BRACEWELL Se | ae &GIULIANI eee Kezakhstan HASDC REPORT PREPARED BY BRACEWELL & GIULIANI LLP FOR THE CITY OF HOUSTON September 1, 2009BRACEWELL & GIULIANI Report to the City of Houston. September 1, 2009 Page ii TABLE OF CONTENTS Scope of Review Methodology... Limitations and Qualifications Introductiot Backgroun HAS... HASDC. Quito Project in Quito, Beuac Costa Rica Projects. Results of Review L Quito Ecuador Project. A. Structure. B. HAS Obligations and Compensation... C. _ HASDC’s Equity Interest and Compensation D. Estimated Value of the Quito Project A. B. DAAUNELONR I. First Amended HAS TSA... Obligations under First Amended HAS TS. . Compensation under First Amended HAS TS: IIL, Multiple Airport Project (a5 ofthe date of tis Report: San Jose and Liberia, Costa Rica)... Structure... HASDC's Equity Interest and Compensation Estimated Value of the Multiple Airport Project (as of the date of this Report: San Jose and ers Costa Rica) ernnetnnesee 20 IV. Projects Serviced Under the TSAs. V. Hours Worked on HASDC Projects «0. Vi. Compensation Paid for Hours Worked on HASDC Projects, VII. Miscellaneous Issues and Recommendations 5 ‘A. HASDC Governance and Compensation Issu B. __ Relationship between HASDC and HAS... VIII. Conclusion....... Schedule 1: Defined Terms. oRP Exhibit Exhibit Quito Project Structure Multiple Airport StructureBRACEWELL &GIULIANI Report to the City of Houston September 1, 2009 Page 1 SCOPE OF REVIEW Bracewell & Giuliani LLP (sometimes referred to as "we", "our" or "us") was asked by the City of Houston (the "City") to review documents associated with the activities of HAS Development Corporation, a Texas non-profit corporation ("HASDC"), to determine (i) the Houston Airport System's ("HAS") and the City’s potential obligations arising from HASDC's activities and (ii) HASDC' capital structure and cash flows and the potential value of HASDC's activities to the City. We have also discussed these documents with certain individuals as needed for the review. This report (this "Report") has been prepared in connection with our review. We have not expanded the scope of our review beyond these specific requests. tis beyond the scope of this Report to analyze the complete history of HASDC's formation and the reasons for it, or the advisability of continuing or discontinuing HAS's participation in HASDCS activities. We are available to share any observations we made during our review. METHODOLOGY We asked representatives of HASDC to provide us with all documents related to projects for which HAS has provided services to HASDC through various technical services agreements. We were provided the opportunity to review the following materials: = compact disk prepared by the law firm Allen & Overy LLP containing a complete set of the documents associated with the concession to design, build and operate a new airport (the "New Airport") to replace the Mariscal Sucre Intemational airport (the "Old Airport") in Quito, Ecuador; and = compact disk prepared by a representative of HASDC containing certain documents associated with Partnership (as defined herein) that closed on April 20, 2009, and its acquisition of an interest in the concession for the San Joe Airport (as defined here). The HASDC representatives represented to us that they did not have all of the documents relating to this transaction but that they had provided to us all of the documents relating to this matter that were in their possession. At the time of our review, HASDC only had possession of the agreements to which HASDC is a party. Therefore, not all documents associated with the Partnership and the San Jose Airport transaction were available to us. Nevertheless, HASDC representatives accommodated our requests for specific additional documents. We believe we have reviewed the pertinent documents associated with the Partnership and the San Jose Airport transaction. The materials provided above were reviewed on computer screens in the presence of HASDC representatives at our Houston offices on July 27, 28 and 29 and August 5, 7 and 29, during normal business hours. We also reviewed: