covenants that the Energy Guarantee will not be discharged except
by (i) termination of this Agreement according to its terms, (ii) termination or expiration of
Seller’s indemnification obligations under this Agreement or (iii) payment in full of all amounts
due and payable under this Agreement.

(c) Energy expressly waives the benefits set forth in Articles 366, 827, 835, 837, 838 and 839
of the Brazilian Civil Code and Article 595 of the Brazilian Code of Civil Procedure.

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

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

(f) All notices under this Article VIII from Purchaser or any member of the Purchaser
Group shall be given to Seller and Energy concurrently.

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
	Affiliate Contracts	 	Section 3.15
	Agreement	 	Preamble
	Arbitration Expenses	 	Section 10.9
	Balance Sheet	 	Section 3.3(a)
	Breach Notice	 	Section 7.1(f)
	Closing	 	Section 1.3
	Closing Date	 	Section 1.3
	Common Shares

	 	Recitals
	
 
	 	 
	 
	 	 
	Company

	 	Preamble
	
 
	 	 
	 
	 	 
	Company Disclosure Letter

	 	Article III
	
 
	 	 
	 
	 	 
	Company Financial Statements

	 	Section 3.3(a)
	
 
	 	 
	 
	 	 
	Company Material Contracts

	 	Section 3.11(a)
	
 
	 	 
	 
	 	 
	Company Permits

	 	Section 3.9(a)
	
 
	 	 
	 
	 	 
	Company Plans

	 	Section 3.8(a)
	
 
	 	 
	 
	 	 
	Company Required Consents

	 	Section 3.1(c)
	
 
	 	 
	 
	 	 
	Company Required Statutory Approvals

	 	Section 3.1(d)
	
 
	 	 
	 
	 	 
	Continuing Employees

	 	Section 5.6(a)
	
 
	 	 
	 
	 	 
	Contracting Party

	 	Section 3.11(a)
	
 
	 	 
	 
	 	 
	Deductible Amount

	 	Section 8.4(a)(ii)
	
 
	 	 
	 
	 	 
	Director Shareholder

	 	Recitals
	
 
	 	 
	 
	 	 
	Dispute

	 	Section 10.9
	
 
	 	 
	 
	 	 
	Energy

	 	Preamble
	
 
	 	 
	 
	 	 
	Energy Guarantee

	 	Section 8.9
	
 
	 	 
	 
	 	 
	Guarantees

	 	Section 5.16
	
 
	 	 
	 
	 	 
	ICC

	 	Section 10.9
	
 
	 	 
	 
	 	 
	Indemnification Cap

	 	Section 8.4(c)
	
 
	 	 
	 
	 	 
	Indemnitee

	 	Section 8.7(a)
	
 
	 	 
	 
	 	 
	Indemnitor

	 	Section 8.7(a)
	
 
	 	 
	 
	 	 
	Intellectual Property

	 	Section 3.14
	
 
	 	 
	 
	 	 
	Leased Real Property

	 	Section 3.10(a)
	
 
	 	 
	 
	 	 
	Loss Payment Date

	 	Section 8.8
	
 
	 	 
	 
	 	 
	Outside Date

	 	Section 7.1(d)
	
 
	 	 
	 
	 	 
	Owned Real Property

	 	Section 3.10(a)
	
 
	 	 
	 
	 	 
	Mini-Basket Amount

	 	Section 8.4(a)(i)
	
 
	 	 
	 
	 	 
	Notice of Claim

	 	Section 8.7(e)
	
 
	 	 
	 
	 	 
	Panel

	 	Section 10.9
	
 
	 	 
	 
	 	 
	Party

	 	Preamble
	
 
	 	 
	 
	 	 
	Preferred Shares

	 	Recitals
	
 
	 	 
	 
	 	 
	Purchase Price

	 	Section 1.2
	
 
	 	 
	 
	 	 
	Purchaser

	 	Preamble
	
 
	 	 
	 
	 	 
	Purchaser Disclosure Letter

	 	Article IV
	
 
	 	 
	 
	 	 
	Purchaser Group

	 	Section 8.2
	
 
	 	 
	 
	 	 
	Purchaser Required Consents

	 	Section 4.2(b)
	
 
	 	 
	 
	 	 
	Purchaser Required Statutory Approvals

	 	Section 4.2(c)
	
 
	 	 
	 
	 	 
	Rules

	 	Section 10.9
	
 
	 	 
	 
	 	 
	Seller

	 	Preamble
	
 
	 	 
	 
	 	 
	Seller Disclosure Letter

	 	Article II
	
 
	 	 
	 
	 	 
	Seller Group

	 	Section 8.3
	
 
	 	 
	 
	 	 
	Seller Required Statutory Approvals

	 	Section 2.3(c)
	
 
	 	 
	 
	 	 
	Shares

	 	Recitals
	
 
	 	 
	 
	 	 
	Special Seller Indemnification Cap

	 	Section 8.5(b)
	
 
	 	 
	 
	 	 
	Survival Period Termination Date

	 	Section 8.1(a)
	
 
	 	 
	 
	 	 
	Third Party Claim

	 	Section 8.7(a)
	
 
	 	 
	 
	 	 
	Transaction

	 	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.

“ANEEL” means Agência Nacional de Energia Elétrica, the Brazilian Electricity
Regulatory Agency.

“Brazilian GAAP” means the Princípios Fundamentais de Contabilidade, the
Brazilian Basic Principles of Accounting, as applied by the CVM and the CFC, in effect from
time to time, consistently applied.

“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 and
São Paulo, Brazil.

“CFC” means Conselho Federal de Contabilidade, the Brazilian accounting
authority.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company Material Adverse Effect” means any material adverse effect on the
business, properties, financial condition or results of operations of the Company and the
Company Subsidiaries taken as a whole; provided, however, that the term
“Company 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 Brazil or any
state or municipality in which the Company operates, (iii) changes in accounting standards,
principles or interpretations, (iv) events or changes that are consequences of hostility,
terrorist activity, acts of war or acts of public enemies, (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.

“Company Subsidiary” means each of the Persons set forth on Schedule
3.2(b).

“Confidentiality Agreement” means the Confidentiality Agreement, dated March
22, 2007, between CPFL Energia S.A. 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.

“CVM” means the Comissão de Valores Mobiliários, which is the functional
equivalent in Brazil of the United States Securities and Exchange Commission.

“Depositary Agent” means Banco Itaú S.A., the financial institution acting as
the depositary of the Shares.

“Environmental Law” means any Brazilian 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 the Company or any Company
Subsidiary for borrowed money.

“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.

“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.

“IGP-M” means Índice Geral de Preços ao Mercado, the general inflation index
calculated by Fundação Getúlio Vargas and used to adjust electricity rates in Brazil.

“Knowledge” when used with respect to: (i) the Company, means the actual
knowledge of any fact, circumstance or condition of those officers of the Company set forth
on Schedule 9.2(a) of the Company Disclosure Letter; (ii) Seller, means the actual
knowledge of any fact, circumstance or condition of those officers and employees of Seller
and its Affiliates set forth on Schedule 9.2(b) of the Seller Disclosure Letter; and
(iii) Purchaser, means the actual knowledge of any fact, circumstance or condition of those
officers of Purchaser and its Affiliates, as the case may be, set forth on Schedule
9.2(c) of the Purchaser Disclosure Letter.

“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.

“Losses” means all losses and damages amounts, liabilities, costs, expenses,
awards, judgments, whether or not resulting from Third Party Claim (including reasonable
attorney’s and accountants fees and expenses) based, where applicable, upon a final and/or
non-appealable decision or other final resolution by settlement or otherwise of a demand,
claim, suit, action.

“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 the Company.

“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 sociedade anônima de capital aberto, its
estatuto social; 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
the Company and each Company Subsidiary or (ii) any shareholders or similar agreement to
which of the Company or any Company Subsidiary is a party or by which it is bound and (f)
any Lien in connection with or permitted by a Financing Facility.

“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 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.

“Seller Material Adverse Effect” means, with respect to Seller, any material
adverse effect on the ability of Seller to consummate the transactions contemplated by this
Agreement or perform its obligations hereunder.

“Shareholders Agreement” dated April 20, 2005 between Companhia CMS
Distribuidora Ltda. and Eduardo Dias Roxo Nobre.

“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) references to Sections, Schedules, Seller Disclosure Letter, Company Disclosure Letter,
Purchaser Disclosure Letter, Exhibits and Parties are references to sections or sub-sections,
schedules in the Seller Disclosure Letter, the Company Disclosure Letter and Purchaser Disclosure
Letter, as the case may be, the Seller Disclosure Letter, the Company Disclosure Letter, 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
Brazilian GAAP;

(g) references to “R$” refer to Brazilian reais; and

(h) 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,

CPFL Energia S.A.

Rodovia Campinas Mogi-Mirim

13088-900 Campinas SP, Brazil

Fax: (55-19) 3756-8111

Attention: Sergio de Britto Pereira Figueira

with a copy to:

Tozzini Freire Teixeira e Silva Advogados

R. Borges Lagoa, 1328

04038-904 São Paulo SP, Brazil

Fax: (55-11) 5086-5111

Attention: José Luis de Salles Freire

Mauro Eduardo Guizeline

(b) if to Seller,

CMS Electric & Gas, L.L.C.

c/o CMS Energy Corporation

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-1671

Attention: General Counsel

with a copy to Seller’s counsel:

Demarest e Almeida Advogados

Av. Pedroso de Moraes, 1201

05419-001 São Paulo SP, Brazil

Fax: (55-11) 2245-1700

Attention: Rogerio Lessa

with a copy to Seller’s U.S. counsel:

Sidley Austin LLP

787 Seventh Avenue

New York, NY 10019

Fax: (212) 839-5599

Attention: Lori Anne Czepiel

Jack I. Kantrowitz

(c) if to the Company,

CMS Energy Brasil S.A.

Rua Vigato, 1620

13820-000 Jaguaríúna SP, Brazil,

Fax: (55-19) 3837-4564

Attention: General Counsel

(d) if to Energy,

CMS Energy Corporation

One Energy Plaza

Jackson, MI 49201

Fax: (517) 788-1671

Attention: General Counsel

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

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. All notices under this Agreement for Purchaser or any member of the Purchaser
Group shall be given to Seller and to Energy concurrently. For the purposes of this Section
10.1, notice to the Company shall not constitute notice to Seller and/or Energy, and vice
versa.

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

10.3 Assignment; Successors; Third-Party Beneficiaries.

(a) This Agreement is not assignable by any Party or Energy without the prior written consent
of all of the other Parties and Energy, as the case may be, 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 and obligations hereunder to one or more of its Affiliates
(upon prior written notice to Seller), provided that Purchaser remains irrevocably and
unconditionally liable for all such rights and obligations; provided, however, that
no such assignment shall be permitted if such assignment shall impair, delay or otherwise adversely
affect the consummation of the Transaction 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 and Energy, whether or not
so expressed.

(c) This Agreement is intended for the benefit of the Parties and Energy and does not grant
any rights to any third parties.

