Empresa Distribuidora y Comercializadora Norte S.A. · PDF file54 11 4346 5127 / 54 11 4346...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

Form 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007

Commission File number: 001-33422

Empresa Distribuidora y Comercializadora Norte S.A. (Exact name of registrant as specified in its charter)

Distribution and Marketing Company of the North S.A. Argentine Republic (Translation of registrant’s name into English) (Jurisdiction of incorporation or organization)

Azopardo 1025 Ciudad de Buenos Aires, C1107ADQ

Buenos Aires, Argentina (Address of principal executive offices)

Ivana Del Rossi 54 11 4346 5127 / 54 11 4346 5325

Azopardo 1025 (C1107ADQ) Bs. As. Investor Relations Officer

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class: Name of each exchange on which registered

Class B Shares New York Stock Exchange, Inc.* American Depositary Shares, or ADSs, evidenced by American

Depositary Receipts, each representing 20 Class B Shares New York Stock Exchange, Inc. * Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the

Securities and Exchange Commission. __________ Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: N/A Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 462,292,111 Class A Ordinary Shares, 442,210,385 Class B Ordinary Shares and 1,952,604 Class C Ordinary Shares Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. Yes No Note: Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP IFRS Other If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes No

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Item 1. Identity of Directors, Senior Management and Advisors ....................................................................... 2 Item 2. Offer Statistics and Expected Timetable ................................................................................................ 2 Item 3. Key Information..................................................................................................................................... 2 Item 4. Information on the Company ............................................................................................................... 19 Item 4A. Unresolved Staff Comments ................................................................................................................ 44 Item 5. Operating and Financial Review and Prospects ................................................................................... 44 Item 6. Directors, Senior Management and Employees ................................................................................... 80 Item 7. Major Shareholders and Related Party Transactions............................................................................ 88 Item 8. Financial Information........................................................................................................................... 92 Item 9. The Offer and Listing........................................................................................................................... 95 Item 10. Additional Information......................................................................................................................... 97 Item 11. Quantitative and Qualitative Disclosures about Market Risk............................................................. 117 Item 12. Description of Securities Other than Equity Securities ...................................................................... 118 Item 13. Defaults, Dividend Arrearages and Delinquencies............................................................................. 118 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds ................................ 118 Item 15. Controls and Procedures .................................................................................................................... 118 Item 16A. Audit Committee Financial Expert..................................................................................................... 119 Item 16B. Code of Ethics .................................................................................................................................... 119 Item 16C. Principal Accountant Fees and Services ............................................................................................ 119 Item 16D. Exemptions from the Listing Standards for Audit Committees ......................................................... 120 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers............................................. 120 Item 17. Financial Statements .......................................................................................................................... 120 Item 18. Financial Statements .......................................................................................................................... 120 Item 19. Exhibits .............................................................................................................................................. 120 Index to Financial Statements...................................................................................................................................F-1

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PART I

Introduction

Empresa Distribuidora y Comercializadora Norte S.A., or Edenor, is a corporation (sociedad anónima) organized under the laws of the Argentine Republic, or Argentina. Our principal executive offices are located at Azopardo 1025, Ciudad de Buenos Aires, C1107ADQ, Buenos Aires, Argentina.

Item 1. Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

FORWARD-LOOKING STATEMENTS

This annual report includes forward-looking statements, principally under the captions “Item 3. Key Information—Risk factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Forward-looking statements may also be identified by words such as “believes,” “expects,” “anticipates,” “projects,” “intends,” “should,” “seeks,” “estimates,” “future” or similar expressions. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ materially from those expressed or implied in our forward-looking statements, including, among other things:

• the outcome and timing of the integral tariff revision process we are currently undertaking with the Argentine National Electricity Regulator (Ente Nacional Regulador de la Electricidad, or the ENRE) and, more generally, uncertainties relating to future government approvals to increase or adjust our tariffs;

• general political, economic, social, demographic and business conditions in Argentina and particularly in the geographic market we serve;

• the impact of regulatory reform and changes in the regulatory environment in which we operate;

• electricity shortages;

• potential disruption or interruption of our service;

• restrictions on the ability to exchange Pesos into foreign currencies or to transfer funds abroad;

• the revocation or amendment of our concession by the granting authority;

• our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms;

• fluctuations in inflation and exchange rates, including a devaluation of the Peso; and

• additional matters identified in “Risk factors.”

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Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we file this annual report because of new information, future events or other factors. In light of these limitations, undue reliance should not be placed on forward-looking statements contained in this annual report.

SELECTED FINANCIAL DATA

The following table presents selected financial and operating data. This information should be read in conjunction with our audited financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report.

The financial data as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005 are derived from our audited financial statements included elsewhere in this annual report. Our audited financial statements have been prepared in accordance with generally accepted accounting principles in the City of Buenos Aires, Argentina, which we refer to as Argentine GAAP and which differ in certain significant respects from U.S. GAAP. Note 26 to our audited financial statements included elsewhere in this annual report provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2007, 2006 and 2005 and for the years then ended.

In this annual report, except as otherwise specified, references to “$”, “U.S. $” and “Dollars” are to U.S. Dollars, and references to “Ps. ” and “Pesos” are to Argentine Pesos. Solely for the convenience of the reader, Peso amounts as of and for the year ended December 31, 2007 have been translated into U.S. Dollars at the buying rate for U.S. Dollars quoted by Banco de la Nación Argentina (Banco Nación) on December 31, 2007 of Ps. 3.149 to U.S. $1.00. The U.S. Dollar equivalent information should not be construed to imply that the Peso amounts represent, or could have been or could be converted into, U.S. Dollars at such rates or any other rate. See “Item 3. Key Information – Exchange rates.”

Under Argentine GAAP, we generally are not required to record the effects of inflation in our financial statements. However, because Argentina experienced a high rate of inflation in 2002, with the wholesale price index increasing by approximately 118%, we were required by Decree No. 1269/2002 and CNV Resolution No. 415/2002 to restate our financial statements in constant Pesos in accordance with Argentine GAAP. On March 25, 2003, Decree No. 664/2003 rescinded the requirement that financial statements be prepared in constant currency, effective for financial periods on or after March 1, 2003. As a result, the financial data as of and for the year ended December 31, 2003 includes the effects of inflation. However, we are not required to restate and have not restated our financial statements for inflation after February 28, 2003. As a result, our results of operations and financial position may not be directly comparable from period to period. See note 2 to our audited financial statements included in this annual report.

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Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals may not sum due to rounding.

For the year ended December 31, 2007 2006 2005 2004 2003 Statement of operations data (in millions, except for per share and per ADS data) Argentine GAAP Net sales(1)........................................................U.S. $ 629.4 Ps. 1,981.9 Ps. 1,378.3 Ps. 1,262.2 Ps. 1,107.2 Ps. 942.9 Electric power purchases ................................ (282.6) (889.9) (799.1) (757.7) (599.1) (439.8) Gross margin ................................................... 346.8 1,092.0 579.3 504.5 508.1 503.1 Transmission and distribution expenses ........ (132.6) (417.6) (362.1) (346.1) (332.8) (304.5) Selling expenses .............................................. (38.3) (120.6) (87.9) (86.0) (81.8) (71.6) Administrative expenses................................. (39.6) (124.7) (93.3) (72.9) (60.7) (59.3) Net operating income (loss)............................ 136.3 429.2 35.9 (0.4) 32.7 67.7 Financial income (expenses) and holding

gains (losses): Generated by assets:

Exchange difference ............................... (0.3) (0.9) 2.6 2.1 4.8 (6.1) Interest ..................................................... 4.3 13.4 13.9 12.9 10.1 14.7 Exposure to inflation and holding

results................................................... — 0.1 0.1 (0.6) (11.0) (2.5) Generated by liabilities:

Financial expenses .................................. (6.7) (21.0) (25.4) (14.1) (10.1) (9.7) Exchange difference ............................... (9.5) (29.9) (13.3) (29.0) (26.1) 225.8 Interest ..................................................... (23.7) (74.5) (101.3) (119.5) (87.7) (79.9) Exposure to inflation and holding

results................................................... — — — (0.2) 9.3 15.1 Adjustment to present value of the

retroactive tariff increase arising from the application of the new electricity rate schedule and from the Payment Plan Agreement with the Province of Buenos Aires(2)........................................... (9.4) (29.6) — — — —

Gain on extinguishment of former debt(3)............................................................ — — 179.2 — — —

Adjustment to present value of notes(4).......... (6.8) (21.5) 57.1 — — — Loss from the purchase and redemption of

notes(5) (3.2) (10.2) — — — — Adjustment to present value of purchased

and redeemed notes(4).................................. (2.7) (8.6) — — — — Other income (expenses), net ......................... 0.3 1.0 (22.9) (0.7) (12.0) (14.3) Income (loss) before taxes .............................. 78.6 247.4 125.9 (149.6) (89.9) 210.7 Income tax(6) .................................................... (39.7) (125.0) 167.2 — — — Net income (loss) ............................................ U.S. $ 38.9 Ps. 122.5 Ps. 293.1 Ps. (149.6) Ps. (89.9) Ps. 210.7 Net income (loss) per ordinary share

– basic and diluted......................... 0.043 0.135 0.352 (0.180) (0.108) 0.253 Dividends declared per ordinary share(7) ............................................... — — — — — — Net income per ADS(8) — basic and diluted................................................ 0.858 2.702 — — — — Number of shares outstanding .......... 906,455,100 906,455,100 831,610,200 831,610,200 831,610,200 831,610,200 U.S. GAAP Net sales/service revenues .............................. U.S. $ 615.1 Ps. 1,937.0 Ps. 1,403.5 Ps. 1,334.9 — — Electric power purchases ................................ (282.6) (889.9) (799.1) (757.7) — — Transmission and distribution expenses ........ (151.6) (477.5) (450.3) (425.3) — — Gross margin ................................................... 180.9 569.6 154.1 151.0 — — Operating expenses, net .................................. (65.9) (207.5) (194.1) 185.0 Net operating income (loss)............................ 115.0 362.1 40.0 (33.1) — — Financial (expense), net and holding gains.... (14.8) (46.5) (133.3) (139.1) — — Net income (loss) before income taxes.......... 100.3 315.7 (173.3) (172.1) — — Income tax ....................................................... (31.7) (99.9) 128.0 8.1 — — Net income (loss) for the year ........................ 68.5 215.8 (45.3) (164.0) — — Net income (loss) per ordinary share –

basic and diluted(7)......................... 0.238 0.238 (0.054) (0.197) — — Net income (loss) per ADS(8) — basic and diluted......................................... 4.761 4.761 — — — — ______________________ (1) Net sales for 2007 include the retroactive portion of the tariff increase, which amounts in aggregate to Ps. 218.6 million, and is being invoiced in 55 consecutive

monthly installments, starting in February 2007. As of December 31, 2007 we had invoiced Ps. 47.3 million of this amount. (2) Reflects the adjustment to present value of the retroactive portion of the tariff increase that is being invoiced in 55 consecutive monthly installments, starting in

February 2007, and the adjustment to present value of Ps. 38.4 million due under the payment plan agreement with the Province of Buenos Aires that is being invoiced in 18 installments, starting in January 2007. As of December 31, 2007, the Government of the Province of Buenos Aires had paid Ps. 18.6 million of the amount due under the payment plan agreement with the Province of Buenos Aires and Ps. 47.3 million of the retroactive tariff adjustment had been invoiced to our non-residential customers. In accordance with Argentine GAAP, we account for these long-term receivables at their present value, which we calculate at

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a discount rate of 10.5%, and record a charge as an adjustment to present value of these two receivables. See “Item 4. Information on the Company —Framework agreement (Shantytowns).”

(3) Our debt restructuring generated a one-time gain of Ps. 179.2 million, reflecting the recognition of a Ps. 55.3 million waiver of principal amount on our financial debt, a Ps. 75 million waiver of accrued interest on our financial debt and a Ps. 65.7 million waiver of penalties related to the non-payment of our financial debt, which more than offset Ps. 16.8 million in related restructuring costs. See “Item 5. Operating and Financial Review and Prospects—Liquidity and capital resources—Debt” for a description of the restructuring notes.

(4) We record our financial debt in our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money, which, for purposes of our financial statements, was calculated using a market interest rate of 10% in 2006 and 10.5% in 2007. We did not record any adjustment to present value in any year before the year ended December 31, 2006 because our financial debt was in default.

(5) In 2007, we repurchased U.S. $43.7 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and U.S. $218 million principal amount of our outstanding Discount Notes due 2014. We also redeemed U.S. $22 million principal amount of our outstanding Discount Notes due 2014. As of December 31, 2007 we had no Discount Notes due 2014 outstanding.

(6) In 2006, our income tax result reflects the reversal of net deferred tax assets, primarily due to the fact that, as a consequence of the ratification of the Adjustment Agreement in January 2007 and the renegotiation of our financial debt in April 2006, we generated taxable income that allowed us to offset a significant portion of the tax loss carryforwards we generated in 2002. We recorded a tax charge of Ps. 125.0 million in the year ended December 31, 2007 due to a significant increase in our taxable income, that was partially offset by the tax deduction of ENRE penalties, which allowed us to partially offset our tax loss carryforwards generated in 2002.

(7) We have not declared or paid any dividends since August 14, 2001. (8) Each ADS represents 20 Class B ordinary shares.

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As of December, 31, 2007 2006 2005 2004 2003 (in millions) Balance sheet data Argentine GAAP Current Assets: Cash and banks........................................... U.S. $1.1 Ps. 3.5 Ps. 0.5 Ps. 11.7 Ps. 8.5 Ps. 9.6Investments................................................. 31.0 97.7 32.2 296.5 242.6 163.8Trade receivables ....................................... 109.9 346.0 270.9 231.9 194.8 181.5Other receivables........................................ 8.3 26.0 30.2 21.7 10.0 9.0Supplies ...................................................... 7.4 23.2 13.6 13.8 13.5 17.5

Total current assets................................. U.S. $157.6 Ps. 496.3 Ps. 347.5 Ps. 575.6 Ps. 469.4 Ps. 381.4Non-Current Assets: Trade receivables ....................................... 31.9 100.3 — — — —Other receivables........................................ 45.8 144.1 256.5 74.7 59.3 60.3Investments in other companies................ 0.1 0.4 0.4 0.4 0.4 0.4Supplies ...................................................... 4.4 13.8 4.9 36.5 31.4 32.0Property, plant and equipment .................. 982.1 3,092.7 2,925.4 2,889.3 2,944.1 2,994.4

Total non-current assets......................... 1,064.2 3,351.3 3,187.2 3,000.9 3,035.3 3,087.0Total assets ............................................. 1,221.8 3,847.6 Ps. 3,534.7 Ps. 3,576.5 Ps. 3,504.6 Ps. 3,468.4

Current liabilities: Trade account payable ............................... 100.4 316.2 267.6 205.1 154.3 104.2Loans........................................................... 9.3 29.3 2.0 1,620.1 1,525.6 1,223.3Salaries and social

security taxes .......................................... 19.0 59.9 51.4 34.1 31.2 29.6Taxes....................................................... 26.9 84.6 62.2 67.9 44.3 43.5Other liabilities ....................................... 3.1 9.7 26.4 175.8 139.0 85.2Accrued litigation................................... 12.7 39.9 25.9 18.3 12.3 9.8Total current liabilities........................... U.S. $171.4 Ps. 539.6 Ps. 435.6 Ps. 2,121.3 Ps. 1,906.7 Ps. 1,495.6

Non-current liabilities: Trade account payable ............................... 11.3 35.5 31.3 26.8 23.1 20.3Loans(1)........................................................ 301.4 949.1 1,095.5 — — 286.0Salaries and social

security taxes .......................................... 7.8 24.7 20.3 12.4 10.9 10.7Other liabilities........................................... 89.4 281.4 241.1 — — —Accrued Litigation ..................................... 13.6 42.8 40.6 38.7 37.0 38.9Total non-current

liabilities.................................................. 423.5 1,333.5 1,428.7 77.8 71.0 355.8Total liabilities........................................ U.S. $594.8 Ps. 1,873.0 Ps. 1,864.3 Ps. 2,199.2 Ps. 1,977.7 Ps. 1,851.4

Shareholders’ equity .................................. 627.1 1,974.6 1,670.4 1,377.3 1,526.9 1,616.8Total liabilities and shareholders’ equity.. U.S. $1,221.8 Ps. 3,847.6 Ps. 3,534.7 Ps. 3,576.5 Ps. 3,504.6 Ps. 3,468.4 U.S. GAAP Current assets ............................................. U.S. $170.4 Ps. 536.7 Ps. 547.0 Ps. 728.8 — —Property, plant and equipment, net ........... 1,008.5 3,175.7 3,016.4 3,009.7 — —Other non-current assets ............................ 110.1 346.6 201.5 145.5 — —Total assets ................................................. U.S. $1,289.0 Ps. 4,059.0 Ps. 3,764.9 Ps. 3,884.0 — —Current liabilities........................................ U.S. $182.2 Ps. 573.7 Ps. 470.0 Ps. 2,124.8 — —Non-current liabilities................................ 640.9 2,018.2 2,225.1 640.3 — —Total liabilities............................................ 823.1 2,591.9 2,695.1 2,765.1 Shareholders’ equity .................................. 465.9 1,467.1 1,069.8 1,118.8 — —Total liabilities and shareholders’ equity.. U.S. $1,289.0 Ps. 4,059.0 Ps. 3,764.9 Ps. 3,884.0 — —

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Year ended December 31, 2007 2006 2005 2004 2003 Cash flow data Argentine GAAP Operating activities:

Net income (loss) ....................................................................... U.S.$ 38.9 Ps. 122.5 Ps. 293.1 Ps. (149.6) Ps. (89.9) Ps. 210.7 Adjustment to reconcile net income (loss) to net cash

flows provided by (used in) operating activities: Depreciation of property, plant and equipment....................... 55.4 174.4 179.0 178.4 174.9 174.7 Retirement of property, plant and equipment.......................... 0.4 1.1 0.7 0.9 0.5 1.4 Gain on extinguishment of former debt................................... — — (179.2) — — — Adjustment to present value of notes....................................... 6.8 21.5 (57.1) — — — Loss from the purchase and redemption of

notes…………… 3.2 10.2 — — — — Adjustment to present value of the repurchased and

redeemed notes...................................................................... 2.7 8.6 — — — — Adjustment to present value of the retroactive tariff

increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires................... 9.4 29.6 — — — —

Gain from investments in affiliated parties ............................. — — — — — — Exchange differences, interest and penalties on loans............ 22.1 69.5 49.1 139.0 66.4 (171.4)Supplies recovered from third parties...................................... — — (5.8) — — — Increase in trade receivables due to the unbilled

portion of the retroactive tariff increase............................... (54.4) (171.3) — — — — Income tax ................................................................................. 39.7 125.0 (167.2) — — —

Changes in operating assets and liabilities: Increase in trade receivables (net of the unbilled

portion of the retroactive tariff increase) ............................. (11.7) (36.9) (39.0) (37.1) (13.3) (4.8)Net (increase) in other receivables........................................... (2.7) (8.4) (23.1) (27.2) (9.7) (7.2)(Increase) decrease in supplies................................................ (5.8) (18.4) 1.4 (5.4) 4.6 (3.9)Increase in trade accounts payable........................................... 16.7 52.7 67.1 54.4 52.9 11.2 Increase in salaries and social security taxes........................... 4.1 12.9 25.2 4.5 1.8 8.6 Increase (decrease) in taxes ...................................................... 7.1 22.5 (5.7) 23.6 (8.9) 7.6 Increase in other liabilities........................................................ 5.6 17.7 91.7 36.8 53.7 14.4 Net increase in accrued litigation............................................. 5.1 16.2 9.5 7.7 0.7 10.8 Financial interest paid, net of interest capitalized ................... (8.1) (25.5) (26.7) (46.5) (55.5) (60.3)Financial interest collected ....................................................... 1.0 3.2 2.2 2.0 5.4 5.8

Net cash flow provided by operating activities..................................................................................... 135.7 427.2 215.0 181.5 202.8 198.0

Investing activities: Addition to property, plants and equipment................................ (107.0) (336.9) (179.7) (124.5) (125.1) (80.6)Net cash flow used in investing activities ................................... (107.0) (336.9) (179.7) (124.5) (125.1) (80.6)Financing activities:

Decrease in loans....................................................................... (64.7) (203.6) (310.8) — — — Capital increase ......................................................................... 57.7 181.8 — — — —

Net cash flows used in financing activities..................................................................................... (6.9) (21.8) (310.8) — — —

Cash variations: Cash at beginning of year ......................................................... U.S. $10.4 Ps. 32.7 Ps. 308.1 Ps. 251.1 Ps. 173.4 Ps. 56.5 Cash at end of the year.............................................................. 32.1 101.2 32.7 308.1 251.1 173.4 Net increase (decrease) in cash ................................................ 21.8 68.5 (275.5) 57.0 77.8 116.9

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Year ended December 31, 2007 2006 2005 2004 2003 Operating data Argentine GAAP Energy sales (in GWh):

Residential .................................................................................. 7,148 6,250 5,819 5,413 5,150 Small Commercial ..................................................................... 1,485 1,433 1,387 1,322 1,192 Medium Commercial ................................................................. 1,552 1,446 1,354 1,293 1,217 Industrial ..................................................................................... 3,628 3,364 3,195 3,685 2,976 Wheeling system(1) ..................................................................... 3,111 3,211 2,984 2,100 2,364 Others:

Public Lighting ....................................................................... 643 650 642 646 637 Shantytowns ........................................................................... 301 261 279 275 257 Others(2) ................................................................................... 18 18 17 18 18

Customers (in thousands)(3) ........................................................... 2,490 2,445 2,404 2,353 2,317 Energy losses (%) .......................................................................... 11.6% 11.1% 11.0% 11.5% 12.7%MWh sold by employee ................................................................ 7,230.6 6,736.6 6,395.9 5,936.8 5,435.3 Customers per employee ............................................................... 997.8 982.3 970.8 940.7 897.6 ______________________ (1) Wheeling charges represent our tariffs for large users, which consist of a fixed charge for recognized technical losses and a charge for our

distribution margins but exclude charges for electric power purchases, which are undertaken directly between generators and large users. (2) Represents energy consumed internally by our company and our facilities. (3) We define a customer as one meter. We may supply more than one consumer through a single meter. In particular, because we measure our

energy sales to each shantytown collectively using a single meter, each shantytown is counted as a single customer.

EXCHANGE RATES

From April 1, 1991 until the end of 2001, the Convertibility Law established a fixed exchange rate under which the Central Bank was obliged to sell U.S. Dollars at a fixed rate of one Peso per U.S. Dollar. On January 6, 2002, the Argentine Congress enacted the Public Emergency Law, formally putting an end to the regime of the Convertibility Law and abandoning over ten years of U.S. Dollar-Peso parity. The Public Emergency Law grants the executive branch of the Argentine government the power to set the exchange rate between the Peso and foreign currencies and to issue regulations related to the foreign exchange market. The Public Emergency law has been extended until December 31, 2008. For a brief period following the end of the Convertibility Regime, the Public Emergency Law established a temporary dual exchange rate system. Since February 2002, the Peso has been allowed to float freely against other currencies.

The following table sets forth the annual high, low, average and period-end exchange rates for U.S. Dollars for the periods indicated, expressed in Pesos per U.S. Dollar at the purchasing exchange rate and not adjusted for inflation. When preparing our financial statements, we utilize the selling exchange rates for U.S. Dollars quoted by Banco Nación to translate our U.S. Dollar denominated assets and liabilities into Pesos. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos.

Low High Average Period End (Pesos per U.S. Dollar) Year ended December 31,

2003 ................................................................................................................. 2.74 3.36 2.95(1) 2.93 2004 ................................................................................................................. 2.94 2.99 2.95(1) 2.98 2005 ................................................................................................................. 2.98 3.04 3.01(1) 3.03 2006 ................................................................................................................. 3.03 3.11 3.07(1) 3.06 2007 ................................................................................................................. 3.06 3.18 3.12(1) 3.15

Month December 2007................................................................................................ 3.13 3.15 3.14(2) 3.15 January 2008 ................................................................................................... 3.13 3.16 3.15(2) 3.16 February 2008 ................................................................................................. 3.15 3.17 3.16(2) 3.16 March 2008 ..................................................................................................... 3.15 3.17 3.16(2) 3.17 April 2008 ...................................................................................................... 3.15 3.18 3.17(2) 3.16 May 2008......................................................................................................... 3.16 3.18 3.17(2) 3.17

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Low High Average Period End (Pesos per U.S. Dollar)

June 2008(3) .................................................................................................... 3.03 3.11 3.06(2) 3.03 _______________________ Source: Banco Nación (1) Represents the average of the exchange rates on the last day of each month during the period. (2) Average of the lowest and highest daily rates in the month. (3) Represents the corresponding exchange rates from June 1 through June 20.

RISK FACTORS

Risks related to Argentina

Overview

We are a stock corporation (sociedad anónima) incorporated under the laws of the Republic of Argentina and all of our revenues are earned in Argentina and all of our operations, facilities, and customers are located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing in Argentina. For example, lower economic growth or economic recession could lead to lower demand for electricity in our concession area or a decline in purchasing power of our customers, which, in turn, could lead to lower collections from our clients or growth in energy losses due to illegal use of our service. Argentine government actions concerning the economy, including decisions with respect to inflation, interest rates, price controls, foreign exchange controls and taxes, have had and could continue to have a material adverse effect on private sector entities, including us. To address Argentina’s economic crisis in 2001 and 2002, for example, the Argentine government took measures, such as the freeze of electricity distribution margins and pesification of our tariffs, which had a severe effect on our financial condition and led us to suspend payments on our financial debt. In addition, on December 10, 2007, Cristina Fernández de Kirchner, wife of the ex-President Dr. Néstor Kirchner, was inaugurated as President of Argentina for a four-year term. The President of Argentina exercises significant authority over the policies and government actions that relate to the Argentine economy and, consequently, that affect the operations and income of Argentine companies such as ours. To date, the new government has continued the policies adopted by the administration of Dr. Kirchner. We cannot provide any assurance whether these policies will change or whether any new policies will be adopted that could adversely affect the economy or our business. In addition, we cannot provide any assurance that future economic, social and political developments in Argentina, over which we have no control, will not impair our business, financial condition or results of operations.

Argentina’s current growth and stability may not be sustainable

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Although the economy has recovered significantly over the past four years, uncertainty remains as to whether the current growth and relative stability is sustainable. Sustainable economic growth is dependent on a variety of factors, including international demand for Argentine exports, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers and foreign and domestic investors and a stable and relatively low rate of inflation. As in the recent past, Argentina’s economy may suffer if political and social pressures inhibit the implementation by the Argentine government of policies designed to maintain price stability, generate growth and enhance consumers and investor confidence. This, in turn, could lead to lower demand for our services, lower collections from our clients or growth in energy losses due to illegal use of our service, which could materially adversely affect our financial condition and results of operations. Furthermore, as it has done in the past, the Argentine government could respond to a lack of economic growth or stability by adopting measures that affect private sector enterprises such as the tariff restrictions imposed on public utility companies such as our own.

The continuing rise in inflation may have adverse effects on the Argentine economy

After several years of price stability under the Convertibility regime, which established a fixed exchange rate of one U.S. Dollar per one Peso, the formal devaluation of the Peso in January 2002 created pressures on the domestic prices system that generated high inflation in 2002, before substantially stabilizing in 2003. In 2002, the inflation

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rate (as measured by changes in the consumer price index, or CPI) reached 41.0% according to data published by the National Statistics and Census Institute (Instituto Nacional de Estadísticas y Censos, or INDEC). Despite a decline to 3.7% in 2003, the rate of inflation increased again to 6.1% in 2004 and to 12.3% in 2005, in each case according to data published by INDEC. In 2006, according to INDEC data, the rate of inflation decreased to 9.8%, in part due to several actions implemented by the Argentine government to control inflation and monitor prices for most relevant goods and services. Such government actions included price support arrangements agreed to by the Argentine government and private sector companies in several industries and markets. In 2007, the inflation rate was 8.5%. However, in spite of the decrease in inflation, uncertainty surrounding future inflation and the status of the price support agreements implemented in 2006 and 2007 could slow the rebound in the economy. In the past, inflation has materially undermined the Argentine economy and the government’s ability to create conditions that permit growth. A return to a high inflation environment would also undermine Argentina’s foreign competitiveness by diluting the effects of the Peso devaluation, with the same negative effects on the level of economic activity. A high inflation environment could also temporarily undermine our results of operations as a result of a lag in cost adjustments. An economic slowdown or recession could affect the purchasing power of our customers, which, in turn, could lead to lower demand for our services, lower collections from our clients or growth in energy losses due to illegal use of our service. In addition, a return to high inflation would undermine confidence in Argentina’s banking system in general, which may limit the availability of domestic and international credit to businesses, which could adversely affect our ability to finance our working capital needs on favorable terms.

The methodology used to calculate the consumer price index (CPI), as published by the INDEC, has been questioned, as have been other indexes related to the CPI

In January 2007, INDEC modified its methodology used to calculate the CPI, which is calculated as the monthly average of a weighted basket of consumer goods and services that reflects the pattern of consumption of Argentine households. Several economists as well as the international and Argentine press have suggested that this change in methodology was related to the Argentine Government’s policy aimed at curbing inflation. Further, at the time that INDEC adopted this change in methodology, the Argentine Government also replaced several key personnel at INDEC. The alleged governmental interference prompted complaints from the technical staff at INDEC, which, in turn, has led to the initiation of several judicial investigations involving members of the Argentine Government and aimed at determining whether there was a breach of classified statistical information relating to the collection of data used in the calculation of the CPI. These events have affected the credibility of the CPI index published by INDEC, as well as other indexes published by INDEC which require the CPI for their own calculation, including the poverty index, the unemployment index as well as the calculation of the GDP, among others. If these investigations result in a finding that the methodologies used to calculate the CPI or other INDEC indexes derived from the CPI were manipulated by the Argentine Government, or if it is determined that it is necessary to correct the CPI and the other INDEC indexes derived from the CPI, there could be a significant decrease in confidence in the Argentinean economy, which could, in turn, have a materially adverse effect on our ability to access international credit markets at market rates to finance our operations. In addition, because inflation is taken into account in determining our actual cost base and corresponding adjustments in our distribution margins, a change in the methodology used to calculate official inflation rates may adversely affect our ability to recover changes in our cost base attributable to actual inflation.

Argentina’s ability to obtain financing from international markets is limited, which may impair its ability to implement reforms and foster economic growth

In the first half of 2005, Argentina restructured part of its sovereign debt that had been in default since the end of 2001. The Argentine government announced that as a result of the restructuring, it had approximately U.S. $126.6 billion in total outstanding debt remaining. Of this amount, approximately U.S. $19.5 billion correspond to defaulted bonds owned by creditors who did not participate in the restructuring. Some bondholders in the United States, Italy and Germany have filed legal actions against Argentina, and holdout creditors may initiate new suits in the future. Additionally, foreign shareholders of several Argentine companies, including public utilities and a group of bond holders that did not participate in the sovereign restructuring, have filed claims in excess of U.S. $17 billion before the International Center for the Settlement of Investment Disputes, or ICSID, alleging that certain government measures are inconsistent with the fair and equitable treatment standards set forth in various bilateral investment treaties to which Argentina is a party. To date, the ICSID has rendered decisions in four of these cases, requiring the Argentine government to pay U.S. $427.2 million plus interest in claims. Recently, a

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group of bond holders that declined to participate in the restructuring of the external public debt presented a claim before the ICSID for U.S. $4.4 billion.

Argentina’s past default and its failure to restructure completely its remaining sovereign debt and fully negotiate with the holdout creditors may limit Argentina’s ability to reenter the international capital markets. Litigation initiated by holdout creditors as well as ICSID claims may result in material judgments against the Argentine government which, if not complied with, could prevent Argentina from obtaining credit from multilateral organizations and might result in attachment orders or injunctions relating to assets of Argentina that the government intended for other uses. As a result, the government may not have the financial resources necessary to implement reforms and foster economic growth, which, in turn, could lead to lower demand for our services, lower collections from our clients or growth in energy losses due to illegal use of service. Furthermore, Argentina’s inability to obtain credit in international markets could have a direct impact on our own ability to access international credit markets to finance our operations and growth.

Significant fluctuations in the value of the Peso against the U.S. Dollar may adversely affect the Argentine economy

Despite the positive effects the depreciation of the Peso in 2002 had on the export-oriented sectors of the Argentine economy, the depreciation has also had a far-reaching negative impact on a range of businesses and on individuals’ financial position. The devaluation of the Peso had a negative impact on the ability of Argentine businesses to honor their foreign currency-denominated debt, led to very high inflation initially, significantly reduced real wages, had a negative impact on businesses whose success is dependent on domestic market demand, including public utilities, such as our company, and adversely affected the government’s ability to honor its foreign debt obligations. If the Peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences to our business.

A substantial increase in the value of the Peso against the U.S. Dollar also presents risks for the Argentine economy. The appreciation of the Peso against the U.S. Dollar negatively impacts the financial condition of companies with foreign currency-denominated assets that exceed foreign currency-denominated liabilities. In addition, in the short term, a significant real appreciation of the Peso would adversely affect exports. This could have a negative effect on economic growth and employment and reduce the Argentine public sector’s revenues by reducing tax collection in real terms.

Government measures to address social unrest may adversely affect the Argentine economy

During its crisis in 2001 and 2002, Argentina experienced social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s ongoing economic recovery and stabilization, the social and political tensions and high levels of poverty and unemployment continue. These conditions could adversely affect our relations with our employees, which could affect our operations and increase our energy losses and fines imposed by the ENRE. Future government policies to preempt or respond to social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts (including our concession), suspension of the enforcement of creditors’ rights and shareholders’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws, regulations and policies affecting foreign trade and investment. These policies could adversely and materially affect the economy and our business. The policies adopted by the Argentine government to address Argentina’s 2001 and 2002 economic crisis, for example, had a severe effect on our results of operations and financial condition and led us to suspend payments on our financial debt. See “Item 5. Operating and Financial Review and Prospects —Factors affecting our results of operations—Argentine economic conditions.”

Further shocks to Argentina’s financial sector could threaten the financial system and lead to renewed political and social tensions, adversely affecting the Argentine economy

In 2001 and the first half of 2002, Argentina experienced a massive withdrawal of deposits from the Argentine financial system in a short period of time, as depositors lost confidence in the Argentine government’s ability to repay its foreign debt and maintain the Convertibility regime. This precipitated a liquidity crisis within the Argentine financial system, which prompted the Argentine government to impose exchange controls and restrictions on the ability of depositors to withdraw their deposits. In the event of a future shock, such as the failure of one or

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more banks or a crisis in depositor confidence, the Argentine government could impose further exchange controls or transfer restrictions and take other measures that could lead to renewed political and social tensions and undermine the Argentine government’s public finances, which could adversely affect Argentina’s economy and prospects for economic growth.

The Argentine economy could be adversely affected by economic developments in other global markets

Financial and securities markets in Argentina are influenced, to varying degrees, by economic and market conditions in other global markets. Although economic conditions vary from country to country, investors’ perception of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries, including Argentina. The Argentine economy was adversely impacted by the political and economic events that occurred in several emerging economies in the 1990s, including Mexico in 1994, the collapse of several Asian economies between 1997 and 1998, the economic crisis in Russia in 1998 and the Brazilian devaluation of its currency in January 1999. In addition, Argentina continues to be affected by events in the economies of its major regional partners. Furthermore, the Argentine economy may be affected by events in developed economies which are trading partners or that impact the global economy. Shocks of a similar magnitude to the international markets in the future can be expected to affect adversely the Argentine economy and its financial system.

Risks relating to the electricity distribution sector

The Argentine government has intervened in the electricity sector in the past, and is likely to continue intervening

To address the Argentine economic crisis in 2001 and 2002, the Argentine government adopted the Public Emergency Law and other resolutions, which made a number of material changes to the regulatory framework applicable to the electricity sector. These changes, which severely affected electricity distribution companies, included the freezing of distribution margins, the revocation of adjustment and inflation indexation mechanisms and a limitation on charging our customers the increases of certain regulatory charges. In addition, a new price-setting mechanism was introduced in the wholesale electricity market, which had a significant impact on electricity generators and has led to significant price mismatches between participants in our market. The Argentine government continues to intervene in this sector, including granting temporary margin increases to distributors and creating specific charges to be transferred to trust funds managed by the government to finance investments in generation and distribution infrastructure and mandating investments for the construction of new generation plants and the expansion of existing transmission and distribution networks. We cannot make assurances that these or other measures that may be adopted by the Argentine government will not have a material adverse effect on our business and operations or that the Argentine government will not adopt emergency legislation similar to the Public Emergency Law, or other similar resolutions, in the future.

Electricity distributors were severely affected by the emergency measures adopted during the economic crisis, many of which remain in effect

Distribution tariffs include a regulated margin that is intended to cover the costs of distribution and provide an adequate return over the distributor’s asset base. Under the Convertibility regime, distribution tariffs were calculated in U.S. Dollars and distribution margins were adjusted periodically to reflect variations in U.S. inflation indexes. Pursuant to the Public Emergency Law, in January 2002 the Argentine government froze all distribution margins, revoked all margin adjustment provisions in distribution concessions and converted distribution tariffs into Pesos at a rate of Ps. 1.00 per U.S. $1.00. These measures, coupled with the effect of high inflation and the devaluation of the Peso, led to a decline in distribution revenues in real terms and an increase of distribution costs in real terms, which could no longer be recovered through adjustments to the distribution margin. This situation, in turn, led many public utility companies, including us and other important distribution companies, to suspend payments on their financial debt (which continued to be denominated in U.S. Dollars despite the pesification of revenues), which effectively prevented these companies from obtaining further financing in the domestic or international credit markets and making additional investments. Although the Argentine government has recently granted temporary relief to some distribution companies, including an increase in distribution margins and a temporary cost adjustment mechanism, distribution companies are currently involved in discussions with regulators on additional, permanent measures needed to adapt the current tariff scheme to the post-crisis situation of this sector.

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We cannot make assurances that these measures will be adopted or implemented or that, if adopted, they will be sufficient to address the structural problems created for our company by the economic crisis and its aftermath.

Electricity demand may be affected by future tariff increases

During the 2001 Argentine economic crisis, electricity demand in Argentina decreased due to the decline in the overall level of economic activity and the deterioration in the ability of many consumers to pay their electricity bills. After the economic crisis, however, electricity demand has experienced significant growth, increasing an average of 6.4% per annum from 2003 through 2007. This increase in demand reflects renewed economic growth in Argentina and the relative low cost, in real terms, of electricity to consumers due to the initial freeze of distribution margins and the elimination of the inflation adjustment provisions in distribution concessions, coupled with the devaluation of the Peso and inflation. A significant increase in the cost of electricity to consumers could lead to lower growth in demand for electricity. Although we do not believe that the recent increases in electricity distribution margins will have a significant negative effect on demand, we cannot make assurances that any future increases in the relative cost of electricity to consumers will not have a material adverse effect on electricity demand in Argentina.

Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies

In recent years, the condition of the Argentine electricity market has provided little incentive to generators to further invest in increasing their generation capacity, which would require material long-term financial commitments. As a result, Argentine electricity generators are currently operating at near full capacity and could be required to ration supply in order to meet a national energy demand that exceeds the current generation capacity. In addition, the economic crisis and the resulting emergency measures had a material adverse effect on other energy sectors, including oil and gas companies, which has led to a significant reduction in natural gas supplies to generation companies that use this commodity in their generation activities. Moreover, the recent drought in the southern region of Argentina has led to a significant reduction in energy supply from hydroelectric plants that operate in this region and may cause several of these plants to cease supply to the national grid altogether. For these reasons, electricity generators may not be able to continue to meet the growing demand for electricity in Argentina in the short- to medium-term. In an attempt to address this situation, in September 2006 the Argentine government adopted measures requiring large industrial users to limit their energy consumption to their “base demand” (equal to their demand in 2005) and to secure any additional energy needs in excess of their base demand from sources other than the national grid. Large users that do not comply with these measures can be subject to penalties imposed by the Argentine government. These measures, however, have not led to a significant reduction in demand by these users, despite requests from, and penalties imposed by, the Argentine government. As a result, electricity generators may not to be able to guarantee the supply of electricity to distribution companies, which, in turn, could prevent these companies, including our company, from experiencing continued growth in their businesses and could lead to failures to provide electricity to customers. Under Argentine law, distribution companies are responsible to their customers for any disruption in the supply of electricity. As a result, distribution companies may face customer claims and fines and penalties for disruptions caused by energy shortages unless the relevant Argentine authorities determine that energy shortages constitute force majeure. To date, the Argentine authorities have not been called upon to decide under which conditions energy shortages may constitute force majeure. In the past, however, the Argentine authorities have recognized the existence of force majeure only in limited circumstances, such as internal malfunctions at the customer’s facilities, extraordinary meteorological events (such as major storms) and third party work in public thoroughfares. We cannot make assurances that we will not experience a lack of energy supply that could adversely affect our business, financial condition and results of operations.

Risks relating to our business

Our business and prospects depend on our ability to negotiate further improvements to our tariff structure, including increases in our distribution margin

We are currently engaged in an integral tariff revision process (Revisión Tarifaria Integral, or RTI) with the ENRE. The goal of the RTI is to achieve a comprehensive revision of our tariff structure, including further increases in our distribution margins and periodic adjustments based on changes in our cost base, to provide us with an adequate return on our asset base. Although we believe the RTI will result in a new tariff structure, we cannot

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make assurances that the RTI will conclude in a timely manner or at all, or that the new tariff structure will effectively cover all of our costs and provide us with an adequate return on our asset base. Moreover, the RTI could result in the adoption of an entirely new regulatory framework for our business, with additional terms and restrictions on our operations and the imposition of mandatory investments. We also cannot predict whether a new regulatory framework will be implemented and what terms or restrictions could be imposed on our operations. If we are not successful in achieving a satisfactory renegotiation of our tariff structure, our business, financial condition and results of operations may be materially adversely affected and the value of our Class B common shares and ADSs may decline.

We may not be able to adjust our tariffs to reflect increases in our distribution costs in a timely manner, or at all, which may have a material adverse effect on our results of operations

The Adjustment Agreement contemplates a cost adjustment mechanism for the transition period during which the RTI is being conducted. This mechanism, known as the Cost Monitoring Mechanism, or CMM, requires the ENRE to review our actual distribution costs every six months (in May and November of each year) and adjust our distribution margins to reflect variations of 5% or more in our distribution cost base. We may also request that the ENRE apply the CMM at any time that the variation in our distribution cost base is at least 10% or more. Any adjustments, however, are subject to the ENRE’s assessment of variations in our costs, and we cannot guarantee that the ENRE will approve adjustments that are sufficient to cover our actual incremental costs. In addition, there likely will be a lag in time between when we actually experience increases in our distribution costs and when we receive increased revenues following the corresponding adjustments, if any, to our distribution margins pursuant to the CMM. Despite the recent adjustment we were granted under the CMM in October 2007, we cannot make assurances that we will receive similar adjustments in the future. If we are not able to recover all of these incremental costs or there is a significant lag time between when we incur the incremental costs and when we receive increased revenues, we may experience a decline in our results of operations, which may have a material adverse effect on the value of our ADSs and Class B common shares.

Proceedings challenging the renegotiation of our concession

In November 2006, two Argentine consumer associations, Asociación Civil por la Igualdad y la Justicia (ACIJ) and Consumidores Libres Cooperativa Limitada de Provisión de Servicios de Acción Comunitaria, brought an action against us and the Argentine government before a federal administrative court seeking to block the ratification of the Adjustment Agreement on the grounds that the approval mechanism was unconstitutional. On March 26, 2007, the federal administrative court dismissed these claims and ruled in our favor on the grounds that the adoption of Executive Decree No. 1957/06, which ratified the Adjustment Agreement, rendered this action moot. ACIJ appealed this decision on April 12, 2007, and the appeal was decided in our favor. However, on April 14, 2008, ACIJ filed another complaint challenging the procedures utilized by the Argentine Congress in approving the Adjustment Agreement. We cannot make assurances regarding how this latest complaint will be resolved nor can we make assurances that other actions or requests for injunctive relief will not be brought by these or other groups seeking to reverse the adjustments we have obtained or to block any further adjustments to our tariffs.

We have been, and may continue to be, subject to fines and penalties that could have a material adverse effect on our results of operations

We operate in a highly regulated environment and have been and in the future may continue to be subject to significant fines and penalties by regulatory authorities, including for reasons outside our control, such as service disruptions attributable to problems at generation facilities or in the transmission network that result in a lack of electricity supply. After 2001, the amount of fines and penalties imposed on our company has increased significantly, which we believe is mainly due to the economic and political environment in Argentina following the recent economic crisis. Although the Argentine government has agreed to forgive a significant portion of our accrued fines and penalties pursuant to the Adjustment Agreement and to allow us to repay the remaining balance over time, this forgiveness and repayment plan is subject to a number of conditions, including compliance with quality of service standards, reporting obligations and required capital investments. As of December 31, 2007, our accrued fines and penalties totaled Ps. 281.4 million (taking into account our adjustment to fines and penalties following the ratification of the Adjustment Agreement). If we fail to comply with any of these requirements, the Argentine government may seek to obtain payment of these fines and penalties by our company. In addition, we

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cannot make assurances that we will not incur material fines in the future, which could have a material adverse effect on our results of operations.

Our financial difficulties led us to curtail our capital expenditures following the economic crisis and we may need to make further investments in our network to meet anticipated increases in energy demand

Due to the adverse effects of Argentina’s economic crisis in 2001 and 2002, including the freezing of our distribution margins and the lack of available financing, we were forced to curtail our capital expenditures and make only those investments that were necessary to permit us to comply with our quality of service and safety and environmental requirements. Because energy demand has grown consistently in Argentina in recent years and is expected to continue to grow in the near future, we may increasingly experience service interruptions unless we are able to make further investments in our network to meet this growth in demand. We cannot make assurances that we will have the necessary resources or will be able to obtain financing on favorable terms to make these investments in a timely manner, or at all, which may in turn lead us to incur greater fines and penalties and adversely affect our results of operations.

If we are unable to control our energy losses, our results of operations could be adversely affected

Our concession does not allow us to pass through to our customers the cost of additional energy purchased to cover any energy losses that exceed the loss factor contemplated by our concession, which is, on average, 10%. As a result, if we experience energy losses in excess of those contemplated by our concession, we may record lower operating profits than we anticipate. Prior to the recent economic crisis, we had been able to reduce the high level of energy losses experienced at the time of the privatization to the levels contemplated (and reimbursed) under our concession. However, during the economic crisis, our level of energy losses, particularly our non-technical losses, started to grow again, in part as a result of the increase in poverty levels and, with it, the number of delinquent accounts and fraud. Although we have been able to reduce our energy losses again in recent periods, these losses continue to exceed the 10% average loss factor in our concession. Our energy losses amounted to 11.6% in 2007, 11.1% in 2006 and 11.0% in 2005. We cannot make assurances that our energy losses will not continue growing in future periods, which may lead us to have lower margins and could adversely affect our results of operations and financial condition.

The Argentine government could foreclose its pledge over our Class A shares under certain circumstances, which could have a material adverse effect on our business and financial condition

Pursuant to our concession and the provisions of the Adjustment Agreement, the Argentine government will have the right to foreclose its pledge over our Class A shares and sell these shares to a third party buyer if:

• the fines and penalties we incur in any given year exceed 20% of our gross energy sales, net of taxes (which corresponds to our energy sales);

• we repeatedly and materially breach our concession and do not remedy these breaches upon the request of the ENRE;

• our controlling shareholder, EASA, creates any lien or encumbrance over our Class A shares (other than the existing pledge in favor of the Argentine government);

• we or EASA obstruct the sale of Class A shares at the end of any management period under our concession;

• EASA fails to obtain the ENRE’s approval in connection with the disposition of our Class A shares;

• our shareholders amend our articles of incorporation or voting rights in a way that modifies the voting rights of the Class A shares without the ENRE’s approval; or

• EASA does not desist from its ICSID claims against the Argentine government following completion of the RTI and the approval of a new tariff regime.

In 2007, the fines and penalties imposed on us by the ENRE amounted to Ps. 23.9 million, which represented 1.2% of our energy sales (including the retroactive portion of the VAD increase). See “Item 4. Information on the Company—Our concession—Fines and penalties.”

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Pending the sale of our Class A shares following a foreclosure of its pledge, the Argentine government also has the right to exercise the voting rights of the Class A shares. In addition, the foreclosure by the Argentine government of the pledge on our Class A shares may be deemed to constitute a change of control under the terms of our restructured debt, which would require us to offer to repurchase all such debt at its nominal value. We cannot make assurances that we will have sufficient funds or access to financing to effect such repurchases. If the Argentine government forecloses its pledge over our Class A shares, the market value of our ADSs and Class B common shares could be significantly affected.

Our concession may be revoked if we are declared bankrupt, which would have a material adverse effect on our ability to operate as a going concern

In the event we are ever declared bankrupt by a competent court, the Argentine government has the right to revoke our concession or, alternatively, to seek authorization from the bankruptcy court to allow us to continue our operations. If we are declared bankrupt and the government decides that we should not continue rendering our distribution services, all of our assets will be transferred to a new state-owned company that will be sold in an international public bidding process. At the conclusion of this bidding process, the purchase price will be delivered to the bankruptcy court in favor of our creditors, net of any debt owed by us to the Argentine government and a specified percentage of the bidding price will be awarded as compensation in favor of the Argentine government. Any residual proceeds will be distributed among our shareholders. The revocation of our concession would have a material adverse effect on our ability to operate as a going concern, which in turn would materially and adversely affect the value of our ADSs and Class B common shares anyway.

We employ a largely unionized labor force and could be subject to an organized labor action

As of December 31, 2007, approximately 78% of our employees were union members. Although our relations with unions are currently stable, we cannot make assurances that we will not experience work disruptions or stoppages in the future, which could have a material adverse effect on our business and revenues, especially in light of the social tensions generated in Argentina by the economic crisis. In addition, our collective bargaining agreements with our unions expired at the end of 2007. Although we are currently negotiating new agreements, we cannot make assurances that we will be able to negotiate new collective bargaining agreements on the same terms as those currently in effect, or that we will not be subject to strikes or work stoppages before or during the negotiation process.

We might incur material labor liabilities in connection with our outsourcing

We have outsourced a number of activities related to our business to third party contractors in order to maintain a flexible cost base that allows us both to maintain a lower cost base and respond more quickly to changes in our market. We had approximately 3,612 third-party employees under contract with our company as of December 31, 2007. Although we have very strict policies regarding compliance with labor and social security obligations by our contractors, we are not in a position to ensure that contractors’ employees will not initiate legal actions to seek indemnification from us based upon a number of judicial rulings issued by labor courts in Argentina recognizing joint and several liability between the contractor and the entity to which it is supplying services under certain circumstances. If we are not able to prevail in any of these proceedings, we might be forced to incur material labor liabilities, which may have an adverse effect on our results of operations.

We currently are not able to effectively hedge our currency risk and, as a result, a devaluation of the Peso may have a material adverse effect on our results of operations and financial condition

Our revenues are collected in Pesos pursuant to tariffs that are not indexed to the U.S. Dollar, while all of our existing financial indebtedness is denominated in U.S. Dollars, which exposes us to the risk of loss from devaluation of the Peso. We currently seek to hedge this risk in part by converting a portion of our excess cash denominated in Pesos into U.S. Dollars and investing those funds outside Argentina, as permitted by applicable Argentine Central Bank regulations, but we continue to have substantial exposure to the U.S. Dollar. We cannot make assurances that the Argentine government will continue to allow us to access the market to acquire U.S. Dollars in the manner we have done so to date. Although we may also seek to enter into hedging transactions to cover all or a part of our remaining exposure, we have not been able to enter into these transactions on terms we consider viable for our company. If we continue to be unable to effectively hedge all or a significant portion of our currency risk exposure,

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a devaluation of the Peso may significantly increase our debt service burden, which, in turn, may have a material adverse effect on our financial condition and results of operations.

Our insurance may not be sufficient to cover certain losses

As of December 31, 2007, our physical assets are insured for up to U.S. $417.5 million. However, we do not carry insurance coverage for losses caused by our network or business interruption, including loss of our concession. Although we believe that our insurance coverage is commensurate with standards for the international electricity distribution industry, no assurance can be given of the existence or sufficiency of risk coverage for any particular risk or loss. If an accident or other event occurs that is not covered by our current insurance policies, we may experience material losses or have to disburse significant amounts from our own funds, which may have a material adverse effect on our results of operations and financial condition.

A substantial number of our assets are not subject to attachment or foreclosure

A substantial number of our assets are essential to the public service we provide. Under Argentine law, as interpreted by the Argentine courts, assets which are essential to the provision of a public service are not subject to attachment, whether as a guarantee for an ongoing legal action or to allow for the enforcement of a legal judgment. Accordingly, the enforcement of judgments obtained against us by our shareholders may be substantially limited to the extent our shareholders seek to attach those assets to obtain payment on their judgment.

If our controlling shareholder fails to meet its debt service obligations, its creditors may take measures that could have a material adverse effect on our results of operations

In July 2006, EASA completed a comprehensive restructuring of all of its outstanding financial indebtedness, which had been in default since 2002. In connection with this restructuring, EASA issued approximately U.S. $85.3 million in U.S. Dollar-denominated notes in exchange for the cancellation of approximately 99.94% of its outstanding financial debt. EASA’s ability to meet its debt service obligations under these notes depends largely on our ability to pay dividends or make distributions or payments to EASA, and our failure to do so could result in EASA becoming subject to actions by its creditors, including attachments of EASA’s assets and petitions for involuntary bankruptcy proceedings. If EASA’s creditors were to attach our Class A shares held by EASA, the Argentine government would have the right under our concession to foreclose its pledge over our Class A shares, which could trigger a repurchase obligation under the terms of our restructured debt and have a material adverse effect on the market value of our ADSs and Class B common shares.

Our exclusive right to distribute electricity may be adversely affected by technological or other changes in the energy distribution industry

Although our concession grants us the exclusive right to distribute electricity within our service area, this exclusivity may be terminated in whole or in part if technological changes make it possible for the energy distribution industry to evolve from its present condition as a natural monopoly into a competitive business. Although, to our knowledge, there are currently no projects to introduce new technologies in the medium or long-term which could reasonably be expected to alter the current landscape of the electricity distribution business, we cannot make assurances that future developments will not introduce competition that would adversely affect the exclusivity right granted by our concession. Any total or partial loss of our exclusive right to distribute electricity within our service area would likely have a material adverse effect on our financial condition, results of operations and prospects.

Risks relating to ADSs and our Class B common shares

Restrictions on the movement of capital out of Argentina may impair the ability of holders of ADRs to receive dividends and distributions on, and the proceeds of any sale of, the Class B common shares underlying the ADSs

The Argentine government may impose restrictions on the conversion of Argentine currency into foreign currencies and on the remittance to foreign investors of proceeds from their investments in Argentina. Argentine law currently permits the government to impose this kind of restrictions temporarily in circumstances where a

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serious imbalance develops in Argentina’s balance of payments or where there are reasons to foresee such an imbalance. Beginning in December 2001, the Argentine government implemented an unexpected number of monetary and foreign exchange control measures that included restrictions on the free disposition of funds deposited with banks and on the transfer of funds abroad, including dividends, without prior approval by the Central Bank, some of which are still in effect. Among the restrictions that are still in effect are those relating to the payment prior to maturity of the principal amount of loans, bonds or other securities owed to non-Argentine residents, the requirement for Central Bank approval prior to acquiring foreign currency for certain types of investments and the requirement that 30% of certain types of capital inflows into Argentina be deposited in a non-interest-bearing account in an Argentine bank for a period of one year. Although the transfer of funds abroad in order to pay dividends no longer requires Central Bank approval, restrictions on the movement of capital to and from Argentina such as the ones which previously existed could, if reinstated, impair or prevent the conversion of dividends, distributions, or the proceeds from any sale of Class B common shares, as the case may be, from Pesos into U.S. Dollars and the remittance of the U.S. Dollars abroad. We cannot make assurances that the Argentine government will not take similar measures in the future. In such a case, the depositary for the ADSs may hold the Pesos it cannot convert for the account of the ADR holders who have not been paid.

Our ability to pay dividends is limited

In accordance with Argentine corporate law, we may pay dividends in Pesos out of retained earnings, if any, as set forth in our audited financial statements prepared in accordance with Argentine GAAP. Our ability to pay dividends, however, is restricted pursuant to the indenture we entered into when we restructured our financial debt. Pursuant to this indenture, we may not pay any dividends prior to April 24, 2008 and, thereafter, our ability to pay dividends is limited at any time that our leverage ratio, as defined in the indenture, exceeds 2.5, unless we attain an international investment grade rating on our long term debt from an internationally recognized rating agency. Our leverage ratio is defined in the indenture as our total indebtedness (without giving effect to the discount to net present value applied to our restructured debt) over EBITDA, as defined in the indenture. EBITDA is defined in the indenture as our operating income plus amortization of intangible assets and non-current assets, depreciation of fixed assets and any other non-cash charges. If our leverage ratio is greater than 2.5, we will only be able to pay dividends using a specified portion of our excess cash (as defined in the indenture), which ranges from 25% to 50% of our excess cash depending on our leverage ratio. In addition, if our leverage ratio exceeds 3.5 we will not be able to pay any dividends to our shareholders. We cannot make assurances that we will be able to generate excess cash under the indenture at any time or that our leverage ratio will allow us to pay dividends at any given time. In addition, pursuant to the Adjustment Agreement, we have agreed not to pay dividends without the ENRE’s prior approval until we complete the integral tariff review process with the ENRE, which we expect to occur in 2008, although we cannot make assurances that the process will be completed by then.

Our shareholders’ ability to receive cash dividends may be limited

Our shareholders’ ability to receive cash dividends may be limited by the ability of the depositary to convert cash dividends paid in Pesos into U.S. Dollars. Under the terms of our deposit agreement with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the common shares underlying the ADSs into U.S. Dollars, if it can do so on a reasonable basis and can transfer the U.S. Dollars to the United States. If this conversion is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the depositary cannot convert the foreign currency, shareholders may lose some or all of the value of the dividend distribution.

Under Argentine law, shareholder rights may be fewer or less well defined than in other jurisdictions

Our corporate affairs are governed by our by-laws and by Argentine corporate law, which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States, such as the States of Delaware or New York, or in other jurisdictions outside Argentina. In addition, the rights of holders of the ADSs or the rights of holders of our common shares under Argentine corporate law to protect their interests relative to actions by our board of directors may be fewer and less well-defined than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets are not as highly regulated or supervised as the U.S. securities markets or markets in some other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less

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well-defined and enforced in Argentina that in the United States, putting holders of our common shares and ADRs at a potential disadvantage.

Holders of ADRs may be unable to exercise voting rights with respect to the Class B common shares underlying the ADSs at our shareholders’ meetings

ADRs represent ADSs being held by the depositary in the name of the holder of the ADR. As such, we will not treat holders of ADRs as one of our shareholders and holders of ADRs will not have shareholder rights. The depositary will be the holder of the common shares underlying the ADSs and holders may exercise voting rights with respect to the Class B common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. There are no provisions under Argentine law or under our by-laws that limit the exercise by ADS holders of their voting rights through the depositary with respect to the underlying Class B common shares. However, there are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with these holders. For example, holders of our common shares will receive notice of shareholders’ meetings through publication of a notice in an official gazette in Argentina, an Argentine newspaper of general circulation and the bulletin of the Buenos Aires Stock Exchange, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders, by comparison, do not receive notice directly from us. Instead, in accordance with the deposit agreement, we provide the notice to the depositary. If we ask it to do so, the depositary will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, ADS holders must then instruct the depositary as to voting the Class B common shares represented by their ADSs. Due to these procedural steps involving the depositary, the process for exercising voting rights may take longer for ADS holders than for holders of Class B common shares and Class B common shares represented by ADSs may not be voted as the holders of ADRs desire. Class B common shares represented by ADSs for which the depositary fails to receive timely voting instructions may, if requested by our company, be voted as we instruct at the corresponding meeting.

Developments in other emerging market countries, including Argentina, may adversely affect the Argentine economy and, therefore, the market price of the Class B common shares and the ADSs

In the past, the Argentine economy and the securities of Argentine companies have been, to varying degrees, influenced by economic and market conditions in other emerging market countries, particularly in Latin America, as well as investors’ responses to those conditions. Although economic conditions are different in each country, investors’ reactions to adverse developments in one country may affect the market price of securities of issuers in other countries, including Argentina. For example, each of the 1997 Asian economic crisis, the 1998 Russian debt moratorium and devaluation of the Russian currency and the 1999 Brazilian devaluation of its currency triggered market volatility in Latin America and securities markets in other emerging market countries. Accordingly, adverse developments in Argentina or in other emerging market countries could lead to a reduction in the demand for, and market price of, the Class B common shares and the ADSs.

Our shareholders may be subject to liability for certain votes of their securities

Because we are a limited liability corporation, our shareholders are not liable for our obligations. Shareholders are generally liable only for the payment of the shares they subscribe. However, shareholders who have a conflict of interest with us and who do not abstain from voting at the respective shareholders’ meeting may be liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is subsequently declared void by a court as contrary to the law or our bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

Item 4. Information on the Company

We are the largest electricity distribution company in Argentina in terms of number of customers and electricity sold (both in GWh and in Pesos) in 2007. We believe we are also one of the largest electricity distributors in Latin America in terms of customers and volume of electricity sold. We hold a concession to distribute electricity on an exclusive basis to the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, comprising an area of 4,637 square kilometers and a population of approximately seven

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million people. As of December 31, 2007, we served 2,490,064 customers. The following table shows the percentage of the electricity produced and sold by generating companies that was purchased by us in the periods indicated:

Demand (GWh)

Wholesale Electricity

Market(1) Edenor

Demand(2)

Edenor Demand as a % of Wholesale

Electricity Market 2007 ....................................................... 102,950 20,233 19.7% 2006 ....................................................... 97,590 18,700 19.2% 2005 ....................................................... 92,340 17,623 19.1% _______________________ Source: Compañía Administradora del Mercado Mayorista Eléctrico, S.A. (CAMMESA) (1) Includes demand in the Patagonia wholesale electricity market (Mercado Eléctrico Mayorista Sistema Patagónico, or

MEMSP). (2) Calculated as electricity purchased by us and our wheeling system customers.

THE ARGENTINE ELECTRICITY INDUSTRY

Historical background

Electricity was first made available in Argentina in 1887 with the first public street lighting in Buenos Aires. The Argentine government’s involvement in the electricity sector began in 1946 with the creation of the General Directorate of Electric Power Plants of the State (Dirección General de Centrales Eléctricas del Estado) to construct and operate electricity generation plants. In 1947, the Argentine government created Water and Electricity (Agua y Energía Eléctrica S.A., or AyEE) to develop a system of hydroelectric generation, transmission and distribution for Argentina.

In 1961, the Argentine government granted a concession to the Italian-Argentine Electricity Company (Compañía Italo Argentina de Electricidad, or CIADE) for the distribution of electricity in a part of the City of Buenos Aires. In 1962, the Argentine government granted a concession formerly held by the Argentine Electricity Company (Compañía Argentina de Electricidad, or CADE) to Electricity Services of Greater Buenos Aires (Servicios Eléctricos del Gran Buenos Aires, or SEGBA), our predecessor, for the generation and distribution of electricity to parts of Buenos Aires. In 1967, the Argentine government granted a concession to Hidroeléctrica Norpatagónica S.A. (Hidronor) to build and operate a series of hydroelectric generation facilities. In 1978, CIADE transferred all of its assets to the Argentine government, following which CIADE’s business became government-owned and operated.

By 1990, virtually all of the electricity supply in Argentina was controlled by the public sector (97% of total generation). The Argentine government had assumed responsibility for the regulation of the industry at the national level and controlled all of the national electricity companies, AyEE, SEGBA and Hidronor. The Argentine government also represented Argentine interests in generation facilities developed or operated jointly with Uruguay, Paraguay and Brazil. In addition, several of the Argentine provinces operated their own electricity companies. Inefficient management and inadequate capital spending, which prevailed under national and provincial government control, were in large measure responsible for the deterioration of physical equipment, decline in quality of service and proliferation of financial losses that occurred during this period.

In 1991, as part of the economic plan adopted by former President Carlos Menem, the Argentine government undertook an extensive privatization program of all major state-owned industries, including within the electricity generation, transmission and distribution sectors. In January 1992, the Argentine federal congress adopted the Regulatory Framework Law (Law No. 24,065), which established guidelines for the restructuring and privatization of the electricity sector. This Regulatory Framework Law, which continues to provide the framework for regulation of the electricity sector since the privatization of this sector, divided generation, transmission and distribution of electricity into separate businesses and subjected each to appropriate regulation.

The ultimate objective of the privatization process was to achieve a reduction in rates paid by users and improve quality of service through competition. The privatization process commenced in February 1992 with the sale of

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several large thermal generation facilities formerly operated by SEGBA, and continued with the sale of transmission and distribution facilities (including those currently operated by our company) and additional thermoelectric and hydroelectric generation facilities.

At the end of 2001 and beginning of 2002, Argentina experienced an unprecedented crisis that virtually paralyzed the country’s economy through most of 2002 and led to radical changes in government policies. See “Item 5. Operating and Financial Review and Prospects—Factors affecting our results of operations—Argentine economic conditions.” The crisis and the government’s policies during this period severely affected the electricity sector. Pursuant to the Public Emergency Law, the Argentine government, among other measures:

• converted public utility tariffs from their original U.S. Dollar values to Pesos at a rate of Ps. 1.00 per U.S. $1.00;

• froze all regulated distribution margins relating to the provision of public utility services (including electricity distribution services);

• revoked all price adjustment provisions and inflation indexation mechanisms in public utility concessions (including energy concessions); and

• empowered the Executive Branch to conduct a renegotiation of public utility contracts (including energy concessions), including the tariffs for public utility services.

These measures, combined with the devaluation of the Peso and high rates of inflation, had a severe effect on public utilities in Argentina, including our company. Because public utilities were no longer able to increase tariffs to cover their cost increases, the impact of inflation on costs led to decreases in their revenues in real terms and a deterioration of their operating performance and financial condition. Most public utilities had also incurred large amounts of foreign currency indebtedness under the Convertibility regime and, following the elimination of the Convertibility regime and the resulting devaluation of the Peso, the debt service burden of these utilities increased sharply, which led many of these utilities to suspend payments on their foreign currency debt in 2002. This situation caused many Argentine electricity generators, transmission companies and distributors to defer making further investments in their networks. As a result, Argentine electricity market participants, particularly generators, are currently operating at near full capacity, which could lead to insufficient supply to meet a growing national energy demand. In addition, the economic crisis and the resulting emergency measures had a material adverse effect on other energy sectors, including oil and gas companies, which has led to a significant reduction in natural gas supplies to generation companies that use this commodity in their generation activities.

To address the electricity crisis generated by the economic crisis, the Argentine government has repeatedly intervened in and modified the rules of the wholesale electricity market since 2002. These modifications include the establishment of caps on the prices paid by distributors for electricity power purchases and the requirement that all prices charged by generators be calculated based on the price of natural gas (which are also regulated by the Argentine government), regardless of the fuel actually used in generation activities, which together have created a huge structural deficit in the operation of the wholesale electricity market. In December 2004, the Argentine government adopted new rules to readapt or readjust the marketplace, but these rules will not come into effect until the construction of two new 800 MW combined cycle generators is completed. One of these generators is currently scheduled to commence operations in late 2008, and the second one in 2009. The costs of construction will be primarily financed with net revenues of generators derived from energy sales in the spot market through special charges to our non-residential customers per MWh of energy billed and through specific charges from CAMMESA applicable to large users that will be deposited in the Fund for Investments Required to Increase Electricity Supply in the Wholesale Electricity Market (Fondo de Inversiones Necesarias que Permitan Incrementar la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista, or FONINVEMEM). We cannot assure you that the Argentine government will complete these projects in a timely manner, or at all.

The construction of these new generators reflects a recent trend by the Argentine government to take a more active role in promoting energy investments in Argentina. In addition to these projects, in April 2006 the Argentine congress enacted a law that authorized the executive branch to create a special fund to finance infrastructure improvements in the Argentine energy sector through the expansion of generation, distribution and transmission infrastructure relating to natural gas, propane and electricity. The fund would obtain funds through cargos específicos (specific charges) passed on to customers as an itemization on their energy bills, but it has not yet been

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implemented. We cannot assure you that the Argentine government will complete the implementation of these new projects in a timely manner, if at all.

Finally, in September 2006 the Secretary of Energy (Secretaría de Energía) of the Ministry of Federal Planning, Public Investment and Services issued Resolution No. 1281/06 in an effort to respond to the sustained increase in energy demand following Argentina’s economic recovery after the crisis. This resolution seeks to create incentives for energy generation plants in order to meet increasing energy needs. The resolution’s principal objective is to ensure that energy available in the market is used primarily to service residential users and industrial and commercial users whose energy demand is at or below 300 kW and who do not have access to other viable energy alternatives. To achieve this, the resolution provides that:

• large users in the wholesale electricity market and large customers of distribution companies (in both cases above 300 kilowatts), such as us, will be authorized to secure energy supply up to their “base demand” (equal to their demand in 2005) by entering into term contracts; and

• large users in the wholesale electricity market and large customers of distribution companies (in both cases above 300 kilowatts) must satisfy any consumption in excess of their base demand with energy from the Energía Plus (Energy Plus) system at unregulated market prices. The Energy Plus system consists of the supply of additional energy generation from new generation and/or generating agents, co-generators or auto-generators who are not agents of the electricity market or who as of the date of the resolution were not part of the wholesale electricity market. Large users in the wholesale electricity market and large customers of distribution companies can also enter into contracts directly with these new generators or purchase energy at unregulated market prices through CAMMESA.

This new resolution will help us mitigate the risk of energy shortages due to a lack of electricity generation. See “Business—Our concession—Our obligations.”

Regulatory authorities

The principal regulatory authorities responsible for the Argentine electricity industry are:

(1) the Secretary of Energy (Secretaría de Energía) of the Ministry of Federal Planning, Public Investment and Services (Ministerio de Planificación Federal, Inversión Pública y Servicios), and

(2) the National Electricity Regulator (Ente Nacional Regulador de la Electricidad, or the ENRE).

The Secretary of Energy advises the Argentine government on matters related to the electricity sector and is responsible for the application of the policies concerning the Argentine electricity industry.

The ENRE is an autonomous agency created by the Regulatory Framework Law. The ENRE has a variety of regulatory and jurisdictional powers, including, among others:

• enforcement of compliance with the Regulatory Framework Law and related regulations;

• control of the delivery of electric services and enforcement of compliance with the terms of concessions;

• adoption of rules applicable to generators, transmitters, distributors, electricity users and other related parties concerning safety, technical procedures, measurement and billing of electricity consumption, interruption and reconnection of supplies, third-party access to real estate used in the electricity industry and quality of services offered;

• prevention of anticompetitive, monopolistic and discriminatory conduct between participants in the electricity industry;

• imposition of penalties for violations of concessions or other related regulations; and

• arbitration of conflicts between electricity sector participants.

The ENRE is managed by a five-member board of directors appointed by the executive branch of the Argentine government. Two of these five members are nominated by the Federal Council on Electricity (Consejo Federal de

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la Energía Eléctrica, or CFEE). The CFEE is funded with a percentage of revenues collected by CAMMESA for each MWh sold in the market. Sixty percent of the funds received by the CFEE are reserved for the Fondo Subsidiario para Compensaciones Regionales de Tarifas a Usuarios Finales (Regional Tariff Subsidy Fund for End Users), from which the CFEE makes distributions to provinces that have met certain specified tariff provisions. The remaining forty percent is used for investments related to the development of electrical services in the interior regions of Argentina.

The wholesale electricity market

Overview

The Secretary of Energy established the wholesale electricity market in August 1991 to allow electricity generators, distributors and other agents to buy and sell electricity in spot transactions or under long-term supply contracts at prices determined by the forces of supply and demand.

The wholesale electricity market consists of:

• a term market in which generators, distributors and large users enter into long-term agreements on quantities, prices and conditions;

• a spot market, in which prices are established on an hourly basis as a function of economic production costs, represented by the short-term marginal cost of production measured at Ezeiza 500 kV substation, the system’s load center, and demand; and

• a stabilization fund, managed by CAMMESA, that absorbs the differences between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price.

Operation of the wholesale electricity market

The operation of the wholesale electricity market is administered by the Wholesale Electricity Market Administration Company (Compañía Administradora del Mercado Mayorista Eléctrico S.A., or CAMMESA). CAMMESA was created in July 1992 by the Argentine government, which currently owns 20% of CAMMESA’s capital stock. The remaining 80% is owned by various associations that represent wholesale electricity market participants, including generators, transmitters, distributors, large users and electricity brokers.

CAMMESA is in charge of:

• managing the national interconnection system pursuant to the Regulatory Framework Law and related regulations, which includes:

• determining technical and economic dispatch of electricity (i.e., schedule of production for all generating units on a power system to match production with demand) in the national interconnection system;

• maximizing the system’s security and the quality of electricity supplied;

• minimizing wholesale prices in the spot market;

• planning energy capacity needs and optimizing energy use pursuant to the rules set out from time to time by the Secretary of Energy, and

• monitoring the operation of the term market and administering the technical dispatch of electricity pursuant to any agreements entered into in such market;

• acting as agent of the various wholesale electricity market participants;

• purchasing or selling electricity from or to other countries by performing the relevant import/export operations; and

• providing consulting and other services related to these activities.

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The operating costs of CAMMESA are covered by mandatory contributions made by wholesale electricity market participants. CAMMESA’s annual budget is subject to a mandatory cap equivalent to 0.85% of the aggregate amount of transactions in the wholesale electricity market projected for that year.

Wholesale electricity market participants

The main participants in the wholesale electricity market are generation, transmission and distribution companies. Large users and traders participate also in the wholesale electricity market, but to a lesser extent.

Generators

According to a recent report issued by CAMMESA, there are 43 generation companies in Argentina, most of which operate more than one generation plant. As of December 31, 2007, Argentina’s installed power capacity was 24,352 MW. Of this amount, 54% was derived from thermal generation, 42% from hydraulic generation and 4% from nuclear generation, provided by 40 private companies using conventional thermal equipment and hydraulic generation technology, 2 bi-national companies using hydraulic generation technology and one national state-owned company using nuclear generation technology. Private generators participate in CAMMESA through the Argentine Association of Electric Power Generators (Asociación de Generadores de Energía Eléctrica de la República Argentina, or AGEERA), which is entitled to appoint two acting and two alternate directors of CAMMESA.

Transmitters

Electricity is transmitted from power generation facilities to distributors through high voltage power transmission systems. Transmitters do not engage in purchases or sales of power. Transmission services are governed by the Regulatory Framework Law and related regulations promulgated by the Secretary of Energy.

In Argentina, transmission is carried at 500 kV, 220 kV and 132 kV through the national interconnection system. The national interconnection system consists primarily of overhead lines and sub-stations (i.e., assemblies of equipment through which electricity delivered by transmission circuits is passed and converted into voltages suitable for use by end users) and covers approximately 90% of the country. The majority of the national interconnection system, including almost all of the 500 kV transmission lines, has been privatized and is owned by Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener) which is indirectly controlled by Pampa Holding S.A., a public company managed by Grupo Dolphin’s principals and our controlling Shareholder. Regional transmission companies, most of which have been privatized, own the remaining portion of the national interconnection system. Supply points link the national interconnection system to the distribution systems, and there are interconnections between the transmission systems of Argentina, Brazil, Uruguay and Paraguay allowing for the import or export of electricity from one system to another.

Transmission companies also participate in CAMMESA by appointing two acting and two alternate directors through the Argentine Association of Electric Power Transmitters (Asociación de Transportistas de Energía Eléctrica de la República Argentina, or ATEERA).

Distributors

Each distributor supplies electricity to consumers and operates the related distribution network in a specified geographic area pursuant to a concession. Each concession establishes, among other things, the concession area, the quality of service required, the rates paid by consumers for service and an obligation to satisfy demand. The ENRE monitors compliance by federal distributors, including us, Empresa Distribuidora Sur S.A. (Edesur) and Empresa Distribuidora La Plata S.A. (Edelap), with the provisions of our respective concessions and with the Regulatory Framework Law, and provides a mechanism for public hearings at which complaints against distributors can be heard and resolved. In turn, provincial regulatory agencies monitor compliance by local distributors with their respective concessions and with local regulatory frameworks.

We and Edesur are the largest distribution companies and, together with Edelap, originally comprised SEGBA, which was divided into three distribution companies at the time of its privatization in 1992.

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Distributors participate in CAMMESA by appointing two acting and two alternate directors through the Argentine Association of Electric Power Distributors (Asociación de Distribuidoras de Energía Eléctrica de la República Argentina, or ADEERA).

Large users

The wholesale electricity market classifies large users of energy into three categories: Major Large Users (Grandes Usuarios Mayores, or GUMAs), Minor Large Users (Grandes Usuarios Menores, or GUMEs) and Particular Large Users (Grandes Usuarios Particulares, or GUPAs).

Each of these categories of users has different requirements with respect to purchases of their energy demand. For example, GUMAs are required to purchase 50% of their demand through supply contracts and the remainder in the spot market, while GUMEs and GUPAs are required to purchase all of their demand through supply contracts.

Large users participate in CAMMESA by appointing two acting and two alternate directors through the Argentine Association of Electric Power Large Users (Asociación de Grandes Usuarios de Energía Eléctrica de la República Argentina, or AGUEERA).

Traders

Since 1997, traders are authorized to participate in the wholesale electricity market by intermediating block sales of energy. Currently, there are eight authorized traders in the wholesale electricity market, several of which conduct transactions with Comercializadora de Energía del Mercosur S.A. (CEMSA) in the export market.

Spot market

Spot prices

The emergency regulations enacted after the Argentine crisis in 2001 had a significant impact on energy prices. Among the measures implemented pursuant to the emergency regulations were the pesification of prices in the wholesale electricity market, known as the spot market, and the requirement that all spot prices be calculated based on the price of natural gas, even in circumstances were alternative fuel such as diesel is purchased to meet demand due to the lack of supply of natural gas.

Prior to the crisis, energy prices in the spot market were set by CAMMESA, which determined the price charged by generators for energy sold in the spot market of the wholesale electricity market on an hourly basis. The spot price reflected supply and demand in the wholesale electricity market at any given time, which CAMMESA determined using different supply and demand scenarios that dispatched the optimum amount of available supply, taking into account the restrictions of the transmission grid, in such a way as to meet demand requirements while seeking to minimize the production cost and the cost associated with reducing risk of system failure.

The spot price set by CAMMESA compensated generators according to the cost of the last unit to be dispatched for the next unit as measured at the Ezeiza 500 Kv substation, which is the system’s load center and is in close proximity of the City of Buenos Aires. Dispatch order was determined by plant efficiency and the marginal cost of providing energy. In determining the spot price, CAMMESA also would consider the different costs incurred by generators not in the vicinity of Buenos Aires.

In addition to energy payments for actual output at the prevailing spot market prices, generators would receive compensation for capacity placed at the disposal of the spot market, including stand-by capacity, additional stand-by capacity (for system capacity shortages) and ancillary services (such as frequency regulation and voltage control). Capacity payments were originally established and set in U.S. Dollars to allow generators to cover their foreign-denominated costs that were not covered by the spot price. However, in 2002, the Argentine government set capacity payments in reference to the Peso thereby limiting the purpose for which capacity payments were established.

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Seasonal Prices

The emergency regulations also made significant changes to the seasonal prices charged to distributors in the wholesale electricity market, including the implementation of a cap (which varies depending on the category of customer) on the cost of electricity charged by CAMMESA to distributors at a price significantly below the spot price charged by generators. These prices have not changed since January 2005.

Prior to implementation of the emergency regulations, seasonal prices were regulated by CAMMESA as follows:

• prices charged by CAMMESA to distributors changed only twice per year (in summer and winter), with interim quarterly revisions in case of significant changes in the spot price of energy, despite prices charged by generators in the wholesale electricity market fluctuating constantly;

• prices were determined by CAMMESA based on the average cost of providing one MWh of additional energy (its marginal cost), as well as the costs associated with the failure of the system and several other factors; and

• CAMMESA would use seasonal database and optimization models in determining the seasonal prices and would consider both anticipated energy supplies and demand as follows:

• in determining supply, CAMMESA would consider energy supplies provided by generators based on their expected availability, committed imports of electricity and the availability declared by generators;

• in determining demand, CAMMESA included the requirements of distributors and large users purchasing in the wholesale electricity market as well as committed exports.

Stabilization Fund

The stabilization fund, managed by CAMMESA, absorbs the difference between purchases by distributors at seasonal prices and payments to generators for energy sales at the spot price. When the spot price is lower than the seasonal price, the stabilization fund increases, and when the spot price is higher than the seasonal price, the stabilization fund decreases. The outstanding balance of this fund at any given time reflects the accumulation of differences between the seasonal price and the hourly energy price in the spot market. The stabilization fund is required to maintain a minimum amount to cover payments to generators if prices in the spot market during the quarter exceed the seasonal price.

Billing of all wholesale electricity market transactions is performed monthly through CAMMESA, which acts as the clearing agent for all purchases between participants in the market. Payments are made approximately 40 days after the end of each month.

The stabilization fund was adversely affected as a result of the modifications to the spot price and the seasonal price made by the emergency regulations, pursuant to which seasonal prices were set below spot prices resulting in large deficits in the stabilization fund. As of December 31, 2007, the stabilization fund deficit totaled Ps. 4,663.6 million. This deficit has been financed by the Argentine government through loans to CAMMESA and with FONINVEMEM funds, but these continue to be insufficient to cover the differences between the spot price and the seasonal price.

Term market

Generators are able to enter into agreements in the term market to supply energy and capacity to distributors and large users. Distributors are able to purchase energy through agreements in the term market instead of purchasing energy in the spot market. Term agreements typically stipulate a price based on the spot price plus a margin. Prices in the term market have at times been lower than the seasonal price that distributors are required to pay in the spot market. However, as a result of the emergency regulations, spot prices in the term market are currently higher than seasonal prices, particularly with respect to residential tariffs, making it unattractive to distributors to purchase energy under term contracts while prices remain at their current levels.

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HISTORY AND DEVELOPMENT OF THE COMPANY

We are a public service company incorporated as an Argentine limited liability corporation (sociedad anónima) on July 21, 1992 under the name Empresa Distribuidora Norte Sociedad Anónima. We were incorporated as part of the privatization of the Argentine state-owned electricity utility, Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA). In anticipation of its privatization, SEGBA was divided into three electricity distribution companies, including our company, and four electricity generation companies, and on May 14, 1992, the Argentine Ministry of Economy and Public Works and Utilities approved the public sale of all of our company’s Class A shares, representing 51% of the capital stock of our company.

A group of international investors, which included EDF International S.A. (a wholly owned subsidiary of EDF), presented a bid for our Class A shares through Electricidad Argentina S.A. (EASA), an Argentine company. EASA was awarded the bid and, in August 1992, EASA and the Argentine government entered into a stock purchase agreement relating to the purchase of our Class A shares. In addition, on August 5, 1992, the Argentine government granted our company a concession to distribute electricity on an exclusive basis within our concession area for a period of 95 years. On September 1, 1992, EASA acquired the Class A shares and became our controlling shareholder.

In June 1996, our shareholders approved the change of our company’s name to Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) to more accurately reflect the description of our core business. The amendment to our bylaws related to our name change was approved by the ENRE and registered with the Public Registry of Commerce in 1997.

In 2001, EDF International S.A. (EDFI) acquired, in a series of transactions, all of the shares of EASA held by EASA’s other shareholders, ENDESA Internacional, YPF S.A., which was the surviving company of Astra, and SAUR. As a result, EASA became a wholly owned subsidiary of EDFI. In addition, EDFI purchased all of the Class B shares of our company held by these shareholders, increasing its direct and indirect interest in our company to 90%.

On January 6, 2002, the Argentine congress enacted the Public Emergency Law, which authorized the Argentine government to implement certain measures to overcome the country’s economic crisis. Under the Public Emergency Law, the Argentine government altered the terms of our concession and the concessions of other public utility services by renegotiating tariffs, freezing distribution margins and revoking price adjustment mechanisms, among other measures.

In September 2005, Dolphin Energía and IEASA acquired an indirect controlling stake in our company from EDFI. Dolphin Energía and IEASA were at the time of such acquisition controlled by the principals of Grupo Dolphin, an Argentine advisory and consulting firm that carries out private equity activities. On September 28, 2007, Pampa Holding S.A. acquired all the outstanding capital stock of Dolphin Energía and EASA from the then current shareholders of these companies, in exchange for common stock of Pampa Holding S.A. Pampa Holding S.A., which is managed by Grupo Dolphin’s principals, owns a 50% interest in the company that co-controls the principal electricity transmission company in Argentina, Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener). In addition, Pampa Holding S.A. has controlling stakes in five generation plants located in the Salta, Mendoza, Neuquén and Buenos Aires provinces (Hidroeléctrica Nihuiles, Hidroeléctrica Diamante, Central Térmica Güemes, Loma de la Lata and Central Piedra Buena). See “Item 7. Major Shareholders and Related Party Transactions.”

In April 2007, we completed the initial public offering of our Class B common shares, in the form of shares and American depositary shares, or ADSs. We and certain of our shareholders sold 18,050,097 ADSs, representing 361,001,940 Class B common shares, in an offering in the United States and elsewhere outside Argentina, and our Employee Stock Participation Program sold 81,208,416 Class B common shares in a concurrent offering in Argentina. Our ADSs are listed in The New York Stock Exchange under the symbol “EDN,” and our Class B shares are listed on the Buenos Aires Stock Exchange under the same symbol. We received approximately U.S. $61.4 million in proceeds from the initial public offering, before expenses, which we used to repurchase a part of our outstanding debt. Following the initial public offering, EASA continues to hold 51% of our common shares, and approximately 49% are held by the public. See “Item 7. Major Shareholders and Related Party Transactions.”

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BUSINESS OVERVIEW

Our strengths

We believe our main strengths are the following:

• We are the largest electricity distributor in Argentina. We serve the largest number of electricity customers in Argentina, which at December 31, 2007 amounted to 2,490,064 customers. Our electricity purchases, used to meet customer demand in our service area, accounted for approximately 19.7% of total electricity demand in the country in 2007. As a result of being the largest electricity distributor in Argentina in terms of volume and customers, we have strong bargaining power with respect to many of our operating expenses, including salaries, and benefit from economies of scale. We also actively participate in industry decision-making bodies and are working closely with the Argentine government to address Argentina’s current energy challenges.

• We distribute electricity to an attractive and diversified client base in a highly developed area of Argentina. We operate on an exclusive basis in the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, which is one of Argentina’s largest industrial and commercial centers. We have a highly concentrated, urban client base characterized by high purchasing power and low delinquency in payments of electricity bills (with an average of less than five days of past due bills outstanding). Our geographically concentrated and urban client base also allows us to operate more efficiently with relatively lower distribution costs. Finally, we have a balanced distribution of clients (residential, commercial, industrial).

• We have substantial experience in the operation of electricity distribution systems with strong operating performance and efficiency for the characteristics of our concession area. We have substantial experience in the operation of electricity distribution systems and have received multiple ISO certifications on our commercial, technical and administrative processes, including on the quality of our services and safety and environmental standards. We were declared by the ENRE a self-operating business in 1997, which means we are not required to have a strategic operator conduct our business and allows us to act as an operator in other electricity businesses. We believe that our energy losses are low compared to other electricity distribution companies in Latin America. In addition, we have maintained what we believe are optimal levels of operating efficiency, with 997.8 customers per employee and 7,230.6 MWh sold per employee in 2007.

• We have a well-balanced capital structure. As of December 31, 2007, the total principal amount of our financial debt amounted to U.S. $312.7 million, with an average life of approximately nine years. We have continued to strengthen our capital structure since the 2006 restructuring of our debt, acquiring, as of December 31, 2007, U.S. $79.7 million principal amount of restructuring notes, and refinancing a portion of the restructured debt (U.S. $204.0 million principal amount) with the issuance in October 2007 of U.S. $220 million principal amount of 10.5% senior notes due 2017.

• We have a stable, committed and seasoned management team. Our management team has not changed significantly since 1992, despite the changes to and from foreign ownership of our company since our privatization. In accordance with our concession, we are operating our electricity distribution business without the assistance of an external technical operator. Our new controlling shareholder has maintained our management team, and added financial expertise primarily for the restructuring of our financial debt. We encourage internal promotion and provide training and other opportunities for our employees to continue to grow with our business.

Our strategy

Our goal is to continue to serve the strong demand in our concession area, while maximizing profitability and shareholder value. We are seeking to realize this goal through the following key business strategies:

• Complete our tariff renegotiation process. Following the increase in our distribution margins charged to our non-residential customers agreed by the Argentine government in September 2005 and ratified by the executive branch in January 2007, our management is currently focused on completing our integral tariff revision process with the ENRE. Our integral tariff proposal will include, among other factors, a

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recalculation of the compensation we receive for our distribution services based on a revision of our asset base and rate of return. For this purpose, we will present a post-tax return on our gross asset base, which we estimate was 3.4% in 2007 without taking into account the retroactive portion of the VAD increase, which we believe is still extremely low considering our annual post-tax return before the economic crisis. Our average annual post-tax return on our gross asset base from 1997 through 2001 was 9.6%.

• Continue to serve our concession area with a high quality of service. We aim to continue serving our clients in accordance with the terms of our concession, distributing electricity within our area meeting or exceeding the required quality standards. We intend to continue to dedicate a significant portion of our capital expenditures to the maintenance, enhancement and expansion of our network to achieve this goal.

• Undertake a reclassification of our smaller customers by economic activity rather than level of demand to optimize our tariff base. We intend to reclassify our client base based on type of economic activity and purchasing power rather than only on levels of electricity demand. We believe this will allow us to shift clients who currently fall within our lowest tariff categories, to other, more appropriate categories, including professionals and small businesses which, due to their low demand, are currently classified as residential customers, and to charge them accordingly.

• Focus on increasing our operating efficiency and optimizing our level of energy losses. We are committing significant resources to improving the quality of our technical services and the safety of our public infrastructure to allow us to reduce the amount of fines imposed by Argentine regulatory authorities in the ordinary course of our operations. We intend to build new entry points for our network in Tigre (previously called Escobar), Province of Buenos Aires, and Malaver, City of Buenos Aires, which will significantly improve the quality and reliability of our network. Currently, our objective is to maintain energy losses at an optimum level, taking into account the marginal cost of reducing such losses and the level at which, pursuant to the terms of our concession, we are reimbursed for the cost of such losses.

Our concession

By a concession dated August 5, 1992, the Argentine government granted us the exclusive right to distribute electricity within our concession area for a period of 95 years. Our concession currently expires on August 31, 2087 and can be extended for one additional 10-year period if we request the extension at least 15 months before expiration. The Argentine government may choose, however, to grant us the extension on a non-exclusive basis. The concession period was initially divided into an initial management period of 15 years expiring August 31, 2007, followed by eight 10-year periods. However, the initial management period may be extended at our option, with the ENRE’s approval, for an additional 5-year period from the entry into force of the new tariff structure to be adopted under the integral tariff revision process. We presented a request for such extension in May 2007 and on July 5, 2007, the ENRE, pursuant to ENRE resolution No. 467/2007, agreed to extend the initial management period for an additional five years from the date that the new tariff structure is adopted under the RTI. The remaining 10-year periods will run from the expiration of the extension of the initial management period.

On January 6, 2002, the Argentine congress enacted the Public Emergency Law, which empowered the Argentine government to implement, among other things, monetary, financial and foreign exchange measures to overcome the economic crisis. These measures, combined with the devaluation of the Peso and high rates of inflation, had a severe effect on public utilities in Argentina, including our company. Under the Public Emergency Law, the Argentine government converted public utility tariffs from their original U.S. Dollar values to Pesos at an exchange rate of Ps. 1.00 per U.S. $1.00, froze all regulated distribution margins relating to the provision of public utility services (including electricity distribution services), revoked all price adjustment provisions and inflation indexation mechanisms in public utility concessions (including our concession) and empowered the Executive Branch to conduct a renegotiation of public utility contracts (including our concession) and the tariffs set therein (including our tariffs).

In September 2005 we and the Argentine government entered into an Adjustment Agreement, which was ratified by the Argentine executive branch in January 2007. Because a new Argentine Minister of Economy took office thereafter, we formally re-executed the Adjustment Agreement with the Argentine government on February 13, 2007 under the same terms and conditions originally agreed.

Pursuant to the Adjustment Agreement, the Argentine government granted us an increase of 28% in our distribution margin, which is effective retroactively as of November 1, 2005. The Adjustment Agreement is

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intended to apply transitionally until we complete the RTI with the ENRE in accordance with the terms of the Adjustment Agreement. See “Item 5. Operating and Financial Review and Prospects —Factors affecting our results of operations—Tariffs.” In addition, because the Adjustment Agreement is effective retroactively as of November 1, 2005, the ENRE applied the CMM retroactively in each of May and November 2006, the dates in each year on which the ENRE is required to apply the CMM. In the May 2006 CMM, the ENRE determined that our distribution cost base increased by 8.032% (compared to the distribution cost base recognized in the Adjustment Agreement), and, accordingly, approved an equivalent increase in our distribution margin effective May 1, 2006. This increase, when compounded with the 28% VAD increase granted under the Adjustment Agreement, results in an overall 38.3% increase in our distribution margins charged to our non-residential customers. In the November 2006 CMM, the ENRE determined that our distribution cost base increased by 4.6% (compared to our distribution cost base as adjusted by the May 2006 CMM), and accordingly, did not approve any further increase in our distribution margins at such time. In May 2007, we requested an 11.31% increase to our distribution margins under the CMM to reflect an increase in our distribution cost base for the period from May 1, 2006 to April 30, 2007, compared to the recognized distribution cost base as adjusted by the May 2006 CMM. In October 2007, the Argentine Secretary of Energy published Resolution No. 1037/2007, which granted us an increase of 9.63% to our distribution margins. However, this increase has not been incorporated into our tariff structure. Instead, the Resolution establishes that the funds that we are required to collect and transfer to the PUREE may be retained by us to cover this May 2007 CMM increase and future CMM increases until the new tariff structure is established pursuant to the RTI contemplated by the Adjustment Agreement. Once the new tariff structure is adopted, we will be required to reimburse the amounts deducted from the PUREE. In November 2007, we began accounting for the retroactive portion of the May 2007 CMM increase for the period from May 1, 2007 to October 31, 2007, which amounted to Ps. 49.6 million.

In November 2007, we requested an additional 7.51% increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from May 1, 2007 to October 31, 2007, in comparison to the distribution cost base recognized by the CMM in May 2007. In May 2008, we requested an additional 5.24% increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from November 1, 2007 to April 30, 2008, in comparison to the distribution cost base requested in November 2007. Although we believe that these increases comply with the terms of the CMM, we cannot assure you that the ENRE will grant us these increases in full, or at all, or if granted, that we will be able to bill our customers or otherwise recover these increases from other sources of payment (such as PUREE). As of the date of this annual report, the ENRE has not rendered a decision with respect to either of these requests.

