Document:

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                                                                  EXHIBIT 10(m)

                                                                  EXECUTION COPY

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                         AGREEMENT OF PURCHASE AND SALE

                                 BY AND BETWEEN

                            CMS ENTERPRISES COMPANY,
                       CMS GENERATION HOLDINGS COMPANY and
                        CMS INTERNATIONAL VENTURES, LLC,

                             COLLECTIVELY AS SELLER,

                                      AND

                            LUCID ENERGY, L.L.C. and
                     NEW ARGENTINE GENERATION COMPANY, LLC

                             COLLECTIVELY AS BUYER,

                                   DATED AS OF

                                 MARCH 12, 2007

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                               TABLE OF CONTENTS

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ARTICLE I DEFINITIONS....................................................     2
   Section 1.1    Specific Definitions...................................     2
ARTICLE II SALE AND PURCHASE.............................................     9
   Section 2.1    Agreement to Sell and Purchase.........................     9
   Section 2.2    Deliveries by the Parties..............................    10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.....................    12
   Section 3.1    Corporate Organization; Qualification..................    12
   Section 3.2    Authority Relative to this Agreement...................    13
   Section 3.3    Equity Interests; Assumed Indebtedness.................    13
   Section 3.4    Consents and Approvals.................................    15
   Section 3.5    No Conflict or Violation...............................    15
   Section 3.6    Financial Information..................................    15
   Section 3.7    Contracts..............................................    16
   Section 3.8    Compliance with Law....................................    16
   Section 3.9    Permits................................................    17
   Section 3.10   Litigation.............................................    17
   Section 3.11   Employee Matters.......................................    17
   Section 3.12   Labor Relations........................................    18
   Section 3.13   Intellectual Property..................................    18
   Section 3.14   Representations with Respect to Environmental
                  Matters................................................    19
   Section 3.15   Tax Matters............................................    20
   Section 3.16   Insurance..............................................    22
   Section 3.17   Regulatory Matters.....................................    22
   Section 3.18   Absence of Certain Changes or Events...................    22
   Section 3.19   Absence of Undisclosed Liabilities.....................    24
   Section 3.20   Property...............................................    24
   Section 3.21   Brokerage and Finders' Fees............................    24
   Section 3.22   Corporate and Accounting Records.......................    24
   Section 3.23   Affiliated Transactions................................    25
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   Section 3.24   Certain Practices......................................    25
   Section 3.25   No Other Representations or Warranties.................    26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER...................    26
   Section 4.1    Corporate Organization; Qualification..................    26
   Section 4.2    Authority Relative to this Agreement...................    26
   Section 4.3    Consents and Approvals.................................    27
   Section 4.4    No Conflict or Violation...............................    27
   Section 4.5    Litigation.............................................    28
   Section 4.6    Brokerage and Finders' Fees............................    28
   Section 4.7    Investment Representations.............................    28
   Section 4.8    Regulation Matters.....................................    28
   Section 4.9    No Other Representations or Warranties.................    29
ARTICLE V COVENANTS OF THE PARTIES.......................................    29
   Section 5.1    Notification to the CNDC; Negative Antitrust Decision;
                  Transfer of Equity Interests to a Third Purchaser......    29
   Section 5.2    Further Assurances.....................................    32
   Section 5.3    Employee Matters.......................................    32
   Section 5.4    Tax Covenants..........................................    34
   Section 5.5    Intercompany Accounts..................................    38
   Section 5.6    Surrender of Intellectual Property.....................    38
   Section 5.7    Maintenance of Insurance Policies......................    39
   Section 5.8    Preservation of Records................................    40
   Section 5.9    Public Statements......................................    40
   Section 5.10   Certain Transactions...................................    40
   Section 5.11   Use of Corporate Name; Transitional Use of Seller's
                  Name...................................................    41
   Section 5.12   Use of Information Technology..........................    41
   Section 5.13   Confidentiality........................................    41
   Section 5.14   Actions Relating to Entities...........................    42
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ARTICLE VI SURVIVAL; INDEMNIFICATION.....................................    42
   Section 6.1    Survival...............................................    42
   Section 6.2    Indemnification........................................    43
   Section 6.3    Calculation of Damages.................................    45
   Section 6.4    Procedures for Third-Party Claims......................    45
   Section 6.5    Procedures for Inter-Party Claims......................    46
ARTICLE VII MISCELLANEOUS PROVISIONS.....................................    47
   Section 7.1    Interpretation.........................................    47
   Section 7.2    Disclosure Letters.....................................    48
   Section 7.3    Payments...............................................    48
   Section 7.4    Expenses...............................................    48
   Section 7.5    Choice of Law..........................................    48
   Section 7.6    Assignment.............................................    48
   Section 7.7    Notices................................................    48
   Section 7.8    Resolution of Disputes.................................    50
   Section 7.9    Language...............................................    52
   Section 7.10   No Right of Setoff.....................................    52
   Section 7.11   Time is of the Essence.................................    52
   Section 7.12   Specific Performance...................................    52
   Section 7.13   Currency Matters.......................................    52
   Section 7.14   Entire Agreement.......................................    52
   Section 7.15   Binding Nature; Third Party Beneficiaries..............    53
   Section 7.16   Counterparts...........................................    53
   Section 7.17   Severability...........................................    53
   Section 7.18   Headings...............................................    53
   Section 7.19   Waiver.................................................    53
   Section 7.20   Amendment..............................................    54
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EXHIBITS

A  ASSIGNMENT OF QUOTAS AGREEMENT
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INDEX OF DEFINED TERMS

Action...................................................................     2
Affected Employees.......................................................     2
Affiliate................................................................     2
Agreement................................................................     2
Antitrust Approval.......................................................     2
Antitrust Law............................................................     2
Applicable Law...........................................................     2
AR$......................................................................     2
Business Day.............................................................     3
Buyer Disclosure Letter..................................................     3
Claims...................................................................     3
CNDC.....................................................................     3
Code.....................................................................     3
Confidentiality Agreement................................................     3
CTM......................................................................     3
Cut-off..................................................................     3
Damages..................................................................     3
Direct Equity Interests..................................................     3
Distribution.............................................................     3
Dollars or $.............................................................     3
Employees................................................................     4
Entities.................................................................     4
Environmental Laws.......................................................     4
Environmental Permit.....................................................     4
EWG......................................................................     4
Exchange Act.............................................................     4
FERC.....................................................................     4
FPA......................................................................     4
FUCO.....................................................................     4
GAAP.....................................................................     5
Generation...............................................................     5
Governmental Authority...................................................     5
Hazardous Substances.....................................................     5
Hidroinvest SPA..........................................................     5
Indebtedness.............................................................     5
Indirect Equity Interests................................................     5
Intellectual Property....................................................     5
Knowledge of Buyer.......................................................     6
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Knowledge of Seller......................................................     6
Liabilities..............................................................     6
Liens....................................................................     6
Material Adverse Effect..................................................     6
Negative Antitrust Decision..............................................     7
Operating................................................................     7
Ownership Percentage.....................................................     7
Pension Plans............................................................     7
PermittedLiens...........................................................     7
Person...................................................................     8
Representatives..........................................................     8
Seller Disclosure Letter.................................................     8
Subsidiary...............................................................     8
Tax Return...............................................................     9
Taxes....................................................................     9
TGM......................................................................     9
USFCPA...................................................................     9
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ANNEXES

I    EQUITY INTERESTS

II   ASSUMED INDEBTEDNESS

III  COPY OF THE HIDROINVEST SPA
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                         AGREEMENT OF PURCHASE AND SALE

     This AGREEMENT OF PURCHASE AND SALE, dated as of March 12, 2007, is made
and entered into by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C., a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC ("Lucid") and New Argentine Generation Company, LLC, a
Delaware limited liability company ("Newco" and collectively with Lucid, the
"Buyer").

                                   WITNESSETH:

     WHEREAS, Seller and Lucid have entered into that certain Common Agreement
dated as of the date hereof (the "Common Agreement"), pursuant to which Seller,
directly or through Affiliates of Seller, agreed to sell, and Lucid, directly or
through Affiliates of Lucid, agreed to acquire, upon the terms and conditions
set forth in this Agreement certain Argentina-based natural gas transmission and
marketing and independent power production businesses (the "Argentine
Businesses"), and upon the terms and conditions entered into contemporaneously
herewith, Michigan-based natural gas transmission, gathering, storage and
processing businesses (the "Michigan Businesses");

     WHEREAS, Seller and Buyer intend that the transactions contemplated by the
agreements relating to the sale of the Michigan Business will be consummated if
and only if the sale of the Argentine Businesses is consummated;

     WHEREAS, the Argentine Businesses are conducted through various Argentine
legal entities, the equity participations in which are owned, directly or
indirectly and in relevant amounts, by Seller ("Equity Interests" as described
on Annex I);

     WHEREAS, Buyer desires to purchase, and Seller desires to sell to Buyer,
the Equity Interests, and Seller desires to assign, and Buyer desires to assume,
certain intercompany Indebtedness as described in Annex II (the "Assumed
Indebtedness"), in each case upon the terms and subject to the conditions set
forth herein;

     NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth in this Agreement, and other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:

                                    ARTICLE I

                                  DEFINITIONS

     Section 1.1 Specific Definitions.

For purposes of this Agreement, the following terms shall have the meanings set
forth below:

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"Action"                    shall mean any administrative, regulatory, judicial
                            or other formal proceeding, action, Claim, suit,
                            investigation or inquiry by or before any
                            Governmental Authority, arbitrator or mediator, at
                            law or at equity.

"Affected Employees"        shall mean the Employees on the date hereof.

"Affiliate"                 shall have the meaning set forth in Rule 12b-2 of
                            the General Rules and Regulations under the Exchange
                            Act.

"Agreement"                 shall mean this Agreement of Purchase and Sale,
                            together with the Seller Disclosure Letter, Buyer
                            Disclosure Letter, Annexes I, II and III and
                            Exhibits hereto, as the same may be amended or
                            supplemented from time to time in accordance with
                            the provisions hereof.

"Antitrust Approval"        is the approval of the Acquisition without
                            undertakings by the Republic of Argentina
                            Secretariat of Internal Trade, or any agency or
                            tribunal that may replace it in the future or that
                            may be declared by a res judicata judgment to be
                            empowered to issue a final decision on the
                            Acquisition, approving the same under the Antitrust
                            Law.

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

"Applicable Law"            shall mean any statute, treaty, code, law,
                            ordinance, executive order, rule or regulation
                            (including a regulation that has been formally
                            promulgated in a rule-making proceeding but, pending
                            final adoption, is in proposed or temporary form
                            having the force of law); guideline or notice having
                            the force of law; or approval, permit, license,
                            franchise, judgment, order, decree, injunction or
                            writ of any Governmental Authority applicable to a
                            specified Person or specified property, as in effect
                            from time to time.

"AR$"                       shall mean Argentine Pesos.
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"Business Day"              shall mean any day that is not a Saturday, Sunday or
                            other day on which banks are required or authorized
                            by law to be closed in the City of New York.

"Buyer Disclosure Letter"   shall mean the Buyer Disclosure Letter delivered to
                            Seller concurrently with this Agreement, which is an
                            integral part of this Agreement.

"Claims"                    shall mean any and all claims, lawsuits, demands,
                            causes of action, investigations and other
                            proceedings (whether or not before a Governmental
                            Authority).

CNDC"                       shall mean Comision Nacional de Defensa de la
                            Competencia.

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

"Confidentiality            shall mean the confidentiality agreement entered
Agreement"                  into by and between the EE Group and CMS Enterprises
                            Company dated October 23, 2006.

"CTM"                       shall mean Centrales Termicas Mendoza S.A.

"Cut-off"                   shall mean December 31, 2006.

"Damages"                   shall mean judgments, settlements, fines, penalties,
                            damages, Liabilities, losses or deficiencies, costs
                            and expenses, including reasonable attorney's fees,
                            court costs, expenses of arbitration or mediation,
                            and other out-of-pocket expenses incurred in
                            investigating or preparing the foregoing; provided,
                            however, that "Damages" shall not include
                            incidental, indirect or consequential damages,
                            damages for lost profits or other special, punitive
                            or exemplary damages unless such Damages are deemed
                            to be direct damages of an Indemnified Party in
                            connection with a Third-Party Claim.

"Direct Equity Interests"   shall mean the equity interests held directly by the
                            Seller as described in Annex I.

"Distribution"              shall mean: (a) any dividend, distribution,
                            repayment or repurchase of share capital, capital
                            contribution or other return of capital to such
                            Person's shareholders or equivalent holders of its
                            ownership interests; (b) any repayment of any loan
                            owed to an Affiliate of such Person; and (c) any
                            loan made to an Affiliate of such Person, in each
                            case, other than to any of the Entities.

"Dollars or $"              shall mean dollars of the United States of America.
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"Employees"                 shall mean all employees employed by the Argentine
                            Businesses, including employees on short-term
                            disability, military leave, maternity leave or
                            paternity leave and other approved leaves of absence
                            from active employment as set forth in Section
                            1.1(a) of the Seller Disclosure Schedule.

"Entities"                  shall mean each of the following Argentine
                            sociedades anonimas and sociedades de
                            responsabilidad limitada, as the case may be: CMS
                            Operating S.R.L., CMS Centrales Termicas S.A., CMS
                            Generation S.R.L., CMS Comercializadora de Energia
                            S.A., Cuyana S.A. de Inversiones, Central Termicas
                            Mendoza S.A., CMS Ensenada S.A. and Transportadora
                            de Gas del Mercosur S.A.

"Environmental Laws"        shall mean all foreign, federal, state and local
                            laws, regulations, rules and ordinances in effect
                            and existence as of the closing Date where the
                            Argentine Businesses currently operate relating to
                            pollution or protection of human health or the
                            environment, natural resources or safety and health,
                            including laws relating to releases or threatened
                            releases of Hazardous Substances into the
                            environment (including ambient air, surface water,
                            groundwater, land, surface and subsurface strata).

"Environmental Permit"      shall mean any Permit, formal exemption,
                            identification number or other authorization issued
                            by a Governmental Authority pursuant to an
                            applicable Environmental Law.

"EWG"                       shall have the meaning set forth for the term
                            "exempt wholesale generator" at Section 366.1 of
                            FERC's regulations (18 C.F.R. 366.1).

"Exchange Act"              shall mean the United States Securities Exchange Act
                            of 1934, as amended.

"FERC"                      shall mean the United States Federal Energy
                            Regulation Commission.

"FPA"                       shall mean the United States Federal Power Act, as
                            amended.

"FUCO"                      shall have the meaning set forth for the term
                            "foreign utility company" at Section 366.1 of FERC's
                            regulations (18 C.F.R. 366.1).

"GAAP"                      shall mean Argentine generally accepted accounting
                            principles
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                            as in effect from time to time, applied on a
                            consistent basis.

"Generation"                shall mean CMS Generation S.R.L.

"Governmental Authority"    shall mean any executive, legislative, judicial,
                            tribal, regulatory, taxing or administrative agency,
                            body, commission, department, board, court,
                            tribunal, arbitrating body or authority of the
                            United States or any foreign country, or any state,
                            local or other governmental subdivision thereof.

"Hazardous Substances"      shall mean any chemicals, materials or substances
                            defined as or included in the definition of
                            "hazardous substances", "hazardous wastes",
                            "hazardous materials", "hazardous constituents",
                            "restricted hazardous materials", "extremely
                            hazardous substances", "toxic substances",
                            "contaminants", "pollutants", "toxic pollutants", or
                            words of similar meaning and regulatory effect under
                            any applicable Environmental Law.

"Hidroinvest SPA"           shall mean that certain Stock Purchase Agreement
                            between CMS Generation Co. and Generation, as
                            sellers, and Empresa Nacional de Electricidad S.A. -
                            ENDESA CHILE, as buyer, dated March 8, 2007, the
                            copy of which is attached as Annex III to this
                            Agreement.

"Indebtedness"              of any Person shall mean (a) all liabilities and
                            obligations of such Person for borrowed money or
                            evidenced by notes, bonds or similar instruments,
                            (b) obligations in respect of the deferred purchase
                            price of property or services (other than any amount
                            that would constitute current assets) to the extent
                            that such amount would be accrued as a liability on
                            a balance sheet prepared in accordance with GAAP,
                            (c) obligations in respect of capitalized leases,
                            (d) obligations in respect of letters of credit,
                            acceptances or similar obligations, (e) obligations
                            under interest rate cap agreements, interest rate
                            swap agreements, foreign currency exchange contracts
                            or other hedging contracts, (f) any accrued or
                            unpaid interest or breakage fees related to any of
                            the foregoing and (g) any guarantee of the
                            obligations of another Person with respect to any of
                            the foregoing.

"Indirect Equity            shall mean the equity interests held indirectly by
Interests"                  the Seller as described in Annex I.

"Intellectual Property"     shall mean all Argentine and foreign (a) patents and
                            patent applications, (b) trademarks, service marks,
                            logos, slogans, and
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                            trade dress, (c) copyrights, (d) software (excluding
                            commercial off-the-shelf software), and (e) all
                            confidential and proprietary information and
                            know-how.

"Knowledge of Buyer"        shall mean, with respect to Lucid, the knowledge,
                            after due inquiry, of those Persons set forth in
                            Section 1.1(b) of the Buyer Disclosure Letter, and
                            with respect to Newco, the knowledge, after due
                            inquiry, of those Persons set forth in Section
                            1.1(c) of the Buyer Disclosure Letter.

"Knowledge of Seller"       shall mean the knowledge, after due inquiry, of
                            those Persons set forth in Section 1.1(b) of the
                            Seller Disclosure Letter.

"Liabilities"               shall mean any and all debts, liabilities,
                            commitments and obligations, whether or not fixed,
                            contingent or absolute, matured or unmatured,
                            liquidated or unliquidated, accrued or unaccrued,
                            known or unknown, whether or not required by GAAP to
                            be reflected in financial statements or disclosed in
                            the notes thereto.

"Liens"                     shall mean any mortgage, pledge, lien (statutory or
                            otherwise and including, without limitation,
                            environmental, ERISA and tax liens), security
                            interest, easement, right of way, limitation,
                            encroachment, covenant, claim, restriction, right,
                            option, conditional sale or other title retention
                            agreement, charge or encumbrance of any kind or
                            nature (except for any restrictions arising under
                            any applicable securities laws).

"Material Adverse Effect"   shall mean actions, circumstances or omissions that
                            have an effect, individually or in the aggregate,
                            that is materially adverse to (a) the business,
                            operations, financial condition or assets of the
                            Entities, taken as a whole or (b) the ability of
                            Seller to consummate the transactions contemplated
                            hereby, in each case, other than any effect
                            resulting from, relating to or arising out of: (i)
                            the negotiation, execution, announcement of this
                            Agreement and the transactions contemplated hereby,
                            including the impact thereof on relationships,
                            contractual or otherwise, with customers, suppliers,
                            distributors, partners, joint owners or venturers
                            and employees, (ii) any action taken by Seller, the
                            Entities, Buyer or any of their respective
                            representatives or Affiliates required or permitted
                            to be taken by the terms of this Agreement or
                            necessary to consummate the transactions
                            contemplated by this Agreement, (iii) the general
                            state of the industries in Argentina in which the
                            Entities operate (including (A) pricing levels, (B)
                            changes in the national, regional or local wholesale
                            or retail markets for
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                            natural gas or electricity in Argentina, (C) changes
                            in the national, regional or local natural gas
                            pipeline systems in Argentina, (D) changes in the
                            Argentine national, regional or local markets for
                            the distribution of electricity, (E) rules,
                            regulations or decisions of Governmental Authorities
                            or the courts affecting the natural gas transmission
                            or independent power production industries in
                            Argentina as a whole and (F) any condition described
                            in the Seller Disclosure Letter, (iv) general legal,
                            regulatory, political, business, economic, capital
                            market and financial market conditions (including
                            prevailing interest rate levels), or conditions
                            otherwise generally affecting the industries in
                            which the Entities operate, (v) any change in law,
                            rule or regulation or GAAP or interpretations
                            thereof applicable to the Entities, Seller or Buyer,
                            (vi) acts of God, national or international
                            political or social conditions or (vii) general
                            economic conditions in Argentina; provided, that,
                            for purposes of determining a "Material Adverse
                            Effect", any effect on the business, financial
                            conditions or assets of the business of any Person
                            shall include only the portion of such effect
                            attributable to the ownership interests of the
                            Entities and their Affiliates and shall exclude any
                            portion of such effect attributable to the ownership
                            interest of any third party in such Person.

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

"Operating"                 shall mean CMS Operating S.R.L.

"Ownership Percentage"      shall mean, with respect to any Subsidiary, the
                            percentage of the equity represented by securities
                            or ownership interests, or, in the case of a
                            partnership, the percentage of the profits and
                            losses of such partnership, owned directly or
                            indirectly by Seller as of the date hereof.

"Pension Plans"             shall mean all Plans providing pensions,
                            superannuation benefits or retirement savings,
                            including pension plans, top up pensions or
                            supplemental pensions.

"Permitted Liens"           shall mean (a) zoning, planning and building codes
                            and other
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                            applicable laws regulating the use, development and
                            occupancy of real property and permits, consents and
                            rules under such laws; (b) encumbrances, easements,
                            rights-of-way, covenants, conditions, restrictions
                            and other matters affecting title to real property
                            which do not materially detract from the value of
                            such real property or materially restrict the use of
                            such real property; (c) leases and subleases of real
                            property; (d) all easements, encumbrances or other
                            matters which are necessary for utilities and other
                            similar services on real property; (e) Liens to
                            secure Indebtedness reflected on the Financial
                            Statements or Indebtedness incurred in the ordinary
                            course of business, consistent with past practice,
                            after the date thereof, (f) Liens for Taxes and
                            other governmental levies not yet due and payable
                            or, if due, (i) not delinquent or (ii) being
                            contested in good faith by appropriate proceedings
                            during which collection or enforcement against the
                            property is stayed and with respect to which
                            adequate reserves have been established and are
                            being maintained to the extent required by GAAP, (g)
                            mechanics', workmen's, repairmen's, materialmen's,
                            warehousemen's, carriers' or other Liens, including
                            all statutory Liens, arising or incurred in the
                            ordinary course of business, (h) original purchase
                            price conditional sales contracts and equipment
                            leases with third parties entered into in the
                            ordinary course of business, (i) Liens that do not
                            materially interfere with or materially affect the
                            value or use of the respective underlying asset to
                            which such Liens relate, and (j) Liens which are
                            reflected in any Material Contract.

"Person"                    shall mean any natural person, corporation, company,
                            general partnership, limited partnership, limited
                            liability partnership, joint venture,
                            proprietorship, limited liability company, or other
                            entity or business organization or vehicle, trust,
                            unincorporated organization or Governmental
                            Authority or any department or agency thereof.

"Representatives"           shall mean accountants, counsel or representatives.

"Seller Disclosure          shall mean the Seller Disclosure Letter delivered to
Letter"                     Buyer concurrently with this Agreement, which is an
                            integral part of this Agreement.

"Subsidiary"                of any entity means, at any date, any Person (a) the
                            accounts of which would be consolidated with and
                            into those of the applicable Person in such Person's
                            consolidated financial statements if such financial
                            statements were prepared in accordance with GAAP as
                            of such date or (b) of which
</TABLE>

8

<PAGE>

<TABLE>
<S>                         <C>
                            securities or other ownership interests representing
                            more than fifty percent (50%) of the equity or more
                            than fifty percent (50%) of the ordinary voting
                            power or, in the case of a partnership, more than
                            fifty percent (50%) of the general partnership
                            interests or more than fifty percent (50%) of the
                            profits or losses of which are, as of such date,
                            owned, controlled or held, directly or indirectly by
                            the applicable Person or one or more subsidiaries of
                            such Person.

"Tax Return"                shall mean any report, return, declaration, or other
                            information required to be supplied to a
                            Governmental Authority in connection with Taxes
                            including any claim for refund or amended return.

"Taxes"                     shall mean all taxes, levies or other like
                            assessments, including income, gross receipts,
                            excise, value added, real or personal property,
                            withholding, asset, sales, use, license, payroll,
                            social security (including payments and
                            contributions to pension funds) transaction,
                            capital, business, corporation, employment, net
                            worth and franchise taxes, or other governmental
                            taxes of any kind whatsoever imposed by or payable
                            to any U.S. or foreign, federal, state, provincial
                            or local taxing authority, whether computed on a
                            separate, consolidated, unitary, combined or any
                            other basis; and whether imposed as transferee,
                            successor, by contract or otherwise; in each
                            instance such term shall include any interest,
                            penalties or additions to tax attributable to any
                            such Tax.

"TGM"                       shall mean Transportadora de Gas del Mercosur S.A.

"US FCPA"                   shall mean the United States Foreign Corrupt
                            Practices Act of 1977, as amended.
</TABLE>

                                   ARTICLE II

                                SALE AND PURCHASE

          Section 2.1 Agreement to Sell and Purchase.

               (a) In accordance with the terms of this Agreement and
     simultaneously with the payment of the Purchase Price in accordance with
     Section 2.1(b) of this Agreement, (i) Buyer shall purchase, acquire and
     accept from Seller, and Seller shall sell, convey, assign, transfer and
     deliver to Buyer, the Equity Interests, free and clear of all Liens, and
     (ii) Buyer shall purchase and assume from Seller, and Seller shall sell and
     assign to Buyer, the Assumed Indebtedness, free and clear of all Liens (the
     "Acquisition").

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<PAGE>

               (b) As of the date hereof, Buyer shall pay to Seller, in
     consideration for (i) the purchase of the Equity Interests pursuant to
     Section 2.1(a)(i) and (ii) the assignment and assumption of the Assumed
     Indebtedness pursuant to section 2.1(a)(ii), an amount in cash equal to
     $125,000,000 less the amount paid to CMS Generation Co. under the
     Hidroinvest SPA (the "Purchase Price"), by wire transfer of same day funds
     to an account or accounts and in such amounts as designated by Seller.

          Section 2.2 Deliveries by the Parties.

               (a) Simultaneously with the confirmation of receipt of the
     Purchase Price by Seller's bank, Seller shall deliver or cause to be
     delivered, in form and substance satisfactory to Buyer (unless previously
     delivered), the following items:

               (i) the appropriate notices of transfer of the Direct Equity
     Interests signed by the holders of record and addressed to each of the
     relevant Entities whose Equity Interests are being transferred;

               (ii) certified copies of all resolutions of the boards of
     directors of Seller approving the entering into and completion of the
     transactions contemplated by this Agreement;

               (iii) certified copies of the registration of Seller at the
     Superintendency of Corporations (Inspeccion General de Justicia), in
     accordance with Section 123 of Argentine Corporate Act No 19.550;

               (iv) except for TGM, (x) all organizational documents
     (estatutos); (y) all books of minutes of meeting and resolutions of
     shareholders, quotaholders, directors and managers (and any committees);
     and (z) the share certificate books (libro de registro de accionistas), if
     applicable;

               (v) except for the resignations of those officers listed in
     Section 2.2(a)(v) of the Seller Disclosure Letter, written resignations,
     effective as of the date hereof, from each of the regular and alternate
     directors, and of the regular and alternate managers, as the case may be,
     and, when applicable, and statutory supervisors (sindicos) of any of the
     Entities appointed by Seller;

               (vi) written evidence of the signing by the directors and
     statutory auditors (sindicos) appointed by Seller of the minutes which are
     pending in the shareholders' and board of directors' minutes books of the
     Entities;

               (vii) official reports stating that CMS International Ventures
     LLC and CMS Generation Holdings Company are not subject to any restriction
     to sell and transfer their interests in Operating and Generation, in
     compliance with Section 127 of General Resolution 7/2005 passed by the
     Superintendency of Corporations (Inspeccion General de Justicia). The
     above-mentioned reports shall be granted by the competent authority with
     jurisdiction in the City of Buenos Aires and should be dated up to ten (10)
     days prior to the date hereof;

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<PAGE>

               (viii) officer's certificates of CMS International Ventures, LLC
     and CMS Generation Holdings Company stating that, according to the laws of
     the State of Michigan, United States of America, it is not possible to
     comply with Section 127, 4th paragraph of General Resolution 7/2005 passed
     by the Superintendency of Corporations (Inspeccion General de Justicia)
     based on the fact that there is no governmental authority that can issue
     such certificate;

               (ix) duly executed instruments of transfer, assignment and
     assumption of the Assumed Indebtedness, and all underlying documentation
     evidencing the rights and obligations of the creditors and obligors
     thereunder (the "Assumed Indebtedness Documents"), in form and substance
     acceptable to Buyer; and

               (x) a certificate of incumbency and authority of Seller dated the
     date hereof.

               (b) Simultaneously with the confirmation of receipt of the
     Purchase Price by Seller's bank, Seller and Buyer shall enter into the
     relevant Assignment of Quotas Agreements substantially in the form of the
     Agreement attached hereto as Exhibit B to perfect the transfer of Seller's
     quotas in Operating and in Generation to Buyer.

               (c) As of the date hereof, Buyer shall deliver or cause to be
     delivered to Seller (unless previously delivered), the following items:

               (i) the Purchase Price by wire transfer of same day funds to an
     account or accounts and in such amounts as designated by Seller in writing;
     and

               (ii) a certificate of incumbency and authority of Buyer dated the
     date hereof.

               (d) As of the date hereof, Seller shall cause the board of
     directors or managers of the Entities, as the case may be, to call
     shareholders' or quotaholders' meetings (as applicable) of the Entities
     wholly owned, directly or indirectly, by Seller to be held on the date
     hereof and shall cause such shareholders or quotaholders meetings to (i)
     accept the resignation of the regular and alternate directors and of the
     regular and alternate managers, as the case may be, and, when applicable,
     statutory supervisors (sindicos) originally nominated by Seller or its
     Affiliates and, if applicable, replace the officers appointed by Seller who
     have not resigned to their offices as of the date hereof; (ii) approve the
     performance of the resigning directors and managers, as the case may be,
     and statutory supervisors (sindicos); (iii) appoint regular and alternate
     directors and regular and alternate managers, as the case may be, and, when
     applicable, statutory supervisors (sindicos) designated by Buyer; (iv)
     change, pursuant to Buyer's instructions, the Entities' legal address (sede
     social) and corporate name (denominacion social) in order to eliminate
     references to "CMS"; (v) amend the requisite organizational documents to
     authorize each of the Entities to guarantee the debt (actual or contingent)
     of any Person (including any Person directly or indirectly

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<PAGE>

     controlling, controlled by, under common control with or otherwise
     affiliated to, such Entities) and to pledge, mortgage or otherwise encumber
     (including, without limitation, by way of trust assignment or security
     assignment) any of its present or future assets of any kind as security for
     the debt (actual or contingent) of any Person (including any person
     directly or indirectly controlling, controlled by, under common control
     with or otherwise affiliated to, such Entities); and (vi) amend the by-laws
     of each of Operating and Generation in order to eliminate the reference to
     the identity of each quotaholders from the articles of the by-laws.

               (e) Simultaneously with the confirmation of receipt of the
     Purchase Price by Seller's bank, Seller shall cause the board of directors
     of CTM to convey (i) a special class "A" shareholders' meeting to be held
     on the date hereof to (A) accept the resignation of the regular and
     alternate directors and statutory supervisors (sindicos) nominated by class
     "A" shareholders; and (B) appoint regular and alternate directors and
     statutory supervisors (sindicos) designated by class "A" shareholders; (ii)
     a special class "B" shareholders' meeting to be promptly held after the
     date hereof to (A) accept the resignation of the regular and alternate
     directors and statutory supervisors (sindicos) nominated by class "B"
     shareholders and (B) appoint regular and alternate directors and statutory
     supervisors (sindicos) designated by class "B" shareholders; and (iii) an
     ordinary shareholders meeting to be promptly held after the date hereof in
     order to consider and approve the performance of the resigning officers.
     Buyer undertakes to approve the performance of the regular and alternate
     directors and statutory supervisors (sindicos) appointed by class "A" and
     class "B" shareholders in the relevant general shareholders' meeting of
     CTM.

               (f) Simultaneously with the confirmation of receipt of the
     Purchase Price by Seller's bank, Seller shall cause the members of the
     board of directors of TGM appointed by Class "C" shareholders to request a
     calling of a board of directors' meeting in order to convey (i) a special
     Class "C" shareholders' meeting to be promptly held after the date hereof
     to (A) accept the resignation of the regular and alternate directors
     nominated by Class "C" shareholders and (B) appoint regular and alternate
     directors designated by Class "C" shareholders; and (ii) an ordinary
     shareholders' meeting to be promptly held after the date hereof in order to
     consider and approve the performance of the resigning officers. Buyer
     undertakes to approve the performance of the regular and alternate
     directors appointed by Seller in the relevant general shareholders' meeting
     of TGM.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

          Seller hereby represents and warrants to Buyer as follows:

          Section 3.1 Corporate Organization; Qualification. Each Seller is duly
     organized and validly existing and in good standing under the Laws of its
     governing jurisdiction. Each of the Entities is duly organized and validly
     existing and in good standing under the Laws of its governing jurisdiction
     and each (a) has the requisite power

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<PAGE>

     to carry on its businesses as currently conducted and (b) is duly qualified
     to do business in each of the jurisdictions in which the ownership,
     operation or leasing of its properties or assets or the conduct of its
     business requires it to be so qualified, except where the failure to be so
     qualified would not have a Material Adverse Effect.

          Section 3.2 Authority Relative to this Agreement.

          Each Seller has full corporate power and authority to execute and
     deliver this Agreement and the other agreements, documents and instruments
     to be executed and delivered by it in connection with this Agreement and to
     consummate the transactions contemplated hereby and thereby. The execution,
     delivery and performance of this Agreement and the other agreements,
     documents and instruments to be executed and delivered in connection with
     this Agreement and the consummation of the transactions contemplated hereby
     and thereby have been duly and validly authorized by all the necessary
     action on the part of each Seller (as applicable), and no other corporate
     or other proceedings on the part of Seller are necessary to authorize this
     Agreement and the other agreements, documents and instruments to be
     executed and delivered in connection with this Agreement or to consummate
     the transactions contemplated hereby and thereby. This Agreement and the
     other agreements, documents and instruments to be executed and delivered in
     connection with this Agreement have been duly and validly executed and
     delivered by Seller and assuming that this Agreement and the other
     agreements, documents and instruments to be executed and delivered in
     connection with this Agreement constitute legal, valid and binding
     agreements of the Buyer are enforceable against Seller in accordance with
     their respective terms, except that such enforceability may be limited by
     applicable bankruptcy, insolvency, moratorium or other similar laws
     affecting or relating to enforcement of creditors' rights generally or
     general principles of equity.

          Section 3.3 Equity Interests; Assumed Indebtedness.

               (a) Except as set forth in Section 3.3(a) of the Seller
     Disclosure Letter, the Equity Interests are duly authorized, validly issued
     and fully paid and were not issued in violation of any preemptive rights.
     Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, (i)
     there are no equity interests of the Entities authorized, issued or
     outstanding or reserved for any purpose and (ii) there are no (A) existing
     options, warrants, calls, preemptive rights, subscriptions or other rights,
     agreements, arrangements or commitments of any character, relating to the
     Entities, obligating Seller or any of its Affiliates to issue, transfer or
     sell, or cause to be issued, transferred or sold, any additional equity
     interest in the Entities, (B) outstanding securities of Seller or its
     Affiliates that are convertible into or exchangeable or exercisable for any
     equity interest in the Entities, (C) options, warrants or other rights to
     purchase from Seller or its Affiliates any such convertible or exchangeable
     securities or (D) outstanding Liabilities to pay any additional amounts on
     the equity interests or in respect of the capital of the Entities,
     including any Liabilities in respect of obligations to make capital
     contributions to any of the Entities, or (E) other than this Agreement,
     contracts, agreements or arrangements of any kind relating to the issuance
     of any equity

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<PAGE>

     interest in the Entities, or any such options, warrants or rights, pursuant
     to which, in any of the foregoing cases, Seller or its Affiliates are
     subject or bound.

               (b) Except as set forth in Section 3.3(b) of the Seller
     Disclosure Letter, Seller owns all of the issued and outstanding Equity
     Interests and has good, valid and marketable title to the Equity Interests,
     free and clear of all Liens or other defects in title, and the Equity
     Interests have not been pledged or assigned to any Person. The Equity
     Interests owned by Seller are not subject to any restrictions on
     transferability other than those imposed by this Agreement and by
     applicable securities laws. Following the transfer of the Equity Interests
     to Buyer, Buyer will own all of the issued and outstanding Equity Interests
     and will have good and valid title to the Equity Interests, free and clear
     of all Liens.

               (c) Section 3.3(c) of the Seller Disclosure Letter sets forth, as
     of the date hereof, a list of each of the Entities, including its name, its
     jurisdiction of organization, its authorized and outstanding capital stock
     (or equivalent equity interest) and the percentage of its outstanding
     capital stock (or quota) owned by the Seller and/or the Entities, as
     applicable. Except as set forth in Section 3.3(c) of the Seller Disclosure
     Letter, the shares of outstanding capital stock or other equity interests
     or quotas, as the case may be, of the Entities are duly authorized, validly
     issued, fully paid and nonassessable, and are held of record by Seller and
     the Entities as set forth in Section 3.3(c) of the Seller Disclosure
     Letter, free and clear of Liens. Except as set forth in Section 3.3(c) of
     the Seller Disclosure Letter, there are no (i) existing options, warrants,
     calls, preemptive rights, subscriptions or other rights, agreements,
     arrangements or commitments of any character, relating to the capital stock
     or partnership interest of the Entities, obligating Seller, the Entities,
     or any of their Affiliates to issue, transfer or sell, or cause to be
     issued, transferred or sold, any equity interest in any of the Entities,
     (ii) outstanding securities of Seller, the Entities, or their Affiliates
     that are convertible into or exchangeable or exercisable for any of capital
     stock or partnership interest of any of the Entities, (iii) options,
     warrants or other rights to purchase from Seller, the Entities, or their
     Affiliates any such convertible or exchangeable securities or (iv) other
     than this Agreement, contracts, agreements or arrangements of any kind
     relating to the issuance of any equity interest of any of the Entities, or
     any such options, warrants or rights, pursuant to which, in any of the
     foregoing cases, Seller, any of the Entities or its Affiliates are subject
     or bound.

               (d) Except as set forth in Section 3.3(d) of the Seller
     Disclosure Letter, there are no Persons (other than an Entity) in which any
     of the Entities owns any equity or other similar interest.

               (e) Seller represents and warrants that it is the legal and
     beneficial owners of the Assumed Indebtedness, free and clear of any Lien.
     Seller has delivered to Buyer true and complete copies of all Assumed
     Indebtedness Documents. Seller further represents and warrants that any and
     all representations and warranties given by Seller or any of its Affiliates
     in the Assumed Indebtedness Documents are true and correct in all material
     respects.

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<PAGE>

          Section 3.4 Consents and Approvals.

          Except as otherwise provided in Section 5.1(a) of this Agreement or
     as set forth in Section 3.4 of the Seller Disclosure Letter, Seller
     requires no consent, approval or authorization of, or filing, registration
     or qualification with, any Governmental Authority, or any other Person as a
     condition to the execution and delivery of this Agreement or the
     performance of the obligations hereunder, except where the failure to
     obtain such consent, approval or authorization of, or filing of,
     registration or qualification with, any Governmental Authority, or any
     other Person would not have a Material Adverse Effect.

          Section 3.5 No Conflict or Violation.

          Except as set forth in Section 3.5 of the Seller Disclosure Letter,
     the execution, delivery and performance by the Seller of this Agreement
     does not:

               (a) violate or conflict with any provision of the organizational
     documents or bylaws of Seller or any of the Entities;

               (b) violate any applicable provision of a law, statute, judgment,
     order, writ, injunction, decree, award, rule or regulation of any
     Governmental Authority, except where such violation would not have a
     Material Adverse Effect; or

               (c) violate, result in a breach of, constitute (with due notice
     or lapse of time or both) a default or cause any obligation, penalty or
     premium to arise or accrue under any Material Contract, lease, loan,
     mortgage, security agreement, trust indenture or other material agreement
     or instrument to which Seller or any of the Entities is a party or by which
     any of them is bound or to which any of their respective properties or
     assets is subject, except for violations, breaches or defaults that would
     not have a Material Adverse Effect.

               (d) result in the imposition or creation of any material Lien
     upon or with respect to any of the properties or assets owned or used by
     the Entities; or

               (e) result in the cancellation, modification, revocation or
     suspension of any material Permits or in the failure to renew any material
     Permit.

          Section 3.6 Financial Information.

               (a) Prior to the date hereof, Seller has made available to Buyer
     or its representatives the audited combined balance sheet of each of the
     Entities as of December 31, 2005, and the audited combined statements of
     income and cash flows of each of the Entities for each of the two years
     ended December 31, 2004 and 2005, together with the related notes thereto,
     accompanied by the reports thereon of Seller's accountants, as well as such
     audited combined balance sheet and statements of income and cash flows of
     each of the Entities (except Generation and TGM) as of and for the two
     years ended December 31, 2005 and 2006, (collectively, the "Financial
     Statements").

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<PAGE>

               (b) The Financial Statements were prepared in accordance with
     GAAP, consistently applied throughout the periods indicated and fairly
     present, in all material respects, the combined financial position, results
     of operations and cash flows of each of the Entities, as of the dates
     thereof and for the periods covered thereby, in each case, except as
     disclosed in the Financial Statements (or the notes thereto) or in Section
     3.6(b) of the Seller Disclosure Letter.

               (c) As reflected in the Financial Statements as of December 31,
     2006, there was approximately $50,000,000 of unencumbered cash and cash
     equivalents held by the Entities (excluding TGM and Generation).

               (d) As the date hereof, $26,900,000 collected by Generation under
     the Hidroinvest SPA as purchase price of the Hidroinvest S.A. shares sold
     by Generation thereunder are held in the an account of Operating for the
     benefit of Generation.

          Section 3.7 Contracts.

               (a) Section 3.7(a) of the Seller Disclosure Letter sets forth a
     list of each material contract, lease or similar agreement or instrument to
     which any of the Entities (except for TGM) is a party, other than (i) any
     purchase or sale orders arising in the ordinary course of business, and
     (ii) any contract involving the payment or receipt of less than $350,000 in
     any one year (each contract set forth in Section 3.7(a) of the Seller
     Disclosure Letter being referred to herein as a "Material Contract").

               (b) Section 3.7(b) of the Seller Disclosure Letter sets forth a
     list of each contract that any of the Entities has with Seller or with any
     Affiliate of Seller that is not one of the Entities.

               (c) Except as set forth in Section 3.7(c) of the Seller
     Disclosure Letter, each Material Contract is a valid and binding agreement
     of the Entities party thereto and, to the Knowledge of Seller, is in full
     force and effect.

               (d) Except as set forth in Section 3.7(d) of the Seller
     Disclosure Letter, there is no default by Seller or any Entity under any
     Material Contract to which it is a party, and Seller has no Knowledge of
     any default by any counterparties under any Material Contract, other than
     defaults which have been cured or waived and which would not have a
     Material Adverse Effect.

          Section 3.8 Compliance with Law.

          Except for Environmental Laws and Tax laws, which are the subject of
     Section 3.14 and Section 3.15, respectively, and except as set forth in
     Section 3.8 of the Seller Disclosure Letter, the Entities are in compliance
     with all federal, state, local or foreign laws, statutes, ordinances,
     rules, regulations, judgments, orders, writs, injunctions or decrees of any
     Governmental Authority applicable to their respective properties, assets
     and businesses except where such noncompliance would not have a Material
     Adverse Effect.

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<PAGE>

          Section 3.9 Permits.

          Except as set forth in Section 3.9 of the Seller Disclosure Letter,
     Seller and the Entities have all permits, licenses, certificates of
     authority, orders and approvals of, and have made all filings applications
     and registrations with Governmental Authorities necessary for the conduct
     of their respective business operations as presently conducted
     (collectively, the "Permits"), except for those Permits the absence of
     which would not, individually or in the aggregate, have a Material Adverse
     Effect.

          Section 3.10 Litigation.

          Except as identified in Section 3.10 of the Seller Disclosure Letter,
     there are no Actions before any Governmental Authority or arbitration panel
     or tribunal pending or in progress or, to the Knowledge of Seller,
     threatened, against Seller, the Entities, or any of their respective
     Affiliates or any executive officer or director thereof relating to the
     Equity Interests or Assumed Indebtedness or the respective assets or
     businesses of the Entities, except as would not, individually or in the
     aggregate, have a Material Adverse Effect. None of Seller, the Entities, or
     any of their respective Affiliates are subject to any outstanding judgment,
     order, writ, injunction, decree or award entered in an Action to which such
     Person was a named party relating to the Equity Interests or Assumed
     Indebtedness or the respective assets or businesses of such Persons, except
     as would not, individually or in the aggregate, have a Material Adverse
     Effect.

          Section 3.11 Employee Matters.

               (a) Section 3.11(a) of the Seller Disclosure Letter lists all
     material employee benefit and compensation plans and contracts and deferred
     compensation, stock option, stock purchase, stock appreciation rights,
     stock-based incentive bonus, severance, employment, change in control,
     vacation or fringe benefit programs, policies, agreements, arrangements or
     plans maintained by the Entities for the benefit of any of their current or
     former Employees (collectively, the "Plans"). True and complete copies of
     all material Plans, and all amendments thereto have been provided or made
     available to Buyer or its representatives.

               (b) To the Knowledge of Seller:

               (i) each Plan is registered, funded, administered and invested,
     as applicable, in substantial compliance with the current terms of such
     Plan, and in accordance with Applicable Laws;

               (ii) for any Plan where contributions are required to be made in
     accordance with an actuarial valuation report, all minimum contributions
     required to be made to such Plan have been made or will be timely made in
     accordance with the actuarial report most recently filed with the
     applicable Governmental Entity;

               (iii) for any Plan where contributions are not required to be
     made in accordance with an actuarial valuation report, all contributions
     required to be made to such Plan have been made;

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<PAGE>

               (iv) no event has occurred respecting any qualified Plan that
     would result in the revocation of the registration of such Plan or could
     otherwise reasonably be expected to adversely affect the tax status of any
     such Plan; and

               (v) each of the Entities have made all contributions to the
     Pension Plans to which the Entities are required to make contributions.

               (c) With respect to each Plan, (i) no material Action is pending
     or, to the Knowledge of Seller, threatened and (ii) to the Knowledge of
     Seller no facts or circumstances exist that would give rise to any material
     Actions.

               (d) Except as set forth in Section 3.11(d) of the Seller
     Disclosure Letter, in the three (3) years prior to the date hereof there
     have been no partial or full wind-ups declared in respect of any Pension
     Plan.

               (e) Except as set forth in Section 3.11(e) of the Seller
     Disclosure Letter, none of Seller or the Entities has made any written
     promise to create any Plan or to improve or change the benefits provided
     under any Plan.

               (f) Except as set forth in Section 3.11(f) of the Seller
     Disclosure Letter, the consummation of the transactions contemplated hereby
     will not (i) cause any of the Entities to be obliged to pay to any current
     or former employee or officer of any of the Entities any termination pay,
     severance pay, unemployment compensation or any other payment; or (ii)
     accelerate the time of payment or vesting, or increase the amount of
     compensation due to any such employee or officer.

          Section 3.12 Labor Relations.

          Except as set forth in Section 3.12 of the Seller Disclosure Letter,
     (i) none of the Entities is a party to any labor or collective bargaining
     agreements, and there are no labor or collective bargaining agreements
     which pertain to any employees of the Entities, (ii) within the preceding
     eighteen (18) months, there have been no representation or certification
     proceedings, or petitions seeking a representation proceeding, pending or,
     to the Knowledge of Seller, threatened in writing to be brought or filed
     with any other labor relations tribunal or authority with respect to the
     Entities and (iii) within the preceding twelve (12) months, to the
     Knowledge of Seller, there have been no organizing activities involving the
     Entities with respect to any group of their respective employees; (iv)
     there are no pending or, to the Knowledge of Seller, threatened strikes,
     work stoppages, slowdowns or lockouts against the Entities, or their
     respective Employees or involving any of the Entities' facilities; and (v)
     there are no pending unfair employment practice charges, grievances or
     complaints filed or, to the Knowledge of Seller, threatened to be filed
     with any Governmental Authority based on the employment or termination of
     employment by the Entities of any employee.

          Section 3.13 Intellectual Property.

               (a) Subject to the provisions of Section 5.6 of this Agreement,
     Section 3.13(a) of the Seller Disclosure Letter sets forth a list of all
     material Argentine

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<PAGE>

     and foreign: (i) patents and patent applications; (ii) trademark
     registrations and applications; and (iii) copyright registrations and
     applications, owned by the Entities. The foregoing schedules set forth at
     Section 3.13(a) of the Seller Disclosure Letter are complete and accurate
     in all material respects. To the Knowledge of Seller, the Entities have
     taken all steps necessary to maintain these rights and have not taken any
     action that would constitute abandonment thereof, including, but not
     limited to, making any and all necessary filings with any governmental
     authority, administrative office, or other entity, and paying any and all
     necessary fees.

               (b) Except as set forth on Section 3.13(b) of the Seller
     Disclosure Letter or as would not have a Material Adverse Effect:

               (i) the foregoing registrations are in effect and subsisting;

               (ii) each of the Entities owns all of the rights and interests in
     and has title to, or has validly licensed to it all of the Intellectual
     Property used by such Person;

               (iii) the Entities are the owners or authorized users of all the
     Intellectual Property required to operate their respective businesses as
     currently operated, free and clear of all Liens;

               (iv) no Intellectual Property owned or used by the Entities is
     subject to any outstanding judgment, injunction, order, decree or agreement
     restricting the use, licensing or sublicensing thereof by any of such
     Persons. There are no claims or actions pending or, to the Knowledge of
     Seller, threatened against any of the Entities by any Person arising out of
     or relating to any Intellectual Property owned or used by such Persons;

               (v) the execution, delivery and performance of this Agreement and
     the consummation of the transactions contemplated hereby will not breach,
     violate or conflict with any instrument or agreement governing any
     Intellectual Property owned or used by the Entities, and will not cause the
     forfeiture or termination or give rise to a right of forfeiture or
     termination of any Intellectual Property owned or used by such Entities,
     except for the forfeiture or termination of such Intellectual Property as
     would not materially and adversely affect business, operations, financial
     condition or assets of the Entities, taken as a whole; and

               (vi) To the Knowledge of Seller, no third party is infringing
     upon, misappropriating, or otherwise violating rights to the Intellectual
     Property owned by the Entities.

          Section 3.14 Representations with Respect to Environmental Matters.

          To the Knowledge of Seller, and except as set forth in Section 3.14 of
     the Seller Disclosure Letter or as would not, individually or in the
     aggregate, have a Material Adverse Effect:

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               (a) The Entities are in compliance with all applicable
     Environmental Laws;

               (b) The Entities have all of the Environmental Permits required
     in order to conduct their operations in accordance with applicable laws or,
     where such Environmental Permits have expired, have applied for a renewal
     of such Environmental Permits in a timely fashion;

               (c) The Entities are in compliance with the Environmental Permits
     issued to them;

               (d) There is no pending or threatened written Claim, lawsuit, or
     administrative proceeding against the Entities under or pursuant to any
     Environmental Law;

               (e) None of the Entities is a party or subject to any
     administrative or judicial order, decree or other agreement with a
     Governmental Authority under or pursuant to any applicable Environmental
     Law;

               (f) None of the Entities has received written notice from any
     third party, including any Governmental Authority, alleging that any of the
     Entities has been or is in violation or potentially in violation of any
     applicable Environmental Law or otherwise may be liable under any
     applicable Environmental Law; and

               (g) With respect to the real property that is currently owned or
     leased by the Entities, there have been no spills or discharges of
     Hazardous Substances on or underneath any such real property.

          The representations and warranties set forth in this Section 3.14 are
     Seller's sole and exclusive representations and warranties related to
     environmental matters.

          Section 3.15 Tax Matters.

          Except for matters set forth on Section 3.15 of the Seller Disclosure
     Letter, and limited to the Knowledge of Seller with respect to TGM:

               (a) Each of the Entities and each consolidated, combined,
     unitary, affiliated or aggregate group of which any of the Entities is or
     was a member has timely filed all Tax Returns that it was required to file.
     All such returns are correct and complete in all material respects. All
     Taxes owed by any of the Entities have been paid, whether or not shown as
     due on any such filed Tax Returns. None of the Entities currently is the
     beneficiary of any extension of time within which to file any Tax Return.
     No claim or assertion has ever been made by a taxing authority in a
     jurisdiction where any of the Entities does not file Tax Returns that such
     Entity is or may be subject to taxation by that jurisdiction. There are no
     Tax liens on the assets of any of the Entities, other than Permitted Liens.

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               (b) The charges, accruals and reserves for Taxes reflected on the
     December 31, 2006 Financial Statements are adequate to cover all
     liabilities for Taxes of the Entities (except TGM), through the date of
     such Financial Statements. The charges, accruals and reserves for Taxes for
     TGM reflected on the December 31, 2005 Financial Statements are adequate to
     cover all liabilities for Taxes of TGM through the date of such Financial
     Statements. Since December 31, 2006, the Entities have not incurred any
     liability for Taxes relating to transactions outside the ordinary course of
     business or otherwise inconsistent with past custom and practice.

               (c) Each of the Entities has withheld and paid all material Taxes
     required to have been withheld and paid in connection with amounts paid or
     owing to any employee, former employee, independent contractor, creditor,
     stockholder, affiliate, customer, supplier or other third party.

               (d) There is no dispute or claim concerning any Tax liability of
     an Entity either claimed or raised by any taxing authority in writing.
     Section 3.15(d) of the Seller Disclosure Letter lists all United States
     federal, state, local and non-United States Tax Returns with respect to
     Taxes determined by reference to net income filed with respect to each
     Entity for any taxable period ended on or after January 1, 2002, indicates
     those Tax Returns that have been audited and indicates those Tax Returns
     that currently are the subject of audit. No other Tax audits or other
     administrative or judicial Tax proceedings with respect to Taxes of the
     Entities are pending or are being conducted. No Entity has waived any
     statute of limitations in respect of Taxes or agreed to any extension
     thereof that is currently in effect.

               (e) Section 3.15 of the Seller Disclosure Letter sets out the
     classification for United States federal income tax purposes of each of the
     Entities.

               (f) Each of the Entities that is subject to VAT (or sales Tax) is
     registered for VAT, is a taxable person and has complied in all material
     respects with the requirements of the Laws relating to VAT. All VAT returns
     and payments due in respect of the VAT group of which the Entities are
     members have been made.

               (g) To the Knowledge of Seller, all stamp, transfer and
     registration Taxes have been paid in respect of documents in the
     enforcement of which each of the Entities is interested.

               (h) None of the Entities has any liability for the Taxes of any
     person other than itself under Section 1.1502-6 of the Treasury Regulations
     (or any similar provision of state, local or foreign law), as a transferee
     or successor, by contract or otherwise. No Entity has extended or waived
     the application of any statute of limitations of any jurisdiction regarding
     the assessment or collection of any Tax. None of the Entities is a party to
     any Tax sharing or Tax indemnity agreements or similar arrangements
     pursuant to which Buyer or its Affiliates would have any obligation to make
     payments after the date hereof or surrender or share any Tax attributes or
     benefits.

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               (i) None of the Entities has made an election under Section
     897(i) of the code to be treated as a United States corporation for
     purposes of Section 897, 1445 and 6039C of the Code.

               (j) None of the Entities (i) has an investment in U.S. property
     within the meaning of Section 956 of the Code, (ii) is engaged in a United
     States trade or business for U.S. federal income Tax purposes, or (iii) is
     a passive foreign investment company within the meaning of the Code; and

               (k) None of the Entities is a "surrogate foreign corporation"
     within the meaning of Section 7874(a)(2)(B) of the Code or is treated as a
     U.S. corporation under Section 7874(b) of the Code.

          Section 3.16 Insurance.

               (a) Section 3.16(a) of the Seller Disclosure Letter sets forth a
     true and complete list of all current policies of all material property and
     casualty insurance, insuring the properties, assets, employees and/or
     operations of the Entities (collectively, the "Policies"). To the Knowledge
     of Seller, all premiums payable under such Policies have been paid in a
     timely manner and the Entities, as applicable, have complied in all
     material respects with the terms and conditions of all such Policies.

               (b) As of the date hereof, Seller has not received any written
     notification of the failure of any of the Policies to be in full force and
     effect. To the Knowledge of Seller, none of the Entities is in default
     under any provision of the Policies, and except as set forth in Section
     3.16(b) of the Seller Disclosure Letter, there is no claim by the Entities
     or any other Person pending under any of the Policies as to which coverage
     has been denied or disputed by the underwriters or issuers thereof.

          Section 3.17 Regulatory Matters.

          Seller is not a "public utility" as such term is defined in the FPA,
     as amended, or the regulations of the FERC promulgated thereunder. No
     Entity is a "public utility" as such term is defined in the FPA or the
     regulations of the FERC promulgated thereunder. Each Entity that directly
     owns or operates facilities used for the generation, transmission, or
     distribution of electric energy for sale or the distribution at retail of
     natural or manufactured gas for heat, light, or power is a FUCO, or, to the
     extent that an Entity's activities are limited to the business of owning or
     operating electric generating facilities and selling electricity at
     wholesale such Entity is either an EWG or FUCO.

          Section 3.18 Absence of Certain Changes or Events.

               (a) Except as set forth in Section 3.18(a) of the Seller
     Disclosure Letter, each Entity has conducted its respective businesses in
     the ordinary course of business, consistent with past practice in all
     material respects, since the date of the latest Financial Statements for
     such Entity as described in Section 3.6.

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               (b) Except as set forth in Section 3.18(b) of the Seller
     Disclosure Letter, or in the Financial Statements, and the notes thereto,
     there has not been with respect to each of the Entities any event or
     development or change which has resulted or would reasonably be likely to
     result in a Material Adverse Effect.

