FRANCIS J. COLEMAN, JR.

Attorney at Law
1803 South Boulevard 713.254.8730
Houston, Texas 77098 hcoleman@hasdc.net

The Honorable Greg Abbott

Texas Attorney General
P. O. Box 12548
Austin, Texas 78711-2548

Attention: Open Records Division

Re: AG ID# 351739; Texas Public Information request dated May 26, 2009, from
Jennifer Peebles for information pertaining to the Houston Airport System, and
the Houston Airport System [sic] Development Corporation.

Dear General Abbott:

I am General Counsel to HAS Development Corporation, a Texas nonprofit corporation

(“HASDC”). My client’s name has been incorrectly referred to in prior correspondence with
your office. It is not “Houston Airport System Development Corporation” but “HAS
Development Corporation.”

I am writing with regard to the captioned request in response to a letter dated June 16, 2009 from
the City of Houston Legal Department (“City June 16 Letter”). By a copy of the City June 16
Letter mailed to me, Assistant City Attorney Evelyn W. Njuguna advised me that she had sought
your office’s advice as to the exception from public disclosure of certain commercial or financial
information of my client, a representative example of which is contained in Exhibit 3 to her
letter.

I received by mail a copy of the materials included in Exhibit 3 on June 23, 2009 (“Exhibit 3
Data”). By your rules, I understand that I have ten (10) business days, or until July 8, 2009 to
respond. As required by section 552.110(b) of the Act, I wish to demonstrate “based on specific
factual evidence that disclosure would cause substantial competitive harm to the person from
whom the information was obtained.” Because of the complexity of the issues involved, I am
including factual evidence in this letter addressing certain statutory exemptions under the Act
identified in the City June 16 Letter. In addition, HASDC believes other statutory exceptions
may exist under the Act. Accordingly, I wish to reserve the right to supplement this letter until
the end of ten (10) business days allowed by law (July 8, 2009).

Because of the unique factual structure involved, I have prepared a “Background” section that
will aid in understanding the “factual evidence” that follows, as is required by the Act.

1
I. Background

1.HASDC, as a private nonprofit corporation, recognized by the IRS as a 501c-3 organization.

HASDC is not a “governmental body” subject to the Act. Although Act’s definition of
“governmental body” does include certain nonprofit corporations in clauses (ix), (x), (xi) and
(xii), HASDC does not fit any of them. The last clause (regarding publicly supported
corporations) does not apply to HASDC as it has not received any public support. All of
HASDC’s revenues have come from sales of services and investments. Moreover, rather than
receiving public support, HASDC supports the Houston Airport System (the “Airport System”).
Over the years, it has paid substantial amounts to the Airport System. HASDC was not created
by the Airport System or by City of Houston, and it is not controlled by the Airport System or by
the City of Houston. Although the Director of the Airport System sits on its board, the majority
of directors of HASDC are appointed by entities other than the City of Houston. A more
elaborate description of the reasons that HASDC is not a “governmental body” subject to the Act
will be forthcoming to your office under separate cover in response to another TPIA request filed
by Jennifer Peebles that was directed to HASDC.

2. Although HASDC is not subject to the Act, there are certain public documents regarding (i)
the creation of HASDC and (ii) its relationship with the City of Houston and the Airport System,
which are governmental bodies subject to the Act. In the City June 16 Letter, you were provided
two such documents, the Articles of Incorporation of HASDC in Exhibit A and certain technical
services agreements between HASDC and the City of Houston (on behalf of the Airport System)
in Exhibit B. I wish to incorporate those by reference into this letter. Additionally, I would like
to submit one more public document available in the public records of the City of Houston
(entitled “Agreement-Quito Airport Project”) (a copy of which is attached as Exhibit 1) (“2001
City/ADC Agreement”). Based upon these three public documents, and other publicly
available information about the Quito airport project, I would offer the following background
information with respect to the matter under review. Because it is drawn from public sources,
HASDC offers the following background information without waiving any of its rights to
confidentiality of non-public information.

3. In 2001 (before the creation of HASDC), the City of Houston and its Airport System were
requested by Airport Development Corporation, a Canadian corporation (“ADC”) to participate
with ADC in connection with a proposal to obtain a 35-year concession from the municipality of
Quito, Ecuador for the design, construction, financing and operation of a new airport for Quito,
which is the capital of Ecuador. After due consideration, the City of Houston’s City Council
approved, on behalf of the Airport System, the 2001 City/ADC Agreement. It called for the
Airport System to provide certain airport technical services to ADC for agreed upon payments.
The Airport System was willing to provide such services directly to ADC during the
qualification and bidding phase, when the City deemed the risks to be minimal. However, the
2001 City/ADC Agreement was clear that if ADC’s bid were accepted, the Airport System
would cease providing such services directly to ADC and instead require that such services be
marketed to ADC through an independent, private nonprofit corporation to be formed for the
benefit of the Airport System (referred to in the 2001 City/ADC Agreement as “NPC”). Section
3.a of the 2001 City/ADC Agreement states that the NPC “will have the ability to act as a private
non-profit corporation and will have the power to enter into partnerships, ventures and other

2
commercial relationships and to participate in the formation of and to hold ownership interests in
the SPC [a special purpose limited liability company]” and that “NPC will be granted a 5%
carried ownership interest in the SPC.” The 2001 City/ADC Agreement further contemplated
the creation of, and NPC’s participation in, a consortium to acquire any concession granted for
the Quito airport through a “second special purpose limited liability company to be incorporated
in Ecuador (‘Holdco’)”.

4. After the ADC group was selected to be awarded the Quito Airport concession, HASDC was
formed as the “NPC” contemplated in the Agreement (see Exhibit A to the City June 16 Letter).
HASDC was not created by the City of Houston, but by me with three incorporators as permitted
under Texas general law for nonprofit corporations. The Houston City Council authorized the
Airport System to enter into agreements (see Exhibit B to City June 16 Letter) with HASDC
upon the condition that the Airport System be paid on a current basis for all technical services
rendered at cost plus 80% plus a future interest in certain net profits. Moreover, the agreement
required HASDC to indemnify the Airport System and the City. The agreement for the Quito
project is referred to as the “Quito Technical Services Agreement”. This was in fulfillment of the
terms of the 2001 City/ADC Agreement which contemplated that Airport System services would
be provided through the NPC [HASDC] intermediary once ADC secured the award of the bid for
the Quito Airport concession.

5. Also as contemplated in the 2001 City/ADC Agreement, HASDC and a subsidiary of ADC
formed a Quito airport management company referred to in the Agreement as SPC
(“Management Company”) in which HASDC was granted a 5% carried equity interest (i.e.
without payment of a purchase price), and HASDC has also obtained a carried equity interest in
an Ecuadorian corporation created by ADC and others, which is referred to in the Agreement as
Holdco (“Concession Company”).

6. HASDC’s equity interests in the Management Company and the Concession Company are
represented by shares of stock that constitute “securities” within the meaning of the Securities
Act of 1933 and Securities Exchange Act of 1934 and similar laws of the United States
regulating, among other things the release of information with respect to securities. Furthermore,
HASDC has reason to believe that such shares of stock also constitute securities, under
comparable securities laws of Canada, various jurisdictions within the United Kingdom and
perhaps Ecuador. Pursuant to applicable legal exemptions, none of such securities are registered
and none trade on public securities exchanges. Nonetheless, antifraud provisions of the United
States securities laws (e.g. Rule 10b-5 promulgated by the Securities and Exchange Commission
under Section 10b of the Securities Exchange Act of 1934, 15 U.S.C. section 78j(b)) and other
similar laws in Canada, the United Kingdom and perhaps Ecuador may similarly apply to the
dissemination of information that, as a result of incompleteness or lack of explanation, is
materially misleading in connection with any offers for the purchase or sale of securities such as
these. As a result, HASDC is concerned that the release of information such as the Exhibit 3
Data could, if deemed incomplete and misleading, be inconsistent with applicable securities
laws..

7. As a private nonprofit corporation, HASDC is able to engage in commercial transactions of a

kind not legally available to the Airport System (e.g. such commercially common activities as

3
participating in partnerships, granting indemnifications, and entering into confidentiality and
non-disclosure agreements). This was recognized by the City of Houston and its City Council.
In the 2001 City/ADC Agreement, the City agreed to the creation of an NPC [which is HASDC]
which “will have the power to enter into partnerships, ventures and other commercial
relationships and to participate in the formation of and to hold ownership interests in the SPC
[which is the Management Company].” Commercial relationships commonly include agreeing
to confidentiality and non-disclosure agreements.

8. The Concession Company secured financing for the New Quito International Airport, a project
that will cost over US$600 million. Much of that amount was secured by financing from a
consortium led by United States Overseas Private Investment Corporation, U.S Import-Export
Bank, Inter-American Development Bank and Canada’s Economic Development Corporation.
HASDC is the sole American company in the Concession Company, and therefore was requested
to be the United States sponsor of the loan. Without the sponsorship of HASDC, the American
lenders could not have participated in the financing. The financial closing for the New Quito
International Airport occurred in 2006 and construction has been underway since then and
should be complete in late 2010/early 2011.

9 Pending completion of the New Quito International Airport, the Concession Company has been
charged with managing the operations of the existing Mariscal Sucre Airport in Quito, which
will be closed when the New Quito International Airport opens. The Concession Company has
in turn charged the Management Company with managing operations at the Mariscal Sucre
Airport pending completion of the New Quito International Airport, when the Management
Company will begin managing that airport. Successful management of the existing Mariscal
Sucre Airport is critical to the overall financial planning for the New Quito International Airport
and is also critical to the various Ecuadorean concession interests and government regulators.

10. The Airport System and the City of Houston were never asked to enter into any obligation or
liability in connection with the construction, financing, management or operation of the Quito
airport project except to honor the Airport System’s obligation to provide certain airport
technical services under the Quito Technical Services Agreement with HASDC, for which
HASDC pays the Airport System on a current basis at cost plus a mark-up of 80%. The Quito
Technical Services Agreement, which was collaterally assigned to the lenders to secure their
loans for the project (as permitted in the agreement), recognizes that the Airport System’s
commitment to provide such technical services “shall at all times be subordinate to its primary
obligation of operating [the Airport System].” Neither the City nor the Airport System has been
asked to take on any other obligation or liability in connection with the Quito airport project.

11. In contrast to the Airport System and the City, HASDC has a vital interest in the ongoing
financial and operational affairs of the Quito Airport project—both in managing operations at the
existing Mariscal Sucre Airport and in the construction of the New Quito International Airport.
As the owner (through unregistered securities) of equity interests in the Concession Company
and the Management Company, HASDC receives and monitors much data, including the Exhibit
3 Data, on a regular basis. As is common practice in corporations, certain of such data has been
shared with the board of directors of HASDC, which includes the Director of the Airport System.
The Exhibit 3 Data was apparently in the files of the former Director of the Airport System

4
solely because of his role as a member of the board of HASDC. For the reasons described
below, the Exhibit 3 Data was all subject to confidentiality agreements pursuant to which it could
properly be received by officers and directors of HASDC but not others. The former Director
held the Exhibit 3 Data in his capacity as a director of HASDC, but not in his capacity as
Director of the Airport System. Neither the Airport System nor the City has any right to such
Exhibit 3 Data.