Following are the key provisions of the Adjustment Agreement, which are described elsewhere in this annual report:

• a cost adjustment mechanism (CMM), pursuant to which our distribution costs are reviewed semiannually (or, under certain circumstances, more often) and adjusted if deemed appropriate by the ENRE to cover increases in our distribution costs;

• an obligation to make capital expenditures of approximately Ps. 204 million for specified projects in 2006, which we complied with although we were not required to given that the Adjustment Agreement was not ratified in 2006;

• our obligation to meet specified service quality standards more stringent than the ones originally contemplated in our concession;

• a restriction on our ability to pay dividends without prior ENRE approval during the period in which we are conducting the RTI;

• forgiveness of approximately one-third of our accrued and unpaid fines, subject to certain conditions relating to compliance with our capital expenditures obligations and service quality standards, and a 7-year payment plan for the balance, commencing 180 days after the date on which the RTI comes into effect;

• our obligation to apply a social tariff regime for low-income customers, which regime will be defined in the context of the RTI; and

• our obligation to extend our network to provide service to certain rural areas.

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According to Resolution No. 434/2007 published by the Argentine Secretary of Energy on April 30, 2007, the new tariff structure resulting from the RTI was supposed to take effect on February 1, 2008 and to be implemented in two installments, in February and August 2008. However, the RTI has not yet been completed and although we are currently in discussions with the Argentine government regarding the RTI, we cannot predict when the RTI will be implemented or whether it will be implemented in the manner contemplated by Resolution No. 434/2007.

Geographic Exclusivity

The concession gives us the exclusive right to distribute electricity within the concession area during the term of the concession. Under our concession, neither the national nor the provincial or local governments may grant further concessions to operate electricity distribution services within our concession area. In that respect, we are obligated to satisfy all of the demand for electricity originated in the concession area, maintaining at all times a service quality standard that has been established in the concession. This geographic exclusivity may be terminated in whole or in part by the executive branch if technological changes make it possible for the energy distribution industry to evolve from its present condition as a natural monopoly into a competitive business. However, the Argentine government may only exercise its right to alter or suppress our geographical exclusivity at the end of each management period under our concession, by prior written notice at least six months before the expiration of the then current management period.

We divide our concession area into the following operating territories:

Operating territory Districts Morón ...................................................... Morón, Ituzaingó, Hurlingham, Merlo, Marcos Paz, Las Heras and La

Matanza Norte ........................................................ Ciudad de Buenos Aires, San Martín and Tres de Febrero Olivos....................................................... Vicente López, San Isidro, San Fernando, Tigre and Escobar Pilar.......................................................... Moreno, Gral, Rodríguez, Pilar, Malvinas Argentinas, J.C. Paz and San

Miguel

The table below sets forth certain information relating to our operating territories as of and for the period ended December 31, 2007:

Operating territory Area (km2)

Customers (in thousands) % of Sales

Morón ....................................................................................................... 1,761 806.0 32.4% 27.1% Norte ......................................................................................................... 164 779.3 31.3% 28.7% Olivos........................................................................................................ 1,624 458.6 18.4% 23.4% Pilar........................................................................................................... 1,088 446.1 17.9% 20.8% Total .......................................................................................................... 4,637 2,490.0 100% 100%

According to INDEC, the Pilar area experienced the highest population growth rate of the Buenos Aires metropolitan region between 1991 and 2001, growing by 56.6% from approximately 149,070 people in 1991 to approximately 233,508 people in 2001. Today, some of the most affluent neighborhoods and upscale commercial centers and businesses are located in the Pilar area.

Our obligations

We are obligated to supply electricity upon request by the owner or occupant of any premises in our concession area. We are entitled to charge for the electricity supplied at rates that are established by tariffs set with the prior approval of the ENRE under applicable regulations. Pursuant to our concession, we must also meet specified service quality standards relating to:

• the time required to connect new users;

• voltage fluctuations;

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• interruptions or reductions in service; and

• the supply of electricity for public lighting and to certain municipalities.

Our concession requires us to make the necessary investments to establish and maintain quality of service standards and to comply with stringent minimum public safety standards as specified in our concession. We are also required to furnish the ENRE with all information requested by it and must obtain the ENRE’s prior consent for the disposition of assets that are assigned to the provision of our electricity distribution services. The ENRE also requires us to compile and submit various types of reports regarding the quality of our service and other technical and commercial data, which we must periodically report to the ENRE.

Under our concession, we may also be required to continue rendering services after the termination of the concession term upon the request of the Argentine government, but for a period not to exceed 12 months.

We are obligated to allow certain third parties (other agents and large users) to access any available transportation capacity within our distribution system upon payment of a wheeling fee. Consequently, Edenor must render the distribution service on an uninterrupted basis to satisfy any reasonable demand. We are prohibited from engaging in practices that limit competition or result in monopolistic abuses.

In addition, the Adjustment Agreement requires us and our shareholders and former shareholders to suspend all claims and legal proceedings (including arbitration actions) in administrative, state or federal courts located in Argentina or abroad, that are related to measures adopted since the Public Emergency Law was enacted. After the completion of the RTI, we and our shareholders and former shareholders must completely waive and desist from all of the above mentioned claims and legal proceedings. If our shareholders or former shareholders do not desist from these claims, the Argentine government will have the right to foreclose its pledge over our Class A shares and sell these shares to a third party buyer. If the company or any shareholder or former shareholder re-establishes or initiates a new claim, we must hold harmless the Argentine government in respect of amounts it is required to pay pursuant to such claims. EDFI and EASA have suspended all such claims against the Argentine government as part of the Adjustment Agreement and, in connection with its sale of its controlling stake in Edenor, EDFI has agreed to withdraw its claims against the Argentine government before the ICSID at the request of Dolphin Energía S.A.

In accordance with our concession, our controlling shareholder, EASA, has pledged its 51% stake in our company to the Argentine government to secure obligations under the concession. The Adjustment Agreement requires the pledge to be extended to secure our obligations under this agreement.

Quality standards

Pursuant to the concession, we are required to meet specified quality standards with respect to the quality of the product (electricity) and the delivery of the product. The quality standards relating to the product quality refer to the electricity’s voltage levels. A disturbance occurs when there is a change in the voltage level. The concession requires that the voltage level that we deliver must be 3x380/220 V; 13.2 kV; 33kV; 132 kV; 220 kV. The concession provides that disturbances in the voltage level may not exceed the following (in accordance with international standards):

High voltage ......................................................................................................................................... -5.0% to +5.0%Overhead network (medium or low voltage) ...................................................................................... -8.0% to +8.0%Buried network (medium or low voltage) ........................................................................................... -5.0% to +5.0%Rural ..................................................................................................................................................... -10.0% to +10.0%

A fine is imposed under the concession for disturbances that exceed the above-mentioned limits for 3.0% or more of the total amount of time that electricity is provided. The amount of the fine depends on the magnitude of the disturbance. As the disturbance’s percentage increases (or decreases) from the contracted tension level, the rate of the fine per kWh increases. These fines are credited to the affected user’s next bill.

The standards for delivery of the product set forth in the concession refer to the frequency and duration of the interruptions. The following table sets forth the standards set forth in the concession with respect to the frequency and duration of interruptions per customer during the current management period:

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Category of user

Frequency of interruptions

(maximum number of interruptions per

semester)

Duration of interruption (maximum amount of time

per interruption)(1) High voltage ...................................................................................... 3 2 hours Medium voltage................................................................................. 4 3 hours Low voltage: (small and medium demand) ...................................... 6 10 hours Large demand .................................................................................... 6 6 hours _______________________ (1) Interruptions of less than three minutes are not recorded.

These standards may be subject to change during subsequent management periods and/or pursuant to the outcome of the RTI.

In addition, pursuant to the Adjustment Agreement, we have agreed to comply with a medium delivery standard that reflects our actual average delivery standards during the period from 2001 through 2003. This medium delivery standard requires us to comply with a maximum number of interruptions per semester, on average, of 2.761 and a maximum duration of interruption, on average, of 5.386 hours. If we do not meet the delivery standards required by our concession, as set forth in the table above, but are otherwise in compliance with the medium delivery standard under the Adjustment Agreement, we may withhold payment of any fines that may be imposed under our concession for this failure and use this amount of unpaid fines for our capital expenditures. If we fail to comply with this measure, we will be required to pay the fines.

Pursuant to our concession, the ENRE may fine us if one of our customers suffers more than the maximum number of interruptions specified for its category (excluding interruptions of less than 3 minutes) or suffers interruptions for a longer time than the time specified for its category. We pay these fines by granting credits to the affected customers in their electricity bills. Fines are calculated at a rate per kWh that varies depending on the particular tariff or price schedule that is applicable to the user. Following the privatization of our company in 1992, we have been able to improve our quality of service from an average of 22 hours of interruptions per customer and 13 interruptions per customer in 1992 to an average of 7.33 hours of interruptions per customer and 4.98 interruptions per customer in 2000, the last full year prior to the Argentine crisis.

The following table sets forth the frequency and duration of interruptions of our service in the periods indicated:

Year ended December 31, 2007 2006 2005 2004 2003 Average frequency of interruptions ........................................................ 2.78 2.81 3.38 2.63 3.19 Average duration of interruption (in hours)............................................ 6.59 5.01 5.10 4.31 4.70

Additionally, in order to satisfy quality standards, we must meet certain operating requirements relating to commercial service, including maintenance of the distribution network so as to minimize failures and to maximize the useful life of fixed assets and billings on actual meter readings to generate customer bills. We may bill customers using estimates in cases of force majeure, but we may not send a customer more than two successive estimated bills, if billed bimonthly, or, in other cases, more than three successive estimated bills. Furthermore, estimated bills cannot exceed 8% of total billings in each category of customers.

Fines and penalties

Pursuant to our concession, the ENRE may impose various fines and penalties on us if we fail to comply with our obligations under the concession, including our failure to meet any of the quality and delivery standards described above. Because we are required to pay for the fines imposed for violations of our quality or delivery standards by granting credits to our customers, we operate since 1996 a central information system that allows us to credit fines directly to our customers who are affected by these quality or delivery deficiencies.

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The ENRE may also fine us for any of our network installations that it considers may pose a safety or security hazard in public spaces, including streets and sidewalks. In addition, the ENRE may fine us for inconsistency in technical information required to be furnished to the ENRE.

Fines and penalties for violations of public safety and reporting violations are deposited in the Reserva de Fondos de Terceros del ENRE (a Third Party Reserve Fund of the ENRE) in an account in the Banco Nación. Payments accrue in that account until the account reaches Ps. 3 million and then, with the ENRE’s authorization, the amount is proportionally distributed among our customers.

When we entered into the Adjustment Agreement in September 2005, the ENRE granted us a payment plan in respect of approximately Ps. 116 million of our accrued fines and penalties and agreed, subject to the condition that we meet the quality standards and capital expenditure requirements specified in the Adjustment Agreement, to forgive approximately Ps. 58 million of our accrued fines and penalties. Because the Adjustment Agreement was not ratified until January 2007, we have recalculated the amounts of accrued fines and penalties subject to the payment plan under the terms of the Adjustment Agreement as well as the amounts subject to forgiveness. In addition, we were also required to make an adjustment as of December 31, 2006, totaling Ps. 47.0 million to the accrued fines and penalties under the payment plan in order to reflect the increase to our VAD pursuant to the Adjustment Agreement, and we will be required to make further adjustments to our payment plan to reflect the impact of future increases in our distribution margins, including the CMM adjustments. In October 2007, we recorded an adjustment of Ps.18.1 million to reflect the CMM adjustment for the period May 2006 – April 2007. We estimate that the ENRE will forgive approximately Ps. 71.4 million of our accrued fines and penalties upon the completion of the RTI, and that we will be required to pay approximately Ps. 210.0 million in accordance with the payment plan provided for in the Adjustment Agreement. This payment plan allows us to repay these fines and penalties in fourteen semiannual installments commencing after a 180-day grace period from the date the RTI comes into effect.

In 2007, the fines and penalties imposed on us by the ENRE amounted to Ps. 23.9 million, which represented 1.2% of our energy sales. As of December 31, 2007 our accrued fines and penalties imposed by the ENRE amounted to Ps. 281.4 million.

The following table shows, in thousands of Pesos, the adjustments to our accruals for potential ENRE fines and penalties for the periods specified:

Year ended December 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Accruals at beginning of year 241,079 169,650 99,277 63,422 49,022 18,955 13,642 17,437 11,038 8,550Plus: Charged to Results for period 23,940 25,200 72,736 36,000 14,643 31,661 16,384 13,640 14,754 5,940Quality of Technical Service 6,950 10,390 4,860 4,710 3,241 5,639 5,184 4,002 4,876 —Quality of Technical Product 910 590 1,110 6,900 6,541 5,533 2,863 2,880 1,832 —Quality of Commercial Service 1,080 1,210 60 1,170 504 1,504 1,704 874 599 —Public Safety ...................... 10,290 6,730 25,430 10,850 2,041 4,940 4,219 6,276 2,705 —Transport Technical Function 230 410 20 183 204 204 85 304 311 —Reporting Violations ......... 4,400 5,630 33,730 12,187 1,704 4,891 1,874 (220) 2,235 —Others ................................. 80 240 7,526 — 408 8,950 455 (477) 2,196 5,940Less: Paid during period: Quality of Technical Service 27 8 1,644 5 6 918 3,294 5,572 5,574 484Quality of Technical Product 6 1 (4) (55) 4 1 2,303 4,179 963 89Quality of Commercial Service 1,494 373 112 136 103 314 1,443 1,001 486 2,154Public Safety ...................... 4 — — — 3 14 2,086 6,119 1,209 202Transport Technical Function 139 349 40 — 126 347 168 470 123 523Others ................................. 38 12 572 60 1 — 1,777 94 — —Total paid during period.... 1,708 743 2,364 146 243 1,594 11,071 17,435 8,355 3,452Plus: Adjustment to fines and

penalties pursuant to the ratification of the Adjustment Agreement...................... 18,084 46,972 — — — — — — — —

Accruals at year-end.......... 281,395 241,079 169,650 99,277 63,422 49,022 18,955 13,642 17,437 11,038

______________________ Note: The facts or events that generated the amounts charged in each period may have occurred in prior periods and not necessarily in the period in which the charge is made.

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Foreclosure of pledge over our Class A shares or revocation of our concession

The Argentine government may foreclose its pledge over our Class A shares and sell them in an public bidding process if any of the following occur:

• we incur penalties in excess of 20% of our gross energy sales, net of taxes (which corresponds to our energy sales) in any given year;

• our controlling shareholder, EASA, fails to obtain the ENRE’s approval in connection with the disposition of our Class A shares;

• material and repeated breaches of our concession that are not remedied upon request of the ENRE;

• EASA creates any lien or encumbrances on our Class A shares (other than the pledge to the Argentine government);

• EASA or Edenor obstruct the sale of the Class A shares at the end of any management period under our concession;

• our shareholders amend our articles of incorporation or voting rights in a way that modifies the voting rights of the Class A shares without the ENRE’s approval; or

• our shareholders or former shareholders fail to desist from any ICSID claims against the Argentine government following completion of the RTI and the approval of a new tariff regime.

Upon the occurrence of any of these events, the Argentine government will have the right to foreclose its pledge over our Class A shares and exercise the voting rights of the Class A shares until the transfer of such shares to a new purchaser occurs, at which time EASA will receive the proceeds of such transfer, net of a specified penalty payable to the Argentine government.

In addition, under our concession, the Argentine government has the right to revoke our concession if we enter into bankruptcy and the government decides that we shall not continue rendering services, in which case all of our assets will be transferred to a new state- owned company that will be sold in an international public bidding process. At the conclusion of this bidding process, the purchase price will be delivered to the bankruptcy court in favor of our creditors, net of any debt owed by us to the Argentine government. Any residual proceeds will be distributed among our shareholders.

Periodic bidding for control of Edenor

Before the end of each management period under our concession, the ENRE will arrange for an international public bidding procedure to be conducted for the sale of 51% of our capital stock and voting rights in similar conditions to those under which EASA acquired its stake. EASA will be entitled to participate in the bid. The person or group offering the highest price will acquire the stock and will pay the offered price to EASA. If EASA is the highest bidder or if EASA’s bid equals the highest bid, it will retain 51% of our stock, but no funds need to be paid to the Argentine government and EASA will have no further obligation with respect to its bid. There is no restriction as to the amount EASA may bid. In the event EASA fails to submit a bid or its bid is lower than the highest bid, the Class A shares will be transferred to the highest bidder and the price paid by the purchaser (except for any amounts owed to the Argentine government) will be delivered to EASA.

The first management period was set to expire August 31, 2007. We presented a request for a five-year extension of the initial management period in May 2007 and on July 5, 2007, the ENRE, pursuant to the ENRE resolution No. 467/2007, agreed to extend the initial management period for an additional five years from the date that the new tariff structure is adopted under the RTI. The remaining 10-year periods will run from the expiration of the extension of the initial management period.

Default of the Argentine government

If the Argentine government breaches its obligations in such a way that we cannot comply with our obligation under the concession or in such a way that the distribution service is materially affected, we can request the termination of the concession, after giving the Argentine government 90 days’ prior notice. Upon termination of the

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concession, all our assets used to provide electricity service would be transferred to a new state-owned company to be created by the Argentine government, whose shares would be sold in an international public bidding procedure. The amount obtained in such bidding would be paid to us, net of the payment of any debt owed by us to the Argentine government, plus compensation established as a percentage of the bidding price, ranging from 10% to 30% depending on the management period in which the sale occurs.

Our network

As of December 31, 2007, the system through which we supply electricity was composed of 67 Sub-Stations of high/high voltage, high/high/medium voltage, high/medium voltage, representing 12,994 MVA of transformer capacity and 1,338 kilometers of high-voltage power lines 220 kV and 132 kV. The distribution system of medium/low voltage was comprised of 14,054 transformers of medium/low voltage, representing 5,136 MVA of transformer capacity, 8,806 kilometers of medium-voltage power lines 33 and 13.2 kV and 23,910 kilometers of low-voltage power lines 380 V.

The following table provides certain information concerning our transmission and distribution system as of the dates presented:

At December 31, 2007 2006 2005 Kilometers of transmission lines High voltage........................................................................................................ 1,338 1,310 1,232 Medium voltage.................................................................................................. 8,806 8,719 8,548 Low voltage ........................................................................................................ 23,910 23,753 23,512 Total .................................................................................................................... 34,054 33,782 33,292 Transformer capacity (MVA) High voltage/high voltage .................................................................................. 7,128 7,128 7,128 High voltage/medium voltage ............................................................................ 5,866 5,746 5,666 Medium voltage/low voltage and medium voltage/medium voltage................ 5,136 4,950 4,621 Total .................................................................................................................... 18,130 17,824 17,415

Access is provided from points of connection with the national interconnection grid, (500 kV-220 kV Rodríguez, 220 kV Ezeiza) and from the local Puerto and Costanera power plants. The transmission and subtransmisson system of the Company (“HV System”) is composed of the 220kV and 132kV head Sub-Stations: Casanova, Matanza, Ramos Mejía, Morón, Agronomía, Puerto Nuevo, Nuevo Puerto, Malaver, Colegiales, Edison, Matheu, Talar and Zappalorto.

This HV System, together with the Edesur and Edelap systems, forms the Greater Buenos Aires (GBA) system. The GBA system is operated by the Sociedad Anónima Centro de Movimiento de Energía (SACME), of which Edenor and Edesur own 50% of the shares. SACME is responsible for the management of regional high-voltage distribution in the greater Buenos Aires metropolitan area, coordinating, controlling and supervising the operation of the generation, transmission and sub-transmission network in the City of Buenos Aires and the greater Buenos Aires metropolitan areas, including coordination with Sistema Interconectado Nacional (the National Network System or NIS) in the Edenor and Edesur concession areas. SACME also represents its shareholders in the control of distribution for those concession areas.

We distribute energy from the sub-stations of high/medium voltage through the primary 13.2kV and 33kV system to a secondary 380/220 V low-voltage system. Our distribution network, consisting of several transformers, power lines and substations, distributes the electricity to final users with varied voltages depending on the requirements of end users. Certain customers, however, are supplied with power at significantly higher voltages.

We are currently working with the Argentine government and Edesur to implement two new projects for the construction of new entry points for our network “Oscar Smith” (previously called “Norte”) and “Puerto Nuevo-Malaver-Costanera”. These new entry points would significantly improve the quality and reliability of our network. On April 4, 2008, we entered into an agreement with the Minsterio de Planificación Federal, Inversión Pública y Servicios (the Ministry of Federal Planning, Public Investment and Services) to build a new 500/220 kV transformer

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station at the Partido de Tigre. This new transformer station will serve to connect our network with the Sistema Argentino de Interconexión (Argentine Interconnection System or SADI). We believe that this new entry point will allow us to meet the increasing energy demands in the medium and long term throughout our concession area. See “Item 5. Operating and Financial Review and Prospects—Factors affecting our results of operations—Demand—Capacity demand.”

Systems

In 2006, we launched a phased plan to update critical systems and components, which was completed in 2007. In particular, we completed the following projects:

• A complete upgrade of our information systems to a new generation of equipment with new versions of Windows and MS Office;

• The first step of the Nexus-Scada project, which allowed us to connect all of our substations to a supervisory control and data acquisition system;

• The first step of the implementation of the NEXUS-GIS system, which permits the association of cartographic information with information on our database;

• An upgrade of our SAP system to the new MySAP ERP 6.0 version, with the implementation of the PS (Control de Proyectos, or Project Control), BW (Business Warehouse) and TRE (Tesoreria Extendida, or Extended Treasury), as well as the redefinition of some of our existing processes to obtain better standards and solutions;

• Changes within our billing system, which allow us to bill T1 customers for new businesses;

• The transition to XNet servers, which allow us to improve the performance and security of our internet, intranet and electronic mail applications; and

• The implementation of the new Loyal-DMS system, which covers all of the standards of our company, and the new Loyal-QMS system, which registers all incidents related with our Quality System;

We intend to continue to enhance the quality and effectiveness of our systems and components during 2008, including through the following projects:

• The second step of the Nexus-Scada project, which includes the integration of the Scada systems with the DMS and allow the registration of AT/MT operations or processes in real time;

• The second step of the implementation of the NEXUS-GIS system, which includes the Call Center, Outage Management System (OMS), Quality Service and Quality Product, and interfaces with SCADA-DMS;

• The installation of a new institutional Web Page, including a new intranet developed with a new generation of technology; and

• A complete overhaul of our commercial systems, which we expect will be launched in 2008 and be completed by 2010.

Customers

The following graph shows the evolution of our customer base through December 31, 2007:

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As of December 31, 2007, we served 2,490,064 customers. We define a “customer” as one meter. We classify our customers pursuant to the following tariff categories:

• Residential (T1-R1 and T1-R2): residential customers whose peak capacity demand is less than 10kW. In 2007, this category accounted for approximately 40% of electricity sales.

• Small commercial (T1-G1 and T1-G2): commercial customers whose peak capacity demand is less than 10kW. In 2007, this category accounted for approximately 8% of electricity sales.

• Medium commercial (T2): customers whose peak capacity demand is equal to or greater than 10kW but less than 50kW. In 2007, this category accounted for approximately 9% of electricity sales.

• Industrial (T3): industrial customers whose peak capacity demand is equal to or greater than 50kW. This category is applied to high-demand customers according to the voltage at which each customer is connected. The voltage ranges included in this category are the following: (i) Low Voltage (LV): voltage less than or equal to 1 kV; (ii) Medium Voltage (MV): voltage greater than 1kV but less than 66 kV; and (iii) High Voltage (HV): voltage equal to or greater than 66kV. In 2007, this category accounted for approximately 20% of our electricity sales. This category does not include customers who purchase their electricity requirements directly through the wholesale electricity market under the wheeling system.

• Wheeling System: large users who purchase their electricity requirements directly from generation or broker companies through the wholesale electricity market. These tariffs follow the same structure as those applied under the Industrial category described above. As of December 31, 2007, the total number of such large users was 569, and in 2007 this category represented approximately 17% of our electricity sales.

• Others: public lighting (T1-PL) and shantytown customers whose peak capacity demand is less than 10kW. In 2007, this category accounted for approximately 5% of electricity sales. See “—Framework agreement (Shantytowns).”

We try to maintain an accurate categorization of our customers in order to charge the appropriate tariff to each of our customers. In particular, we focus on our residential tariff categorizations to both minimize the number of commercial and industrial customers who are classified as residential customers and identify residential customers whose peak capacity demand exceeds 10kW and therefore do not qualify as residential users.