               (c) Section 3.18(c) of the Seller Disclosure Letter sets forth a
     true and complete list of the Distributions made by each Entity since the
     date of the latest Financial Statements for such Entity as described in
     Section 3.6.

               (d) Except as set forth in Section 3.18(d) of the Seller
     Disclosure Letter, since the date of the latest Financial Statements for
     each Entity, such Entity has not:

                    (i) granted any severance or termination pay to, or entered
     into, extended or amended any employment, consulting, severance or other
     compensation agreement with, or otherwise increased the compensation or
     benefits provided to any of its officers or other employees whose annual
     salary base is in excess of $100,000;

                    (ii) sold, leased, licensed, mortgaged or otherwise disposed
     of any properties or assets material to its business having a fair market
     value in excess of $100,000 individually or $400,000 in the aggregate,
     other than (A) sales made in the ordinary course of business, consistent
     with past practice; or (B) sales of obsolete or other assets not presently
     utilized in its business;

                    (iii) made any capital expenditure in excess of 10% of the
     annual budgeted capital expenditures;

                    (iv) paid, repurchased, discharged or satisfied any of its
     material Claims, Liabilities or obligations (absolute, accrued, asserted or
     unasserted, contingent or otherwise), other than in the ordinary course of
     business, consistent with past practice;

                    (v) (A) incurred or assumed or guaranteed any long-term
     debt, or except in the ordinary course of business consistent with past
     practice, incurred or assumed or guaranteed short-term Indebtedness (other
     than intercompany Indebtedness) exceeding $100,000 in the aggregate; (B)
     modified the terms of any Indebtedness or other liability, other than
     modifications of short-term debt in the ordinary course of business,
     consistent with past practice; or (C) assumed, guaranteed, endorsed or
     otherwise became liable or responsible (whether directly, contingently or
     otherwise) for the material obligations of any other Person; or

                    (vi) authorized any of, or committed or agreed to take any
     of, the actions referred to in the paragraphs (i) through (v) above.

               (e) Except as set forth in Section 3.18(e) of the Seller
     Disclosure Letter, since the date of the latest Financial Statements for
     each Entity, such Entity has not incurred any material Tax liability
     outside the ordinary course of

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     business, made or changed any election for Tax purposes, changed any annual
     accounting period for Taxes, filed any amended Tax Return, entered into any
     closing agreement for Tax purposes, settled any Tax claim or assessment
     relating to any Entity, surrendered any right to claim a refund of Taxes,
     consented to any extension or waiver of the limitation period applicable to
     any Tax claim or assessment relating to any Entity, or taken any other
     action relating to the filing of any Tax Return or the payment of any Tax,
     if such election, adoption, change, amendment, agreement, settlement,
     surrender, consent or other action would have the effect of increasing the
     Tax liability of any Entity for any period ending after the Cut-off or
     decreasing any Tax attribute of any Entity existing on the Cut-off.

          Section 3.19 Absence of Undisclosed Liabilities.

          None of the Entities has any Liabilities (whether absolute, accrued,
     contingent or otherwise) except those Liabilities (a) disclosed and
     reserved against in the Financial Statements (or notes thereto) as required
     by GAAP, (b) set forth in Section 3.19 of the Seller Disclosure Letter, (c)
     incurred in the ordinary course of business since the date of the latest
     Financial Statements for such Entity as described in Section 3.6 or (d)
     which would not result in a Material Adverse Effect.

          Section 3.20 Property.

          Except as set forth in Section 3.20 of the Seller Disclosure Letter,
     each of the Entities has valid title to or leases, free and clear of any
     Liens (other than Permitted Liens), all assets used or held for use by each
     of the Entities, except for such assets the failure of which to so own or
     lease would not, individually or in the aggregate, have a Material Adverse
     Effect.

          Section 3.21 Brokerage and Finders' Fees.

          None of Seller, the Entities, or any of their Affiliates or their
     respective stockholders, partners, directors, officers or employees, has
     incurred, or will incur any brokerage, finders' or similar fee in
     connection with the transactions contemplated by this Agreement.

          Section 3.22 Corporate and Accounting Records.

          The minute books of the Entities previously made available to Buyer
     contain true, complete and accurate records of all meetings and accurately
     reflect all other corporate action of their respective stockholders and
     board of directors (including committees thereof). Each of the Entities
     maintains adequate records which accurately and validly reflect
     transactions conducted by such Entity in reasonable detail, and maintains
     accounting controls, policies and procedures sufficient to ensure that such
     transactions are (a) executed in accordance with its management's general
     or specific authorization and (b) recorded in a manner which permits the
     preparation of financial statements in accordance with Applicable Law and
     applicable regulatory accounting requirements,

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          Section 3.23 Affiliated Transactions.

          Except as described in Section 3.23 of the Seller Disclosure Letter,
     and except for trade payables and receivables arising in the ordinary
     course of business consistent with past practices for purchases and sales
     of goods or services consistent with past practice, none of the Entities
     have been a party over the past twelve (12) months to any material
     transaction or agreement with Seller or any Affiliate of Seller (other than
     the Entities) and no director or officer of Seller or its Affiliates (other
     than the Entities), has, directly or indirectly, any material interest in
     any of the assets or properties of the Entities.

          Section 3.24 Certain Practices.

          None of the Entities or any of their respective Representatives has
     corruptly (within the meaning of the US FCPA or any other similar
     Applicable Law) or otherwise illegally offered or given, and, to the
     Knowledge of Seller, no Person has corruptly (within the meaning of the US
     FCPA or any other similar applicable Law) or otherwise illegally offered or
     given on behalf of the Entities, anything of value to: (i) any official of
     a Governmental Authority, any political party or official thereof, or any
     candidate for political office; or (ii) any other Person, in any such case
     while knowing, or having reason to know, that all or a portion of such
     money or thing of value may be offered, given or promised, directly or
     indirectly, to any official or employee of a Governmental Authority, any
     political party or official thereof, or candidate for political office for
     the purpose of the following: (x) influencing any action or decision of
     such Person, in his or her official capacity, including a decision to fail
     to perform his or her official function; (y) inducing such Person to use
     his or her influence with any Governmental Authority to affect or influence
     any act or decision of such Governmental Authority to assist any of the
     Entities in obtaining or retaining business for, or with, any Governmental
     Authority or to secure an improper advantage; or (z) where such payment
     would constitute a bribe, kickback or illegal or improper payment to assist
     any of the Entities in obtaining or retaining business for, or with, or
     directing business to, any Person or in securing any improper advantage.
     There have been no false or fictitious entries made in the books or records
     of any of the Entities relating to any illegal payment or secret or
     unrecorded fund and none of the Entities has established or maintained a
     secret or unrecorded fund. Each Entity keeps books, records and accounts
     which in reasonable detail which accurately and fairly reflect the
     transactions and dispositions of its assets. Each of the Entities has
     devised and maintained a system of internal accounting controls sufficient
     to provide reasonable assurances that: (i) transactions are executed in
     accordance with management's general or specific authorization; (ii)
     transactions are recorded as necessary (x) to permit preparation of
     financial statements in conformity with GAAP or any other criteria
     applicable to such statements; and (y) to maintain accountability for
     assets; (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

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          Section 3.25 No Other Representations or Warranties.

          Except for the representations and warranties contained in this
     Article III, none of Seller, the Entities, or any other Person makes any
     other express or implied representation or warranty on behalf of Seller.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

          Each Buyer hereby represents and warrants to Seller as follows:

          Section 4.1 Corporate Organization; Qualification.

          Such Person (a) is a limited liability company duly organized and
     validly existing under the Laws of its jurisdiction of formation, (b) has
     the requisite power to carry on its businesses as currently conducted and
     (c) is duly qualified to do business in each of the jurisdictions in which
     the ownership, operation or leasing of its properties or assets or the
     conduct of its business requires it to be so qualified, except where the
     failure to be so qualified would not materially and adversely affect the
     ability of, or timing for, Buyer to consummate the transactions
     contemplated by this Agreement.

          Section 4.2 Authority Relative to this Agreement.

          Such Person has full corporate or similar power and authority to
     execute and deliver this Agreement and the other agreements, documents and
     instruments to be executed and delivered by it in connection with this
     Agreement and to consummate the transactions contemplated hereby and
     thereby. The execution, delivery and performance of this Agreement and the
     other agreements, documents and instruments to be executed and delivered in
     connection with this Agreement and the consummation of the transactions
     contemplated hereby and thereby have been duly and validly authorized by
     all the necessary action on the part of such Person and no other
     organization or similar proceedings on the part of such Person are
     necessary to authorize this Agreement and the other agreements, documents
     and instruments to be executed and delivered in connection with this
     Agreement or to consummate the transactions contemplated hereby and
     thereby. This Agreement and the other agreements, documents and instruments
     to be executed and delivered in connection with this Agreement have been
     duly and validly executed and delivered by such Person and assuming that
     this Agreement and the other agreements, documents and instruments to be
     executed and delivered in connection with this Agreement constitute legal,
     valid and binding agreements of the Seller are enforceable against such
     Person in accordance with their respective terms, except that such
     enforceability may be limited by applicable bankruptcy, insolvency,
     moratorium or other similar laws affecting or relating to enforcement of
     creditors' rights generally or general principles of equity.

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          Section 4.3 Consents and Approvals.

          Except as otherwise provided in Section 5.1(a) of this Agreement or
     as set forth in Section 4.3 of the Buyer Disclosure Letter, such Person
     requires no consent, approval or authorization of, or filing, registration
     or qualification with, any Governmental Authority, or any other Person as a
     condition to the execution and delivery of this Agreement or the
     performance of the obligations hereunder, except where the failure to
     obtain such consent, approval or authorization of, or filing of,
     registration or qualification with, any Governmental Authority, or any
     other Person would not materially and adversely affect the ability of, or
     timing for, such Person to consummate the transactions contemplated by this
     Agreement.

          Section 4.4 No Conflict or Violation.

          Except as set forth in Section 4.4 of the Buyer Disclosure Letter, the
     execution, delivery and performance by such Person of this Agreement does
     not:

               (a) violate or conflict with any provision of the organizational
     documents of such Person;

               (b) violate any applicable provision of a law, statute, judgment,
     order, writ, injunction, decree, award, rule or regulation of any
     Governmental Authority, except where such violation would not materially
     and adversely affect the ability of, or timing for, such Person to
     consummate the transactions contemplated by this Agreement; or

               (c) violate, result in a breach of, constitute (with due notice
     or lapse of time or both) a default or cause any material obligation,
     penalty or premium to arise or accrue under any material contract, lease,
     loan, agreement, mortgage, security agreement, trust indenture or other
     material agreement or instrument to which such Person is a party or by
     which it is bound or to which any of its properties or assets is subject,
     except as would not materially and adversely affect the ability of, or
     timing for, such Person to consummate the transactions contemplated by this
     Agreement.

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          Section 4.5 Litigation.

          Except as identified in Section 4.5 of the Buyer Disclosure Letter,
     there are no Actions before any Governmental Authority or arbitration panel
     or tribunal pending or in progress or, to Knowledge of such Person,
     threatened, against such Person, or any of their respective Affiliates or
     any executive officer or director thereof, except as would not materially
     and adversely affect the ability of, or timing for, such Person to
     consummate the transactions contemplated by this Agreement. Neither such
     Person nor any of its Affiliates is subject to any outstanding judgment,
     order, writ, injunction, decree or award entered in an Action to which such
     Person was a named party, except as would not materially and adversely
     affect the ability of, or timing for, such Person to consummate the
     transactions contemplated by this Agreement.

          Section 4.6 Brokerage and Finders' Fees.

          Neither such Person nor any of its Affiliates, or their respective
     members, stockholders, partners, directors, officers or employees, has
     incurred, or will incur any brokerage, finders' or similar fee in
     connection with the transactions contemplated by this Agreement.

          Section 4.7 Investment Representations.

               (a) Such Person is acquiring the Equity Interests to be acquired
     by it hereunder for its own account, solely for the purpose of investment
     and not with a view to, or for sale in connection with, any distribution
     thereof in violation of the federal securities laws or any applicable
     foreign or state securities law.

               (b) Such Person understands that the acquisition of the Equity
     Interests to be acquired by it pursuant to the terms of this Agreement
     involves substantial risk. Such Person and its officers have experience as
     an investor in securities and equity interests of companies such as the
     ones being transferred pursuant to this Agreement and acknowledges that it
     can bear the economic risk of its investment and has such knowledge and
     experience in financial or business matters that such Person is capable of
     evaluating the merits and risks of its investment in the Equity Interests
     to be acquired by it pursuant to the transactions contemplated hereby.

               (c) Such Person understands that the Equity Interests to be
     acquired by it hereunder have not been registered under the Securities Act
     on the basis that the sale provided for in this Agreement is exempt from
     the registration provisions thereof. Such Person acknowledges that such
     securities may not be transferred or sold except pursuant to the
     registration and other provisions of applicable securities laws or pursuant
     to an applicable exemption therefrom.

               (d) Such Person acknowledges that the offer and sale of the
     Equity Interests to be acquired by it in the transactions contemplated
     hereby has not been accomplished by the publication of any advertisement.

          Section 4.8 Regulation Matters.

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          Such Person is not (a) "public utility," or a "holding company in a
     holding company system that includes a transmitting utility or an electric
     utility", as such terms are defined in the FPA or the regulations of the
     FERC promulgated thereunder.

          Section 4.9 No Other Representations or Warranties.

          Except for the representations and warranties contained in this
     Article IV, neither such Person nor any other Person makes any other
     express or implied representation or warranty on behalf of such Person.

                                    ARTICLE V

                            COVENANTS OF THE PARTIES.

          Section 5.1 Notification to the CNDC; Negative Antitrust Decision;
     Transfer of Equity Interests to a Third Purchaser.

               (a) Notification of the Acquisition to the CNDC. Within seven (7)
     days from the date hereof, and at any subsequent date that may be required
     by instruction of the CNDC, Seller and Buyer shall cooperate with one
     another and file all notifications, applications, registrations, filings,
     declarations and reports required under the Antitrust Law relating to the
     Acquisition, and use their reasonable efforts to take, or cause to be taken
     all appropriate action, and to do, or cause to be done, all things
     necessary, proper or advisable to obtain the Antitrust Approval.

               (b) Negative Antitrust Decision.

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

               (ii) Buyer shall be the sole responsible party to perform any and
     all actions required by the Negative Antitrust Decision including, but not
     limited to, (i) a divesture of Buyer's or the Entities' businesses, product
     lines or assets in favor of a third party, at its own risk, cost and
     expense; and (ii) appointment of the management of the Entities following
     directives by the CNDC or other antitrust authority. Notwithstanding
     anything contained herein to the contrary, none of Seller or its Affiliates
     shall be required to (i) divest any of its respective businesses, product
     lines or assets that are not transferred to Buyer or (ii) take or agree to
     take any other action or agree to any limitation that could reasonable be
     expected to (a) result in a adverse effect on its business, assets,
     condition (financial or otherwise) or (b) deprive any Seller of any benefit
     of the Acquisition.

               (iii) Each party shall promptly give to the other party notice of
     all information in its possession regarding the Negative Antitrust Decision
     or its

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     consequences and promptly transmit to the other party a copy of all
     documents received or sent in that respect. Each party shall also promptly
     respond to any reasonable request for information from the other party on
     the Negative Antitrust Decision or its consequences.

               (c) Transfer of Equity Interests to a Third Purchaser.

               (i) Notwithstanding Section 5.1(f), upon issuance of a Negative
     Antitrust Decision prohibiting the transfer of the Equity Interests to
     Buyer, Buyer shall negotiate the sale and transfer of the Equity Interests
     to a third party regarding whom the Antitrust Approval may be obtained (the
     "Third Purchaser").

               (ii) If legally required and for the exclusive purpose of
     transferring the Equity Interests to the Third Purchaser, each Seller
     hereby grants special irrevocable powers of attorney to Buyer and/or the
     Persons whom Buyer may appoint to (i) take all reasonable actions to obtain
     the relevant Antitrust Approval; (ii) notify the transfer of the Equity
     Interests to the Ente Nacional Regulador de la Electricidad and to the
     Republic of Argentina Secretariat of Energy; (iii) subscribe the relevant
     documentation and make the relevant filings to record the transfer of the
     Equity Interests on their respective official ownership records; and (iv)
     collect from the Third Purchaser the purchase price of the Shares (it being
     understood that if such purchase price were to exceed the Purchase Price,
     then the excess shall be exclusively for Buyer's benefit). It is hereby
     expressly agreed that the irrevocable powers of attorney provided for in
     this Section 5.1(c) are granted for a period beginning on the date of
     issuance of the Negative Antitrust Decision preventing the Acquisition and
     ending on the date which is ten (10) years from the date hereof; it being
     understood that the irrevocability of the special power of attorney granted
     herein is based on both parties' interests.

               (iii) Notwithstanding anything contained herein to the contrary,
     from the transfer of the Equity Interests to Buyer pursuant to this
     Agreement until the transfer of the Equity Interests to a Third Purchaser,
     as the case may be, Buyer will have, to the fullest extent permitted by
     law, complete control of the assets and businesses of the Entities. In
     furtherance of the foregoing, Seller shall execute and deliver, or cause to
     be executed and delivered, all such documents and instruments and shall
     take, or cause to be taken, all such further or other actions, as Buyer may
     reasonably deem necessary to permit Buyer to have complete control of the
     Entities as from the date hereof.

               (d) Waiver by Buyer. Seller will not be held liable for any loss
     or damage arising out of any of the events provided for in Section 5.1(b)
     hereof and/or the transfer of the Equity Interests to the Third Purchaser,
     including, but not limited to, any difference between the Purchase Price
     and the purchase price of the Equity Interests ultimately collected by
     Buyer from the Third Purchaser. Buyer hereby irrevocably and
     unconditionally waives to file any legal action and/or claim, judicial,
     non-judicial or of any other nature, against any Seller or any other third
     party directly or indirectly based on the fact that the Equity Interests
     were sold at a price lower than the Purchase Price.

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               (e) Waiver by Seller. Each Seller hereby irrevocably and
     unconditionally waives any right it may have against Buyer based on the
     fact that the Shares were sold to the Third Purchaser at a price higher
     than the Purchase Price.

               (f) Indemnification.

               (i) Subject only to the terms and limitations set forth in this
     Section 5.1 and not those set forth in Article VI, Buyer shall jointly and
     severally indemnify, defend and hold harmless Seller Indemnified Parties
     (whether or not also indemnified by any other Person under any other
     document) from and against any penalties, fines, administrative sanctions,
     costs and expenses (including reasonable attorneys' fees as provided in
     (ii) below) which directly relate to, or arise out of, any of the events
     provided for in Section 5.1(b), including fines, penalties and/or
     administrative sanctions imposed, or handed down, by the CNDC, the
     Secretariat of Internal Trade and/or any other agency, tribunal or court
     because the Acquisition is ultimately deemed to breach the Antitrust Law
     (an "Antitrust Claim").

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

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

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

               (v) If Seller and Buyer are found jointly liable of any Antitrust
     Claim, Buyer shall be the sole responsible for the settlement of said
     Antitrust Claim and Buyer hereby waives any recoverability right it may
     have against any Seller.

               (vi) This Section 5.1 shall exclusively govern all Antitrust
     Claims. For the avoidance of doubt, indemnity limitations contemplated in

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     Section 6.2 hereof shall not apply to the indemnity undertakings assumed by
     Buyer in this Section 5.1 regarding Antitrust Claims.

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

          Section 5.2 Further Assurances.

          On and after the date hereof, Seller and Buyer shall cooperate and use
     their respective reasonable best efforts to take or cause to be taken all
     appropriate actions and do, or cause to be done, all things necessary or
     appropriate to consummate and make effective the transactions contemplated
     hereby, including the execution of any additional documents or instruments
     of any kind, the obtaining of consents which may be reasonably necessary or
     appropriate to carry out any of the provisions hereof and the taking of all
     such other actions as such party may reasonably be requested to take by the
     other party hereto from time to time, consistent with the terms of this
     Agreement, in order to effectuate the provisions and purposes of this
     Agreement and the transactions contemplated hereby and thereby.

          Section 5.3 Employee Matters.

               (a) Subject to the following provisions, Buyer shall maintain the
     employment of all Affected Employees following the date hereof for at least
     a period of twelve (12) months as from the date hereof and subject to the
     existence of proper grounds for Buyer for termination or restructuring
     thereof.

               (b) Subject to Section 5.3(c) and Section 5.3(d) below, on the
     date hereof (unless previously done), Seller shall give notice to all
     Affected Employees that the active participation of the Affected Employees
     in those employee benefit plans, programs and arrangements that are not
     sponsored by the Entities or that are not listed in Section 3.11(a) of the
     Seller Disclosure Letter (such plans, programs and arrangements, the
     "Seller Plans") shall terminate on the date hereof, and the Entities shall
     terminate participation of Affected Employees in the Seller Plans as of the
     date hereof. Each of the Entities shall be solely responsible for all
     obligations and Liabilities under each employee benefit plan listed in
     Section 3.11(a) of the Seller Disclosure Letter in existence as of the
     date hereof, or that they establish, maintain or contribute to, on or after
     the date hereof, and no such obligations or Liabilities shall be assumed or
     retained by Seller or its Affiliates. In addition, Seller shall retain all
     Liabilities and assets with respect to current and former employees of the
     Entities under the Pension Plan for Employees of Consumers Energy and Other
     CMS Energy Companies. Notwithstanding the foregoing, any Affected Employee
     who is unable to report to work with Buyer as of the date hereof due to
     disability (each, a "Disabled Employee"), shall continue to be eligible for
     any applicable long-term disability and life insurance coverage pursuant to

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     Seller's plans until such Disabled Employee returns to active employment
     with Buyer or any of the Entities; provided, however, that in order to be
     eligible for such benefits, each such Disabled Employee, pending approval
     for long-term disability benefits or return to active employment, must
     continue to pay all applicable long-term disability and life insurance
     premiums due following the date hereof for such coverage pursuant to
     Seller's long-term disability plan and life insurance plans. Buyer shall,
     or shall cause the Entities to, (A) pay Disabled Employees who are on
     short-term disability as of the date hereof the short-term disability
     benefits, if any, that apply under the Buyer's plans, provided, however,
     that such benefits need not be provided to the extent that they would
     duplicate benefits paid under the Seller Plans, and (B) honor any
     continuing pay or salary obligations and return to work obligations that
     apply to any such Disabled Employees.

               (c) Buyer and the Entities shall be responsible for all
     Liabilities and obligations under the Worker Adjustment and Retraining
     Notification Act and similar foreign, state and local rules, statutes and
     ordinances resulting from the actions of Buyer and the Entities after the
     date hereof. Buyer agrees to hold Seller harmless for any breach of such
     responsibility and Buyer's indemnification of Seller in this regard
     specifically includes any Claim by the Affected Employees for back pay,
     front pay, benefits or compensatory or punitive damages, any Claim by any
     Governmental Authority for penalties regarding any issue of prior
     notification (or lack thereof) of any plant closing or mass layoff
     occurring after the date hereof and Seller's costs, including reasonable
     attorney's fees, in defending any such Claims.

               (d) CMS Energy Corporation or its Affiliates shall retain all
     assets that are accumulated through the date hereof under Financial
     Accounting Standards Board Statement 106 (and deposited in various VEBA
     accounts and 401(h) accounts of Seller or its Affiliates). Further, Seller
     or its Affiliates shall retain the liability for PBOP for the benefit of
     former employees of the Entities who are retirees of the Entities as of the
     date hereof, and Affected Employees who are eligible to retire and
     qualified for benefits under PBOP as of the date hereof, and Seller or its
     Affiliates shall retain the responsibility for providing post-retirement
     benefits (other than pension) to such employees pursuant to the eligibility
     requirements of the Seller Plans.

               (e) Nothing in this Section 5.3 shall (i) create any third party
     beneficiary right in any current or former Employees, any beneficiary or
     dependent thereof, or any collective bargaining or other labor
     representation thereof, or (ii) constitute an amendment to any Plan.

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          Section 5.4 Tax Covenants.

               (a) Section 338(g) Elections. Except with the express written
     consent of Seller, which can be withheld in Seller's sole and absolute
     discretion, Buyer shall not make any election under Section 338(g) of the
     Code (or any analogous provision of state, local, or foreign income tax
     law) with respect to the deemed purchase of the assets of any of the
     Entities.

               (b) Tax Return Filings, Refunds, and Credits.

               (i) Seller shall timely prepare and file (or cause such
     preparation and filing) with the appropriate Tax authorities all Tax
     Returns with respect to the Entities which are Subsidiaries of the Seller
     for Tax periods that end on or before the Cut-off or that otherwise are
     required to be filed (taking into account any extensions) on or before the
     date hereof (the "Seller Returns"), and will pay (or caused to be paid) by
     such Entities all Taxes due with respect to the Seller Returns. The Seller
     Returns shall be prepared in accordance with past practice, except as
     required by applicable law. Seller shall make such income Tax Return
     sufficiently in advance of the due date for filing any such income Tax
     Returns to provide Buyer with a meaningful opportunity to review and
     comment on such income Tax Returns before filing.

               (ii) Buyer shall timely prepare and file (or cause such
     preparation and filing) with the appropriate Tax authorities all Tax
     Returns (the "Straddle Period Returns") with respect to the Entities which
     are Subsidiaries of the Seller for all Tax periods ending after the Cut-off
     that include the Cut-off (the "Straddle Period") except for Tax Returns
     required to be filed (taking into account any extension) on or before the
     date hereof. Except as otherwise required by applicable law, all Straddle
     Period Returns shall be prepared in accordance with past practice. Buyer
     shall provide Seller with copies of any Straddle Period Returns at least
     forty-five (45) days prior to the due date thereof (giving effect to any
     extensions thereto), accompanied by a statement (the "Straddle Statement")
     setting forth and calculating in reasonable detail the Pre- Cutoff Taxes as
     defined below. If Seller agrees with the Straddle Period Return and
     Straddle Statement, Seller shall pay to Buyer (or Buyer shall pay to
     Seller, if appropriate) an amount equal to the Ownership Percentage of Pre-
     Cut-off Taxes as shown on the Straddle Statement not later than two (2)
     Business Days before the due date (including any extensions thereof) for
     payment of Taxes with respect to such Straddle Period Return. If, within
     fifteen (15) days of the receipt of the Straddle Period Return and Straddle
     Statement, Seller notifies Buyer that it disputes the manner of preparation
     of the Straddle Period Return or the amount calculated in the Straddle
     Statement, then Buyer and Seller shall attempt to resolve their
     disagreement within the five (5) days following Seller's notification or
     Buyer of such disagreement. If Buyer and Seller are unable to resolve their
     disagreement, the dispute shall be submitted to a mutually agreed upon
     nationally recognized independent accounting firm, whose expense shall be
     borne equally by Buyer and Seller, for resolution, if possible, within
     twenty (20) days of such submission. If the parties have not agreed on an
     independent accounting firm within fifteen days following Seller's
     notification of Buyer of such disagreement, on the request of any party
     such independent accounting firm shall be appointed by the ICC Centre.

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     Any independent accounting firm appointed by the ICC Centre shall be an
     impartial and disinterested senior partner in an internationally recognized
     accounting firm. The decision of such accounting firm with respect to such
     dispute shall be binding upon Buyer and Seller, and Seller shall pay to
     Buyer (or Buyer shall pay to Seller, if appropriate) an amount equal to the
     Pre- Cut-off Taxes as decided by such accounting firm not later than two
     (2) Business Days before the due date (including any extensions thereof)
     for payment of Taxes with respect to such Straddle Period Return.

               (iii) From and after the date hereof, Buyer and its Affiliates
     (including the Entities) will not file any amended Tax Return, carryback
     claim, or other adjustment request with respect to the Entities for any Tax
     period that includes or ends on or before the Cut-off unless Seller
     consents in writing; provided, however, that (i) such prohibition shall not
     apply (A) to any amended Tax Return filed to address any Tax matter
     excepted out of the Seller's tax representations and warranties in Section
     3.15, or (B) to address any Tax matter for which, at the time of filing
     such amended Tax Return, Seller's indemnification obligations under Section
     6.2 hereof shall have expired, except, with respect to the foregoing
     subparagraph (B) only, as would have, in Seller's reasonable opinion, an
     adverse effect with regard to any Tax Returns filed by Seller and/or
     Seller's Affiliates (not including the Entities) and (ii) with respect to
     any Straddle Period Return, such consent shall not be unreasonably
     withheld, or conditioned, provided Buyer has made arrangements to the
     reasonable satisfaction of Seller to make Seller whole for any detriment or
     cost incurred (or to be incurred) by Seller as a result of such amended
     Straddle Period Return.

               (iv) For purposes of this Agreement, in the case of any Taxes of
     the Entities that are payable with respect to any Straddle Period, the
     portion of any such Taxes that constitutes "Pre- Cut-off Taxes" shall be
     the excess of (A) (i) in the case of Taxes that are either (x) based upon
     or related to income or receipts or (y) imposed in connection with any
     sale, transfer or assignment or any deemed sale, transfer or assignment of
     property (real or personal, tangible or intangible) be deemed equal to the
     amount that would be payable if the Tax period ended on the Cut-off and
     (ii) in the case of Taxes (other than those described in clause (i))
     imposed on a periodic basis with respect to the business, property, shares,
     quota holdings or assets of the Entities, be deemed to be the amount of
     such Taxes for the entire Straddle Period (or, in the case of such Taxes
     determined on an arrears basis, the amount of such Taxes for the
     immediately preceding Tax period) multiplied by a fraction the numerator of
     which is the number of calendar days in the portion of the Straddle Period
     ending on the Cut-off and the denominator of which is the number of
     calendar days in the entire Straddle Period over (B) any prepayment or
     advances of Taxes or any payments of estimated Taxes with respect to the
     Straddle Period. For purposes of clause (i) of the preceding sentence, any
     exemption, deduction, credit or other item that is calculated on an annual
     basis shall be allocated to the portion of the Straddle Period ending on
     the Cut-off on a pro rata basis determined by multiplying the total amount
     of such item allocated to the Straddle Period by a fraction, the numerator
     of which is the number of calendar days in the portion of the Straddle
     Period ending on the Cut-off and the denominator of which is the number of
     calendar days in the entire Straddle Period. Pre-Cut-off Taxes include any
     Taxes attributable to a Person that is treated as a partnership for federal
     income tax purposes as

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     if such Person allocated Tax items to its partners in a manner consistent
     with this Section 5.4(b)(iv). In the case of any Tax based upon or measured
     by capital (including net worth or long-term debt) or intangibles, any
     amount thereof required to be allocated under this Section 5.4(b)(iv) shall
     be computed by reference to the level of such items on the Cutoff. The
     parties hereto will, to the extent permitted by Applicable Law, elect with
     the relevant Tax authority to treat a portion of any Straddle Period as a
     short taxable period ending as of the close of business on (i) the Cut-off
     date or (ii) the date hereof, as applicable. For purposes of this
     Agreement, "Post- Cut-off Taxes" shall include any Taxes of the Entities
     that are payable with respect to a Straddle Period, except for the portion
     of any such Taxes that constitutes Pre-Cut-off Taxes.

               (v) Seller and Buyer shall reasonably cooperate in preparing and
     filing all Tax Returns with respect to the Entities, including maintaining
     and making available to each other all records reasonably necessary in
     connection with Taxes of the Entities and in resolving all disputes and
     audits with respect to all Tax periods relating to Taxes of the Entities.

               (vi) For a period of seven (7) years after the date hereof, the
     Seller and its representatives shall have reasonable access to the books
     and records (including the right to make extracts thereof) of the Entities
     to the extent that such books and records relate to Taxes and to the extent
     that such access (i) is in the power of Buyer using reasonable best efforts
     and (ii) may reasonably be required by Seller in connection with matters
     relating to or affected by the operation of the Entities prior to the
     Cut-off. Such access shall be afforded by Buyer upon receipt of reasonable
     advance notice and during normal business hours. If Buyer shall desire to
     dispose of any of such books and records prior to the expiration of such
     seven-year period, Buyer shall, prior to such disposition, give Seller a
     reasonable opportunity, at Seller's expense, to segregate and remove such
     books and records as Seller may select.

               (vii) For a period of seven (7) years after the date hereof,
     Buyer and its representatives shall have reasonable access to the books and
     records (including the right to make extracts thereof) of Seller to the
     extent that such books and records relate to Taxes of an Entity or Taxes of
     Seller and its Affiliates attributable to such Persons' investment in an
     Entity that are reasonably necessary for Buyer and its members to compute
     their Taxes (including, for the avoidance of doubt, such Person's share of
     each Entity's previously taxed income, earnings and profits, and any deemed
     dividend from such Person's sale of any Entity under Section 1248 of the
     Code, and any information necessary to comply with Proposed Regulations
     Section 1.959-1(d) and Proposed Regulations Section 1.959-3 or any
     successor regulation and to the extent that such access (i) is within the
     power of Seller using reasonable best efforts and (ii) may reasonably be
     required by Buyer in connection with matters relating to or affected by the
     operation of any Entity after the Cut-off. Such access shall be afforded by
     Seller upon receipt of reasonable advance notice and during normal business
     hours. If Seller shall desire to dispose of any such books and records
     prior to the expiration of such seven year period, Seller shall, prior to
     such disposition, give Buyer reasonable opportunity, at Buyer's expense, to
     segregate and remove such books and records as Buyer may select.

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               (viii) If an Indemnified Party actually receives a refund or
     credit or other reimbursement with respect to Taxes for which it would be
     indemnified under this Agreement, the Tax Indemnified Party shall pay over
     such refund or credit or other reimbursement to the Tax Indemnifying Party.

               (ix) Buyer shall not, and to the extent within the power of Buyer
     using reasonable best efforts, cause any Entity to not, make, amend or
     revoke any Tax election if such action would reasonably be expected to
     adversely affect any of Seller or its Affiliates with respect to any Tax
     period ending on or before the date hereof or for the portion of any
     Straddle Period prior to the Cut-off or any Tax refund or credit with
     respect thereto, except (A) to the extent such amendment or revocation
     relates to any Tax matter excepted out of the Seller's tax representations
     and warranties in Section 3.15 or as relates to (B) any Tax matter which,
     at the time such election is made or revoked, Seller's indemnification
     obligations under Section 6.2 hereof shall have expired, except, with
     respect to the foregoing subparagraph (B) only, as would have, in Seller's
     reasonable opinion, an adverse effect with regard to any tax returns filed
     by Seller and/or Seller's Affiliate (not including the Entities). Seller
     shall not, and shall cause any Entity to not, make, amend or revoke any Tax
     election if such action would reasonably be expected to adversely affect
     any of Buyer or its Affiliates with respect to any Tax period beginning
     after the date hereof or for the portion of any Straddle Period after the
     Cut-off or any Tax refund or credit with respect thereto.

               (c) Certain Payments. Buyer and Seller agree to treat (and cause
     their Affiliates to treat) any payment under this Section 5.4 as an
     adjustment to the Purchase Price for all Tax purposes.

               (d) Transfer and Similar Taxes. Notwithstanding any other
     provisions of this Agreement to the contrary, all transfer, stamp,
     registration and similar Taxes (collectively, "Transfer Taxes") incurred in
     connection with the transactions contemplated by this Agreement shall be
     borne 50% by Buyer and 50% by Seller and Buyer shall accurately file all
     necessary Tax Returns and other documentation with respect to Transfer
     Taxes and timely pay all such Transfer Taxes. If required by Applicable
     Law, Seller will join in the execution of any such Return. Buyer shall
     provide copies of any Tax Returns with respect to Transfer Taxes to Seller
     no later than ten (10) days after the due dates of such Tax Returns. Seller
     shall pay its portion of the Transfer Taxes to Buyer prior to the due date
     of such Transfer Taxes.

               (e) Termination of Tax Sharing Agreements. On the date hereof,
     Seller shall cause all Tax sharing agreements between Seller or any of its
     Affiliates (that is not one of the Entities) on the one hand, and any of
     the Entities on the other hand, to be terminated, and all obligations
     thereunder shall be settled, and no additional payments shall be made under
     any provisions thereof after the date hereof.

               (f) Actions Affecting Seller's Liability for Taxes. Except as
     otherwise set forth in Section 5.4(f) of the Seller Disclosure Letter, on
     or before December 31, 2007, Buyer (i) shall not sell, liquidate, merge or
     otherwise dispose of any Entity, and (ii) shall cause each Entity which is
     a Subsidiary of Buyer not to sell,

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     liquidate, merge or otherwise dispose of any other Entity or to dispose of
     a significant portion of its assets outside of the ordinary course of
     business, in each case, in a manner which by virtue of such transaction
     being a taxable transaction of such Entity for U.S. tax purposes would
     increase the U.S. Subpart F income of Seller or its Affiliates or the
     deemed dividend recognized by Seller or its Affiliates under Section 1248
     of the Code (such Subpart F income or deemed dividend hereinafter referred
     to as the "Seller Tax Amount"), when netted or combined with any other
     transaction involving an Entity which affects the Seller Tax Amount. For
     the avoidance of doubt, this Section 5.4(f) shall not limit Buyer's rights
     under Section 5.4(b) to address any Tax matter excepted out of the Seller's
     Tax representations and warranties under Section 3.15.

          Section 5.5 Intercompany Accounts.

          Except with respect to the Assumed Indebtedness, all of which is
     detailed in Section 5.5 of the Seller Disclosure Letter that will remain
     outstanding as of the date hereof or be assumed by Buyer at the date
     hereof, (i) Seller shall, and shall cause its Affiliates (other than the
     Entities) to, pay in full all intercompany accounts payable to the
     Entities; and (ii) Seller shall cause the Entities to pay in full all
     intercompanies accounts payable to the Seller and its Affiliates (other
     than the Entities), in each case before the date hereof, and in each case
     in a manner that does not increase any Tax Liability or decrease any Tax
     assets of any Entity.

          Section 5.6 Surrender of Intellectual Property.

          On the date hereof Seller shall cause each of Operating and CMS
     Ensenada S.A., as the case may be, to surrender its right, title, and
     interest in and to all trademarks, trademarks applications, domain names,
     renewal applications, and Intellectual Property listed in Section 5.6 of
     the Seller Disclosure Letter, as well its commercial name, trade name,
     reputation and all its good will associated with its name, its trademarks
     and its Intellectual Property. As from the date hereof, Buyer shall cause
     each of Operating and CMS Ensenada S.A. to do their best efforts to obtain
     the final surrender of such Intellectual Property.

          Section 5.7 Maintenance of Insurance Policies.

               (a) Seller and Buyer agree that Casualty Insurance Claims
     relating to the businesses of the Entities (including reported claims and
     including incurred but not reported claims) will remain with the Entities
     immediately following the date hereof. For purposes hereof, "Casualty
     Insurance Claims" shall mean workers' compensation, auto liability, general
     liability and products liability claims and claims for damages caused to
     the facilities of the Entities generally insured under all risk, real
     property, boiler and mechanical breakdown insurance coverage. The Casualty
     Insurance Claims are subject to the provisions of policies of insurance
     with insurance carriers and contractual arrangements with insurance
     adjusters maintained by Seller or its Affiliates prior to the date hereof
     (collectively, the "Insurance Policies").

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               (b) With respect to the Casualty Insurance Claims, the following
     procedures shall apply: (i) Seller shall use reasonable best efforts to
     make recovery under the relevant Insurance Policy and ensure that each of
     its Affiliates shall take such steps as Buyer reasonably requires to make
     and/or pursue any such claim (including giving notice of the claim to the
     insurer at the request of Buyer) and to assist Buyer and the Entities in
     making the claim; (ii) to the extent that recovery is made, Seller shall
     ensure that any proceeds actually received by Seller or its Affiliates that
     are not Entities are promptly paid to the applicable Entity which suffered
     the insured event giving rise to the Casualty Insurance Claim (or to Buyer
     on behalf of such Entity) and in any case within fifteen (15) Business Days
     of the receipt of such proceeds; and (iii) Seller or its Affiliates shall
     continue to administer, adjust, settle and pay, on behalf of the Entities,
     all Casualty Insurance Claims with dates of occurrence prior to the date
     hereof. Casualty Insurance Claims to be paid by Seller hereunder shall
     include all costs necessary to settle claims including compensatory,
     medical, legal and other allocated expenses.

               (c) The parties acknowledge that the Insurance Policies may
     provide coverage for workers' compensation, auto liability, general
     liability and products liability claims and claims for damages not related
     to the Entities ("Non-Entity Casualty Insurance Claims"). Seller agrees
     that, when administering, settling and paying Casualty Insurance Claims, it
     shall endeavor to provide that the economic benefits of the Insurance
     Policies are shared equitably among the Casualty Insurance Claims and the
     Non-Entity Casualty Insurance Claims (including, without limitation, by
     ensuring that coverage limits are equitably allocated or reserved among
     such claims or potential claims).

               (d) Seller makes no representation or warranty with respect to
     the applicability, validity or adequacy of any Insurance Policies, and
     Seller shall not be responsible to Buyer or any of its Affiliates for the
     failure of any insurer to pay under any such Insurance Policy.

               (e) Nothing in this Agreement is intended to provide or shall be
     construed as providing a benefit or release to any insurer or claims
     service organization of any obligation under any Insurance Policies. Seller
     and Buyer confirm that the sole intention of this Section 5.7 is to divide
     and allocate the benefits and obligations under the Insurance Policies
     between them as of the date hereof and not to effect, enhance or diminish
     the rights and obligations of any insurer or claims service organization
     thereunder. Nothing herein shall be construed as creating or permitting any
     insurer or claims service organization the right of subrogation against
     Seller or Buyer or any of their Affiliates in respect of payments made by
     one to the other under any Insurance Policy.

               (f) If Buyer requests a copy of an Insurance Policy relating to a
     pending or threatened Casualty Insurance Claim, Seller shall provide a copy
     of all relevant insurance policies which insure such Casualty Insurance
     Claims within five (5) Business Days, provided, that if Seller cannot
     provide such policy within five (5) days after exercising reasonable best
     efforts to locate such policy, Seller shall continue to

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     exercise its reasonable best efforts to provide such policy to Buyer as
     soon as possible thereafter.

          Section 5.8 Preservation of Records. Buyer acknowledges and agrees
     that Seller may, from time to time, in the normal course of investigating,
     prosecuting and/or defending various ongoing matters which may relate to
     the Entities or the businesses thereof, including its obligations pursuant
     to Section 6.2 of the Agreement, have, and will continue to have, a need
     (i) to refer to, and to use as evidence, certain books, records and other
     data, including electronic data maintained in computer files, relating to
     the Entities and /or their businesses and (ii) for the support and
     cooperation of present or former employees of the Entities in the event
     that such Persons' assistance or participation is needed to aid in the
     defense or settlement of the such matters. Buyer agrees that it shall, at
     its own expense, preserve and keep the records held by it relating to the
     respective businesses of the Entities that could reasonably be required
     after the consummation of the transaction contemplated in this Agreement by
     Seller for a period of five (5) years; provided, however, that upon
     expiration of such period, as applicable, Buyer shall give written notice
     to Seller if it or the custodian of such books and records proposes to
     destroy or dispose of the same. Seller shall have the opportunity for a
     period of thirty (30) days after receiving such notice to elect to have
     some or all of such books and records delivered, at Seller's expense and
     risk, to a location chosen by Seller. In addition, Buyer shall make such
     records available to Seller as may reasonably be required by Seller in
     connection with, among other things, any insurance claim, legal proceeding
     or governmental investigation relating to the respective businesses of
     Seller and its Affiliates, including the Entities. Seller agrees to
     maintain the confidentiality of all information provided by Buyer or the
     Entities hereunder.

          Section 5.9 Public Statements. No public or private release,
     announcement or regulatory filing concerning the transaction contemplated
     hereby shall be issued by any of the parties without the prior consent of
     the other parties (which consent shall not unreasonably withheld), except
     for such press release, announcement, or regulatory filing as is required
     by law, court process or stock exchange rule to be made by the party
     proposing to issue the same, in which case such party shall use its
     reasonable best efforts to consult in good faith with the other party prior
     to the issuance of any such press release, announcement or filing.

          Section 5.10 Certain Transactions. Buyer shall not, and shall not
     permit any of its Subsidiaries to, acquire or agree to acquire by merging
     or consolidating with, or by purchasing a substantial portion of the assets
     of or equity in, or by any other manner, any business or any corporation,
     partnership, association or other business organization or division
     thereof, or otherwise acquire or agree to acquire any assets if the
     entering into of a definitive agreement relating to, or the consummation of
     such acquisition, merger or consolidation would reasonably be expected to
     (a) impose any material delay in the obtaining of, or significantly
     increase the risk of not obtaining, any authorizations, consents, orders,
     declarations or approvals of any Governmental Authority (other than any
     authority competent under the Antitrust Law) necessary to consummate the
     transactions contemplated by this Agreement or the expiration or
     termination of any applicable waiting period, (b) significantly increase
     the risk of any Governmental

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     Authority (other than any authority competent under the Antitrust Law)
     entering an order prohibiting the consummation of the transactions
     contemplated by this Agreement, (c) significantly increase the risk of not
     being able to remove any such order on appeal or otherwise or (d)
     materially delay or prevent the consummation of the transactions
     contemplated by this Agreement.

          Section 5.11 Use of Corporate Name; Transitional Use of Seller's Name.
     As soon as reasonably practicable following the date hereof, but in no
     event later than sixty (60) days following the date hereof, Buyer shall
     cause each of the Entities to make any necessary legal filings with the
     appropriate Governmental Authorities to register the change in their
     corporate names. Buyer and its Affiliates shall hold harmless and indemnify
     Seller and any of its Affiliates against all Damages resulting from or
     arising in connection with the use by Buyer or any of its Affiliates of the
     "CMS" name as provided in this Section 5.12.

          Section 5.12 Use of Information Technology. Seller will ensure the
     e-mail forwarding service from the Argentine Employees inboxes to the new
     inboxes placed at the Buyer's servers for a period of three (3) months from
     the date hereof. The following services will remain running for at least
     one (1) month: (a) Internet access; (b) VPN access; (c) incoming and
     outgoing e-mails to / from the Seller's current e-mail accounts; and (d)
     blackberry access. Seller will also provide the users id's and passwords
     for all the installed communication equipments, and upgrade the
     administration levels of the Argentine servers to the maximum privileges.
     Should Buyer request an extension for any time period provided herein, such
     services shall be provided solely at Seller's discretion and at a
     reasonable cost to be agreed upon by Buyer and Seller.

          Section 5.13 Confidentiality. Buyer will hold, and will cause its
     Representatives to hold, in confidence, unless compelled to disclose by
     judicial or administrative process or by other requirements of Law, all
     confidential documents and information concerning the Seller furnished to
     Buyer in connection with the transactions contemplated by this Agreement,
     except to the extent that such information can be shown to have been (i)
     previously known on a non-confidential basis by Buyer, (ii) in the public
     domain through no fault of Buyer or (iii) later lawfully acquired by Buyer
     from sources other than the Seller; provided that Buyer may disclose such
     information to its Representatives in connection with the transactions
     contemplated by this Agreement so long as such Persons are informed by
     Buyer of the confidential nature of such information and are directed by
     Buyer to treat such information confidentially. The obligation of Buyer to
     hold any such information in confidence shall be satisfied if it exercises
     the same care with respect to such information as it would take to preserve
     the confidentiality of their own similar information.

          Section 5.14 Actions Relating to Entities.

          Seller shall use its reasonable best efforts to cooperate with Buyer
     after the date hereof, to:

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               (a) comply with all Argentine foreign holding company regulations
     in respect of Seller's holdings in each of the Entities (including, without
     limitation, Art. 220 of Resolution 7/05 of the IGJ) and related laws and
     regulations and provide evidence reasonably satisfactory of such
     compliance;

               (b) register all past capital increases and decreases of each the
     Entities with the IGJ, to the extent such capital increases and decreases
     have not been duly registered;

               (c) fund all necessary reserve amounts (including reserve amounts
     legally required to be funded) which have not been duly funded in
     connection with dividends declared by each of the Entities;

               (d) register with the Banco Central de la Republica Argentina,
     and otherwise comply with all applicable Argentine foreign exchange
     regulations (including, without limitation, Communication A3602, as
     amended, of the Argentine Central Bank and Decree 616/05 and its
     implementing regulations) relating to, the United States
     Dollars-denominated indebtedness of each of the Entities set forth in
     Section 3.7(b) of the Seller Disclosure Letter; and

               (e) deliver to Buyer all the original counterparts of the United
     States Dollars-denominated indebtedness of each of the Entities set forth
     in Section 3.7(b) of the Seller Disclosure Letter.

                                   ARTICLE VI

                           SURVIVAL; INDEMNIFICATION

          Section 6.1 Survival.

               (a) All representations and warranties contained herein shall
     survive for a period of twelve (12) months following the date hereof except
     for the representations and warranties of Seller set forth in Sections 3.1,
     3.2 and 3.3, and of Buyer in Sections 4.1 and 4.2, which shall survive
     indefinitely (such time periods set forth above are referred to herein as
     the relevant "Indemnity Period"). The parties intend to shorten the statute
     of limitations and agree that no claims or causes of action may be brought
     against Seller, Buyer or any of their respective directors, officers,
     employees, Affiliates, controlling persons, agents or representatives based
     upon, directly or indirectly, any of the representations and warranties
     contained in this Agreement after the Indemnity Period; provided that if a
     written notice of claim for indemnification is made during the applicable
     Indemnity Period in accordance with this Article VI, such claim shall
     survive until its resolution.

               (b) All covenants and agreements contained herein that by their
     terms are to be performed in whole or in part, or which prohibit actions,

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     subsequent to the date hereof, shall survive the consummation of the
     transaction contemplated hereby in accordance with their terms.

          Section 6.2 Indemnification.

               (a) Subject to the limitations set forth in this Article VI,
     subsequent to the date hereof, Seller shall indemnify, defend, save and
     hold harmless Buyer and its Affiliates, their respective successors and
     permitted assigns, and their officers and directors (collectively, the
     "Buyer Indemnified Parties"), from and against any and all Damages incurred
     by a Buyer Indemnified Party arising out of, resulting from or incurred in
     connection with:

               (i) any breach or inaccuracy of any representation or warranty of
     Seller contained in this Agreement, in each case, when made or deemed made;

               (ii) any breach in any material respect by Seller of any covenant
     or agreement contained in this Agreement; and

               (iii) the matters set forth on Section 6.2(a)(iii) of the Seller
     Disclosure Letter.

               (b) Subject to the limitations set forth in this Article VI,
     subsequent to the date hereof, each Buyer shall indemnify, defend, save and
     hold harmless Seller and its Affiliates, their respective successors and
     permitted assigns, and their officers and directors (collectively, the
     "Seller Indemnified Parties") from and against any and all Damages to the
     extent incurred by the Seller Indemnified Party arising out of, resulting
     from or incurred in connection with:

               (i) any breach or inaccuracy of any representation or warranty of
     such Buyer contained in this Agreement, in each case, when made or deemed
     made. For the avoidance of doubt, it is expressly understood that each of
     Lucid and Newco shall be severally, and not jointly, liable for Damages
     incurred by a Seller Indemnified Party as a result of a breach or
     inaccuracy of any representation or warranty made by such Person or for the
     breach of confidentiality obligations governed by Section 5.13 and, as a
     result, a Seller Indemnified Party shall not be entitled to make a Claim,
     seek contribution, assert joint and several liability or otherwise seek
     indemnification against the other Buyer based on such breach or inaccuracy
     or breach of confidentiality obligations; and

               (ii) any breach in any material respect by Buyer of any covenant
     or agreement contained in this Agreement.

               (c) Any Person providing indemnification pursuant to the
     provisions of this Section 6.2 is referred to herein as an "Indemnifying
     Party," and any Person entitled to be indemnified pursuant to the
     provisions of this Section 6.2 is referred to herein as an "Indemnified
     Party."

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               (d) Seller's indemnification obligations shall not apply to any
     Claim for Damages unless and until the aggregate of all such Damages
     exceeds one percent (1%) of the Purchase Price (the "Threshold Amount"), in
     which event Seller's indemnity obligations shall apply to all Claims for
     Damages in excess of the Threshold Amount, subject to a maximum liability
     to Seller, in the aggregate, of $25,000,000 (the "Cap Amount"); provided,
     however, that (i) any Claims for Damages for breach of the representations
     and warranties set forth in Section 3.1, Section 3.2, and Section 3.3,
     shall not be subject to the Threshold Amount, Cap Amount, or Minimum Claim
     Amount (as defined below); and (ii) Seller's indemnification obligations
     contained in Section 6.2(a)(iii) shall not be subject to the Threshold
     Amount and the Minimum Claim Amount. Damages relating to any single breach
     or series of related breaches of Seller's representations and warranties
     shall not constitute Damages, and therefore shall not be applied towards
     the Threshold Amount or be indemnifiable hereunder, unless such Damages
     relating to any single breach or series of related breaches exceed $100,000
     (the "Minimum Claim Amount").

               (e) Buyer's indemnification obligations contained in Section
     6.2(b)(i) shall not apply to any Claim for Damages unless and until the
     aggregate of all such Damages equals the Threshold Amount, in which event
     Buyer's indemnification obligation contained in Section 6.2(b)(i) shall
     apply to all Claims for Damages in excess of the Threshold Amount, subject
     to a maximum liability to the Buyer, in the aggregate, of the Cap Amount.
     Damages relating to any single breach or series of related breaches of
     Buyer's representations and warranties shall not constitute Damages, and
     therefore shall not be applied towards the Threshold Amount or be
     indemnifiable hereunder, unless such Damages relating to any single breach
     or series of related breaches exceed the Minimum Claim Amount.

               (f) The indemnification obligations of each party hereto under
     this Section 6.2 shall inure to the benefit of the Buyer Indemnified
     Parties and Seller Indemnified Parties, and such Buyer Indemnified Parties
     and Seller Indemnified Parties shall be obligated to keep and perform the
     obligations imposed on an Indemnified Party by this Section 6.2, on the
     same terms as are applicable to such other party.

               (g) In all cases in which a Person is entitled to be indemnified
     in accordance with this Agreement, such Indemnified Party shall be under a
     duty to take all commercially reasonable measures to mitigate all losses.

               (h) All amounts paid by Seller or Buyer, as the case may be,
     under this Article VI shall be treated as adjustments to the Purchase Price
     for all Tax purposes.

               (i) Notwithstanding any other provision of this Agreement, in no
     event shall any Indemnified Party be entitled to indemnification pursuant
     to this Article VI to the extent any Damages were attributable to such
     Indemnified Party's own gross negligence or willful misconduct.

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               (j) The remedies provided in this Article VI shall be deemed the
     sole and exclusive remedies of the parties, from and after the date hereof,
     with respect to this Agreement and the transactions contemplated hereby.

          Section 6.3 Calculation of Damages.

               (a) The amount of any Damages suffered by any party hereto shall
     be reduced by (i) any amount that is reserved for sums held in reserve in
     respect of the indemnifiable event on the balance sheet of the Entities, as
     applicable, as of December 31, 2006, to the extent such Damages are
     suffered by a Buyer Indemnified Party, (ii) any amount that an Indemnified
     Party is entitled to receive with respect thereto under any third party
     insurance coverage or from any other party alleged to be responsible
     therefore or (iii) any Tax Benefit realized by an Indemnified Party or its
     Affiliates. For purposes of this Agreement, "Tax Benefit" shall mean the
     Tax savings attributable to any deduction, expense, loss, credit or refund
     to the indemnified party or its Affiliates, when incurred or received;
     provided, however, that if such benefit is reasonably expected to arise or
     be utilized after the year in which indemnification occurs pursuant to this
     Agreement, then it means the present value of such Tax savings (calculated
     using the one Prime Rate (as published in The Wall Street Journal on the
     first Business Day of the taxable year in which the indemnification occurs)
     and a Tax rate equal to the sum of the highest marginal Argentine corporate
     income Tax rate or rates applicable to ordinary income or capital gain, as
     the case may be, in effect for the taxable period in issue).

               (b) If an Indemnified Party makes a claim for indemnification
     under this Article VI, the Indemnified Party shall use its reasonable best
     efforts to collect any amounts available under such insurance coverage and
     from such other party alleged to have responsibility. If an Indemnified
     Party receives an amount under insurance coverage or from such other party
     with respect to Damages at any time subsequent to any indemnification
     provided by Seller or Buyer, as the case may be, pursuant to this Article
     VI, then such Indemnified Party shall promptly reimburse the Indemnifying
     Party for any payment made or expense incurred by the Indemnifying Party in
     connection with providing such indemnification up to such amount received
     by the Indemnified Party, but net of any expenses incurred by the
     Indemnified Party in collecting such amount. To the extent the Indemnifying
     Party makes any indemnification payment pursuant to this Article VI in
     respect of Damages for which an Indemnified Party has a right to recover
     against a third party (including an insurance company), the Indemnifying
     Party shall be subrogated to the right of the Indemnified Party to seek and
     obtain recovery from such third party; provided, however, that if the
     Indemnifying Party shall be prohibited from such subrogation, the
     Indemnified Party shall seek recovery from such third party on the
     Indemnifying Party's behalf and pay any such recovery to the Indemnifying
     Party net of expenses.

          Section 6.4 Procedures for Third-Party Claims. The obligations of any
     Indemnifying Party to indemnify any Indemnified Party under this Article VI
     with respect to Claim for Damages by third parties (including Governmental
     Entities) (a "Third-Party Claim"), shall be subject to the following terms
     and conditions:

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               (a) The Indemnified Party shall give the Indemnifying Party
     written notice of any such Third-Party Claim reasonably promptly after
     learning of such Third-Party Claim, and the Indemnifying Party may, at its
     option, undertake the defense thereof by representatives of its own
     choosing and reasonably acceptable to the Indemnified Party, and shall
     provide written notice of any such undertaking to the Indemnified Party.
     Failure to give prompt written notice of a Third-Party Claim hereunder
     shall not affect the Indemnifying Party's obligations under this Article
     VI, except to the extent that the Indemnifying Party is actually prejudiced
     by such failure to give prompt written notice. The Indemnified Party shall,
     and shall cause its employees and representatives to, cooperate reasonably
     with the Indemnifying Party in connection with the settlement or defense of
     such Third-Party Claim and shall provide the Indemnifying Party with all
     available information and documents concerning such Third-Party Claim. The
     Indemnifying Party shall provide the Indemnified Party with copies of all
     non-privileged communications and other information in respect of the
     Third-Party Claim and, with respect to any Third-Party Claim for Taxes,
     shall allow Buyer to participate at its own expense in defense of the claim
     under the reasonable control of the Indemnifying Party. If the Indemnifying
     Party, within thirty (30) days after written notice of any such Third-Party
     Claim, fails to assume the defense of such Third-Party Claim, or, after
     assuming defense, negligently fails to defend and fails to call after
     reasonable written notice of the same, the Indemnified Party against whom
     such Third-Party Claim has been made shall (upon further written notice to
     the Indemnifying Party) have the right to undertake the defense, compromise
     or settlement of such Third-Party Claim on behalf of and for the account
     and risk, and at the expense, of the Indemnifying Party, subject to the
     right of the Indemnifying Party to assume the defense of such Third-Party
     Claim at any time prior to settlement, compromise or final determination
     thereof upon written notice to the Indemnified Party.

               (b) Anything in this Section 6.4 to the contrary notwithstanding,
     (i) the Indemnified Party shall not settle a Third-Party Claim for which it
     is indemnified without the prior written consent of the Indemnifying Party,
     which consent shall not be unreasonably withheld, conditioned or delayed
     and (ii) the Indemnifying Party shall not enter into any settlement or
     compromise of any action, suit or proceeding, or consent to the entry of
     any judgment for relief other than monetary damages to be borne by the
     Indemnifying Party, without the prior written consent of the Indemnified
     Party, which consent shall not be unreasonably withheld, conditioned or
     delayed.

          Section 6.5 Procedures for Inter-Party Claims.

          In the event that an Indemnified Party determines that it has a Claim
     for Damages against an Indemnifying Party hereunder (other than as a result
     of a Third-Party Claim), the Indemnified Party shall give reasonably prompt
     written notice thereof to the Indemnifying Party, specifying the amount of
     such Claim and any relevant facts and circumstances relating thereto, and
     such notice shall be promptly given even if the nature or extent of the
     Damages is not then known. The notification shall be subsequently
     supplemented within a reasonable time as additional information regarding
     the Claim or the nature or extent of Damages resulting therefrom becomes
     available to the Indemnified

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     Party. Any failure to give such reasonably prompt notice or supplement
     thereto or to provide any such facts and circumstances will not waive any
     rights of the Indemnified Party, except to the extent that the rights of
     the Indemnifying Party are actually materially prejudiced thereby. The
     Indemnified Party and the Indemnifying Party shall attempt to negotiate in
     good faith for a thirty-day (30-day) period regarding the resolution of any
     disputed Claims for Damages. If for any reason, such dispute cannot be
     resolved by negotiation, on the request of any party it shall be resolved
     by arbitration in accordance with Section 7.8 herein. Promptly following
     the final determination of the amount of any Damages claimed by the
     Indemnified Party, the Indemnifying Party, subject to the limitations of
     the Minimum Claim Amount, Threshold Amount and the Cap Amount, shall pay
     such Damages to the Indemnified Party by wire transfer of immediately
     available funds.

                                   ARTICLE VII

                            MISCELLANEOUS PROVISIONS

          Section 7.1 Interpretation.

               (a) Unless the context of this Agreement otherwise requires, (a)
     words of any gender include the other gender; (b) words using the singular
     or plural number also include the plural or singular number, respectively;
     (c) the terms "hereof," "herein," "hereby" and derivative or similar words
     refer to this entire Agreement; (d) the terms "Article," "Section" and
     "Exhibit" refer to the specified Article, Section and Exhibit of this
     Agreement, respectively; and (e) "including," shall mean "including, but
     not limited to"; and (v) the words "asset" and "property" shall be
     construed to have the same meaning and effect and to refer to any and all
     tangible and intangible assets and properties (whether real or personal).
     Unless otherwise expressly provided, any agreement, instrument, law or
     regulation defined or referred to herein means such agreement, instrument,
     law or regulation as from time to time amended, modified or supplemented,
     including (in the case of agreements or instruments) by waiver or consent
     and (in the case of a law or regulation) by succession of comparable
     successor law and includes (in the case of agreements or instruments)
     references to all attachments thereto and instruments incorporated therein.

               (b) For purposes of Article III and all covenants and obligations
     of Seller hereunder including indemnification obligations of Article VI,
     all representations, warranties, covenants and obligations made by Seller
     shall be deemed to be jointly and severally made by each Seller entity.

               (c) For purposes of Article V, in the event that Seller shall be
     obligated to cause, or use its reasonable best efforts to cause, an
     Affiliate over which it does not have voting control to act or not act,
     directly or indirectly through the exercise of equity voting rights or
     contractual and other rights, it shall be obligated to exercise all of its
     contractual and other rights to cause such action or inaction by such
     Affiliate.

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          Section 7.2 Disclosure Letters.

          The Seller Disclosure Letter and the Buyer Disclosure Letter are
     incorporated into this Agreement by reference and made a part hereof.

          Section 7.3 Payments.

          All payments set forth in this Agreement are in United States Dollars.
     Such payments shall be made by wire transfer of immediately available funds
     or by such other means as the parties to such payment shall designate.

          Section 7.4 Expenses.

          Except as expressly set forth herein, or as agreed upon in writing by
     the parties, each party shall bear its own costs, fees and expenses,
     including the expenses of its representatives, incurred by such party in
     connection with this Agreement and the transaction contemplated hereby and
     thereby.

          Section 7.5 Choice of Law.

          THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
     PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
     OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR
     CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER
     JURISDICTION OTHER THAN THE STATE OF NEW YORK APPLICABLE HERETO.

          Section 7.6 Assignment.

          This Agreement may not be assigned by either party without the prior
     written consent of the other party; provided, however, that without the
     prior written consent of the other party, each party shall have the right
     to assign its rights and obligations under this Agreement to any third
     party successor to all or substantially all of its entire business.

          Section 7.7 Notices.

          All demands, notices, consents, approvals, reports, requests and other
     communications hereunder must be in writing, will be deemed to have been
     duly given only if delivered personally or by facsimile transmission (with
     confirmation of receipt) or by an internationally-recognized express
     courier service to the parties at the following addresses or telephone or
     facsimile numbers and will be deemed effective upon delivery; provided,
     however, that any communication by facsimile shall be confirmed by an
     internationally-recognized express courier service.

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               (i)  If to the Seller:

                    CMS Enterprises Company
                    One Energy Plaza
                    Jackson, Michigan 49201
                    Attention: General Counsel
                    Telephone: (517) 788-0550
                    Facsimile: (517) 788-1671

                    With a required copy to:

                    Miller, Canfield, Paddock and Stone, PLC
                    101 North Main Street, 7th Floor
                    Ann Arbor, Michigan 48104
                    Attention: Michael D. VanHemert
                    Telephone: (734) 668-7117
                    Facsimile: (734) 747-7147

               (ii) If to Buyer:

                    (a) Lucid Energy, LLC

                    30078 Schoenherr, Suite 150
                    Warren, Michigan
                    Attention: Rai Bhargava/Manouch Daneshvar
                    Telephone: (586) 445-2300
                    Facsimile: (586) 445-1782

                    With a required copy to:

                    Ufer & Spaniola, P.C.
                    5440 Corporate Drive, Suite 250
                    Troy, Michigan 48098-2648
                    Attention: Gerald Van Wyke, Esquire
                    Telephone: (248) 641-7000
                    Facsimile: (248) 641-5120)

                    (b) New Argentine Generation Company, L.L.C.

                    410 Park Avenue, Suite 510,
                    New York, NY 10022
                    Attention: Authorized Person
                    Telephone: (212) 751-9233
                    Facsimile: (212) 355-3594

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                    With a required copy to:

                    Garrigues
                    410 Park Avenue, Suite 510,
                    New York, NY 10022

                    Attention: Xavier Ruiz
                    Telephone: (212) 751-9233
                    Facsimile: (212) 355-3594

                    Citigroup Financial Products Inc.
                    390 Greenwich Street
                    7th Floor
                    NY, NY 10013

                    Attention: Al Valma
                    Telephone: 212-657-8195
                    Facsimile: 212-657-9042

                    Attention: Michael Triolo
                    Telephone: 212-723-1305
                    Facsimile: 212-723-8036

     or to such other address as the addressee shall have last furnished in
     writing in accord with this provision to the addressor.

          Section 7.8 Resolution of Disputes.

          Except for the resolution of disputes that shall be resolved in
     accordance with the procedures set forth in Sections 5.1 and 6.5 herein,
     all disputes arising out of or relating to this Agreement or any Related
     Agreement or the breach, termination or validity thereof or the parties'
     performance hereunder or thereunder ("Dispute") shall be resolved as
     provided by this Section 7.8.

               (a) If the Dispute has not been resolved by executive officer
     negotiation within thirty (30) days of the disputing party's notice
     requesting negotiation, or if the parties fail to meet within twenty (20)
     days from delivery of said notice, such Dispute shall be submitted to and
     finally settled by arbitration in accordance with the Rules of Arbitration
     of the International Chamber of Commerce in New York ("ICC") then in effect
     (the "Rules"), except as modified herein.

               (b) The arbitration shall be held, and the award shall be
     rendered, in the English language. There shall be three arbitrators, one of
     whom shall be nominated by each of Buyer and Seller in accordance with the
     Rules. The two party appointed arbitrators shall have thirty (30) days from
     the confirmation of the nomination

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     of the second arbitrator to agree on the nomination of a third arbitrator
     who shall serve as chair of the arbitral tribunal. On the request of any
     party, any arbitrator not timely appointed in accordance with this
     Agreement or the Rules shall be appointed by the ICC.

               (c) The award shall be final and binding upon the parties as from
     the date rendered, and shall be the sole and exclusive remedy between the
     parties regarding any claims, counterclaims, issues, or accounting
     presented to the arbitral tribunal. Judgment upon any award may be entered
     and enforced in any court having jurisdiction over a party or any of its
     assets. For the purpose of the enforcement of an award, the parties
     irrevocably and unconditionally submit to the jurisdiction of a competent
     court in any jurisdiction in which a party may have assets and waive any
     defenses to such enforcement based on lack of personal jurisdiction or
     inconvenient forum. This Agreement and the rights and obligations of the
     parties shall remain in full force and effect pending the award in any
     arbitration proceeding hereunder.

               (d) The Parties agree that any court action or proceeding to
     compel or in support of arbitration or for provisional remedies in aid of
     arbitration, including but not limited to any action to enforce the
     provisions of this Section 7.8, for temporary injunctive relief to maintain
     the status quo or prevent irreparable harm prior to the appointment of the
     arbitral tribunal, shall be brought exclusively in the federal or state
     courts located in New York, New York (the "New York Courts"). The Parties
     hereby unconditionally and irrevocably submit to the exclusive jurisdiction
     of the New York Courts for such purpose, and to the non-exclusive
     jurisdiction of the New York Courts in any action to enforce any
     arbitration award rendered hereunder, and waive any right to stay or
     dismiss any such actions or proceedings brought before the New York Courts
     on the basis of forum non conveniens or improper venue. Without prejudice
     to such provisional remedies as may be available under the jurisdiction of
     a national court, the arbitral tribunal shall have full authority to grant
     provisional remedies and to direct the parties to request that any court
     modify or vacate any temporary or preliminary relief issued by such court,
     and to award damages for the failure of any party to respect the arbitral
     tribunal's orders to that effect.

          Section 7.9 Language.

          The parties confirm that it is their wish that this Agreement and any
     other documents related hereto or thereto, including notices, schedules and
     authorizations, have been and shall be drawn up in the English language
     only.

          Section 7.10 No Right of Setoff.

          Neither party hereto nor any Affiliate thereof may deduct from, set
     off, holdback or otherwise reduce in any manner whatsoever any amount owed
     to it hereunder or pursuant to any Related Agreement against any amounts
     owed hereunder of pursuant to any Related Agreement by such Persons to the
     other party hereto or any of such other party's Affiliates.

51

<PAGE>

          Section 7.11 Time is of the Essence.

          Time is of the essence in the performance of the provisions of this
     Agreement.

          Section 7.12 Specific Performance.

          Each party acknowledges and agrees that any breach of any provision of
     this Agreement would cause irreparable harm to the other party. Each party,
     without prejudice to any rights to judicial relief it may otherwise have,
     shall be entitled to equitable relief, including injunction and specific
     performance. Each party agrees that it will not oppose the granting of such
     relief on the basis that the other party has not suffered irreparable harm
     or that the other party has an adequate remedy at Law. Each party agrees
     that it will not seek and agrees to waive any requirement for the securing
     or posting of a bond in connection with the other party's seeking or
     obtaining such relief.

          Section 7.13 Currency Matters.

               (a) Each Party's obligations hereunder to make payments in
     Dollars shall not be discharged or satisfied by any tender or recovery
     pursuant to any judgment expressed in or converted into any currency other
     than Dollars.

               (b) The obligation of any Party to pay in Dollars those amounts
     specified to be due in Dollars under this Agreement shall not be deemed to
     have been novated, discharged or satisfied by any tender of (or recovery
     under judgment expressed in) any currency other than Dollars. Additionally,
     all amounts due under this Agreement shall be payable and paid in the
     United States.

          Section 7.14 Entire Agreement.

          This Agreement, together with the Seller Disclosure Letter, Buyer
     Disclosure Letter, Annexes I, II and III, Exhibits hereto, the
     Confidentiality Agreement, and the closing letter between Seller and Buyer
     dated the date hereof constitute the entire agreement between the parties
     hereto with respect to the subject matter herein and supersede all previous
     agreements, whether written or oral, relating to the subject matter of this
     Agreement and all prior drafts of this Agreement, all of which are merged
     into this Agreement. No prior drafts of this Agreement and no words or
     phrases from any such prior drafts shall be admissible into evidence in any
     action or suit involving this Agreement. In the case of any material
     conflict between any provision of this Agreement and any other Related
     Agreement, this Agreement shall take precedence.

          Section 7.15 Binding Nature; Third Party Beneficiaries.

          This Agreement shall be binding upon and inure solely to the benefit
     of the parties hereto and their respective successors (whether by operation
     of law or otherwise) and permitted assigns. Except as expressly provided
     herein, none of the provisions of this Agreement shall be for the benefit
     of or enforceable by any third party, including any creditor of either
     party or any of their Affiliates. Except as expressly provided herein, no
     such third party shall obtain any right under any provision of this
     Agreement or shall by

52

<PAGE>

     reasons of any such provision make any Claim in respect of any Liability
     (or otherwise) against either party hereto.

          Section 7.16 Counterparts.

          This Agreement may be executed in two (2) or more counterparts, each
     of which, when executed, shall be deemed to be an original and both of
     which together shall constitute one and the same document. Any counterpart
     or other signature to this Agreement that is delivered by facsimile or
     electronic mail shall be deemed for all purposes as constituting good and
     valid execution and delivery by such party of this Agreement.

          Section 7.17 Severability.

          If any provision of this Agreement is held to be illegal, invalid or
     unenforceable under any applicable present or future law, and if the rights
     or obligations of either party under this Agreement will not be materially
     and adversely affected thereby, (i) such provision shall be fully
     severable, (ii) this Agreement shall be construed and enforced as if such
     illegal, invalid or unenforceable provision had never comprised a part
     hereof, (iii) the remaining provisions of this Agreement shall remain in
     full force and effect and shall not be affected by the illegal, invalid or
     unenforceable provision or by its severance herefrom and (iv) in lieu of
     such illegal, invalid or unenforceable provision, there shall be added
     automatically as a part of this Agreement, a legal, valid and enforceable
     provision as similar in terms to such illegal, invalid or unenforceable
     provision as may be possible.

          Section 7.18 Headings.

          The headings used in this Agreement have been inserted for convenience
     of reference only and do not define or limit the provisions hereof.

          Section 7.19 Waiver.

          Any term or condition of this Agreement may be waived at any time by
     the party that is entitled to the benefit thereof, but no such waiver shall
     be effective unless set forth in a written instrument duly executed by or
     on behalf of the party or parties waiving such term or condition. No waiver
     by any party of any term or condition of this Agreement, in any one or more
     instances, shall be deemed to be or construed as a waiver of the same or
     any other term or condition of this Agreement on any future occasion. All
     remedies, either under this Agreement or by law or otherwise afforded, will
     be cumulative and not alternative.

          Section 7.20 Amendment.

          This Agreement may be altered, amended or changed only by a writing
     making specific reference to this Agreement and signed by duly authorized
     representatives of each party.

53

<PAGE>

          IN WITNESS WHEREOF, Seller and Buyer, by their duly authorized
     officers, have executed this Agreement as of the date first written above.

                                        CMS ENTERPRISES COMPANY

                                        By: /s/ Thomas W. Elward
                                            ------------------------------------
                                            Name: Thomas W. Elward
                                            Title: President and Chief Operating
                                                   Officer

                                        CMS GENERATION HOLDINGS COMPANY

                                        By: /s/ Thomas W. Elward
                                            ------------------------------------
                                            Name: Thomas W. Elward
                                            Title: President and Chief Executive
                                                   Officer

                                        CMS INTERNATIONAL VENTURES, L.L.C.

                                        By: /s/ Thomas W. Elward
                                            ------------------------------------
                                            Name: Thomas W. Elward
                                            Title: President

                                        (Collectively, the Seller)

                                        LUCID ENERGY, LLC

                                        By: /s/ Manouch Daneshvar
                                            ------------------------------------
                                            Name: Manouch Daneshvar
                                            Title: President, COO and Secretary

                                        NEW ARGENTINE GENERATION COMPANY, LLC

                                        By: /s/ Rai Bhargava
                                            ------------------------------------
                                            Name: Rai Bhargava
                                            Title: Chairman and Chief Executive
                                                   Officer

                                        NEW ARGENTINE GENERATION COMPANY, LLC

                                        By: /s/ Manouch Daneshvar
                                            ------------------------------------
                                            Name: Manouch Daneshvar
                                            Title: President, Chief Operating
                                                   Officer and Secretary

                                        (Collectively, the Buyer)

54

<PAGE>

                                     ANNEX I

                                 EQUITY INTEREST

DIRECT EQUITY INTEREST

          (i)  312,234,100 quotas of CMS Operating S.R.L. owned by CMS
               International Ventures, L.L.C.

          (ii) 43,176,438 quotas of CMS Operating S.R.L. owned by CMS Generation
               Holding Company (12,1483% of the capital)

          (iii) 62,055,630 quotas of CMS Generation S.R.L. owned by CMS
               International Ventures, L.L.C.

          (iv) 6,895,070 quotas of CMS Generation S.R.L. owned by CMS Generation
               Holdings Company

          (v)  121,999 shares of CMS Comercializadora de Energia S.A. owned by
               CMS Enterprises Company

          (vi) 1 share of CMS Comercializadora de Energia S.A. owned by CMS
               Generation Holdings Company

          (vii) 22,500 shares of CMS Centrales Termicas S.A. owned by CMS
               Enterprises Company

          (viii) 2,500 shares of CMS Centrales Termicas S.A. owned by CMS
               Generation Holdings Company

          (ix) 80,060 shares of CMS Ensenada S.A. owned by CMS Generation
               Holdings Company

 INDIRECT EQUITY INTEREST

          (i)  37,931,940 shares of CMS Ensenada S.A. owned by CMS Operating
               S.R.L.

          (ii) 272,890,208 shares of Cuyana S.A. de Inversiones owned by CMS
               Operating S.R.L.

          (iii) 8,440,145 shares of Cuyana S.A. de Inversiones owned by CMS
               Centrales Termicas S.A.

          (iv) 141,946,679 class A shares and 115,772,224 class B shares of
               Centrales

55

<PAGE>

              Termicas Mendoza S.A. owned by Cuyana S.A. de Inversiones.

          (v)  8,702,400 class C shares of Transportadora de Gas del Mercosur
               S.A. owned by CMS Operating S.R.L.

56

<PAGE>

ANNEX II

                              ASSUMED INDEBTEDNESS

          (i)  Promissory Notes from CMS Ensenada S.A. to CMS Enterprises
               Company dated (a) January 15, 2004; (b) July 15, 2004; and (c)
               July 7, 2005 in the amounts of US$825,421, US$2,003,898, and
               US$577,042, respectively plus accrued interests.

          (ii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
               CMS international Ventures L.L.C. - current balance is US$
               7,807,814.45 as of January 31, 2007.

          (iii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
               CMS Operating SRL - current balance is US$ 277,011.51 as of
               January 31, 2007.

          (iv) Promissory Note from CMS Generation Investment Company VI to
               Cuyana S.A. de Inversiones dated December 21, 2005 - current
               balance is US$12,484,339 plus accrued interests.

          (v)  Intercompany Account Payable to CMS International Ventures,
               L.L.C. from CMS Operating S.R.L. in the amount of US$ 4,543,034
               as of February 28, 2007.

57

<PAGE>

                                    ANNEX III

                           COPY OF THE HIDROINVEST SPA

58
<PAGE>

                               Purchase Agreement
                                     between
                               CMS Generation Co.,
                              CMS Generation S.R.L.
                                       and
                Empresa Nacional de Electricidad SA -ENDESA CHILE
                                    signed on
                                  March 8, 2007

This Purchase Agreement (this "Agreement") is entered into in the City of Buenos
Aires on March 9, 2007 by and between:

CMS Generation Co. a corporation organized and existing under the laws of
Michigan, United States of America, with its registered office at One Energy
Plaza, Jackson, Michigan 49201, United States of America, herein represented by
Mr. Bemardo Velar de lrigoyen in his capacity as Attorney-in-fact;

CMS Generation S.R.L. a sociedad de responsabilidad limitade organized and
existing under the laws of the Republic of Argentina, with its registered office
at Ing. E. Butty 220, 8th floor, City of Buenos Aires, Argentina, herein
represented by Mr. Bernardo Velar de Irigoyen in his capacity as Presidente de
la Genercia (collectively with CMS Generation Co., the "Sellers" or "CMS"); and

Empresa Nacional de Electricidad S.A. - ENDESA CHILE, a sociedad anonima
organized and existing under the laws of the Replubic of Chile, with its
registered office at Santa Rosa 76, Santiago, Replublic of Chile, herein
represented by Mr. Carlos Manuel Martin Vergara in his capacity as Secretary of
the Board of Directors and Attorney-in-fact (the "Buyer" and, together with the
Sellers, the "Parties").

                                   WITNESSETH:

A. WHEREAS, CMS Generation Co. owns beneficially and of record 7,405,768 class
"B" shares of Hidroelectrica El Chocon S.A. "(HECSA") representing 2.48% of the
issued and outstanding voting stock of HECSA (including all political an
deconomic rights relating thereto, the "HECSA Shares").

B. WHEREAS, CMS Generation S.R.L. owns beneficially and of record 2,734,110
class "R" shares and 1,733,390 class "L" shares of Hidroinvest S.A.
("Hidroinvest") representing in the aggregate 25% of the issued and outstanding
voting stock of Hidroinvest (including all political and economic rights
relating thereto, the "Hidroinvest Shares" and, together with HECSA Shares, the
"Shares").

C. WHEREAS, Hidroinvest owns beneficially and of record 152,277,866 class "A"
shares and 23,866,723 class "B" shares of HECSA representing in the aggregate
59% of the issued and outstanding voting stock of HECSA.

D. WHEREAS, Endesa Argentina S.A., a corporation organized and existing under
the laws of the Republice of Argentina, and a subsidiary of Buyer, currently
owns beneficially and of record 6,379,590 class "R" shares and 6,116,146 class
"L" shares of Hidroinvest and 18,493,689 class "B" shares of HECSA.

<PAGE>

E. WHEREAS, CMS Generation Co. is the sole and exclusive holder of that certain
promissory note issued by Hidroinvest on September 22, 1995 for a face value of
US$18.582.429,32 (as the same may have been subsequently modified, amended or
extended, together with all instruments and agreements related thereto the
copies of which are attached hereto as Annex E, the "Promissory Note" and,
collectively with the Shares, the "Assets").

F. WHEREAS, pursuant to the terms set forth.in Section 2.10. of the Shareholders
Agreement (as defined below), Sellers have granted to Buyer, and Buyer has
accepted, an offer to buy the Assets.

G. WHEREAS, the Parties declare that, notwithstanding the rights granted to CMS
as a minority shareholder as set forth in the by-laws and the Shareholders
Agreement (as defined in Article VI herein) , Buyer - through Endesa Argentina
S.A. - currently has exclusive economic and legal control over Hidroinvest and
HECSA, directly and indirectly, respectively. Therefore, Sellers and Buyer deem
that the transfer of the Shares from Sellers to Buyer (the "Stock Transaction")
is not subject to the mandatory notice regime established in Article 8, Law No.
25,156, based on the fact that neither the nature nor the content of the
Buyers's current control over Hidroinvest and HECSA shall be altered. Moreover,
the Parties highlight that, as Buyer currently owns almost 70% of the capital
stock and votes of Hidroinvest, the Stock Transaction should be regarded as
exempted from the prior authorization procedure set forth in the abovementioned
regulation, according to Article 10, item (a), Law No. 25,156.

H. WHEREAS, notwithstanding the above, and without prejudice to the execution
and closing of the Stock Transaction as provided herein below, Buyer deems
reasonable and advisable to seek a confirmation from the Secretary of Domestic
Commerce or the competent authority pursuant to the applicable laws (the
"Competent Authority") of the validity of the criteria stated in Recital G
above, through the advisory opinion (opinion consu/tiva) procedure established
in Decree No. 89/2001 and the Annex to Resolution No. 26/2006 of the Technical
Coordination Secretary (the "Request").

I. WHEREAS, the Sellers acknowledge and agree to the filing of the Request to be
performed by the Buyer, as set forth in this Agreement.

J. WHEREAS, subject to the terms and conditions hereof, the Sellers desire to
sell the Assets to the Buyer and the Buyer desires to purchase the Assets from
the Sellers.

NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the Parties hereto agree as
follows:

I. SALE AND PURCHASE OF THE ASSETS. PURCHASE PRICE

1.1. Purchase and Sale of the Assets. Simultaneously with the payment of the
Purchase Price (as defined below) in accordance with this Article I the Sellers
shall sell, assign and transfer all of the Assets to the Buyer, and the Buyer
shall accept such sale, assignment and transfer in consideration for the
Purchase Price.

1.2. Purchase Price. The purchase price of the Assets is Fifty Million United
States Dollars (US $50,000,000) (the "Purchase Price").

<PAGE>

1.3. Allocation of the Purchase Price. The Purchase Price shall be paid by Buyer
on the date hereof in immediately available funds by wire transfers to the
account of each Seller in the following proportions:

     1.3.1. Six Million, Nine Hundred Thousand, United States Dollars (US
$6,900,000) to the following account:

     CMS Generation Company
     One Energy Plaza
     Jackson, Michigan 49201

     Tax ID No. 38-2698677

     Bank: Wachovia Bank, NA
     Location: Charlotte, NC
     SWIFT: PNBP US 33
     ABA #: 053 000 219
     Acct Name: CMS Enterprises Company
     Acct #: 2000028332279

     in consideration for the HECSA Shares;

     1.3.2. Twenty Six Million, Nine Hundred Thousand United States Dollars (US
$26,900,000) to the following account:

     CMS Generation SRL
     Avda. E. Madero 900 8[degree sign] Piso
     Buenos Aires, Argentina

     Tax ID No. 98-0391308

     Acct Name: CMS Operating S.R.L.
     Bank: Citibank, N.A.
     Location: New York, NY
     ABA: 021000089
     A/C: 3683-3063
     SWIFT: CITIUS33

     in consideration for the Hidroinvest Shares; and

     1.3.3. Sixteen Million, Two Hundred Thousand United States Dollars (US
$16,200,000) to the account indicated in 1.3.1 above, in consideration for the
Promissory Note.

II. DELIVERIES BY THE SELLERS

Upon payment of the Purchase Price, CMS shall proceed as follows:

2.1. Sellers shall notify the transfer of the Shares to Hidroinvest and HECSA,
as the case may be, substantially in the form attached hereto as Exhibit 2.1,
pursuant to the terms of Artide 215 of the Argentine Companies Law. Sellers
shall deliver to Buyer a copy of such notice.

<PAGE>

2.2. Sellers shall deliyerto Hidroinvest and HECSA, with copy to the Buyer, the
written resignations of all of the directors and syndics of Hidroinvest and
HECSA appointed by CMS, substantially in the form attached hereto as Exhibit
2.2.

2.3. CMS Generation Co. shall deliver to the Buyer the Promissory Note duly
endorsed in favor of the Buyer. Simultaneously with such endorsement, CMS
Generation Co. shall notify Hidroinvest of the assignment of the credit under
the Promissory Note in favor of the Buyer. A notary public shall certify the
authenticity of the endorsing signature and the corresponding capacity of the
signing officer.

III. FILING OF THE REQUEST

3.1. The Buyer shall file, within three (3) days as of the date hereof, the
Request with the Competent Authority.

3.2. The Sellers acknowledge and agree to the filing of the Request pursuant to
the terms attached hereto as Exhibit 3.2. As required by the applicable
regulations, the Request will be signed both by Sellers and Buyer.

3.3. In the event the Competent Authority issues a Resolution instructing the
Parties to make a formal filing under the terms of Article 8 of Law 25.156,
Sellers shall timely perform or cause to be performed all acts which are
necessary under the relevant laws and regulations, as required by the Competent
Authority, in order to fully cooperate with Buyer in obtaining a favorable
ruling. Counsel for Buyer shall lead the filing process with the permanent
cooperation of counsel for the Sellers. Sellers and their counsel shall equally
cooperate with Buyer and its counsel in the event that the Competent Authority
requested any kind of information or documents atter the filing of the Request
and prior to issuing its advisory opinion (opini6n consultiva).

IV. REPRESENTATIONS BY THE SELLERS

4.1. Representations by CMS Generation Co. CMS Generation Co. represents and
warrants to the Buyer that (i) it has good, valid, marketable and exdusive title
to the HECSA Shares; (ii) it has the right and legal power and authority to sell
the HECSA Shares to Buyer and to enter into and/or perform its obligations under
this Agreement (and all commitments contemplated hereunder); (iii) the HECSA
Shares are validly issued, fully paid and non-assessable; and (iv) none of the
HECSA Shares has been issued in violation of any transfer restrictions.

4.2. Representations by CMS Generation S.R.L CMS Generation S.R.L represents and
warrants to the Buyer that (i) it has good, valid, marketable and exclusive
title to the Hidroinvest Shares; (ii) it has the right and legal power and
authority to sell the Hidroinvest Shares to Buyer and to enter into and/or
perform its obligations under this Agreement (and all commitments contemplated
hereunder); (iii) the Hidroinvest Shares are validly issued, fully paid and
non-assessable; and (IV) none of the Hidroinvest Shares has been issued in
violation of any transfer restrictions.

4.3. Representations by CMS Generation Co. CMS Generation Co. represents and
warrants to the Buyer as of the date hereof that (i) it is the sole and
exclusive' holder of the Promissory Note; and it has the right and legal power
and authority to assign and transfer the Promissory Note to Buyer and to enter
into and/or perform its obligations under this Agreement (and all commitments
contemplated hereunder), without need of any authorization from third parties.

<PAGE>

4.4. Additional Representations by the Sellers. In addition to the limited
representations made by the Sellers in this Article IV, Sellers do not make any
representation nor grant any express or tacit warranty in connection with the
Assets, HECSA, or Hidroinvest. Buyer expressly releases the Sellers and the
directors and syndics of HECSA and Hidroinvest appointed by the Sellers for any
damage that Buyer and/or HECSA and/or Hidroinvest may suffer as a consequence of
the existence of any liability, hidden or not, of HECSA and/or Hidroinvest
and/or with regard to the financial statements of the HECSA and/or Hidroinvest
and waives any claim against the Sellers and the directors and syndics of HECSA
and/or Hidroinvest appointed by the Sellers in connection with the participation
of the Sellers in the management of HECSA and/or Hidroinvest.

V. REPRESENTATIONS BY THE BUYER

Buyer represents and warrants to the Sellers that it has full right and legal
power and authority to purchase the Assets from each of the Sellers and enter
into and/or perform its obligations under this Agreement and all commitments
contemplated hereunder.

VI. ADDITIONAL COVENANT BY THE BUYER

6.1. Darwin Tag Along Right. Buyer acknowledges, understands and agrees that
pursuant to that certain Addendum No. IV to the Contrato para la Participacion
en la Licitacion de Hidroelectricas Alicura S.A., El Chocon S.A., Cerros
Colorados S.A. y Piedra de Aguila S.A. entered into by and between
Hidroelectricidad S.A., Energia Hidraulica S.A., CMS Generation S.A., Sawgrass
Limited, Latin American Capital Partners Limited, C.I. Global Fund, C.I.
Emerging Markets Fund, The South America Fund IV and Darwin Holdings, Inc. on
December 5, 1994 (the "Shareholders Agreement"), as a consequence of this
Agreement Darwin Holdings, Inc. shall have the tag along right to sell the whole
or part of its shares in Hidroinvest to the Buyer (the "Darwin Shares").

6.2. Covenant by Buyer. Buyer expressly covenants and agrees to purchase the
whole or a part of the Darwin Shares upon requirement of Darwin Holdings, Inc.,
in accordance with the terms and conditions of the Shareholders Agreement.

VII. MISCELLANEOUS

7.1. Partial Invalidity. If, at any time, any provision of this Agreement is or
becomes illegal, invalide or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validty or enforceability of the remaining
provisions nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction will in any way be affected or impaired.

7.2. Assignment. This Agreement shall not be assigned in whole or in part
without the prior written consent of the other Parties.

7.3. Entire Agreement. This Agreement constitutes the entire agreement among the
Parties pertaining to the subject matter contained herein and supersedes all
prior agreements, representations and understandings of the Parties, whether
written or oral.

7.4. Interpretation. Buyers and Sellers have each had this Agreement reviewed by
experienced and qualified counsel and the opportunity to negotiate fully all of
the provisions of this Agreement.

<PAGE>

7.5. Amendment and Waiver. No supplement to, or modification, or amendment of,
this Agreement shall be binding unless it is in writing and executed by all of
the Parties. No waiver shall be binding unless executed in writing by the Party
against whom the waiver is to be effective. No waiver or any of the provisions
of this Agreement shall be demed, or shall constitute a continuing waiver. No
failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

7.6. Notices. All notices, requests, demands, waivers and other communications
required to be given under this Agreement shall be in writing and shall be
deemed to have been duly given on (i) the date of service if served personally
on the party to whom notice is to be given; (ii) the date sent if given by
confirmed facsimilie transmission addressed to the party to whom notice is to be
given and a confirming copy is mailed to the party to whom notice is to be given
by first class mail; (iii) the day after sending if sent to the party to whom
notice is to be given by private courier for next day delivery; or (ii) the
third day after mailing if mailed to the party to whom notice is to be given by
certified mail, return receipt requested, and property addressed as follows:

          If to the Sellers:
             CMS Energy
             Ingeniero Butty 220 8degrees Piso
             (C1106ACU) -City of Buenos Aires, Argentina
             Attention: Silvina Indart
             Telephone: +(54 11) 4316 0860
             Facsimile: + (54 11) 4316 0818

          With a ..copy to:

             CMS Enterprises Company
             One Energy Plaza
             Jackson, Michigan 49201
             Attention: Sharon A. Mcllnay
             Telephone: + (1 517) 788 0550
             Facsimile: + (1 517) 788 1671

          If to the Buyer:

             Empresa Nacional de Electricidad S.A.
             Santa Rosa 76, Santiago
             Republic of Chile
             Attention: Rafael Mateo Alcala
             Telephone: + (562) 630.9157
             Facsimile: + (562) 378.4780

VIII. APPLICABLE LAW. DISPUTE RESOLUTION

8.1. This Agreement shall be interpreted and performed in accordance with the
laws of the Republic of Argentina.

<PAGE>

8.2. The Parties shall make their best efforts to amicably settle any
controversy, dispute or claim arising between them with respect to or relating
to the execution of this Agreement, or the breach, termination or validity
thereof (the "Dispute'). If, notwithstanding the foregoing, any Party considers
that such dispute cannot be amicably settled through negotiations, it may notify
in writing the other Parties its intention to settle the Dispute as provided
herein (a "Notice of Dispute"). The Dispute shall be finally settled under the
Rules of Arbitration of the ICC. There shall be three (3) arbitrators, one
appointed by the Sellers, one appointed by Buyers and the third appointed by the
ICC unless the Parties mutually agree to appoint such third arbitrator before it
is appointed by the ICC. The Dispute shall be finally settled solely and
exclusively by the aforesaid arbitration proceeding. The arbitration shall take
place in Geneva and shall be conducted in English.

IN WITNESS WHEREOF, the Parties have duly executed three (3) counterparts. each
of which shall be deemed an original but all of which shall constitute one and
the same instrument, as of the place and date first above written.

CMS GENERATION CO.

By: /s/ Bernardo Velar de Irigoyen
Name: Bernardo Velar de Irigoyen
Title: Attorney-in-fact

CMS GENERATION S.R.I.

By: /s/ Bernardo Velar de Irigoyen
Name: Bernardo Velar de Irigoyen
Title: Attorney-in-fact

EMPRESA NACIONAL DE ELECTRICIDAD SA

By: /s/ Carlos Manuel Martin Vergara
Name: Carlos Manuel Martin Vergara
Title: Secretary of the Board and
       Attorney-in-fact

<PAGE>

ANNEX E

                                 PROMISSORY NOTE

No.3
U.S.$18,582,429.32                                      Date: September 22, 1995

     FOR VALUE RECEIVED, the undersigned, HlDROINVEST S.A., an Argentine
corporation ("sociedad anonima") having its legal domicile at Suipacha No. 268,
Floor 12, (1355) Buenos Alres, Republic of Argentina, (the "Borrower"), hereby
promises to pay to the order of CMS GENERATION CO., having its pnncipal domicile
at Fair1ane Plaza South, 330 Town Center Drive, Suite 1000, Dearborn, Michigan,
United States of America 48126 (the "Lender") the principal sum of
U.S.$18,582,429.32 (Eighteen million, five hundred eighty-two thousand, four
hundred twenty-nine with 32/100 United States dollars). Such payment shall be
made on September 22, 1996. Use of the proceeds from this payment will be
utilized to payoff the amount owed under Promissory Note No. 1, dated as of
January 20, 1994, which had a maturity date on October 31, 1995.

     The unpaid principal hereof shall bear interest from the dale hereof until
payment in full at the rate por annum resulting from adding two hundred (200)
basis points (2 %) to the rate at which United States dollar deposits of one
hundred and eighty (180) days and for amounts approximately equal to the unpaid
principal amount hereof are offered in the London interbank eurodollar market
("LIBOR") three (3) days prior to the date hereof as reported by Reuters,
provided, however, that if the resulting interest rate includes fractions not
divisible into eighths the said interest rate shall be rounded upward to the
nearest one-eight of one percent (1/8 of 1 %). Interest shall be paid together
with principal on September 22, 1996.

     The Borrower shall make each payment under this Promissory Note in
immediately available funds not later than 12:00 noon (New York City time) on
the day when due in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender or subsequent holder hereof at
a bank located in the City of New York, State of New York or elsewhere in the
United States of America, as the Lender or subsequent holder hereof shall
designate by written notice to the Borrower or at a bank located elsewhere in
the United States of America as the Lender or subsequent holder hereof shall
designate by written notice to the Borrower.

     Computations of Interest shall be made on the basis of a year of three
hundred and sixty (360) days and for the actual number of days elapsed hereunder
(including the first day and excluding the last day).

     If any amount shall become payable hereunder on a day which is not a day on
which banks are open for business in the City of London, the City of New York
and the City of Buenos Aires (any such day being herein called a "Business
Day"), such payment shall be made on the next succeeding Business Day unless
such Business Day shall fall in the next succeeding calendar month, in which
case, such payment shall be made on the next preceding Business Day and without
prejudice to the due date of any future payments.

<PAGE>

     It is an essential condition of this Promissory Note that all payments
hereunder be made in United States dollars ('Dollars'). To the extend that, at
the time Borrower is required to make any payments hereunder, the Borrower is
unable (1) to purchase Dollars with Argentine currency or to transfer the
Dollars so purchased in order to make such payments as required hereunder by
reason of the introduction of currency exchange restrictions in the Republic of
Argentina affecting the availability, convertibility or transferability of
foreign exchange to or by Argentine residents or (ii) to apply funds in freely
convertible non-Argentine currencies held by the Borrower outside the Republic
of Argentina, the Lender or subsequent holder hereof may, in its sole discretion
and pursuant to written notice to the Borrower, require the Borrower either (A)
to procure Dollars with "Bonos Externos de la Republica Argentina" ("External
Bonds') in an amount such that the Lender or subsequent holder of this
Promissory Note receives the full and complete amount of such payment in Dollars
on the date and in the manner herein provided or (B) on the date of such
payment, to deliver to the Lender or subsquent holder hereof, at the place
designated for payment at the opening of business, (x) External Bonds of the
series then most traded in the Buenos Aires Stock Exchange ("Bolsa de Comercio
de Buenos Aires") in an amount such that, in the sole judgement of the Lender or
subsequent holder hereof, when sold in the New York market for Dollars (in the
spot market on such date), would produce, net of any commissions, taxes or costs
of any nature, the Dollar amount required to be paid on such date as stated in
this Promissory Note and (y) written instructions to dispose of such External
Bonds on such date in the name and on behalf of the Borrower and apply the
proceeds thereof to such payment hereunder, provided, however, that such
Instructions shall fully discharge, indemnify, defend and hold harmless the
Lender or subsequent holder hereof with respect to any liability whatsoever to
the Borrower it might otherwise incur in connection with the performance of such
instructions and, provided, further, that if as a result of such sale the net
amount received by the Lender or subsequent holder hereof is less than the
Dollar amount due hereunder, the obligation of the Borrower to make payment
hereunder shall not be extinguished to the extent of such difference and, upon
the demand of the Lender or subsequent holder hereof, the Borrower shall
immediately deliver to the Lender or subsequent holder hereof such additional
External Bonds as the Lender or subsequent holder hereof may deem necessary to
compensate for such difference in the same series and under the same conditions
as the previous delivery. In either case, the Borrower shall pay for its own
account, and indemnify, defend and hold the Lender or subsequent holder hereof
harmless from any claim or liability which it may incur by reason or any
Argentine or foreign transfer, stamp, documentary or any other tax, commission
or other cost of any nature incurred in connection with any such payment or
delivery.

     If as a result of any legal rule or of any resolution of any authority the
Lender or subsequent holder hereof determines that the cost to it of making or
maintaining the loan instrumented herein is increased or any amount received or
receivable by the Lender or subsequent holder hereof under this Promissory Note
is reduced, then the Borrower will immediately pay to the Lender or subsequent
holder hereof any additional amount(s) that the Lender or subsequent holder
hereof determines will compensate it for the effect of such increased cost, or
reduction in amount, plus lost profits.

     If the Borrower defaults in the payment of the principal, interest thereon
or any other sums payable pursuant hereto, whether of fees, expenses or
otherwise, the interest on such defaulted amounts (to the extent permitted by
law) up to the day of actual payment (after as well as before judgment) shall
accrue at a rate per annum resulting form adding four hundred (400) basis points
(4%) to LlBOR. Such rate shall accrue on a day-to-day basis and be payable by
the Borrower on the demand of the Lender or subsequent holder hereof.

<PAGE>

     If any of the following events ("Events of Default") shall occur and be
continuing: (i) the Borrower shall fail to pay the principal amount hereof or
interest thereon on or any sum due hereunder when the same becomes due and
payable; (ii) the Borrower shall fail to pay (A) any debt for borrowed money in
excess of five million Dollars (U.S.$5,000,000.00) whether at scheduled maturity
by acceleration or otherwise or (B) any of its other indebtedness when due
(whether at scheduled maturity, by acceleration or otherwise) in connection with
accumulative amounts equal to or in excess of five million Dollars
(U.S.$5,000,000.00), if the effect of said failure is to accelerate, or to
permit the acceleration (after the giving of notice or passage of time or both)
of, the maturity of such indebtedness, or such indebtedness shall be declared to
be due and payable, or required to be prepaid, prior to the stated maturity
thereof; (iii) the Borrower shall fail to perform or observe any other provision
of this Promissory Note; or (iv) the Borrower (1) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; or (2) shall make any assignment for the benefit of creditors,
or petition or apply to any tributal for the appointment of a custodian,
receiver or trustee for it or substantial part of its assets; or (3) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (4) shall have had any such
petition or application filed or any such proceeding shall have been commenced
against it, in which adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed for a
period of thirty (30) days or more after notice thereof has been given to the
Borrower; or (5) by any act or omission shall indicate its consent to, approval
of or acquiescence in any such petition, application or proceeding or order for
relief for the appointment of a custodian, receiver or trustee for all or any
substantial part of its property, or (6) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of thirty (30)
days or more; then, (y) in the case of an Event of Default other than the ones
referred to in clause (iv) above the Lender or subsequent holder hereof may, by
notice to the Borrower, declare the outstanding principal under this Promissory
Note, and all interest accruing thereon and all other amounts payable hereunder
to be forthwith due and payable whereupon all such principal, interest and other
amounts shall become and be forwith due and payabfe, without presentment, demand
protest or further notice of any kind, all of which are hereby waived by the
Borrower; and (z) in the case of an Event of Default referred to in clause (iv)
above, the principal outstanding under this Promissory Note and all interest
accruing thereon and all other amounts payable hereunder shall automatically be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.

     Section 1. Taxes. (a) Any and all payments made by the Borrower hereunder
shall be made free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the overall net
income of the Lender or subsequent holder hereof (all such non-exduded taxes
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
law to make any such deduction from any payment hereunder, (i) the sum payable
shall be increased as may be necessary so that after making all required
deduction under this Section 1, the Lender or subsequent holder hereof receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions. and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.

     (b) In addition, the Borrower agrees to pay any present of future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, registration of, performance or enforcement or otherwise with respect
to this Promissory Note (hereinafter referred to as "Other Taxes").

<PAGE>

     (c) The Borrower will indemnify the Lender or subsequent holder hereof for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts, payable under this
Section 1 paid by the Lender or subsequent holder hereof or any liability
(including penalties, adjustments for inflation, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within thirty
(30) days from the date the Lender or subsequent holder hereof makes written
demand therefor.

     (d) Within thirty (30) days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Lender or subsequent holder hereof the
original or certified copy of a receipt evidencing payment thereof. If no Taxes
or Other Taxes are payable in respect of any payment, the Borrower will furnish
to the Lender or subsequent holder hereof a certificate from each appropriate
authority, or an opinon of counsel acceptable to the Lender or suosequent holder
hereof, in either case stating that such payment is exempt from or not subject
to Taxes or Other Taxes.

     (e) Without prejudice to the survival or any other agreement of the
Borrower hereunder the agreements and obligations of the Borrower contained in
subsections (a) through (d) above (and any compensation for increased costs or
reductions of amounts receivable by the Lender or subsequent holder hereof as
provided herein above) shall survive the payment in full of principal and
interest hereunder.

     Section 2. Consent to jurisdiction. Waiver of Immunities. (a) The Borrower
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal Court sitting in New York City over any action or preceeding
arising out of or relating to this Promissory Note.

     (b) Nothing in this Section 2 shall affect the right of the Lender or
subsequent holder hereof to bring any action or proceeding against the Borrower
or its propertv in the courts of any other jurisdictions, including, without
limitation, the Courts sitting in the City of Buenos Aires, Argentina .

     (c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment in aid of execution, attachment prior to
judgment, execution or otherwise) with respect to itself or its properties,
assets or revenues, the Borrower hereby irrevocably waives such immunity in
respect of its obligations aring out of or relating to this Promissory Note.

     Section 3. Process Agent. The Borrower hereby designates and appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
1633 Broadway, New York, New York 10019, as its agent to receive on its.behalf
and on behalf of its property, service of any and all process which may be
served in any suit, action, or proceeding any New York State or Federal court
sitting in New York City pursuant to Section 2 (a) hereof. Said designation and
appointment shall be irrevocable until all principal of and interest on this
Promissory Note and all other sums payable hereunder have been paid in full in
accordance with the terms hereof. The-Borrower convenants and agrees that it
shall take any and all action including, without limitation, the filing of any
and all documents, that maybe necessary to continue the foregoing designation
and appointment in full force and effect and to cause such agent to continue to
act as agent. If the Process Agent shall cease to so act, the Borrower covenants
and agrees that it shall irrevocably designate and appoint without delay another
such agent satisfactory to the Lender or subsequent holder hereof and shall
promptly deliver evidence in writing of such other agent's acceptance of such
appointment which shall, if necessary, include a waiver by such agent of any
immunity, sovereign or otherwise, which it may have with respect to any service
of process.

<PAGE>

     Section 4. Costs and Expenses. The Borrower agrees to pay on demand all
losses, costs and expenses, if any, in connection with the performance and/or
enforcement of this Promissory Note, including, without limitation, legal costs
and expenses evidenced to have been sustained by the Lender or subsequent holder
hereof as a result of a default hereunder.

     Section 5. Waiver of Presentment. The Borrower hereby waives diligence,
presentment, notice of dishonor, demand, protest and notice of any kind
whatsoever.

     Section 6. No Waiver of Rights. No failure or delay by the Lender in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, not shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies otherwise provided by law.

     Section 7. Amendment, Change, Modification, or Waiver. No amendment,
change, modification, or waiver to this Promissory Note shall be valid unless
executed in writing by an officer of CMS Generation Co. In the event the
amendment, change, modification, or waiver involves an extension of the period
by which the interest together with the principal must be paid, this extension
can be for no more than 364 days at one time. Such an extension must be executed
on the form attached hereto as Schedule 1.

     Section 8. Governing Law. This Note shall be governed by, and construed in
accordance with the internal laws of the State of New York, United States of
America.

     This Promissory Note has not been registered under the Securities Act of
1993, as amended (the "Securities Act") or any securities laws of the States of
the United States and unless so registered, may not be offered or sold except
pursuant to an exemption from or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state securities
laws.

     IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be
executed by its duly authorized representative as of the day and year first
above written.

                                        HIDROINVEST SA

                                        By: /s/ Francisco A. Mezzadri
                                        Name: Francisco A. Mezzadri
                                        Title: Vice President

<PAGE>

                                     ALLONGE

     THIS ENDORSENIENT IS TO BE ATTACHED TO AND MADE A PART OF THAT CERTAIN

          Promissory Note No. 3, (the "Note") dated September 22, 1995, made by
Hidroinvest S.A., to CMS Generation Co, the original payee, in the original
principal amount of U.S. $18,582,429.32 Such Note is hereby transferred pursuant
to the following endorsement, without recourse or warranty, with the same force
and effect as if such endorsement were set forth at the end of such Note:

PAY TO THE ORDER OF:

__________________________

__________________________

By: /s/ AM Wright
Name: Alan M. Wright
Title: Executive Vice President,
       Chief Financial Officer &
       Chief Administrative Officer

     This Allonge shall be attached to the Note described above and is hereby
made a part WHEREOF.

                                   SCHEDULE 1

Amendment to Promissory Note No 3. dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.

Gentlemen:

Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), I, (name) in my capacity as (title), of CMS Generation Co. hereby
authorize the extension of the date upon which the unpaid principal and interest
must be paid to (new date).

All 0ther terms and conditions of the Note remain unchanged, unless authorized
in written.

Signed:                                    Date:
        --------------------------------         ---------------
                     (Name)

<PAGE>

Amendment No.1 to Promissory Note No.3, dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.

Gentlemen:

Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), I, Nicholas A. Vlisides, in my capacity as Assistant Treasurer of
CMS Generation Co. hereby authorize the extension of the date upon which the
unpaid principal and interest must be paid to September 22, 1997.

All other terms and conditions of the Note remain unchanged, unless authorized
in writing.

Signed: /s/ N A Vlisides                   Date: September 20, 1996
        Nicholas A. Vlisides

                                   SCHEDULE 1

Amendment to Promissory Note No.3, dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.

Gentlemen:

Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), Laura L. Mountcastle, in my capacity as Vice President and
Treasurer of CMS Generation Co. hereby authorize the extension of the date upon
which the unpaid principal and interest must be paid to September 22, 2003.

All other terms and conditions of the Note remain unchanged, unless authorized
in writing.

Signed: /s/ Laura L Mountcastle            Date: 10/28/02
        Laura L. Mountcastle
        Vice President and Treasurer
<PAGE>

                                                Buenos Aires, 8 de marzo de 2007
Senor
Presidente de
Hidroinvest SA
Presente

De nuestra consideracian:

                            TRANSFERENCIA DE ACCIONES

               Tenemos el agrado de dirigimos a ustedes, a fin de comunicarles
que en el dia de la fecha CMS Generation S.RL. transfiria des millones
setecientos treinta y cuatro mil ciento diez (2.734.110) acciones clase "R" y un
millan setecientos treinta y tres mil trescientos noventa (1.733.390) acciones
clase "L" emitidas p~r Hidroinvest SA a favor de Empresa Nacional de
Electricidad SA -ENDESA CHILE, una sociedad constituida de acuerdo a las leyes
de la Republica de Chile, domiciliada en Santa Rosa 76, Santiago, Republica de
Chile.

               En consecuencia, solicitamos de confonnidad con el articulo 215
de la ley N" 19.550, registrar la lransferencia de las mencionadas acciones
clase "R" y "L" en ellibro de registro de acciones de Hidroinvest SA a favor de
Empresa Nacional de Electricidad SA -ENDESA CHILE.

              Sin otro particular, saludamos a ustedes atentamente.

                                        /s/ CMS Generation S.R.L.
                                        CMS Generation S.R.L.

<PAGE>

                                                 Buenos Aires, 8de marzo de 2007
Senor
Presidente de
Hidroelectrica EI Chocon SA
Presente

De nuestra consideracion:

                            TRANSFERENCIA DE ACCIONES

               Tenemos el agrado de dirigimos a ustedes, a fin de
comunicarlesque en el dia de la fecha CMS Generation Co. transfirio siete
millones cuatrocientos cinco mil setecientos sesenta yocho (7.405.768) acciones
clase "S" emitidas por Hidroelectrica EI ChocOn S.A. a favor de Empresa Nacional
de ElectriCidad SA -ENDESA CHILE, una sociedad constituida de acuerdo a las
leyes de la Republica de Chile, domiciliada en Santa Rosa 76, Santiago,
Republica de Chile.

               En consecuencia, solicitamos de conformidad con el articulo 215
de la ley N" 19.550, registrar la transferencia de las mencionadas acciones
clase UB" en ellibro de registro de acciones de Hidroelectrica EI Chocon SA a
favor de Empresa Nacional de Electricidad SA -ENDESA CHILE.

             Sin otro particular, saludamos a ustedes atentamente .

                                        /s/ CMS Generation Co.
                                        CMS Generation Co.

<PAGE>

                                   EXHIBIT 2.2

                                                              8 de Marzo de 2007
Presidente del directorio de
Hidroinvest S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Eluenos Aires

De mi consideracion,

                    PRESENTA RENUNCIA

               Comunico a usted mi renuncia indedinable al cargo de Sindico
Titular del directorio de Hidroinvest S.A. a partir de hoy.

               Atentamente,

                                        /s/ Silvina Indart
                                        Silvina Indart
                                        Sindico Titular

<PAGE>

                                                              8 de Marzo de 2007

Presidente del directorio de
Hidroinvest S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion.

                    PRESENTA RENUNCIA

               Comunico a usted mi renuncia indeclinable al cargo de Director
Suplente del directorio de Hidroinvest S.A. a partir de hoy.

               Alentamente.

                                        /s/ Hector S. Falzone
                                        Hector S. Falzone
                                        Director Suplente

                                                              8 de Marzo de 2007

Presidente del diredorio de
Hidroinvest S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion,

                    PRESENTA RENUNCIA

               Comunico a usted mi renuncia indeclinable al cargo de Director
Titular del directorio de Hidroinvest S.A. a partir de hoy.

               Atentamente,

                                        /s/ Carlos Priocipi
                                        Carlos Priocipi
                                        Director Titular

<PAGE>

                                                              8 de Marzo de 2007

Presidente del directorio de
Hidroinvest S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion,

                    PRESENTA RENUNCIA

               Comunico a usted mi renuncia indeclinable al cargo de Vice
Presidente del directorio de Hidroinvest S.A a partir de hoy.

               Atentamente,

                                        /s/ Bernardo Velande Ingoyen
                                        Bernardo Velande Ingoyen
                                        Vice Presidente

                                                              8 de Marzo de 2007

Presidente del directorio de
Hidroelectrica EI Chocon SA
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion,

                    PRESENT A RENUNCIA

               Comunico a usted mi renunda indeclinable al cargo de Sindico
Titular del directorio de Hidroelectrica EI Chacon SA a partir de hoy.

               Atentamente,

                                        /s/ Silvina Indart
                                        Silvina Indart
                                        Sindico Titular

<PAGE>

                                                              8 de Marzo de 2007

Presidente del directorio de
Hidroelectrica El Chocon S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion,

                    PRESENTA RENUNCIA

               Comunico a usted eclinable al cargo de Director Suplente del
directorio de Hidroelectrica S.A. a partir de hoy.

               Atentamente,

                                        /s/ Carlos Principi
                                        Carlos Principi
                                        Director Suplente

<PAGE>

                                                              8 de Marzo de 2007

Presidente del directorio de
Hidroelectrica EI Chocon S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires

De mi consideracion,

                    PRESENTA RENUNCIA

               Comunico a usted mi renuncia indeclinable al cargo de Vice
Presidente del directorio de Hidroelectrica El Chocon SA. a partir de hoy.