II. Factual Evidence Presented Under 552.110.b.

The Exhibit 3 Data contains three reports, which contain data about the operations at the existing
Mariscal Sucre Airport and construction of the New Quito International Airport. The first report
is a monthly operating report by the Management Company (through its Ecuadorean subsidiary),
the second is a monthly management report of the Concession Company and the third is a
monthly financial report of the Concession Company. The Exhibit 3 Data included in such
reports can be summarized as follows for purposes of Section 552.110.b of the Act:

The Management Company’s monthly operating report focuses upon operations at the existing
Mariscal Sucre Airport. It includes financial data and analyses of such financial data, traffic
statistics, operating data, environmental, health and safety summaries, human resources
information, information about planning and construction and maintenance (including some
about the New Quito International Airport), a report on information and technology and a final
report of transition planning to the New Quito International Airport. Such data is in its entirety a
mixture of commercial and financial information as contemplated in Section 552.110.b.

The Concession Company’s monthly report addresses both the operations at the existing
Mariscal Sucre Airport and the construction of the New Quito International Airport. It contains
financial information, especially about the status of funding for ongoing construction costs of the
New Quito International Airport. It includes very sensitive summaries of legal matters that
include claims, insurance claims and lawsuits. Also included are summaries of political and
governmental regulatory matters of a very sensitive nature, descriptions of public health matters
regarding influenza (also very sensitive), traffic forecasts, commercial negotiations with airlines
and commercial tenants and a construction update. All information in this monthly report is
commercial and financial information as contemplated in Section 552.110.b.

The Concession Company monthly financial report is entirely financial information within the
meaning of Section 552.110.b.

Release of the above-described Exhibit 3 Data, for the reasons and evidence enumerated below
(which may be supplemented as herein discussed), would cause substantial competitive harm to
HASDC (as well as to many others).

1. Confidentiality and Non-Disclosure Agreements.

5
There are innumerable agreements that document the Quito airport transaction and virtually all
of them are subject to confidentiality provisions, either directly by their terms or indirectly
through incorporation of other documents or as a result of cross-default provisions. The primary
confidentiality agreements to which HASDC is bound are contained in the following major
contracts and agreements that impose confidentiality obligations on HASDC and others with
regard to the Exhibit 3 Data.

a. The Concession Contract for the Quito Airport Project is the fundamental contract upon which
the entire Quito airport project rests. It is the source of the concession granted to the Concession
Company, in which HASDC (and others) own an equity interest. The Concession Contract is the
contractual underpinning for the construction of the New Quito International Airport by the
Concession Company. The Concession Company does not own the New Quito International
Airport, but only a concession interest in it. Therefore, the Concession Contract also is the
primary source of security for the hundreds of millions of dollars of loans advanced to the
Concession Company by the lending group led by U.S Overseas Private Investment Corporation,
U. S. Export-Import Bank, Inter-American Development Bank and Canada’s Economic
Development Corporation.. The Concession Contract contains the following provision with
respect to confidentiality:

23.3 Confidentiality
Each Party shall keep in confidence all drawings, records, data, books, reports, documents and
information, whether technical, commercial or financial in nature, supplied to it by or on behalf
of another Party relating to the Project and shall not disclose the same in any manner otherwise
than for the purpose of seeking financial assistance (whether by way of debt or equity) for the
Concessionaire [ the Concession Company], or for Airport Developments or the operation of the
Airports, for the purpose of performing its obligations hereunder, or as it may necessarily be
required to disclose pursuant to the laws or orders of appropriate regulatory authorities or
pursuant to any Loan Agreement or as may be required by CORPAQ [the Airport and Free
Trade Zone Corporation of the Metropolitan District of Quito] or the Lenders in connection with
procuring a Substituted Entity, or, in the case of CORPAQ, as may be reasonably deemed to be
in the public interest; provided that nothing in this Clause 23.3 shall limit CORPAQ’s right to
use such documents and information in circumstances where this Concession Contract has been
terminated in accordance with Clause 18.2 or as a result of the operation of Clause 18.4.

b. The agreement between the Concession Company and the Management Company (HASDC is
an equity owner in both) contains the following provision with respect to confidentiality:

30.1.1 Any information (including, without limitation, all drawings, records,

data, books, reports, documents and information, whether technical, commercial or financial in
nature) provided to[the Management Company] by [the Concession Company] or created by
[the Management Company] during the Term of this Agreement shall be confidential and [the
Management Company] agrees to bold in confidence any such information that is proprietary or
commercially sensitive, identified as such in writing by [the Concession Company] (the
"Confidential Information") for a period of five (5) years from the termination date of this
Agreement.