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 Parties and Energy, as the case may be, 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 any of the Parties or Energy, as the case may be, granting such waiver in any
other respect or at any other time. The waiver by any of the Parties or Energy, as the case may
be, 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. The
Parties and Energy shall amend this Agreement to make a wholly owned direct subsidiary of Purchaser
a party hereto, provided that Purchaser agrees to cause any such Affiliate to enter into an
amendment to this Agreement in accordance herewith pursuant to which Purchaser and such Affiliate
shall provide that each of the respective representations, warranties, covenants and agreements
made in this Agreement by Purchaser shall constitute the joint and several representations,
warranties, covenants and agreements of each of Purchaser and such Affiliate; provided,
further, that no amendment shall be permitted if such amendment shall impair, delay or
otherwise adversely affect the consummation of the Transaction and the other transactions
contemplated hereby and, in any event, after the tenth Business Day following the date hereof.

10.5 Entire Agreement.

(a) This Agreement (including the Exhibits and the Seller Disclosure Letter, Company
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 and Energy with respect to such subject matters. Each of Party and Energy 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 any Party or Energy 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,
each of the Parties and Energy 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 Brazil.

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 (or Energy, to
the extent applicable for the limited purposes relating to Section 8.9), 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 each of the Parties and Energy. 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 Energy, to the extent
applicable for the limited purposes relating to Section 8.9), 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. Noe of the Parties nor Energy, shall, under any
circumstance, have any liability to any of the other parties, for any special, indirect,
consequential or punitive damages claimed by any 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. Each of the Parties and Energy 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 Seller 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]

4

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

	 	 	 	 	 
	CMS ELECTRIC & GAS, L.L.C.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Joseph P. Tomasik
	 	

	 	 	 

	
 
	 	Name:

Title:
	 	Joseph P. Tomasik

Vice President

ACKNOWLEDGMENT

	 	 	 	 	 
	State of New York
	 	 	)	 
	 
	 	 	)	 
	County of New York
	 	 	)	 

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly appointed Notary
Public in and for the County of New York, State of New York, United States of America, appeared
Joseph P. Tomasik, to me known and known to me to be the Vice President of CMS Electric & Gas,
L.L.C., and the person who executed the foregoing instrument personally acknowledged to me that in
this capacity and with authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

	 	 	 	 	 
	CMS ENERGY BRASIL S.A.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Joseph P. Tomasik
	 	

	 	 	 

	By:

	 	Name:

Title:

/s/ Rajesh Swaminathan
	 	Joseph P. Tomasik

Chairman

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Rajesh Swaminathan

ACKNOWLEDGMENT

	 	 	 	 	 
	State of New York
	 	 	)	 
	 
	 	 	)	 
	County of New York
	 	 	)	 

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly appointed Notary
Public in and for the County of New York, State of New York, United States of America, appeared
Joseph P. Tomasik, to me known and known to me to be the Chairman of CMS Energy Brasil S.A., and
the person who executed the foregoing instrument personally acknowledged to me that in this
capacity and with authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

	 	 	 	 	 
	CPFL ENERGIA S.A.
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Reni Antonio da Silva
	 	

	 	 	 

	
 
	 	Name:

Title:
	 	Reni Antonio da Silva

Strategy and Regulation V.P.
	 
	 	 	 	 
	By:	 	/s/ Jose Antonio de Almeida Filippo

	 	 	 

	
 
	 	Name:

Title:
	 	José Antonio de Almeida Filippo

CFO

ACKNOWLEDGMENT

	 	 	 	 	 
	State of New York
	 	 	)	 
	 
	 	 	)	 
	County of New York
	 	 	)	 

On this 12th day of April, 2007, before me, Adriel I. Cepeda Derieux, a duly appointed Notary
Public in and for the County of New York, State of New York, United States of America, appeared
Reni Antonio da Silva and José Antonio de Almeida Filippo, to me known and known to me to be the
Strategy and Regulation V.P. and CFO, respectively, of CPFL Energia S.A., and each of the persons
who executed the foregoing instrument personally acknowledged to me that in this capacity and with
authority to issue this document he executed the same.

/s/ Adriel I. Cepeda Derieux

Adriel I. Cepeda Derieux

Notary Public, New York County

New York, U.S.A.

My Commission expires August 29, 2009

5

Acknowledged solely for the limited purposes

of Section 8.9 as of the 12th day of April, 2007:

CMS ENERGY CORPORATION

	 	 	 
	By: /s/ David W. Joos

	 	

	 

	Name:

Title:

	 	David W. Joos

President and Chief Executive

Officer

ACKNOWLEDGMENT

On this 12th day of April, 2007, before me, Joyce H. Norkey, a duly appointed Notary Public in
and for the County of Jackson, State of Michigan, United States of America, appears David W. Joos,
to me known and known to me to be the President and Chief Executive Officer of CMS Energy
Corporation, and the person who executed the foregoing instrument personally acknowledged to me
that in this capacity and with authority to issue this document he executed the same.

/s/ Joyce H. Norkey

Joyce H. Norkey

Notary Public, Jackson County

Michigan, U.S.A.

My Commission expires September 7, 2012

	 	 	 
	 
	 	 
	 
	 	 
	Witnessed by:

	 	

	Name:

	 	Name:
	Title:

	 	Title:
	Date:

	 	Date:
	 
	 	 

6EX-10.1

EXHIBIT 10.1

MAX USA HOLDINGS LTD.

$100,000,000

7.20% Senior Notes due 2017

Fully and unconditionally guaranteed by

MAX RE CAPITAL LTD.

Purchase Agreement

April 11, 2007

	 	 	 
	Citigroup Global Markets Inc.

	 	

	 
	 	 
	As Representative of the Initial Purchasers

	 
	 	 
	c/o

	 	Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

Max USA Holdings Ltd., a corporation organized under the laws of the State of Delaware (the
“Company”), proposes to issue and sell to the several parties named in Schedule I hereto (the
“Initial Purchasers”), for whom you (the “Representative”) are acting as representative,
$100,000,000 principal amount of its 7.20% Senior Notes due 2017 (the “Notes”). The Securities are
to be issued under an indenture (the “Indenture”), to be dated as of the April 15, 2007, between
the Company, Max Re Capital Ltd., a Bermuda company (the “Guarantor”), and The Bank of New York, as
trustee (the “Trustee”).

Pursuant to the Indenture, the Guarantor has agreed to fully, irrevocably and unconditionally
guarantee (the “Guarantees” and, together with the Notes, the “Securities”), to each holder of the
Notes and to the Trustee, (1) the full and punctual payment of principal of, premium, if any,
interest and any Additional Amounts (as defined in the Indenture) in respect thereof on the Notes
when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary
obligations of the Company under the Indenture and the Securities and (2) the full and punctual
performance within applicable grace periods of all other obligations of the Company under the
Indenture and the Notes.

To the extent there are no additional parties listed on Schedule I other than you, the term
Representative as used herein shall mean you as the Initial Purchaser, and the terms Representative
and Initial Purchaser shall mean either the singular or plural as the context requires. The use of
the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain
terms used herein are defined in Section 20 hereof.

The sale of the Securities to the Initial Purchasers will be made without registration of the
Securities under the Act in reliance upon exemptions from the registration requirements of the Act.

In connection with the sale of the Securities, the Company has prepared a preliminary offering
memorandum, dated April 10, 2007 (as amended or supplemented at the date thereof, including any and
all exhibits thereto and any information incorporated by reference therein, the “Preliminary
Memorandum”), and a final offering memorandum, dated April 11, 2007 (as amended or supplemented at
the Execution Time, including any and all exhibits thereto and any information incorporated by
reference therein, the “Final Memorandum”). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the Securities. The Company
hereby confirms that it has authorized the use of the Disclosure Package, the Preliminary
Memorandum and the Final Memorandum, and any amendment or supplement thereto, in connection with
the offer and sale of the Securities by the Initial Purchasers. Unless stated to the contrary, any
references herein to the terms “amend,” “amendment” or “supplement” with respect to the Disclosure
Package, the Preliminary Memorandum and the Final Memorandum shall be deemed to refer to and
include any information filed under the Exchange Act subsequent to the Execution Time that is
incorporated by reference therein.

1. Representations and Warranties. Each of the Company and the Guarantor, jointly and
severally, hereby represents, warrants to, and agrees with each Initial Purchaser as set forth
below in this Section 1.

(a) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The Final Memorandum on its date
did not and on the Closing Date will not (and any amendment or supplement thereto, at the date
thereof, at the Closing Date and one any settlement date (if other than the Closing Date) will not
) contain any untrue statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and the Guarantor make no representation or
warranty as to the information contained in or omitted from the Preliminary Memorandum or the Final
Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company or the Guarantor by or on behalf of any Initial
Purchaser through the Representative specifically for inclusion therein, it being understood and
agreed that the only such information furnished by or on behalf of any Initial Purchaser consists
of the information described as such in Section 8(b) hereof.

(b) The Disclosure Package, as of the Execution Time, does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; provided,
however, that each of the Company and the Guarantor makes no representation or warranty as to the
information contained in or omitted from the Preliminary Memorandum or the Final Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with information furnished in
writing to the Company or the Guarantor by or on behalf of any Initial Purchaser through the
Representative specifically for inclusion therein, it being understood and agreed that the only
such information furnished by or on behalf of any Initial Purchaser consists of the information
described as such in Section 8(b) hereof.

(c) The documents incorporated by reference in the Disclosure Package and the Final
Memorandum, and any amendment or supplement thereto, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and any further documents so filed and
incorporated by reference in the Disclosure Package and/or the Final Memorandum, and/or any further
amendment or supplement thereto, when such documents become effective or are filed with the
Commission, as the case may be, will comply in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.

(d) None of the Company, the Guarantor or their respective Affiliates, or any person acting on
its or their behalf has, directly or indirectly, made offers or sales of any security, or solicited
offers to buy, any security under circumstances that would require the registration of the
Securities under the Act.

(e) None of the Company, the Guarantor or their respective Affiliates, or any person acting on
its or their behalf has engaged in any form of general solicitation or general advertising (within
the meaning of Regulation D) in connection with any offer or sale of the Securities.

(f) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Act.

(g) Subject to the accuracy of the Initial Purchasers’ representations and warranties set
forth in Section 4 hereof and compliance by the Initial Purchasers with the agreements set forth in
Section 4 hereof, no registration under the Act of the Securities, and no qualification of an
indenture under the Trust Indenture Act, are required for the sale and delivery of the Securities
by the Company and the Guarantor to the Initial Purchasers or the offer and sale by the Initial
Purchasers of the Securities in the manner contemplated herein, in the Disclosure Package and in
the Final Memorandum, and any amendment or supplement thereto.

(h) Neither the Company nor the Guarantor is, and after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof as described in the Disclosure
Package and the Final Memorandum, and any amendment or supplement thereto, will be required to
register as an “investment company” as defined in the Investment Company Act.