               Atentamente,

                                        /s/ Bernardo Velarde Ingoyen
                                        Bernardo Velarde Ingoyen
                                        Vice Presidente

<PAGE>

                                   EXHIBIT 3.2

                                   EXHIBIT 2.1

SOLICITA OPINION CONSULTIVA

                                                Buenos Aires, 9 de marzo de 2007

Senor
Presidente de la
Comision Nacional de Defensa de la Competencia
Secretaria de Comercio Interior
Dr. Jose Sbatella
Av. Julio A. Roca 651, Piso 4, Sector 16
Ciudad Autonoma de Buenos Aires
S _____________ / D ______________

De nuestra consideracion:

Marcela !nes Anchava y Bernardo A. lriberri, en representacion de EMPRESA
NACIONAL DE ELECTRICIDAP S.A.. (en adelante "Endesa Chile") con domicilio en
Santa Rosa 76, Santiago, Republica de Chile, constituyendo domicilio especial a
los fines de esta presentacion en las oficinas del Estudio Cardenas, Di Cio,
Romero, Tarsitano & Lucero sitas en Reconquista 360, piso 6degrees, Ciudad de
Buenos Aires, y Bernardo Velar de Irigoyen, en su caracter de Presidente de la
Gerencia de CMS Generation S.R.L. y de apoderado de CMS Generation Co. (ambas
designadas conjuntamente como "CMS"), con domicilios en Ingeniero Butty 220 Piso
8degrees, Buenos Aires y One Energy Plaza, Jackson, Michigan, Estados U nidos de
America respectivamente, constituyendo dornicilio especial a los fines de esta
presentacion en Ingeniero Butty 220 Piso 8degrees, Buenos Aires, se presentan y
dicen:

               I. Personeria

Que se adjunta como Anexo I el poder especial otorgado por Endesa Chile y, como
Anexo 2, copia del acta de designacion del representante legal de CMS Generation
SRL (Presidente de la Gerencia) y del poder otorgado por CMS Generation Co., a
favor de los suscriptos, con facultades suficientes para esta presentacion.

               II. Objecto

               Que por la representacion invocada venimos a solicitar a esa
Comision Nacional de Defensa de la Competencia (la "Comision") una opinion
consultiva en los Mrminos del Articulo 8 del Decreto 89/2001 reglamentario de la
Ley 25. 156 (texto seglin Decreto PEN 39612001) (la "Ley de Defensa de la
Competencia',) y de la Resolucion 26/2006 de la Secretaria de Coordinacion
Tecnica, solicitando se declare que la operacion que se describe a continuacion
no se encuentra sujeta al control previo estable.cido en el articulo 8 de la Ley
de Defensa de la Competencia.

<PAGE>

               III. Descripcion de la Operacion

1. Antecedentes de las partes y de las sociedades objeto de la operacion.

Endesa Argentina S.A., sociedad controlada por Endesa Chile, con domicilio en
Suipacha 268 Piso 12, Buenos Aires, Argentina, es actualmente accionista
mayoritaria de HIDROINVEST S.A. ("HIDROINVEST"), ..compania en la que tiene el
69,93% del capital y de los votos.

CMS tiene actualmente el 25% del capital y de los votos de HIDROINVEST.

HIDROINVEST es una sociedad inversora constituida en ocasion de convocarse el
Concurso Intemacional para la Concesion de las centrales hidroelectricas
anterionnente operadas por HIDRONOR, y resulto adjudicataria en 1993 del paquete
de control (59%) de CENTRAL HIDROELECTRICA EL CHOCON S.A. ("HECSA"). Dicho
paquete de control se compone de la totalidad de las Acciones Clase "A" de
HECSA, representativas del 51 % del capital social de esta Ultima, asi como de
Acciones Clase B, representativas del 8%.

ENDESA ARGENTINA tiene ademas una participacion directa en el capital accionario
de HECSA del 6,19% (Acciones Clase B), en tanto que CMS Generation Co., una
sociedad constituida y domiciliada en el Estado de Michigan, Estados Unidos de
America es tambien titular de acciones Clase B de HECSA representativas del
2,48% de su capital.

2. La operacion bajo consulta

En cumplimiento de una c\ausula contenida en el acuerdo de accionistas de
HIDROINVEST (al que nos referiremos mas adelante), e\ 5 de febrero de 2007 CMS
confirio a ENDESA CHILE una opcion preferente de compra de la totalidad de sus
participaciones en HIDROINVEST, al tiempo que CMS Generation Co. hizo 10 propio
con respecto a las acciones que esta posee en HECSA (la "Operacion"). El plazo"
para aceptar la oferta era de diez dias corridos.

El 15 de febrero de 2007, ENDESA CHILE ejerci61a opci6n de compra.

Finalmente, el 8 de marzo de 2007 se concluyo la Operacion, produciendose la
transferencia de las acciones objeto de la misma a ENDESA CHILE.

La presente solicitud de Opinion Consultiva se rea1iza -con efectos suspensivos
-dentro del plazo previsto en el articulo 8degrees de la Ley de Defensa de la
Competencia.

Como consecuencia de la Operacion, el conjunto economico ENDESA CHILE-ENDESA
ARGENTINA ("ENDESA") incrementa su participacion en HIDROINVEST que ha pasado
del 69,93% al 94,93% de las acciones y votos de dicha compaiiia, en tanto que en
HECSA su participaci6n direcfa se acrecienta del 6,19% al 8,67% del capital y
votos de dicha compania.

2.a) EI control en HECSA

El incremento de participacion de ENDESA en HECSA como consecuencia de la
Operacion no modifica en absoluto el control de dicha compaiiia en manos de
HIDROlNVEST.

Como se anticipara, es en virtud de las propias nonnas que rigieron la
privatizacion de HIDRONOR que el control sobre HECSA es ejercido por
HIDROINVEST. Esta situacion, que se mantiene desde la adjudicacion en 1993, no
variaria en nada can motivo de 1a Operacion.

<PAGE>

De acuerdo con el Articulo 20 del Estatuto Social de HECSA, del cual se acompana
copia como Anexo 3, HIDROINVEST tiene derecho a designar cinco de los ocho
directores de 1a sociedad concesionaria, la Clase B designa dos directores y el
Programa de Propiedad Participada (PPP), titular de la Clase C, designa al
director restante. El Operador de HECSA, designado bajo el Contrato de Concesion
y el respectivo Pliego es ENDESA CHILE. En las asambleas de HECSA, HIDROINVEST
esti en condiciones en todo momento de formar la voluntad social, aclanindose
por otra parte que con relacion a HECSA no se ha suscripto acuerdo de
accionistas alguno. La adquisicion por parte de ENDESA del 2,48% de
piuticipacion directa anterionnente de propiedad de eMS Generation Co. (acciones
Clase B), no modi fica en modo alguno la situacion de control actualmente
ejercida por ENDESA a traves de HIDROINVEST.

2.b) EI control en HIDROINVEST

En HIDROThiVEST tanto la mayoria absoluta de las acciones (casi el 70%) como el
control - en el sentido en que !o ha entendido esa Comision -estaban ya, con
anterioridad a la Operacion, en poder de ENDESA. De acuerdo a las disposiciones
del acuerdo de accionistas vigente entre ENDESA CHILE Y CMS (el "Acuerdo de
Accionistas"), y al Estatuto Social de HIDROINVEST el Directorio de esta ultima
se compone de ocho miembros, correspondiendole a ENDESA, antes de la Operacion,
la designacion de seis:directores y a CMS dos. Se acompana como Anexo 4 copia
del Estatuto de HIDROINVEST. El Acuerdo de Accionistas y sus tres modificaciones
se acompana en copia como Anexo 5.

El Acuerdo de Accionistas, en disposiciones que fueron reflejadas en el Estatuto
Social de HIDROINVEST (Articulos Octavo y Decimocuarto), contenia ciertos
mecanismos de protecci6n de la rninoria habituales en este lipo de estructuras.
Esa proteccion se materializaba mediante la fijacion de una mayoria agravada
para la aprobaci6n de detenninadas decisiones a nivel del Directorio y de la
Asamblea de Accionistas las cuales tenian por objeto preservar la inversi6n del
socio minoritario en la compania

En el caso del Directorio, se requiere el voto favorable de siete directores
para:

(i) la aprobacion de cualquier modificacion o suplemento al presupuesto
operativo anual o al presupuesto de capital;

(ii) la celebracion, terrninacion o modificacion de cualquier contrato de venta
de energia y/o potencia de HECSA que tenga una duraci6n de mils de un ano;

(iii) la contrataci6n de cualquier credito, sea por HIDROlNVEST o por HECSA si
(a) el plazo de la deuda es superior a un ano; (b) sumonto excede US $1.000.000,
o (c) la deuda no puede ser servida con los flujos de caja proyectados;

(iv) la aprobacion de la memoria y los estados contables anuales;

(v) la designacion de los auditores externos de HIDROINVEST y de HECSA, y

(vi) Ia designacion del gerente de administracion y finanzas, aunque el Acuerdo
de Accionistas dispone que dicho cargo sera cubierto por una persona designada
por ENDESA. En caso de no ser aceptada la propuesta inicial, ENDESA debera
presentar una terna de personas.

En las Asambleas de Accionistas, se necesita una mayoria del 76% del capital con
derecho a voto para aprobar:

<PAGE>

(i) cualquier emision de nuevas acciones, sea por HIDROINVEST o por HECSA;

(ii) la aprobacion de la memoria y los estados contables anuales;

(iii) cualquier modificacion a los estatutos de HIDROINVEST o de HECSA; o
fusion, consolidacion, disolucion o liquidacion de cualquier porcion de los
activos de HIDROINVEST o de HECSA que sean necesarios para que cualquiera de
esras companias pueda seguir sus negocios dentro del curso ordinario, y

(iv) las modificaciones a la politica de dividendos tanto en HIDROINVEST como en
HECSA.

Para modificar el estatuto social de HIDROINVEST se requiere unanimidad.

De confonnidad con reiterada doctrina e1aborada por la Comision, la nocion de
control debe construirse no solo atendiendo a la participacion de los
accionistas en el capital de una compafiia sino rambien a las relaciones de
control internas y externas y a las de hecho y de derecho.

En la Opinion Consultiva No. 124 (del 6 de julio de 2001) la Comision desarrollo
en extenso los conceptos de control exclusivo y control conjunto ya referidos en
anteriores Opiniones Consultivas y dictamenes de coocentraciones. En dicha
oportunidad considero que la adquisicion de control depende de una serie de
circunstancias de hecho y de derecho, las que deben ser analizadas caso por
caso.

Con particular referencia a la nocion de control compartido, la Comision dijo en
el caso alii tratado que esta situacion puede darse cuando se requiere eI
acuerdo de los accionistas para acordar sobre temas estrategicos para la
compania

En tal senti do, de acuerdo al criterio de la Comision, el poder de bloquear
decisiones que detenninan la estrategia competitiva de la compania otorga aI
accionista influencia significativa o sustancial sobre la misma

En la Operacion traida a consideracion de esa Comision los derechos de veto del
minoritario se relacionaban con medidas protectivas de su inversion (entre
ellos, modificacion de estatutos, politica de dividendos, decisiones acerca de
la fusion, consolidacioo, disolucion o liquidacion de cualquier porcion de los
activos).

La Comision tiene dicho que "Esta proteccion nonnal de los derechos de los
accionistas minoritarios guarda relacion con las decisiones que afectan a la
esencia misma de la empresa, tales como: modificaciones de los estatutos,
aumento o reduccion del capital, liquidacion, etc." (Opinion Consultiva No. 124)

Notese que la estrategia de inversion, comercial y competitiva de la compafiia,
temas estos a los cuales la Comision adjudica importancia decisiva para
detenninar la existencia o no de control comun por parte de dos 0 mas
accionistas, no eran asuntos que se encontrasen sujetos aI requisito de la
mayoria calificada, ni en HIDROINVEST oi -por via refleja -en la propia HECSA.

En materia de presupuesto por ejemplo, se requiere el voto del minoritario sOlo
para las modificaciones o suplementos del mismo, pero no para su preparacion y
aprobacion. Es decir que la prerrogativa apunta a la proteccion del accionista
para supuestos de apartamiento del presupuesto nonnal de la compania,
partiendose de la base de que ese presupuesto ha side aprobado por mayoria
simple (prevaleciendo asi la voluntad del controlante Endesa). Sin perjuicio de
lo anterior, notese que en la pnictica eI presupuesto fijado se mantiene
constante a lo largo del ano.

<PAGE>

Notese que los derechos de preparacion y aprobacion del presupuesto por parte de
ENDES A son mayores aun a aquellos que la Comision tuvo oportunidad de analizar
en la Opinion Consultiva Ndegrees 219 del 21 de marzo de 2006, oportunidad en la
que la rnayoria concluyo que el accionista minoritario no adquiria control
conjunto. Mas especificarnente, esa Opinion Consultiva (con cita a la Opinion
Consultiva Ndegrees 35/00 del 10 de marzo de 2000) considero a los votos de
accionistas minoritarios en lo relacionado a desvios presupuesta" rios y excesos
de niveles de endeudamiento como acciones defensivas no constitutivas de
control.

EI presupuesto anual consta de un presupuesto economico, un presupuesto
financiero y un presupuesto de inversiones.

En el presupuesto economico se proyecta el margen variable en funcion de una
serie de simulaciones del funcionarniento del MEM (Mercado EJectrico
Mayorista). Los costos incluyenbasicamente los costos de personal y los
servicios contratados.

El presupuesto financiero constituye una proyeccion de caja en funcion del
presupuesto economico y de inversiones.

En relacion con el presupuesto de inversiones, es de destacar que el Pliego de
la Licitacion preveia y el Contrato de Concesion especificamente contempla en su
articulo 31, un regimen de inversiones ob1igatorias.

Por lo tanto, la realizacion de las inversiones obligatorias no es materia
disponible para los accionistas, sino que constituye una obligacion contractuaJ
ya predeterminada. Adicionalmente, es importante destacar que las inversiones no
obligatorias no han superado historicamente la suma de US $1.000.000 por ano.

En consecuencia, la preparacion y aprobacion del presupuesto economico,
financiero y de inversiones, solo requiere rnayoria simple, aJcanzada por
ENDESA.

Cuando el derecho de veto se refiere a inversiones, la Comision ha dicho en la
recordada Opinion Consultiva No. 124 "Su importancia depende, en primer lugar,
del nivel de las inversiones sujetas a la aprobacion de las empresas matrices y,
en segundo lugar, del papel que desempeilen las inversiones en el mercado en que
opera la empresa. (...) La po[{tica de inversion de una empresa constituye
generalmente un elemento importante para demostrar la existencia de control en
comun. Sin embargo, es probable que en algunos mercados la inversion no
desempeile un papel significativo en el comportamiento competitivo de una
empresa. "

Siguiendo con el criterio de la Opinion Consultiva Ndegrees 124, en el mercado
en que opera la empresa las inversiones no obligatorias -reiteramos, (micas
disponibles para los accionistas-, no son relevantes y no desempeii.an un papel
significativo en el comportamiento competitivo de la empresa. Por otra parte,
aquellas inversiones obiigatorias ya han side ejecutadas.

En materia de endeudarniento, aspecto este que tiene tambien relacion con las
inversiones, se requiere mayoria calificada para eI caso en que (a) el plazo de
la deuda sea superior a un ano; (b) su monte exceda US$ 1.000.000,0 (c) la deuda
no pueda ser servida con los flujos de caja proyectados. Es decir que el
minoritario solo puede bloquear decisiones en materia de endeudamiento a ser
contraido fuera del curso ordinario de los negocios.

Es importante destacar, que conforme los tenninos de la Licitacion, el
adjudicatario asumio como condicion de la misma, el pasivo de HECSA. Ese pasivo
asumido es el (mico pasivo financiero de la empresa.

<PAGE>

En cuanto a la aprobacion de los estados contables anuales y la designacion del
gerente de administracion y finanzas, queda claro que se trata de decisiones
alejadas de la estrategia competitiva de HIDROINVEST. En efecto, resulta
evidente que la.posibilidad de un eventual veto de la aprobacion de los estados
contables en su conjunto estli dirigida a proteger la inversion del accionista
minoritario para casos extremos y no a lograr una modificacion en cuestiones
especificas del negocio de la sociedad. Y a fin de afianzar este derecho a una
contabilidad que refleje adecuadarnente la operaciones de la empresa es que se
previo la posibilidad de escoger un candidato aceptable para la gerencia de
administracion y finanzas de entre los propuestos por ENDESA.

Por todo lo hasta aqui expuesto las consuItantes entienden que la realizacion de
la Operacion no ha traido aparejado un cambio en la naturaleza del control de
HIDROINVEST por cuanto ENDESA ya disponia del control exclusivo de dicha
compania.

Sin peIjuicio de 10 seiialado hasta aqui, cabe destacar que atm cuando se
considerara que la Operacion hubiese producido un cambio en la naturaleza del
control en HIDROINVEST, la misma estaria de todos modos exenta de la obligacion
de notificacion en virtud de 10 expresamente normado por eI Articulo 10 inciso
(a) de la Ley de Defensa de la Competencia.

En efecto, de acuerdo con 10 previsto por dicha norma, se encuentran exentas de
la notificacion obligatoria prevista en eI Articulo 8 de la Ley de Defensa de la
Competencia aqueUas operaciones en las cuales " ... el comprador ya poseia mas
del cincuenta por ciento (50%) de las acciones".

En nuestro caso, la tenencia de ENDESA en HIDROINVEST antes de la Operacion ya
superaba largamente el porcentaje previsto en la norma citada, por 10 que la
Operacion quedaria exenta del regimen de control de concentraciones economicas.

En tal sentido, la Comision sostuvo que " ... a pesar que en dertos casos puede
operar un cambio en la naturaleza del control, aI pasar de ser este un control
ejercido en conjunto por dos 0 mas personas a ser un control ejercido en forma
excJusiva por solo una persona, en todos los casos en los que el comprador posea
mas del 50% de las acciones, la adquisicion estara exenta de la obligacion de
notificar, prevista en el Articulo 8 de la Ley No. 25.156, por aplicacion del
articulo 10 inciso a). (Opinion Consultiva No. 63, voto de la mayoria)

Asimismo la Comision tiene dicho que"... siendo voluntad clara y expresa del
legislador exceptuar de la notificacion obligatoria a aquellas adquisiciones de
empresas en los casos en que el comprador posea previamente mas del 50% de las
acciones, deviene iI).necesario analizar si opera o no un cambio en la
naturaleza del control, ya que aUn si ese fuera el caso, igualmente la operacion
estaria exenta de la notificacion obligatoria, por imperio de la Ley." (Opinion
Consultiva No. 72)

De hecho, de las seis oportunidades en que en conocimiento de las presentantes
la Comision se expidio mediante la emision de Opiniones Consultivas sobre la
aplicabilidad de la exencion del articulo 10 inciso a) a casos en los que el
accionista mayoritario no tenia control exclusivo de la compaiiia, en cinco de
elias (Opiniones Consultivas Ndegrees 53 del 18 de julio de 2000, 63 de128 de
agosto de 2000, 72 del 30 de agosto de 2000, 129 del 26 de julio de 2001 Y 144
del 18 de octubre de 2001) concluyo que la exencion resultaba aplicable. En la
Ultima Opinion Consultiva sobre el particular (No 189 del 19 de julio de 2004)
opine> en forma distinta, pero sin perjuicio de considerar las presentantes que
la opinion alii sostenida no se ajusta a 10 que dispone la ley, se destaca que
el caso en cuestion, a diferencia de la Operacion, existia una duda razonable
acerca del cambio de control del adquirente sobre la compaiiia objeto.

<PAGE>

El criterio supra expuesto surge no solo de la propia letra de la norma sino
ademas de una logica irrefutable si tenemos en cuenta que el analizar la
aplicabilidad o no de una exencion presupone que ya ha existido un cambio de
controll. Esto significa que el propio legislador tuvo la intencion de permitir
a las partes eximirse de la notificacion obligatoria en aquellos casos en que
aful existiendo un cambio de control, el comprador ya tuviera mas del 50% de las
acciones de la compaiiia en cuestion.

Una interpretacion contraria nos conduciria a dejar vado de contenido el ambito
de aplicacion de la exencion consagrada por el inciso a). En efecto, si el
comprador ya tenia el control exclusivo de la compaiiia, ningful incremento de
su participacion implicara un cambio de control y, por 10 tanto, el analisis se
cortara alIi no habiendo necesidad de preguntarse si resulta aplicable 0 no la
exencion. Por otro lado, siempre siguiendo esta linea interpretativa, a nuestro
juicio erronea, si el adquirente compartia el control de la compaiiia en
cuestion pero un incremento de su participacion produce un cambio en la
naturaleza del

----------
1    Notese que la ITase introductoria del articulo 10 adelanta que las
     exenciones se aplican a las operaciones sujetas a "fa notificaci6n
     obligatoria del articulo anterior", las cuales -por remision al articulo 8
     y de este ultimo a su vez al 6-no son mas que las ;'concentraciones
     econ6micas'l.

control, pasando de tal modo a un control exdusivo, la aplicacion de la exenci6n
del inciso a) estaria descartada

Ademas, si se argumentase que no es aplicable la exencion aqui feferida porque
no puede presumirse que ellegislador haya querido "liberar" de la notificacion
obligatoria a cambios de un control compartido a un control exclusivo por los
eventuales efectos anticompetitivos de esos actos, cabe preguntarse, por
ejemplo, porque el inciso e) del mismo articulo tambien exime a determinadas
tomas de control (compartido 0 exclusivo) cuando no se superan determinados
montos. Y claramente no puede responderse ese interrogante sosteniendo que esas
ultimas operaciones nunca pueden causar un petjuicio a la competencia, puesto
que ello dependeni del tamafio del mercado re1evante involucrado.

Algo similar puede sostenerse con fespecto a la exencion del inciso d). Que una
empresa no haya registrado actividad en los ultimos 12 meses no implica
automaticarnente, por ejemplo, que no pudiera recapturar su participacion de
mercado cipidamente en manos de un comprador apto.

El inciso c) podr1a analizarse bajo la misma optica. Si bien en principio puede
imaginarse que la "primer adquisicion de un tinico adquirente extranjero" no
produciria peIjuicios a la competencia, puede no seT ese el caso. Imagincmos por
ejemplo la compra de un determinado monopolio, creado no mediante una
adquisicion notificada ante la Comision sino por el crecimiento orgamco de la
empresa De no encontrarse exenta de notificacion, la Comision podrla entender
que e1 acto quedaria alcanzado por la prohibici6n del articulo 7 de la Ley de
Defensa de la Competencia, aunque fuese el monopolio existente, y. no la
concentracion per se, el que generase el poder de mercado que el regimen de
concentraciones economicas pretende evitar. A todo evento, el hecho de que un
eventual comprador no tenga activos en la Argentina no implica que pueda ser
dominante en otras partes del mundo y convertirse nipidamente en dominante en
nuestro pais a traves de la operaci6n exenta

El punto que se pretende demostrar es que el articulo 10 enumera una serie de
adquisiciones que, por motivos de promocion de inversiones, reduccion del uso de
la maquinaria estatal del control de concentraciones u otros, el legislador
pretendi6 exceptuar del regimen de notificacion obligatoria, con 10 cual no cabe
aceptar una opinion que sostenga que iinicamente se trata de exenciones
"didlicticas", "inocuas" 0 sin ninguna utili dad pcictica.

<PAGE>

Un criterio de interpretacion que nos conduce lisa y lIanamente a dejar sin
ambito de aplicaci6n la expresa letra de la ley resulta violatorio del principio
constitucional de legalidad y debe ser, por 10 tanto, descartado sin mas.

Entendemos que alii donde la letra de la ley resulta clara se impone aplicarla
sin necesidad de recurrir a mayores interpretaciones y que, ademas. no resulta
aceptable una interpretacion de la exencion del articulo 10 a) de la Ley de
Defensa de la Competencia que equivalgo a sostener que el legislador quiso
vaciar de contenido a la referida exencion, o darle un contenido distinto al que
claramente surge del texto legal.

Esta es la pacifica doctrina de nuestro mas Alto Tribunal, al sostener por
ejemplo que "...esta Corte ha resuelto en reiteradas oportunidades que no es
admisible una interpretacion que equivafga a la prescindencia del lexto legal
(Folios: 300:687 y 301:958), desde fa omision que fa primerafoente de
hermeneutica de la ley es su letra (Fallos: 299:167, entre otros). Por olra
parte, se ha sostenido que fa inconsecuencia, Ia Jalta de prevision o
involuntaria no se suponen en ellegislador y por eslo se reconoce como principio
que las posiciones (Fallos: 300:1080), en tanto cuando la ley emplea
determinados terminos u [eyes deben inlerpretarse siempre evitando darles un
sentido que ponga en pugna sus disomite, en un caso concreto, hacer referencia a
un aspecto, es la regia mas segura de exegesis fa de que esos (erminos 0 su
inclusion no son superjluos, sino que se ha realizado ello con aIgUn propOsito,
por cuanto, en definitiva, elfin primordial del inftirprete es dar pleno tos
caratulados "Parada, Aidee v. Norambuena, Luis Elias sfdanos y peljuicios").
eJecto ala voluntad dellegislador (FolIos: 299:167, entre otros}." (Fallos
315:727, en autos caratulados "Parada, Aidee v. Norambuena, Luis Elias sl darios
y perjuicios").

En consecuencia, a nuestro criterio la Operacion bajo amilisis resultaria en
todo caso exenta, en virtud de 1a aplicacion de la expresa prevision contenida
en e1 Articulo 10 inciso a) de la Ley de Defensa de la Competencia.

IV. Petitorio

Por las razones expuestas, entendemos que la Operacion no se encuentra
comprendida dentro del regimen de notificacion obligatoria de concentraciones
econ6micas nonnada en el articulo 8 y concordantes de \a Ley de Defensa de la
Competencia, solicitando desde ya sea as! confirmado en la opinion consultiva a
emitirse.

Quedamos a su disposicion para cualquier ac!aracion o ampliacion que estime
pertinente.

Saludarnos a usted con atenta consideracion,

EMPRESA NACIONAL         CMS GENERATION CO.           CMS GENERATION SRL
DE ELECTRICIDAD S.A.

______________________   /s/                          /s/

<PAGE>

                         ASSIGNMENT OF QUOTAS AGREEMENT

Between:

CMS International Ventures, LLC, with domicile at One Energy Plaza, Jackson,
Michigan 49201, United Stated of America, registered on September 3, 2002, with
Inspection General de Justicia, according to section 123 of the Law No. 19,550,
under No. 1462, book 56 Volume "B" of Estatutos Extranjeros, with special
domicile at Ing. Butty 220, 8 floor City of Buenos Aires, Argentine Republic,
herein represented by Bernardo Velar de Irigoyen in his capacity as attorney in
fact; and

CMS Generation Holdings Company domiciled at One Energy Plaza, Jackson, Michigan
49201, United Status of America, registered with Inspeccion General de Justicia
under section 123 of law No. 19,550 on January 5, 1994, under No. 21 book "B" of
Estatutos Extranjeros, with special domicile in Ing. Butty 220, 8 floor, City of
Buenos Aires Argentine Republic, herein represented by Bernardo Velar de
Irigoyen in his capacity as attorney in fact (together with CMS International
Ventures, LLC the "Assignors")-, and,

New Argentine Generation Company LLC, with domicile at Ing. Butty 275, 11 floor,
City of Buenos Aires, represented by Guillermo Pablo Reca in his capacity as
authorized (the "Assignee" and, collectively with the Assignors, the "Parties").

WITNESSETH

A. Whereas, Assignors own _______ quotas ____________ with the Public Registry
of Commerce of __________., a sociedad de responsabilidad limitada organized
under the laws of the Argentine Republic, registered with the Inspeccion General
de Justicia under No. _____, Volume 117 of SRL, with domicile at Ing. Butty 220,
8 floor. City of Buenos Aires (the "Company"), (the "Quotas").

B. Whereas, pursuant to the transfer of certain assets of the Assignors (and
affiliated companies of the Assignors) to the Assignee to be executed on the
date hereof (the "Transaction"). Assignors desire to seil the Quotas to the
Assignee and the Assignee desire to acquire the Quotas from Assignors.

NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Assignment of Quotas Agreement
(the "Agreement"), the Parties hereto agree as follows:

I

ASSIGNMENT OF QUOTAS

1.1. The Assignors hereby irrevocable assign and transfer the Quotas to
Assignee, and the Assignee hereby accept such assignment and transfer:

1.2. The price of the Quotas was paid by the Assignee to the Assignors by wire
transfer made pursuant to the Transaction, the reception of which is hereby
acknowledged by the Assignors.

II

REPRESENTATIONS BY THE ASSIGNORS

The Assignors hereby represent and warrant that (i) they have valid title to the
Quotas, which have not been transferred to any third party; and (ii) they have
the right and legal power and authority to enter into and/or perform the
obligations under this Agreement.

<PAGE>

III

REPRESENTATIONS AND COVENANTS BY THE ASSIGNEE

The Assignee represents and warrants that he has the right and legal power and
authority to enter into and/or perform the obligations under this Agreement.

IV

APPLICABLE LAY. DISPUTE RESOLUTION

4.1. This Agreement shall be interpreted and performed in accordance with the
laws of the Republic of Argentina.

4.2 All disputes arising out of or relating to this Agreement or any Related
Agreement or the breach, termination or validity thereof or the parties'
performance hereunder or thereunder ("Dispute") shall be resolved as follows:

(i) If the Dispute has not been resolved by executive officer negotiation within
thirty (30) days of the disputing party's notice requesting negotiation, or if
the parties fail to meet within twenty (20) days from delivery of said notice,
such Dispute shall be submitted to and finally settled by arbitration in
accordance with the Rules of Arbitration of the International Chamber of
Commerce in New York ("ICC") then in effect (the "Rules"), except as modified
herein.

(ii) The arbitration shall be held, and the award shall be rendered, in the
English language. There shall be three arbitrators, one of whom shall be
nominated by each of Buyer and Seller in accordance with the Rules. The two
party appointed arbitrators shall have thirty (30) days from the confirmation of
the nomination of the second arbitrator to agree on the nomination of a third
arbitrator who shall serve as chair of the arbitral tribunal. On the request of
any party, any arbitrator not timely appointed in accordance with this Agreement
or the Rules shall be appointed by the ICC.

(iii) The award shall be final and binding upon the parties as from the date
rendered, and shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issues, or accounting presented to the
arbitral tribunal. Judgment upon any award may be entered and enforced in any
court having jurisdiction over a party or any of its assets. For the purpose of
the enforcement of an award, the parties irrevocably and unconditionally submit
to the jurisdiction of a competent court in any jurisdiction in which a party
may have assets and waive any defenses to such enforcement based on lack of
personal jurisdiction or inconvenient forum. This Agreement and the rights and
obligations of the parties shall remain in full force and effect pending the
award in any arbitration proceeding hereunder.

(iv) The Parties agree that any court action or proceeding to compel or in
support of arbitration or for provisional remedies in aid of arbitration,
including but not limited to any action to enforce the provisions of this
section, for temporary injunctive relief to maintain the status quo or prevent
irreparable harm prior to the appointment of the arbitral tribunal, shall be
brought exclusively in the federal or state courts located in New York, New York
(the "New York Courts"). The Parties hereby unconditionally and irrevocably
submit to the exclusive jurisdiction of the New York Courts for such purpose,
and to the non-exclusive jurisdiction of the New York Courts in any action to
enforce any arbitration award rendered hereunder, and waive any right to stay or
dismiss any such actions or proceedings brought before the New York Courts on
the basis of forum non conveniens or improper venue. Without prejudice to such
provisional remedies as may be available under the jurisdiction of a national
court, the arbitral tribunal shall have full authority to grant provisional
remedies and to direct the parties to request that any court modify or vacate
any temporary or preliminary relief issued by such court, and to award damages
for the failure of any party to respect the arbitral tribunal's orders to that
effect.

<PAGE>

V

MISCELLANEOUS

5.1. Domicile. The Parties establish domicile in those stipulated at the
beginning of this Agreement.

5.2. Expenses. Except as otherwise specified in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
or the transactions contemplated herein shall be paid by the Parties incurring
in such costs and expenses.

5.3. Language. This Agreement is made in two (2) equally valid original copies
in Spanish and English. In case of any discrepancy between the Spanish and
English texts of this Agreement, the former shall prevail.

5.4. Authorizations: The Parties undertake to perform any and all reasonable
actions that were necessary to perfect the transfer of the Quotas to Assignees
and hereby authorize Siro Pablo Astolfi, Javier Rodriguez Galli, Susana J.
Ripoll, Diego H. Cavanagh, Romina Benvenuti, Ezequiel Braun Pellegrini and Juan
Manuel Recio in order that acting either jointly or separately any one of them
file the registration of the assignment of the Quotas with the Registro Publico
de Comercio of the City of Buenos Aires. For said purpose they will have the
necessary authority, to file writs, reply office actions, collect documents, and
to perform any actions that may be necessary to duly comply with their duty.

IN WITNESS WHEREOF the Parties sign fourth identical originals to one sole
effect, one for each of the Parties and a fourth one to be filed with the
Inspection General de Justicia, in the City of Buenos Aires, on March 12, 2007

CMS INTERNATIONAL VENTURES, LLC

CMS GENERATION HOLDINGS COMPANY

NEW ARGENTINE GENERATION COMPANY LLC

                          CONTRATO DE CESION DE CUOTAS

Entre:

CMS International Ventures, LLC, con domicilio en One Energy Plaza, Jackson,
Michigan 49201, Estados Unidos de America, inscripta en la Inspection General de
Justicia en los terminos del articulo 123 de la ley No. 19.550 el 3 de
septiembre de 2002, bajo el Ndegrees 1462 del libro 56 Tomo "B" de Estatutos
Extranjeros, con domicilio constituido en la Republica Argentina en Ing. Butty
220, piso 8degrees, Ciudad de Buenos Aires, representada en este acto por
Bernardo Velar de Irigoyen en su caracter de apoderado; y

CMS Generation Holdings Company con domicilio en One Energy Plaza, Jackson,
Michigan 49201, Estados Unidos de America, inscripta en la Inspection General de
Justicia en los terminos del articulo 123 de la ley 19.550 el 5 de enero de
1994, bajo el Ndegrees 21 del libra B de Estatutos Extranjeros, con domicilio
constituido en la Republica Argentina en Ing. Butty 220, piso 8degrees, Ciudad
de Buenos Aires, representada en este acto por Bernardo Velar de Irigoyen en su
caracter de apoderado (junto a CMS International Ventures, LLC los "Cedentes");

por una parte y por la otra,

New Argentine Generation Company LLC, con domicilio en Ing. Butty 275, piso
11degrees, Ciudad de Buenos Aires, representada en este acto por Guillermo Pablo
Reca en su caracter de autorizado (el "Cesionario" y, junto a los Cedentes, las
"Partes").

<PAGE>

CONS1DERANDO:

A. Que los Cedentes son en conjunto titulares de 68.938.700 cuotas que fueron
emitidas conforme decisiones asamblearias de fechas 30 de junio de 2005 y 27 de
diciembre de 2006, a la fecha pendientes de registration por ante el Registro
Publico de Comercio, de CMS Generation S.R.L. una sociedad de responsabilidad
limitada, con domicilio en Ing. Butty 220. piso 8degrees, Ciudad de Buenos
Aires, constituida de conformidad con las leyes de la Republica Argentina en la
Inspection General de Justicia bajo el numero 8163, libra 117 de SRL (la
"Sociedad") (las "Cuotas").

B. Que, en el marco de la transferencia de ciertos activos de los Cedentes (y de
companias vinculadas a los Cedentes) al Cesionario a tener lugar en el dia de la
fecha (la "Transaction"), los Cedentes desean ceder a el Cesionario las Cuotas y
el Cesionario desea adquirir las Cuotas de los Cedentes.

EN CONSECUENCIA, considerando los mutuos compromises, acuerdos, declaraciones y
garantias contenidos en este Contrato de Cesion de Cuotas (el "Contrato"), las
Partes acuerdan lo siguiente:

CESION DE CUOTAS

1.1. Los Cedentes ceden y transfieren en forma irrevocable y el Cesionario
acepta la cesion de las Cuotas

1.2. El precio de las Cuotas fue abonado por el Cesionario a los Cedentes
mediante transferencias bancarias efectuadas en el marco de la Transaction,
dandose los Cedentes por recibidos de su importe.

II

DECLARACIONES DE LOS CEDENTES

Los Cedentes declaran que (i) las Cuotas son de su propiedad y que no las nan
transferido a ningun tercero; y (ii) tienen la capacidad que se requiere para
suscribir, ejecutar y cumplimentar las obligaciones previstas en este Contrato.

III

DECLARACIONES Y OBLIGACIONES DEL CESIONARIO

El Cesionario declara que tienen la capacidad que se requiere para suscribir,
ejecutar y cumplimentar las obligaciones previstas en este Contrato.

IV

LEY APLICABLE. SOLUCION DE CONTROVERSIAS

4.1. Este Contrato esta sujeto y sera interpretado de acuerdo a las leyes de la
Republica Argentina.

4.2. Todas las desavenencias o disputas que deriven de este Contrato o que
guarden relation con este, asi como aquellas desavenencias que se origen en
relation a su rescision, resolution, extincion, validez o incumplimiento (la
"Disputa") seran resueltas de la siguiente forma:

(i) Cualquiera de las Partes notificara de manera fehaciente a la otra su
voluntad de iniciar negociaciones tendientes a resolver la Disputa. Si en el
plazo de treinta (30) dfas de recibida la notification mencionada, la Disputa no
es resuelta mediante negociaciones directas y/o si en el Plazo de veinte (20)
dias de recibida la notification senalada las Partes no se reunen con ese fin,
la Disputa sera resuelta mediante arbitraje de conformidad con las reglas de
arbitraje vigentes (las "Reglas") de la Camara de Comercio International ("CCI")
con sede en Nueva York, excepto en cuanto fueran modificadas en este Contrato

<PAGE>

-5-

(ii) El idioma del procedimiento arbitral asi como su laudo sera el Ingles. Se
designaran tres (3) arbitros, dos de los cuales seran elegidos por las Partes,
(uno por los Cedentes y otro por el Cesionario). Los arbitros designados por las
Partes deberan en el plazo de treinta (30) dias contados a partir de la
confirmation de la election del segundo arbitro ponerse de acuerdo en la
designation de un tercer arbitro, el cual sera nombrado presidente del tribunal
arbitral. A pedido de cualquiera de las Partes, el arbitro que no haya sido
elegido en la forma y en los plazos previstos en el presente y/o de conformidad
con las Reglas sera directamente designado por la CCI.

(iii) El laudo sera final y obligatorio para las Partes y sera la unica y
exclusiva solution, procedimiento y/o action entre las Partes con respecto a
cualquier reclamo, demanda, contra demanda, situation y/o tema que haya sido
considerado por el tribunal arbitral. La ejecucion del laudo puede ser iniciada
y ejecutada en cualquier tribunal que tenga jurisdiction sobre cualquiera de las
Partes y/o sobre cualquiera de sus bienes. A fin de ejecutar el laudo las Partes
irrevocablemente y sin condiciones se someten a la jurisdiction de cualquier
tribunal competente en cualquier jurisdiction en que las Partes tengan bienes y
renuncian a cualquier defensa tendiente a impedir la ejecucion que este basada
en la ausencia de jurisdiction personal o en la doctrina de la jurisdiction
inapropiada o no conveniente. Este acuerdo asi como los derechos y obligaciones
de las Partes continuaran surtiendo efectos mientras se encuentre pendiente la
decision del tribunal arbitral.

(iv) Cualquier action legal y/o cautelar iniciada por una Parte para obligar a
la otra a someterse al procedimiento arbitral, incluyendo sin limitaciones
cualquier action previa a la constitution del tribunal arbitral que tenga por
objeto hacer cumplir la presente clausula, y/o obtener medidas cautelares
tendientes a preservar el statu quo o para evitar un perjuicio inminente o
irreparable, sera iniciada exclusivamente ante los tribunales federales o
locales de la ciudad de Nueva York, estado de Nueva York, Estados Unidos de
America (los "Tribunales de Nueva York"). Para ello las Partes se someten
incondicionalmente e irrevocablemente a la exclusiva jurisdiction de los
Tribunales de Nueva York. Asimismo, las Partes se someten a la jurisdiction no
exclusiva de los Tribunales de Nueva York para iniciar acciones que tengan por
objeto ejecutar decisiones que ordenen cumplir con el procedimiento arbitral
aqui estipulado. Las Partes renuncian a invocar la defensa de la doctrina de la
jurisdiction inapropiada o no conveniente ("forum non conveniens") y/o la
ausencia de jurisdiction territorial para impedir que las mencionadas acciones o
procedimientos sean iniciadas en los Tribunales de Nueva York. Sin perjuicio de
aquellas medidas preliminares que pudieran estar disponibles en la jurisdiction
de cualquier tribunal national, el tribunal arbitral tendra autoridad para
ordenar medidas cautelares o preliminares y para ordenar a las Partes que

-5-

soliciten a cualquier tribunal local que modifique o deje sin efecto cualquier
medida cautelar o medida preliminar que haya sido adoptada por dicho tribunal.
El tribunal arbitral podra ordenar a la Parte que incumpla sus decisiones que
indemnice a la otra todos los danos y perjuicios que su incumplimiento genere.

5.1. Domicilio. Las Partes constituyen domicilios especiales en los lugares
indicados al comienzo de este Contrato.

5.2. Gastos. Excepto disposition en contrario en este Contrato, todos los gastos
y costos incluyendo, sin limitation, los honorarios y gastos de asesores
legales, asesores financieros y contables, incurridos en relation con este
Contrato o con las transacciones en el contempladas seran pagados por las Partes
que incurrieron en dichos gastos y costos.

5.3. Idioma. Este Contrato es celebrado en dos (2) ejemplares igualmente validos
en espanol e ingles. En caso de discrepancia entre los textos en espanol e
ingles de este Contrato, la version en espanol prevalecera.

5.4. Autorizaciones. Las Partes se comprometen a realizar todos los actos que
fueran razonablemente necesarios para el perfeccionamiento de la cesion de
Cuotas al Cesionario y autorizan a Siro Pablo Astolfi, Javier Rodriguez Galli,
Susana J. Ripoll, Diego H. Cavanagh, Romina Benvenuti, Ezequiel Braun Pellegrini
y Juan Manuel Recio para que uno cualesquiera de ellos en forma indistinta
tramite la inscription de la presente cesion de Cuotas en el Registro Publico de
Comercio de la ciudad de Buenos Aires, para lo cual quedan facultados para
presentar escritos, contestar vistas, desglosar documentation y realizar cuantos
mas actos sean necesarios para el mejor cumplimiento del presente mandato.

EN FE DE LO CUAL las Partes firman cuatro (4) originates, uno para cada una de
las Partes y un quinto para ser presentado ante la Inspection General de
Justicia, de un mismo tenor y a un solo efecto, en la ciudad de Buenos Aires, a
los 12 dias del mes de marzo de 2007.
<PAGE>

                                                                  EXECUTION COPY

                            SELLER DISCLOSURE LETTER

                                  Introduction

Reference is made to the Agreement of Purchase and Sale, dated as of March 12,
2007 (the "Agreement") by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C., a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC, a Michigan limited liability company and New Argentine
Generation Company, L.L.C. (collectively, the "Buyer").

Capitalized terms used, but not defined herein, have the respective meanings
given to such terms in the Agreement.

This Seller Disclosure Letter (the "Seller Disclosure Letter") sets forth
certain information or agreements intended to be treated as disclosed in the
Seller Disclosure Letter pursuant to the Agreement.

The contents of this Seller Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement. This Seller Disclosure
Letter is not intended to constitute, and shall not be deemed to constitute,
representations and warranties of Seller except as, and to the extent, provided
in the Agreement. In particular, although this Seller Disclosure Letter may
contain supplementary information not specifically required under the Agreement,
such supplementary information is provided as general information for the
parties to the Agreement and is not separately represented or warranted by
Seller herein or in the Agreement. Moreover, the inclusion of any item hereunder
shall not be deemed an admission by Seller that such item is, or may at anytime
be or have been, material to Seller, or any of the Entities, or the transactions
contemplated by the Agreement, or result in any determination that any matter
has a Material Adverse Effect, nor shall it be deemed an admission of an
obligation or liability to any third party.

Any matter set forth in the Seller Disclosure Letter shall be deemed disclosed
with respect to such other sections of the Agreement or the Seller Disclosure
Letter to which such disclosure on its face would reasonably pertain in light of
the form and substance of the disclosure made. Any matter disclosed in the
Financial Statements shall be deemed disclosed with respect to the pertinent
sections of the Agreement or the Seller Disclosure Letter to which such
disclosure on its face would reasonably pertain in light of the form and
substance of the information contained in the Financial Statements. The section
and subsection references set forth in this Disclosure Letter refer to sections
or subsections of the Agreement to which the disclosure set forth in this Seller
Disclosure Letter is intended to apply. The introductory language and headings
in this Seller Disclosure Letter are inserted for convenience of reference only
and will not create or be deemed to create a different standard for disclosure
than the language set forth in the Agreement.

<PAGE>

                                                                  EXECUTION COPY

The information set forth herein is confidential and is subject to the terms of
the Confidentiality Agreement between the EE Group and CMS Enterprises Company
dated October 23, 2006 to the parties thereto and to the confidentiality
undertaking foreseen in Section 5.13 of the Agreement to the parties thereto.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 1.1(A) OF THE SELLER DISCLOSURE LETTER
                                    EMPLOYEES

CMS ENSENADA SA

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
AGUERO        GUSTAVO            12-02-1996   10,2       Plant manager                               No
BARBIER       EDGARDO            05-18-1998   8,8        Assistant to the shift chief                No
BARQUERO      FERNANDO           03-10-1997   10,0       Shift chief                                 No
BISCONTI      HORACIO            03-10-1997   10,0       Shift chief                                 No
BORLANDO      MARIA PIA          05-24-2001   5,8        Plant secretary                             No
BRANAS        PABLO              08-01-2005   1,6        Assistant to the shift chief                No
CASTRO        JORGE              03-10-1997   10,0       Mechanical technician                       No
DEL VECCHIO   MARIA A.           06-12-2006   0,7        Accountant                                  No
ESTIVARIZ     DIEGO              10-26-1998   8,4        Operations chief                            No
FRANCECE      WALTER             03-10-1997   10,0       Shift chief                                 No
FRANCO        SILVIA             01-06-1997   10,2       Administration and Finances chief           No
GLAVICH       PEDRO              03-10-1997   10,0       Assistant to the shift chief                No
GONZALEZ      EDGARDO            04-01-1998   8,9        Operating and control engineer              No
LATASTE       SERGIO             03-10-1997   10,0       Shift chief                                 No
LOPEZ BUSTO   MARIA del C.       04-10-2006   0,9        Accountant Analist                          No
LOSADA        RICARDO            03-10-1997   10,0       Shift chief                                 No
MARCHUETA     GERARDO            01-20-1997   10,1       Maintenance and Engineer                    No
MOSCARELLA    EUGENIO            04-15-1999   7,9        Assistant to the shift chief                No
PERUSIN       ALEJANDRO          05-03-2000   6,8        Implementation and control Technician       No
SACCON        DANIEL             03-10-1997   10,0       Mechanical Engineer                         No
SILVA         JUAN PABLO         03-10-1997   10,0       Assistant to the chief of shift             No
SINTES        LAURA              08-04-2004   2,6        Responsible for purchases                   No
TARAS         ANDRES             03-10-1997   10,0       Electrical technician
</TABLE>

CENTRALES TERMICAS MENDOZA S.A.

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
ALONSO        Osvaldo Daniel     05-06-1985   21,8       Control and regulations technician          No
AMAYA         Jorge German       01-02-1989   18,2       Combined cycle operator                     No
              Hector
AY ALA        Fernando           09-24-1973   33,5       Combined cycle operator                     No
BARBAZZA      Oscar Alberto      07-04-2005   1,7        Sr. Accountant analyst                      No
BARCHIESI     Juan               11-01-2005   1,3        Maintenance operator                        No
BERTAGNO      Carlos Hugo        11-01-1994   12,3       General manager                             No
              Eduardo
BLANCO        Fernando           05-02-1997   9,8        Sr R & C engineer                           No
BORDIN        Angel Augusto      09-20-1982   24,5       Mecanichal Maitenance Supervisor            No
BURGOA        Maria Alejandraj   08-03-1990   16,6       Responsible of invoicing and accounts       No
</TABLE>

<PAGE>

                                                                  EXECUTION COPY

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
CALDERON      Marcelino          02-20-2006   1,0        Plant Operator                              No
CALISE        Veronica Maria     11-01-1994   12,3       Secretary Receptionist                      No
CARAM_        Mariana Isabel     09-18-2006   0,4        Responsible for Applications                No
CASTILLO      Carlos Alberto     07-21-1997   9,6        Electrical Officer                          No
CASTRO        Victor Manuel      10-05-1983   23,4       Combined cycle operator                     No
CHACON        Rolando Hector     09-20-1982   24,5       Electric Specialized Technician             No
CIARALLO      Javier             09-01-2005   1,5        Energy Manager                              No
COMARIN       Carlos Alberto     09-20-1982   24,5       Combined cycle operator                     No
COPPI         Cesar Adolfo       10-25-1982   24,4       Combined cycle operator                     No
CORDERO       Nelson Ariel       01-02-2006   1,2        Plant Operator                              No
DAVOLIO       Antonio Ruben      07-10-1971   35,7       Combined cycle operator                     No
ENRIQUEZ      Carlos Daniel      09-15-1997   9,5        Systems                                     No
FUNES         Oscar Francisco    11-02-1983   23,3       Combined cycle operator                     No
GARCIA        Enrique Aldo       04-01-1981   25,9       Technical Manager                           No
GARCIA O      Hugo Omar          05-22-1984   22,8       Specialized Mechanical Officer              No
GIMENEZ       Jose Luis          05-15-2006   0,8        Plant Operator                              No
GOMEZ         Hector Roberto     07-15-1990   16,6       Warehouses chief                            No
GONZALES      Fabian Andres      02-06-2006   1,1        Purchases                                   No
GONZALEZ      Walter Horacio     01-02-2006   1,2        Plant Operator                              No
GRZONA        Gustavo Carlos     01-17-1984   23,1       Combined cycle operator                     No
GUINAZU       Adruban Juan       11-01-1997   9,3        Responsible for Security                    No
              Ernesto
HERVIDA       Washington         05-22-1972   34,8       Accountability chief                        No
              Leonardo
LAGHEZZA      Daniel             03-02-1985   22,0       Operation chief                             No
LIBERAL       Sergio Jose        12-13-1984   22,2       Civil Maintenance Operator                  No
LUQUEZ        Daniel Eduardo     07-29-1975   31,6       Purchaser                                   No
              Veronica
MARIOTTI      Beatriz            01-02-2006   1,2        Accounts receivable assistant               No
MASSIERO      Raul Ernesto       11-13-1970   36,3       Cogeneration Manager                        No
MAZZITELLI    Ernesto Eduardo    04-01-1980   26,9       Labor security manager                      No
MONTERO       Jose Arturo        12-26-1972   34,2       Combined cycle operator                     No
              Nestor Ricardo
MORALES       Rogue              01-10-1984   23,2       Regulation and control technician           No
              Gabriel
MORENO        Sebastian          01-02-2006   1,2        Plant Operator                              No
NAHIM         Raul Francisco     03-02-1984   23,0       Purchases and logistics chief               No
              Norberto
ORTEGA        Armando            01-05-1984   23,2       Specialized Mechanical Officer              No
ORTIZ         Angel Daniel       02-27-1998   9,0        Combined cycle operator                     No
PARIGI        Raul Ezio          04-05-1979   27,9       Maintenance, Control and Regulations
                                                         Supervisor                                  No
PEREYRA       Manuel Adolfo      11-13-1975   31,3       Mechanical Officer                          No
PEREZ         Daniel Roberto     07-10-1974   32,7       Electrical Maintenance Supervisor           No
PEREZ         Oscar Humberto     01-18-1984   23,1       Combined cycle operator                     No
PEREZ         Gabriel Raul       07-16-1984   22,6       Combined cycle operator                     No
POPULIN       Jorge Jose         11-01-1994   12,3       Administration and finances manager         No
RODRIGUEZ     Miguel Horacio     11-16-1984   22,3       Combined cycle operator                     No
</TABLE>

<PAGE>

                                                                  EXECUTION COPY

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
ROMERO        Jorge Eduardo      01-01-1989   18,2       Combined cycle operator                     No
SEVILLA       Jorge Carlos       01-20-1972   35,1       Combined cycle operator                     No
SEVILLA       Julio Jose         03-02-1990   17,0       Combined cycle operator                     No
SIMON         Mario Gabriel      01-02-2006   1,2        Information technologies clerk              No
STROSCIO      Juan Antonio       04-24-1979   27,9       Combined cycle operator                     No
              Pamela
ULLOA         Alejandra          06-12-2006   0,7        Electrical Engineer                         No
VAZQUEZ       Daniel Omar        02-06-1984   23,1       Human Resources Administration chief        No_
VERA          Miguel Eduardo     03-17-1971   36,0       Treasurer                                   No
              Fernando
VIOLA         Sebastian          01-02-2006   1,2        Plant Operator                              No
WILHELM       Roberto Matias     08-08-1983   23,6       Maintenance Manager                         No
</TABLE>

CMS COMERCIALIZADORA DE ENERGIA S.A.

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
ALBERIO       Pablo Andres (1)   12-06-2006   0,9        Gas market Sr. analyst                      No
FALZONE       Hector Sergio      08-23-1997   9,5        Business director                           No
KRAIGHER      Milena             11-01-1994   12,3       Secretary                                   No
</TABLE>

(1)  CMS Comercializadora de Energia S.A. recognized this employee prior 7
     (seven) years of service when he was hired.

CMS OPERATING S.R.L.

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
CACHO
BRATTI        Florencia          05-02-2006   0,8        Receptionist                                No
CARBAJAL      Alejandro Luis     10-01-1996   10,4       Sr. market analyst                          No
              Jorge Antonio
CASANOVA      (1)                04-01-1997   9,9        Systems manager                             No
COLOMBO       Maria Cecilia      03-20-2006   0,9        Jr. accountant                              No
COSSIO        Martin             09-01-1996   10,5       Responsible for applications                No
DE            Marcela Cecilia
FRANCESCO     (2)                04-01-2005   1,9        Assistant for Sox and Internal Control      No
ELISSETCHE    German Alberto     06-19-1997   9,7        Semi Sr. market analyst                     No
FERNANDEZ
BARBIERO      Martin             02-02-1998   9,1        Responsible for Sox and Internal Control    No
FERRETTO      Sandro             11-01-2001   5,3        Semi Sr. market analyst                     No
GALLINO       Fernando           07-04-2005   1,7        Administration and finances director        No
IMPART        Silvina            09-01-2005   1,5        General legal counsel                       No
KATZ          Leonardo Pablo     09-10-1997   9,5        Sr. market analyst                          No
MOLLERAC      Maria Fernanda     04-06-1998   8,9        Assistant
</TABLE>

<PAGE>

                                                                  EXECUTION COPY

<TABLE>
<CAPTION>
                                   DATE OF    YEARS OF                                                  UNION
SURNAME             NAME         EMPLOYMENT    SERVICE              POSITION - FUNCTION              AFFILIATION
-----------   ----------------   ----------   --------   -----------------------------------------   -----------
<S>           <C>                <C>          <C>        <C>                                         <C>
MOLLO         Maria Julieta      02-01-1995   12,1       Secretary                                   No
MOLTENI       Sergio Andres      02-23-2004   3,0        Jr. administrative                          No
              Leonardo
MONSALVO      Ruben              04-21-2004   2,9        Jr. market analyst                          No
MUNOZ
FERNANDEZ     Patricia (3)       03-01-2006   1,0        Secretary                                   No
NACCAREL
LI            Alejandra          11-01-1996   10,3       Jr. accountant analyst                      No
NACCAREL
LI            Lilian             05-01-1996   10,8       Accounting Chief                            No
OCAMPO        Maria Angela       08-01 -2006  0,6        Jr. accountant                              No
PELLE VON
PIESCHEL      Carolina           11-27-2006   0,3        Secretary                                   No
PRINCIPI      Carlos Arturo      06-02-1995   11,8       Operation and marketing manager             No
REINA         Carla Irene        01-01-1999   8,2        Jr. accountant analyst                      No
REY           Jorge Andres       11-01-1994   12,3       Human resources manager                     No
TERRANEO      Enrique (3)        08-15-2006   0,5        accountant                                  No
VAZQUEZ       Rodrigo            10-17-2005   1,4        General purpose employee                    No
VELAR DE
IRIGOYEN      Bernardo Julio     12-01-1992   14,3       President of the Board of Directors         No
VILLA DE
BIGNONE       Maria Cristina     07-28-1997   9,6        Responsible for general services            No
</TABLE>

(1)  CMS Operating S.R.L. recognized those employees prior 10 (ten) years of
     service when they were hired.

(2)  CMS Operating S.R.L. recognized this employee prior 9.5 (nine and a half)
     years of service when she was hired.