We rely on the following measures to detect incorrectly categorized customers:

• reporting by our employees tasked with reading meters to identify observed commercial activities which are being performed by residential customers,

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• conducting internet surveys to identify advertisements for commercial services (such as medical or other professional services) that are linked to a residential customer’s address, and

• analyzing customer demand to determine whether we should further evaluate the peak capacity demand of a given customer whose use might exceed 10kW.

Reading, billing and collecting

We bill our customers based on their category of service. Residential and small commercial customers are billed a fixed charge payable bimonthly and a variable charge based on each unit of energy consumed. The price of these charges, in turn, is determined based on the bimonthly consumption registered by each customer, which is divided into subcategories for each of our residential and small commercial customers as follows:

Residential (Tariff 1-R):

• Tariff 1-R1: bimonthly energy demand less than or equal to 300 kWh

• Tariff 1-R2: bimonthly energy demand greater than 300 kWh

Small commercial (Tariff 1-G):

• Tariff 1-G1: bimonthly energy demand less than or equal to 1600 kWh

• Tariff 1-G2: bimonthly energy demand greater than 1600 kWh but less than or equal to 4000 kWh

• Tariff 1-G3: bimonthly energy demand greater than 4000 kWh

Medium commercial customers (Tariff T2) are billed a fixed charge based on a fixed amount of capacity that is payable monthly and a variable charge based on each unit of energy consumed.

Industrial customers (Tariff T3) are billed two monthly fixed charges based on capacity during peak hours and non-peak hours and three variable charges for each unit of energy consumed, which charges vary based on whether the unit was consumed during peak hours (from 6 p.m. to 11 p.m.), valley hours (horas de valle, from 11 p.m. to 5 a.m.) or during the remaining hours of the day (from 5 a.m. to 6 p.m.).

Public lighting customers are billed a monthly variable energy charge based on each unit of energy consumed.

The table below shows the number of our customers per category at the dates indicated.

At December 31, 2007 2006 2005 2004 Residential ............................................................................................. 2,162,586 2,118,447 2,084,713 2,038,874 Small commercial.................................................................................. 292,617 293,162 287,567 283,673 Medium commercial ............................................................................. 28,676 27,414 26,157 25,064 Industrial ................................................................................................ 5,217 5,067 4,615 4,765 Wheeling system ................................................................................... 569 507 704 384 Other* .................................................................................................... 399 392 385 368

Total.................................................................................................... 2,490,064 2,444,989 2,404,141 2,352,211 ______________________ * Represents public lighting and shantytown customers.

Since 1995, we have maintained two billing systems: one for small- and medium-demand customers and other for large users. Both permit the integration of the reading, billing, collection processes and the tracing of the delinquent balances of customers included in those demand categories.

All of the meters are read with portable meter-reading terminals, either with manual access or optical reading (in the case of electronic meters for medium commercial and industrial customers). The systems validate the readings, and any inconsistent reading is checked in the field. Estimates of customer usage are no longer used as a result of this new billing system. Once the invoices are printed, they are distributed by independent contractors in each operating area, subject to strict controls.

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More than 70% of the bills are paid through banking institutions, automatic credit via card debit or in stores, including supermarkets and pharmacies. Customers pay the remainder at any of our 28 commercial offices. In summary, automation of these processes has led to high quality billing, reducing the billing cycle from 87 days to less than 54 days over the last few years. In addition, we use various incentive plans to increase payment of outstanding bills by our customers.

Slow-Paying Accounts and Past Due Receivables

When we assumed the operation of the distribution system from SEGBA in September 1992, many residential electricity meters had not been read for months, individual customer account information was unreliable or nonexistent, and billing and collection systems and procedures required substantial improvement. The state of these customer records made it difficult to determine how much electricity individual customers had used and whether they were delinquent in paying for the service. As a result, one of our primary objectives since 1992 has been to address and minimize slow-paying accounts and past due receivables.

Many procedures were established to reduce delinquency and make collection possible. Our Commercial Department oversees the strict observance of such procedures.

Municipalities’ accounts form a significant number of our arrears accounts. The methods of collection on such arrears vary for each municipality. One method of collection is to withhold from the municipalities certain taxes collected by us from the public on behalf of the municipalities and using such taxes to offset any past due amounts owed to us by such municipalities. Another method of collection is entering into refinancing agreements with the municipalities. These procedures allowed reducing significantly the number of arrears accounts.

The following graph shows our delinquent balances as of December 31 of each year:

53.7

37.2

30.6

21.6 21.7 22.7

31.3

41.0

34.829.9 32.3

28.8 29.30

0

10

20

30

40

50

60

mill

ion

of P

esos

1995 1997 1999 2001 2003 2005 2007

We also supply energy to low-income areas pursuant to the framework agreement with the Argentine government and the Province of Buenos Aires for which certain payments are still owed to us. See “—Framework agreement (Shantytowns).”

Energy losses

Energy losses are equivalent to the difference between energy purchased and energy sold and may be classified as technical and non-technical losses. Technical losses represent the energy that is lost during transmission and distribution within the network as a consequence of natural heating of the conductors which transmit the electricity from the generating plants to the customers. These losses typically increase in proportion to the amount of energy volume distributed (as has been the case for us in recent years). Technical losses are normal for any energy distributor and cannot be completely eliminated but can be reduced by improvements in the network. We believe that the level of technical losses is approximately 7% in countries with distribution networks similar to ours. Non-

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technical losses represent the remainder of our energy losses and are primarily due to illegal use of our services and administrative and technical errors.

Energy losses require us to purchase additional energy to satisfy apparent demand, thereby increasing costs. Furthermore, illegally tied-in customers typically register abnormally high levels of electricity consumption. We are unable to recover from customers the cost of electricity purchased beyond the loss factor established as 10% (on average) pursuant to our concession. The reduction of energy losses therefore reduces the amount of energy that we have to purchase to satisfy apparent demand but cannot invoice, and increases the amount of electricity actually sold.

At the time of privatization of the electricity sector in 1992, our total energy losses were approximately 30%. At that time, our non-technical losses were estimated at 21%, with over half of that amount due to fraud and illegal use of our service. In response to the high level of losses, we implemented a loss reduction plan in 1992 which emphasized accurate measurement of energy consumption through periodic inspections, updating of client lists and tariff categories, reduction of electric power theft, reduction of illegal direct connections, provision of services to shantytowns and reduction of technical losses.

In the year 2000, our losses were close to the 10% target rate established in our concession and recognized in tariffs. However, as a result of the economic, political and social crisis that erupted in 2001, the level of energy losses began to escalate again due to increased poverty levels and payment delinquency. Fraud control by Edenor workers was often impeded due to the increased aggression from customers during monitoring visits. Such incidents have decreased since 2004, however, due to improved socioeconomic conditions and the efforts of our management. Due to the inefficiencies associated with reducing our energy losses below the level at which we are reimbursed pursuant to our concession, we currently do not intend to significantly lower our level of losses.

At present, our goal is to maintain our energy losses at an optimal level, taking into account the cost of reducing such losses and the level at which we are reimbursed for the cost of these losses under our concession. Our procedures for maintaining an optimal level of losses are focused on improving collections to ensure that customers pay for all the energy that they consume and making investments in our network to control technical losses. To reduce the theft of electricity we have implemented vigilance and special technologies, such as much higher networks that cannot be reached using normal ladders, shields close to the electricity posts, concentric cables, shielded meters and suspension of electricity service, among other remedies. We are experimenting with other programs including teaching low-income customers how to ration their consumption, providing low-income customers with the option of paying in installments and the installation of 4,000 prepaid meters. We also plan to encourage, through subsidies, the installation of special low-energy lamps. A final decision with respect to the implementation of these energy sales measures on a large scale is currently under evaluation by the ENRE.

The following table illustrates our estimation of the approximate breakdown between technical and non-technical energy losses experienced in our concession area in the last ten years.

Year ended December 31, 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 Technical losses ............ 9.6% 8.6% 8.3% 8.1% 8.0% 7.8% 7.5% 7.3% 8.0% 7.9% Non-technical losses ..... 2.0% 2.5% 2.7% 3.4% 4.7% 4.5% 3.6% 2.7% 2.2% 2.7% Total losses.................... 11.6% 11.1% 11.0% 11.5% 12.7% 12.3% 11.1% 10.0% 10.1% 10.6%

Framework agreement (Shantytowns)

In January 1994, we and Edesur entered into the framework agreement with the Argentine government and the Province of Buenos Aires to regulate our supply to low-income areas and shantytowns. Pursuant to the framework agreement, we agreed to supply electricity and, if feasible, install individual meters within each shantytown. However, given the lack of adequate space or streets between shantytown homes, in many instances we were only able to install a single meter at the boundary of each shantytown to measure its collective consumption. Under the terms of the framework agreement, we were entitled to receive compensation from (a) the municipality in which the shantytowns were located, (b) a federal fund, first, for any non-payment in respect of the electricity supplied to the shantytowns and, second, for losses up to Ps. 20 million incurred prior to the signing of the framework agreement, and (c) a provincial fund for capital expenditures made to regularize the shantytown energy supply.

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In October 2003, we, together with Edesur and Edelap, signed a new framework agreement with the Argentine government and the Province of Buenos Aires, which was applicable retroactively as of September 2002 and was to expire on the earlier of December 31, 2006 or the full regularization of electricity supply to the shantytowns. Under the framework agreement, we are compensated for the service we provide to shantytowns by a commission formed in each shantytown that collects funds from residents of the shantytown. In addition, we are compensated separately by the municipality in which each shantytown is located, and, if there is any payment shortfall, by a special fund to which the Argentine government contributes an amount equal to 21%, and the Province of Buenos Aires 15.5%, of the compensation, net of taxes, paid by those customers with payment problems and meter irregularities who are regularized under the framework agreement. Under the framework agreement, we may also suspend service to regularized clients for lack of payment. We are currently negotiating with the federal and provincial governments either an extension of this agreement, which expired on December 31, 2006, or, if we cannot extend this agreement, a new framework agreement with the Province of Buenos Aires and the Argentine government under substantially the same terms of the framework agreement. We continue to supply electricity to low-income areas and shantytowns. Given the absence of a framework agreement for payment of this service, we are currently accruing provisions in our financial statements for the full amount of the related receivable.

In October 2006, we and the Province of Buenos Aires entered into a payment plan agreement with respect to amounts owed to us by the Province of Buenos Aires under the framework agreement with respect to periods prior to 2007. Pursuant to the payment plan agreement, we are required to submit a statement of claims owed to us for the service we provided in low-income and shantytown areas between September 2002 and June 2006. The Province of Buenos Aires will verify these claims in accordance with the terms of the framework agreement and, once verified, pay these claims in 18 equal consecutive monthly installments. Furthermore, as part of the payment plan agreement, the Province of Buenos Aires agreed to pay the first six installments of our claims, irrespective of whether verification of such claims had taken place, and to pay any amounts corresponding with the services we provided to low-income areas and shantytowns during the second half of 2006. We agreed to waive our right to interest accrued on outstanding amounts owed to us under the framework agreement, provided the Province of Buenos Aires complies with its obligations under the payment plan. As of December 31, 2007, the Government of the Province of Buenos Aires had paid Ps. 18.6 of the total amount due under this agreement. On April 3, 2008, we received another payment of Ps. 4.5 million from the Government of the Province of Buenos Aires.

As of December 31, 2007, our receivables for amounts accrued, but not yet paid for the supply of energy to shantytowns under the framework agreement (which was in effect up to December 31, 2006) amounted to Ps. 17.9 million, compared with Ps. 45.6 million at December 31, 2006.

Insurance

As of December 31, 2007, we are insured for loss or damage to property, including damage due to floods, fires and earthquakes covering amounts up to U.S. $417.5 million, with the following deductibles:

• sub-stations, with a deductible of U.S. $75,000.

• commercial offices, with a deductible of U.S. $1,500 for each office.

• deposits and other properties (including underground cells and real property (non electricity distribution related)), with a deductible of U.S. $10,000.

• terrorist acts up to U.S. $10 million, with a deductible of U.S. $50,000.

We maintain customary directors’ and officers’ liability insurance, a civil liability insurance with a deductible (covering damages to third parties), workmen’s compensation, automobile, life and theft/burglary insurance policies subject to customary deductibles and limitations. Mandatory life insurance is maintained in accordance with Argentine law. Although we do not have business interruption insurance, we consider our insurance coverage to be adequate and in accordance with the standards prevailing for the industry. See “Item 3. Key Information. Risk Factors—Risks Relating to Our Business—Our insurance may not be sufficient to cover certain losses.”

Environmental management

In Argentina, the provinces and the government of the City of Buenos Aires are entitled to legislate on natural resources and environmental protection issues. The 1994 Constitution reaffirms this principle, assigning to the

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Argentine federal government the establishment of broad environmental guidelines and to the provinces the duty to implement the necessary legislation to attain national environmental goals. The environmental policy for the electricity market is formulated by the Secretary of Energy and implemented by the ENRE. Areas regulated by the ENRE include the tolerance level for electromagnetic fields, radio interference, voltage of contact and pass, liquid spills, disposal and handling of solid wastes, noise and vibration admissible levels and use, and the transport on and storage of toxic substances, including polychlorinated biphenil (PCB), a viscous substance which was historically used to lubricate electrical transformers. The Argentine Environmental Law requires that we eliminate the PCB in our transformers before the end of 2010. We currently plan to achieve this goal by the end of 2008.

As part of our investment plan, we made important improvements to our network and implemented environmental tests to evaluate the impact of these improvements on the environment and the surrounding areas. We are currently engaged, together with environmental governmental entities, in the application of procedures to decontaminate mineral oils. We are required to apply for licenses from the ENRE for all our business activities, including those related to the environment. We believe that we are in compliance in all material respects with all applicable environmental standards, rules and regulations established by the ENRE, the Secretary of Energy and federal, provincial and municipal authorities. We have implemented environmental variables testing programs to evaluate environmental variances and to take corrective actions when necessary. In addition, we have in place an environmental emergency plan to reduce potential adverse consequences if an environment accident should occur. Finally, as part of our environmental actions, we improved the program of rational uses of energy in our buildings and in our customer equipment.

On October 19, 1999, the Instituto Argentino de Normalización (the Argentine Institute of Normalization) certified that we have an Environmental Management System that is in accordance with the requirements of the standards set by the International Standardization Organization (ISO) as specified in its release, ISO 14001, which relates specifically to environmental management systems. This certification is reaffirmed on an annual basis, most recently as of November 2007.

New businesses

In March 2007, we entered into two new business agreements with Comunicaciones y Consumos S.A. (CYCSA) and Préstamos y Servicios S.A. (PYSSA) in order to provide voice and data transmission services using power line communication technology microcredit and insurance products to our customers.

Pursuant to the terms of the agreement with PYSSA, an Argentine financial services company controlled by Grupo ST S.A., we granted PYSSA the exclusive right to conduct direct marketing services and marketing through the use of our facilities. In addition, we agreed to include in our bills, as a new item, the charges corresponding to this service and collecting them through our bills. As part of this agreement, we authorized PYSSA to offer its loan and financial services to our clients through special modules in certain or our facilities or through direct marketing services. In addition, we agreed to include marketing materials for PYSSA in mailings to our clients, including bills to our clients. The agreement will be in effect initially for a period of five years beginning June 15, 2007, the date that the ENRE issued Resolution No. 381/2007 approving the terms of the agreement, and automatically renew for subsequent five year periods, subject to our right and the right of PYSSA to terminate the agreement providing notice at least 120 days prior to the expiration of a given term. Under the terms of the agreement, PYSSA will pay us 2% of the total amount collected by PYSSA from our customers plus all the corresponding taxes, as well as an annual charge amounting to 10% of the net income before taxes derived from the services that PYSSA sells to our customers. In addition, PYSSA has agreed to indemnify us for any liability arising from the rendering of its services.

Pursuant to the terms of the agreement with CYCSA, we granted CYCSA the exclusive right to offer telecommunication services to our clients through our network in accordance with Presidential Decree No. 764/2000, which contemplates the integration of voice communication services and the transmission of information and images by way of the existing infrastructure of energy distributors such as our own. See “Item 7. Major Shareholders and Related Party Transactions—Related party transactions–Agreement with Comunicaciones y Consumos S.A.”

We are currently exploring other additional opportunities to use our network and customer service systems in new business ventures. If we choose to enter into any of these new businesses, we currently expect that our

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contribution will consist of access to our network and customer service systems, rather than any significant capital expenditures on our part. Our ability to enter into any of these new businesses will be subject to regulatory and other approvals in Argentina, including the ENRE’s approval. We cannot make assurances that we will obtain these approvals or that we will otherwise be able to enter into any of these new businesses.

Seasonality

For a discussion of seasonality of demand see “Item 5. Operating and Financial Review and Prospects—Demand—Seasonality of Demand.”

PROPERTY, PLANT AND EQUIPMENT

Our main properties are transmission lines, substations and distribution networks, all of which are located in the northwestern area of the greater Buenos Aires metropolitan area and the northern area of the City of Buenos Aires. Substantially all of our properties are held in concession to provide the electricity distribution service, which, by nature, is considered to be an essential public service. In accordance with Argentine legislation and court precedents, assets which are affected to rendering an essential public service are not subject to attachment or attachment in aid of execution and therefore, enforcement of judgments against us may be substantially limited. The net book value of the property, plant and equipment recorded on our balance sheet as of December 31, 2007 was Ps. 3,092.7 million. The net book value of the property, plant and equipment recorded on our balance sheet as of December 31, 2006 and 2005 was Ps. 2,925.4 million and Ps. 2,889.3 million, respectively.

Our gross asset base represents property, plant and equipment related to our distribution services. Because our total property, plant and equipment represents substantially the same assets, but calculated at historical cost as adjusted by inflation through February 2003, we believe the inflation-adjusted value of our property, plant and equipment is an accurate measure of our asset base for purposes of calculating our return on our assets. See “Item 5. Operating and Financial Review and Prospects—Factors affecting our results of operations—Tariffs—Distribution margin or value-added for distribution (VAD)—Integral Tariff Revision (Revisión Tarifaria Integral, or RTI).” The last adjustment for inflation to our property, plant and equipment was registered in February 2003 in accordance with Argentine GAAP. Accordingly, we estimate the effects of inflation on our property, plant and equipment for periods after February 2003 for purposes of determining the value of our gross asset base in connection with our concession. See Note 2 to our audited financial statements included elsewhere in this annual report.

Item 4A. Unresolved Staff Comments

None.

Item 5. Operating and Financial Review and Prospects

The following discussion should be read in conjunction with our audited financial statements as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005. Our audited financial statements have been prepared in accordance with Argentine GAAP, which differ in certain significant respects from U.S. GAAP. Note 26 to our audited financial statements included elsewhere in this annual report provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2007, 2006 and 2005 and for the years then ended. Our financial statements have not been adjusted for inflation after February 28, 2003, in accordance with Argentine GAAP. See “Item 3. Key Information—Selected financial data.”

OPERATING RESULTS

We distribute electricity on an exclusive basis to the northwestern zone of the greater Buenos Aires metropolitan area and the northern portion of the City of Buenos Aires, comprising an area of 4,637 square kilometers, with a population of approximately seven million people. Pursuant to our concession, we have the exclusive right to distribute electricity to all users within our concession area, including to wholesale electricity market participants. At December 31, 2007, we had 2,490,064 customers.

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We serve two markets: the regulated market, which is comprised of users who are unable to purchase their electricity requirements directly through the wholesale electricity market, and the unregulated market, which is comprised of large users that purchase their electricity requirements directly from generators in the wholesale electricity market. The terms and conditions of our services and the tariffs we charge users in both the regulated and unregulated markets are regulated by the ENRE.

Factors affecting our results of operations

Our net sales consist mainly of net energy sales to users in our service area. Our net energy sales reflect the tariffs we charge our customers (which include our energy purchase costs) and reflect deductions for fines and penalties we incur during the year. Any adjustments, however, to our accrual for fines and penalties resulting from increases in our distribution margins are recorded under financial income (expenses) and holding gains (losses). See “Item 4. Information on the Company—Our concession —Fines and penalties.”

In addition, our net sales include late payment charges we bill our customers for delays in payment of their bills, connection and reconnection charges and leases of poles and other network equipment.

If we fail to comply with the obligations under our concession, we may become subject to fines and penalties imposed by the ENRE. Some of these fines and penalties are payable by granting credits or bonuses to our customers to offset a portion of their electricity charges. Fines and penalties that are not directly related to our customers, such as fines for public safety violations, are paid directly to the ENRE. We deducted approximately Ps. 23.9 million in fines and penalties from our revenues in 2007, Ps. 25.2 million in 2006 and Ps. 72.7 in 2005. We have incurred significantly higher levels of fines and penalties in recent years, which we believe is due mainly to the political and economic situation in Argentina during these years, as evidenced by the significant increase in fines that we believe are subject to greater discretion on the part of the authorities, such as fines for inconsistencies in technical reports and public safety violations. In September 2005, we entered into an agreement with the Argentine government, which was formally re-executed in February 2006 and ratified in January 2007, pursuant to which the Argentine government has agreed, subject to certain conditions, to forgive approximately one-third of our accrued and unpaid fines and penalties and grant us a payment plan for the remainder of these fines and penalties, which will be adjusted for future increases in our distribution margins, if any. See “Item 4. Information on the Company—Our concession —Fines and penalties.”

The following table sets forth the composition of our net sales for the periods indicated:

Year ended December 31, 2007 2006 2005 (in millions of Ps. ) Energy sales (1)....................................................................................................... Ps. 1,972.7 Ps. 1,372.5 Ps. 1,311.0 Fines and penalties................................................................................................ (23.9) (25.2) (72.7) Net energy sales .................................................................................................... 1,948.7 1,347.3 1,238.2 Late payment charges ........................................................................................... 17.1 12.6 11.6 Connection charges............................................................................................... 4.0 2.6 2.6 Reconnection charges ........................................................................................... 1.4 1.6 1.4 Pole leases ............................................................................................................. 10.7 14.3 8.3

Net sales ................................................................................................................ Ps. 1,981.9 Ps. 1,378.3 Ps. 1,262.2 _______________________ (1) Energy sales for 2007 include the retroactive portion of the increase in our distribution margins, which amounts in aggregate to

Ps. 218.6 million and will be invoiced in 55 consecutive monthly installments. We began invoicing these installments in February 2007 and, as of December 31, 2007, we had invoiced Ps. 47.3 million of this amount.

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The following tables show our energy sales by category of customer (in GWh and in Pesos) for the periods indicated:

Year ended December 31, 2007 2006 2005 2004 2003 (in GWh) Residential ............................... 7,148 40% 6,250 38% 5,819 37% 5,413 37% 5,150 37%Small commercial ................... 1,485 8% 1,433 9% 1,387 9% 1,322 9% 1,192 9%Medium commercial............... 1,552 9% 1,446 9% 1,354 9% 1,293 9% 1,217 9%Industrial.................................. 3,628 20% 3,364 20% 3,195 20% 3,685 25% 2,976 22%Wheeling system(1) .................. 3,111 17% 3,211 19% 2,984 19% 2,100 14% 2,364 17%Others:

Public lighting ..................... 643 4% 650 4% 642 4% 646 4% 637 4%Shantytowns ........................ 311 2% 261 2% 279 2% 275 2% 257 2%Others(2)................................ 8 — 18 — 17 — 18 — 18 —

Total ................................. 17,886 100% 16,632 100% 15,677 100% 14,752 100% 13,811 100%_______________________ (1) Wheeling charges represent our tariffs for large users, which consist of a fixed charge for recognized technical losses and a charge for our distribution margins but

exclude charges for electric power purchases, which are undertaken directly between generators and large users. (2) Represents energy consumed internally by our company and our facilities.

Year ended December 31, 2007(1) 2006 2005 2004 2003(2) (in millions of Pesos) Residential ..................... Ps. 488.7 29% Ps. 445.4 32% Ps. 421.8 32% Ps. 395.7 35% Ps. 376.9 40%Small commercial ......... 276.5 16% 202.7 15% 197.2 15% 150.3 13% 131.0 14%Medium commercial..... 288.1 17% 216.5 16% 204.1 16% 159.0 14% 131.3 14%Industrial........................ 481.9 28% 376.8 27% 358.6 27% 325.4 29% 200.8 22%Wheeling system(3) ........ 84.9 5% 60.7 4% 57.1 4% 35.4 3% 39.5 4%Others:

Public lighting ........... 55.2 3% 46.9 4% 46.3 4% 42.0 4% 39.5 4%Shantytowns and

others...................... 29.1 2% 23.6 2% 26.0 2% 13.1 1% 13.1 1%Total ....................... 1,704.4 100% Ps. 1,372.5 100% Ps. 1,311.0 100% Ps. 1,120.9 100% Ps. 932.1 100%

_______________________ (1) Does not include the retroactive portion (Ps. 218.6 million ) of our tariff increase, Ps. 47.3 million of which we have invoiced as of December 31, 2007, and the CMM

adjustment for the period May 2006 – April 2007, applicable as of May 1, 2007 and collected through PUREE funds, for a total amount of Ps. 49.6 million. (2) Does not include any adjustment for inflation. (3) Wheeling charges represent our tariffs for large users, which consist of a fixed charge for recognized energy losses and a charge for our distribution margins but

exclude charges for electric power purchases, which are undertaken directly between generators and large users.

Our revenues and results of operations are principally affected by economic conditions in Argentina, changes in our regulated tariffs and fluctuations in demand for electricity within our service area. To a lesser extent, our revenues and results of operations are also affected by service interruptions or reductions in excess of those contemplated by our concession, which may lead us to incur fines and penalties imposed by the ENRE.

Argentine Economic Conditions and Inflation

Because all of our operations, facilities and customers are located in Argentina, we are affected by general economic conditions in the country. In particular, the general performance of the Argentine economy affects demand for electricity, and inflation and fluctuations in currency exchange rates affect our costs and our margins. Inflation primarily affects our business by increasing operating costs, while at the same time reducing our revenues in real terms.

In December 2001 Argentina experienced an unprecedented crisis that virtually paralyzed the country’s economy through most of 2002 and led to radical changes in government policies. The crisis and the government’s policies during this period severely affected the electricity sector, as described below. Although over the past four years the Argentine economy has recovered significantly from the crisis and the business and political environment has been largely stabilized, the Argentine government has only recently begun to address the difficulties experienced by the Argentine electricity sector as a result of the crisis and its aftermath. However, we believe that the current recovery and the recent measures adopted by the Argentine government in favor of the electricity sector, such as incentives for the construction of additional generation facilities and the creation of fiduciary funds to further enhance generation, transmission and distribution of electricity throughout the country, have set the stage for growth opportunities in our industry.

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The following table sets forth key economic indicators in Argentina during the years indicated:

Year ended December 31, 2007 2006 2005 2004 2003 Real GDP (% change)...................................................................... 8.7 8.5 9.2 9.0 8.8 Nominal GDP (in millions of Pesos) ............................................... 812,072 654,413 532,268 447,643 375,909 Real Consumption (% change) ........................................................ 8.7 7.3 8.5 8.3 7.0 Real Investment (% change) ............................................................ 14.4 18.7 22.7 34.4 38.2 Industrial Production (% change) .................................................... 7.5 8.3 7.7 10.6 16.3 Consumer Price Index...................................................................... 8.5 9.8 12.3 6.1 3.7 Nominal Exchange Rate (in Ps. /U.S.$ at period end) .................... 3.16 3.06 3.04 2.98 2.93 Exports (in millions of U.S.$).......................................................... 55,933 46,569 40,013 34,550 29,939 Imports (in millions of U.S.$).......................................................... 44,780 34,159 28,692 22,445 13,851 Trade Balance (in millions of U.S.$)............................................... 11,153 12,410 11,321 12,105 16,088 Current Account (% of GDP) .......................................................... 2.8 3.8 3.0 2.2 6.3 Reserves (in millions of U.S.$)........................................................ 46,176 32,037 28,077 19,650 14,120 Tax Collection (in millions of Pesos) .............................................. 199,781 150,008 119,252 98,285 72,275 Primary Surplus (in millions of Pesos)............................................ 25,719 23,156 19,661 17,360 8,688 Public Debt (% of GDP at December 31)........................................ 56.0 76.4 70.7 125.7 140.3 Public Debt Service (% of GDP) ..................................................... 5.4 5.1 5.4 5.8 3.2 External Debt (% of GDP at December 31) .................................... 47.6 51.3 64.4 112.4 129.5 _______________________ Sources: National Institute of Statistics and Census (INDEC); Central Bank; Ministry of Economy and Production.

Following years of hyperinflation and economic recession, in 1991 the Argentine government adopted an economic program that sought to liberalize the economy and impose monetary discipline. The economic program, which came to be known as the Convertibility regime, was centered on the Convertibility Law of 1991 and a number of measures intended to liberalize the economy, including the privatization of a significant number of public sector companies (including our company). The Convertibility Law established a fixed exchange rate based on what is generally known as a currency board. The goal of this system was to stabilize the inflation rate by requiring that Argentina’s monetary base be fully backed by the Central Bank’s gross international reserves. This restrained the Central Bank’s ability to effect changes in the monetary supply by issuing additional Pesos and fixed the exchange rate of the Peso and the U.S. Dollar at Ps. 1.00 to U.S. $1.00.

The Convertibility regime temporarily achieved price stability, increased the efficiency and productivity of the Argentine economy and attracted significant foreign investment to Argentina. At the same time, Argentina’s monetary policy was tied to the flow of foreign capital into the Argentine economy, which increased the vulnerability of the economy to external shocks and led to increased reliance on the services sector of the economy, with the manufacturing, agricultural and industrial sectors lagging behind due to the relative high cost of Peso-denominated products in international markets as a result of the Peso’s peg to the U.S. Dollar. In addition, related measures restricted the Central Bank’s ability to provide credit, particularly to the public sector.

Following the enactment of the Convertibility Law, inflation declined steadily and the economy experienced growth through most of the period from 1991 through 1997. This growth slowed from 1998 on, however, as a result of the Asian financial crisis in 1997, the Russian financial crisis in 1998 and the devaluation of Brazil’s currency in 1999, which led to the widespread withdrawal of investors’ funds from emerging markets, increased interest rates and a decline in exports to Brazil, Argentina’s principal export market at the time. According to INDEC, in the fourth quarter of 1998, the Argentine economy entered into a recession that caused the gross domestic product to decrease by 3.4% in 1999, 0.8% in 2000 and 4.4% in 2001. In the second half of 2001, Argentina’s recession worsened significantly, precipitating a political and economic crisis at the end of 2001.

Economic crisis

Beginning in December 2001, the Argentine government implemented an unexpected number of monetary and foreign exchange control measures that included restrictions on the free disposition of funds deposited with banks and on the transfer of funds abroad without prior approval by the Central Bank, some of which are still in effect. On December 21, 2001, the Central Bank decided to close the foreign exchange market, which amounted to a de facto devaluation of the Peso. On December 24, 2001, the Argentine government suspended payment on most of Argentina’s foreign debt.

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The economic crisis led to an unprecedented social and political crisis, including the resignation of President Fernando De la Rúa and his entire administration in December 2001. After a series of interim governments, in January 2002 the Argentine congress appointed Senator Eduardo Duhalde, a former vice-president and former governor of the province of Buenos Aires, to complete De la Rúa’s term through December 2003.

On January 6, 2002, the Argentine congress enacted the Public Emergency Law, which introduced dramatic changes to Argentina’s economic model and brought to an end the Convertibility regime, including the fixed parity of the U.S. Dollar and the Peso. Following the adoption of the Public Emergency Law, the Peso devalued dramatically, reaching its lowest level on June 25, 2002, at which time it had devalued from Ps. 1.00 to Ps. 3.90 per U.S. Dollar according to Banco de la Nación Argentina, or Banco Nación. The devaluation of the Peso had a substantial negative effect on the Argentine economy and on the financial condition of individuals and businesses. The devaluation caused many Argentine businesses (including our company) to default on their foreign currency debt obligations, significantly reduced real wages and crippled businesses that depended on domestic demand, such as public utilities and the financial services industry. The devaluation of the Peso created pressure on the domestic pricing system and triggered very high rates of inflation. According to INDEC, during 2002 the Argentine wholesale price index increased by approximately 118% and the Argentine consumer price index rose approximately 41%.

The Public Emergency Law empowered the Argentine government to implement, among other things, additional monetary, financial and foreign exchange measures to overcome the economic crisis in the short term, such as setting the exchange rate between the Peso and foreign currencies. Following the adoption of the Public Emergency Law, the Argentine government implemented measures, whether by executive decree, Central Bank regulation or federal legislation, attempting to address the effects of the collapse of the Convertibility regime, recover access to financial markets, reduce government spending, restore liquidity to the financial system, reduce unemployment and generally stimulate the economy.

Pursuant to the Public Emergency Law, the Argentine government, among other measures:

• converted public utility tariffs from their original U.S. Dollar values to Pesos at a rate of Ps. 1.00 per U.S. $1.00;

• froze all regulated distribution margins relating to the provision of public utility services (including electricity distribution services);

• revoked all price adjustment provisions and inflation indexation mechanisms in public utility concessions (including our concession); and

• empowered the Executive Branch to conduct a renegotiation of public utility contracts (including our concession) and the tariffs set therein (including our tariffs).

These measures, combined with the devaluation of the Peso and high rates of inflation, had a severe effect on public utilities in Argentina (including our company). Because public utilities were no longer able to increase tariffs at a rate consistent with the increased costs they were incurring, increases in the rate of inflation led to decreases in their revenues in real terms and a deterioration of their operating performance and financial condition. Most public utilities had also incurred large amounts of foreign currency indebtedness to finance the capital improvement and expenditure programs. At the time of these privatizations, the capital structures of each privatized company were determined taking into account the Convertibility regime and included material levels of U.S. Dollar-denominated debt. Following the elimination of the Convertibility regime and the resulting devaluation of the Peso, the debt service burden of these utilities significantly increased, which combined with the margin freeze and conversion of tariffs from U.S. Dollars to Pesos, led many of these utilities (including our company) to suspend payments on their foreign currency debt in 2002.

Economic recovery

Beginning in the second half of 2002, Argentina experienced economic growth driven primarily by exports and import-substitution, both facilitated by the lasting effect of the devaluation of the Peso in January 2002. While this devaluation had significant adverse consequences, it also fostered a reactivation of domestic production in Argentina as the sharp decline in the Peso’s value against foreign currencies made Argentine products relatively inexpensive in the export markets. At the same time, the cost of imported goods increased significantly due to the lower value of

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the Peso, forcing Argentine consumers to substitute their purchase of foreign goods with domestic products, substantially boosting domestic demand for domestic products.

In April 2003, Dr. Néstor Kirchner, the former governor of the province of Santa Cruz, was elected as president for a four-year term. President Kirchner took office in May 2003. President Kirchner has been highly critical of certain policies followed in the 1990s, to which he attributes in large part the crisis that affected Argentina. During 2003, Argentina moved towards normalizing its relationship with the IMF, withdrew all the national and provincial governments’ quasi-money securities from circulation and eliminated all deposit restrictions. The trade balance experienced a sustained surplus, aided by the rise in commodity prices and export volumes. At the same time, social indicators improved, with the unemployment rate decreasing to 17.3%, and real wages began to recover according to INDEC.

On December 10, 2007, Cristina Fernández de Kirchner, wife of the ex-President Dr. Néstor Kirchner, was inaugurated as President of Argentina for a four-year term.

Restructuring of External Debt

In June 2005, the Argentine government completed a restructuring of Argentina’s public external debt, which had been in default since December 2001. Argentina reduced its outstanding principal amount of public debt from U.S. $191.3 billion to U.S. $126.6 billion and extended payment terms. Approximately U.S. $19.5 billion of defaulted bonds held by creditors who did not participate in the exchange offer remain outstanding according to the Argentine Ministry of Economy and Production, Secretary of Finance, Undersecretary of Financing.

On January 3, 2006, Argentina completed an early repayment of all of its outstanding indebtedness with the IMF, for an amount totaling approximately U.S. $10.0 billion owing under credit lines.

Consolidation of Economic Recovery

• The economy has been recovering strongly since the economic crisis: According to data published by INDEC, the Argentine economy reached a low in the second quarter of 2002 and has been growing rapidly since, with 8.8% growth in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007, led by domestic demand and exports. From a demand perspective, private sector spending was accompanied by a combination of liberal monetary and conservative fiscal policies. Growth in spending, however, has consistently exceeded the rate of increase in revenue and nominal GDP growth. From a supply perspective, the trade sector has benefited from a depressed real exchange rate, which was supported by the intervention of the Central Bank in the foreign exchange market. Real exports have improved, in part due to growth in Brazil, and the current account has improved significantly, registering surpluses in 2004, 2005, 2006 and 2007.

• Fiscal policy has improved substantially in the last six years: The consolidated public sector primary surplus has improved by 4.4% of GDP since 2001, from a deficit of 0.9% in 2001 to a surplus of 3.5% in 2007, driven mainly by greater public revenues and cautious public spending according to INDEC.

• Monetary policy has remained expansionary: Real interest rates have remained negative since 2005, which has led to increased domestic spending. The real exchange rate has been stabilized by the Central Bank through U.S. Dollar purchases in the foreign exchange market. According to data published by INDEC, inflation was 12.3% in 2005, 9.8% in 2006 and 8.5% in 2007. The decreases in the rate of inflation in 2006 and 2007 were mainly due to a regime of price support arrangements implemented by the Argentine government.

• Argentina’s risk profile has improved considerably: According to Reuters, based on the U.S. Dollar-denominated BODEN 2012 bond spread over the comparable U.S. treasury note, Argentina’s country risk premium decreased from 4,765 basis points as of December 31, 2004 to 471 basis points as of December 31, 2005, decreased to 235 basis points as of December 31, 2006. On January 3, 2007, Argentina’s risk premium reached its lowest point, decreasing to 189 basis points. As of December 27, 2007, however, Argentina’s country risk premium had increased to 629 basis points. Argentina’s risk premium was 862 basis points as of June 20, 2008.

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Tariffs

Our revenues and margins are substantially dependent on the composition of our tariffs and on the tariff setting and adjustment process contemplated by our concession. Our management is currently focused on the renegotiation of our tariff structure, which, if successful, would have a significant impact on our results of operations.

The following chart shows the variation in our average tariff, including taxes, (in Ps. /MWh) in the periods indicated:

0

20

40

60

80

100

120

140

160

180

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ps./M

Wh

Energy Purchases VAD Taxes

123 120121 118 114 107114 114

141 141 141

166

Our tariffs for all of our customers (other than customers in the wheeling system) are composed of:

• the cost of electric power purchases, which we pass on to our customers, and a fixed charge (which varies depending on the category and level of consumption of each customer and their energy purchase prices) to cover a portion of our energy losses in our distribution activities (determined by reference to a fixed percentage of energy and power capacity for each respective voltage level set forth in our concession);

• our regulated distribution margin, which is known as the value-added for distribution, or VAD; and

• any taxes imposed by the Province of Buenos Aires or the City of Buenos Aires, which may differ in each jurisdiction.

Certain of our large users (which we refer to as wheeling system customers) are eligible to purchase their energy needs directly from generators in the wholesale electricity market and to acquire from us only the service of delivering that electricity to them. Our tariffs for these large users (known as wheeling charges) do not include, therefore, charges for energy purchases. Accordingly, wheeling charges consist of the fixed charge for recognized losses (determined by reference to a fixed percentage of energy and power capacity for each respective voltage level set forth in our concession) and our distribution margin. As a result, although the amounts billed to wheeling system customers are relatively lower than those billed to other large users, namely industrial users, the distribution margin on sales to wheeling system customers is the same as for sales to other large users because we do not incur the corresponding cost of electric power purchases related to those sales.

Recognition of cost of electric power purchases

As part of our tariffs, we bill our customers for the costs of our electric power purchases, which include energy and capacity charges. We purchase electric power at a seasonal price, which is approved by the ENRE every six months and reviewed quarterly. In February 2004, the Secretary of Energy established different seasonal prices for

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each category of user. Our electric power purchase price reflects transportation costs and certain other regulatory charges (such as the charges imposed by the National Electricity Energy Fund (Fondo Nacional de Energía Eléctrica)). Although under the current regulatory framework, the ENRE is required to adjust seasonal prices every six months, the seasonal price for energy we provide was last updated by the ENRE in January 2005, and, since then, no adjustments have been included in our tariffs for this concept. As a result, we have not been able to charge our customers the increases in regulatory charges since January 2005.

Upon the ratification of the Adjustment Agreement, we began again to charge our non-residential customers the increases in regulatory charges that we had not been allowed to charge to them prior to the ratification of the Adjustment Agreement. As part of the RTI, we expect that we will be able to charge residential customers for accrued amounts for these increases, which we were not permitted to do under the Adjustment Agreement.

We purchased a total of 17,122 GWh in 2007, 15,491 GWh in 2006 and 14,639 GWh in 2005 (excluding wheeling system demand). Until 2004, we purchased a portion of our energy needs under long-term supply contracts. Following the adoption of certain amendments to the pricing rules applicable to the wholesale electricity market pursuant to the Public Emergency Law, however, we currently purchase all of our energy supply in the wholesale electricity market. We have not purchased any energy under long-term supply contracts since 2004 and we do not anticipate making any material purchases of energy in the term market in the near future.

Recognition of cost of energy losses

Energy losses are equivalent to the difference between energy purchased (including wheeling system demand) and energy sold. These losses may be classified as technical and non-technical losses. Technical losses represent the energy that is lost during transmission and distribution within the network as a consequence of natural heating of the conductors that transmit electricity from the generating plants to the customers. Non-technical losses represent the remainder of our energy losses and are primarily due to illegal use of our services. Energy losses require us to purchase additional electricity to satisfy demand and our concession allows us to recover from our customers the cost of these purchases up to a loss factor specified in our concession for each tariff category. Our loss factor under our concession is, on average, 10%. Our management is focused on taking the necessary measures to ensure that our energy losses do not increase above current levels because of their direct impact on our gross margins. However, due to the inefficiencies associated with reducing our energy losses below the level at which we are reimbursed pursuant to our concession (i.e., 10%), we currently do not intend to significantly lower our level of losses.

At the time of our privatization, our total energy losses represented approximately 30% of our energy purchases, of which more than two thirds were non-technical losses attributable to fraud and illegal use of our service. Beginning in 1992, we implemented a loss reduction plan (plan de disciplina del mercado, or market discipline plan) that allowed us to gradually reduce our total energy losses to 10.0% by 2000, with non-technical losses of 2.7%. However, beginning in mid-2001, we experienced an increase in our non-technical losses, as the economic crisis eroded the ability of our customers to pay their bills, and in our technical losses in proportion with the increased volume of energy we supplied during those periods. Our total losses amounted to 11.0% in 2005, 11.1% in 2006 and 11.6% in 2007. The increase in losses in 2007 is primarily the result of higher technical losses associated with the higher level of demand in 2007.

The following table sets forth the approximate breakdown between technical and non-technical energy losses experienced in our concession area over the periods indicated:

Year ended December 31, 2007 2006 2005 Technical losses................................................. 9.6% 8.6% 8.3% Non-technical losses.......................................... 2.0% 2.5% 2.7% Total losses ........................................................ 11.6% 11.1% 11.0%

Our capital expenditure program includes investments to improve and update our network, which we believe

will allow us to maintain our technical losses at current levels despite further increases in demand. See “Item 4. Information on the Company—Energy losses.”

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Distribution margin or value-added for distribution (VAD)

Our concession authorizes us to charge a distribution margin for our services to seek to cover our operating expenses, taxes and amortization expenses and to provide us with an adequate return on our asset base.

Historical Overview of VAD. Our concession originally contemplated a fixed distribution margin for each tariff parameter with semiannual adjustments based on variations in the U.S. wholesale price index (67% of the distribution margin) and the U.S. consumer price index (the remaining 33% of the distribution margin). However, pursuant to the Public Emergency Law, all adjustment clauses in U.S. Dollars or other foreign currencies and indexation clauses based on foreign indexes or other indexation mechanisms included in contracts to be performed by the Argentine government were revoked. As a result, the adjustment provisions contained in our concession are no longer in force and, from January 2002 through January 2007, we were required to charge the same fixed distribution margin in Pesos established in 2002, without any type of currency or inflation adjustment. These measures, coupled with the effect of accumulated inflation since 2002 and the devaluation of the Peso, have had a material adverse effect on our financial condition, results of operation and cash flows, leading us to record net losses.

Adjustment Agreement. On September 21, 2005, we entered into an agreement with the Argentine government relating to the adjustment and renegotiation of the terms of our concession (Acta Acuerdo sobre la Adecuación del Contrato de Concesión del Servicio Público de Distribución y Comercialización de Energía Eléctrica, or Adjustment Agreement). Because a new Minister of Economy took office thereafter, we formally re-executed the Adjustment Agreement with the Argentine government on February 13, 2006 under the same terms and conditions originally agreed. The ratification of the Adjustment Agreement by the Argentine government was completed in January 2007. Pursuant to the Adjustment Agreement, the Argentine government granted us an increase of 28% in our distribution margin, which includes a 5% increase to fund specified capital expenditures we are required to make under the Adjustment Agreement. See “—Liquidity and Capital Resources—Capital expenditures.” This increase is subject to a cap in the increase of our average tariff of 15%. Although this increase applies to all of our tariff categories, the amount of the increase must be allocated to our non-residential customers (including large users that purchase electricity in the wheeling system) only, which, as a result, will experience an increase in VAD greater than 28%, while our residential customers will not experience any increase in VAD. The increase is effective retroactively from November 1, 2005 and will remain in effect until the approval of a new tariff scheme under the RTI, as described below.

The Adjustment Agreement also contemplates a cost adjustment mechanism for the transition period during which the integral tariff review process is being conducted. This mechanism, known as the Cost Monitoring Mechanism, or CMM, requires the ENRE to review our actual distribution costs every six months (in May and November of each year). If the variation between our actual distribution costs and our recognized distribution costs (as initially contemplated in the Adjustment Agreement or, if adjusted by any subsequent CMM, the most recent distribution cost base established by a CMM) is 5% or more, the ENRE is required to adjust our distribution margin to reflect our actual distribution cost base. The ENRE’s review is based on our distribution costs during the six-month period ending two months prior to the date on which the ENRE is required to apply the cost adjustment mechanism (on May 1 and November 1) and any adjustment will become effective from such date. The CMM takes into consideration, among other factors, the wholesale and consumer price indexes, current exchange rates, the price of diesel and construction costs and salaries, all of which are weighted based on their relative importance to operating costs and capital expenditures. We may also request that the CMM be applied at any time that the variation between our actual distribution costs and our then recognized distribution costs is at least 10% or more, and any adjustment to our distribution cost base that results from this CMM will become effective retroactively from the date we present the CMM request to the ENRE. We cannot make any assurances, however, that we will receive any future increases under the CMM.

On January 30, 2007, the ENRE formally approved our new tariff schedule reflecting the 28% increase in the distribution margins charged to our non-residential customers contemplated by the Adjustment Agreement. In addition, because the Adjustment Agreement is effective retroactively as of November 1, 2005, the ENRE applied the CMM retroactively in each of May and November 2006, the dates in each year on which the ENRE is required to apply the CMM. In the May 2006 CMM, the ENRE determined that our distribution cost base increased by 8.032% (compared to the distribution cost base originally recognized in the Adjustment Agreement), and, accordingly, approved an equivalent increase in our distribution margins effective May 1, 2006. This increase,

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when compounded with the 28% increase granted under the Adjustment Agreement, results in an overall 38.3% increase in our distribution margins charged to our non-residential customers. In the November 2006 CMM, the ENRE determined that our distribution cost base increased by 4.6% (compared to our distribution cost base as adjusted by the May 2006 CMM), and accordingly, did not approve any further increase in our distribution margins at such time.

We began charging our non-residential customers the new tariffs (as adjusted by the May 2006 CMM) on February 1, 2007. As a result of these increases, we estimate that, beginning in February 2007, the average price for energy sold by us increased to approximately Ps. 0.1109 per KWh, compared to an average price of Ps. 0.0825 per KWh in 2006. The ENRE also authorized us to charge our non-residential customers the retroactive portion of these tariff increases for the period from November 2005 through January 2007, which amounts in the aggregate to Ps. 218.6 million, that is being invoiced in 55 consecutive monthly installments beginning in February 2007, representing approximately Ps. 48 million each year. As December 31, 2007, we had invoiced Ps. 47.3 million of this amount.