(i) Neither the Company nor the Guarantor has paid or agreed to pay to any person any
compensation for soliciting another to purchase the Securities (except as contemplated in this
Agreement).

(j) Neither the Company nor the Guarantor has taken or will take, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or result, under the Exchange
Act or otherwise, in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.

(k) The Guarantor has been duly formed, is validly existing as a company in good standing
under the laws of Bermuda, has the corporate power and authority to own or lease its property and
to conduct its business as described in the Disclosure Package and the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not, singly or in the
aggregate, have a material adverse effect on the condition (financial or otherwise), prospects,
earnings, business, operations or properties of the Guarantor and its subsidiaries (including the
Company), taken as a whole, whether or not arising from transactions in the ordinary course of
business (a “Material Adverse Effect”).

(l) The Company has been duly formed and is validly existing and in good standing under the
laws of the State of Delaware, has the corporate power and authority to own its property and to
conduct its business as described in the Disclosure Package and the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not, singly or in the
aggregate, have a Material Adverse Effect; all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-assessable and are owned
by the Guarantor directly or indirectly, free and clear of all liens, encumbrances, equities or
claims, other than certain restrictive covenants contained in that certain Credit Agreement dated
as of June 1, 2005, as amended or modified from time to time, by and among the Company, the
Guarantor, Max Re Ltd., various financial institutions and Bank of America, N.A., as fronting bank,
letter of credit administrator and administrative agent.

(m) Each of the Guarantor’s subsidiaries has been duly formed and is validly existing and in
good standing under the laws of the jurisdiction of its formation. Each of such subsidiaries of the
Company has the corporate power and authority to own its property and to conduct its business as
described in the Disclosure Package and the Final Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not, singly or in the aggregate, have a Material
Adverse Effect; all of the issued shares of capital stock of each such subsidiary of the Guarantor
have been duly and validly authorized and issued, except as set forth in the Disclosure Package and
the Final Memorandum, are fully paid and non-assessable and are owned by the Guarantor directly or
indirectly, free and clear of all liens, encumbrances, equities or claims; except that the shares
of Max Re Diversified Strategies Ltd. are pledged to secure certain obligations of the Guarantor
under a total return swap and certain reinsurance obligations, as disclosed in the Disclosure
Package and the Final Memorandum; and the shares representing a 7.5% interest in Grand Central Re
Limited are owned by the Guarantor through Max Re Ltd., free and clear of all liens, encumbrances,
equities or claims. Except as described in the Disclosure Package and the Final Memorandum, there
are no limits, whether direct or indirect, under any provision of applicable law, under the
memorandum of association or bye-laws or other organizational document of any subsidiary of the
Guarantor (including the Company) under any agreement or other instrument binding upon the Company
or any of its subsidiaries or any of their properties, or under any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Guarantor or any of its
subsidiaries, on the ability of any subsidiary of the Guarantor (i) to pay any dividends to the
Guarantor, (ii) to make any other distribution on such subsidiary’s capital stock, (iii) to repay
to the Guarantor any loans or advances to such subsidiary from the Guarantor or (iv) to transfer
any of such subsidiary’s property or assets to the Guarantor or any other subsidiary of the
Guarantor.

(n) All of the outstanding common shares of the Guarantor have been duly authorized and are
validly issued, fully paid (except to the extent that shares of Common Stock purchased by certain
executives of the Guarantor that were financed by Guarantor loans could be deemed not to be fully
paid) and non-assessable.

(o) The statements in the Disclosure Package and the Final Memorandum, and any amendment or
supplement thereto, under the headings “Description of the Notes and the Guarantee,” and “Certain
Material U.S. Federal Income Tax Considerations,” insofar as such statements purport to summarize
certain provisions of the Securities, the Indenture, or the statutes and regulations referred to
therein, fairly summarize the matters therein described in all material respects.

(p) This Agreement has been duly authorized, executed and delivered by the Company and the
Guarantor.

(q) The Indenture has been duly authorized by the Company and the Guarantor and, assuming due
authorization, execution and delivery of the Indenture by the Trustee, when executed and delivered
by the Company and the Guarantor, will constitute a valid and binding agreement enforceable against
the Company and the Guarantor, as the case may be, in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or other similar laws affecting
the enforcement of creditors’ rights generally or by general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at law).

(r) The Notes have been duly authorized by the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the Initial
Purchasers (assuming the due authorization, execution and delivery of the Indenture by the
Trustee), will have been duly executed and delivered by the Company and will constitute the legal,
valid and binding obligations of the Company entitled to the benefits of the Indenture and will be
enforceable against the Company in accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws affecting the enforcement
of creditors’ rights generally or by general equitable principles (regardless of whether
enforcement is considered in a proceeding in equity or at law). The Notes will be in the form
contemplated by the Indenture.

(s) The Guarantees have been duly authorized by the Guarantor and, when the Indenture has been
duly executed and delivered by the Guarantor, the Company and the Trustee (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and when the Notes have been
duly executed and authenticated in accordance with the provisions of the Indenture and delivered to
and paid for by the Initial Purchasers, will have been duly executed and delivered by the Guarantor
and will constitute the legal, valid and binding obligations of the Guarantor enforceable against
the Guarantor in accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally or by general equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law). The Guarantees will be in the form contemplated by the Indenture.

(t) No consent, approval, authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions contemplated herein or in the
Indenture, except such as may be required under the blue sky laws of any jurisdiction in which the
Securities are offered and sold.

(u) None of the execution and delivery of this Agreement, the Indenture, the issuance and sale
of the Securities, or the consummation of any other of the transactions herein or therein
contemplated, or the fulfillment of the terms hereof or thereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of
the Guarantor or any of its subsidiaries (including the Company) pursuant to, (i) the charter or
by-laws or comparable constituting documents of the Guarantor, the Company or any of their
respective subsidiaries; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to
which the Guarantor or any of its subsidiaries (including the Company) is a party or bound or to
which its or their property is subject; or (iii) any statute, law, rule, regulation, judgment,
order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Guarantor or any of its subsidiaries (including the
Company) or any of its or their properties except, in the case of clauses (ii) and (iii) above, for
any such breach, violation or imposition as would not individually or in the aggregate, have (A) a
Material Adverse Effect or (B) a material adverse effect upon the consummation of the transactions
contemplated hereby.

(v) The consolidated historical financial statements and schedules of the Guarantor and its
consolidated subsidiaries (including the Company) included in the Disclosure Package and the Final
Memorandum present fairly in all material respects the financial condition, results of operations
and cash flows of the Guarantor and its subsidiaries (including the Company) as of the dates and
for the periods indicated, comply as to form with the applicable accounting requirements of the
Securities Act and the Exchange Act and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). Such financial statements have been audited by KPMG. The selected
financial data set forth under the caption “Summary – Summary Financial Data” and “Selected
Financial Data” in the Disclosure Package and the Final Memorandum fairly present, on the basis
stated in the Disclosure Package and the Final Memorandum the information included therein. All
statutory financial statements of Max Re Ltd., from which certain ratios and other statistical data
contained in the Disclosure Package and the Final Memorandum have been derived, have for each
relevant period been prepared in conformity with the accounting practices required or permitted by
applicable Insurance Laws (as defined below) of Bermuda and present fairly the information
purported to be shown. Such accounting practices have been applied on a consistent basis throughout
the periods involved. Statutory financial statements of Max Re Ltd. are not required to be prepared
pursuant to the insurance laws of any jurisdiction other than Bermuda.

(w) KPMG, which has certified certain financial statements of the Guarantor and its
consolidated subsidiaries and delivered their report with respect to the audited consolidated
financial statements incorporated by reference in the Disclosure Package and the Final Memorandum,
is an independent registered public accounting firm with respect to the Company within the meaning
of the Securities Act and the Exchange Act and the applicable published rules and regulations
thereunder.

(x) There are no legal or governmental proceedings pending or, to the Guarantor’s knowledge,
threatened to which the Guarantor, the Company or any of their respective subsidiaries is a party
or to which any of the properties of the Guarantor, the Company or any of their respective
subsidiaries is subject that (i) could reasonably be expected to have a material adverse effect on
the performance of this Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a Material Adverse Effect, except as set forth
in or contemplated in the Disclosure Package and the Final Memorandum (exclusive of any amendment
or supplement thereto).

(y) There has not occurred any material adverse change, or any development involving a
prospective material adverse change, in the condition, financial or otherwise, or in the prospects,
earnings, business, operations or properties of the Guarantor and its subsidiaries (including the
Company) taken as a whole, whether or not arising from transactions in the ordinary course of
business, from that set forth in the Disclosure Package and the Final Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement). Subsequent to the
respective dates as of which information is given in the Disclosure Package and the Final
Memorandum and except as described in the Disclosure Package and the Final Memorandum: (i) the
Guarantor and its subsidiaries (including the Company) have not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not in the ordinary
course of business; (ii) the Guarantor has not purchased any of its outstanding capital stock
(other than in connection with its long-term incentive plan and pursuant to its previously
disclosed stock repurchase plan), nor declared, paid or otherwise made any dividend or distribution
of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has
not been any material change in the capital stock, short-term debt or long-term debt of the
Guarantor and its subsidiaries (including the Company)..

(z) The Guarantor and its subsidiaries (including the Company) (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have a Material Adverse
Effect.

(aa) There are no costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.

(bb) The Guarantor and each of its subsidiaries (including the Company) maintains (x)
effective internal control over financial reporting as defined in Rule 15d-15 under the Exchange
Act and (y) a system of internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.

(cc) Except as disclosed in the Disclosure Package and the Final Memorandum or in any document
incorporated by reference therein, since the end of the Guarantor’s most recent audited fiscal
year, there has been (i) no material weakness in the Guarantor’s internal control over financial
reporting (whether or not remediated) and (ii) no change in the Guarantor’s internal control over
financial reporting that has materially affected, or is reasonably likely to materially affect, the
Guarantor’s internal control over financial reporting.

(dd) The Guarantor and its subsidiaries (including the Company) do not own any real property
and have good and marketable title to all personal property owned by them that is material to the
business of the Guarantor and its subsidiaries (including the Company) in each case free and clear
of all liens, encumbrances and defects except such as are described in the Disclosure Package and
the Final Memorandum or such as do not interfere with the use made and proposed to be made of such
property by the Guarantor and its subsidiaries (including the Company); and any real property and
buildings held under lease by the Guarantor and its subsidiaries (including the Company) are held
by them under valid, subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and buildings by the
Guarantor and its subsidiaries (including the Company) in each case except as described in the
Disclosure Package and the Final Memorandum.

(ee) The Guarantor and its subsidiaries (including the Company) own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and trade names
currently employed by them in connection with the business now operated by them, and neither the
Guarantor nor any of its subsidiaries (including the Company) has received any notice of
infringement of or conflict with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect.

(ff) No material labor dispute with the employees of the Guarantor or any of its subsidiaries
(including the Company) exists, except as described in the Disclosure Package and the Final
Memorandum, or, to the knowledge of the Guarantor, is imminent; and the Guarantor is not aware of
any existing, threatened or imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could, singly or in the aggregate, have a Material
Adverse Effect.