(3)  CMS Operating S.R.L. recognized those employees prior 5 (five) years of
     service when they were hired.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 1.1(B) OF THE SELLER DISCLOSURE LETTER
                               KNOWLEDGE OF SELLER

     1.   WITH REGARD TO ALL ENTITIES

<TABLE>
<CAPTION>
Officer                      Representation
-------                      --------------
<S>                          <C>
Thomas L. Miller             Consulted with regard to representations generally
Thomas Elward                Consulted with regard to representations generally
Sharon Mclnlay               Consulted with regard to representations generally
Bernardo Velar de Irigoyen   Consulted with regard to representations generally
Fernando Gallino             Consulted with regard to representations concerning
                             tax matters, accounting and financial matters
Carlos Principi              Consulted with regard to representations generally
Jorge Rey                    Consulted with regard to representations concerning
                             employee and labor matters
Mike Weber                   Consulted with regard to representations concerning
                             environmental matters
Beverly Berger               Consulted with regard to representations concerning
                             intercompany accounts and notes matters
Jay Silverman                Consulted with regard to representations concerning
                             tax matters
</TABLE>

<PAGE>

                                                                  EXECUTION COPY

     2.   EXCLUSIVELY WITH REGARD TO CMS ENSENADA S.A.

<TABLE>
<CAPTION>
Officer                      Representation
-------                      --------------
<S>                          <C>
Gustavo Aguero               Consulted with regard to representations generally
</TABLE>

     3.   EXCLUSIVELY WITH REGARD TO CENTRALES TERMICAS MENDOZA S.A.

<TABLE>
<CAPTION>
Officer                      Representation
-------                      --------------
<S>                          <C>
Carlos Bertagno              Consulted with regard to representations generally
</TABLE>

<PAGE>

                                                                  EXECUTION COPY

                SECTION 2.2(A)(V) OF THE SELLER DISCLOSURE LETTER
                        RESIGNATION OF ENTITIES' OFFICERS
                                  Viviana Soria

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.3(A) OF THE SELLER DISCLOSURE LETTER
                                EQUITY INTERESTS

Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, the
Equity Interests are duly authorized, validly issued and fully paid and were not
issued in violation of any preemptive rights.

CUYANA S.A. DE INVERSIONES

CMS Centrales Termicas SA. has paid in 25% of the shares subscribed in Cuyana
S.A. de Inversiones pursuant to the capital increase approved on December 27th,
2006. Therefore, there is a commitment to pay the balance thereof (AR$
6,329,933) within two years from the date of subscription.

Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, [...]
(ii) there are no [...] (E) other than this Agreement, contracts, agreements or
arrangements of any kind relating to the issuance of any equity interest in the
Entities, or any such options, warrants or rights, pursuant to which, in any of
the foregoing cases, Seller or its Affiliates are subject or bound.

CENTRALES TERMICAS MENDOZA S.A.

On December 15, 2006, Cuyana S.A. de Inversiones made an offer to acquire the
whole of class "C" shares of Centrales Termicas Mendoza S.A. that are held
through the Programa de Propiedad Participada ("PPP") for an aggregate amount of
AR$ 4,300,000. The offer, which was accepted by an unanimous class "C"
shareholders' meeting of Centrales Termicas Mendoza S.A. held on the same date,
remains subject to the relevant authorizations of Banco de la Nacion Argentina
(trustee of PPP) and Ministerio de Economia de la Nacion (Argentinean Ministry
of Economy). All class "C" shares held through the PPP, which are fully paid,
are currently pledged in favor of the Argentine Government. Once the
authorizations are granted, Cuyana S.A. de Inversiones will be obliged to pay
the purchase price and acquire the shares, which shall be transferred free of
any Liens, including the pledge granted in favor of the Argentine Government.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.3(B) OF THE SELLER DISCLOSURE LETTER
                                EQUITY INTERESTS

None.

<PAGE>

                                                                  EXECUTION COPY

                  SECTION 33(C) OF THE SELLER DISCLOSURE LETTER
                    LIST OF THE CAPITAL STOCK OF THE ENTITIES

CMS ENSENADA S.A.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 38,012,000
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:

-    0.2106% (80,060 shares) owned by CMS Generation Holdings Company

-    99.7893% (37,931,940 shares) owned by CMS Operating S.R.L.

CMS OPERATING S.R.L.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 355,410,538
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:

-    87,8516% (312,234,100 quotas) owned by CMS International Ventures, L.L.C

-    12,1483% (43,176,438 quotas) owned by CMS Generation Holding Company

CMS COMERCIALIZADORA DE ENERGIA S.A.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 122,000
Percentage of its outstanding capital stock owned by the Seller: 100 % in
aggregate:

-    99.99% (121,999 shares) owned by CMS Enterprises Company

-    0.01% (1 share) owned by CMS Generation Holdings Company

CMS CENTRALES TERMICAS S.A.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 25,000
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:

<PAGE>

                                                                  EXECUTION COPY

-    90% (22,500 shares) owned by CMS Enterprises Company

-    10% (2,500 shares) owned by CMS Generation Holdings Company

CMS GENERATION S.R.L.

Jurisdiction of organization: City of Buenos Aires.
Authorized and outstanding capital stock: AR$ 68,950,700
Percentage of its outstanding capital stock owned by the Seller: 100 % in
aggregate:

-    90% (62,055,630 quotas) owned by CMS International Ventures, L.L.C.

-    10%o (6,895,070 quotas) owned by CMS Generation Holdings Company

CUYANA S.A. DE INVERSIONES

Jurisdiction of organization: City of Buenos Aires.
Authorized and outstanding capital stock: AR$ 281,330,353
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:

-    97% (272,890,208 shares) owned by CMS Operating S.R.L.

-    3% (8,440,145 shares) owned by CMS Centrales Termicas S.A.

NOTE: CMS Centrales Termicas S.A. has paid in capital equivalent to 25% of the
shares subscribed in Cuyana S.A. de Inversiones on December 27th, 2006.
Therefore, there is a commitment to pay the balance thereof (AR$ 6,329,933)
within two years from the date of subscription.

CENTRALES TERMICAS MENDOZA S.A.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: 278,326,823 shares amount
AR$266,431,572 Percentage of its outstanding capital stock owned by the Seller:
92.9557%

-    92.5957% (141,946,679 class A shares and 115,772,224 class B shares) owned
     by Cuyana S.A. de Inversiones

TRANSPORTADORA DE GAS DEL MERCOSUR S.A.

Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 43,512,000

<PAGE>

                                                                  EXECUTION COPY

Percentage of its outstanding capital stock owned by the Seller: 20%

-    20% (8,702,400 class C shares) owned by CMS Operating S.R.L.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.3(D) OF THE SELLER DISCLOSURE LETTER
                                EQUITY INTERESTS

CENTRALES TERMICAS MENDOZA S.A.

1. Owns 2 shares of Termoelectrica General San Martin S.A.

2. Owns 2 shares of Termoelectrica Manuel Belgrano S.A.

CMS Centrales Termicas Mendoza S.A. has assigned to the Fondo de Inversiones
Necesarias para la Readaptacion del Mercado Electrico Mayorista (FONINVEMEM)
(Necessary Investment Fund for the Readjustment of the Wholesale Electric
Market) the credits as power compensation against the National Government. In
return for the assignment of said credit Centrales Termicas Mendoza S.A.
acquired shares in Termoelectrica General San Martin and Termoelectrica General
Belgrano (the "Companies") pro rata the assigned credits.

In order to administer the funds transferred to FONINVEMEM by the generating
companies (among others Centrales Termicas Mendoza S.A.) and build two
thermoelectric power stations of 800 MW each ( the FONINVEMEM's purpose), two
trusts have been created (one for each power station: Manuel Belgrano and San
Martin).

Within this context, the Companies are in charge of the building and operation
of both power stations and CMS Centrales Termicas Mendoza S.A. has pledged its
shares in the Companies in favor of said trusts as a guarantee for its actions
regarding the building and construction of the power stations.

<PAGE>

                                                                  EXECUTION COPY

                   SECTION 3.4 OF THE SELLER DISCLOSURE LETTER
                             CONSENTS AND APPROVALS

None.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.5(C) OF THE SELLER DISCLOSURE LETTER
                            NO CONFLICT OR VIOLATION

CMS ENSENADA S.A.

In accordance with the Acuerdo Transitorio (Transitional Agreement) entered into
by and between CMS Ensenada S.A. and YPF S.A. on December 28, 2002, upon change
of control of CMS Operating S.R.L. by CMS Enterprises Company, CMS Operating
S.R.L.'s guaranty (fianza) of CMS Ensenada S.A.'s obligations under the Oferta
Para el Suministro de Energia Electrica y Vapor (Power and Steam Supply
Agreement) entered into by and between CMS Ensenada S.A. and YPF S.A. on August
16, 1995 shall be replaced within ten days following the Closing Date by one of
the guarantees foreseen in Chapter X of the Power and Steam Supply Agreement.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.6(B) OF THE SELLER DISCLOSURE LETTER
                              FINANCIAL STATEMENTS

CMS OPERATING S.R.L.

The financial statements as of December 31st, 2006 have a limitation to the
auditor scope of works regarding the non-availability of the audited financial
statements of Transportadora de Gas del Mercosur S.A. as of the date of issuance
of CMS Operating S.R.L.'s financial statements.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.7(A) OF THE SELLER DISCLOSURE LETTER
                                    CONTRACTS

CMS ENSENADA S.A.

1. Oferta para el Suministro de Energia y Vapor (Offer for the Provision of
Power and Steam) entered into between CMS Ensenada S.A. and YPF S.A. dated
August 16, 1995.

2. Acuerdo Transitorio (Transition Agreement) entered into between YPF S.A. and
CMS Ensenada S.A. dated December 28, 2002.

3. Carta oferta para la construccion de una linea de transmision (Agreement for
the construction of a transmission line) entered into between CMS Ensenada S.A.
and Empresa Distribuidora La Plata S.A. dated January 7, 1997.

4. Oferta para el Servicio de Asistencia de Transporte (Offer for Transport
Assistance Service) entered into between CMS Ensenada S.A. and Metrogas S.A.
dated July 31, 2006.

5. Oferta para la distribucion del servicio de gas natural (Offer to render
distribution of natural gas service) entered into between CMS Ensenada S.A. and
Camuzzi Gas Pampeana S.A. dated March 18, 1996.

6. Acuerdo de Despacho y Operacion (Dispatch and Operating Agreement) entered
into between Empresa de Energia y Vapor S.A., CMS Ensenada S.A. - UTE and
Camuzzi Gas Pampeana S.A. dated May 14, 1996.

7. Oferta para el Suministro de Piezas y Servicios de Mantenimiento (Offer for
the Provision of Parts and Maintenance Services) entered into between CMS
Ensenada S.A. and General Electric International Inc. dated May 5, 1997.

8. Oferta para el Servicio de Transporte en Firme (Offer for Transportation
Service) entered into between CMS Ensenada S.A. and Transportadora de Gas del
Sur S.A. dated July 21, 1997

9. Operation and Maintenance Agreement (La Plata Cogeneration Facility) entered
into between CMS Operating S.A. and CMS Ensenada S.A., dated May 7, 1997.

10. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively.

CMS COMERCIALIZADORA DE ENERGIA S.A.

1. Oferta para la Contratacion del Servicio de Intercambio y Desplazamiento de
Gas Natural (Offer to Hire a Service for the Exchange and Movement of Natural
Gas) entered into between CMS Comercializadora de Energia S.A. and
Transportadora de Gas del Norte S.A. dated August 3, 2006.

<PAGE>

                                                                  EXECUTION COPY

2. Oferta de Servicio de Transporte (Offer for Transportation Service) entered
into between CMS Comercializadora de Energia S.A. and Metroenergia S.A. dated
July 28, 2006.

3. Oferta para el Servicio de Transporte Interrumpible (Offer for Transportation
Service) entered into between CMS Comercializadora de Energia S.A. and
Transportadora de Gas del Sur S.A. dated August 11, 2006.

4. Oferta de Servicio de Gestion Comercial (Commercial Management Service Offer)
entered into between CMS Comercializadora de Energia S.A. and MetroEnergia S.A.
dated July 28, 2006.

5. Oferta de Venta de Gas (Gas Sale Offer) entered into betweeen CMS
Comercializadora de Energia S.A. and Pluspetrol S.A. dated December 27, 2006.

6. Oferta de Compra de Gas (Gas Purchase Offer) entered into between CMS
Comercializadora de Energia S.A. and A. Mutz S.R.L. dated January 15, 2007.

CENTRALES TERMICAS MENDOZA S.A.

1. Long Terms Parts and Long Term Services Agreement entered into between
Centrales Termicas Mendoza S.A. and General Electric International Inc., General
Electric International Inc. (Argentine Branch) and G.E. Energy Parts Inc. dated
January 31, 2001.

2. Program Parts, Miscellaneous Hardware, Program Management, and Services
Contract entered into between Centrales Termicas Mendoza S.A. and Siemens
Westinghouse Power Corporation, dated January 28, 2005.

3. Steam Generation Services Agreement entered into between Centrales Termicas
Mendoza S.A. and YPF S.A., November 17, 1997 and Amendment for the resolution of
disputes dated July 2, 2001 and Amendment (offer for price adjustment) dated May
12, 2005.

4. Gas Sale and Purchase Agreement entered into between Centrales Termicas
Mendoza S.A. and Total Austral S.A., Bridas Austral S.A. and Deminex Argentina
S.A. by exchange of letters dated June 11, 12 and 14, 1996 and Additional
Clauses: (i) No. i dated June 30, 1997; and (ii) No. 2 dated June 12, 2001.

5. Carta Oferta de Transporte en Firme (Offer Letter for Transportation) entered
into between Centrales Termicas Mendoza S.A. and Transportadora de Gas del Norte
S.A. dated June 25, 1996 and Amendment dated April 22, 2003.

6. Acuerdo para el Servicio de Transporte de Gas (Gas Transportation Service
Agreement) entered into between Centrales Termicas Mendoza S.A. and
Transportadora de Gas de Norte S.A. dated April 5, 2004.

7. Oferta para la Distribucion de Gas (Offer for Gas Distribution) entered into
between Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A.
dated October 1, 1996 and Addendas (amendments) dated (i) May 2, 1997; (ii)
August 3, 1998; (hi) July 4, 2003; and (iv) November 10, 2004.

<PAGE>

                                                                  EXECUTION COPY

8. Agreement for rendering assistance in peak hours entered into between
Distribuidora de Gas Cuyana S.A. and Centrales Termicas Mendoza S.A., October 1,
1996; Acuerdo Complementario (Complementary Agreement) dated August 3, 1998;
Addendas (amendments) dated: (i) December 10, 2001; (ii) July 4, 2003; and (iii)
November 10, 2004.

9. Addenda Ndegrees 4 a los Contratos de Distribucion, Asistencia en Picos y
Complementario para el Servicio de Compresion (Amendment No. 4 to the
Distribution Agreement, Peak Hours Assistance Agreement and Complementary
Agreement for the Compresion Service) entered into between Centrales Termicas
Mendoza S.A. and Distribuidora de Gas Cuyana S.A. dated July 24, 2006.

10. Acuerdo de Balance de Gas (Gas Balance Agreement) entered into between
Distribuidora de Gas Cuyana S.A. and Centrales Termicas Mendoza S.A. dated
August 3, 1998.

11. Contrato de Transporte de Gas (Gas Transportation Agreement) entered into
between Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A.
dated January 31, 2006.

12. Acuerdo Operativo de Desbalances para el Sistema de Distribucion (Operative
Agreement for the Imbalances on the Distribution System) entered into between
Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A. dated
December 15, 2000.

13. Contrato de Operacion (Operating Agreement) entered into between CMS
Operating S.A. and Centrales Termicas Mendoza S.A. in May, 1995 and Amendment I
dated December 11, 2000, Amendment II dated November 12, 2001, Amendment III
dated November 1, 2002, Amendment IV dated December 29, 2003, Amendment V dated
November 1, 2004, Amendment VI dated November 11, 2005 and Amendment VII dated
November 1, 2006.

CMS OPERATING S.R.L.

1. Shareholder Loan Agreement entered into between Transportadora de Gas del
Mercosur S.A., as borrower, and Sofax Banque, Compania General de Combustibles
S.A.,, TECGAS Argentina S.A., PETRONAS Argentina S.A.. CMS Operating S.R.L. and
CMS Internationa] Ventures L.L.C., collectively as lenders, dated August 30,
2001 and amendments thereof dated (i) January 31, 2003; (ii) January 30, 2004,
(iii) September 7, 2004; (iv) January 31, 2005; (v) January 31, 2006; and (vi)
January 31, 2007.

2. Contrato de Desarrollo, Provision, Instalacion y puesta en marcha de Software
de Aplicacion (Application software development, supply, installation and
running agreement) entered into between CMS Operating S.R.L. and Dipros S.A.
dated January 6, 2006.

3. Contrato de Prestamo (Loan Agreement) entered into between CMS Operating S.A.
and CMS Centrales Termicas S.A. dated December 27, 2006.

4. Contrato de Operacion (Operating Agreement) entered into between CMS
Operating S.A. and Centrales Termicas Mendoza S.A. in May, 1995 and Amendment I
dated December 11, 2000,

<PAGE>

                                                                  EXECUTION COPY

Amendment II dated November 12, 2001, Amendment III dated November 1, 2002,
Amendment IV dated December 29, 2003, Amendment V dated November 1, 2004,
Amendment VI dated November 11, 2005 and Amendment VII dated November 1, 2006.

5. Operation and Maintenance Agreement (La Plata Cogeneration Facility) entered
into between CMS Operating S.A. and CMS Ensenada S.A., dated May 7, 1997.

CMS CENTRALES TERMICAS MENDOZA S.A.

13. Contrato de Prestamo (Loan Agreement) entered into between CMS Operating
S.A. and CMS Centrales Termicas S.A. dated December 27, 2006.

CUYANA S.A. DE INVERSIONES

Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005.Outstanding principal amount $ 12,484,339
plus accrued interests.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.7(B) OF THE SELLER DISCLOSURE LETTER
                                    CONTRACTS

1. Shareholder Loan Agreement entered into between Transportadora de Gas del
Mercosur S.A., as borrower, and Sofax Banque, Compania General de Combustibles
S.A., TECGAS Argentina S.A., PETRONAS Argentina S.A., CMS Operating S.R.L.. and
CMS International Ventures L.L.C., collectively as lenders, dated August 30,
2001 and amendments thereof dated (i) January 31, 2003; (ii) January 30, 2004,
(iii) September 7, 2004; (iv) January 31, 2005; (v) January 31, 2006; and (vi)
January 31, 2007. The amount owed to CMS International Ventures, L.L.C. and CMS
Operating S.R.L. are evidenced in: (i) promissory note from Transportadora de
Gas del Mercosur S.A. to CMS International Ventures, L.L.C. (the current balance
is $ 7,807,814.45 as of January 31, 2007); and (ii) promissory note from
Transportadora de Gas del Mercosur S.A. to CMS Operating S.R.L. (the current
balance is $ 277,011.51 as of January 31, 2007).

2. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively.

3. Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005. Outstanding principal amount $ 12,484,339
plus accrued interests.

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.7(C) OF THE SELLER DISCLOSURE LETTER
                                    CONTRACTS

None

<PAGE>

                                                                  EXECUTION COPY

                 SECTION 3.7(D) OF THE SELLER DISCLOSURE LETTER
                                    CONTRACTS

CMS ENSENADA S.A.

The de-mineralized, de-gasified water provided by YPF S.A. to CMS Ensenada S.A.
for the heat boilers plant pursuant to the Power and Steam Supply Agreement may
not meet the minimum quality requirements to enable the facility to operate
adequately, which could be the reason for corrosion and other malfunctions.

CENTRALES TERMICAS MENDOZA S.A.

Pursuant to that certain Long Term Parts and Term Services Agreement entered
into by and between Centrales Termicas Mendoza S.A. and General Electric
International Inc., General Electric International Inc., (Argentina Branch) and
G.E. Energy Parts on January 31, 2001, Centrales Termicas Mendoza S.A. undertook
to grant a given $ 300,000 bank guaranty from US bank to said parties. As of the
date hereof, the guarantee provided by Centrales Termicas Mendoza S.A. has
expired and is in the process of being renegotiated. G.E. might consider the
lack of guaranty as a breach of the Agreement by Centrales Termicas Mendoza S.A.

<PAGE>

                                                                  EXECUTION COPY

        SECTION 3.8 OF THE SELLER DISCLOSURE LETTER COMPLIANCE WITH LAWS

CMS COMERCIALIZADORA DE ENERGIA S.A.

1. CMS Comercializadora de Energia S.A. is not complying with Section 55 of
Resolution No. 7/2005 issued by the Inspection General de Justicia (Commercial
Companies House) regarding plurality of shareholders.

2. Shareholder CMS Enterprises Company has filed the information for 2005 and
2006 in order to comply with Resolution No. 7/2005 and Resolution No. 12/2005
issued by the Inspection General de Justicia (Commercial Companies House) on
February 14, 2007. Final approval by Inspection General de Justicia (Commercial
Companies House) is pending.

3. CMS Comercializadora de Energia S.A. has initiated the filings before the
Inspection General de Justicia (Commercial Companies House) in order to register
the appointment of the members of the Board of Directors for 2006 period. Final
approval by Inspection General de Justicia (Commercial Companies House) is
pending

CMS ENSENADA S.A.

1. CMS Ensenada S.A. is not complying with Section 55 of Resolution No. 7/2005
issued by the Inspection General de Justicia (Commercial Companies House)
regarding plurality of shareholders.

2. Pursuant to the terms of the Transportation Service Agreement entered into
between CMS Ensenada S.A. and Transportadora de Gas del Sur S.A. dated July 21,
1997, Transportadora de Gas del Sur S.A. has applied five separate fines (for an
aggregate amount of AR$ 5,124,754.83) to CMS Ensenada S.A. based on the alleged
imbalances in the volume of natural gas supplied in accordance with Ente
National Regulador del Gas - ENARGAS Resolution Ndegrees 716/98. The amount of
the fines has been disputed by CMS Ensenada S.A. In August 2006, Transportadora
de Gas del Sur S.A. brought an action before ENARGAS in order to settle the
dispute and collect the fines. CMS Ensenada S.A. has rejected Transportadora de
Gas del Sur S.A.'s demands and has sustained that imbalances were caused by gas
supplier's (YPF S.A.) breaches. CMS Ensenada S.A. has requested that YPF S.A.
(the gas supplier) be subpoenaed, which has been accepted by ENARGAS. A
resolution by ENARGAS is pending.

CMS OPERATING S.R.L.

1. The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register: (i) appointment of managers for 2006
period; and (ii) capital increase and the corresponding by-laws' amendment
approved by the ordinary and extraordinary Quotaholders' meeting held on
December 27, 2006. Final approval by Inspection General de Justicia (Commercial
Companies House) is pending

2. Shareholder CMS International Ventures LLC has filed all the information
required in order to comply with Resolution No. 7/2005 issued by the Inspection
General de Justicia (Commercial

<PAGE>

                                                                  EXECUTION COPY

Companies House) regarding foreign holding companies for 2006 period. Final
approval of Inspection General de Justicia (Commercial Companies House) is
pending.

CMS CENTRALES TERMICAS S.A.

1. The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register: (i) the capital increase approved by
the shareholders' meeting held on May 5th, 2005; and (ii) the appointment of the
members of the Board of Directors for 2006 period approved by the shareholders'
meeting held on May 22nd, 2006. Final approval of Inspection General de Justicia
(Commercial Companies House) is pending.

2. Shareholder CMS International Ventures LLC has filed all the information
required in order to comply with Resolution No. 7/2005 issued by the Inspection
General de Justicia (Commercial Companies House) regarding foreign holding
companies for 2006 period. Final approval of Inspection General de Justicia
(Commercial Companies House) is pending.

3. CMS Centrales Termicas S.A. is not complying with section 31 of the
Commercial Companies Act No. 19,550 since its shareholding in Cuyana S.A. de
Inversiones exceeds its free reserves and half of its capital stock and
mandatory reserves.

CMS GENERATION S.R.L.

The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register the capital increase and the
corresponding by-laws' amendment approved by means of the ordinary and
extraordinary quotaholders' meeting held on April 4, 2005. Final approval by
Inspection General de Justicia (Commercial Companies House) is pending.

CUYANA S.A. DE INVERSIONES

The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register the capital increase approved by the
Ordinary and Extraordinary Shareholders' meeting held on December 27, 2006.
Final approval by Inspection General de Justicia (Commercial Companies House) is
pending.

<PAGE>

                                                                  EXECUTION COPY

                   SECTION 3.9 OF THE SELLER DISCLOSURE LETTER
                                     PERMITS

None

<PAGE>

                                                                  EXECUTION COPY

                  SECTION 3.10 OF THE SELLER DISCLOSURE LETTER
                                   LITIGATION

The following claims/lawsuits have been filed against the Entities:

CENTRALES TERMICAS MENDOZA S.A.

1. "Consejo Profesional de Ingenierosy Geologos s/Apremio " (legal proceeding
for purposes of debt collection): File No. 351.365. The amount claimed is AR$
4,000.

2. "Rodriguez, Diego Alberto c/ del Barco, Roberto y otro s/ despido" (firing,
labor claim): File No. 14.999. The amount claimed is AR$ 14,344.

3. "Direction de Defensa del Consumidor s/ C.T.M. S.A. " (National Public Entity
of Consumer Rights): Administrative File. The amount claimed is AR$ 50.

4. Customs' claim against Centrales Termicas Mendoza S.A. (importation of spare
parts subject to dispute as to new or used status of parts): Administrative File
No. 580.749/2003. The amount claimed is AR$ 260,836.

5. "Escardini Graciela Marina c/ Centrales Termicas Mendoza s/despido" (firing,
labor claim) hearing before Labor Court No. 5 of the city of Mendoza. The amount
claimed is AR$ 168,178.

CMS ENSENADA S.A.

1. "Figueroa Claudia Antonia c/ CMS Ensenada S.A. s/ accidente action civil"
(accident, labor claim) hearing before Labor Court No. 21 of the city of Buenos
Aires. The amount claimed is AR$ 151,580.

2. "Figueroa Claudia Antonia c/ CMS Ensenada S.A. s/ cobro de pesos " (accident,
labor claim) hearing before Labor Court No. 50 of the city of Buenos Aires. The
amount claimed is AR$ 94,984.

Note: CMS Ensenada S.A. filed in 1998 a joint-claim against the Organismo de
Control de la Energia Electrica de la Provincia de Buenos Aires for the non
application of a tax rate ("Central Dock Sud S.A. y otros c/ Buenos Aires,
Provincial y otro s/ action declarativa de inconstitucionalidad\ Federal Courts
of La Plata, Secretary No. 4).

CMS OPERATING S.R.L.

1. "Reina Carla Irene c/CMS Opreating S.R.L. s/cobro de pesos" (labor claim)
hearing before Administrative Court of the city of Buenos Aires. A hearing is
expected for March 19, 2007. The claimant requested the Aseguradora de Riesgos
de Trabajo (ART) to attend the hearing. The amount claimed is AR$ 180,000 plus
20% attorney's fees.

<PAGE>

                                                                  EXECUTION COPY

2. "Soria Viviana c/CMS Operating S.R.L. s/ despido" (firing, labor claim)
hearing before Administrative Court of the city of Buenos Aires (SECLO). The
amount claimed is AR$ 848,707.26 plus 20% attorney's fees. This claim related to
items not considered in the final payment and an indemnity letter since the
claimant was director and syndic for different Entities.

In March 9, 2007 the proceeding before the SECLO was already finished and the
parties did not reach a conciliatory agreement.
<PAGE>

                                                                  EXECUTION COPY

                 Section 3.11(a) of the Seller Disclosure Letter
                                Employee Matters

Centrales Termicas Mendoza S.A.

1. Employees of Centrales Termicas Mendoza S.A. own 4,205,698 class "C" shares
through the Programa de Propiedad Participada.

2. Section 22 of Centrales Termicas Mendoza S.A.'s by-laws establishes a
dividend distribution of 0.5% of the corporations net profits. This is paid to
the personnel every year according to the distribution set forth thereof.

3. At present, Centrales Termicas Mendoza has two pension or saving plans: (i)
one that includes all personnel comprised in Acta Convencional entered into
between Centrales Termicas Mendoza S.A. and Federation Argentina de Trabajadores
de Luzy Fuerza\ and (ii) the one that includes all personnel comprised in the
Collective Bargaining Agreement No. 788/06 "E" entered into between Centrales
Termicas Mendoza S.A. and Asociacion de Profesionales Universitarios del Aguayla
Energia Electrica.

4. The 70% of the personnel's meal is borne by Centrales Termicas Mendoza S.A.
being the unitary cost between AR$5 and AR$6 per meal.

5. There are plant vehicles (pick-ups, vans and cars), which are used by the
plant's personnel.

6. Centrales Termicas Mendoza S.A pays for the radio and cell phone
communication systems.

7. Internet Service -with access to Centrales Termicas Mendoza S.A.'s server- is
provided to certain employees at their domiciles.

8. The company affords language-training courses for the employees either
totally or partially, depending on the case.

9. Usually and according to the different updating needs, the company affords
training courses, in or out the company.

10. Pending vacations of the staff from Centrales Termicas Mendoza S.A.:

                                PENDING VACATIONS

<TABLE>
<CAPTION>
                                                                                                 TOTAL
                                                                                                PENDING
SURNAME AND NAME                        COMPANY              2001   2002   2003   2004   2005     DAYS
----------------             -----------------------------   ----   ----   ----   ----   ----   -------
<S>                          <C>                             <C>    <C>    <C>    <C>    <C>    <C>
ALONSO, OSVALDO              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
AMAYA, JORGE G.              CENTRALES TERMICAS MENDOZA SA     0      0      0      1     28       29
AYALA, HECTOR F.             CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
BARBAZZA, Oscar Alberto      CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
BARCHIESI, Juan              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
BERTAGNO, Carlos Hugo        CENTRALES TERMICAS MENDOZA SA     0      0      0      0     21       21
BLANCO, Eduardo F.           CENTRALES TERMICAS MENDOZA SA     0      0      0      0     13       13
BORDIN, ANGELA.              CENTRALES TERMICAS MENDOZA SA     0      0      2     35     35       72
</TABLE>

<PAGE>

<TABLE>
<S>                          <C>                             <C>    <C>    <C>    <C>    <C>    <C>
BURGQA, ALEJANDRA            CENTRALES TERMICAS MENDOZA SA     0      0      0      0      3        3
CALDERON, Marcelino          CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CALISE, Veronica             CENTRALES TERMICAS MENDOZA SA     0      0      0      0     22       22
CARAM, Mariana               CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CASTILLO, Carlos Alberto     CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CASTRO, VICTOR M.            CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CIARALLQ, Javier             CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
COMARIN, CARLOS A.           CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
COPPI, CESAR ADOLFO          CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CORDERO, Nelson Ariel        CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
CHACON, ROLANDO              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
DAVOLIO, ANTONIO R.          CENTRALES TERMICAS MENDOZA SA     0      0      0     30     35       65
ENRIQUEZ, Carlos Daniel      CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
FUNES, OSCAR F.              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      2        2
GARCIA, ENRIQUE              CENTRALES TERMICAS MENDOZA SA    23     35     35     35     35      163
GARCIA, HUGO OMAR            CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
GIMENEZ, Jose Luis           CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
GOMEZ, HECTOR                CENTRALES TERMICAS MENDOZA SA     0      0      0      0     11       11
GONZALES, Fabian Andres      CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
GONZALEZ, Walter Horacio     CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
GRZONA, GUSTAVO              CENTRALES TERMICAS MENDOZA SA     0      0      0     12     35       47
GUINAZU, Asdrubal Juan       CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
HERVIDA, ERNESTO             CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
LAGHEZZA, LEONARDO           CENTRALES TERMICAS MENDOZA SA     0      8     28     28     35       99
LIBERAL, SERGIO J.           CENTRALES TERMICAS MENDOZA SA     0      0      0      0     30       30
LUQUEZ, DANIEL               CENTRALES TERMICAS MENDOZA SA     0      0      0     27     35       62
MARIOTTI, Veronica Beatriz   CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
MAROTTOLI, Jose Antonio      CENTRALES TERMICAS MENDOZA SA     0      0     13     21     21       55
MASSIERO, RAUL E.            CENTRALES TERMICAS MENDOZA SA     0      0     18     35     35       88
MAZZITELLI, ERNESTO          CENTRALES TERMICAS MENDOZA SA     0      0      0      1     35       36
MONTERO, JOSE A.             CENTRALES TERMICAS MENDOZA SA     0      0      0      0     31       31
MORALES, RICARDO             CENTRALES TERMICAS MENDOZA SA     0      0      0     13     35       48
MORENO, Gabriel Sebastian    CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
NAHIM, RAUL                  CENTRALES TERMICAS MENDOZA SA     0      0      0     35     35       70
ORTEGA, NORBERTO             CENTRALES TERMICAS MENDOZA SA     0      0      0      4     35       39
ORTIZ, Angel Daniel          CENTRALES TERMICAS MENDOZA SA     0      0      0      0     10       10
PARIGI, RAUL                 CENTRALES TERMICAS MENDOZA SA     0      0      0      4     35       39
PEREYRA, MANUEL              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      1        1
PEREZ, DANIEL R.             CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
PEREZ, GABRIEL RAUL          CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
</TABLE>

<PAGE>

<TABLE>
<S>                          <C>                             <C>    <C>    <C>    <C>    <C>    <C>
PEREZ, OSCAR H.              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
POPULIN, Jorge Jose          CENTRALES TERMICAS MENDOZA SA    16     30     30     30     30      136
RODRIGUEZ, MIGUEL H.         CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
ROMERO, JORGE E.             CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
SEVILLA, JORGE C.            CENTRALES TERMICAS MENDOZA SA     0      0      0      0     34       34
SEVILLA, JULIO J.            CENTRALES TERMICAS MENDOZA SA     0      0      0      1     28       29
SIMON, Mario Gabriel         CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
STROSCIO, JUAN A.            CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
TERRANEO, Enrique            CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
ULLOA, Pamela Alejandra      CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
VAZQUEZ, DANIEL              CENTRALES TERMICAS MENDOZA SA     0      0      0      0      5        5
VERA, MIGUEL E.              CENTRALES TERMICAS MENDOZA SA     0     16     35     35     35      121
VIOLA, Fernando Sebastian    CENTRALES TERMICAS MENDOZA SA     0      0      0      0      0        0
WILHELM, ROBERTO M.          CENTRALES TERMICAS MENDOZA SA    22     28     35     35     35      155
</TABLE>

CMS Ensenada S.A.

1. CMS Ensenada S.A. pays for cell phone communication system.

2. The 70% of the personnel's meal is borne by CMS Ensenada S.A. being the
unitary cost between AR$5 and AR$6 per meal.

3. There are plant vehicles (pick-ups, vans and cars), which are used by the
plant's personnel.

4. Internet Service -with access to CMS Ensenada S.A.'s sever- is provided to
certain employees at their domiciles.

5. The company affords language-training courses for the employees either
totally or partially, depending on the case.

6. Usually and according to the different updating needs, the company affords
training courses, in or out the company.

7. Pending vacations of the staff from CMS Ensenada S.A.:

                                PENDING VACATIONS

<TABLE>
<CAPTION>
                                                                                         TOTAL
                                                                                        PENDING
SURNAMES             NAME             COMPANY        2001   2002   2003   2004   2005     DAYS
------------   ---------------   ---------------     ----   ----   ----   ----   ----   -------
<S>            <C>               <C>                 <C>    <C>    <C>    <C>    <C>    <C>
AGUERQ         GUSTAVO           CMS Ensenada SA       0      0      0      0      0        0
FRANCO         SILVIA            CMS Ensenada SA       0      0      0      0      0        0
MARCHUETA      GERARDO           CMS Ensenada SA       0      0      0      0      7        7
BARQUER        FERNANDO          CMS Ensenada SA       0      0      0      0      0        0
TARAS          ANDRES            CMS Ensenada SA       0      0      0      0      0        0
LOSADA         RICARDO           CMS Ensenada SA       0      0      0      0      0        0
SACCON         DANIEL            CMS Ensenada SA       0      0      0      0      0        0
CASTRO         JORGE             CMS Ensenada SA       0      0      0      0      0        0
BISCONTI       HORACIO           CMS Ensenada SA       0      0      0      0      0        0
LATASTE        SERGIO            CMS Ensenada SA       0      0      0      0      0        0
SILVA          JUAN PABLO        CMS Ensenada SA       0      0      0      0      0        0
</TABLE>

<PAGE>

<TABLE>
<S>            <C>               <C>                 <C>    <C>    <C>    <C>    <C>    <C>
GLAVICH        PEDRO             CMS Ensenada SA       0      0      0      0      0        0
FRANCECE       WALTER            CMS Ensenada SA       0      0      0      0      0        0
GONZALEZ       EDGARDO           CMS Ensenada SA       0      0      0      0      0        0
BARBIER        EDGARDO           CMS Ensenada SA       0      0      0      0      0        0
ESTIVARIZ      DIEGO             CMS Ensenada SA       0      0      0      0     21       21
MOSCARELLA     EUGENIO           CMS Ensenada SA       0      0      0      0      0        0
PERUSIN        ALEJANDRO         CMS Ensenada SA       0      0      0      0      0        0
BORLANDO       MARIA PIA         CMS Ensenada SA       0      0      0      0      0        0
SINTES         LAURA             CMS Ensenada SA       0      0      0      0      0        0
BRANAS         PABLO             CMS Ensenada SA       0      0      0      0      0        0
LOPEZ BUSTO    MARIA del C.      CMS Ensenada SA       0      0      0      0      0        0
DEL VECCHIO    MARIA A.          CMS Ensenada SA       0      0      0      0      0        0
</TABLE>

CMS Operating S.R.L

1. The company pays for certain employee assigned cell phones.

2. Internet Service -with access to CMS Operating S.R.L.'s sever- is provided to
certain employees at their domiciles.

3. The company affords language-training courses for the employees either
totally or partially, depending on the case.

4. Usually and according to the different updating needs, the company affords
training courses, in or out the company.

5. Pending vacations of the staff from CMS Operating S.R.L.:

                               PENDING VACATIONS

<TABLE>
<CAPTION>
                                                                                         TOTAL
                                                                                        PENDING
SURNAMES             NAME             COMPANY        2001   2002   2003   2004   2005     DAYS
------------   ---------------   -----------------   ----   ----   ----   ----   ----   -------
<S>            <C>               <C>                 <C>    <C>    <C>    <C>    <C>    <C>
ALBERIQ        PABLO ANDRES      CMS OPERATING SRL     0      0      0      0      0        0
CACHOBRATTI    FLORENCIA         CMS OPERATING SRL     0      0      0      0      0        0
CARBAJAL       ALEJANDRO LUIS    CMS OPERATING SRL     0      0      0      0      0        0
CASANOVA       JORGE ANTONIO     CMS OPERATING SRL     0      0      0      0     29       29
COLOMBO        MARIA CECILIA     CMS OPERATING SRL     0      0      0      0      0        0
COSSIO         MARTIN            CMS OPERATING SRL     0      0      0      0      0        0
DE FRANCESCO   MARCELA CECILIA   CMS OPERATING SRL     0      0      0      0      0        0
ELISSETCHE     GERMAN ALBERTO    CMS OPERATING SRL     0      0      0      0      0        0
FALZONE        HECTOR SERGIO     CMS OPERATING SRL     0      0      0      0      0        0
FERNANDEZ
BARBIERO       MARTIN            CMS OPERATING SRL     0      0      0      0      0        0
FERRETTO       SANDRO            CMS OPERATING SRL     0      0      0      0      0        0
GALLINO        FERNANDO          CMS OPERATING SRL     0      0      0      0      0        0
INDART         SILVINA           CMS OPERATING SRL     0      0      0      0      0        0
KATZ           LEONARDO PABLO    CMS OPERATING SRL     0      0      0      0      0        0
KRAIGHER       MILENA            CMS OPERATING SRL     0      0      0      0     14       14
MOLLERACH      MARIA FERNANDA    CMS OPERATING SRL     0      0      0      0      2        2
MOLLO          MARIA JULIETA     CMS OPERATING SRL     0      0      0      0      9        9
</TABLE>

<PAGE>

<TABLE>
<S>            <C>               <C>                 <C>    <C>    <C>    <C>    <C>    <C>
MOLTENI        SERGIO ANDRES     CMS OPERATING SRL     0      0      0      0      0        0
MONSALVO       LEONARDO RUBEN    CMS OPERATING SRL     0      0      0      0      0        0
MUNOZ
FERNANDEZ      PATRICIA          CMS OPERATING SRL     0      0      0      0      0        0
NACCARELLI     ALEJANDRA         CMS OPERATING SRL     0      0      0      0      0        0
NACCARELLI     LILIAN            CMS OPERATING SRL     0      0      0      0      0        0
OCAMPO         MARIA ANGELA      CMS OPERATING SRL     0      0      0      0      0        0
PRINCIPI       CARLOS ARTURO     CMS OPERATING SRL     0      0      0     21     28       49
REY            JORGE ANDRES      CMS OPERATING SRL    11     30     30     30     30      131
TERRANEO       ENRIQUE           CMS OPERATING SRL     0      0      0      0      0        0
VAZQUEZ        RODRIGO           CMS OPERATING SRL     0      0      0      0      0        0
VELAR DE
IRIGOYEN       BERNARDO JULIO    CMS OPERATING SRL     0      0      0      0      0        0
VILLA DE
BIGNONE        MARIA CRISTINA    CMS OPERATING SRL     0      0      0      0      6        6
</TABLE>

CMS Comercializadora de Energia S.A,

1. The company pays for certain employee assigned cell phones.

2. Internet Service -with access to CMS Comercializadora de Energia S.A.'s
sever- is provided to certain employees at their domiciles.

3. The company affords language-training courses for the employees either
totally or partially, depending on the case.

4. Usually and according to the different updating needs, the company affords
training courses, in or out the company.

                                                                  EXECUTION COPY

                 Section 3.11(d) of the Seller Disclosure Letter
                                Employee Matters

None.

                                                                  EXECUTION COPY

                 Section 3.11(e) of the Seller Disclosure Letter
                                Employee Matters

Centrales Termicas Mendoza S.A.

Centrales Termicas Mendoza S.A. has developed a benefit plan for the employees
who are neither comprised under the scope of the pension fund created for those
employees represented by Federation Argentina de Trabajadores de Luz y Fuerza
nor the pension fund created for the personnel represented by Asociacion de
Profesionales Universitario del Agua y la Energia Electrica. There is a formal
engagement with the personnel to put in force this pension plan as from January
1, 2007 and to apply it retroactively from November 1994. The plan
implementation process has been already finished and waits for final approval.

<PAGE>

                                                                  EXECUTION COPY

                 Section 3.11(f) of the Seller Disclosure Letter
                                Employee Matters

None.

                                                                  EXECUTION COPY

                  Section 3.12 of the Seller Disclosure Letter
                                 Labor Relations

Centrales Termicas Mendoza S.A.

1. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Federation Argentina de Trabajadores de Luzy Fuerza dated
October 6, 1995.

2. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Obra Social de los Profesionales del Agua y Energia Electrica
dated December 28, 2005.

3. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Asociacion de Profesionales del Agua y Energia Electrica dated
December 28, 2005.

                                                                  EXECUTION COPY

                 Section 3.13(a) of the Seller Disclosure Letter
                              Intellectual Property

CMS Operating S.R.L.

Internet Domain Names: (i) ctmendoza.com.ar; and (ii) ctlaplata.com.ar.
Owner: CMS Operating S.A.
Expiration date: July 4,2007.

Centrales Termicas Mendoza S.A.
Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 7
Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 2674259
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430

Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 9

<PAGE>

Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 2674260
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430

Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 37
Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 26742601
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430

Comercializadora de Energia S.A.

Trademark: COMESA COMERCIALIZADORA DE ENERGIA S.A.
Class: 36
Owner: COMERCIALIZADORA DE ENERGIA S.A.
Registration number: 1.678.159
Filing date: 23/04/1997
Publication date: 18/06/1997
Expiration Date: 15/09/2010
Bulletin: 1613

Transportadora de Gas del Mercosur S.A.

Trademark: TGM TRANSPORTADORA DE GAS DEL MERCOSUR S A
Class: 27
Owner: Transportadora de Gas del Mercosur S.A.
Registration number: 1.804.329
Filing date: 22/03/1999
Expiration date: 24/08/2011

                                                                  EXECUTION COPY

                 Section 3.13(b) of the Seller Disclosure Letter
                              Intellectual Property

None.

                                                                  EXECUTION COPY

                  Section 3.14 of the Seller Disclosure Letter
              Representations with Respect to Environmental Matters

CMS Ensenada S.A.

Pursuant to the report issued by Ente Nacional Regulador de la Electricidad
(ENRE) on July 4, 2006 two opportunities of improvements (oportunidades de
mejora) and three observations (observaciones) have been detected, which can be
solved by CMS Ensenada S.A. using the Environmental Management System in force.
Twice a year, CMS Ensenada S.A. informs ENRE on the observations and findings.
In November 2006, ENRE lifted 100% of the observations and one of the findings.
There are 80% of the findings remaining.

<PAGE>

Centrales Termicas Mendoza S.A.

Pursuant to the report issued by the Atomic Energy Commission ("Comision
Nacional de Energia Atomica") on June 23, 2005, six opportunities of
improvements (oportunidades de mejora), four observations (observaciones) and
two findings (hallazgos) were detected, as informed through Ente Nacional
Regulador del Gas" note issued on June 23, 2005.

Twice a year, Centrales Termicas Mendoza S.A. informs ENRE on the observations
and findings. In November 2006, ENRE lifted all of the observations, one of the
findings and verified the implementation of all opportunities of improvements.
There is one finding still remaining.

Upon taking over operations of Centrales Termicas Mendoza S.A., an extensive
clean-up of oil-contaminated soil was undertaken. A lined pit was constructed
on-site and oily soil was encapsulated in this pit. There has been no evidence
of release of any contamination from this pit.

                                                                  EXECUTION COPY

                  Section 3.15 of the Seller Disclosure Letter
                                   Tax Matters

3.15 (b)

Cuyana S.A. de Inversiones

On January 11, 2007 Cuyana S.A. de Inversiones filed a rectification affidavit
for income tax corresponding to the fiscal year 2004 and 2005 by which it was
recognized a profit stemming from the inflation adjustment of certain
irrevocable contributions reimbursed by Centrales Termicas Mendoza S.A.. As a
result Cuyana S.A de Inversiones paid additional tax for the amount of AR$
22,710,750.

3.15(d)

"There is no dispute or claim concerning any Tax liability of an Entity claimed
or raised by any taxing authority in writing... "

CMS Ensenada S.A.

1. On September 20, 1999, CMS Ensenada S.A. was put on notice of a claim by the
Province of Rio Negro (Direction General de Rentas de la Provincia de Rio Negro)
for failure to pay stamp tax, requiring payment of tax for an aggregate amount
of AR$ 1.09 million and imposing fines on CMS Ensenada S.A. for an aggregate
amount of AR$2.19 million (Exp. 60536-R-98, 60474-R-98 and 60508-R-98).

2. On July 24, 2002, CMS Ensenada S.A. was put on notice of a claim by the
Province of La Pampa (Direction General de Rentas de la Provincia de La Pampa)
requiring payment of stamp tax for an aggregate amount of AR$ 606,439 (Exp.
405/2001).

3. On August 22, 2003, CMS Ensenada S.A. was put on notice of a claim by the
Province of Mendoza (Direction General de Rentas de la Provincia de Mendoza)
requiring the company to register for the payment of gross income tax in such
province (Exp. 17132-O-04).
<PAGE>

CMS Operating S.R.L.

On December 13, 2006 the Tax Authority (Administration Federal de Ingresos
Piiblicos) has notified CMS Operating S.R.L. a tax assessment on income tax for
fiscal year 2000 (Resolution 312/2006 DV RR1P). According to the Tax Authority
deemed interest is applicable on the receivables of CMS Operating S.R.L. as a
result of having paid the expenses on behalf of other companies of the CMS group
(resident in Argentina). As a consequence of the assessment, the tax Authority
has determined the new taxable income of the company for tax year 2000 and a
reduction of the losses. On February, 2007 CMS Operating S.R.L. have filed an
appeal against Resolution 312/2006 (DV RR1P) before the National Tax Court
rejecting the tax assessment.

Centrales Termicas Mendoza S.A.

l.On May 5, 2001, Centrales Termicas Mendoza S.A. was put on notice of a claim
by the Province of Corrientes for failure to pay gross income tax in such
province.

2. On October 9, 2001, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the Province of Tucuman for failure to pay gross income tax in such
province.

3. On December 3, 2002, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the City of Parana for non-payment of local taxes dating as of December
2002.

4. On July 16, 2004, the Province of Catamarca initiated a proceeding to verify
compliance by Centrales Termicas Mendoza S.A. with tax obligations in such
province.

5. On October 26, 2006, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the City of San Nicolas for non-payment of local tax in an amount
equivalent to 6% of gross revenues from energy sales.

3.15(d)

"(...) Section 3.15 of the Seller Disclosure Letter list all United States
federal, state, local and non-United States Tax Returns with respect to Taxes
determined by reference to net income filed with respect to each Entity for any
taxable period ended on or after January 1, 2002(...) "

1. IRS Forms 5471 were filed for CMS Ensenada S.A, CMS Centrales Termicas, S.A.,
Cuyana S.A. de Inversiones and Centrales Termicas Mendoza, S.A for 2002-2005,
and final IRS Forms 5471 were filed for CMS Operating, S.A. (now known as CMS
Operating SRL) and CMS Generation, S.A. (now known as CMS Generation SRL) for
2002 (final years ending 12/20/2002). IRS Forms 8865 were filed for CMS
Operating, S.R.L. and CMS Generation S.R.L. for 2002 (short initial years
beginning 12/30/2002) to 2005.

2. Administration Federal de Ingresos Publicos (AFIP) Forms 713 (Formulario de
declaration jurada 713) were filed for all the Entities for 2002 to 2005.

3. CMS Ensenada S.A. filed a rectification affidavit for income tax
corresponding to fiscal years 2003 and 2004.

4. CMS Operating S.R.L. filed rectification affidavit for income tax
corresponding to fiscal year 2002.

5. Cuyana S.A. de Inversiones filed rectification affidavit for income tax
corresponding to fiscal years 2004 and 2005.

3.15(d)

"(...) indicates those Tax returns that have been audited and indicates those
Tax returns that currently are the subject of audit(...) "

<PAGE>

CMS Operating S.R.L.' affidavits for income tax corresponding to fiscal years
2003 and 2004 are subject to audit. In addition, CMS Operating S.R.L. has
received a requirement in order to file information regarding certain expenses
made on behalf of third parties during the fiscal years 2001 to 2005.

3.15(e)

All of the Entities are treated as corporations for US tax purposes except for
CMS Operating S.R.L. and CMS Generation S.R.L., which are treated as
partnerships for US tax purposes.

3.15 (h)

CMS Operating S.R.L.

CMS Operating S.R.L. shall pay AR$ 2,748,344 for personal assets tax
attributable to CMS International Ventures LLC and CMS Generation Holding
Company.

CMS Comercializadora de Energia S.A.

CMS Comercializadora de Energia S.A. shall pay AR$ 4,841 for personal assets tax
attributable to CMS Enterprises Co. and CMS Generation Holding Co.

CMS Generation S.R.L.

CMS Generation S.R.L. shall pay AR$ 415,448 for personal assets tax attributable
to CMS International Ventures, L.L.C and CMS Generation Holding Company.

CMS Centrales Termicas S.A.

CMS Centrales Termicas S.A. shall pay AR$ 16,689 for personal assets tax
attributable to CMS Enterprises and CMS Generation Holding Company

CMS Ensenada S.A.

CMS Ensenada S.A. shall pay AR$ 1,265 for personal assets tax attributable to
CMS Generation Holding Company.

                                                                  EXECUTION COPY

                 Section 3.16(a) of the Seller Disclosure Letter
                                    Insurance

CMS Ensenada S.A.

1. Foreign DIC/DIL General Liability - International Casualty; Insurance Co.:
Great Northern + Federal Insurer; Expiration date: May 31, 2007; Broker: Marsh
USA; Policy number: 37110040 + 79764046; Annual Premium: $ 51,700; Rate of
exchange: AR$ 3.083; Annual Premium paid: AR$ 159,139.10.

2. International transport insurance; Insurance Co.: Mapfre Argentina S.A.;
Expiration date: April 19, 2007; Broker: Marsh; Policy number: 152-0242876-05;
Insurance coverage: $300,000; Annual Premium: $ 1,522.58; Rate t)f exchange: AR$
3.076; Annual Premium paid: AR$ 4,683.46.

3. Vehicles Insurance; Insurance Co.: La Repiiblica Compafiia Argentina de
Seguros S.A.; Expiration date: March 31, 2007; Broker: Marsh; Policy number:
829566; Insurance coverage: AR$ 170,300; Annual Premium paid: AR$ 7,054.24.

<PAGE>

4. Property / Business Interruption / Terrorism; Insurance Co.: La Meridional
Compafiia de Seguros S.A. + Liberty Seguros S.A.; Expiration date: May 31, 2007;
Broker: Marsh; Policy number: 26 + 27; Insurance coverage: $ 106,722,984; Annual
Premium: $ 283,960; Rate of exchange: AR$ 3.079; Annual Premium paid: AR$
874,312.84.

5. Judicial Guarantee / Provisional Measures; Insurance Co.: Aseguradora de
Cauciones S.A.; Expiration date: April 13, 2007; Broker: Marsh; Policy number:
556,380,00,02 + 545,316,00,02; Insurance coverage: AR$ 3,000,000; Annual Premium
paid: AR$ 75,555.22.

6. Civil Responsibility; Insurance Co.: Chubb Argentina de Seguros S.A.;
Expiration date: May 31, 2007; Broker: Marsh; Policy number: 33051; Insurance
coverage: $ 15,000,000; Annual Premium: $ 20,543; Rate of exchange: AR$ 3.09;
Annual Premium paid: AR$ 63,477.87.

7. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compafiia de
Seguros de Vida S.A.; Expiration date: September 3, 2007; Broker: Marsh; Policy
number: 15543; Insurance coverage: AR$ 155,250.

8. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.

9. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8710, Insurance coverage: 20 salaries, top amount AR$350,000.

CMS Operating S.R.L.

1. Fire of building and content / Robbery of assets in cash desk / Robbery of
general content, fixed electronic equipment, mobile electronic equipment /
Wreckage removal / Others; Insurance Co.; ACE Seguros S.A.; Expiration date:
June 30, 2007; Broker: Marsh; Policy Number: 1528564; Insurance Coverage:
$1,631,410.00; Fee: $ 2,437.05; Surcharge: $190.11; Tax: $ 547.87; Premium Paid:
$ 3,175.03.

2. Civil Responsibilities; Covered with CMS Ensenada Policy, Insurance Co.:
Chubb Argentina de Seguros S.A..

3. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compania de
Seguros de Vida S.A.; Expiration date: September 30, 2007; Broker: Marsh; Policy
number: 17942; Insurance coverage: AR$ 175,500.

4. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April, 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.

5. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8710, Insurance coverage: 20 salaries, top amount AR$350,000.

Centrales Termicas Mendoza S.A.

1. Collective Life Insurance / Critical Diseases; Insurance Co.: HSBC New York
Life Vida; Broker: Makler; Policy Number: CE01-99-008706; Annual Premium:
$9,452.

2. Civil Responsibilities; Insurance Co.: ACE Seguros S.A.; Expiration Date: May
31, 2007; Broker: Marsh S.A.; Policy Number: 818572; Insurance Coverage: Civil
Responsibility $15,000,000; Annual Premium: $27,041.

3. Operative All Risk Coverage - 75%; Insurance Co.: ACE Seguros S.A. 75%;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 144374; Cert.
017107; Insurance Coverage: Assets & Stocks $303,481,515; Annual Premium:
$427,291.

4. Operative All Risk Coverage - 25%; Insurance Co.: Royal & Sun Alliance 25%;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 000200267;
Insurance Coverage: Business Interruption $31,753,481; Annual Premium: $142,611.

<PAGE>

5. Vehicles - Civil Responsibilities + others; Insurance Co.: Royal & Sun
Alliance; Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number:
1457288; Insurance Coverage: Civil Responsibility $133,831; Annual Premium:
$2,325.

6. Physical Accidents; Insurance Co.: La Meridional Compania de Argentina de
Seguros S.A. A&G; Expiration Date: July 25, 2007; Broker: Gamasi; Policy Number:
513215; Insurance Coverage: Physical Accidents $970,874; Annual Premium: $333.

7. Mandatory Collective Life Insurance; Insurance Co.: Generali Argentina
Compania de Seguros de Vida S.A.; Expiration Date: October 1, 2007; Broker:
Gamasi; Policy Number: 13864; Insurance Coverage: Life $405,000.

8. Physical Accidents - Eventual Third Parties; Insurance Co.: ACE Seguros S.A.;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 1225026;
Annual Premium: $120.

9. Labor Risks; Insurance Co.: Mapfre Argentina S.A.; Expiration Date: April 30,
2007; Broker: Makler; Policy Number: 79374-01; Annual Premium: $5,944.

10. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.

11. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8706, Insurance coverage: 20 salaries, top amount AR$350,000.

CMS Comercializadora de Energia S.A.

1. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compania de
Seguros de Vida S.A.; Expiration date: September 30, 2007; Broker: Marsh; Policy
number: 17941; Insurance coverage: AR$ 20,250.

2. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.

3. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8708, Insurance coverage: 20 salaries, top amount AR$350,000.

                                                                  EXECUTION COPY

                 Section 3.16(b) of the Seller Disclosure Letter
                                    Insurance

None

                                                                  EXECUTION COPY

                 Section 3.18(a) of the Seller Disclosure Letter
                      Absence of Certain Changes or Events

None

                                                                  EXECUTION COPY

<PAGE>

                Section 3.18(b) of the Seller Disclosure Letter
                      Absence of Certain Changes or Events

None

                                                                  EXECUTION COPY

                 Section 3.18(c) of the Seller Disclosure Letter
                      Absence of Certain Changes or Events

1. Cancellation of intercompany account receivable from CMS Enterprises Co to
CMS Comercializadora de Energia S.A. in the amount of U$ 46,741 in concept of
dividend distribution from 2004 and 2005 approved during 2005 and 2006
respectively.

2. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Province of Mendoza in the amount of $ 397,824 in concept of dividends from 2005
results approved during 2006.

3. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Province of Mendoza in the amount of $ 286,493 in concept of dividend advance
from 2006 results approved during 2006.

4. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Programa de Propiedad Participada in the amount of $ 73,460 in concept of
dividends from 2005 results approved during 2006.

5. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Programa de Propiedad Participada in the amount of $ 102,006 in concept of
dividend advance from 2006 results approved during 2006.

                                                                  EXECUTION COPY

              Section 3.18 (d) (ii) of the Seller Disclosure Letter
                      Absence of Certain Changes or Events

CMS Generation S.R.L.

On March 8, 2007, CMS Generation S.R.L. sold and transferred to Empresa Nacional
de Electricidad S.A. - ENDESA CHILE the whole of CMS Generation S.R.L.'s shares
in Hidroinvest S.A. for a purchase price of $ 26,900,000. CMS Generation S.R.L.
will have to pay income tax on capital gains as a consequence of such sale.

                                                                  EXECUTION COPY

                 Section 3.18(e) of the Seller Disclosure Letter
                      Absence of Certain Changes or Events

Cuyana S.A. de Inversiones

On January 11, 2007 Cuyana S.A. de Inversiones filed a rectification affidavit
for income tax corresponding to the fiscal year 2004 and 2005 by which it was
recognized a profit stemming from the inflation adjustment of certain
irrevocable contributions reimbursed by Centrales Termicas Mendoza S.A. As a
result Cuyana S.A de Inversiones paid additional tax for the amount of AR$
22,710,750.

<PAGE>

Centrales Termicas Mendoza S.A.

1. Centrales Termicas Mendoza S.A. is currently paying certain duties (Cargo
Fideicomiso I) imposed by Nota ENARGAS No. 6585/05 on the transportation gas
used as fuel for the generation of steam under the Steam Generation Services
Agreement entered into with YPF S.A. on November 17, 1997 (as amended). At
present, such duties are not transferred to YPF S.A. but assumed by Centrales
Termicas Mendoza S.A. Pursuant to Nota ENARGAS No. 3689/07, certain additional
duties (Cargo Fideicomiso II) were imposed on the transportation of gas used as
fuel for the generation of steam, which will be retroactively collected as from
January 1, 2007. Even though such duties have not been invoiced yet, in the
event these new duties were not transferred to YPF S.A., Centrales Termicas
Mendoza S.A. would be deprived from any gain under the Steam Generation Services
Agreement.

2. A claim might arise under the Steam Generation Services Agreement entered
into between Centrales Termicas Mendoza S.A. and YPF S.A., November 17, 1997 and
Amendment for the resolution of disputes dated July, 2, 2001 and Amendment
(offer for price adjustment) dated May 12, 2005, given that Centrales Termicas
Mendoza S.A. is paying for the gas provided by the YPF S.A. at the price
recognized by the Secretary of Energy instead of the price invoiced by YPF S.A..

3. Labor contingencies might derive from services rendered by ten employees of
EXO S.R.L. regarding operating and maintenance of two Centrales Termicas Mendoza
S.A. machines (Turbo Gas ABB and Turbo Vapor Marelli) since the services so
contracted are part of the main activities of the company.

4. Labor contingencies might arise from services rendered by eight employees of
Sanchez y Oguey S.R.L. to Centrales Termicas Mendoza S.A. in relation to the
maintenance of civil works, change of filters and corrective maintenance of
stoves and pipelines since the services so contracted are part of the main
activities of the company.

5. A claim might arise under the Gas Sale and Purchase Agreement entered into
between Centrales Termicas Mendoza S.A. and Total Austral S.A., Bridas Austral
S.A. and Deminex Argentina S.A. ("UTE") by exchange of letters dated June 11, 12
and 14, 1996 (as amended) given that Centrales Termicas Mendoza S.A. is paying
for the gas provided by the UTE thereof at the price recognized by the Secretary
of Energy instead of the price invoiced by the Seller.

6. Labor contingencies might derive from medical services rendered by Dr. Daniel
Massanet to Centrales Termicas Mendoza S.A. since such services might be deemed
a labor agreement. CMS Ensenada S.A.

A claim might arise under the Oferta para el Suministro de Energia y Vapor
(Offer for the Provision of Power and Steam) entered into between CMS Ensenada
S.A. and YPF S.A. dated August 16, 1995 given that CMS Ensenada S.A. has been
paying since May 2006 for the gas provided by YPF S.A. at the price recognized
by the Secretary of Energy instead of the price invoiced by YPF S.A.

CMS Operating S.R.L.

Labor contingencies might arise from services rendered by two employees of
Inaxis S.A. to CMS Operating S.R.L. relating to computer services and
maintenance of networks.

Cuyana S.A. de Inversiones

On December 15, 2006, Cuyana S.A. de Inversiones made an offer to acquire the
whole of class "C" shares of Centrales Termicas Mendoza S.A. that are held
through the Programa de Propiedad Participada ("PPP") for an aggregate amount of
AR$ 4,300,000. The offer, which was accepted by an unanimous class "C"
shareholders' meeting of Centrales Termicas Mendoza S.A. held on the same date,
remains subject to the relevant authorizations of Banco de la Nacion Argentina
(trustee of PPP) and Ministerio de Economia de la Nacion (Argentinean Ministry
of Economy). All class "C" shares held through the PPP, which are fully paid,
are currently pledged in favor of the Argentine Government. Once the
authorizations are granted, Cuyana S.A. de Inversiones will be obliged to pay
the purchase price and acquire the shares, which shall be transferred free of
any Liens, including the pledge granted in favor of the Argentine Government.

<PAGE>

                                                                  EXECUTION COPY

                  Section 3.20 of the Seller Disclosure Letter
                                    Property

Centrales Termicas Mendoza S.A.

There is a right of way in favor of Agua y Energia Electrica S.E. over the
access road to Centrales Termicas Mendoza S.A.'s premises, according to the
notary deed ndegrees 45 dated April 15, 1996 by notary public Roberto G. Cejas.

CMS Ensenada S.A.

The cogeneration plant operated by CMS Ensenada S.A. pursuant to that certain
Oferta Para el Suministro de Energia Electrica y Vapor (Power and Steam Supply
Agreement) entered into by and between CMS Ensenada S.A. and YPF S.A. on August
16, 1995 is built on land owned by YPF S.A. Asset retirement obligations are
those of CMS Ensenada S.A. upon termination of the Power and Steam Supply
Agreement unless assets are acquired by YPF S.A.

                                                                  EXECUTION COPY

                  Section 3.23 of the Seller Disclosure Letter
                             Affiliated Transactions

1. Please refer to items listed in Sections 3.7(b), Contracts and 5.5,
Intercompany Accounts of this Seller Disclosure Letter

2. Promissory Note from CMS Ensenada S.A. to CMS Enterprises Company dated April
15, 2004 in the amount of $1,678,795 plus accrued interests (obligation repaid
and promissory note cancelled on December 20, 2006.

                                                                  EXECUTION COPY

                 Section 5.4(f) of the Seller Disclosure Letter
                 Actions Affecting Seller's Liability for Taxes

Buyer shall be able to:

1. Transform CMS Operating S.R.L. into a sociedad anonima;

2. Cause Centrales Termicas Mendoza S.A. to pay dividends or make capital
reductions;

3. Merge Cuyana S.A. de Inversiones into CMS Operating S.R.L., being CMS
Operating S.R.L. the survivor entity;

4. Merge CMS Centrales Termicas S.A. into CMS Operating S.R.L., being CMS
Operating S.R.L. the survivor entity; and

5. Merge CMS Operating S.R.L and/or CMS Generation S.R.L. with Sociedad
Argentina de Electricidad S.A. or any of its Affiliates.

<PAGE>

                                                                  EXECUTION COPY

                   Section 5.5 of the Seller Disclosure Letter
                              Intercompany Accounts

1. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively plus accrued interests.

2. Promissory Note from Transportadora de Gas del Mercosur S.A. to CMS
international Ventures L.L.C. - current balance is $ 7,807,814.45 as of January
31, 2007.

3. Promissory Note from Transportadora de Gas del Mercosur S.A. to CMS Operating
SRL -current balance is $ 277,011.51 as of January 31, 2007.

4. Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005 - current balance is $12,484,339 plus
accrued interests.

5. Intercompany Account Payable to CMS International Ventures, L.L.C. from CMS
Operating S.R.L. in the amount of $ 4,543,034 as of February 28, 2007.

                                                                  EXECUTION COPY

                   Section 5.6 of the Seller Disclosure Letter
                       Surrender of Intellectual Property

CMS Operating S.R.L.

Trademark renewal application: CMS ENERGY
Class: 39
Owner: CMS OPERATING S.A.
Application number: 2632955
Filing date: 16/11/2005

Application for renewal of registration No. 1584639. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)

Trademark renewal application: CMS ENERGY
Class: 42
Owner: CMS OPERATING S.A.
Application number: 2632956
Filing date: 16/11/2005

Application for renewal of registration No. 1584212. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)

Trademark: CMS ENERGY
Class: 35
Owner: CMS OPERATING S.A.
Application number: 2632957
Filing date: 16/11/2005

Application for renewal of registration No. 1584209. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)

Internet Domain Names: (i) cmsenergy.com.ar; and (ii) cmscomesa.com.ar

<PAGE>

Owner: CMS Operating S.A.
Expiration date: (i) cmsenergy.com.ar: July 4, 2007; and (ii) cmscomesa.com.ar:
July 5, 2007.

CMS Ensenada S.A.

Trademark: LA PLATA COGENERACION CMS ENSENADA S.A.
Class: 40
Owner: CMS ENSENADA S.A.
Registration number: 1.692.127
Filing date: 04/07/1997
Publication date: 20/08/1997
Expiration date: 01/10/2008
Bulletin: 1628

                                                                  EXECUTION COPY

               Section 6.2(a)(iii) of the Seller Disclosure Letter
                                 Indemnification

1. Seller shall indemnify and hold harmless the Buyer for any and all costs,
damages, losses or liabilities (including diminution in value and consequential
damages) arising under or in connection with a final binding decision of a duly
constituted arbitration panel (or such other competent judicial authority) and
arising from claims (whether formal or informal) by Repsol-YPF S.A. made on or
prior to the first anniversary of the Buyer's acquisition of the Equity
Interests relating to CMS Ensenada S.A.'s breach of the Electricity and Steam
Supply Agreement ("ESSA") dated as of August 16, 1995, as amended from time to
time, entered into by and between CMS Ensenada S.A. and Repsol-YPF S.A., due to
the unauthorized change of operator thereunder deemed existing as a consequence
of the transaction contemplated in the Agreement. The Cap Amount shall apply to
any such indemnification obligations of Seller. In any arbitration proceeding
arising as result of such breach under the ESSA, Seller shall be entitled to
control the defense (but not settle without the agreement of the Buyer) of such
claim against Repsol-YPF S.A.. In the event the final arbitration award is in
favor of CMS Ensenada S.A. and entirely disposes of Respsol-YPF S.A.'s claims,
then Buyer shall reimburse Seller's reasonable legal expenses up to an amount of
$200,000 relating to the defense of such claim pursuant to the Agreement, unless
such fees are paid by YPF S.A.. In the event that Buyer submits to Seller for
its approval a tentative settlement with Repsol-YPF S.A., Seller will consider
approval of such settlement in good faith.

2. Seller shall indemnify and hold harmless Buyer from and against any and all
Damages, losses or liabilities incurred by CMS Generation S.R.L. arising out of,
resulting from or incurred in connection with, the Hidroinvest SPA, including
without limitation any result, consequence, obligation, cost, expense, Damage or
loss arising out of any resolution issued by any Governmental Authority in
relation with the Hidroinvest SPA under the Antitrust Law, provided, however,
that Seller shall not be liable for any Tax liabilities arising by virtue of the
transactions consummated pursuant to the Hidroinvest SPA which Buyer has
expressly agreed to assume.

3. Seller shall indemnify and hold harmless Buyer from and against any and all
Damages, losses or liabilities incurred by a Buyer Indemnified Party arising out
of, resulting from or incurred in connection with, any retention letter
delivered by Seller or any of its Affiliates (other than the Entities) to any
Employee, except for any amounts awarded to Viviana Soria in her claim for
retention bonus which shall be indemnified pursuant to item 5 of this Section
6.2(a)(iii).

4. In the event that Buyer is required to fund the benefit plan described under
Section 3.11(e) of this Seller Disclosure Letter for a period preceding the date
hereof, Seller shall be responsible to Buyer for up to $300,000 of such amount
of funding,

5. Seller shall indemnify Buyer from and against any and all Damages, losses or
liabilities arising under or in connection with the claim filed by Viviana Soria
against CMS Operating S.R.L. that is detailed in Section 3.10 of this Seller
Disclosure Letter; provided that Seller must be consulted with regard to and
give its consent to any settlement entered into with Ms. Soria by Operating.

<PAGE>

                                                          Draft - March 10, 2007

                             BUYER DISCLOSURE LETTER
                                  Introduction

Reference is made to the Agreement of Purchase and Sale, dated as of March 12,
2007 (the "Agreement") by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C, a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC, a Michigan limited liability company and New Argentine
Generation Company, L.L.C, a Delaware limited liability company (collectively,
the "Buyer").

Capitalized terms used, but not defined herein, have the respective meanings
given to such terms in the Agreement.

This Buyer Disclosure Letter (the "Buyer Disclosure Letter") sets forth certain
information or agreements intended to be treated as disclosed in the Buyer
Disclosure Letter pursuant to the Agreement.

The contents of this Buyer Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement. This Buyer Disclosure
Letter is not intended to constitute, and shall not be deemed to constitute,
representations and warranties of Buyer except as, and to the extent, provided
in the Agreement. In particular, although this Buyer Disclosure Letter may
contain supplementary information not specifically required under the Agreement,
such supplementary information is provided as general information for the
parties to the Agreement and is not separately represented or warranted by Buyer
herein or in the Agreement. Moreover, the inclusion of any item hereunder shall
not be deemed an admission by Buyer that such item is, or may at anytime be or
have been, material to Buyer, or any of the Entities, or the transactions
contemplated by the Agreement, or result in any determination that any matter
has a Material Adverse Effect, nor shall it be deemed an admission of an
obligation or liability to any third party.

Any matter set forth in the Buyer Disclosure Letter shall be deemed disclosed
with respect to such other sections of the Agreement or the Buyer Disclosure
Letter to which such disclosure on its face would reasonably pertain in light of
the form and substance of the disclosure made. The section and subsection
references set forth in this Disclosure Letter refer to sections or subsections
of the Agreement to which the disclosure set forth in this Buyer Disclosure
Letter is intended to apply. The introductory language and headings in this
Buyer Disclosure Letter are inserted for convenience of reference only and will
not create or be deemed to create a different standard for disclosure than the
language set forth in the Agreement.

The information set forth herein is confidential and is subject to the terms of
the Confidentiality Agreement between the EE Group and CMS Enterprises Company
dated October 23, 2006 to the parties thereto and to the confidentiality
undertaking foreseen in Section 5.13 of the Agreement to the parties thereto.

<PAGE>

                                                          Draft - March 10, 2007

                  Section 1.1(b) of the Buyer Disclosure Letter
                          Persons of Knowledge of Lucid

1. Rai Bhargava, Chairman and CEO

2. Manouch Daneshvar, President, COO and Secretary

     Persons of Knowledge of New Argentina Generation Company LLC

1. Rai Bhargava, Chairman and CEO

2. Manouch Daneshvar, President, COO and Secretary

                                                          Draft - March 10, 2007

                   Section 4.3 of the Buyer Disclosure Letter
                              Consent and Approvals

None.

                                                          Draft - March 10, 2007

                   Section 4.4 of the Buyer Disclosure Letter
                            No conflict or Violation

None.

                                                          Draft - March 10, 2007

                   Section 4.5 of the Buyer Disclosure Letter
                                   Litigation

Noneexv10wxny

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Exhibit 10(n)

FINAL VERSION

SALE PURCHASE OF SHARES AND EQUIPMENT AND

INDEBTEDNESS REPAYMENT AGREEMENT

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

 

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

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

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

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

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

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

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CLAUSE 1

SALE PURCHASE

     Clause
1.1.  Sale Purchase of the Shares.

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

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     Clause
1.2  Closing.

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

CLAUSE 2

REPRESENTATIONS AND WARRANTIES OF THE SELLER

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

     Clause
2.1  Incorporation and Authority; Absence of Conflicts.

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

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     Clause
2.2.  Shares and Capital.

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

     Clause
2.3  Equipment and Indebtedness.

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

     Clause
2.4  Financial Statements.

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

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     Clause
2.5  Conduct of Business and Inexistence of Hidden Liabilities.

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

     Clause
2.6  Taxes.

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

     Clause
2.7  Litigation and Proceedings.

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

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     Clause
2.8  Compliance with the Law.

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

     Clause
2.9  Transactions with Related Parties.

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

     Clause
2.10  Property Title and Absence of Security Interests.

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

     Clause
2.11  Assets Conditions.

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

     Clause
2.12  Contracts.

     Appendix 2.12 contains a complete list of all material contracts entered into by SENECA for
the correct and good operation and conduction of the business of SENECA or with an amount higher
than two hundred fifty thousand Dollars of the United States of America (US$ 250,000) (the
“Important Contracts”). Each of the Important Contracts is in full force and effect, provided that
the Seller has disclosed to the Buyer what is set forth in

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Appendix 4.1 in connection with the possible termination of the reinsurance. SENECA is not in
breach in accordance with the Important Contracts, and the completion of the Transactions will not
result in any breach on the part of SENECA in accordance to the Important Contracts, nor will it
give right to the counterpart for early termination of the same.

     Clause
2.13  Environmental Liability.

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

     Clause
2.14  Absence of Indemnification Obligation to Employees.

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

     Clause
2.15  Complete Disclose.

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

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CLAUSE 3

REPRESENTATIONS AND WARRANTIES OF THE BUYER

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

CLAUSE 4

ADDITIONAL COVENANTS

     Clause
4.1  Activities of SENECA.

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

     Clause
4.2  Access to Information, Transition Committee.

     Between the date of execution of this Agreement and the Closing Date, the Seller shall (a)
provide to the Buyer a copy of the financial statements and operative reports received by the
Seller and related, in each case, with the operation of SENECA, as close as possible to the date
issued, and (b) give

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access to Buyer, during working hours and having received a request, to all the properties,
books and files and administrative personnel of SENECA and to all the information related thereto.
To carry out an organized transmission of the property and management of SENECA, the Seller will
assure that SENECA will cooperate with a transition committee to be designated by the Seller.

     Clause
4.3  Resignations.

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

     Clause
4.4  Distribution.

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

     Clause
4.5  Delivery of Documentation.

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

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     Clause
4.6  Pending Lease Payment.

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

CLAUSE 5

CONDITIONS FOR THE CLOSING

     Clause
5.1  Conditions to the Obligation of the Buyer.

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

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

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	 	  b)	 	No facts or circumstances (including the ones that have arisen during the legal
and financial due diligence carried out by the Buyer in relation to SENECA) shall exist
that have resulted or may reasonably result in a material adverse effect in connection
with the value of the Shares, provided that (i) the Price of the Transactions is based
on the Financial Statements and (ii) the Buyer does not have the intention to challenge
the decisions taken by SENECA prior to the Closing, which have been taken under
reasonable commercial criteria;
	 
	 	  c)	 	No material adverse change shall have occurred in the business, financial
condition or the operations of SENECA; and
	 
	 	  d)	 	The Buyer shall have received the resignations of the Directors that have to
resign in accordance with the provided in the Clause 4.3.

     Clause 5.2 Conditions to the Obligation of the Seller.

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

CLAUSE 6

INDEMNIFICATION

     Clause 6.1 Seller Indemnification.

     The Seller shall protect, defend, indemnify and hold the Buyer and its affiliates (including
to SENECA) and to the relevant representatives, successors and assigns of each one of the above
(jointly referred as, the “Indemnified Parties”) harmless of liability for and against all the
losses, damages, liabilities and claims of any nature such Indemnified Party have

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incurred, endured, suffered, to the extent they arise or are related to any inaccuracy of any
representation made or warranty granted by the Seller in this Agreement, or with the breach of the
Seller to any obligation provided in this Agreement, with the understanding that to enforce this
indemnity, in relation to the representations of the warranties provided for in the Clauses 2.4,
2.5, 2.6, 2.7, 2.8, 2.9, 2.11, 2.12, 2.13, 2.14 and 2.15, the Buyer shall have notified Seller of
the claim within one year from the date of the Closing.

     Clause 6.2 Buyer Indemnification.

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

     Clause 6.3 Notice and Third Party Claims.

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

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CLAUSE 7

GENERAL DISPOSITIONS

     Clause 7.1 Fees and Expenses.

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

     Clause
7.2 Notices.

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

	 	 	 
	If it is to the Buyer:

	 	Petróleos de Venezuela
	 

	 	Av. Libertador, Edif. Petróleos de Venezuela,
	 

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

	 	Venezuela.
	 

	 	Attention: Legal Department
	 

	 	Telephone: +58 (0) 212 708 47 90
	 

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

	 	CMS Energy Corp.
	 

	 	One Energy Plaza
	 

	 	Jackson, Michigan
	 

	 	Attention: General Counsel
	 

	 	Telephone: (517) 788-0550
	 

	 	Fax: (517) 788-1671

     Clause
7.3  Entire Agreement

     This Agreement embodies the entire agreement among the Parties relating to the transactions
contemplated herein. There are no agreements, representations, or warranties among the parties
other than those set forth or provided for herein. This Agreement supersedes any prior agreements,

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understandings, or letters of intent between or among the Parties with respect to the subject
matter of it.

     Clause
7.4  Applicable Law, Special Domicile and Jurisdiction.

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

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

	 	 	 	 	 
	 	CMS ENERGY CORPORATION

 	 
	 	By:  	/s/ Joseph P. Tomasik
 	 
	 	 	Vice President 	 
	 	 	 	 
	 
	 	PETRÓLEOS DE VENEZUELA, S.A.

 	 
	 	By:  	/s/ Rafael Ramirez
 	 
	 	 	 	 
	 	 	 	 
	 

-15-

Table of Contents

Annex A

Indebtedness

SENECA Accounts Payable (Positive Balance) and Accounts Receivable (Negative Balance): CMS de Venezuela

Summary

In Venezuelan Bolivars

As of February 28, 2007

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2000	 	2001	 	2002	 	2003	 	2004	 	2005	 	2006	 	Total
	Fees
-Services
- Income
	 	 	2.346.630.597,34	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.346.630.597,34	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fees
Expense
	 	 	 	 	 	 	 	 	 	 	(8.031.568,93	)	 	 	 	 	 	 	(4.002.009,60	)	 	 	(40.118,485,00	)	 	 	(61.344.825,50	)	 	 	(113.496.889,03	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Business Assets
Tax
	 	 	 	 	 	 	 	 	 	 	(57.034.228,94	)	 	 	(8.147.747 0	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(65.181.965,92	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax
	 	 	 	 	 	 	26.239.488,92	 	 	 	(246.112.355,89	)	 	 	(94.910.319,81	)	 	 	 	 	 	 	 	 	 	 	(1.157.375.613,00	)	 	 	(1.472.158.799,78	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sale of Fiscal
Credits
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(1.283.129.991,00	)	 	 	(1.283.129.991,00	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Travel
Expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(228.748,80	)	 	 	 	 	 	 	 	 	 	 	(228.748,80	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equipment
Leasing
	 	 	1.609.992.000,00	 	 	 	115.271.061,12	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1.725.263.061,12	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Debt
Capitalization
	 	 	 	 	 	 	(382.076.335,42	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(382.076.335,42	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Amounts
charged to
Account
	 	 	 	 	 	 	 	 	 	 	(346.838.516,85	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(346.838.516,85	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2000	 	2001	 	2002	 	2003	 	2004	 	2005	 	2006	 	Total
	Other debts
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	56,68	 	 	 	 	 	 	 	56,68	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Balance
	 	 	3.956.622.597,34	 	 	 	(240.565.785,38	)	 	 	(658.016.670,61	)	 	 	(103.058.066,79	)	 	 	(4.230.758,40	)	 	 	(40.118.428,32	)	 	 	(2.501.850.429,50	)	 	 	408.782.458,34	 

SENECA Accounts Receivable (Positive Balance) and Accounts Payable (Negative Balance): Enelmar

Summary

In US Dollars

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2000	 	2001	 	2002	 	2003	 	2004	 	2005	 	2006	 	2007 *	 	Total
	Fees-Services
	 	 	12.982,11	 	 	 	7.092,00	 	 	 	1.200,00	 	 	 	725,00	 	 	 	3.376,56	 	 	 	3.220,41	 	 	 	11.178.41	 	 	 	 	 	 	 	39.774,49	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Business Assets
Tax
	 	 	 	 	 	 	 	 	 	 	2.146,46	 	 	 	488,37	 	 	 	134,95	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.769,78	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	12.310,99	 	 	 	138.302.48	 	 	 	 	 	 	 	 	 	 	 	150.613.47	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Other expenses
(mail
- miscellaneous
services
- miscellaneous
expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(18.492,86	)	 	 	16,16	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(18.476,70	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enelmar 1%
Capitalization
Rate
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	188.077,43	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	188.077,43	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjustments
Commissions
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(13.842,18	)	 	 	(9.950,94	)	 	 	 	 	 	 	3.954,86	 	 	 	(19.838,27	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payment on
Account
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(102.378,30	)	 	 	 	 	 	 	 	 	 	 	(102.378,30	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Travel Expenses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	56,82	 	 	 	 	 	 	 	 	 	 	 	56,82	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Balance
	 	 	12.982,11	 	 	 	7.092,00	 	 	 	3.346,46	 	 	 	(17.279,49	)	 	 	190.003,91	 	 	 	29.250,47	 	 	 	11.178,41	 	 	 	3.954,86	 	 	 	240.528,73	 

 

			
	*	 	As of February 28, 2007

 

Table of Contents

SENECA Accounts Payable (Positive Balance) and Accounts Receivable (Negative Balance): CMS Electric & Gas.

Summary

In US Dollars

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2000	 	2001	 	2002	 	2003	 	2004	 	2005	 	2006	 	2007 *	 	Total
	Fees-Services
	 	 	1.104.193,14	 	 	 	139.223,95	 	 	 	618,25	 	 	 	4.223,33	 	 	 	7.420,68	 	 	 	44.712;49	 	 	 	30.057,81	 	 	 	5.144,20	 	 	 	1.335.593,85	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Travel Expenses
	 	 	56.689,99	 	 	 	5.700,43	 	 	 	9.181,43	 	 	 	 	 	 	 	16.967,52	 	 	 	6.704,66	 	 	 	6.751,81	 	 	 	(1,836.07	)	 	 	100.159,77	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equipment —
Materials for
Luisa Caceres de
Arismendi Plant
(PLCA)
	 	 	934.301,40	 	 	 	134.089,95	 	 	 	9.742,82	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1.078.134,17	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Caterpillar (CAT)
Units
	 	 	2.382.967,72	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2.382.967,72	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EDEERSA Open
SGC Start-up
Assistance
	 	 	246.676,24	 	 	 	63.550,91	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	310.227,15	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equipments IT
&T, Software and
Communications
	 	 	128.822,33	 	 	 	72.495,21	 	 	 	13.788,25	 	 	 	 	 	 	 	2900,8	 	 	 	16.677,45	 	 	 	16243,88	 	 	 	4.157,59	 	 	 	252.075,51	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Furniture and
Equipment, Head
Office
	 	 	162.820,83	 	 	 	53.843,45	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	216.664,28	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance
expenses
	 	 	 	 	 	 	692.931,52	 	 	 	653.442,67	 	 	 	 	 	 	 	19.364,18	 	 	 	14.416,15	 	 	 	15.575,30	 	 	 	2.474,39	 	 	 	1.398.204,21	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2000	 	2001	 	2002	 	2003	 	2004	 	2005	 	2006	 	2007 *	 	Total
	Other expenses
(mail
- miscellaneous
services-
miscellaneous
expenses
	 	 	138.327,29	 	 	 	20.898,11	 	 	 	3.461,47	 	 	 	 	 	 	 	833,44	 	 	 	487,30	 	 	 	 	 	 	 	 	 	 	 	164.007,61	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Debt Negotiation
	 	 	 	 	 	 	 	 	 	 	(3.333.245,68	)	 	 	(501.139,16	)	 	 	 	 	 	 	(796.742,00	)	 	 	 	 	 	 	 	 	 	 	(4.631.126,84	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Adjustments
	 	 	 	 	 	 	 	 	 	 	(18.483,41	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(18.483,41	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Balance
	 	 	5.151.798,94	 	 	 	1.182.733,53	 	 	 	(2.661.504,20	)	 	 	(496.915,83	)	 	 	47.486,62	 	 	 	(713.743,95	)	 	 	68.628,80	 	 	 	9.940,11	 	 	 	2.588.424,02	 

 

			
	*	 	As of February 28 2007

 

Table of Contents

Annex “B”

EQUIPMENT DESCRIPTION

Two (2) General Electric Alstrom Frame 6561B gas generating turbines installed at the plant named
Luisa Caseres de Arismendi located in Sector Macho Muerto, Margarita Island Bolivarian Republic of
Venezuela and having the following serial numbers: Unit 1-832 and Unit 2-837, with their
respective step-up transformers.

Generating Units:

Brand: 2 General Electric Alstrom Frame 6561B gas generating turbines. 38,300 kilowatts each:

Model Number: PG6561B

Serial Numbers: 832 and 837

Turbine Type: Gas generating turbines (diesel)

Use: Generate electrical power

Valor estimado: US$11.507.500,00 each

Quality: GE Standard

Condition: Used

Identification: Known in plant as TG-10 and TG-11

Manufacturing Characteristics: Metal Finishing

Present State/Condition: Unit TG-10 has accumulated 54,000 operating hours and Unit TG-11 has
accumulated 50,000 operating hours.

Step-up Transformers:

Brand: Koncar Power

Serial numbers: 307040 y 307041

Power: 30 / 50 MVA

Transformer Ratio: 13.8 / 115 kV

Cooling: OA / FA

Identification: known in Plant as TR-10 and TR-11

 

 

SENECA — Sistema Electrico del Estado Nueva Esparta, C.A.

Independent Auditors’ Report

Financial Statements

For the years ended December 31, 2006 and 2005

SENECA — SISTEMA ELECTRICO DEL ESTADO NUEVA ESPARTA, C.A.

TABLE OF CONTENTS

	 	 	 
	 	 	Pages
	 
	 	 
	INDEPENDENT AUDITORS’ REPORT
	 	1-2
	FINANCIAL STATEMENTS STATED IN CONSTANT BOLIVARS FOR
THE YEARS ENDED DECEMBER 31, 2006 AND 2005:
	 	 
	 
	 	 
	Balance sheets
	 	3
	 
	 	 
	Statements of operations
	 	4
	 
	 	 
	Statements of changes in stockholders’equity
	 	5
	 
	 	 
	Statements of cash flows
	 	6
	 
	 	 
	Notes to the financial statements
	 	7-26

Deloitte Lara Marambio & Asociados

Torre Corp Banca, Piso 21, Av. Blandfn, La Castellana Caracas 1060 — Venezuela 2

Tel:
(58-212)206 85 03 Fax: (58-212) 206 88 70 www.deloitte.com/ve

INDEPENDENT AUDITORS’ REPORT

To the Stockholders and Board of Directors of

SENECA — Sistema Electrico del Estado Nueva Esparta, C.A.

We have audited the accompanying balance sheets of SENECA — Sistema EI6ctrico del Estado Nueva
Esparta, C.A. as of December 31, 2006 and 2005, and the related statements of operations, changes
in stockholders’ equity, and cash flows for the years then ended, stated in constant bolivars.
These financial statements have been prepared by and are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted in Venezuela.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes . assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 23 to the financial statements, on February 13,2007 the Company’s main
stockholder signed a memorandum of understanding with Petr61eos de Venezuela, S.A. (PDVSA), which
establishes the bases of negotiation for the sale of its equity participation in the Company.

In our opinion, such financial statements present fairly, in all material respects, the financial
position of SENECA — Sistema Eltctrico del Estado Nueva Esparta, C.A. as of December 31,2006 and
2005, and the results of its operations and its cash flows for the years then ended in conformity
with accounting principles generally accepted in Venezuela.

 

Table of Contents

As indicated in Note 20 to the financial statements, from January 21, 2003, the Venezuelan
Government and die Central Bank of Venezuela agreed to temporarily suspend the trading of foreign
currencies in the country. In connection therewith, they have entered into some Exchange Agreements
and issued certain related standards that rule the Foreign Currency Management Regime and establish
the exchange rate applicable to transactions set forth in such agreements. The Company has taken
proceeds with die corresponding institutions to obtain the foreign currencies required for the
payment of its foreign currency liabilities, and presents a foreign currency asset and liability
position as of December 31, 2006 and 2005 as indicated in Note 20 to the financial statements. To
the date of this report, the acquisition of foreign currencies necessary for foreign transactions
carried out by the Company in the normal course of operations, will be dependent upon: (1) the
approval of all the registrations requested by the related institutions; (2) the availability of
foreign currencies to be established in the application of the standards referred to above; and (3)
the actions to be performed by the Company to obtain either the required foreign currencies not
requested with the related institutions, of those requests that could be rejected by such
institutions; therefore, we do not have sufficient facts in order to determine the effects, if any,
on the financial statements as of December 31,2006.

The translation of the financial statements into English has been made solely for the convenience
of English-speaking readers.

LARA MARAMBIO & ASOCIADOS

Adriana Blanco E.

Public Accountant CPCN° 5416

Caracas — Venezuela, January 20,2007, except for the matter mentioned in Note 23
to the Financial Statements, as to which the date is February 13, 2007

2

Table of Contents

SENECA — SISTEMA ELECTRICO DEL ESTADO NUEVA ESPARTA, C.A.

BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005

IN CONSTANT BOLIVARS AS OF DECEMBER 31, 2006

(In thousands of bolivars)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NOTES	 	2006	 	2005
	 	 	 
	ASSET
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CURRENT ASSETS:
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash and equivalents
	 	1, 2 and 20	 	 	37,554,635	 	 	 	28,155,419	 
	Accounts receivable, net
	 	3 and 20	 	 	34,971,793	 	 	 	34,683,575	 
	Inventories, net
	 	1 and 4	 	 	4,469,046	 	 	 	3,409,775	 
	Prepaid expenses and other current assets
	 	5 and 20	 	 	5,124,620	 	 	 	6,869,076	 
	 	 	 	 	 	 	 
	Total current assets
	 	 	 	 	 	 	82,120,094	 	 	 	73,117345	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LONG-TERM ACCOUNTS RECEIVABLE
	 	 	13	 	 	 	508,633	 	 	 	566,818	 
	PROPERTY, PLANT AND EQUIPMENT, NET
	 	1 and 6	 	 	330,181,660	 	 	 	337,451,773	 
	DEFERRED CHARGES AND OTHER ASSETS, NET
	 	1 and 7	 	 	1,015,728	 	 	 	194,720	 
	 	 	 	 	 	 	 
	TOTAL
	 	 	 	 	 	 	413,826,115	 	 	 	411,331,156	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LIABILITIES
AND STOCKHOLDERS’ EQUITY
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CURRENT LIABILITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Trade accounts payable
	 	17,18,19 and 21	 	 	31,056,958	 	 	 	7,838,821	 
	Accounts payable to related companies
	 	13 and 20	 	 	1,967,804	 	 	 	4,612,960	 
	Accrued liabilities
	 	 	9	 	 	 	11,348,238	 	 	 	12,154,695	 
	Other accounts payable
	 	 	 	 	 	 	851,717	 	 	 	490,189	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total current liabilities
	 	 	 	 	 	 	45,224,717	 	 	 	25,096,665	 
	LONG-TERM LIABILITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable to stockholder and related companies
	 	13 and 20	 	 	5,952,523	 	 	 	9,716,176	 
	Accrual for severance benefits
	 	 	1	 	 	 	4,444,822	 	 	 	4,294,715	 
	Accrual for pension plan
	 	1 and 8	 	 	5,745,867	 	 	 	477,725	 
	Accrual for contingencies
	 	1 and 22	 	 	858,252	 	 	 	824,676	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total long-term liabilities
	 	 	 	 	 	 	17,001,464	 	 	 	19,213,292	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total liabilities
	 	 	 	 	 	 	62,226,181	 	 	 	44,309,957	 
	 	 	 	 	 	 	 
	STOCKHOLDERS’ EQUITY:
	 	 		 	 	 		 	 	 		 
	Restated capital stock (equivalent to nominal capital
stock of Bs. 127,457,58)
	 	 	14	 	 	 	361,894,743	 	 	 	361,894,743	 
	Stockholders’ contribution to be
capitalized
	 	 	 	 	 	 	2,989,215	 	 	 	264,693	 
	Legal reserve
	 	 	 	 	 	 	264,693		 	 	4,861,763	 
	Accumulated surplus
	 	 	 	 	 	 	(13,548,717	)	 	 		 
	Total stockholders’ equity
	 	 	 	 	 	 	351,599,934	 	 	 	367,021,199	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	 	 	 	 	413,826,115	 	 	 	411,331,156	 
	 	 	 	 	 	 	 

See notes to the financial statements

3

Table of Contents

SENECA — SISTEMA ELECTRICO DEL ESTADO NUEVA ESPARTA, C.A.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

IN CONSTANT BOLIVARS AS OF DECEMBER 31, 2006

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NOTES	 	2006	 	2005
	 	 	 
	OPERATING REVENUES
	 	 	1	 	 	 	104,288,054	 	 	 	129,689,673	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	PURCHASES OF ENERGY AND DIESEL
	 	18 and 19	 	 	40,063,101	 	 	 	39,692,258	 
	 	 	 	 	 	 	 
	GROSS MARGIN
	 	 	 	 	 	 	64,224,953	 	 	 	89,997,415	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	OPERATING COSTS:
	 	 	 	 	 	 	 	 	 	 	 	 
	Operating and maintenance expenses
	 	 	 	 	 	 	50,201,015	 	 	 	56344,865	 
	Administrative expenses
	 	 	 	 	 	 	13,757,092	 	 	 	14,564,153	 
	Commercialization expenses
	 	 	 	 	 	 	14,101,231	 	 	 	17,285,050	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	78,059,38	 	 	 	88,194,068	 
	 	 	 	 	 	 	 
	OPERATING (LOSS) INCOME
	 	 	16	 	 	 	(13,834,385	)	 	 	1,803347	 
	 
	OTHER INCOME AND EXPENSES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Loss from disposal of property, plant and equipment
	 	 	13	 	 	 	(561,135	)	 	 	(666,033	)
	Gam on debt Structuring 
	 	 	7	 	 	 	924,136	 	 	 	1,930,871	 
	 	 	 	 	 	 	 
	Reversal of provisions for
net realizable value of other assets
	 	 	 	 	 	 	363,001	 	 	 	1,264,838	 
	COMPREHENSIVE FINANCING COST:
	 	 	 	 	 	 
	Monetary result for the period 
	 	1 and 15	 	 	(4,016,881	)	 	 	(2,942,910	)
	Loss from sale of
investment securities
	 	 	2	 	 	 	(5,430	)	 	 	(160,671	)
	Exchange loss, net
	 	 	1	 	 	 	2,658,507	 	 	 	(765,610	)
	Financial income, net
	 	 	 	 	 	 	(1,363,804	)	 	 	1,425,126	 
	 
	 	 	 	 	 	 	 	 	 	 	(2,444,065	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	(LOSS) INCOME BEFORE INCOME TAXES
	 	 	 	 	 	 	(14,835,188	)	 	 	624,120	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	INCOME TAXES
	 	1 and 12	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	NET (LOSS) INCOME
	 	 	 	 	 	 	(14,835,188	)	 	 	624,120	 
	 	 	 	 	 	 	 

See notes to the financial statements

4

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SENECA — SISTEMA ELECTRICO DEL
ESTADO NUEVA ESPARTA, C.A.

STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

IN CONSTANT BOLIVARS AS OF DECEMBER 31, 2006 

(In thousands of bolivars)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Restated	 	Stockholder’s	 	 	 	 	 	 	 	 	 	Accumulated	 	Total
	 	 	 	 	 	 	Capital	 	contribution to	 	Legal	 	Special	 	surplus	 	stockholders’
	 	 	NOTES	 	stock	 	be capitalized	 	reserve	 	reserve	 	(deficit)	 	equity
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BALANCES AS OF
DECEMBER 31, 2004
	 	 	 	 	 	 	361,894,743	 	 	 	—	 	 	 	233,487	 	 	 	—	 	 	 	4,268,849	 	 	 	366,397,079	 
	Net income
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	624,120	 	 	 	624,120	 
	Provision for legal reserve
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	31,206	 	 	 	— 	 	 	 	(31,206	)	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BALANCES AS OF
DECEMBER 31, 2005
	 	 	 	 	 	 	361,894,743	 	 	 	—	 	 	 	264,693	 	 	 	—	 	 	 	4,861,763	 	 	 	367,021,199	 
	Dividends declared
	 	 	14	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(3,575,292	)	 	 	(3,575,292	)
	Stockholder’s contribution to
be capitalized
	 	 	14	 	 	 	—	 	 	 	2,989,215	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,929,215	 
	Net loss
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(14,835,188	)	 	 	(14,835,188	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BALANCES AS OF DECEMBER 31, 2006
	 	 	 	 	 	 	361,894,743	 	 	 	2,989,215	 	 	 	264,693	 	 	 	—	 	 	 	(13,548,717	)	 	 	351,599,934	 

See notes to the financial statements

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SENECA — SISTEMA ELECTRICO DEL ESTADO NUEVA ESPARTA, C.A.

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2006 AND 2005

IN CONSTANT BOLIVARS AS OF
DECEMBER 31, 2006

(In thousadsof bolivars)

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	NOTES	 	2006	 	2005
	 	 	 
	OPERATING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Net (loss) income
	 	1 and 15	 	 	(14,835,188	)	 	 	624,120	 
	Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Comprehensive financing cost-Exchange loss, net
	 	 	 	 	 	 	5,430	 	 	 	765,610	 
	Monetary result for the period
	 	 	 	 	 	 	4,016,881	 	 	 	2,942,910	 
	Depreciation
	 	 	 	 	 	 	20,771,105	 	 	 	20322,112	 
	Accrual for severance benefits
	 	 	 	 	 	 	1,774,630	 	 	 	1*492,957	 
	Allowance for doubtful accounts
	 	 	 	 	 	 	683,779	 	 	 	2316,674	 
	Reversal of provision for realizable value of other asset:
	 	 	 	 	 	 	(924,136	)	 	 	116,820	 
	Allowance for obsolescence
	 	 	 	 	 	 	10091	 	 	 	(4320,178	)
	Changes in operating assets and
liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 
	Decrease (increase) in:
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts receivable
	 	 	 	 	 	 	(6,498,097	)	 	 	(8,090382	)
	Inventories
	 	 	 	 	 	 	(1,791,155	)	 	 	(1342,154	)
	Prepaid expenses
	 	 	 	 	 	 	814,043	 	 	 	(3,948,140	)
	Increase (decrease) in:
	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable
	 	 	 	 	 	 	22355,859	 	 	 	(265378	)
	Accrued liabilities
	 	 	 	 	 	 	1,040.959	 	 	 	2,001338	 
	Accrual for pension plan
	 	 	 	 	 	 	2,179,767	 	 	 	(297,952	)
	Accrual for contingencies
	 	 	 	 	 	 	166,706	 	 	 	(176,639	)
	Severance benefits paid
	 	 	 	 	 	 	(933,396	)	 	 	 	 
	 	 	 
	Net cash provided by operating activities
	 	 	 	 	 	 	28,836,178	 	 	 	11,941,718	 
	 	 	 
	INVESTING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Purchases of property, plant and equipment
	 	 	 	 	 	 	(12,878,102	)	 	 	(11,120,198	)
	 	 	 
	Net cash used in investing activities
	 	 	 	 	 	 	(12,878,102	)	 	 	(11,120,198	)
	 	 	 
	FINANCING ACTIVITIES:
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash dividends
	 	 	14	 	 	 	(586,077	)	 	 	 	 
	 	 	 
	Net cash used in financing activities
	 	 	 	 	 	 	(586,077	)	 	 	 	 
	 	 	 
	NET INCREASE IN CASH AND CASH
EQUIVALENTS
	 	 	 	 	 	 	15,371,999	 	 	 	821320	 
	CASH PURCHASING POWER LOSS
	 	 	 	 	 	 	(5,972,783	)	 	 	(3,545,368	)
	CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR
	 	 	 	 	 	 	28,155,419	 	 	 	30,879367	 
	 	 	 
	CASH AND CASH EQUIVALENTS AT THE END OF YEAR
	 	 	 	 	 	 	37,554,635	 	 	 	28,155,419	 
	 	 	 
	MONETARY RESULT FOR THE PERIOD
	 	 	14	 	 	 	1,955,900	 	 	 	602,458	 
	CORRESPONDING TO:
	 	 	 	 	 	 	 	 	 	 	 	 
	Operations
	 	 	 	 	 	 	(5,972,781	)	 	 	(3,545368	)
	Cash
	 	 	 	 	 	 	(4,016,881	)	 	 	(2,942,910	)
	INFORMATION ON TRANSACTIONS NOT GENERATING CASH FLOWS:
	 	 	 	 	 	 	 	 	 	 	 	 
	Stockholder’s contribution to be capitalized
	 	 	 	 	 	 	2,989^15	 	 	 	 	 

See notes to the financial statements

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SENECA — SISTEMA ELECTRICO DEL ESTADO NUEVA ESPARTA, CA.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

(In thousands of constant bolivars)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Company was incorporated on February 26, 1998 and is mainly engaged in the generation,
non-trunk transmission, distribution and commercialization of electric energy in Nueva Esparta
state and its interconnection with the National Electric System

On June 3,1998, the National Government issued Decree N° 2552 granting SENECA Sistema Eletrico del
Estado Nueva Esparta, C.A., a concession for the exclusive rights to render public electric
services in Nueva Esparta State (See Notes 10 and 17).

Significant
accounting policies —The main accounting policies used by the Company for the
preparation of its financial statements are summarized as follows:

	 	a.	 	Financial statements in constant bolivars — The financial statements are presented in
constant bolivars, for the purpose of eliminating the distortion generated by changes in
the price levels in the Venezuelan economy. The General Price Level Method (G.P.L.) was
used to prepare the financial statements in constant bolivars. This method consists in
substituting the measurement unit used in traditional accounting for a constant currency,
restated at the date of the financial statements. For restating purposes, the “Consumer
Price Index” (C.P.I.) for the metropolitan area of Caracas was used, which is issued by the
Central Bank of Venezuela.

Monetary items included in the balance sheet are presented at nominal value, since they reflect the
purchasing power of the monetary unit to the date of the last balance sheet. Nonmonetary items such
as inventories, deferred charges, and other assets, property, plant and equipment, capital stock
and other income accounts related to nonmonetary items such as depreciations and amortizations are
stated in constant bolivars using the ^ factor from the date of acquisition or origin. Operating
revenues, costs and expenses and other monetary items are stated in constant bolivars, based on the
average inflation factor for the year. The monetary result for the year is calculated applying
during the period die inflation rates to net monetaiy assets and liabilities. This represents the
result from exposure to inflation for holding net monetary assets or liabilities during
inflationary periods (See Note 15).

The 2005 financial statements, previously presented in constant bolivars at that date, are
presented for comparison purposes in constant bolivars as of December 31,2006 through the
application of the annual variation in the Consumer Price Index (C.P.I.).

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The Consumer Price Indexes at the beginning, end and average for the years ended December 31 are as
follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 
	 	 	 	 	 	 	 	 
	At the beginning of year
	 	 	525.65	 	 	 	459.65	 
	At the end of year
	 	 	614.83	 	 	 	525.65	 
	Average for the year
	 	 	565.01	 	 	 	497.13	 
	Inflation for the year
	 	 	16.97	%	 	 	14.36	%

b. Cash equivalents — Cash equivalents include investments in time deposits, maturing in three
months or less and National Public Debt Bonds with agreed-upon terms generally under 30 days (See
Note 2).

c. Allowance far doubtful accounts — Allowance for doubtful accounts is determined by management
based on the estimated amount of doubtful accounts over the basis of specific balances and prior
year experience, considering both official and private entities (See Note 3).

d. Inventories — Inventories are accounted for at cost adjusted for inflation, determined under the
average cost method, which does not exceed their recovery value (See Note 4).

e. Property, plant and equipment — Property, plant and equipment included as assets during the
shares transfer process, are presented at acquisition cost determined by appraisals made by
independent appraisers at acquisition date and restated through the application of the
corresponding CPI. Property, plant and equipment subsequently acquired are presented at acquisition
cost adjusted for inflation. Disbursements for maintenance and repairs are charged to income for
the year as incurred, while disbursements for renewals or improvements are capitalized.
Depreciation is calculated using the straight-line method based on the original estimated useful
lives of the assets, as follows (See Note 6):

	 	 	 	 	 
	 	 	Years
	Transmission system

	 	 	7-36	 
	Diesel plant

	 	 	15-30	 
	Distribution system

	 	 	10-25	 
	Metering equipment

	 	 	15-25	 
	Computers and software

	 	 	2-10	 
	Coche plants

	 	 	15-30	 
	Vehicles and trucks

	 	 	5-15	 
	Buildings

	 	 	5-20	 
	Flow Meter

	 	 	5-25	 
	Communication equipment

	 	 	5-15	 
	Office furniture and equipment

	 	 	12	 

The Company includes within property, plant and equipment* inventories of spare parts that will be
used for maintenance or improvement of property, plant and equipment, based on International
Accounting Standard (IAS) 16 Property, plant and equipment.

Constructions in progress include the costs of on-going projects and are depreciated upon beginning
of operations

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f. Deferred charges — Deferred charges mainly correspond to organization and restructuring
expenses, which are amortized over five (5) years or less using the straight-line method and are
restated for inflation considering its original acquisition date (See Note 7).

g. Accrual for severance benefits — Accrual for severance benefits comprises all the liabilities
related to the workers’ vested rights in accordance with the Labor Law and the collective
bargaining agreement.

Additionally, the Company maintains an accrual based on experience to cover this liability set
forth in the current legislation with respect to the employees* stability.

h. Income
taxes—The provision for income taxes represents the sum of the estimated current income
tax payable and deferred income taxes, if significant.

Current income taxes are determined by applying the tax rates as established by the current tax
legislation to net taxable income for the period. Deferred income taxes have been determined in
accordance with Statement of Accounting Principles N° 3 (DPC-3
Accounting for income taxes —
Revised August 2003). In accordance with said statement, deferred tax assets and liabilities should
be recognized, corresponding to the amount of income taxes expected to be recovered or payable on
temporary differences between reported book values of assets and liabilities and their
corresponding tax bases.

Deferred tax assets and liabilities are determined by applying the tax rates established or decreed
under current tax law at the balance sheet date.

The recording of the deferred income tax is subjected to the assurance, beyond a reasonable doubt,
of its realization. Considering current conditions, the Company has not recorded the asset
resulting from deferring the tax effect on the aforementioned temporary differences.

The investment tax credit resulting from investments in property, plant and equipment is treated as
a reduction of the provision for current income taxes (See Note 12).

i. Accrualfor pension plan and other post-retirement benefits — The non-contributory pension plan
and other post-retirement benefits (medical benefit insurance and electric subsidy) are accumulated
in accordance with estimates made by independent actuaries and based on the technical discount rate
used to calculate the obligation for the projected benefit (See Note 8).

j. Accrual for contingencies — Contingencies are situations at each period closing that might
result in a loss for the Company, and the realization of which depends oh the potential occurrence
or non-occurrence of one or more future events. Review of contingent liabilities and creation of
corresponding accruals is the responsibility of the Company’s management, based on the opinion of
its legal counsel and available judgment elements (See Note 22).

k. Fair value of financial instruments — The carrying amount reported on the balance sheets for
cash and cash equivalents, accounts receivable and payable, accruals and other short-term
liabilities approximate their fair values due to the short-term maturity of these financial
instruments. Consequently, these items have been excluded from the disclosure of fair value in the
notes to these financial statements.

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l. Transactions in foreign currency — Transactions in foreign currency are recorded in bolivars
using the exchange rates applicable on the transaction date/Balances in foreign currency are
presented in bolivars and adjusted at the year-end exchange rate. The resulting exchange
differences are recorded in die statement of operations (See Note 20).

m. Revenue recognition — Revenues from energy services are recognized on a cumulative basis in the
period earned. At each month-end, Company’s management estimates and records the unbilled energy
effectively distributed to its subscribers. As of December 31,2006 and 2005, accounts receivable
include Bs. 5,960,304 thousand and Bs. 5,990,906 thousand, respectively, from earned but unbilled
revenues. Once approved, decreases in the price of diesel foel granted by the Ministry of Energy
and Petroleum (MENPET) are recorded as income in their corresponding period and presented as
operating income in the statement of operations (See Note 16).

n. Use ofestimates in the preparation ofthefinancial statements — The preparation of financial
statements in conformity with accounting principles generally accepted in Venezuela requires
management to make estimates and assumptions that affect die reported amounts of assets and
liabilities, their disclosure and the reported amounts of revenues and expenses. Final results
could differ from those estimates.

o. Reclassifications — Certain items of the financial statements as of December 31,2005 have
been reclassified to conform to the 2006 presentation.

Previously reported Reclassification Restructured

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Property, plant and equipment, net
	 	 	315,696,835	 	 	 	21,754,938	 	 	 	337,451,773	 
	Inventories, net
	 	 	25,164,713	 	 	 	(21,754,938	)	 	 	3,409,775	 

For the purpose of complying with International Accounting Standard N° 16, Company’s management has
decided to include inventories of spare parts in Property, plant and equipment, by considering
these are fixed asset components which will only be used for maintenance or improvement of
Property, plant and equipment.

2. CASH AND EQUIVALENTS

As of December 31, cash and equivalents are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 	 	 
	Cash and banks
	 	 	1,650,750	 	 	 	3,702,455	 
	 
	 	 	 	 	 	 	 	 
	Placements:
	 	 	 	 	 	 	 	 
	Time deposits
	 	 	15,016,000	 	 	 	13,690,898	 
	National Public Debt Bonds (DPN)
	 	 	20,887,885	 	 	 	10,762,066	 
	 	 	 
	 
	 	 	37,554,635	 	 	 	28,155,419	 
	 	 	 

Placements in time deposits are due in 90 days or less with annual interests at current market
rates ranging between 5.50% and 10%, and 6.5 and 12% for the years 2006 and 2005, respectively.
National Public Debt Bonds placements are due in 90 days or less, with annual interests ranging
between 3.30% and 7.25%, and 3.5% and 10.5% for 2006 and 2005, respectively

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During 2005, the Company purchased National Public Debt Bonds (PDB), which were exchanged by
securities denominated in foreign currency and later traded on the secondary market. As a result of
these transactions, losses were generated, which amounted to Bs. 160,671 thousand in 2005, included
in the statements of operations as comprehensive financing cost.

3. ACCOUNTS RECEIVABLE, NET

As of December 31, accounts receivable, net are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 	 	 
	Accounts receivable from customers, net
	 	 	34,838,892	 	 	 	34,560,287	 
	 
	 	 	 	 	 	 	 	 
	Other
	 	 	132,901	 	 	 	123,288	 
	 	 	 
	 
	 	 	34,971,793	 	 	 	34,683,575	 
	 	 	 

As of December 31,2006 and 2005, accounts receivable from customers include Bs. 22,469,081 thousand
and Bs. 23,106,256 thousand, respectively, corresponding to accounts receivable from government
entities, which are mostly over 360 days (Note 21). The Company reviews pending balances on a
regular basis in order to update debts with these entities and take proceeds for their collection.

Management considers that all receivable balances from official entities will be fully recovered
since they are guaranteed by the Venezuelan Government.

During 2006, the Company collected for street lighting and electric power supply Bs. 1,089,319
thousand and Bs. 974,933 thousand from Macanao and Tubores Municipalities, respectively.

During 2005, the Company collected Bs. 1,225,515 thousand for street lighting and electric power
supply from Antolfn del Campo Municipality and Bs 1,848,127 thousand from Antonio Diaz
Municipality.

As of December 31, 2006 and 2005, allowance for doubtful accounts amounts to Bs. 8,707,081 thousand
and Bs. 9,907,542 thousand, respectively. Likewise, write-offs to accounts receivable amounted to
Bs. 395,764 thousand and Bs. 1,006,363 thousand for 2005.

INVENTORIES, NET

As of December 31, inventories, net are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 	 	 
	Materials and spare parts for distribution
	 	 	3,556,113	 	 	 	2,233,619	 
	 
	 	 	 	 	 	 	 	 
	Fuels
	 	 	447,959	 	 	 	670,612	 
	Other
	 	 	543,390	 	 	 	544,560	 
	Materials and spare parts for transmission
	 	 	578,398	 	 	 	508,806	 
	 	 	 
	 
	 	 	5,125,860	 	 	 	3,957,597	 
	Less — allowance for obsolescence
	 	 	(656,814	)	 	 	(547,822	)
	 	 	 
	 
	 	 	4,469,046	 	 	 	3,409,775	 
	 	 	 

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5. PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of December 31, prepaid expenses and other current assets are as follows:

	 	 	 	 	 
	2006	 	2005
	 
	1,982,960
	 	 	4,988,076	 
	1,940,925
	 	 	32,020	 
	451,840
	 	 	135,094	 
	543,765
	 	 	1,506,030	 
	205,130
	 	 	207,856	 
	 
	5,124,620
	 	 	6,869,076	 
	 

Guarantee deposits (Note 13)

Prepaid insurance

Advances to suppliers

Prepaid taxes

Other

6. PROPERTY, PLANT AND EQUIPMENT, NET

As of December 31, property, plant and equipment, net are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 
	 	 	 	 	 	 	 	 
	Transmission system
	 	 	121,664,667	 	 	 	121,248,597	 
	Diesel plants
	 	 	122,168,291	 	 	 	121,930,731	 
	Distribution system
	 	 	96,593,015	 	 	 	93,169,888	 
	Metering equipment
	 	 	51,577,367	 	 	 	47,526,098	 
	Computers and software
	 	 	20,785,462	 	 	 	20,456,639	 
	Coche plants
	 	 	5,726,736	 	 	 	5,681,761	 
	Vehicles and trucks
	 	 	5,145,670	 	 	 	4,935,336	 
	Buildings
	 	 	8,997,324	 	 	 	8,737,055	 
	Flow meters
	 	 	1,655,010	 	 	 	1,655,010	 
	Communication equipment
	 	 	2,586,234	 	 	 	2,582,129	 
	Furniture and office equipment
	 	 	2,155,184	 	 	 	1,998,524	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	439,054,960	 	 	 	429,921,768	 
	Less- accumulated depreciation
	 	 	(142,790,345	)	 	 	(122,423,560	)
	 
	 	 	 	 	 	 	 	 
	 
	 	 	296,264,615	 	 	 	307,498,208	 
	Land
	 	 	2,903,232	 	 	 	2,928,995	 
	Materials and spare parts for generation
	 	 	18,313,123	 	 	 	17,078,284	 
	Materials and spare parts for investment projects
	 	 	4,064,705	 	 	 	4,676,654	 
	Constructions in progress
	 	 	8,635,985	 	 	 	5,269,632	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	330,181,660	 	 	 	337,451,773	 
	 
	 	 	 	 	 	 	 	 

Depreciation expense for the years ended December 31,2006 and 2005 amounts to Bs. 20,771,105
thousand and Bs. 20,222,111 thousand, respectively.

