PARTIAL SPIN-OFF AND ITS EFFECTS. 3.1. Partial Spin-off. The Partial Spin-off will be through the merge into CPFL Energia of the Demerged Assets of CPFL Geração, so that the first will succeed the second, in all its assets, rights and obligations related to the Demerged Assets, pursuant to articles 227 and 229 of the Brazilian Corporate Law. 3.2. Exchange Ratio and inapplicability of article 264 of the Brazilian Corporate Law. Considering that (i) CPFL Geração is a wholly owned subsidiary of CPFL Energia; (ii) the Partial Spin-Off will not result in an increase in CPFL Energia's equity, since the equity value of the Demerged Assets is already fully reflected in its net asset, resulting in the transfer of the Demerged Assets being a mere accounting substitution of the value of the equity interest held by CPFL Energia in CPFL Geração, there is no mention of an exchange ratio to be negotiated between the Parties' managements, nor in a capital increase resulting from the Partial Spin- off, and therefore the provisions of article 264 of the Brazilian Corporate Law are inapplicable1. 3.3. Capital Reduction and Amendment to CPFL Geração’s Bylaws. The Partial Spin-Off will result in the reduction of CPFL Geração's capital stock in the amount of R$ 350,054,157.40, according to the Appraisal Report, also observing the accounting transactions carried out "line by line" in CPFL Geração's net asset due to the Partial Spin-Off, as detailed below: Este documento foi assinado digitalmente por Xxxxxxxxx Xxxx Xx Xxxx Xxxxxx Xxxxxx, Xxxxxxx Xxxxx Xxxxxxxxxx e Xxxxxx Xxxxxxxx Xxxxxxx. Para verificar as assinaturas vá ao site xxxxx://xxx.xxxxxxxxxxxxxxxxxxx.xxx.xx:000 e utilize o código 75DC-42E2-2AA2-6252.