(gg) The Guarantor and its subsidiaries (including the Company) are insured by the insurers of
recognized financial responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged; and neither the Guarantor nor
any of its subsidiaries (including the Company) has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that would
not, singly or in the aggregate, have a Material Adverse Effect, except as described in the
Disclosure Package and the Final Memorandum.

(hh) Max Re Ltd. is duly registered by the Bermuda Monetary Authority as a long-term insurer
and as a Class 4 insurer under the Bermuda Insurance Act 1978, as amended, and any applicable rules
and regulations thereunder. Neither the Guarantor nor Max Re Ltd. is required to be licensed or
admitted as an insurer or an insurance holding company, as applicable, in, or otherwise to comply
with the insurance laws (including laws that relate to companies that control insurance companies)
and the rules, regulations and interpretations of the insurance regulatory authorities thereunder
(collectively, “Insurance Laws”) of, any jurisdiction other than Bermuda in order to conduct their
respective businesses as described in the Disclosure Package and the Final Memorandum. Each of Max
Re Europe Limited and Max Insurance Europe Limited are duly registered, licensed or admitted as an
insurer under the Insurance Laws of Ireland and the European Union (the “EU”). Max Insurance
Europe Limited has established a branch in Switzerland which is duly registered, licensed or
admitted under the Swiss Insurance Supervision Law and the ordinances, guidelines and directives
promulgated thereunder. Max Re Europe Limited is not required to be licensed or admitted as an
insurer in, or otherwise to comply with, the Insurance Laws of, any jurisdiction other than Ireland
and the EU in order to conduct its business as described in the Disclosure Package and the Final
Memorandum. Max Insurance Europe Limited is not required to be licensed or admitted as an insurer
in, or otherwise to comply with, the Insurance Laws of, any jurisdiction other than Ireland, the EU
and Switzerland in order to conduct its business as described in the Disclosure Package and the
Final Memorandum. Max Specialty is duly registered, licensed or admitted under applicable
Insurance Laws in each jurisdiction where it is required to be so registered, licensed or admitted
in order to conduct its business as described in the Disclosure Package and the Final Memorandum.
Except as described in the Disclosure Package and the Final Memorandum, each of the Guarantor and
its insurance subsidiaries has all other necessary authorizations, approvals, orders, consents,
certificates, permits, registrations and qualifications of and from, and has made all declarations
and filings with, all insurance regulatory authorities necessary to conduct their respective
businesses as described in the Disclosure Package and the Final Memorandum, and all of the
foregoing are in full force and effect, except where the failure to have such authorizations,
approvals, orders, consents, certificates, permits, registrations or qualifications, the failure to
make such declarations and filings, or the failure to be in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as otherwise described in the Disclosure Package and the Final Memorandum, none of the Guarantor
nor any of its insurance subsidiaries has received any notification from any insurance regulatory
authority to the effect that any additional authorization, approval, order, consent, certificate,
permit, registration or qualification is needed to be obtained by either the Guarantor or any of
its insurance subsidiaries to conduct its business as currently conducted, except where the failure
to have such additional authorization, approval, order, consent, certificate, permit, registration
or qualification would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as otherwise described in the Disclosure Package and the Final
Memorandum, no insurance regulatory authority has issued to the Guarantor or any subsidiary
(including the Company) any order impairing, restricting or prohibiting (A) the payment of
dividends by any of the Guarantor’s subsidiaries (including the Company) (B) the making of a
distribution on any subsidiary’s, including the Company’s share capital, (C) the repayment to the
Guarantor of any loans or advances to any of its subsidiaries (including the Company) from the
Guarantor, (D) the repayment to the Company of any loans or advances to any of its subsidiaries
from the Company, or (E) the transfer of any of the Guarantor’s subsidiary’s property or assets to
the Guarantor or any other subsidiary of the Guarantor, including the Company. Each of the
Guarantor and its insurance subsidiaries maintains its books and records in accordance with all
applicable Insurance Laws, except where the failure to so maintain its books and records would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(ii) Except as disclosed in the Disclosure Package and the Final Memorandum, all
retrocessional and reinsurance treaties, contracts and arrangements to which any of the Guarantor’s
subsidiaries is a party are in full force and effect and none of the Guarantor or any of its
subsidiaries is in violation of, or in default in the performance, observance or fulfillment of,
any obligation, agreement, covenant or condition contained therein, except where the failure to be
in full force and effect and except where any such violation or default would not, singly or in the
aggregate, have a Material Adverse Effect. None of the Guarantor or any of its subsidiaries has
received any written notice that any of the other parties to such treaties, contracts or agreements
intends not to perform, or will be unable to perform, in any material respect such treaty, contract
or agreement, except where such non-performance would not, singly or in the aggregate, have a
Material Adverse Effect.

(jj) Except to the extent that the failure of the following to be true would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect, any tax returns
required to be filed by the Guarantor or any of its subsidiaries in any jurisdiction have been
filed and any material taxes, including any withholding taxes, excise taxes, penalties and
interest, assessments and fees and other charges due or claimed to be due from such entities have
been paid, other than any of those being contested in good faith and for which adequate reserves
have been provided or any of those currently payable without penalty or interest; Max Re Ltd. has
filed protective U.S. federal income tax returns for each of the years ended December 31, 2000,
2001, 2002, 2003, 2004 and 2005.

(kk) The Guarantor and Max Re Ltd. have each received from the Bermuda Minister of Finance an
assurance under The Exempted Undertakings Tax Protection Act, 1966 of Bermuda to the effect set
forth in the Disclosure Package and the Guarantor has not received any notification to the effect
(and is not otherwise aware) that such assurance may be revoked or otherwise not honored by the
Bermuda government.

(ll) The Guarantor and its subsidiaries (other than the Company and its subsidiaries) have not
taken, directly or indirectly, any action designed to or that would be reasonably expected to cause
or result in the Guarantor and/or any of its subsidiaries (other than the Company and its
subsidiaries) being treated as (i) engaged in a trade or business within the United States for
purposes of the Internal Revenue Code of 1986, as amended (the “Code”) or, where required
by an applicable income tax treaty to which the United States is a party, having a permanent
establishment situated in the United States, or (ii) a passive foreign investment company within
the meaning of section 1297 of the Code.

(mm) None of the Initial Purchasers or any subsequent purchasers of the Securities is subject
to any stamp duty, transfer, excise or similar tax imposed in Bermuda in connection with the
issuance, offering or sale of the Securities to the Initial Purchasers or to any subsequent
purchasers;

(nn) There are no currency exchange control laws or withholding taxes, in each case of
Bermuda, that would be applicable to (1) the payment of interest or principal on the Securities by
the Company or the Guarantor (other than as may apply to residents of Bermuda for Bermuda exchange
control purposes) or (2) the payment of dividends, interest or principal by the any of the
Guarantor’s subsidiaries, including the Company to such subsidiary’s parent company. The BMA has
designated the Guarantor and Max Re Ltd. as non-resident for exchange control purposes. Each of the
Guarantor and Max Re Ltd. are “exempted companies” under Bermuda law and have not (A) acquired and
do not hold any land for its business in Bermuda, other than that held by way of lease or tenancy
for terms of not more than 50 years, without the express authorization of the Bermuda Minister of
Finance, (B) acquired and do not hold land by way of lease or tenancy which is acquired for its
business and held for terms of not more than 21 years in order to provide accommodation or
recreational facilities for its officers and employees, without the express authorization of the
Minister of Finance of Bermuda, (C) taken mortgages on land in Bermuda to secure an amount in
excess of $50,000, without the consent of the Bermuda Minister of Finance, (D) acquired any bonds
or debentures secured by any land in Bermuda, except bonds or debentures issued by the government
of Bermuda or a public authority of Bermuda, or (E) conducted their business in a manner that is
prohibited for “exempted companies” under Bermuda law. Neither the Guarantor nor Max Re Ltd. has
received notification from the Bermuda Monetary Authority or any other Bermuda governmental
authority of proceedings relating to the modification or revocation of its designation as
non-resident for exchange control purposes or its status as an “exempted company” under Bermuda
law;

(oo) Neither the Guarantor nor any of its subsidiaries nor any of its or their properties or
assets has any immunity from the jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of execution or
otherwise) under the laws of Bermuda.

(pp) The Guarantor has validly and irrevocably submitted to the non-exclusive jurisdiction of
any New York Court (as defined below) with respect to suits, actions or proceedings arising out of
or in connection with violations of United States federal securities laws relating to offers and
sales of the Securities, has validly and irrevocably waived, to the fullest extent permitted by
law, any objections that it may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in any New York Court based on or arising under this Agreement or any
claims that any such suit, action or proceeding brought in any New York Court has been brought in
an inconvenient forum, and has duly and irrevocably appointed CT Corporation System as its agent to
receive service of process with respect to actions arising out of or in connection with any such
suit, action or proceeding; and service of process effected in the manner set forth in Section 16
of this Agreement will be effective under the laws of Bermuda to confer personal jurisdiction over
the Guarantor.

(qq) Except with respect to the restatements as described in the Disclosure Package and the
Final Memorandum, there is and has been no failure on the part of the Guarantor or any of the
Guarantor’s directors or officers, in their capacities as such, to comply with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the
“Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to
certifications.

(rr) The Guarantor has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15 under the Exchange Act) that (i) are designed to ensure that
material information relating to the Guarantor, including its consolidated subsidiaries (including
the Company), is made known to the Guarantor’s chief executive officer and its chief financial
officer by others within those entities, (ii) have been evaluated for effectiveness as of a date
within 90 days prior to the filing of the Guarantor’s most recent Annual Report filed with the
Commission, as applicable and (iii) are effective to perform the functions for which they were
established.

(ss) The operations of the Guarantor and its subsidiaries (including the Company) are and have
been conducted at all times in compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened, except, in each case, for any failures, actions, suits
or proceedings that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(tt) None of the Company, any of its subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee or Affiliate of the Company or any of its subsidiaries is
currently subject to any sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use the
proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.

(uu) Neither the Company, nor any of its subsidiaries, nor, to the knowledge of the Company,
any director, officer, agent, employee or Affiliate of the Company or any of its subsidiaries is
aware of or has taken any action, directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the Company, its subsidiaries and, to the
knowledge of the Company, its Affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.

Any certificate signed by any officer of the Company or the Guarantor and delivered to the
Representative or counsel for the Initial Purchasers in connection with the offering of the
Securities shall be deemed a representation and warranty by the Company and the Guarantor, as to
matters covered thereby, to each Initial Purchaser.

2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to each Initial
Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 99.111% of the principal amount thereof, plus accrued interest, if
any, from April 16, 2007 to the Closing Date, the principal amount of Securities set forth opposite
such Initial Purchaser’s name in Schedule I hereto.