As of December 31,2006 and 2005, fully depreciated assets incorporated to the production process
amount to Bs. 6,719,249 thousand and Bs. 6,268,155 thousand, respectively.

Durante 2006, the Company capitalized Bs. 4,051,268 thousand corresponding to the Metering
Normalization Project, and Bs. 408,945 thousand for Chacopata Electrical Improvement Project

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During 2005, the Company capitalized Bs. 7,445,363 thousand corresponding to the Metering
Normalization Project, Bs. 2,784,187 thousand for the Data Geoprocessing System, Bs. 1,490,087
thousand for 13.8 KV Cells Project and Bs. 4,526,827 thousand corresponding to other projects.

As of December 31, 2006, constructions in process mainly include the Unit N° 5 Generation Turbine
Repair Project for Bs. 2,908,377 thousand, and the Preassembled Cable Project for Bs. 2,094,755
thousand, and Metering Normalization Project for Bs. 1,584,396 thousand.

As of December 31, 2005, construction in progress mainly includes the Normalization and Metering
Projects for Bs. 854,751 thousand and Preassembled Cable Project for Bs. 914,345 thousand.

In December 1999, the Company completed its analysis on the historical value of property, plant and
equipment as of December 31, 1998, resulting from the transfer made during die privatization
process (See Note 10), taking as basis an appraisal made by an Independent Appraisers Firm. This
appraisal allowed for the segregation of property, plant and equipment by business units and define
the basis to adapt to the requirements of the Organic Electric Service Law.

Certain assets amounting to approximately Bs. 5,398,084 thousand have been given as guarantee in
order to comply with the surety bond filed before the Ministry of Energy and Petroleum (See Note
11).

7 DEFERRED CHARGES AND OTHER ASSETS, NET

As of December 31, deferred charges and Other assets, net are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 
	 	 	 	 	 	 	 	 
	Restructuring expenses
	 	 	8,870,434	 	 	 	8,870,434	 
	Reorganization expenses
	 	 	4,575,819	 	 	 	4,575,819	 
	Investments in real estate and other assets
	 	 	1,015,728	 	 	 	194,720	 
	 
	 	 	 	 	 	 	 	 
	Less — accumulated amortization
	 	 	14,461,981	 	 	 	13,640,973	 
	 
	 	 	(13,446,253	)	 	 	(13,446,253	)
	 
	 	 	 	 	 	 	 	 
	 
	 	 	1,015,728	 	 	 	194,720	 
	 
	 	 	 	 	 	 	 	 

Restructuring expenses correspond to disbursements made by the Company to carry out projects during
start-up for the extension, update and improvement of the company’s administrative and operating
functions, as well as professional fees and start-up expenses. Reorganization expenses correspond
to payments made by virtue of the Company’s privatization process, such as extraordinary labor
indemnities, payroll and other labor benefits for personnel released as part of the reorganization
process implemented by the Company. These expenses have been amortized since January 1,2000 over a
five-year period. As of December 31,2004, deferred charges were folly amortized.

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Investments in real estate correspond to property received during 2003 as part of accounts
receivable recovery and restructuring plan carried out during such year, and are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 
	 	 	 	 	 	 	 	 
	Three (3) premises at C.C. Jumbo, in Porlamar, Nueva
Esparta State
	 	 	397,735	 	 	 	465,216	 
	 
	 	 	 	 	 	 	 	 
	Twenty-nine (29) apartments at Complejo Turistico
Vacacional Condominio Margarita Caribe Hotel-
Resort, in Porlamar, Nueva Esparta State
	 	 	849,254	 	 	 	993,340	 
	 
	 	 	 	 	 	 	 	 
	Less- provision for decrease in realizable value of other
Assets
	 	 	(231,259	)	 	 	(1,263,836	)
	Total
	 	 	1,015,728	 	 	 	194,720	 

During the year ended December 31, 2004, the Company recorded a provision of Bs. 1,263,836 thousand
to recognize the realizable value of certain assets represented by the premises at C.C. El Jumbo
and the total value of the apartments at Complejo Turistico Vacacional Condominio Margarita Caribe
Hotel-Resort.

During the year ended December 31, 2006, the Company reversed the provision for realizable value of
the apartments located at Complejo Turistico Vacacional Condominio Margarita Caribe Hotel-Resort
for Bs. 924,136 thousand, which is presented in Other income in the statement of operations. The
Company reversed the provisions for die realizable value of the assets aforementioned, based on the
evidence of the fair value of the apartments through the purchase-sale agreement entered into
during December 2006, whereby the Company received an advance of Bs. 300,000 thousand presented in
Other accounts payable.

8 ACCRUAL FOR PENSION PLAN

The Company has a non-contributory pension plan for employees as provided in the collective
bargaining agreement. Benefits under this plan are based on years of service and employees’
30-salary average.

The Company annually contracts an actuarial study prepared by an independent actuarial management
consulting company that includes the benefits corresponding to the collective bargaining agreement
and those established in the Decree-Law for the Partial Amendment to Retirement Regime regulations
in order to determine its obligations for this concept.

As of December 31, the balance of pension plan liabilities, net is as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 	 	 
	Obligation from projected benefit
	 	 	7,993,953	 	 	 	7,896,972	 
	 
	 	 	 	 	 	 	 	 
	Unrecognized net transitory obligation (UNTO)
	 	 	(261,875	)	 	 	(481,342	)
	Unrecognized gain (loss)
	 	 	(1,986,211	)	 	 	(3,037,905	)
	 	 	 
	Values recorded in books to support the plan
	 	 	5,745,867	 	 	 	4,377,725	 
	 	 	 

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The estimated cost for the years ended September 30,2006 and 2005 (actuarial study period) is as
follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 
	Service cost at year-end
	 	 	449,451	 	 	 	478,608	 
	 
	 	 	 	 	 	 	 	 
	Interest cost
	 	 	1,131,233	 	 	 	1,112,810	 
	Amortization of unrecognized net transitory obligation
(UNTO)
	 	 	149,644	 	 	 	175,034	 
	Amortization of unrecognized loss
	 	 	697339	 	 	 	829,048	 
	 
	 
	 	 	2,427,667	 	 	 	2,595,500	 
	Expected payment of benefits
	 	 	216,230	 	 	 	298,174	 

For the years ended December 31,2006 and 2005, the Company recorded pension plan expenses for Bs.
2,204,552 thousand and Bs. 2,049,072 thousand, respectively.

9. ACCRUED LIABILITIES

As of December 31, accrued liabilities are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	 	 	 
	Municipal taxes payable
	 	 	6,683,631	 	 	 	8,359,280	 
	 
	 	 	 	 	 	 	 	 
	Allowance for production and service quality
	 	 	1,646,867	 	 	 	1,540,119	 
	Accounts payable for tax inspection rate
	 	 	957,604	 	 	 	1,226,517	 
	Contribution to the Organic Law of Science,
	 	 	 	 	 	 	 	 
	Technology and Innovation
	 	 	1,078,715	 	 	 	 	 
	Other provisions
	 	 	810,643	 	 	 	924,484	 
	Payroll and contributions payable
	 	 	170,778	 	 	 	104,295	 
	 	 	 
	 
	 	 	11,348,238	 	 	 	12,154,695	 
	 	 	 

PRIVATIZATION AND CONCESSION AGREEMENT

On September I5, 1998, the Company’s privatization process was carried out through a public
offering of Class A shares of SENECA — Sistema Eldctrico del Estado Nueva Esparta, C-A as a result
of this process Energfa Etectrica de Margarita, S.A. (ENELMAR) was granted the share. On October
19, 1998, Enelmar initiated management of Seneca.

The concession contract mainly provides, among others, for the following terms:

a. The concession for the rendering of electric public utility in Nueva Esparta state will be
ruled by the terms of such contract and Decrees N° 138 of the Concession Law on Public Works and
National Public Services; Decree N° 368 on Standards for Determining Electric Sector tariffs; and
Decree No. 1558 on Standards for the Electric Sector Regulation, of which only Articles 69 and 71
are in effect, since this decree was substituted by the Electric Service Law (See Note 17).

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b. The concession for the rendering of electric public utility in Nueva Esparta state will be in
effect for 50 years. Exclusive rights of the concession to cany out generation and
commercialization activities by SENECA — Sistema Etectrico del Estado Nueva Esparta, C.A. will be
for a minimum period of 10 years from the granting date.

c. The Company will not be able to transfer, convey or alienate the rights granted by the
concession contract, without the prior authorization of the Venezuelan Government.

d. The concession establishes that the Company must render continuous, reliable and uninterrupted
services at agreed-upon quality levels. Also, it shall make investments and adopt the necessary
measures to guarantee the supply of electricity services, arid compliance with environmental
laws.

e. The Company will apply the tariffs approved by the Venezuela Ministry of Energy and Petroleum,
in accordance with the Tariff Regime included in the concession contract from January 1,1999
through 2002. The application of the tariff conditions for the 2003-2006 period, contemplated in
this contract, has not been approved yet (See Note 17).

11 SURETY BOND

In order to guarantee the performance of the obligations assumed by SENECA by virtue of the
concession contract (see Note 10), the Company must file a surety bond before the Venezuelan
Ministry of Energy and Petroleum. The bond shall be granted by a financial institution or an
insurance company. Its value is equivalent to 1% of the value of net revalued fixed assets of the
Company. The bond shall be renewed on an annual basis and filed with the Ministry of Energy and
Petroleum within the first ninety (90) days following the beginning of each economic period.

As of December 31, 2006, the Company maintains a surety bond for a Bs. 2,699,042 thousand to
guarantee the Ministry of Energy and Petroleum its compliance with the obligations assumed by the
Company under the concession contract (See Note 22).

12. TAX REGIME

Income Taxes

Venezuelan tax legislation considers an annual calculation of a regular adjustment for inflation of
its nonmonetary items, which is included in the reconciliation of the net taxable income as taxable
or deductible, as appropriate. With respect to property, plant and equipment and other similar
assets, this regular adjustment for inflation is either depreciated or amortized over the remaining
useful tax life of the respective assets. For inventories, this adjustment is considered in the
cost of sale of products upon consumption or sale. The total regular adjustment for the year is
determined through the algebraic sum of the various adjustments for inflation of each nonmonetary
item. This total reconciling item is considered to be a permanent difference for the effects of the
deferred income tax for the year.

In conformity with such legislation, taxpayers subject to income taxes that cany out transactions
with foreign related parties must determine their income from exports, and costs for goods and
services from foreign related parties, in accordance with certain methods set forth in such
legislation. Management conducted the transfer pricing study required to document such foreign
transactions, and it did not result in important differences with regard to the amounts included
for determining the net taxable income for the years ended December 31, 2006 and 2005.

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Likewise, in conformity with such legislation, die Company can cany forward operating tax losses,
other than losses from the tax adjustment for inflation for up to three (3) years subsequent to the
period in which they were incurred/The deductible tax effect that is not offset with the adjustment
for inflation can be carried forward up to the following year after itisincurred. As of December
31, 2006, the Company does not maintain tax loss carryforwards applicable to future taxable income.

In accordance with the Income Tax Law published in Extraordinary Official Gazette N° 5390 dated
October 22,1999, the Company can credit ten percent (10%) of new investments carried out during
five (5) years after its issuance, and these can be carried forward up to three (3) years following
the period in which they were incurred. Such Law was subsequently amended and published on
Extraordinary Official Gazette N° 5566 dated December 28, 2001. Management considers that this last
amendment sets forth a five (5) year term, from the date it became effective, for the application
of investment tax credits — i.e. all investments carried out by the Company until December 28,
2006, may be considered for the effects of credit calculation for the fiscal years ended December
31, 2005 and 2006, Based on the matters aforementioned, as of December 31,2006, the Company
maintained unutilized investment tax credits applicable to future income taxes for Bs. 2,158,745
thousand, expiring in 2007.

Decree-Law N° 3266, whereby the Business Assets Tax Law was issued, published in the Extraordinary
Official Gazette of the Bolivarian Republic of Venezuela N° 4654, dated December 1, 1993, was
derogated in Official Gazette N° 38002, dated August 17, 2004, as well as the other standards
issued during the development of this Law, effective since September 1, 2004.

13. TRANSACTIONS WITH STOCKHOLDERS AND RELATED COMPANIES

During years 2006 and 2005, the Company carried out the following significant transactions with its
stockholders and related companies, during the normal course of operations:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005
	Equipment leasing
	 	 	8,538,843	 	 	 	9,531,718	 
	Transfer of tax credits
	 	 	2,445,790	 	 	 	—	 
	Accounts payable restructuring
	 	 	—	 	 	 	1,930,871	 
	Professional fees
	 	 	74,866	 	 	 	241,243	 
	Insurance premium charge
	 	 	39,429	 	 	 	22,972	 

In December 2000, the Company entered into a lease agreement with CMS Electric and Gas, LLC, a
related company, for Frame 6B assets. Such agreement is effective for eight (8) years and is
subject to quarterly installments of approximately US$912,436 each, until 2008.

During 2006, the Company transferred to its stockholder CMS Venezuela, C.A., through balance
compensation, Bs. 2,445 million in tax credits.

Insurance premium and fee charges correspond to reimbursable expenses.

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As a result of these and other less significant transactions, the following balances
receivable and payable are as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2006	 	2005	 	 	 	 
	 	 	 
	Long-term accounts receivable: Energfa Electrica
de Margarita, S.A. (ENELMAR)
	 	 	508,633	 	 	 	566,818	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Short-term accounts payable:
	 	 	 	 	 	 	 	 	 	 	 	 
	CMS Enterprises Company
	 	 	1,959,754	 	 	 	4,586,821	 	 	 	 	 
	CMS Operating, LLC
	 	 	5,401	 	 	 	23,568	 	 	 	 	 
	CMS Argentina, S.A.
	 	 	2,649	 	 	 	2,571	 	 	 	 	 
	 	 	 
	Long-term accounts payable:
	 	 	1,967,804	 	 	 	4,612,960	 	 	 	 	 
	CMS Electric and Gas, LLC
	 	 	5,543,740	 	 	 	6,311,718	 	 	 	 	 
	CMS Venezuela, S.A.
	 	 	408,783	 	 	 	3,404,458	 	 	 	 	 
	 	 	 
	 
	 	 	5,952,523	 	 	 	9,716.176	 	 	 	 	 
	 	 	 

Long-term accunts receivable from Energia Electrica de Margarita, S.A. (ENELMAR) correspond to
payments made by the Company on behalf of a stockholder for taxes and equity capitalization .
contributions.”

During 2005, CMS Venezuela, S.A. (stockholder) and CMS Electric and Gas, LLC restructured the
accounts payable that the Company maintained with both companies. As a result from these
transactions, income amounting to Bs. 1,930,871 thousand was generated, which is presented in the
statements of operations as part of other income and expenses

During 2004, the Company entered into an agreement for guarantee deposits in bolivars in order to
ensure payment of its foreign currency obligations with related companies. As of December 31, 2006
and 2005, these guarantee deposits amounted to Bs. 1,961,737 thousand and Bs. 4,589,140 thousand,
respectively, and are recorded as prepaid expenses and other current assets (See Note 5).

14. STOCKHOLDERS* EQUITY

Capital stock and stockholders’ contribution to be capitalized

As of December 31,2006 and 2005, the Company’s subscribed and paid-in capital stock is as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of	 	Legal capital
	Stockholders	 	Class	 	shares	 	stock
	 
	Energia Electrica de Margarita, S.A.
(ENELMAR)
	 	 	A	 	 	 	58,961,699	 	 	 	35,682,834	 
	Fideicomiso BANDES
	 	 	B	 	 	 	3,038,646	 	 	 	1,838,948	 
	Labor Partcipation Program
	 	 	B	 	 	 	13,807,554	 	 	 	8,356,148	 
	Fideicomiso BANDES
	 	 	C	 	 	 	8,423,100	 	 	 	5,097,548	 
	CMS VENEZUELA, S.A.
	 	 	D	 	 	 	1	 	 	 	76,481,880	 
	 
	 	 	 	 	 	 	84,231,000	 	 	 	127,457,358	 

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	•	 	Class A shares owned by Energfa Etectrica de Margarita, S.A. (ENELMAR), acquired through the
privatization process
	 
	•	 	Class B shares owned by employees and former employees of SENECA, as well as of CADAFE -
ELEORIENTE; these shares were granted in trust to Banco de Desarrollo Econ6mico y Social de
Venezuela (BANDES) for the Labor Participation Program pursuant to provisions of the privatization
process.
	 
	•	 	Class C shares owned by CADAFE, granted in trust to Banco de Desarrollo Econdmico y Social de
Venezuela (BANDES), for the Civil Participation Program, pursuant to provisions of the
privatization process.
	 
	•	 	Class D shares owned by CMS Venezuela, S.A.

As of December 31, 2003, the Company maintained Bs. 34,746,604 thousand (Bs. 21,795,288 thousand,
in constant bolivars as of December 31, 2003) as stockholder’s contributions to be capitalized.
Later, at an Extraordinary Stockholders’ Meeting held on December 10, 2004, it was agreed to
increase the Company’s legal capital stock to Bs. 135,908,532 thousand, through the capitalization
of the stockholder’s contribution of CMS Venezuela, C.A, amounting to Bs. 34,746,604 thousand (Bs.
21,795,288 thousand, in constant bolivars as of December 31, 2003), thus maintaining the number of
shares and increasing the value of “Class D” shares owned by CMS Venezuela, S.A. In addition, in
the same Meeting, it was agreed to reduce capital stock in Bs. 11,518,768 thousand (Bs. 8,451,169
thousand, in constant bolivars as of December 31, 2003) to reach Bs. 127,457,358 thousand, in order
to cover the accumulated deficit as of December 31, 2003, thus maintaining the number of shares and
reducing the value of each share according to its class on a proportional basis.

At an Extraordinary Stockholders Meeting held on April 26,2006, it was agreed to declare and pay a
dividend corresponding to the period ended December 31,2004 of Bs. 3,116,547 thousand (Bs.
3,575,292 thousand in constant bolivars) based on the number of shares subscribed and paid as of
December 31,2005, from which Bs. 510,879 thousand (Bs. 586,080 thousand in constant bolivars) were
paid in cash to the class “B” stockholders enrolled in the Labor Participation Program. In
addition, Bs. 2,605,668 thousand (Bs. 2,989,215 thousand in constant bolivars) were recorded as
stockholders’ contributions to be capitalized in favor of the rest of the stockholders. The cash
dividend was transferred to BANDES for its later distribution to the aforementioned stockholders.

Legal Reserve

The Commercial Code sets forth a provision of 5% of companies’ net income for establishing the
legal reserve, until it reaches at least 10% of capital stock. This reserve cannot be distributed
as dividends.

Special reserve

At an Extraordinary Stockholders’ Meeting held on December 7,2001, a special reserve was created
with cash received from Banco de Desarrollo Econ6mico y Social (BANDES); these funds were related
to a labor liabilities’ settlement.

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At an Extraordinary Stockholders’ Meeting held on December 10,2004, it was agreed to transfer the
special reserve included in stockholders’ equity, which amounts to Bs. 10,793,442 thousand (Bs.
6,770,336 thousand, in constant bolivars as of December 31,2003) to the accumulated surplus account
included in stockholders’ equity

Undistributed earnings

The Company’s stockholders consider die financial statements stated in constant bolivars for the
purpose of approvals set forth in the bylaws and the Venezuelan Commercial Code.

15 MONETARY RESULT FOR THE PERIOD

The monetaiy result for the years ended December 31, is as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	NET MONETARY ASSET POSITION, at the beginning
of year
	 	 	26,966,334	 	 	 	24,742,257	 
	Increase due to:
	 	 	 	 	 	 	 	 
	Net sales
	 	 	101,424,561	 	 	 	126,420,992	 
	Other income
	 	 	2,863,493	 	 	 	5,199,552	 
	Financial income
	 	 	2,658,508	 	 	 	1,425,126	 
	Reversal of monetary asset provision
	 	 	924,136	 	 	 	 	 
	Sale of property, plant and equipment
	 	 	3,537	 	 	 	 	 
	Provision for disposal of property, plant and equipment
	 	 	—	 	 	 	662,321	 
	Sale of materials
	 	 	—	 	 	 	79,978	 
	 
	 	 	 	 	 	 
	 
	 	 	107,874,235	 	 	 	133,787,969	 
	 
	 	 	 	 	 	 	 	 
	Decrease due to:
	 	 	 	 	 	 	 	 
	Operating and maintenance expenses
	 	 	29,510,514	 	 	 	28,742,588	 
	Purchases of diesel fuel
	 	 	27,187,330	 	 	 	28,166,279	 
	Purchases of inventories
	 	 	17,289,593	 	 	 	28,361,857	 
	Purchase of energy
	 	 	12,653,117	 	 	 	11,562,457	 
	Administrative expenses
	 	 	10,753,964	 	 	 	11,091,057	 
	Commercialization expenses
	 	 	10,499,495	 	 	 	13,354,984	 
	Acquisition of property, plant and equipment
	 	 	1,503,028	 	 	 	3,367,505	 
	Additions to projects and works
	 	 	3,845,492	 	 	 	3,047,974	 
	Exchange losses
	 	 	5,430	 	 	 	765,610	 
	Loss from investment securities
	 	 	—	 	 	 	160,671	 
	 
	 	 	 	 	 	 
	 
	 	 	113,247,963	 	 	 	128,620,982	 
	ESTIMATED NET MONETARY ASSET POSITION, at
year end
	 	 	21,592,605	 	 	 	29,909,244	 
	ACTUAL NET MONETARY ASSET POSITION, at year end
	 	 	17,575,724	 	 	 	26,966,334	 
	 
	 	 	 	 	 	 
	Monetary result for the period
	 	 	(4,016,881	)	 	 	(2,942,910	)
	 
	 	 	 	 	 	 

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16. OPERATING INCOME

During 2006, the Company did not obtain from the Ministry of Energy and Petroleum, reductions in
the price of diesel fuel corresponding to such period. These reductions would have partially offset
the non-application and/or partial application of the price adjustment factor (PAF) of electric
energy, set forth in the Joint Resolution of the Ministry of Production and Commerce N° 089 and
that of the Ministry of Energy and Petroleum N° 455, dated April 3, 2002 (Note 16). The financial
statements include an operating loss amounting to Bs. 13,834,3 85 thousand and accumulated deficit
at that date of Bs. 13,548,717 thousand, originated by non-received reductions. Currently,
Company’s management is in the process of evaluating the impact of this situation in the business;
future.

As of December 31, 2006, the Company has issued credit notes to Deltaven (diesel fuel supplier) of
Bs. 18,908,400 thousand, which are presented in Trade accounts payable.

17 REGULATION AND TAFIFFS

The Venezuelan Electric Industry is ruled by the Electric Service Law, enacted on December 31,
2001, published in Extraordinary Official Gazette of the Bolivarian Republic of Venezuela N° 5568.
This law substitutes the previous Electric Service Decree-Law published in Official Gazette of the
Bolivarian Republic of Venezuela, N° 36791 dated September 21,1999, and other legal provisions
contrary to this law. The Law provides for the following:

	•	 	The legal, accounting and managerial segregation of the functions for generation, transmission,
distribution and commercialization.
	 
	•	 	The opening to competition in generation and commercialization activities.
	 
	•	 	Access to the national energy distribution and transmission system network to other electric
service agents, as well as large consumers. Its use shall be compensated according to this law and
the regulations issued by the National Commission of Electric Power on this matter.
	 
	•	 	The creation of an unregulated wholesale electric power market for generators, distributors and
large clients, especially those engaged in generation and distribution activities.
	 
	•	 	The creation of regulatory entities such as the National Commission of Electric Power authorized
by the Ministry of Energy and Petroleum (formerly, Ministry of Energy and Mines), to be responsible
for the regulation, supervision, inspection and control of electric service activities and the
National Center of Electric System Management and the Wholesale Electric Power Market.
	 
	•	 	Elimination of Article 120, related to the applicability of contractual conditions in cases of
concessions granted.

The Electric Service Law provided for the gradual implementation of some of its resolutions,
indicating January 31, 2003 as the deadline for the legal, accounting and managerial segregation of
generation, distribution and commercialization functions. Nevertheless, on November 6, 2002, this
deadline was extended by the Ministry of Energy and Petroleum through January 31, 2004 in
accordance to Resolution N° 303. To date, the Regulator has not required electric sector companies
to fully comply with the segregation of activities set forth for January 31, 2004. The segregation
of

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activities in the electric service in Venezuela, including the opening for competition in certain
activities might have an effect on revenues and consequently on the company’s assets values. To
date, such effect cannot be reasonably estimated.

The regulations related to the Venezuelan Electric Service Law were published on the Extraordinary
Official Gazette N° 5510 of the Bolivarian Republic of Venezuela on December 14, 2000. The
objective of this regulation is to develop the provisions of the Law ruling the electric service at
national level, including generation, transmission, national electric system management,
distribution and commercialization activities of electric power and energy sectors, as well as
performance of the agents involved in the electric service.

The National Electric System Management Center (CNGSE) was officially created by the National
Government through Decree N° 5026 of the Presidency of the Republic, published in Official Gazette
N° 38576, dated December 1, 2006. The main functions of the CNGSE are the control, supervision, and
coordination of the joint operation of the National Electric System Generation and transmission
Resources. The CNGSE is a state Company under the status of a Limited Liability Company with equity
participation of the Bolivarian Republic of Venezuela through the Ministry of Energy and Petroleum
(MENPET).

Despite of its official incorporation, the CNGSE has not started operations. In this regard, the
Organic Electric Service Law (LOSE) sets forth that until CNGSE’s start-up, the operation and
control of generation and transmission activities of the National Electric system will continue to
be performed by the Electric System Operation Office (OPSIS) under the terms established in the
Interconnection Agreement entered into^ CADAFE; ENELVEN and EDC on December 1, 1988.

Tariff regime

The Electric Service Law and its regulations provide for the economic regime applicable to the
rendering of electric services. Likewise, the Concession Agreement entered into between the
Bolivarian Republic of Venezuela and SENECA clearly defines terms and methodology to be applied for
the preparation of subsequent tariff conditions to which it was originally authorized.

In the case of SENECA, on December 30, 1998, according to Official Gazette N° 36612, the Ministry
of Energy and Petroleum established the tariffs that the Company should apply to electric energy
consumption beginning January 1,1999. It also included applicability conditions and the methodology
for their subsequent adjustment and modification for a term of up to four years from that date.

On February 6, 2003, the National Government issued Decree No. 2304, whereby prices of certain
goods and services, including power supply, are frozen. Subsequently, on May 5, 2003, a joint
Resolution by the Ministry of Energy and Petroleum and the Ministry of Production and Commerce was
published in Official Gazette, which temporarily suspends tariff increases derived from the FAP
application. However, Article 2 of this resolution sets forth that MENPET might exceptionally
approve the application of such factor.

On February 9, 2004, MENPET informed SENECA about the incorporation of its information in the
tariff calculation process in order to evaluate its future application. This should generate the
benefit of applying the same tariff methodology in all companies within the sector.

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Pursuant to Articles 11 and 12 of Official Gazette N° 36612 and communications received from
MENPET, the Company applied adjustments related to the application of gas and energy charges
(CACE). In connection with the application of the price adjustment factor (FAP), the Company has
applied the values authorized by MENPET beginning August 2003. These values did not maintain tariff
levels in real terms; therefore, until 200S, the Company has received partial compensation in
diesel fuel prices, thus obtaining from the Ministry of Energy and Petroleum reductions in the
price of diesel fuel corresponding to 2006 (See Note 16).

During 2006 and 2005, in order to maintain established tariff levels in real terms, management
periodically carried out communications with the regulator as to the appropriate current tariff
that should be applied if regulation were followed.

18. ELECTRIC POWER SUPPLY CONTRACT

On July 1998, the Company entered into a contract with CVG — Electrificacion del Caroni, C.A. (CVG
EDELCA). CVG commits to render services of supply and transportation of electric power to SENECA -
Sistema Electrico del Estado Nueva Esparta, C.A, through die payment of pre-established tariffs per
each kilowatt of energy transmitted. This contract is effective for twenty (20) years, and clause
N° 25 provides for a minimum annual charge, which has not been applied by the parties.

19. FUEL SUPPLY CONTRACT

On July 27, 1998, the Company entered into a contract with Deltaven Sociedad Mercantil, a
subsidiary of PDVSA. PDVSA committed therethrough to provide fuel for the generation of
thermoelectricity for the internal consumption in Nueva Esparta state. The fuel price is set by the
related authorities. This contract will be in effect for five (5) years from the date of
subscription, and it will be automatically renewed for equal and consecutive periods. Consequently,
such contract will be in effect until 2008.

20. ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY

Since 2003, the Venezuelan Government and the Central Bank of Venezuela have entered into several
Exchange Agreements that rule the Foreign Currency Management Regime and establish the exchange
rate applicable to transactions set forth in such agreements. Since then, the Foreign Exchange
Administration Commission (CADIVI) is in charge of coordinating, administrating, controlling and
establishing the requirements, procedures and restrictions that the execution of said agreement
would require.

CADIVI has issued certain rules related to the registrations, guidelines, requirements and
conditions related to the foreign currency administration. The Company has taken all the necessary
proceeds to obtain the foreign currencies required for payment of its foreign currency liabilities
amounting to US$8,299,891 as of December 31, 2006.

The acquisition of foreign currencies necessary for foreign currency transactions carried out by
the Company in the normal course of operations will be dependent upon: (1) the approval of all the
registrations requested by the related institutions; (2) the availability of foreign currencies to
be established in the application of the standards referred to above; and (3) the actions to be
performed by the Company to obtain either the required foreign currencies not requested with the
related institutions, or those requests rejected by such institutions.

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A summary of assets and liabilities denominated in foreign currencies as of December 31,2006 and
2005, recorded in bolivars at the official exchange rate at year-end of Bs. 2,150 per US$1 (in US
dollars) are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	2006	 	 	2005	 
	 
	ASSETS:

	Cash and equivalents
	 	 	312,124	 	 	 	841,958	 
	Advances to suppliers
	 	 	 	 	 	 	11,330	 
	Guarantee deposits
	 	 	45,268	 	 	 	148,765	 
	 
	Total assets
	 	 	357,392	 	 	 	1,002,053	 
	 
	 	 	 	 	 	 	 	 
	LIABILITIES:

	Trade accounts payable
	 	 	1,626,100	 	 	 	1,186,671	 
	Accounts
payable to stockholder and related companies
	 	 	915,258	 	 	 	1,834344	 
	Total liabilities
	 	 	2,541,358	 	 	 	3,021.015	 
	Excess of liabilities over assets
	 	 	2,183,966	 	 	 	2,018,962	 
	 

21. CONCENTRATION OF CREDIT RISKS

Financial instruments that partially subject the Company to concentrations of credit risks mainly
consist of short-term investments in time deposits and investments in National Public Debt Bonds
with terms agreed for less than 30 days and trade accounts receivable. The Company places its
short-term investments in different financial institutions, and which excludes risks on price
and/or conditions. Concentration of credit risk regarding trade accounts receivable is limited due
to the Company’s significant number of clients; however, as of December 31, 2006 and 2005,
government clients represent approximately 64% and 67%, respectively, of the Company’s portfolio
(See Note 3). As of December 31, 2006 and 2005, the Company does not have any additional
significant concentration of credit risk.

22. CONTINGENCIES AND COMMITMENTS

Contingencies

During 2006, certain claims have been filed against the Company by former employees enrolled in the
labor participation program, which are mainly related to difference in severance benefits payments
amounting to Bs. 2,741 million. Management estimates that the outcome of thesis claims would not be
in favor of the former employees; therefore the Company has not recorded any provision in the
financial statements for this concept (See Note 1 j)

Certain claims related to labor indemnities, moral and material damages, among others, have been
filed against the Company. Management estimates that if the results of such claims were adverse,
they would not have any material effect on the financial statements. Provisions have been created
pursuant to available information regarding the possibility of success of such cases.

Bonds and guarantees granted

The Company currently maintains a surety bond in order to guarantee the Ministry of Energy and
Petroleum, obligations assumed by virtue of the concession agreement (See Note 11).

24

Table of Contents

Commitments

In December 2005, the Company entered into a Cooperation Agreement with Compania Anonima de
Administracion y Fomento Electrico (CADAFE). CADAFE will install, operate and maintain a thermal
generation plant on Margarita Island, and the Company will buy the energy generated thereof
Likewise, CADAFE and the Company commit to enter into an electric power supply contract effective
for 10 years under the terms and conditions agreed upon by the parties, in maximum six (6) months
from the date of execution of the partnership agreement.

However, due to changes in the sector guidelines, a new cooperation agreement is being discussed
under similar terms and conditions to the aforementioned, as well as a commodatum contract for an
area located at Luisa Caceres de Arismendi Plant, where thermal generation plants will be
installed, operated and maintained by the corresponding government entity.

In December 2005, the Company also entered into an agreement with Compania Anonima de
Administracion y Fomento Eletrico (CADAFE) for the leasing of a turbine compartment (cigar), which
is fully and exclusively owned by the latter. The annual installment will amount to Bs. 40,000
thousand, which shall be paid upon installation of the module in Luisa Ciceres de Arismendi Plant.
When the agreement term ends, the Company commits to return the compartment to CADAFE in its
current conditions. At year-end 2006, the module was incorporated to Unit N° 5, which is currently
undergoing pre-dperating tests prior to its start-up, expected during January 2007.

23 SUBSEQUENT EVENTS

FUNDELEC

In January 2007, the Company entered into a Cooperation Agreement with Fundaci6n para el Desarrollo
del Sector E16ctrico (FUNDELEC) for the purpose of installing, operating and maintaining thermal
generation units with their respective fuel supply, protection and communications system in Nueva
Esparta State, assumed by FUNDELEC. SENECA, on the other hand, will receive, in conformity with the
quality, continuity and reliability specifications, energy generated by FUNDALEC for its
distribution and conmierci^izatiott. FUNDELEC and SENECA commit to enter into an electric energy
supply agreement in no later than six (6) months since the Agreement execution, which will be in
effect for five (5) years under the terms and conditions agreed upon by the parties.

Based on this agreement, SENECA gives FUNDELEC in commodatum or loan for use, at all risks, a real
estate for five (5) years, destined to the installation of the generation units mentioned in Clause
III of the Cooperation Agreement between FUNDELEC — SENECA aimed at increasing Thermal Generation
in Nueva Esparta state and meet the increasing local customers’ demand.

Presidential announcements on January 8, 2007

The President of the Bolivarian Republic of Venezuela announced through the local media, the
nationalization, among others, of the telecommunication, electricity and petroleum sectors, which
had been formerly privatized, by considering them strategic sectors.

25

Table of Contents

Enabling Law

On February 1, 2007, the National Assembly passed a Law enabling the President of the Republic to
issue legislative decrees on certain specific matters for an 18-month period since the publication
of said Law in the Official Gazette of the Bolivarian Republic of Venezuela. The purpose of this
law is to rule on different matters related to the Transformation of Government Entities, Popular
Participation, as well as Economic, Social, Financial, Tax and Energy matters.

Memorandum of Understanding with Petrdleos de Venezuela (PDVSA)

On February 13, 2007 the Company’s main stockholder signed a memorandum of understanding (MOU) with
Petroleos de Venezuela, S.A. (PDVSA), which establishes the bases of negotiation for the sale of
their equity participations in the Company, as well as other assets from related companies for
US$105.5 million, subject to:

	•	 	Negotiation and conclusion of a full sale purchase agreement of CMS Interest, with standard
representations, warranties and indemnity obligations to be granted by CMS and PDVSA.
	 
	•	 	Performance of a legal and financial due diligence by PDVSA, which do not result in the
identification of material differences with the financial statements accompanying the MOU, and
that, in the reasonable opinion of PDVSA, does not materially affect the value of CMS Interest
previously agreed. It is expressly understood that the agreed compensation is based on SENECA’s
current situation according to the accompanying financial statements, and that it is not PDVSA’s
intent to challenge the legal and reasonable administrative acts carried out by the employees and
executives of the Company prior to the acquisition.
	 
	•	 	Inexistance of transactions outside the ordinary course of business before the closing of the
acquisition.
	 
	•	 	Full cooperation on the part of CMS up to the closing of the acquisition with a liaison team to
be appointed by PDVSA shortly, and best efforts of CMS to facilitate the transition in the
administration of SENECA.
	 
	•	 	Accuracy in all substantial aspects of the representations granted by CMS in the sale purchase
agreement of CMS Interest; and
	 
	•	 	Transfer of ownership regarding all the shares and equipment included in CMS Interest, as well as
the discharge of all SENECA’s indebtedness with CMS or any of its subsidiaries, and delivery of
evidence that the value of leased equipment to be transferred is equal or higher than US$15.6
million and that the total debt amount is not lower than US$1.9 million (amounts included in the
compensation referred to in the memorandum of understanding).
	 
	•	 	Both parties will proceed, in good faith, to conclude the agreements tp close the operation as
soon as possible, but in no event after March 31, 2007.

26

Table of Contents

Appendix 2.6 Taxes

1. Tax on Economic Activities:

Status of the Gross Income Returns with Municipalities of the State of Nueva Esparta as of
12/31/2006.

a. Diaz Municipality:

SENECA filed gross income return from October 2005 to September 2006. Pending review of the
situation to reconcile debt.

b. Tubores Municipality:

Solvent until September 2006.

c. Macanao Municipality: Solvent until September 2006.

d. Antolin del Campo Municipality:

	 	 	 	 	 
	Filed Returns	 	Observations
	Oct-03

	 	Sep-04
	 	Pending
	Oct-04

	 	Sep-05
	 	agreement
	Oct-05

	 	Sep-06
	 	to reconcile debt

e. Marcano Municipality:

	 	 	 	 	 
	Filed Returns	 	Observations
	Oct-03

	 	Sep-04
	 	Pending
	Oct-04

	 	Sep-05
	 	agreement
	Oct-05

	 	Dic-05
	 	to reconcile debt
	Ene-06

	 	Dic-06	 	 

f. Arismendi Municipality:

Gross income return has not been filed. Pending review of the situation to reconcile debt.

g. Garcia Municipality:

Gross income declaration has not been filed.

h. Gomez Municipality:

Gross income return has not been filed. Pending review of the situation to reconcile debt.

i. Maneiro Municipality:

Gross income return has not been filed. Pending review of the situation to reconcile debt,

j. Villalba Municipality:

Gross income return has not been filed. Pending review of the situation to reconcile debt

Following, a summary of the outstanding debts as of December 31st, 2006 for municipal taxes on
economic activities, its provision in SENECA, and the favorable balance to SENECA upon
reconciliation of debts:

	 	 	 	 	 
	TOTAL AMOUNT of TAXES on GROSS INCOME as of DECEMBER 2006
	 	 	6,188,904,614	 
	PROVISION FOR MUNICIPAL TAXES DECEMBER 2006
	 	 	6,683,630,906	 
	ACCOUNTS RECEIVABLES TO MUNICIPALITIES as OF DDECEMBER
2006 FOR ELECTRIC SERVICE
	 	 	18,147322,664	 

 

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	NET BALANCE IN FAVOR OF SENECA AS OF DECEMBER 2006
	 	 	(11,958,418,050	)

2. Other Municipal Taxes:

Status of Municipal Taxes year 2007

	 	 	 	 	 	 	 	 	 
	Marifio

	 	Solvent until 2007.
	 	Solvent until
February 2007
	 	Solvent until 2007
	 	Solvent untilo 2007
	Maneiro

	 	Solvent until 2007
	 	A communication was
sent and
awaiting for
Account Statement
	 	A communication was
sent
and awaiting for
Account Statement
	 	Solvent until 2007
	Antolln del eampo

	 	Solvent until 2007
	 	A communication was
sent and awaiting
for Account
Statement.
	 	and awaiting for

Account
	 	Not applicable
	Diaz

	 	Not applicable
	 	Not applicable
	 	Not applicable
	 	Not applicable
	Macanma

	 	A communication was
sent and
awaiting for
Account Statement.
Solvent until 2004
	 	A communication was
sent and awaiting
for Account
Statement
	 	A communication was
tend and awaking for
Account
§&forar“flfe to
2004
	 	Acommunkaaionwasscnd
and awaking for Account
5of£rtun*12M>4
	Arismendi

	 	Solvent until 2007
	 	A communication was
sent and awaiting
for Account
Statement.
	 	and awaking for
Account Statement.
	 	Not applicable
	Tuhorts

	 	Not applicable
	 	Not applicable
	 	No applicable
	 	Not applicable
	VUlalba

	 	A communication was
sent and
awaiting for
Account Statement.
	 	A communication was
sent and
awaiting for
Account Statement.
	 	A commu taxation
was sent
and awaking for
Account Statemaatt
	 	A comminication was sent
and awaking for Account
Statement
	Gomez

	 	Not applicable
	 	Not applicable
	 	No applicable
	 	No applicable
	Marcano

	 	A communication was
sent and
awaiting for
Account Statement.
Solvent until 2005
	 	A communication was
sent and awaiting
for Account
Statement
	 	A coinuMMcutton was
sent and awaking
for Account
Statement.
	 	A communication was sent
and awaking for Account
State. Solvent until
2003
	Cruz Salmon* Acoaa

	 	A communication was
sent and
awaiting for
Account Statement.
Solvent until 2006
	 	Not applicable
	 	Not applicable
	 	Not applicable
	Garcia

	 	Solvent until 2007
	 	A communication was
sent and awaiting
for Account
Statement.
	 	A cominu nicotian
was sent
sad awaking for
Account
StstejMfiL.
	 	Not applicable

 

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The amounts outstanding as of December 31st 2006 included in the Financial Statements for the
abovementioned taxes are Bs. 31.533.000,00.

3. Assessment

On March 8th, 2007 SENECA received assessment N° J-H.04-2007 issued by the Mayor’s Office Tax
Department of the Garcia Municipality, in connection with years 1998 to 2006 for the amount of Bs.
61,939,223,059.00, based on Municipality’s Ordinance on Industrial and Commercial License and the
Municipal Ordinance on Urban Property Tax for the following concepts:

1. Energy Distribution

2. Post rental

3. Garbage Collection Fee

1,428,521,843

10,863,680

1,557,536

4. Servitude (Distribution)

5. Servitude (Transmission)

54,335,200,000

6,163,080,000

Bs. 61,939,223,059

SENECA agrees with the concepts described in points 1, 2 and 3. However, it does not agree with the
amounts assessed in the concepts 4 and 5.

On 2004, Antolin del Campo Municipality of the State of Nueva Esparta issued an assessment to
SENECA for the same concepts asserted by Garcia Municipality. The Assessment of Antolin del Campo
Municipality was declared null and void by the Mayor’s Office, at his own instance, and therefore,
the Judicial Tax Appeal was voluntarily desisted by SENECA, and confirmed by the Superior Tax
Court.

Action: SENECA filed defense arguments before the Garcia Municipality’s Tax Department on March
27th, 2007 for the concepts 4 and 5, based on the arguments used in the Antolin del Campo
Municipality assessment. SENECA has not reserved for concepts 4 and 5.

 

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Provision: As of December 31st, 2006, SENECA Financial Statements show the assigned provision
for the amounts contained in concepts 1, 2 and 3, aforementioned. Therefore, there shall be no
changes in the financial condition of SENECA.

Debt of the Municipality: Garcia Municipality owes SENECA for energy consumption since 1998. As of
December 31”, 2006 the amount owed is Bs. 3,045,000,000.00 without interests and Bs.
5,157,000,000.00 with interests.

Appendix 2.10

Exceptions to Property Title and Liens of Assets

1. — Airport Substation. Located at the General Santiago Marino International Airport in the State
of Nueva Esparta. The Nueva Esparta Government is the owner of the land. Seneca has no title to the
constructions. The aforementioned property was listed in Annex 5 (Property with Entitlement
Problems) of the Sales Purchase Agreement entered into on September 15th, 1998 between
FIV-Cadafe-Eleoriente and Enelmar whereby the Seneca class “A” shafes were purchased. The property
of this asset was never transferred to Seneca.

2. — Las Hernandez Substation. Located at Las Hernandez Sector in the Diaz Municipality of the
State of Nueva Esparta. Cadafe transferred Seneca the possession rights over the land and
constructions by document authenticated before Pampatar Notary Public Office of the State of Nueva
Esparta on May 26th, 2000, under N° 68, Volume 21, and before Sucre Municipality’s Second Notary
Public Office of the State of Miranda on May 17th, 2000 under N° 78, Volume 24, There is an adverse
ownership declaration proceeding identified with N° 19.765, as mentioned in Appendix 2.7.

3. — Land on which Coche Plant and Substation is located. The land has an area of 14,663 Mt2 and is
owned by the Villalba Municipality of the State of Nueva Esparta. The aforementioned property was
listed on Annex 5 (Property with Entitlement Problems) of the Sales Purchase Agreement entered on
September 15th, 1998 between FIV-Cadafe-Eleoriente and Enelmar whereby the Seneca class “A” shares
were purchased. The property of this asset was never transferred to Seneca.

4. — San Lorenzo Transition Substation. This substation existed at moment class “A” shares were
purchased, but was never mentioned in Annex 2 (Inventory on the Fixed Assets), nor in Annex 5
(Property with Entidement Problems) of the Sales Purchase Agreement Seneca has tide neither to the
land, nor to the constructions.

5. -Servitudes:

For the transmission lines, networks and circuits referred to below, SENECA servitude right is
based on a legal presumption of servitude, transferred by Cadafe and Eleoriente, and not on
servitudes formally constituted.

a.- As evidenced in document registered before the following Registry Offices:

	•	 	Subordinate Public Registry Office of Maneiro Municipality of the State of Nueva Esparta on
February 2nd, 2005, under N° 12, Volume 4, Protocol 1°.
	 
	•	 	Subordinate Public Registry Office of Diaz Municipality of the State of Nueva Esparta on April
5th, 2005, under N° 11, Volume 1, Protocol 1°, pages 46 to 60.
	 
	•	 	Subordinate Public Registry Office of Gomez Municipality of the State of Nueva Esparta on April
11th, 2005, under N° 21, Protocol 1 °, pages 46 to 60.
	 
	•	 	Subordinate Public Registry Office of Arismendi y Antolin del Campo Municipalities of the State
of Nueva Esparta on April 1.1* 2005, under N° 29, Volume 2, Protocol 1°, pages 162 to 183.
	 
	•	 	Subordinate Public Registry Office of Marcano Municipality of the State of Nueva Esparta on
April 12th, 2005, under N° 27, Volume 1, Protocol 1°, pages 140 to 157.
	 
	•	 	Subordinate Public Registry Office of Marino Municipality of the State of Nueva Esparta on April
21”, 2005, under N° 17, Volume 5, Protocol 1°, pages 125 to 151.

Cadafe and Eleoriente transferred Seneca the right of way for electric conductors identified below,
based on the existence of duly constituted servitude’s presumption in favor of Cadafe issued by the
First Instance Civil and

 

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Commerce Second Court in the State of Nueva Esparta on May 2nd, 2001, file N° 1198/01, and
registered before the following Real Estate Subordinate Registry Public Offices:

	•	 	Subordinate Public Registry Office of Maneiro Municipality of the State of Nueva Esparta on
November 20*, 2003, under N° 37, Volume 7, Protocol 1°, pages 225 to 287;
	 
	•	 	Subordinate Public Registry Office of Gomez Municipality of the State of Nueva Esparta on
December 5th, 2003, under N° 24, Volume 3, Protocol 1°;
	 
	•	 	Subordinate Public Registry Office of Marcano Municipality of the State of Nueva Esparta on
December 19*, 2003, under N° 10, Volume 5, Protocol 1°, pages 95 to 166;
	 
	•	 	Subordinate Public Registry Office of Diaz Municipality of the State of Nueva Esparta on January
20*, 2004, under N° 37, Volume 1, Protocol 1°, pages 215 to 280;
	 
	•	 	Subordinate Public Registry Office of Marino Municipality of the State of Nueva Esparta on March
8*, 2004, under N° 50, Volume 13, Protocol 1°, pages 295 to 321;
	 
	•	 	Subordinate Public Registry Office of Arismendi y Antolin del Campo Municipality of the State of
Nueva Esparta on March 15*, 2004, under N° 21, Volume 9, Protocol 1°, pages 217 to 290:

1.- 115 Kv. Transmission Lines

Name of the Lines_

Luisa Caceres — Los Millanes_

La Asuncion — San Lorenzo — Los Robles

Luisa Caceres — Boca de Rio_.

Pampatar — San Lorenzo_

2.- Networks:

(i). 34,5 Kv Circuits,

	 	 	 
	Name of the Substation (E/S)	 	Name of the Line
	Pampatar

	 	Morropo
	Los Millanes

	 	Aricagua
	Luisa Caceres

	 	Aeropuerto — Las Hernandez
	Luisa Caceres

	 	Conejeros
	Boca de Rio

	 	Boca de Rio — Las Hernandez
	Los Robles

	 	Morropo — Conejeros

(ii). 13,8 Kv Circuits.

	 	 	 
	Name of the Substation (E/S)	 	Name of the Line
	Los Robles

	 	Los Robles
	 

	 	Playa El Angel
	 

	 	Sabanamar — Fermtn
	 

	 	Av. 4 de mayo
	 

	 	Achipano
	 

	 	La Arboleda
	 

	 	ClinicaLa Fe
	Coche

	 	San Pedro
	 

	 	ElBichar
	Aricagua

	 	Paraguachi
	 

	 	ElSalado

 

Table of Contents

	 	 	 
	Name of the Substation (E/S)	 	Name of the Line
	 

	 	Hotel Playa El Agua
	 

	 	La Mir a
	 

	 	Aricagua
	Conejeros

	 	Calle Maneiro
	 

	 	Calle Marcano
	 

	 	ElValle
	 

	 	La Comarca
	 

	 	Av. F. Fajardo
	 

	 	Mercado
	Porlamar

	 	CANTV
	 

	 	Iiano Adentro
	 

	 	Calle Igualdad
	 

	 	El Jumbo
	 

	 	Clinico Margarita
	 

	 	Hospital
	 

	 	CC. El Angel
	 

	 	Calle Guevara
	La Asuncion

	 	La Otra Banda
	 

	 	Cruce de Guacuco
	 

	 	Av. 31 de Julio
	 

	 	La Gobernacion
	 

	 	La Fuente
	 

	 	Atamo Norte
	Pampatar

	 	Pampatar
	 

	 	La Caranta
	 

	 	ElParaiso
	 

	 	Hotel Hilton
	 

	 	Marina Bay
	 

	 	San Lorenzo
	 

	 	Laguna Mar
	 

	 	Centro AB
	 

	 	Jorge Coll

	 	 	 
	Name of the Substation (E/S)	 	Name of the Line
	Boca de Rio

	 	Boca de Pozo
	 

	 	San Francisco
	 

	 	Boca de Rio
	Las Hernandez

	 	Los Gomez
	 

	 	El Guamache
	 

	 	Punta Piedras
	 

	 	Las Hernandez
	Aeropuerto

	 	Aeropuerto
	 

	 	Av. Aeropuerto
	 

	 	Base Aerea
	 

	 	Los Bagres
	Luisa Caceres

	 	Villa Rosa

 

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	Name of the Substation (E/S)	 	Name of the Line
	 

	 	Valle Verde
	 

	 	Los Cocos
	 

	 	El Piache
	 

	 	Cuidad Carton
	 

	 	La Isleta
	Los Millanes

	 	Isla Bonita
	 

	 	Bahia de Plata
	 

	 	Pedregales
	 

	 	San Juan
	 

	 	La Vecindad
	 

	 	Taritare
	 

	 	Los Martires
	 

	 	Juan Griego
	Morropo

	 	Dumar — Caracola
	 

	 	Bella Vista
	 

	 	Av. Bolivar
	 

	 	El Dandy
	 

	 	Concorde
	 

	 	Costa Azul

b.- On the following 13.8 Kv circuits there is no constituted servitude, but the presumption of
duly constituted semtude provided in the Electric Service Organic Act may be applied.

	 	 	 	 	 
	Substation	 	Circuit	 	Description
	Pampatar

	 	Sambil
	 	Feeds Centro Comercial Sambil
	Los Millanes

	 	El Maco
	 	Feeds El Maco, El Tuey y Punta Cuji.
	Morropo

	 	Sabanamar
	 	Feeds Sabanamar y Porlamar’s El Hambre Street
	Porlamat

	 	Av. Terranova
	 	Feeds the hamlets form Terranova Este Av.

c- On the following 13.8 Kv circuits there is no constituted servitude.

	 	 	 	 	 
	Substation	 	Circuit	 	Description
	Luisa Caceres

	 	San Antonio
	 	Feeds San Antonio and Pedro Luis Briceiio
hamlets.
	Luisa Caceres

	 	ElDatil
	 	Feeds El Datil, Cotoperis I, II and III
	Boca de Rio

	 	El Indio
	 	Feeds Chacachacare and Santa Maria
	Conejeros

	 	Macho Muerto
	 	Feeds Macho Muerto and Los Cuartos

6. — There is no title to vehicle Type: PICK-UP; Year: 1985; Number Plate: 721 -BBJ; Brand: TOYOTA;
Model: FJ45LPK; Body Serial Number: FJ45-947426.

7. — As evidenced in document registered before the Real Estate Registry Public Office of Marino
Municipality in the State of Nueva Esparta on May 23rf, 2006, under N° 5, Volume 18, Protocol 1°,
pages 28 to 40 and before the Real Estate Registry Public Office of Maneiro Municipality in the
same State on June 1st, 2006, under N° 46, Volume 11, Protocol 1°, pages 223 to 238 a first degree
mortgage was granted in order to secure performance bond issued by

 

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Corpbanca, and required by the Nueva Esparta Electric Service Concession Agreement, on the
following real estate:

(i) Land on which Pampatar Substation is located with an area of 2,412 Mts2. Seneca owns the land
as evidenced in document registered before Subordinate Registry Public Office of Maneiro
Municipality in the State of Nueva Esparta on March 16th, 2000, under N° 31, Volume 6, Protocol 1°,
pages 153 to 156

(ii) Land on which Seneca Main Offices are located with an area of 22,500Mts2. Seneca owns the land
as evidenced in document registered before the Subordinate Registry Public Office of Maneiro
Municipality in the State of Nueva Esparta on March 16th, 2000, under N° 31, Volume 6, Protocol 1°,
pages 153 to 156, and the Main Offices as evidenced in document before the same Registry Office on
July 29th, 2003, under N° 18, Volume 4, Protocol 1°, pages 79 to 101.

(iii) Two (2) commercial establishments identified with N° 17 with an area of de 106,88 mts2 and
17-D with an area of 144.03 mts2 located at El Angel Shopping Mall in the city of Porlamar, Marino
Municipality. Seneca owns the aforementioned commercial establishments as evidenced in document
registered before the Subordinate Registry Public Office of Marino Municipality in the State of
Nueva Esparta on January 14th, 1999, under N° 34, Volume 2 Protocol 1°, pages 223 to 230 and on
April 8th, 1999, under N° 6, pages 37 to 46, Volume 1 °, Protocol 3°.

(iv) Two (2) commercial establishments identified with N° 18 with an area of de 104,92 nits2 and
18-D with an area of 144.03 mts2 located at El Angel Shopping Mall in the city of Porlamar, Marino
Municipality. Seneca owns the aforementioned commercial establishments as evidenced in document
registered before the Subordinate Public Registry Office of Marino Municipality in the

State of Nueva Esparta on April 8th, 1999, under N° 31, Volume 30 Protocol 1°, pages 250 to 257 and
on April 7th, 1999, under N° 9, pages 67 to 76, Volume 1°, Protocol 3°.

(v) Two (2) commercial establishments identified with N° 19 with an area of de 104,92 mts2 and 19-D
with an area of 141.66 mts2 located at El Angel Shopping Mall in the city of Porlamar, Marino
Municipality. Seneca owns the aforementioned commercial establishments as evidenced in document
registered before the Subordinate Public Registry Office of Marino Municipality in the State of
Nueva Esparta on January 14* 1999, under N° 33, Volume 2 Protocol 1°, pages 215 to 222 and on April
8*, 1999, under N° 8, pages 57 to 66, Volume 1°, Protocol 3°.

(iv) Two (2) commercial establishments identified with N° 20-A and 20-B, both with an area of de
154,69 mts2 each, located at El Angel Shopping Mall in the city of Porlamar, Marino Municipality.
Seneca owns the before mentioned commercial establishments as evidenced in document registered
before the Subordinate Public Registry Office of Marino Municipality in the Nueva Esparta State on
January 14*, 1999, under N° 9, Volume 2 Protocol 1°, pages 57 to 64 and on April 8*, 1999, under N°
7, pages 47 to 56, Volume 1°, Protocol 3°.