6
c. The agreement between the Management Company and HASDC contains the following
provision with respect to confidentiality:

15.3 Confidentiality
Each of [the Management Company] and HASDC shall keep in confidence all drawings,
records, data, books, reports, documents and information, whether technical, commercial or
financial in nature, supplied to it by or on behalf of the other party relating to this Agreement
and the management, maintenance and operation of the Airports and shall not disclose the same
in any manner otherwise than for the purpose of seeking financial assistance in connection with
the Project or for the purpose of performing its obligations hereunder, or as it may necessarily
be required to disclose pursuant to the laws or orders of appropriate regulatory authorities or
pursuant to any agreement by which it may be bound.

2. Third Party Beneficiaries of Confidentiality Agreements.

Each of the documents identified above has been collaterally assigned to (or for the benefit of)
lenders (U.S. Overseas Private Investment Corporation, U.S. Export-Import Bank, Inter-
American Development Bank and Canada’s Economic Development Corporation) to secure their
loans in connection with the project.

3. Events of Default and Remedies.

Every loan made in connection with the transaction includes provisions for default and remedies.
The loans include not only the main construction loans for the New Quito International Airport,
but also the loans to HASDC for its carried interest in the Concession Company. In each case
events of default include violations of covenants by the borrowing party (in this case HASDC).
Remedies include the right to accelerate the loans, foreclose and, in the case of HASDC’s carried
equity loans, stop the funding of such carried equity and foreclose on advances made to date.

As an example, pursuant to the loan agreement of the lead lender, U.S. Overseas Private
Investment Corporation, any breaches or defaults by any major project participants (which
includes HASDC) under any major project document (which include the three referred to above
containing confidentiality provisions) can be declared events of default. Remedies available to
U.S. Overseas Private Investment Corporation as a result of such an event of default include
termination of its funding obligations, declaring all loans immediately due and payable and
directing the foreclosure on collateral.

Included within the collateral pledged to secure the various lenders in the transaction are all of
HASDC’s shares representing its equity interests in the Concession Company and the
Management Company.

4. Potential Impact of Release of Exhibit 3 Data on Potential Sales and Purchases By Others
of Shares in Concession Company.

7
HASDC has reason to believe that one or more persons (other than HASDC) is exploring the
possibility of offering to make a private equity purchase of shares in the Concession Company
from one or more of the current owners of such shares (other than HASDC). The release of
confidential information such as the Exhibit 3 Data could adversely affect such a transaction,
especially if the Exhibit 3 Data is misleading as a result, for instance, of being incomplete,
unrepresentative, inadequately explained, unadjusted for seasonal or other variations or stale.
The release of such confidential data could harm innocent third party investors interested in the
private equity purchase or sale of unregistered securities in the Concession Company.

5. Potential Impact of Release of Exhibit 3 Data on Dealings with Ecuadorian Regulators.

The Concession Company and Management Company are subject to constant review and
scrutiny by various Ecuadorean regulatory bodies, including the grantor of the airport
concession. Various public statements by Ecuadorean officials indicate their desire to
renegotiate various terms of the concession adverse to the interests of the Concession Company
(including HASDC). While the construction of the New Quito International Airport is in
progress, the Exhibit 3 Data includes reports as to the progress of construction and site
preparation, and includes confidential comments about applicable environmental requirements,
public health matters and labor issues. The release of such information, intended to represent
candid confidential communications among those responsible for constructing the New Quito
International Airport, was not intended to be available to Ecuadorean regulatory bodies. Nor was
the candid confidential information contained in the Exhibit 3 Data meant to be available to
Ecuadorean authorities who might use it to attempt to renegotiate the concession adversely to the
interests of HASDC.