3. Delivery and Payment. Delivery of and payment for the Securities shall be made at
10:00 A.M., New York City time, on April 16, 2007, or at such time on such later date not more than
three Business Days after the foregoing date as the Representative shall designate, which date and
time may be postponed by agreement between the Representative and the Company or as provided in
Section 9 hereof (such date and time of delivery and payment for the Securities being herein called
the “Closing Date”). Delivery of the Securities shall be made to the Representative for the
respective accounts of the several Initial Purchasers against payment by the several Initial
Purchasers through the Representative of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to the account specified by the Company.
Delivery of the Securities shall be made through the facilities of The Depository Trust Company
unless the Representative shall otherwise instruct.

4. Offering by Initial Purchasers. (a) Each Initial Purchaser acknowledges that the
Securities have not been and will not be registered under the Act and may not be offered or sold
except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Act.

(b) Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees
with the Company and the Guarantor that:

(i) it has not offered or sold, and will not offer or sell, any Securities
except to those it reasonably believes to be “qualified institutional buyers” (as
defined in Rule 144A under the Act);

(ii) neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D) in
the United States;

(iii) in connection with each sale pursuant to Section 4(b)(i) it has
taken or will take reasonable steps to ensure that the purchaser of such Securities
is aware that such sale may be made in reliance on Rule 144A;

(iv) it is an “accredited investor” (as defined in Rule 501(a) of Regulation
D); and

(v) it has not given and, without notice to the Company and the Guarantor, will
not give to any prospective purchaser of the Securities any written information
concerning the offering of the Securities, with the exception of (A) written
information containing only materials contained in the Disclosure Package, the Final
Memorandum or any other offering materials prepared by or with the consent of the
Company and the Guarantor and (B) notices provided through the Bloomberg system
regarding the launching and pricing of the transaction.

5. Agreements. Each of the Company and the Guarantor agrees with each Initial
Purchaser that:

(a) The Company and the Guarantor will furnish to each Initial Purchaser and to counsel for
the Initial Purchasers, without charge, during the period referred to in Section 5(c)
below, as many copies of the materials contained in the Disclosure Package and the Final Memorandum
and any amendments and supplements thereto as they may reasonably request.

(b) The Company and the Guarantor will prepare a final term sheet, containing solely a
description of final terms of the Securities and the offering thereof, in the form approved by you
and attached as Schedule II hereto.

(c) Neither the Company nor the Guarantor will amend or supplement the Disclosure Package or
the Final Memorandum other than by filing documents under the Exchange Act that are incorporated by
reference therein, without giving the Representative prior notice thereof and a reasonable
opportunity to comment therein; provided, however, that prior to the completion of the distribution
of the Securities by the Initial Purchasers (as determined by the Representative), the neither the
Company nor the Guarantor will file any document under the Exchange Act that is incorporated by
reference in the Disclosure Package or the Final Memorandum unless, prior to such proposed filing,
the Company or the Guarantor has furnished the Representative with a copy of such document for
their review and the Representative have not reasonably objected to the filing of such document.
The Company or the Guarantor will promptly advise the Representative when any document filed under
the Exchange Act that is incorporated by reference in the Disclosure Package or the Final
Memorandum shall have been filed with the Commission.

(d) If at any time prior to the completion of the sale of the Securities by the Initial
Purchasers (as determined by the Representative), any event occurs as a result of which the
Disclosure Package or the Final Memorandum, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading,
or if it should be necessary to amend or supplement the Disclosure Package or the Final Memorandum
to comply with applicable law, the Company and the Guarantor will promptly (i) notify the
Representative of any such event; (ii) subject to the requirements of Section 5(c), prepare
an amendment or supplement that will correct such statement or omission or effect such compliance;
and (iii) supply any supplemented or amended Disclosure Package or Final Memorandum to the several
Initial Purchasers and counsel for the Initial Purchasers without charge in such quantities as they
may reasonably request.

(e) Neither the Company nor the Guarantor has given and without the prior written consent of
the Representative will give to any prospective purchaser of the Securities any written information
concerning the offering of the Securities other than materials contained in the Disclosure Package,
the Final Memorandum or any other offering materials prepared by or with the prior written consent
of the Representative.

(f) The Company and the Guarantor will arrange, if necessary, for the qualification of the
Securities for sale by the Initial Purchasers under the laws of such jurisdictions as the
Representative may reasonably designate and will maintain such qualifications in effect so long as
reasonably required for the sale of the Securities; provided that in no event shall the Company or
the Guarantor be obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action that would subject it to service of process in suits, other than
those arising out of the offering or sale of the Securities, in any jurisdiction where it is not
now so subject. The Company and the Guarantor will promptly advise the Representative of the
receipt by the Company or the Guarantor of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.

(g) Each of the Company and the Guarantor will not, and will take reasonable efforts to not
permit any of its Affiliates to, resell any Securities that have been acquired by any of them.

(h) Each of the Company and the Guarantor will not, and will take reasonable efforts to not
permit any of its Affiliates or any person acting on its or their behalf (other than the Initial
Purchasers), to directly or indirectly, make offers or sales of any security, or solicit offers to
buy any security, under circumstances that would require the registration of the Securities under
the Act.

(i) Each of the Company and the Guarantor will not, and will take reasonable efforts to not
permit any of its Affiliates or any person acting on its or their behalf (other than the Initial
Purchasers) to engage in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of the Securities in the United
States.

(j) So long as any of the Securities are “restricted securities” within the meaning of Rule
144(a)(3) under the Act, each of the Company and the Guarantor will, during any period in which it
is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder or prospective purchaser,
any information required to be provided by Rule 144A(d)(4) under the Act. This covenant is intended
to be for the benefit of the holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.

(k) Each of the Company and the Guarantor will cooperate with the Representative and use its
reasonable best efforts to permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.

(l) The Company and the Guarantor will not, from the date hereof through the Closing Date,
without the prior written consent of the Representative, offer, sell or contract to sell, or
otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be
expected to, result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company, the Guarantor or any Affiliate of
the Company or Guarantor or any person in privity with the Company or Guarantor or any Affiliate of
the Company or Guarantor), directly or indirectly, or announce the offering of, any debt securities
issued or guaranteed by the Company or Guarantor (other than the Securities).

(m) The Company and the Guarantor will not take, directly or indirectly, any action designed
to, or that has constituted or that might reasonably be expected to, cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.

(n) Each of the Company and the Guarantor will, for a period of twelve months following the
date hereof, furnish to the Representative (i) all reports or other communications (financial or
other) generally made available to its shareholders, and deliver such reports and communications to
the Representative as soon as they are available, unless such documents are furnished to or filed
with the Commission or any securities exchange on which any class of securities of the Company or
the Guarantor is listed and generally made available to the public.

(o) The Company and the Guarantor agree to pay the costs and expenses relating to the
following matters: (i) the preparation of the Indenture and the issuance of the Securities and the
fees of the Trustee; (ii) the preparation, printing or reproduction of the materials contained in
the Disclosure Package and the Final Memorandum and each amendment or supplement to either of them;
(iii) the printing (or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the materials contained in the Disclosure
Package and the Final Memorandum, and all amendments or supplements to either of them, as may, in
each case, be reasonably requested for use in connection with the offering and sale of the
Securities; (iv) the issuance and delivery of the Securities; (v) any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (vi) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering of the Securities;
(vii) any registration or qualification of the Securities for offer and sale under the securities
or blue sky laws of the several states (including filing fees and the reasonable fees and expenses
of counsel for the Initial Purchasers relating to such registration and qualification) (such fees
and expenses not to exceed $5,000); (viii) the transportation and other expenses incurred by or on
behalf of Company or Guarantor representatives in connection with presentations to prospective
purchasers of the Securities; (ix) the fees and expenses of the Company’s or Guarantor’s
accountants and the fees and expenses of counsel (including local and special counsel) for the
Company and Guarantor; and (x) all other costs and expenses incident to the performance by the
Company and Guarantor of their obligations hereunder, except as provided in this Section
5(o) and Section 7 and Section 8, the Initial Purchasers shall pay their own
expenses, including the fees and disbursements of their counsel.

6. Conditions to the Obligations of the Initial Purchasers. The obligations of the
Initial Purchasers to purchase the Securities shall be subject to the accuracy of the
representations and warranties of the Company and the Guarantor contained herein at the Execution
Time and the Closing Date, to the accuracy of the statements of the Company and the Guarantor made
in any certificates pursuant to the provisions hereof, to the performance by the Company and the
Guarantor of their obligations hereunder and to the following additional conditions:

(a) The Company and the Guarantor shall have requested and caused

(i) Akin Gump Strauss, Hauer & Feld LLP, United States counsel for the Company
and the Guarantor, to furnish to the Representative its opinion, dated the Closing
Date and addressed to the Representative, substantially in the form attached hereto
as Exhibit A.

(ii) Conyers Dill & Pearman, Bermuda counsel for the Company and the Guarantor,
to furnish to the Representative its opinion, dated the Closing Date and addressed
to the Representative, substantially in the form attached hereto as Exhibit B.

(iii) A&L Goodbody, Irish counsel for the Company and the Guarantor, to furnish
to the Representative its opinion, dated the Closing Date and addressed to the
Representative, substantially in the form attached hereto as Exhibit C.

(iv) the General Counsel of the Guarantor, to furnish to the Representative its
opinion, dated the Closing Date and addressed to the Representative, substantially
in the form attached hereto as Exhibit D.

(b) The Representative shall have received from Mayer, Brown Rowe & Maw LLP, counsel for the
Initial Purchasers, such opinion or opinions, dated the Closing Date and addressed to the
Representative, with respect to the issuance and sale of the Securities, the Indenture, the
Disclosure Package, the Final Memorandum (as amended or supplemented at the Closing Date) and other
related matters as the Representative may reasonably require, and the Company and the Guarantor
shall have furnished to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.

(c) Each of the Company and the Guarantor shall have furnished to the Representative a
certificate of the Company and the Guarantor, signed by the Chairman of the Board or the President
and the principal financial or accounting officer thereof, dated the Closing Date, to the effect
that the signers of such certificate have carefully examined the Disclosure Package and the Final
Memorandum and any supplements or amendments thereto, and this Agreement and that:

(i) the representations and warranties of the Company and the Guarantor in this
Agreement are true and correct on and as of the Closing Date with the same effect as
if made on the Closing Date, and each of the Company and the Guarantor has complied
with all the agreements and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date; and

(ii) since the date of the most recent financial statements included or
incorporated by reference in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto), there has been no material
adverse change in the financial condition, earnings, business or properties of the
Company, the Guarantor and their respective subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Disclosure Package and the Final Memorandum
(exclusive of any amendment or supplement thereto).

(d) At the Execution Time and at the Closing Date, KPMG shall have furnished to the
Representative letters, dated respectively as of the Execution Time and as of the Closing Date, in
form and substance reasonably satisfactory to the Representative and containing statements and
information of the type customarily included in accountants’ “comfort letters” to underwriters with
respect to the financial statements and certain financial information contained in the Disclosure
Package and the Final Memorandum.

All references in this Section 6(d) to the Disclosure Package and the Final Memorandum include
any amendment or supplement thereto at the date of the applicable letter.