8.- Nueva Esparta Electric Supply Concession Agreement entered between Republic of Venezuela Acting
through the Ministry of Energy and Mines, SENECA Sistema Electrico del Estado Nueva Esparta, C.A.
authenticated by the 27^ Notary Public Office in the Libertador Municipality of the Federal
District on July 17th, 1998, under N° 9, Volume 42, sets forth in its Fourth Clause that the
Electric Supply Concession in the State of Nueva Esparta will have term of 50 years, that is, until
July 17*, 2048. The Eighteenth Clause of the Agreement establishes that upon termination of the
concession all the assets affected to the supply of the service shall gratuitously reverse to the
Republic, free of liens and encumbrances.

 

Table of Contents

Appendix 2.7 Litigation

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Docket	 	 	 	 	 	 
	 	 	Court	 	Number	 	Case	 	Amount	 	Description
	1

	 	First Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	20.286	 	 	 	Lawsuit filed by
Jose R. Lares
against SENECA for
economic/physic al
and moral damages
	 	Bs. 814.720.000,oo
NOTE:

Due to calculation
mistake on the
lawsuit (External
lawyer’s opinion)
the amount of the
action reduces to
Bs. 435.000.000,00
1. -
400.000,00-moral
damages, and
2. — 35.000.000,00
-material damages
	 	Claim for moral and
material damages to
the plaintiff and
his property, who
entered into a
contract with a
third party to
perform works of
removal of aerial
electric lines to
underground lines,
and lost both arms
due to an electric
shock. This trial
presents many
controversial
facts, since the
circumstances
alleged by the
plaintiff in the
complaint are not
coincident with the
facts alleged in
the answer to the
complaint, nor the
allegations of
three trade
companies summoned
and acting as third
parties.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	2

	 	First Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	20.442	 	 	 	Lawsuit filed by
SENECA against
CONSORCIO CVA
seeking payment of
outstanding
amounts.
(Collection action)
	 	Bs. 360.000.000,00	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	3

	 	First Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	21.011	 	 	 	Lawsuit filed by

Ivan De Angelis

against SENECA for

moral damages
	 	Bs. 50.000.000,00
	 	Claim for moral and
material damages
allegedly caused by
officers of SENECA
upon carrying out
inspections to
power consumption
measuring equipment

There are
reasonable
arguments to think
that this claim
should be
dismissed.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	4

	 	Second Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters
of Nueva Esparta
State
	 	6192	 	 	 	Lawsuit fileid by
SENECA against
PENTAG for
Termination of
Contract
	 	Bs. 600.000.000,00	 	 

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Docket	 	 	 	 	 	 
	 	 	Court	 	Number	 	Case	 	Amount	 	Description
	5

	 	Second Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	6229	 	 	 	Lawsuit filed by
SENECA against
Jenny Acuero
seeking payment of
outstanding
amounts.
(Collection action)
	 	Bs. 25.000.000,00	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	6

	 	Second Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	8538	 	 	 	Foreclosure lawsuit

filed by SENECA

against JUMBO

CIUDAD COMERCIAL	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7

	 	Second Court of
First Instance on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	6388	 	 	 	Lawsuit filed by
SENECA against
TELECARIBE seeking
payment of
outstanding
amounts.
(Collection action)
	 	Bs. 72.000.000,00	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	8

	 	Superior Court on
Civil, Mercantile,
Traffic and
Agrarian Matters of
Nueva Esparta State
	 	5.480	 	 	 	Demand for payment
of legal costs 

Brigitte Rudolph W.
(CADAFE Case)
	 	Bs. 125.000.000,00
	 	Demand for Payment
of Legal Costs
derived from final
ruling in the suit
for legal
protection filed by
Brigitte Rudolph W.
against SENECA
(1998).
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	9

	 	Superior Court on
Labor Matters of
Nueva Esparta State
	 	OP02-R- 2006-
 000002
6 3738
	 	Lawsuit filed
against SENECA by
former employees of
PENTAG, Joint
Liability of
Employers
	 	Bs. 55.696.353,69
	 	Lawsuit filed by a
group of former
employees that
provided services
to the company
PENTAG, C.A.,
contractor of
seneca, engaged in
carrying out
costumer, posts and
lighting census.
Plaintiffs claim
payment of social
benefits of labor
nature from both
companies, since
they allege that
existed inherence
in the labor
provided by the
contractor PENTAG,
C.A. to Seneca,
this last one is
jointly liable for
the payment of the
amounts and social
benefits of labor
nature claimed.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	10.

	 	Superior Court on
Labor Matters of
Nueva Esparta State	 	 	 	 	 	 	 	 	 	 

 

Table of Contents

OP02-R-2005-148 y 1516 OP02-L-2004-0000267

Lawsuit filed by Romulo Lorenzo Oliveros against Lecturay Servicios Electricos Buen Viaje and
SENECA seeking payment of outstanding amounts. (Collection action)

Bs. 33.854.398,47

Claim seeking acknowledgement of labor relation that purportedly existed between the plaintiff and
SENECA and payment of social benefits derived from said relation; however, it is indicated the
existence of a company named Lecturas y Servicios Electricos Buen Viaje, C.A., integrated by
several stockholders, being that the plaintiff was actually an employee of Lecturas y Servicios
Electricos Buen Viaje, C.A., so it is alleged that SENECA lacks the quality to be demanded in this
trial.

11 Superior Court on Labor Matters of Nueva Esparta State

OP02-R-2007-000009 6OP02-L-2005-0000580

Lawsuit filed by Pablo Cesar Nunez against SENECA seeking payment of Severance Benefits.

Bs. 611.830.458,58

Claim seeking acknowledgement of labor relation that purportedly existed between the plaintiff and
SENECA since the first service contract entered into on January 1st, 2001 until August 12th, 2005.
Consequendy, payment of social benefits derived from said relation, including vacation pay,
severance pay and further benefits provided by the Collective Bargaining Agreement of the Company

12 First Court on Contentious-Administrative Matters

00351

Lawsuit filed by several employees against SENECA for enforcement of contract

Bs. 421.273.010,08

Action for annulment of settlement entered into by former employees and Seneca before the Labor
Inspectorate, whereby both parties agreed to terminate the labor . relations, payment of social
benefits and a setdement fee, and mutual releases were exchanged. Plaintiffs allege that such
settlement is null and void due to defect of consent, since they mistakenly considered that such
settlement was more favorable in economic terms. In this sense, they alleged that the Company owes
them a series of social benefits of labor nature, including: rise of wages, housing pay, vacation
pay, food pay, and back wages, and profits among others.

	 	 	 	 	 	 	 	 	 	 	 
	13

	 	Third Court of
First Instance of
substantiation,
Mediation and
Execution on Labor
Matters
	 	OP02-L-2006-000 612
	 	Lawsuit filed by
NumarMata against
Electric 3000, CA.
and SENECA seeking
payment of
outstanding
amounts,
(collection action)
	 	Bs. 15.625.507,00
	 	Claim seeking
acknowledgement of
labor relation that
purportedly existed
between the
plaintiff and
SENECA and payment
of social benefits
derived from said
relation; however,
it is indicated the
existence of a
company named
ELECTRIC 3000, C
A., integrated by
several
stockholders, being
that the plaintiff
was actually an
employee of the
ELECTRIC 3000, CA.
so it is alleged
that SENECA lacks
the quality to be
demanded in this
trial

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	14

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-353
	 	Action for
annulment against
SENECA filed by
Migdalia Ramona
Vasquez, Luisa
Beltrana Acosta
Garcia and Beltran
Diaz, (former
employees of
SENECA) + economic
damages
	 	Bs. 277.253.219,72
	 	Action for
annulment of
setdement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature,..’
including: rise of
wages, back wages,
sole
gratifications,
housing pay, food
pay, profits,
vacations, vacation
pay, among others;
	 
	 	 	 	 	 	 	 	 	 	 
	15

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-356
	 	Action for
annulment against
SENECA filed by
Elena Salazar de
Landaeta, Juan
Antonio Hernandez,
Luis Beltran
Velasquez Marin
(former employees
of SENECA) +
economic damages
	 	Bs. 268.075.744,75
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a settlement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others.

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	16

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-351
	 	Action for
annulment against
SENECA filed by
Juana Alcira Diaz
de Cedeno,Jennis
Velasquez and Jose
Gregorio Gonzalez,
(former employees
of SENECA) +
economic damages
	 	Bs. 78.512.411,63
	 	Action for
annulment of
setdement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a settlement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others
	 
	 	 	 	 	 	 	 	 	 	 
	17

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-358
	 	Action for
annulment against
SENECA filed by
Estilito jose
Milano, Neidy del
Valle Monasterios
deIimpio,Jose
Rafael Rojas
(former employees
of SENECA)
	 	Bs. 75.832.264,20
	 	Action for
annulment of
setdement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a settlement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	18

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-352
	 	Action for
annulment against
SENECA filed by
Emiro Rafael
Salazar Brito,
Orlando Jose
Rodriguez Vizcaino,
Alceo Rafael
Velasquez Marcano
(former employees
of SENECA) +
economic damages
	 	Bs. 75.832.264,20
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others
	 
	 	 	 	 	 	 	 	 	 	 
	19

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-355
	 	Action for
annulment against
SENECA filed by
Felix Gomez,
Remigio Ganero and
Luisa Diaz (former
employees of
SENECA) + economic
damages
	 	Bs. 71.103.479,77
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor .
Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such settlement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	20

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-323
	 	Action for
annulment against
SENECA filed by
Teowaldojose Milano
Gonzalez, Jesus
Maria Tineo
Martinez and
Enrique Marcano
Jimenez (former
employees of
SENECA) + economic
damages
	 	Bs. 74.760.199,45
	 	Action for
annulment of
setdement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others
	 
	 	 	 	 	 	 	 	 	 	 
	21

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-357
	 	Action for
annulment against
SENECA filed by
Leonardo Rafael
Gonzalez, Maria
Rosario Medina
Perez and Luis
Alberto Suarez
(former employees
of SENECA) +
economic damages
	 	Bs. 68.443.614,01
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
scries of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others
	 
	 	 	 	 	 	 	 	 	 	 
	22

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-350
	 	Action for
annulment against
SENECA filed by
Jose Rivas, Gonzalo
Rodriguez and
Guillermo Rocca
(former employees
of SENECA) +
economic
	 	Bs. 74.545.447,00
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of

 

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	consent, since they
mistakenly
considered that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others
	 
	 	 	 	 	 	 	 	 	 	 
	23

	 	Supreme Tribunal of
Justice, the Full
Court (Sala Plena)
	 	2006-326
	 	Action for
annulment against
SENECA filed by
Saud Ramon
Villaroel,Jose
German Barreto
Frontado and
Zoraida Veronica
Lopez (former
employees of
SENECA) + economic
damages
	 	Bs. 77.332.539,45
	 	Action for
annulment of
settlement entered
into by former
employees and
Seneca before the
Labor Inspectorate,
whereby both
parties agreed to
terminate the labor
relations, payment
of social benefits
and a setdement
fee, and mutual
releases were
exchanged.
Plaintiffs allege
that such setdement
is null and void
due to defect of
consent, since they
mistakenly
considered • that
such setdement was
more favorable in
economic terms. In
this sense, they
alleged that the
Company owes them a
series of social
benefits of labor
nature, including:
	 

	 	 	 	 	 	 	 	 	 	rise of wages, back
wages, sole
gratifications,
housing pay, food
pay, vacations,
vacation pay, among
others

	 	 	 	 	 	 	 	 	 	 	 	 	 
	24

	 	Regional Archives for the
Judicial Circuit of Nueva
Esparta State
(Remitted under file No.
363, page. 1, official
communication No.
0970-5602 dated
27/07/2006)
	 	 	19.765	 	 	Lawsuit filed by CADAFE
claiming adverse
ownership of land plot on
which Las Hernandez
Substation is built
	 	 
	 	 

 

Table of Contents

Potencial
Litigation

	 	 	 	 	 	 	 	 	 	 	 
	1

	 	Garcia
Municipality’s Tax
Department
	 	 
	 	Tax Assesment

N°J-H-04-2007

received on March

8th, 2007
	 	Bs.
61.939.223.059,00
	 	SENECA filed
defense arguments
before the Garcia
Municipality’s Tax
Department on March
27*, 2007

Criminal Complaints involving Seneca as a victim as of March 28th, 2007

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	1.
18/08/2003 INEPOL Report C13-3626

	 	EX-OFFICIO
	 	Francisco Esteban Gomez Avenue Defendants:
Omar Jose Mendez and Hender Jean Ramos
Quijada. Type of criminal Offense: ATTEMPTED
QUALIFIED THEFT
	 	1st Prosecutor’s
Office. Docket No.
17-F3-0855-03 TRIAL
STAGE. Public and
oral hearing
scheduled 29/07/05
at 11 AM, and
adjourned until
07/09/05 at 10:00
AM, due to the
absence of the
counsel for the
defense. The trial
was scheduled
21/08/06 but it was
adjourned due to
the lack of
available room
until 20/10/06 at
11:00 AM 1” Trial
Court Docket No.
1M-206
	 
	 	 	 	 	 	 
	2.
18/04/05 Polimarino Dckt. 2053-05

	 	Formal complaint
made by Erica
Hernandez and
several residents
of El Poblado.
	 	Alteration of electric meters and collection
of unlawful fees.
El Poblado, calle el Colegio, cruce con
callejon El Chino.
Defendant: Jose Ramon Gil
	 	3rd Prosecutor’s
Office. Docket No.
17 -F3-601-05 TRIAL
STAGE. Defendant
was presented
before die 3rd
Tribunal of Control
on 19/04/05 charged
with EXTORTION AND
MISAPPROPRIATION OF
GOODS FROM A
CRIMINAL OFFENSE,
with a conditional
release
precautionary
measure which
involves appearing
before the court
every thirty days.
On 05/06/05 a power
of attorney was
filed on the
records. The trial
was scheduled
14/08/06 but it was
subsequently
adjourned due to
lack of available
room until
05/10/06. 1* Trial
Court Docket No.
2431
	 
	 	 	 	 	 	 
	3.
15/01/2004 Polimarino Report no.
1641-04

	 	Formal Complaint

made by Angel

Bermudez
	 	Calle Guayacan Sur, Costa Azul
Theft of 250 meters of underground cable
Defendant: Felipe Antonio Lopez.
	 	1* and 3rd
Prosecutor’s
Offices. Docket No.
17-F3-039-04
INVESTIGATION
STAGE. The
Prosecutor’s Office
received the
complaint and the
commencement of
investigations was
ordered by official
communication No.
0127 dated
10/02/04.
On 14/10/04 the
police force
requested members
of SENECA staff to
testify in order to
proceed with the
investigations
	 
	 	 	 	 	 	 
	4.
16/1/2004
CICPC Report No. G-587157

	 	Formal Complaint

made by Angel

Indriago
	 	SENECA, Luisa Caceres
JL UUll
Theft of 700 meters of electrical cable at
Almacen delaPlantaLCA.
	 	1” and 3rd
Prosecutor’s
Offices. Docket No.
17-F3-089-04
INVESTIGATION
STAGE. The
Prosecutor’s
Office-received the
complaint and the
commencement of
investigations was
ordered on 19/01/04

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	5.
13 / 9 / 2003 CICPC Report G-492296

	 	Formal Complaint

made by Marianella

Silva
	 	Av. Bolivar, Urb. Piedra Virgen, El Datil
Theft of electrical cable
	 	1* and 5th
Prosecutor’s
Offices, Docket
No.17-F5-0961-03
INVESTIGATION
STAGE. This case is
to be processed by
the ltt
Prosecutor’s
Office, but it is
waiting for the
police records in
order to commence
proceedings
	 
	 	 	 	 	 	 
	6.
04/03/05 CICPC Report No G-751.813

	 	Formal Complaint

made by

Cruz Manuel Rasse

Rojas
	 	Altagracia, calle Presente Quijada.
Theft of 2 Motorola transmission radios,
black valued at Bs.2 million
	 	1* Prosecutor’s
Office Docket No.
17-F1-298-05
INVESTIGATION
STAGE. Commencement
of investigations
was ordered on
06/04/05. On
21/04/05
Prosecutor’s Office
requested dismissal
of the case
	 
	 	 	 	 	 	 
	 

	 	 	 	each. One pair of
electrical insulated
gloves valued at Bs.l50
thousand. One plastic
lantern, yellow, valued
at Bs.90 thousand. One
hydraulic jack valued at
Bs.l50 thousand and one
lug wrench valued at Bs.
30 thousand Total Bs.
420.000,00	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 
	7.
11 /06 / 2003 CICPC
Report No G-431018

	 	Formal Complaint made by Marianella

Silva
	 	 	 	2nd Prosecutor’s Office Docket No.
17-F2^477-03 INVESTIGATION STAGE. This
Prosecutor’s Office is processing the
case, but the records are with the
Police, Theft and Robbery Brigade,
since 27/05/03
	 
	 	 	 	 	 	 
	8.
08 / 01 / 2004
INEPOL

	 	Formal Complaint made by Pedro

Losada
	 	Villa Rosa
Attempted theft at the
communications tower of
O/C
	 	2nd Prosecutor’s Office Docket No.
17-F2-549-03 INVESTIGATION STAGE. The
Prosecutor’s Office received formal
complaint and on 20/01 /04 it was
ordered the commencement of
investigations.
	 
	 	 	 	 	 	 
	9.
10 / 01 / 2004
Inepol Report No.C-22-4549

	 	EX-OFFICIO
	 	Recuperadora el Datil.
Theft of goods owned by
SENECA and CANTV.
	 	2nd Prosecutor’s Office Docket No.
17-F2-081-04 INVESTIGATION STAGE. It
is at investigation stage since 09/03/04
	 
	 	 	 	 	 	 
	10
11 /02/2004 CICPC
Report No. G-748022

	 	Formal Complaint made by
Dra. Marianella Silva
	 	Costa Azul, Macho Muerto
and Los Bagres
Theft of electrical wiring
	 	2nd Prosecutor’s Office Docket No.
17-F2-133-04 INVESTIGATION STAGE. The
Prosecutor’s Office received the
complaint and the commencement of
investigations was ordered on
13/02/04.
	 
	 	 	 	 	 	 
	11.
06/04/2005 CICPC
Report No.
H-067.052

	 	Formal Complaint made by Angela
Castillo.
	 	Sector Cotoperi 2 calle 7
casa E-143.
Theft of Electric meter.
	 	2nd Prosecutor’s Office Docket No.
17-F2-497-05 INVESTIGATION STAGE.
Commencement of investigations was
ordered on 13/02/04 by the
Prosecutor’s Office.

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	12.
04/09/2005

	 	EX-OFFICIO
	 	Isla de Coche. Near
Cementerio El Bichar
Theft of cables
Criminal Offense:
ATTEMPTED QUALIFIED THEFT
Defendant: J-Fran
Reinaldo Suarez Gonzalez
	 	2nd Prosecutor’s Office Docket No.
17-F2-1257-05 INVESTIGATION STAGE.
This case was remitted ex-officio by
Coche police forces since the
defendant was found with cables from
the public electric wiring. The
prosecutor carried out the
Presentation Hearing on Sunday
04/09/05 Control 2. Docket No. OP01
-P- 05-4684. Judicial Archives Docket
No 8220
	 
	13
05/08/05 INEPOL
Report No. El
6-0400

	 	Formal Complaint

made by

Alexandra Gomez

Garcia
	 	Av. Fucho Tovar
Illegal Connections
	 	2nd Prosecutor’s Office Docket No. 17-F2-1181-05
INVESTIGATION STAGE. The Prosecutor’s Office
ordered commencement of investigations. On
31/01/06 a petition was filed before the
Prosecutor’s Office seeking the Company to
normalize the irregular situation.
	 
	 	 	 	 	 	 
	14.
13/08/04 INEPOL
Report No D16-6399

	 	Formal Complaint

made by

Alexandra Gomez
	 	Luisa Caceres de
Arismendi
Warehouse, Sector
Macho Muerto, via
la Isleta,
Municipio Garcia
Theft of four tires
for vehicles, model
300-040-0207-0
valued at Bs.
94.373,46 each, and
two tires for
forklift trucks,
model
300-040-0301-0
valued at Bs.
5.852,30 each.
Total amount Bs.
389.198,44
	 	3rf Prosecutor’s Office 3° Docket No. 17-F3-848-04
INVESTIGATION STAGE. Commencement of
investigations was ordered on 13/02/04 by the
Prosecutor’s Office.
	 
	 	 	 	 	 	 
	15.
27/01/05 INEPOL
Report No. D16-8495

	 	EX-OFFICIO
	 	Raids carried out
at la Chatarrera
San Juan, in
Carapacho, a scrap
dealer located at
Av. San Juan
Bautista Arismendi,
Sector Macho Muerto
and another one at
Calle Velasquez in
Porlamar.
	 	3* Prosecutor’s Office 3° Docket 17-F3-175-05
INVESTIGATION STAGE. Commencement of
investigations was ordered. The Company may not
request for return of stolen goods until
processed by the prosecution. On 08/03/05 a broad
request was filed for the return of goods found
in the raids carried out by the National Guard.
On 19/05/05 a new petition was filed for the
return of the stolen goods to Seneca. On 09/06/05
the order for the released of stolen goods was
delivered.
	 
	 	 	 	 	 	 
	16.
28/02/05
Prosecutor’s Office
Superior

	 	Formal Complaint
made by Asociacion
de Trabajadores del
Centro Comercial
Jumbo.
Ivano Bonciani et al.
	 	Centro Gudad
Comercial Jumbo.
Formal complaint
related to
incorrect
installation of
electric meters
	 	3rd Prosecutor’s Office 3° Docket No. 17
-F3-340-05 INVESTIGATION STAGE. Commencement of
investigations was ordered on 09/04/05 by the
Prosecutor’s Office, on 09/04/05 information on
the installation of electric meters was requested
from Seneca by official communication.

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	17.
04/06/05 INEPOL
Report No. D16-9876

	 	Formal Complaint
made by
Alexandra Gomez
Garcia.
	 	Calle Guayacan,
urbanizacion Costa
Azul.
Cut of public
electric wiring and
theft of the
control box
	 	3"* Prosecutor’s Office Docket 17- F3-886-05
INVESTIGATION STAGE. Commencement of.
investigations was ordered on 08/06/05
	 
	 	 	 	 	 	 
	18.
01/04/04 INEPOL
Report No.
D-16-5196

	 	Formal Complaint

made by

Alexandra Gomez
	 	Puente de la
Restinga, theft of
100 meters of No. 2
coated conductor
cooper cables,
valued at
Bs.280.000,oo and
100 meters of 2”
wire duct,
Bs. 289.000,oo. 2)
At Juan Griego,
Theft of 6 meters
of 2/0 coated TTU
cooper conductor
valued at Bs.
82.500,oo. 3) Av.
Los Robles. Theft
of AWG coated
cooper threaded
cable valued at Bs
147.000,oo
	 	4* Prosecutor’s Office Dckt 17 -F4-0266-04
INVESTIGATION STAGE. On 2/04/04, said docket was
remitted to the Prosecutor’s Office, enclosed
with official communication No. 0199, and
commencement of investigations was ordered.
Remission to a Prosecutor’s Office still pending.
	 
	19. 06/05/04 INEPOL
Report No Dl
6-5490-04

	 	Formal Complaint

made by Alexandra

Gomez
	 	Several places
	 	4th Prosecutor’s
Office 4° Docket.
17-F4-0423-04
INVESTIGATION
STAGE. Remission to
a Prosecutor’s
Office still
pending.
	 
	 	 	 	 	 	 
	20. 06 / 02 / 2004
INEPOL Report No.
D-6201

	 	Formal Complaint

made by Alexandra

Gomez
	 	1) La Asuncion
Substation, 2) Plaza
Bolivar, la
Asuncion., 1) Theft
of several materials
valued at 9 million
bolivars. 2) theft
of wiring, automatic
start, lighters and
lighting
strengthened valued
at Bs. 13.500.000,oo
Total Bs22.500.000,oo
	 	5th Prosecutor’s
Office. Docket No.
17-F5-0713-04
INVESTIGATION
STAGE. Case was
entered and
commencement of
investigations
ordered. It is
processed by CICPC
under Docket No.
G-749.789

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	21. 26/06/04 INEPOL
report No. Dl
6-6538

	 	Formal Complaint

made by Alexandra

Gomez
	 	TariTari Sector,
2da transversal
near Comercial
Leon.
Theft of 3
stretches of cooper
wire valued at Bs.
225.150,oo
Valparaiso Street
with Campos de Juan
Griego Street.
Theft of one
stretch of cooper
wire valued at Bs.
85.050,oo. 

Pedregales, theft
of two stretches of
cooper wire valued
at Bs. 170.100,oo.
Calle Campos con
Av. Chalia, theft
of one stretch of
cooper wire valued
at Bs. 85.050,oo.
Abre Brecha Sector.
Theft of cooper
line valued at Bs.
85.050,oo.
El Palito Sector,
Pedregales. Theft
of a cooper line
valued at Bs.
85.050,oo.
Altos de Moro de la
Vecindad, near Urb.
Los Cocoteros.
Theft of 4
stretches of cooper
wire line valued at
Bs. 340.000,oo.
Total 1.075.450,oo
	 	5th Prosecutor’s
Office 5° Docket
No. 17-F5- 0833-04
INVESTIGATION
STAGE. The
prosecution ordered
commencement of
investigations. The
police department
requested a
technical-scientific
report on the
stolen material and
information about
the defendant. On
17/09/04 Inspector
Marin received a
report .containing
photographs of the
places where the
theft took place
	 
	 	 	 	 	 	 
	22. 7/11/2004 GN
Report No.

	 	Formal Complaint
	 	Luisa Caceres de

Arismendi Warehouse
	 	5th Prosecutor’s
Office Docket No.
17-F5 -1216-04
INVESTIGATION
STAGE. On 02/12/04
said docket was
remitted to
Criminal
Investigations
Department (CICPC)
so as to proceed
with the
investigations
	 
	 	 	 	 	 	 
	23.14/09/05 INEPOL
Report No. E16-0698

	 	Formal Complaint
made by Alexandra
Gomez Garcia.
	 	Several thefts in
Maneiro and Marino
Municipalities,
Playa el Angel and
Costa Azul Sectors.

Several meters of
cable and fittings
	 	5th Prosecutor’s
Office Docket No.
17-F5 -1271-05
INVESTIGATION STAGE
commencement of
investigations was
ordered on 22/09/05

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	24. 14/04/05 INEPOL
Report No. D16-9203

	 	Formal Complaint made
by Alexandra Gomez Garcia.
	 	Boca del Rio to Las
Hernandez Substation, at
Santa Maria. Theft of 2/0
cooper wire, two stretches
of 200 meters each, and
different fittings and
parts. Total value: Bs.
2.086.372,01
	 	5th Prosecutor’s Office Docket No. 17- F5-0567-05 On 22/04/05 the
prosecution received the complaint and ordered commencement of criminal
investigations. On 30/05/05 the prosecution received the corresponding
records from the Criminal Investigations Department On 14/2/07, the
court ordered Stay of Proceedings.
	 
	 	 	 	 	 	 
	25. 15/04/04 INEPOL
Report No. Dl-5326

	 	Formal Complaint made
by representatives of
Seneca
	 	Festejos Super Portu. Calle
Maria Losada, Sector Sabana
Mar.
An electric meter was being
placed at this business
premises without an
installation order due to
delinquent accounts

Criminal Offense: Qualified
Fraud.
Defendants: Tomas Enriquez
Guzman Silva, Adolfo Rafael
Guerra Sihra and Joscar Luis
Lares Hernandez.
	 	1st Prosecutor’s Office 1° Dckt 17-F1 -434-04 CONCLUSIVE ACT PENDING.
On 16/04/04 the presentation hearing was carried out by the Prosecution
before the Fourth Tribunal of Control, and the defendant was charged
with QUALIFIED FRAUD with a conditional release precautionary measure
which involves appearing before the court every fifteen days. Juneima
Cordero takes te case over and indicates that it has been a
transgression of article 26 of the Constitution, therefore, the Court
requests the Prosecutor’s Office to issue conclusive act The
prosecution issues summons upon the defendants. On 22/06/06 the
Prosecutor’s Office request a certified copy of the Presentation
Hearing records. Control 3. Docket No.C3-7871-04 Judicial Archives
Docket No 6261
	 
	 	 	 	 	 	 
	26.
03/05/04 INEPOL Report
No. D8-5471

	 	EX-OFFICIO
	 	Qualified Offense.
Appropriation of goods from
criminal Offense
	 	1” Prosecutor’s Office 1° Dckt. 17-F1 -693-04
(4th Prosecutor’s Office 4° 0381) Case was entered on
12/07/04
CONCLUSIVE REPORT PENDING. Charges against
defendants Roberto Jose Ruiz and Manuel Masks still
pending. The court granted a conditional release
precautionary measure hich involves appearing before
the court every fifteen days
Control 4. Docket No. 7489 Judicial Archives Docket
6448
	 
	 	 	 	 	 	 
	27.
01/03/04 GN
Report No. 027

	 	EX-OFFICIO
	 	Recuperadora de Metales

Heracleo Gomez

Investigation proceedings
	 	2nd Prosecutor’s Office Docket No. 17-F2-188-04
CONCLUSIVE REPORT PENDING. Marcelo Heracleo Gomez
was charged. The Prosecutor’s Office received
criminal investigation records from the National
Guard and is currendy preparing conclusive report On
28/04/05 the return of stolen materials was
requested by the Company’s attorneys

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	28.
15/04/04

	 	Formal Complaint made

by Lairon Jimenez
	 	Isla de Coche

Theft at business premises
	 	1* Prosecutor’s Office Docket No. 17-F1-375-04
CONCLUSIVE REPORT PENDING. On 29/04/04 it was
remitted to the National Guard by official
communication No. NE1-555-04 so as to commence the
investigations. The prosecution issued an arrest
warrant against the defendant, Raiber Jose Carreno.
CHARGES: QUALIFIED THEFT. On 04/10/04 the
prosecution issued an arrest warrant On 25/07/05 it
is requested the dismissal of the case
	 
	 	 	 	 	 	 
	24/08/05 INEPOL Report
No. E16-0582

	 	Formal Complaint made

by Alexandra Gomez Garcia
	 	Res. Villas Castilla Mar, Juan
Griego, Av. Juan de CasteUanos
Illegal connections Second
Offense.
	 	Prosecutor’s Office 1° Dckt. 17-F1256-05 CONCLUSIVE
REPORT PENDING. Commencement of investigations was
ordered to the National Guard on 29/09/05. A
petition was filed for the prosecution to render a
conclusive report. Records were remitted to the
Criminal Investigations Department on 18/01/06, and
it is still pending the conclusive report by^ the
prosecution.
	 
	 	 	 	 	 	 
	30.
14/05/04 INEPOL Report No
D14-5569

	 	EX-OFFICIO
	 	At the Hospital
An individual was found and
arrested by the Police with a
bag of cables used by the
Company to coat electrical
control panels, different
colors and No. 18, with
necessary fittings for power
connection and transmission
	 	5* Prosecutor’s Office Docket No. 17-F5-0477-04
PRELIMINARY HEARING PENDING. On May 15 2007, the
prosecutor presented the case and Luis Gregorio
Perez Saarez was charged with QUALIFIED THEFT before
the 2nd Tribunal of Control, with a conditional
release precautionary measure which involves
appearing before the court every thirty days. On
August 25th, 2004 the prosecution changed charges to
APPROPRIATION OF GOODS FROM CRIMINAL OFFENSE, with
the same precautionary measure. Hearing was
scheduled 28/10/04 at 1:00 p.m., and subsequendy
adjourned due to the absence of the defendant until
11/04/05 at 01:00 PM. The defendant did not appear
before the court. The hearing was scheduled 19/07/05
at 12:00 PM, and the defendant did not appear before
the court On 26/07/05 the court issued an arrest
warrant
Control 4. Dckt No. C4-7491. Judicial Archives 6363
	 
	 	 	 	 	 	 
	31
14/09/05
INTEPOL Report No.
E16-0699

	 	Formal Complaint made

by Alexandra Gomez Garcia
	 	Several thefts at Sabana Mar,
Villa Rosal and Costa Azul.
Theft of several meters of
cable and different fittings
	 	Superior Prosecutor’s Office. Dckt 17 INVESTIGATION
STAGE. Court assignmentpending
	 
	 	 	 	 	 	 
	32

	 	Formal Complaint made

by Alexandra Gomez Garcia
	 	Seneca’s facilities
	 	5th Prosecutor’s Office Dckt 17-F5-1365-05
INVESTIGATION STAGE The Prosecutor’s Office ordered
the commencement of investigations
	 
	 	 	 	 	 	 
	33.
17/01/07 INEPOL Report
No. C-DAI-002-01-07

	 	Formal Complaint made

by Marianella Silva Brea
	 	Several thefts: At Santa Maria,
Chacachacare and Los Gomez of
Tubores Municipality, 2/0
cooper conductor cable
stretches corresponding to the
34.5kv Las Hernandez— Boca de
Rio power line
	 	Superior Prosecutor’s Office INVESTIGATION STAGE.
Court assignment pending

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	Mode of	 	 	 	 
	 	 	Commencement of	 	 	 	 
	Commencement of criminal	 	criminal	 	 	 	 
	investigation	 	investigation	 	Place and Cause of Action	 	Remarks
	34.
19/02/07 CICPC Report No.
H-485.750

	 	Formal Complaint made

by Marianella Silva Brea
	 	Several thefts: At Carretera
Nacional Boca de Rio, Tubores
and Peninsula de Macanao
Municipalities, 2/0 cooper
conductor cable stretches
corresponding to the 34.5kv Las
Hernandez— Boca de Rio power
line
	 	Superior Prosecutor’s Office INVESTIGATION STAGE.
Court assignment pending
	 
	 	 	 	 	 	 
	35 12/03/07 INEPOL Report
No. C-DAI-002-03-07

	 	Formal Complaint made

by Marianella Silva Brea
	 	Several thefts: At Las
Hernandez Substation (doors of
the Battery Room) and at
Carretera Nacional Boca de Rio,
Tubores and Peninsula de
Macanao municipalities, 2/0
cooper conductor cable
stretches corresponding to the
34.5kv Las Hernandez-Boca de
Rio power line.
	 	Superior Prosecutor’s Office INVESTIGATION STAGE.
Court assignment pending
	 
	 	 	 	 	 	 
	36.
15-03-07 INEPOL Report
No. CPP-056-15-03-07

	 	Formal Complaint made

by Jose Mata
	 	Several Larcenies: (£) at Las
Hernandez Subsation (doors from
the Batteries’ Room) and (H)
Theft of streches of copper
conductor caliber 2/0 on the
National Road Boca de Rio in
the Tubores and Macanao
Municipalities that belong to
the 34.5 Kv line Las Hernandez
-Boca de Rio
	 	Superior Prosecutor’s Office INVESTIGATION STAGE.
 Court assignment pending
	 
	 	 	 	 	 	 
	37. 19-03-07 INEPOL
Report No. CPA-028-03-
07

	 	Formal Complaint made

by Jose Mata
	 	Several Larcenies: (i) at Las
Hernandez Subsation (doors from
the Batteries’ Room) and (ti)
Theft of streches of copper
conductor caliber 2/0 on the
National Road Boca de Rio in
the Tubores and Macanao
Municipalities that belong to
the 34.5 Kv line Las Hernandez
-Boca de Rio.
	 	Superior Prosecutor’s Office INVESTIGATION STAGE.
 Court assignment pending

 

Table of Contents

Appendix 2,11 Assets* Condition

1) 115 kV underwater cable Chacopata-Luisa Caseres de Arismendi Plant

The underwater cable consists of four 28 km, cooper individual conductors of approximately 28km
long OF type (Internal oil circulation for cooling) manufactured by Fujikura of Japan and installed
between 1975 and 1977. Design capacity of 100 MVA. Discontinuities on the protective metallic mesh
caused by anchors and/or deep-sea trawling, have caused inefficiency in the operation of the
cathodic protection at least for the last 15 years; therefore the cable should be operated up to
75% of its designed capacity. One of the four cables is kept as a “reserve” and operated when one
of die other three is out of service due to maintenance operations or inspection. As a result of
such inspection it was determined that two of the four cables have some oil leak apparendy in the
Chacopata extreme and are partially under control While awaiting new repairs, the cables are being
operated at 60 to 65% design capacity. Repairs consist of identifying the precise point of the
leak, applying a seal or other repair technique done at the precise junction and replacing the
damage section. These repairs are of outmost priority and should be performed immediately during
the second quarter subject to the availability of Fujikura or other vendor managing such
technology.

2) Unit 03- MS- 5001P Serial # 244.681

Unit 03 is one of seven Frame 5 gas turbines (diesel operated), manufactured by AEG Kanis, in 1977,
installed in the Luisa Caseres de Arismendi Plant. In 1999, the unit was converted in its main
components to “High Tech” obtaining an increase in power and a specific reduction in fuel
consumption. Since its major inspection (3rd quarter 2004) the unit has operated 16,000 hours. The
unit was shut down due to high vibrations caused by a detachment of material from blinding. A
boroscopic inspection was performed and it was determined that the second stage blinding and
thermal blocks are damaged. The required spare parts for replacement and inspection of hot gases
have been ordered from the manufacturer (GE). 90% of these spare parts are already in stock at the
SENECA warehouse. Replacing and assembling the unit has already begun according to the current
contract signed with GE. Expected date to be in service is April / May 07.

3) Unit 10- PG 6561B- Serial # 832

Unit 10 is one of two Frame 6B owned by CMS Enterprises currently under a leasing agreement with
SENECA. This unit was manufactured by GE-Alsthom (GEEPE) in 1999 and put in service during the
first quarter of 2000. During its operation, routine inspections have been performed to determine
the condition of main components which have shown normal wear considering the type of operation,
fuel, weather and air. Since its last major overhaul the unit has operated 30,000 hours
(manufacturers recommended interval 32,000 hours). An inspection of hot gases was planned for last
quarter of 2006 (manufacturer’s recommended interval for a hot gas path inspection is 16,000
hours); however, such inspection had to be postponed due to suppliers’ delivery delay of certain
spare parts. This inspection was then replaced by a major inspection which is expected to occur in
mid April. During such time and as a safety measure the unit’s release temperature has been lowered
to 490*C and its power reduced to 20MW. During 2006, a series of boroscopic inspections were
performed to monitor and deterioration levels of main components were determined.

4) GT Unit 11- PG 6561B- Serial # 837

Unit 11 is one of two Frame 6B owned by CMS Enterprises currendy under a leasing agreement with
SENECA. This unit was manufactured by GE-Alsthom (GEEPE) in 1999 and put in service during the
second quarter of 2000. Since its last major overhaul the unit has operated 23,000 hours
(manufacturer’s recommended interval is 32,000). An inspection of hot gases was planned for the
first quarter of 2007 (manufacturer’s recommended interval for a hot gas path inspection is 16,000
hours); however, a delay in the closing down of Unit 10 has caused the hot gases inspection of Unit
11 to be postponed. Consequendy, a major overhaul is to be performed during the last quarter of
2007 or beginning of 2008. During such time and as a safety measure the fire temperature of the
unit has been reduced.

5) Los Millanes — La Asuncion 115 kV power line.

High voltage, open air power line interconnecting two substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1981, comprises 3 type ACAR conductors with 350 MCM and 80
MVA capacity. The replacement of two towers has been scheduled for March 07. This has already been
contracted and the work has begun. At least 3 Km of said power line lack a guard conductor.

 

Table of Contents

6) La Asuncion — Pampatar- Los Robles 115 kV power line.

High voltage, open air power line interconnecting three substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1981/1983, comprises 3 type ACAR conductors with 350 MCM
and 80 MVA capacity. 8 km approximately lack a guard conductor.

7) Luisa Caceres — Porlamar — Los Robles 115 kV power line.

High voltage, open air power line interconnecting three substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1993, comprises 2x3 ACAR conductors with 500 MCM and 120
MVA capacity. Tower 15 needs to be replaced due to saline contamination. Another six towers are to
be inspected. Near 3 km lack a guard conductor.

 

Table of Contents

Appendix 2.11 Assets’ Condition

1) 115 kV underwater cable Chacopata-Luisa Caseres de Arismendi Plant

The underwater cable consists of four 28 km, cooper individual conductors of approximately 28km
long OF type (Internal oil circulation for cooling) manufactured by Fujikura of Japan and installed
between 1975 and 1977. Design capacity of 100 MVA. Discontinuities on the protective metallic mesh
caused by anchors and/or deep-sea trawling, have caused inefficiency in the operation of the
cathodic protection at least for the last 15 years; therefore the cable should be operated up to
75% of its designed capacity. One of the four cables is kept as a “reserve” and operated when one
of the other three is out of service due to maintenance operations or inspection. As a result of
such inspection it was determined that two of the four cables have some oil leak apparendy in the
Chacopata extreme and are partially under control. While awaiting new repairs, the cables are being
operated at 60 to 65% design capacity. Repairs consist of identifying the precise point of the
leak, applying a seal or other repair technique done at the precise junction and replacing the
damage section. These repairs are of outmost priority and should be performed immediately during
the second quarter subject to the availability of Fujikura or other vendor managing such
technology.

2) Unit 03- MS- 5001P Serial # 244.681

Unit 03 is one of seven Frame 5 gas turbines (diesel operated), manufactured by AEG Kanis, in 1977,
installed in the Luisa Caseres de Arismendi Plant. In 1999, the unit was converted in its main
components to “High Tech” obtaining an increase in power and a specific reduction in fuel
consumption. Since its major inspection (3rd quarter 2004) die unit has operated 16,000 hours. The
unit was. shut down due to high vibrations caused by a detachment of material from blinding. A
boroscopic inspection was performed and it was determined that the second stage blinding and
thermal blocks are damaged. The required spare parts for replacement and inspection of hot gases
have been ordered from the manufacturer (GE). 90% of these spare parts are already in stock at the
SENECA warehouse. Replacing and assembling the unit has already begun according to the current
contract signed with GE. Expected date to be in service is April / May 07.

3) Unit 10- PG 6561B- Serial #832

Unit 10 is one of two Frame 6B owned by CMS Enterprises currendy under a leasing agreement with
SENECA. This unit was manufactured by GE-Alsthom (GEEPE) in 1999 and put in service during the
first quarter of 2000. During its operation, routine inspections have been performed to determine
the condition of main components which have shown normal wear considering the type of operation,
fuel, weather and air. Since its last major overhaul the unit has operated 30,000 hours
(manufacturer’s recommended interval 32,000 hours). An inspection of hot gases was planned for last
quarter of 2006 (manufacturer’s recommended interval for a hot gas path inspection is 16,000
hours); however, such inspection had to be postponed due to suppliers’ delivery delay of certain
spare parts. This inspection was then replaced by a major inspection which is expected to occur in
mid April During such time and as a safety measure the unit’s release temperature has been lowered
to 490*C and its power reduced to 20MW. During 2006, a series of boroscopic inspections were
performed to monitor and deterioration levels of main components were determined.

4) GT Unit 11- PG 6561B- Serial # 837

Unit 11 is one of two Frame 6B owned by CMS Enterprises currendy under a leasing agreement with
SENECA. This unit was manufactured by GE-Alsthom (GEEPE) in 1999 and put in service during the
second quarter of 2000. Since its last major overhaul the unit has operated 23,000 hours
(manufacturer’s recommended interval is 32,000). An inspection of hot gases was planned for the
first quarter of 2007 (manufacturer’s recommended interval for a hot gas path inspection is 16,000
hours); however, a delay in the closing down of Unit 10 has caused the hot gases inspection of Unit
11 to be postponed. Consequendy, a major overhaul is to be performed during the last quarter of
2007 or beginning of 2008. During such time and as a safety measure the fire temperature of the
unit has been reduced.

5) Los Millanes — La Asuncion 115 kV power line.

High voltage, open air power line interconnecting two substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1981, comprises 3 type ACAR conductors with 350 MCM and 80
MVA capacity. The replacement of two towers has been scheduled for March 07. This has already been
contracted and the work has begun. At least 3 Km of said power line lack a guard conductor.

 

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6) La Asuncion — Pampatar- Los Robles 115 kV power line.

High voltage, open air power line interconnecting three substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1981/1983, comprises 3 type ACAR conductors with ‘ 350 MCM
and 80 MVA capacity. 8 km approximately lack a guard conductor.

7) Luisa Caceres — Porlamar — Los Robles 115 kV power line.

High voltage, open air power line interconnecting three substations of 115 kV of the SENECA high
voltage ring. This power line, built in 1993, comprises 2x3 ACAR conductors with 500 MCM and 120
MVA capacity. Tower 15 needs to be replaced due to saline contamination. Another six towers are to
be inspected. Near 3 km lack a guard conductor.

 

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Appendix 2.13 Environmental Liability

1. Industrial water recollection pond, Luisa Caceres de Arismendi Plant:

Except for suspended solids, biochemical oxygen demand and chemical oxygen demand, all the
parameters (21) analyzed show values below the standard limits or range set forth in Decree N0.883,
which establishes the Rules for the Classification and Quality Control of Water Bodies and
Effluents or Wastewater published in the Extraordinary Official Gazette NO. 5021 dated October 11,
1985. The test results have been sent to the Ministry of Environment and Natural Resources. SENECA
continues to take corrective actions to bring these measures into compliance.

2. Industrial Effluent, Coche Plant:

Except for hydrogen potential, mineral and fuel gases and oils, biochemical oxygen demand and
chemical oxygen demand, all the parameters (21) analyzed show values below the standard limits or
range set forth in Decree N0.883, which establishes the Rules for the Classification and Quality
Control of Water Bodies and Effluents or Wastewater, published in the Extraordinary Official
Gazette NO. 5021 dated October 11,1985. The test results have been sent to the Ministry of
Environment and Natural Resources.

3. Noise Levels, Luisa Caceres de Arismendi Plant:

The noise level equivalent (Leq) and the noise level exceeded during 10% of testing period (L10)
in the peripheral areas showed that during night hours the levels were higher than the tolerable
noise established in Decree NO. 2217 which sets forth the Rules on Noise Pollution Control
published in the Special Official Gazette NO.4.418 dated April 23, 1992 for areas classified as
Zone IV. The test results have been sent to the Ministry of Environment and Natural Resources.
SENECA continues to take corrective actions to bring these measures into compliance.

4. Noise Levels, Coche Plant:

The noise level equivalent (Leq) and the noise level exceeded during 10% of testing period (L10)
in the peripheral areas showed that during day and night hours the levels were higher than the
tolerable noise established in Decree NO. 2217 which sets forth the Rules on Noise Pollution
Control published in the Special Official Gazette NO.4.418 dated April 23, 1992 for areas
classified as Zone IV. The test results have been sent to the Ministry of Environment and Natural
Resources.

5. Soil Characteristics, Coche Plant: There are two precise pollution points with hydrocarbons
sub-products (Fuel pumping system around 6m2 and adjacent area to Unit CAT01 55m2approx.)

6. Equipment that may contain PCB: There are two 660 kVA Marelli transformers manufactured in 1953
currendy out of service which may contain Askarel dielectric oil with capacity of approximately 430
litters each. This equipment has been isolated, covered and kept in metal boxes and shows no signs
of leaking. The test results have been sent to the Ministry of Environment and Natural Resources.

7. Underwater Cable: The underwater cable consists of four individual cooper conductors of
approximately 28km long, OF type (Internal oil circulation for cooling) manufactured by Fujikura of
Japan and installed between 1975 and 1977. As a result of inspections it was determined that two of
the four cables have some oil leak apparendy in the Chacopata extreme which are partially under
control. Repairs consist of identifying the precise point of the leak, applying a seal or other
repair technique, perform the relevant junction and replace the damaged section. These repairs are
of outmost priority and should be performed immediately during the second quarter subject to the
availability of Fujikura or other vendor managing such technology. SENECA continues to take
corrective actions to bring these measures into compliance.

 

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Appendix 4.1 Seneca’s Activities

1. The Maintenance Agreement entered into by GE and SENECA dated July 1, 2005 provides that SENECA
shall confirm to GE prior to shipping that all payments related to the shipping of spare parts from
abroad shall be covered by the guaranty issued by CMS Electric & Gas, LLC, in favor of GE. As
explained hereunder such guaranty is no longer in effect and shall not be renewed as consequence of
the sale of SENECA. GE could request a payment guaranty for the shipping of spare parts from
abroad.

On March 1, 2004, CMS Electric & Gas, L.L.C., issued a payment guaranty in favor of GE which was
renewed for the last time on June 29,2006. Said renewal established that the guaranty was to be in
effect until December 29, 2006 and would only cover those spare parts and equipment requested in a
letter dated June 29, 2006 which confirmed GE’s quotation NO.06-1281 as evidenced by SENECA’s
Purchase Order No.38315, up to the amount of USD 956,641.71. In light of such guaranty CMS Electric
& Gas, L.L.C., and SENECA signed a Reimbursement Agreement whereby SENECA agrees to repay any and
all costs incurred by CMS Electric & Gas, L.L.C., pursuant the aforementioned guaranty. Effective
as of March 26, 2007, the Reimbursement Agreement was terminated in all respects and therefore
SENECA is released of any payment or reimbursement obligation.

2. The All Risk Insurance Contract NO 01-04-01914-22-001 entered into with Banesco Seguros, C.A.,
which is in effect from December 14, 2006 until December 14, 2007 establishes as a requirement of
the reinsurance contract set forth in Attachment 6 (Insurance Premium payment Requirements
Attachment NO 22-06-9-03 Special Conditions) that the reinsurance premium owed from the date of the
agreement shall be paid and received by the reinsures before midnight on April 14, 2007. In the
event that such conditions are not met, the reinsurance contract shall be terminated on the
aforesaid date and the reinsured shall pay the premium calculated on a pro rata basis for the time
at risk. Regarding this matter Banesco Seguros, C A., requested authorization to purchase foreign
currency from the Currency Administration Commission (CADIVI) in order to pay the reinsurers:
however said authorization has not yet been granted.

3. Clause NO 5 (Worsening of Risk of the Especial Conditions for Industry All Risk Attachment) of
the AH Risk Insurance Contract NO 01-04-01914-22-001 entered into with Banesco Seguros, C.A., which
is in effect from December 14, 2006 until December 14, 2007 states that if during the life of the
policy the risk was change, the insured shall inform Banesco Seguros, CA. of such changes by
written notice sent within five (5) consecutive days following the date in which the insured became
aware of such changes indicating the precise changes of risk. Banesco Seguros, C.A., shall have
fifteen (5) consecutive days commencing on the date notice is received to propose amending or
terminating the policy. Additionally, it is set forth that the transfer of interest that the
insurer has in the properties subject to the agreement shall constitute a risk change fact. On
March 2, 2007 SENECA informed Marsh Venezuela, C.A., that upon the purchase of SENECA’s shares and
the Equipment by Buyer, the same maintenance programs will continue in effect. Seller has also
requested a confirmation that the purchase of SENECA’s shares and the Equipment is not a worsening
of risk; about this matter, on March 15*, 2007 Banesco Seguros,

CA. informed the reassurer through Marsh Venezuela, CA. that Banesco Seguros, CA. would keep in
effect SENECA’s insurance policies under the same current conditions and including the new holder
of SENECA’s shares, PDVSA.

4. Difficulties with diesei transportation/supply: SENECA’s Luisa Caceres Plant has a storage
capacity of approximately 12.5 million liters, while the daily average diesei consumption is
approximately 1.5 million liters, seven days a week (with peaks up to 1.7 million liter on holiday
season). Due to various circumstances (including without limitation, dispatching problems, limited
hours of operation at PDVSA’s El Guamache Plant, unsuitable and unreliable transportation, traffic
botdenecks, rate disputes with transporters and increased demand on Margarita Island), SENECA’s
inventories of diesei fuel have reached an historically low level of 2.8 million liters. Such
information is reported daily to the Ministry of the Popular Power for Energy and Petroleum
(Electric Room and Internal Market Division), to the National Management Center, to PDVSA and
Deitaven.

 

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SENECA could run short of diesei fuel to operate its plants. Prior to Closing, SENECA will continue
to take such actions (or undertake new actions) as it deems reasonably necessary to maintain and
replenish its inventories of diesei fuel SENECA has previously proposed, among others, the
following solutions:

a) to establish a self-dispacth system in El Guamache

b) to extend dispatch hours until inventory replenishment

c) to dispatch on Sundays and holidays until inventory replenishment

d) Once the inventory is replenished agree with PDVSA/Deltaven delivery of product in Luisa Caseres
de Arismendi Plant, allowing PDVSA/Deltaven to manage with more flexibility and opportunity the
dispatch of fuel, including gas (service stations) and SENECA requirements.

5. On March 23, 2007, SENECA received notice from the regional Labor Authority that a new Labor
Contract has been proposed by SENECA’s labor union. The labor contract proposes wage increases in
excess of three hundred percent (300%). The first meeting before the Labor Authority is scheduled
for March 28, 2007 which was postponed by the Labor Inspector to be held on April 3TM, 2007. SENECA
will continue to take such actions as reasonably necessary to delay the first meeting and/or
postpone negotiations with the labor union until after Closing. If unsuccessful, SENECA may enter
into negotiations with the labor union regarding the proposed Labor Contract

6. As mentioned on Appendix 2.6, on March 8th, 2007 SENECA received assessment N° J-H.04-2007
issued by the Mayor’s Office Tax Department of the Garcia Municipality, in connection with years
1998 to 2006 for the amount of Bs. 61,939,223,059.00, based on Municipality’s Ordinance on
Industrial and Commercial License and the Municipal Ordinance on Urban Property Tax. To this
respect, SENECA filed defense arguments before the Garcia Municipality’s Tax Department on March
27th, 2007.

7. As describe on Appendix 2.7, there are current and potential litigation in which SENECA is
either the plaintiff or defendant processed before the Courts there mentioned. On the Appendix 2.7
all current criminal complaints are also described; in all of which SENECA is the victim.

8. As described in detail on Appendix 2.11, on the assets there mentioned some activities are being
carried out or need to be carried out as established on the aforementioned Appendix.

9. As describe don Appendix 2.13, there are potential environmental liabilities against which
SENECA continues to take corrective actions to bring these measures into compliance including the
notification of these situations to the Ministry of Environment and Natural Resources.

Schedule 2.12

Important Contracts in force entered into by Seneca

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Subject Matter of	 	Termination Date	 	Aprox. Annual	 	 
	Contracting Party	 	Contract	 	(dd/mm/yyyy)	 	Cost ($)	 	Status
	MINISTRY OF ENERGY 

AND OIL

	 	CONCESSION CONTRACT
	 	26/07/2048
	 	 	 	 	 	In force
	DELTAVEN

	 	Diesel supply for
generation in Luisa
Caceres Plant and Coche
Plant
	 	27/07/2008
	 	12.574.884	 	In force

 

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	 	 	Subject Matter of	 	Termination Date	 	Aprox. Annual	 	 
	Contracting Party	 	Contract	 	(dd/mm/yyyy)	 	Cost ($)	 	Status
	EDELCA (1)

	 	Power delivered at
Substations Chacopata I
and II
	 	01/07/2018
	 	5.193.455	 	In force
	GE Energy Parts, 

General Electric 

International, 

Turbimeca

	 	Multiannual maintenance

plan for Frame 5

generation units
	 	30/06/2009
	 	2.000.000	 	In force
	MANPRESA / SINEAUCA

	 	Processing and collection
of garbage disposal fees
	 	14/07/2007
	 	1.311.628	 	In force
	EDELCA (2)

	 	Transportation Services
(Toll) power delivered at
Substations Chacopata I
and II
	 	01/07/2018
	 	1.036.160	 	In force
	Banesco Seguros

	 	(Industrial) Property

damage insurance policy
	 	14/12/2007
	 	840.000	 	In force
	BANESCO/ MARSH /London 

Reinsurers

	 	All Risk Insurance Policy
	 	12/12/2007
	 	800.000	 	Reinsurers payment
is
being processed
	General Electric
International/Turbinas
y
Mecanica, C A.

	 	TG 10 Unit Major

Maintenance
	 	19/06/07 approx.,
until the
completion of the
work
	 	750.000	 	In force
	Inversiones El
Taparo, CA.

	 	Diesel transportation
service to Luisa Caceres
Plant and Coche Plant
	 	30/11/2006
	 	684.681	 	Expired
	Sigo

	 	Food Voucher Payments to
SENECA’s Employees and
Workers on Payroll
	 	23/05/2007
	 	558.140	 	In force
	Makler 

Administradora

	 	Administration of
Self-Administered Health
Plan
	 	31/07/2007
	 	446.512	 	In force
	CANTV

	 	Leasing of poles owned by
SENECA and used by CANTV
for rendering services to
third parties
	 	30/06/2007
	 	418.605	 	In force

 

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	 	 	Subject Matter of	 	Termination Date	 	Aprox. Annual	 	 
	Contracting Party	 	Contract	 	(dd/mm/yyyy)	 	Cost ($)	 	Status
	Venequip, S.A.

	 	Coche Plant’s Unit #
CAT-02 overhaul
	 	Until delivery date.
Estimated date: 6
weeks from delivery
of spare parts
	 	354.889	 	In force
	Venequip, S.A.

	 	Coche Plant’s Unit #
CAT-05 overhaul
	 	Until delivery date.
Estimated date: 6
weeks —from delivery
of spare parts
	 	354.889	 	In process
	Seguridad
Venezuela, C.A.

	 	Surveillance and
Protection of SENECA’s
facilities
	 	31/01/2007
	 	252.000	 	Agreed. Written
contract is being
prepared by the
Legal Department
	Servicios Tecnicos
Turbicar, CA.

	 	Operation and regular
maintenance of Coche
Plant
	 	09/08/2007
	 	77.348	 	In force

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