6. Potential Impact of Release of Exhibit 3 Data Upon Third Party Commercial Dealings
Airport development and operation is a very complex commercial transaction, in which the
Concession Company and Management Company must enter into scores if not hundreds of
leases and agreements with third parties which will use the airport in different ways. These third
parties include airlines, food, beverage and retail concessionaires in the terminals, rental car
companies, utilities and service providers and ground transportation links. They also include a
myriad of contractors, subcontractors and suppliers for the airport. In some cases there are
disputes that are already reduced to claims, insurance claims or lawsuits. Communications as to
matters in litigation or pre-litigation are obviously very sensitive. Release of confidential data
containing information of the kind in Exhibit 3 could adversely impact negotiations about
commercial dealings with such third parties or undermine claims, counterclaims, defenses or
positions taken in litigation or other disputes.

7. Potential Harm to HASDC.

If the confidentiality/non-disclosure covenants in the foregoing agreements are deemed to have
been breached through the release of the Exhibit 3 Data, it could give many of the other parties
to the Quito transaction, including the lenders, the right to declare a default, which could lead to
the exercise of remedies available under the relevant agreements. HASDC’s equity interests in
the Quito project could be substantially jeopardized and even become subject to foreclosure. If
other investors in the Quito Airport Concession Company believe that the release of confidential
information such as the Exhibit 3 Data impairs their ability to enter into private purchases and

8
sales of their interests it could substantially harm HASDC since those other investors are
HASDC’s lenders for its carried equity interest in the Concession Company.

Additionally, the release of such data could adversely impact HASDC (as an owner of equity
interests in the Concession Company and the Management Company) in negotiations with
Ecuadorean regulators, in third party commercial dealings regarding the use of the airport and in
litigation or other disputes. It could also harm HASDC if the release of such confidential data is
used by Ecuadorean officials in an effort to renegotiate terms of the concession or impose
additional regulatory burdens that might not otherwise occur.

III. Public Policy Considerations

The prelude to the Act (section 552.001) emphasizes the public’s right to “complete information
about the affairs of government and the official acts of public officials and employees.” HASDC
submits that the Exhibit 3 Data falls well outside the “affairs of government” (in this case the
affairs of the City of Houston and its Airport System). Moreover, none of the Exhibit 3 Data has
any bearing on the “official acts of public officials and employees” of the City and its Airport
System. The City and the Airport System have their own records of the affairs of the City and the
Airport System and their public officials and employees, which (except to the extent excepted
under the Act) are available to the public.

The Exhibit 3 Data is not data of the City or its Airport System, nor of its public officials or
employees. It is third party commercial and financial information, outside the Act by reason
both of its letter (section 552.110.b) and policy (section 552.001)

IV. Other Statutory Bases For Exception.

In addition to the commercial/financial exception provisions of 552.110 (b) of the Act, HASDC
believes that additional bases for exception may also apply. Prior to the expiration of HASDC’s
ten (10) day reply period, it reserves the right to supplement this letter to discuss the applicability
of any such additional statutory exceptions.

Very truly yours,

Francis J. Coleman, Jr.

General Counsel
HAS Development Corporation

cc. Jennifer Peebles

Deputy Editor, Texas Watchdog
5535 Memorial Drive. Suite F, #601
Houston, TX 77007
(with Exhibit 1)

via email: jennifer@texaswatchdog.org

(w/o Exhibit 1)

9
Beverly Roach
Public Information Officer
Houston Airport System
16930 John F. Kennedy Boulevard
Houston, TX 77032-6020
(with Exhibit 1)

Randy Rivin
Evelyn W. Njuguna
City of Houston
Legal Department
P.O. 368
Houston, TX 77001-0368
(with Exhibit 1)

10