(e) Subsequent to the Execution Time or, if earlier, the dates as of which information is
given in the Disclosure Package (exclusive of any amendment or supplement thereto) and the Final
Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any
change or decrease specified in the letter or letters referred to in paragraph (d) of this Section
6; or (ii) any change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business, operations or properties of the Guarantor and
its subsidiaries (including the Company), taken as a whole, whether or not arising from
transactions in the ordinary course of business, from that set forth in the Disclosure Package and
Final Memorandum (exclusive of any amendments or supplements thereto subsequent to the date of this
Agreement), the effect of which, in any case referred to in clause (i) or (ii) above, is, in the
judgment of the Representative, so material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated in the Disclosure Package
and the Final Memorandum (exclusive of any amendment or supplement thereto).

(f) The Securities shall be eligible for clearance and settlement through The Depository Trust
Company.

(g) Subsequent to the Execution Time, there shall not have been any decrease in the rating of
any of the Company’s or the Guarantor’s debt securities by any “nationally recognized statistical
rating organization” (as defined for purposes of Rule 436(g) under the Securities Act) or any
notice given of any intended or potential decrease in any such rating or of a possible change in
any such rating that does not indicate the direction of the possible change.

(h) On or prior to the Closing Date, the Company and the Guarantor shall have furnished to the
Representative such further information, certificates and documents as the Representative may
reasonably request.

If any of the conditions specified in this Section 6 shall not have been fulfilled when and as
provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Representative
and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given to the Company and the Guarantor in
writing or by telephone or facsimile confirmed in writing.

The documents required to be delivered by this Section 6 will be delivered at the
office of counsel for the Initial Purchasers, at Mayer, Brown, Rowe & Maw LLP, 71 South Wacker
Drive, Chicago, Illinois 60606, on the Closing Date.

7. Reimbursement of Expenses. If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers set forth in Section
6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of
any refusal, inability or failure on the part of the Company to perform any agreement herein or
comply with any provision hereof other than by reason of a default by any of the Initial
Purchasers, the Company will reimburse the Initial Purchasers severally through the Representative
on demand for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed purchase and sale of
the Securities.

8. Indemnification and Contribution. (a) The Company and the Guarantor, jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees, Affiliates and agents of each Initial Purchaser and each person who controls any Initial
Purchaser within the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other U.S. federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Memorandum, the Final Memorandum, any Issuer Written
Information or any other written information used by or on behalf of the Company or the Guarantor
in connection with the offer or sale of the Securities, or in any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company and the Guarantor will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto,
in reliance upon and in conformity with written information furnished to the Company or the
Guarantor by or on behalf of any Initial Purchaser through the Representative specifically for
inclusion therein. This indemnity agreement will be in addition to any liability that the Company
and the Guarantor may otherwise have.

(b) Each Initial Purchaser, severally and not jointly, agrees to indemnify and hold harmless
the Company and the Guarantor, each of its directors, each of its officers, and each person who
controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity to each Initial Purchaser, but only with reference to
written information relating to such Initial Purchaser furnished to the Company or the Guarantor by
or on behalf of such Initial Purchaser through the Representative specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability that any Initial Purchaser may otherwise
have. The Company and the Guarantor hereby acknowledge that (i) the statements set forth in the
last paragraph on the cover page regarding delivery of the securities, (ii) the first sentence of
paragraph three under the heading “Plan of Distribution”, (iii) the third sentence of the seventh
paragraph under the heading “Plan of Distribution,” (iv) the eighth paragraph under the heading
“Plan of Distribution,” (v) the tenth paragraph under the heading “Plan of Distribution” and the
first sentence of the eleventh paragraph under the heading “Plan of Distribution,” in each case in
the Preliminary Memorandum and the Final Memorandum, constitute the only information furnished in
writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum, the
Final Memorandum or in any amendment or supplement thereto.

(c) Promptly after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will
not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent
the indemnified party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses of any separate
counsel, other than local counsel if not appointed by the indemnifying party, retained by the
indemnified party or parties except as set forth below); provided, however, that such counsel shall
be satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to
appoint counsel (including local counsel) to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel
if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties that are different from or additional to those available to the
indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable time after notice of
the institution of such action; or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such claim or action) unless such
settlement, compromise or consent (x) includes an unconditional release of each indemnified party
from all liability arising out of such claim, action, suit or proceeding and (y) does not include
any admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
The indemnifying party shall not be liable for any settlement of any such action effected without
its written consent, but if settled with the consent of the indemnifying party or if there by a
final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by reason of such
settlement or judgment.

(d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company,
the Guarantor and the Initial Purchasers severally agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending any loss, claim, damage, liability or action)
(collectively “Losses”) to which the Company, the Guarantor and one or more of the Initial
Purchasers may be subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Guarantor on the one hand and by the Initial Purchasers on the
other from the offering of the Securities; provided, however, that in no case shall any Initial
Purchaser be responsible for any amount in excess of the purchase discount or commission applicable
to the Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company, the Guarantor and the
Initial Purchasers severally shall contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company and the Guarantor on the one
hand and the Initial Purchasers on the other in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations. Benefits received
by the Company and the Guarantor shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by it, and benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and commissions. Relative
fault shall be determined by reference to, among other things, whether any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to information provided by the Company and the Guarantor on the one hand or the Initial Purchasers
on the other, the intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company, the Guarantor and
the Initial Purchasers agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the provisions of this paragraph
(d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an Initial Purchaser
within the meaning of either the Act or the Exchange Act and each director, officer, employee,
Affiliate and agent of an Initial Purchaser shall have the same rights to contribution as such
Initial Purchaser, and each person who controls the Company or the Guarantor within the meaning of
either the Act or the Exchange Act and each officer and director of the Company or the Guarantor
shall have the same rights to contribution as the Company and the Guarantor, subject in each case
to the applicable terms and conditions of this paragraph (d).

9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail
to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser
hereunder and such failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Initial Purchasers shall be obligated
severally to take up and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the aggregate principal
amount of Securities set forth opposite the names of all the remaining Initial Purchasers) all, but
not less than all, the Securities which the defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase; provided, however, that in the event that the aggregate principal
amount of Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities set forth in Schedule
I hereto, the remaining Initial Purchasers shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such nondefaulting Initial
Purchasers do not purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Initial Purchaser, the Company or the Guarantor. In the event of a default by any
Initial Purchaser as set forth in this Section 9, the Closing Date shall be postponed for such
period, not exceeding five Business Days, as the Representative shall determine in order that the
required changes in the Final Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial Purchaser of its
liability, if any, to the Company, the Guarantor or any nondefaulting Initial Purchaser for damages
occasioned by its default hereunder.

10. Termination. This Agreement shall be subject to termination by the Representative,
by notice given to the Company and the Guarantor prior to delivery of and payment for the
Securities, if at any time prior to such time (i) trading of the Guarantor’s common stock shall
have been suspended by the Nasdaq Global Select Market or the Bermuda Stock Exchange, (ii) trading
in securities generally on the New York Stock Exchange, Nasdaq Global Select Market or the Bermuda
Stock Exchange shall have been suspended or limited or minimum prices shall have been established
on such exchange; (iii) a banking moratorium shall have been declared either by U.S. federal or New
York State authorities or a material disruption in securities settlement, payment or clearance
services in the United States shall have occurred; or (iv) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is such as to make it, in the
judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery
of the Securities as contemplated in the Disclosure Package and the Final Memorandum (exclusive of
any amendment or supplement thereto).

11. Representations and Indemnities to Survive. The representations, warranties,
indemnities and other statements of the Company, the Guarantor or their respective officers and of
the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the Initial Purchasers, the
Company or the Guarantor or any of the indemnified persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.

12. Notices. All communications hereunder will be in writing and effective only on
receipt, and:

(a) if sent to the Representative, will be mailed, delivered or telefaxed to the Citigroup
General Counsel (fax no.: (212) 816-7912) and confirmed to Citigroup at 388 Greenwich Street, New
York, New York 10013, Attention: General Counsel;

(b) or, if sent to the Company or the Guarantor, will be mailed, delivered or telefaxed to Max
USA Holdings Ltd., 9020 Stony Point Parkway, Suite 325, Richmond, Virginia and Max Re Capital Ltd.,
Max Re House, 2 Front Street, Hamilton, HM 11, Bermuda, respectively.

13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the indemnified persons referred to in Section 8
hereof and their respective successors, and, except as expressly set forth in Section 5(j) hereof,
no other person will have any right or obligation hereunder.

14. No Fiduciary Duty. The Company and the Guarantor hereby acknowledge that (a) the
purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial
transaction between the Company and the Guarantor, on the one hand, and the Initial Purchasers and
any Affiliate through which it may be acting, on the other, (b) the Initial Purchasers are acting
as principal and not as an agent or fiduciary of the Company or the Guarantor and (c) the Company’s
and Guarantor’s engagement of the Initial Purchasers in connection with the offering and
the process leading up to the offering is as independent contractors and not in any other capacity.
Furthermore, each of the Company and the Guarantor agree that it is solely responsible for making
its own judgments in connection with the offering (irrespective of whether any of the Initial
Purchasers has advised or is currently advising the Company or Guarantor on related or other
matters). The Company and the Guarantor agree that they will not claim that the Initial Purchasers
have rendered advisory services of any nature or respect, or owe an agency, fiduciary or similar
duty to the Company or the Guarantor, in connection with such transaction or the process leading
thereto.

15. Integration. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company, the Guarantor and the Initial Purchasers, or any of
them, with respect to the subject matter hereof.

16. Applicable Law; Consent to Jurisdiction; Waiver of Immunity.

(a) This Agreement will be governed by and construed in accordance with the laws of the State
of New York applicable to contracts made and to be performed within the State of New York.

(b) Any legal suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of
the United States of America located in the City and County of New York, Borough of Manhattan, or
the courts of the State of New York in each case located in the City and County of New York,
Borough of Manhattan (collectively, the “Specified Courts”), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a
judgment of any such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive)
of such courts in any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective service of process for
any suit, action or other proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action or other proceeding
in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any such court has been
brought in an inconvenient forum. The Guarantor has irrevocably appointed CT Corporation System,
111 Eighth Avenue, 13th Floor, New York, NY 10011 as its agent to receive service of process or
other legal summons for purposes of any such suit, action or proceeding that may be instituted in
any state or federal court in the City and County of New York.

(c) With respect to any Related Proceeding, each party irrevocably waives, to the fullest
extent permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise)
from jurisdiction, service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect to any Related
Judgment, each party waives any such immunity in the Specified Courts or any other court of
competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or
in respect of any such Related Proceeding or Related Judgment, including, without limitation, any
immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.

17. Waiver of Jury Trial. The Company and the Guarantor hereby irrevocably waive, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

18. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.

19. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.

20. Definitions. The terms that follow, when used in this Agreement, shall have the
meanings indicated.

“Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D; provided, however
that “Affiliate” shall not mean Moore Holdings, LLC, or any person (other than the Guarantor and
its subsidiaries) that directly, or indirectly through one or more intermediaries, is controlled by
Moore Holdings LLC.

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day
on which banking institutions or trust companies are authorized or obligated by law to close in The
City of New York.

“Citigroup” shall mean Citigroup Global Markets Inc.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Commission” shall mean the Securities and Exchange Commission.

“Disclosure Package” shall mean (i) the Preliminary Memorandum, as amended or supplemented at
the Execution Time, (ii) the final term sheet prepared pursuant to Section 5(b) hereto and in the
form attached as Schedule II hereto and (iii) any Issuer Written Information.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.

“Execution Time” shall mean the date and time that this Agreement is executed and delivered by
the parties hereto.

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission promulgated thereunder.

“Issuer Written Information” shall mean any writings in addition to the Preliminary Memorandum
that the parties expressly agree in writing to treat as part of the Disclosure Package.

“NASD” shall mean the National Association of Securities Dealers, Inc.

“Regulation D” shall mean Regulation D under the Act.

“Regulation S-X” shall mean Regulation S-X under the Act.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the Commission promulgated thereunder.

[Signature Page to Follow]

1

If the foregoing is in accordance with your understanding of our agreement, please sign
and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company, the Guarantor and the several Initial Purchasers.

	 	 	 	 	 
	Very truly yours,
MAX USA HOLDINGS LTD.
By:
	 	 	—	 

	 	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	MAX RE CAPITAL LTD.
By:
	 	 	—	 

Name:

Title:

The foregoing Agreement is hereby

confirmed and accepted as of the

date first above written.

CITIGROUP GLOBAL MARKETS INC.

By:      

Name:

Title:

For itself and the other several

Initial Purchasers named in

Schedule I to the foregoing Agreement.

2

SCHEDULE I

	 	 	 	 	 
	 
	 	Principal Amount of Securities to be

	Initial Purchasers
	 	Purchased

	 
	 	 	 	 
	Citigroup Global Markets Inc.
	 	$	58,000,000	 
	Banc of America Securities LLC
	 	$	18,500,000	 
	Wachovia Securities
	 	$	18,500,000	 
	Dowling & Partners Securities
	 	$	5,000,000	 
	Total
	 	$	100,000,000	 
	 
	 	 	 	 

3

SCHEDULE II

	 	 	 	 	 
	Issuer:
	 	Max USA Holdings Ltd.

	Guarantor:
	 	Max Re Capital Ltd.

	Ratings:
	 	Moody’s – Baa2 (Stable Outlook)

	 
	 	S&P– BBB- (Stable Outlook)
	 
	 	A.M. Best – bbb- (Stable Outlook)

	 
	 	Fitch Ratings – BBB+ ( Stable Outlook)

	Offering Format:
	 	144A / Reg S
	Security:
	 	7.20% Senior Notes due 2017
	Principal Amount:
	 	$	100,000,000	 
	Pricing Benchmark:
	 	UST 4.625% due 2017

	Benchmark Yield:
	 	 	4.734	%
	Re-offer Spread:
	 	+250 bps
	Re-offer Yield:
	 	 	7.234	%
	Coupon:
	 	 	7.20	%
	Price to Public:
	 	 	99.761	%
	Coupon Dates:
	 	April 16th and October 16th of each year

	First Coupon Date:
	 	October 16, 2007

	Trade Date:
	 	April 11, 2007

	Settlement Date (flat):
	 	April 16, 2006 (T+3)

	Maturity Date:
	 	April 14, 2017

	Make Whole Call:
	 	UST+37.5 bp

	CUSIP:
	 	57775PAA5 (144A)
	 
	 	U57745AA6 (Reg S)
	 
	 	Principal Amount of Notes
	Sole Book-Running Manager
Citigroup Global Markets Inc.:
	 	$	58,000,000	 
	Co-Managers
Banc of America Securities LLC
	 	$	18,500,000	 
	Wachovia Securities,LLC
	 	$	18,500,000	 
	Dowling & Partners Securities, LLC
	 	$	5,000,000	 
	Total:
	 	$	100,000,000	 

This communication is intended for the sole use of the person to whom it is provided by the sender.

These securities have not been registered under the Securities Act of 1933, as amended, and may
only be sold to qualified institutional buyers pursuant to Rule 144A or pursuant to another
applicable exemption from registration.

The information in this term sheet supplements the Company’s preliminary offering memorandum, dated
April 10, 2007 (the “Preliminary Memorandum”) and supersedes the information in the Preliminary
Memorandum to the extent inconsistent with the information in the Preliminary Memorandum. This term
sheet is qualified in its entirety by reference to the Preliminary Memorandum. Terms used herein
but not defined herein shall have the respective meanings as set forth in the Preliminary
Memorandum.

A securities rating is not a recommendation to buy, sell or hold securities and may be subject to
revision or withdrawal at any time.

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND
SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT
OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

4

Exhibit A

[Form of Opinion of Akin Gump, Strauss, Hauer & Feld LLP

U.S. Counsel for the Company and the Guarantor]

Opinion of U.S. counsel for the Guarantor to be delivered pursuant to Section 6(a)(ii) of
the Purchase Agreement.

References to the Final Memorandum in this Exhibit A include any supplements thereto at the
Closing Date.

(i) The Company has been duly formed and is validly existing and in good standing under the
laws of the State of Delaware, has the corporate power and authority to own its property and to
conduct its business as described in the Disclosure Package and the Final Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not, singly or in the
aggregate, have a Material Adverse Effect; all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-assessable and are owned
by the Guarantor directly or indirectly, free and clear of all liens, encumbrances, equities or
claims, other than certain restrictive covenants contained in that certain Credit Agreement dated
as of June 1, 2005, as amended or modified from time to time, by and among the Company, the
Guarantor, Max Re Ltd., various financial institutions and Bank of America, N.A., as fronting bank,
letter of credit administrator and administrative agent.

(ii) This Agreement has been duly authorized, executed and delivered by the Company.

(iii) The Indenture has been duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof by the Guarantor, constitutes a
valid and binding agreement enforceable against the Company and the Guarantor, as the case may be,
in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally or by general equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law).

(iv) The Notes have been duly authorized, executed and delivered by the Company and, assuming
the due authentication thereof by the Trustee, constitute the legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture and will be enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally or by general equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law). The Notes will be in the form contemplated by the Indenture.

(v) The Guarantee, assuming the due authorization, execution and delivery of the Indenture by
the Guarantor, constitute the legal, valid and binding obligations of the Guarantor enforceable
against the Guarantor in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally or by general equitable principles (regardless of whether enforcement
is considered in a proceeding in equity or at law). The Guarantee is in the form contemplated by
the Indenture.

(vi) No consent, approval, authorization, filing with or order of any United States or New
York court or governmental agency or body is required in connection with the transactions
contemplated herein or in the Indenture, except such as may be required under the blue sky laws of
any jurisdiction in which the Securities are offered and sold.

(vii) None of the execution and delivery of this Agreement, the Indenture, the issuance and
sale of the Securities, or the consummation of any other of the transactions herein or therein
contemplated, or the fulfillment of the terms hereof or thereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of
the Guarantor or any of its subsidiaries (including the Company) pursuant to, (i) the charter or
by-laws or comparable constituting documents of the Guarantor, the Company or any of their
respective subsidiaries; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument
filed or incorporated by reference as an exhibit to the Guarantor’s Annual Report on Form 10-K for
the year ended December 31, 2006to which the Guarantor or any of its subsidiaries (including the
Company) is a party or bound or to which its or their property is subject; or (iii) any statute,
law, rule, regulation, judgment, order or decree of any United States Federal or New York court,
regulatory body, administrative agency, governmental body, arbitrator or other authority except, in
the case of clauses (ii) and (iii) above, for any such breach, violation or imposition as would not
individually or in the aggregate, have (A) a Material Adverse Effect or (B) a material adverse
effect upon the consummation of the transactions contemplated hereby.

(viii) The documents incorporated by reference in the Disclosure Package and the Final
Memorandum (other than the financial statements and supporting schedules and other financial data
therein, as to which no opinion need be rendered), when they were filed with the Commission
complied as to form in all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.

(ix) To the extent that the laws of the State of New York are applicable, the Guarantor (A)
has validly submitted to the exclusive jurisdiction of any New York State or Federal court sitting
in The City of New York (the “New York Court”) over any suit, action or proceeding arising out of
or relating to the Underwriting Agreement, the Disclosure Package, the Final Memorandum or the
offering of the Securities, and (B) has validly waived any objection to the venue of a proceeding
in any such New York Court.

(x) Neither the Company nor the Guarantor is and, after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof, will be an “investment company,” as
such term is defined in the Investment Company Act.

(xi) Subject to compliance by the Initial Purchasers with the representations and warranties
of the Initial Purchasers and the procedures set forth in Section 4 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to
each subsequent purchaser in the manner contemplated by this Agreement and the Final Memorandum to
register the Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act.

(xii) The statements in the Disclosure Package and the Final Memorandum, and any amendment or
supplement thereto, under the headings “Description of the Notes and the Guarantee,” insofar as
such statements purport to summarize certain provisions of the Securities, the Indenture fairly
summarize the matters therein described in all material respects.

(xiii) The discussion contained in the Final Memorandum under the caption “Certain Material
U.S. Federal Income Tax Considerations” constitutes, in all material respects, a fair and accurate
summary of the U.S. federal income tax considerations relating to the acquisition, ownership and
disposition of the Securities by U.S. Holders (as defined in the Disclosure Package and the Final
Memorandum) that are not otherwise excepted in the Disclosure Package and the Final Memorandum and
who acquire Securities in the offering described in the Disclosure Package and the Final
Memorandum.

We have not made any independent verification or check, and are not passing upon and do not
assume any responsibility for, the accuracy, completeness or fairness of the statements contained
in the Disclosure Package and the Final Memorandum, other than those mentioned above, but we shall
confirm that we have, however, participated in reviews and discussions in connection with the
preparation of the Disclosure Package and the Final Memorandum prior to the Closing Date, and in
the course of such reviews and discussions (relying as to matters of fact upon statements of
officers and other representatives of the Company) no facts came to our attention that led us to
believe that (x) as of the Execution Time, the Disclosure Package, as amended or supplemented at
the Execution Time, contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading or (y) the Final Memorandum, as of its date or as of the
Closing Date, contained any untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of circumstances under which
they were made, not misleading (in each case, other than the financial statements and other
financial information contained therein, as to which such counsel need express no opinion).

5

Exhibit B

[Form of Opinion of Conyers Dill & Pearman

Bermuda Counsel for the Company and the Guarantor]

Opinion of Bermuda counsel for the Guarantor to be delivered pursuant to Section 6(a)(ii)
of the Purchase Agreement.

References to the Final Memorandum in this Exhibit B include any supplements thereto at the
Closing Date.

(i) The Guarantor is duly incorporated and existing under the laws of Bermuda in good standing
(meaning solely that it has not failed to make any filing with any Bermuda governmental authority
or to pay any Bermuda government fee or tax which would make it liable to be struck off the
Register of Companies and thereby cease to exist under the laws of Bermuda).

(ii) Max Re Ltd. is duly incorporated and existing under the laws of Bermuda in good standing
(meaning solely that it has not failed to make any filing with any Bermuda governmental authority
or to pay any Bermuda government fee or tax which would make it liable to be struck off the
Register of Companies and thereby cease to exist under the laws of Bermuda) and has the necessary
corporate power and authority to conduct its business as described in the Disclosure Package and
the Final Memorandum.

(iii) The Guarantor has the necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Indenture and the Guarantees and to conduct its
business as described in the Disclosure Package and the Final Memorandum. The execution and
delivery of this Agreement, the Indenture and the Guarantees by the Guarantor and the performance
by the Guarantor of its obligations hereunder and thereunder will not violate the memorandum of
association or bye-laws of the Guarantor nor any applicable law, rule, regulation, order, judgment
or decree in Bermuda.

(iv) The Guarantor has taken all corporate action required to authorize its execution,
delivery and performance of this Agreement, the Indenture and the Guarantees.

(v) This Agreement, the Indenture and the Guarantees have been duly authorized, executed and
delivered by or on behalf of the Guarantor, and this Agreement, the Indenture and the Guarantees
constitute the valid and binding obligations of the Guarantor under Bermuda law, enforceable
against the Guarantor in accordance with the terms thereof.

(vi) No order, consent, approval, license, authorization or validation of, filing with or
exemption by any government or public body or authority of Bermuda or any subdivision thereof is
required to authorize or is required in connection with the execution, delivery, performance and
enforcement of this Agreement, the Indenture, the Securities or the Guarantees.

(vii) Based solely upon a review of copies of the Certificates of Registration issued to Max
Re Ltd. by the Bermuda Monetary Authority pursuant to the Insurance Act 1978 of Bermuda (the
“Insurance Act”), Max Re Ltd. is registered in Bermuda under the Insurance Act to carry on general
business as a Class 4 insurer and to carry on long-term business in accordance with the provisions
of the Insurance Act and the conditions attached to their respective registration licenses.

(viii) Each of the Guarantor and Max Re Ltd. has been designated as non-resident of Bermuda
for the purposes of the Exchange Control Act, 1972 and, as such, is free to acquire, hold, transfer
and sell foreign currency (including the payment of dividends or other distributions) and
securities without restriction.

(ix) Based solely upon a review of the register of members of Max Re Ltd. on a specified date,
certified by the Secretary of Max Re Ltd. on a specified date, the issued share capital of Max Re
Ltd. consists of      common shares each having a par value of $     (“Max Re Shareholding”), each
of which is validly issued, fully paid and non-assessable (which term when used herein means that
no further sums are required to be paid by the holders thereof in connection with the issue
thereof) and the Guarantor is the registered holder of the Max Re Shareholding.

(x) The Guarantor has received an assurance from the Minister of Finance in Bermuda under The
Exempted Undertakings Tax Protection Act 1966 that in the event of there being enacted in Bermuda
any legislation imposing tax computed on profits or income or computed on any capital asset, gain
or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of
any such tax shall not be applicable to the Guarantor or any of its operations or its shares,
debentures or other obligations of the Guarantor until March 28, 2016 (subject to certain provisos
expressed in such assurance).

(xi) It is not necessary or desirable to ensure the enforceability in Bermuda of this
Agreement, the Indenture, the Securities or the Guarantees that they be registered in any register
kept by, or filed with, any governmental authority or regulatory body in Bermuda. However, to the
extent that this Agreement, the Indenture, the Securities or the Guarantees create a charge over
assets of the Guarantor, it may be desirable to ensure the priority in Bermuda of the charge that
it be registered in the Register of Charges in accordance with Section 55 of the Companies Act
1981. On registration, to the extent that Bermuda law governs the priority of a charge, such charge
will have priority in Bermuda over any unregistered charges created, and over any subsequently
registered charges, in respect of the assets which are the subject of the charge. A registration
fee of $515 will be payable in respect of the registration.

While there is no exhaustive definition of a charge under Bermuda law, a charge includes any
interest created in property by way of security (including any mortgage, assignment, pledge, lien
or hypothecation). However, as this Agreement is governed by the laws of the State of New York
(“New York Laws”), the question of whether it creates such an interest in property would be
determined under the New York Laws.

(xii) This Agreement, the Indenture, the Guarantees and the Securities will not be subject to
ad valorem stamp duty in Bermuda.

(xiii) Based solely upon a search of the Cause Book of the Supreme Court of Bermuda conducted
at a specified time and date (which would not reveal details of proceedings which have been filed
but not actually entered in the Cause Book at the time of our search), there are no judgments
against the Guarantor or Max Re Ltd., or any legal or governmental proceedings pending in Bermuda
to which the Guarantor or Max Re Ltd. is subject.

(xiv) Based solely on a search of the public records in respect of the Guarantor and Max Re
Ltd. maintained at the offices of the Registrar of Companies at a specified time and date (which
would not reveal details of matters which have not been lodged for registration or have been lodged
for registration but not actually registered at the time of our search) and a search of the Cause
Book of the Supreme Court of Bermuda conducted at a specified time and date (which would not reveal
details of proceedings which have been filed but not actually entered in the Cause Book at the time
of our search), no steps have been, or are being, taken in Bermuda for the appointment of a
receiver or liquidator to, or for the winding-up, dissolution, reconstruction or reorganization of,
the Guarantor or Max Re Ltd., though it should be noted that the public files maintained by the
Registrar of Companies do not reveal whether a winding-up petition or application to the Court for
the appointment of a receiver has been presented and entries in the Cause Book may not specify the
nature of the relevant proceedings.

(xv) The choice of New York Laws as the governing law of this Agreement, the Indenture, the
Securities and the Guarantees is a valid choice of law and would be recognized and given effect to
in any action brought before a court of competent jurisdiction in Bermuda, except for those laws
(i) which such court considers to be procedural in nature, (ii) which are revenue or penal laws or
(iii) the application of which would be inconsistent with public policy, as such term is
interpreted under the laws of Bermuda. The submission in this Agreement, the Indenture, the
Securities and the Guarantees to the non-exclusive jurisdiction of the New York Courts is valid and
binding upon the Guarantor.

(xvi) The courts of Bermuda would recognize as a valid judgment, a final and conclusive
judgment in personam obtained in the New York Courts against the Guarantor based upon this
Agreement, the Indenture, the Securities or the Guarantees under which a sum of money is payable
(other than a sum of money payable in respect of multiple damages, taxes or other charges of a like
nature or in respect of a fine or other penalty) and would give a judgment based thereon provided
that (a) such courts had proper jurisdiction over the parties subject to such judgment, (b) such
courts did not contravene the rules of natural justice of Bermuda, (c) such judgment was not
obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy
of Bermuda, (e) no new admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of Bermuda and (f) there is due compliance with the correct
procedures under the laws of Bermuda.

(xvii) The statements contained in the Disclosure Package and the Final Memorandum under the
caption “Certain Tax Considerations – Bermuda,” to the extent they constitute statements of Bermuda
law, are accurate in all material respects.

6

Exhibit C

[Form of Opinion of A&L Goodbody Irish Counsel for the Company and the Guarantor]

Opinion of Irish counsel for the Guarantor to be delivered pursuant to Section 6(a)(iii)
of the Purchase Agreement.

References to the Final Memorandum in this Exhibit C include any supplements thereto at the
Closing Date.

(i) Each of Max Re Europe, Max Europe Holdings and Max Insurance Europe has been duly
incorporated under the laws of Ireland. Based only on searches carried out in the Irish Companies
Office and the Central Office of the High Court on 13 April 2007, each of Max Re Europe, Max Europe
Holdings and Max Insurance Europe is validly existing under the laws of Ireland and no steps have
been taken or are being taken to appoint a receiver, examiner or liquidator over it or to wind it
up and each of Max Re Europe, Max Europe Holdings and Max Insurance Europe has the corporate power
and authority to own its property and to conduct its business as described in the Disclosure
Package and the Final Memorandum and is duly qualified to transact business in Ireland.

(ii) All of the issued shares of each of Max Re Europe, Max Europe Holdings and Max Insurance
Europe have been duly and validly authorised and issued, are fully paid, are not subject to calls
for any additional payments. All of the issued shares in Max Re Europe and Max Insurance Europe are
registered in the name of Max Europe Holdings. All of the issued shares in Max Re Holdings are
registered in the name of Max Re Limited. To the best of our knowledge and based on Certificates of
Company Secretary, all of those shares are free and clear of all liens, encumbrances, equities and
claims.

(iii) Based only on the Certificates of Company Secretary and searches carried out in the
Central Office of the High Court on 13 April 2007, we do not know of any legal or governmental
proceedings pending or threatened in Ireland to which any of Max Re Europe, Max Europe Holdings and
Max Insurance Europe is a party or to which any of the properties of any of Max Re Europe, Max
Europe Holdings and Max Insurance Europe is subject that could reasonably be expected to have a
Material Adverse Effect.

(iv) Max Re Europe stands duly authorised as a reinsurance undertaking pursuant to Regulation
11(1) of the European Communities (Reinsurance) Regulations 2006.

(v) Max Insurance Europe is duly authorised to carry on insurance business in classes 1, 4, 6,
7, 8, 9, 11, 12, 13 and 16 of Annex I to the European Communities (Non-Life Insurance) Framework
Regulations 1994.

(vi) Based only on the Certificates of Company Secretary, each of Max Re Europe, Max Europe
Holdings and Max Insurance Europe has filed all statutory financial returns, reports, documents and
other information required to be filed under the Insurance Acts of Ireland (as defined in the
Insurance Act 1989, as amended), except where the failure, singly or in the aggregate, to file such
return would not have a Material Adverse Effect; and each of Max Re Europe, Max Europe Holdings and
Max Insurance Europe maintains its books and registers required in the Companies Acts 1963 to 2005
of Ireland in accordance with those Acts, except where the failure to so maintain its books and
records, singly or in the aggregate, would not have a Material Adverse Effect.

7

Exhibit D

[Form of Opinion of the General Counsel of the Guarantor]

Opinion of the General Counsel of the Guarantor to be delivered pursuant to Section
6(a)(iv) of the Purchase Agreement.

References to the Final Memorandum in this Exhibit D include any supplements thereto at the
Closing Date.

To our knowledge, there are no United States federal or New York State legal or governmental
proceedings pending or threatened to which the Guarantor or any of its subsidiaries (including the
Company) is a party or to which any of the properties of the Guarantor or any of its subsidiaries
(including the Company) is subject that (i) could reasonably be expected to have a material adverse
effect on the performance of this Agreement or the consummation of any of the transactions
contemplated hereby or (ii) would reasonably be expected to have a Material Adverse Effect, except
as set forth in or contemplated in the Disclosure Package and the Final Memorandum (exclusive of
any amendment or supplement thereto).

8

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