In May 2007, we requested an 11.3% increase to our distribution margins under the CMM to reflect an increase in our distribution cost base for the period from May 1, 2006 to April 30, 2007, compared to the recognized distribution cost base as adjusted by the May 2006 CMM. In October 2007, the Argentine Secretary of Energy published Resolution No. 1037/2007, which granted us an increase of 9.63% to our distribution margins. However, this increase has not been incorporated into our tariff structure. Instead, the Resolution establishes that the funds that we are required to collect and transfer to the PUREE may be retained by us to cover this May 2007 CMM increase and future CMM increases until the new tariff structure is established pursuant to the RTI contemplated by the Adjustment Agreement. Once the new tariff structure is adopted, we will be required to reimburse the amounts deducted from the PUREE. In November 2007, we began accounting for the retroactive portion of the May 2007 CMM increase for the period from May 1, 2007 to October 31, 2007. Therefore, in our results as of December 31, 2007, Ps. 49.6 million has been recorded and we collected Ps. 33.2 million by compensation through PUREE, corresponding to the period between September and December 2007.

In November 2007, we requested an additional 7.51% increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from May 1, 2007 to October 31, 2007, in comparison to the distribution cost base recognized by the CMM in May 2007. In May 2008, we requested an additional 5.24% increase to our distribution margins under the CMM to account for fluctuations in the distribution cost base for the period from November 1, 2007 to April 30, 2008, in comparison to the distribution cost base requested in November 2007. Although we believe that these increases comply with the terms of the CMM, we cannot assure you that the ENRE will grant us these increases in full, or at all, or if granted, that we will be able to bill our customers or otherwise recover these increases from other sources of payment (such as PUREE). As of the date of this annual report, the ENRE has not rendered a decision with respect to either of these requests.

According to Resolution No. 434/2007 published by the Argentine Secretary of Energy on April 30, 2007, the new tariff structure resulting from the RTI was supposed to take effect on February 1, 2008 and to be implemented in two installments, in February and August 2008. However, the RTI has not yet been completed and although we are currently in discussions with the Argentine government regarding the RTI, we cannot predict when the RTI will be implemented or whether it will be implemented in the manner contemplated by Resolution No. 434/2007.

The following table sets forth the relative weight of our distribution margin in our average tariffs per category of customer (other than wheeling system, public lighting and shantytown customers) in our concession area at the dates indicated. Although the VAD and electric power purchases per category of customer are the same, we are subject to different taxes in the Province of Buenos Aires and the City of Buenos Aires.

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VAD Average Taxes Electric Power Purchases

Tariff(1) November

2001 January

2005 February

2007(2) November

2001 January

2005 February

2007(2) November

2001 January

2005 February

2007(2) Residential:

T1R1 ...................................... 49.4% 44.5% 44.5% 28.7% 28.7% 28.7% 21.9% 26.8% 26.8%T1R2 ...................................... 36.2% 33.0% 33.0% 29.2% 29.2% 29.2% 34.6% 37.8% 37.8%

Small Commercial: T1G1 ...................................... 55.1% 40.0% 47.8% 25.7% 25.7% 25.7% 19.2% 34.3% 26.5%T1G2 ...................................... 53.6% 31.1% 43.6% 25.6% 25.6% 25.6% 20.7% 43.2% 30.7%

Medium Commercial (T2) ........ 43.3% 27.9% 35.5% 25.6% 25.6% 25.6% 31.0% 46.4% 38.9%Industrial:

T3 low tension below 300kw................................. 44.2% 26.5% 34.3% 25.7% 25.7% 25.7% 30.1% 47.8% 40.1%

T3 low tension above 300kw................................. 42.6% 24.5% 32.1% 25.6% 25.6% 25.6% 31.8% 49.9% 42.3%

T3 medium tension below 300kw................................. 29.3% 14.1% 19.7% 25.7% 25.7% 25.7% 45.0% 60.3% 54.6%

T3 medium tension above 300kw................................. 27.3% 12.3% 17.5% 25.7% 25.7% 25.7% 47.0% 62.0% 56.8%

Average tariff ............................ 41.2% 28.5% 33.9% 27.2% 27.2% 27.2% 31.5% 44.2% 38.9%_______________________ (1) T1R1 refers to residential customers whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is less than or equal

to 300 kWh. T1R2 refers to residential customers whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 300 kWh. T1G1 refers to commercial customers whose peak capacity demand is less than 10kW and whose bimonthly energy demand is less than or equal to 1600 kWh. T1G2 refers to commercial customers whose peak capacity demand is less than 10 kW and whose bimonthly energy demand is greater than 1600 kWh. T2 refers to commercial customers whose peak capacity demand is greater than 10 kW but less than 50 KW. T3 refers to customers whose peak capacity demand is equal to or greater than 50 kW. The T3 category is applied to high-demand customers according to the voltage (tension) at which each customer is connected. Low tension is defined as voltage less than or equal to 1 kV and medium tension is defined as voltage greater than 1kV but less than 66 kV.

(2) Includes the effect of the increase in VAD to our non-residential customers pursuant to the Adjustment Agreement, as adjusted by the May 2006 CMM, but excludes the amount of the retroactive portion of the increase for the period from November 2005 through January 2007.

Integral Tariff Revision (Revisión Tarifaria Integral, or RTI). Pursuant to the Adjustment Agreement, we are also currently engaged in an integral tariff revision process with the ENRE, that will, at a minimum, maintain our then current distribution margin levels, following the 28% VAD increase applied to our non-residential tariffs and any increases granted under CMM adjustments.

Our integral tariff proposal will include, among other factors, a recalculation of the compensation we receive for our distribution services, including taxes that are not currently passed through to our customers (such as taxes on financial transactions), a revised analysis of our distribution costs, modifications to our quality of service standards and penalty scheme and, finally, a revision of our asset base and rate of return. For this purpose, we will present a post-tax return on our asset base, which we calculate as operating income plus depreciation of property, plant and equipment, less the tax charge resulting from the application to this amount of the legal tax rate (currently, 35%), divided by the value of our gross asset base. The last adjustment for inflation to our property, plant and equipment was registered in February 2003 in accordance with Argentine GAAP. Accordingly, we estimate the effects of inflation on our property, plant and equipment for periods after February 2003 for purposes of determining the value of our gross asset base in connection with our concession. See “Item 4. Information on the Company—Property, plant and equipment.” Based on our method of calculation, we estimate that the post-tax return on our gross asset base was 3.4% in 2007 (excluding the retroactive portion of the VAD increase and on the basis of a gross asset base valued at Ps. 7.3 billion at December 31, 2007), which we believe is still extremely low considering our annual post-tax return before the economic crisis. Our average annual post-tax return on our gross asset base from 1997 through 2001 was 9.6%. We believe that this method of calculating our return on assets is consistent with the requirements of the Adjustment Agreement, although we cannot guarantee that the ENRE will not decide to use other factors or methods to calculate our return on assets.

We anticipate that, once the ENRE has reviewed our integral tariff proposal, it will hold a public hearing on the proposal, following which we expect that the ENRE will adopt a revised tariff scheme. According to Resolution No. 434/2007 published by the Argentine Secretary of Energy on April 30, 2007, the new tariff structure resulting from the RTI was supposed to take effect on February 1, 2008 and to be implemented in two installments, in February and August 2008. However, the RTI has not yet been completed and although we are currently in discussions with the Argentine government regarding the RTI, we cannot predict when the RTI will be implemented or whether it will be implemented in the manner contemplated by Resolution No. 434/2007.

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Based on the parameters of the RTI set forth in the Adjustment Agreement, we expect that this revised tariff scheme will maintain our then current distribution margins following the increases granted under the Adjustment Agreement (including any increases granted pursuant to the CMM) and include a cost adjustment mechanism similar to the CMM. Because the RTI is provided for in the Adjustment Agreement, which was approved by the Argentine congress and ratified by the Argentine executive branch, we believe that the ENRE’s decision will not be subject to ratification procedures. See “Item 3. Key Information—Risk factors—Risks relating to our business—The Adjustment Agreement may be subject to challenge by Argentine consumer and other groups, which, if successful, could materially adversely affect our ability to implement any tariff adjustments granted by the Argentine government.”

The outcome of the renegotiation of our tariff structure, however, is highly uncertain as to its final result. We cannot make assurances that the renegotiation process will conclude in a timely manner or that the revised tariff structure will cover our costs and compensate us for inflation and currency devaluations in the future and provide us with an adequate return on our asset base. See “Item 3. Key Information—Risk factors—Risks relating to our business—Our business and prospects depend on our ability to negotiate further improvements to our tariff structure, including increases in our distribution margin.”

Social Tariff Regime. According to the Adjustment Agreement, we will be required to apply a social tariff regime as part of our revised tariff structure resulting from the RTI. This regime is a system of subsidized tariffs for the poverty-stricken sectors of the community to be approved by the ENRE in the context of the RTI. The social tariff regime will provide poverty-stricken sectors of the community with the same service and quality of service as other users. The beneficiaries under this regime must register with the Argentine government and meet certain criteria, including not owning more than one home and having a level of electricity consumption that is not higher than a maximum to be established by the government. According to the Adjustment Agreement, the Argentine government will subsidize the increased costs associated with the social tariff regime in part with contributions by users not subject to this regime. We will be required to cover a portion of these costs by not charging the beneficiaries of this regime for reconnection expenses and installation of new equipment, updating our billing system and granting payment plans to beneficiaries for existing past-due electricity bills. We currently anticipate that the incremental cost to us of providing services under the social tariff regime will not be significant. However, we cannot guarantee that the social tariff regime will be implemented in the manner, or under the terms, we currently anticipate.

Demand

Energy demand depends to a significant extent on economic and political conditions prevailing from time to time in Argentina, as well as seasonal factors. In general, the demand for electricity varies depending on the performance of the Argentine economy, as businesses and individuals generally consume more energy and are better able to pay their bills during periods of economic stability or growth. As a result, energy demand is affected by Argentine governmental actions concerning the economy, including with respect to inflation, interest rates, price controls, foreign exchange controls, taxes and energy tariffs.

Electricity demand

The following table sets forth the amount of electricity generated in Argentina and electricity purchases by our company in each of the periods indicated.

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Year Electricity Demand(1) Edenor Demand(2) Edenor’s Demand

as a % of Total Demand (in GWh) 1994.................................. 55,827 11,386 20.4% 1995.................................. 57,839 11,629 20.1% 1996.................................. 61,513 12,390 20.1% 1997.................................. 66,029 13,046 19.8% 1998.................................. 69,103 13,768 19.9% 1999.................................. 71,689 14,447 20.2% 2000.................................. 75,591 15,148 20.0% 2001.................................. 78,098 15,414 19.7% 2002.................................. 76,483 14,865 19.4% 2003.................................. 82,261 15,811 19.2% 2004.................................. 87,477 16,673 19.1% 2005.................................. 92,340 17,623 19.1% 2006.................................. 97,590 18,700 19.2% 2007.................................. 102,950 20,233 19.7%

_______________________ Source: Compañía Administradora del Mercado Mayorista Eléctrico, S.A. (CAMMESA) (1) Includes demand in the Patagonia wholesale electricity market (Mercado Eléctrico Mayorista Sistema Patagónico, or

MEMSP). (2) Calculated as electricity purchased by us and our wheeling system customers. The following table sets forth population and customer growth data for the areas and periods indicated.

Argentina City of Buenos Aires Greater Buenos Aires Edenor

Year Population

% change (previous

year) Population

% change(previous

year) Population

% change

(previous year) Customers

% change(previous

year) 1994 .............................. 33,668,665 — 2,908,769 — 8,216,105 — 2,083,126 — 1995 .............................. 34,047,214 1.12% 2,889,854 (0.65)% 8,293,743 0.94% 2,089,060 0.28%1996 .............................. 34,399,581 1.03 2,870,924 (0.66) 8,371,714 0.94 2,139,451 2.41 1997 .............................. 34,745,807 1.01 2,851,982 (0.66) 8,450,013 0.94 2,189,652 2.35 1998 .............................. 35,135,933 1.12 2,833,030 (0.66) 8,528,639 0.93 2,206,467 0.77 1999 .............................. 35,500,001 1.04 2,814,070 (0.67) 8,607,589 0.93 2,240,300 1.53 2000 .............................. 35,878,053 1.06 2,795,106 (0.67) 8,656,859 0.57 2,259,285 0.85 2001 .............................. 36,260,130 1.06 2,776,138 (0.68) 8,684,438 0.32 2,266,164 0.30 2002 .............................. 36,616,276 0.98 2,757,170 (0.68) 8,846,348 1.86 2,250,454 (0.69) 2003 .............................. 37,036,535 1.15 2,738,203 (0.69) 8,926,561 0.91 2,317,157 2.96 2004 .............................. 37,430,949 1.06 2,719,240 (0.69) 9,007,080 0.90 2,353,211 1.56 2005 .............................. 37,809,002 1.01 2,730,870 0.43 9,069,530 0.69 2,404,141 2.16 2006 .............................. 38,209,777 1.06 2,715,304 (0.57) 9,151,156 0.90 2,444,989 1.70 2007 .............................. 38,614,801 1.06 2,716,024 0.03 9,224,365 0.80 2,490,064 1.84

Source: Fundación Norte y Sur

Electricity demand in our concession area has grown an average of 4.6% per annum since 1994. The evolution of demand shows two growth periods interrupted by a slight decline in demand in 2002 attributable to the economic crisis.

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The following graph represents the annual growth of energy purchased to satisfy the demand of each operating area from 1994 through 2007:

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Morón Norte Olivos Pilar

From 1994 through 2000, demand in our service area increased an average of 4.9% per annum, with a peak of 6.5% in 1996. Although demand generally grew in all of our customer segments during the years before the economic crisis, demand by our high-demand customers and wheeling system customers showed the strongest growth rate during this period. Beginning in mid-2001 through 2002, the decline in the overall level of economic activity and the deterioration in the ability of many of our customers to pay their bills as a result of the crisis led to an overall decrease in demand for electricity and an increase in non-technical energy losses. After the economic crisis, however, demand started growing again, increasing an average of 6.4% per annum from 2003 through 2007. This increase in demand was due to renewed growth in the Argentine economy since the second half of 2003 and the relative low cost of energy to consumers, in real terms, resulting from the freeze of our distribution margin and the elimination of the inflation adjustment provisions of our concession in 2002. Demand by residential customers increased by 14.4% in 2007, primarily due to the addition of new appliances and the relative low cost of energy, in real terms. Demand by our high-demand customers and wheeling system customers has also experienced an increase in demand in recent years due to increased economic activity, particularly in the industrial sector (which includes wheeling customers), with demand growing by 2.8% in 2007.

The small commercial category of customers registered a decrease in demand in 2002, but recovered slightly after the initial effects of the economic crisis due to the sensitivity of customers in this category to the economic status of their small businesses. The medium commercial category of customers has generally demonstrated the same volatility in demand as low-demand customers in recent years.

Public lighting demand has declined significantly over the past few years due to the introduction of low-consumption lighting. We believe that the public lighting category will continue to register low demand despite continued economic expansion and urban development. After having increased significantly in 2005, demand in shantytowns stabilized in 2006, remaining in line with historic growth levels, and was below the increase in demand for our low demand residential category of customers. However, overall demand in this category is relatively small in comparison to other larger categories of our customers. See “Item 4. Information on the Company—Framework agreement (Shantytowns)”

The Argentine government has also implemented the PUREE in an attempt to curb increases in energy demand by offering rewards to residential and small commercial customers who reduce their energy usage in comparison to their use in 2003. In 2005, the Argentine Government implemented a second version of the PUREE (PUREE II),

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which rewards residential and small commercial customers based on their usage in 2003 and industrial customers based on their usage in 2004. The PUREE II also penalizes industrial customers whose usage exceeds 90% of 2004 levels and penalizes residential customers with bi-monthly consumption levels at or above 300 KWh and small commercial customers whose usage exceeds 90% of their usage levels for 2003. Residential customers with consumption levels below 300 KWh are exempt from penalty. In spite of the PUREE, energy demand has continued to increase during the three years it has been in effect.

We believe that the February 2007 increase in our distribution margin has not had an adverse effect on demand, as energy costs remain relatively low in real terms. Demand in GWh by our non-residential customers grew by an average of 3.4% in 2007, as compared to 2006, while demand in GWh by residential customers increased 14.4% over the same period. We cannot make assurances that the tariffs that result from the RTI or future economic, social and political developments in Argentina, over which we have no control, will not have an adverse effect on energy demand in Argentina. See “Item 3. Key Information—Risk factors—Risks related to the electricity distribution sector—Electricity demand may be affected by recent or future tariff increases.”

Capacity demand

Demand for installed capacity to deliver electricity generally increases with growth in demand for electricity. However, since the 2001 crisis no new generation plants have been built due to the lack of economic incentives in the sector following the economic crisis and the subsequent implementation of tariff restrictions by the government. A lack of generation capacity would place limits on our ability to grow and could lead to increased service disruptions, which could cause an increase in our fines. See “Item 3. Key Information—Risk factors—Risks relating to the electricity distribution sector—Energy shortages may act as a brake on growing demand for electricity and disrupt distribution companies’ ability to deliver electricity to their customers, which could result in customer claims and material penalties imposed on these companies.”

In response to the lack of construction of new generation plants, the Argentine government successfully solicited bids in November 2006 for the construction of two new thermal generation plants that will contribute an additional 800 MW each of energy production. The cost of construction of these plants will be funded with net revenues of generators derived from energy sales in the spot market, with a special charge to our non-residential customers per MWh of energy billed and with a specific charge from CAMMESA applicable to large users. The plants are scheduled to be completed by late 2008 or early 2009. In addition to the construction of these two new thermal generation plants, in September 2006 the Secretary of Energy of the Ministry of Federal Planning, Public Investment and Services issued Resolution No. 1281/06 in an effort to respond to the sustained increase in energy demand following Argentina’s economic recovery after the crisis. This Resolution seeks to create incentives for energy generation plants to meet increasing energy needs. The government has also required us to finance 24%, and Empresa Distribuidora Sur S.A.(Edesur) 26%, of the construction costs of two high-tension 220 KV lines between the Central Puerto and Central Costanera generators and the Malaver network, which will provide access to an additional 600MW of energy from the Central Puerto and Central Costanera generators that currently cannot be distributed due to saturation of their grids. We estimate that we will be required to contribute an aggregate of approximately Ps. 39.3 million to construction of the Malaver network under the scheduled capital expenditures of the Adjustment Agreement, Ps. 18.5 of which we contributed in 2007. However, because the commencement of the Malaver project was subject to the ratification of the Adjustment Agreement, we were not able to begin work on this project in 2006. The actual costs of this project will be determined at the time we receive and accept bids from third party contractors in connection with the project.

We cannot make assurances that these initiatives will be implemented in a timely manner or that they will be able to serve our energy demands in the manner we anticipate.

Seasonality of Demand

Seasonality has a significant impact on the demand for electricity in our concession area, with electricity consumption peaks in summer and winter. The impact of seasonal changes in demand is registered primarily in our residential and small commercial customer categories. The seasonal changes in demand are attributable to the impact of various climatological factors, including weather and the amount of daylight time, on the usage of lights, heating systems and air conditioners.

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The impact of seasonality on industrial demand for electricity is less pronounced than on the residential and commercial sectors for several reasons. First, different types of industrial activity by their nature have different seasonal peaks, such that the effect on them of climate factors is more varied. Second, industrial activity levels tend to be more significantly affected by the economy, and with different intensity levels depending on the industrial sector.

The chart below shows seasonality of demand in our residential customer category for the periods indicated.

Residential

0

100

200

300

400

500

600

700

800

900

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GW

h

2003 2004 2005 2006 2007

The chart below shows seasonality of demand in our small commercial customer category for the periods indicated.

Small Commercial

80

90

100

110

120

130

140

150


GW

h

2003 2004 2005 2006 2007

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The chart below shows seasonality of demand in our medium commercial customer category for the periods indicated.

Medium Commercial

020406080

100120140160


GW

h

2003 2004 2005 2006 2007

The chart below shows seasonality of demand in our industrial customer category for the periods indicated.

Industrial

400

450

500

550

600

650


GW

h

2003 2004 2005 2006 2007

Taxes on electricity tariffs

Sales of electricity within our service area are subject to certain taxes, levies and charges at the federal, provincial and municipal levels. These taxes vary according to location and type of user. In general, residential and governmental users are subject to a lower tax rate than commercial and industrial users. Similarly, taxes are typically higher in the Province of Buenos Aires than in the City of Buenos Aires. All of these taxes are billed to consumers along with electricity charges.

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Framework agreement (Shantytowns)

We also supply electricity to low-income areas and shantytowns within our concession area under a special regime established pursuant to a framework agreement that we, Edesur and Empresa Distribuidora La Plata S.A. (Edelap) entered into in October 2003 with the Argentine government and the Province of Buenos Aires. The framework agreement contains terms similar to a prior framework agreement entered into in 1994. Pursuant to the framework agreement, we are compensated for the service we provide to shantytowns by a commission in each shantytown that collects funds from residents of the shantytown. In addition, we are compensated by the municipality in which each shantytown is located, and, if there is any payment shortfall, by a special fund to which the Argentine government and the Province of Buenos Aires each contributes and to which each is severally liable. The framework agreement took effect retroactively from September 1, 2002 and was to remain in effect through the earlier of December 31, 2006 or the full normalization of the shantytowns. We are currently in the process of negotiating the extension of the framework agreement going forward from December 31, 2006, and do not expect a significant change in its terms. Our receivables for amounts accrued through December 31, 2006, but not yet paid for the supply of energy to shantytowns under the framework agreement amounted to Ps. 17.9 million as of December 31, 2007, Ps. 45.6 million as of December 31, 2006 and Ps. 58.0 million as of December 31, 2005. In October 2006, we and the Province of Buenos Aires entered into a payment plan agreement with respect to amounts owed to us by the Province of Buenos Aires under the framework agreement with respect to periods prior to 2007. As of December 31, 2007, the Government of the Province of Buenos Aires had paid Ps. 18.6 million of the total amount due under the payment plan agreement. See “Item 4. Information on the Company—Framework agreement (Shantytowns).”

Operating Expenses

Our most significant operating expenses are transmission and distribution expenses, which include depreciation charges, salaries and social security taxes, outsourcing and purchases of materials and supplies, among others.

After depreciation, our highest expenses are typically salaries and social security taxes. We believe that future increases in our salary and social security expenses will result primarily from salary raises rather than from a significant growth in our work force, which we anticipate will remain relatively stable in the near future. We typically try to reach an agreement at the beginning of each fiscal year, although we have, in the past, implemented mid-year salary increases as necessary.

We seek to maintain a flexible cost base by achieving an optimal level of outsourcing, which allows us both to maintain a lower cost base and gives us the ability to respond more quickly to changes in our market. We had approximately 3,612 third-party employees under contract with our company as of December 31, 2007, 3,156 as of December 31, 2006 and 2,995 as of December 31, 2005. The number of third-party employees under contract does not directly relate to the number of third-party employees actually performing services for our company at any given time, as we only pay for the services of these employees on an as-needed basis. See “Item 6. Directors, Senior Management and Employees—Employees.”

Our principal material and supply expenses consist of purchases of wire and transformers (i.e., electromagnetic devices used to change the voltage level of alternating-current electricity), which we use to maintain our network.

Summary Historical Results of Operations

The following table provides a summary of our operations for the years ended December 31, 2007, 2006 and 2005.

Year ended December 31, 2007 2006 2005 (in millions of pesos) Net sales Ps. 1,981.9 Ps. 1,378.3 Ps. 1,262.2 Electric power purchases (889.9) (799.1) (757.7) Gross margin 1,092.0 579.3 504.5 Transmission and distribution expenses (417.6) (362.1) (346.1) Selling expenses (120.6) (87.9) (86.0)

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Year ended December 31, 2007 2006 2005 (in millions of pesos) Administrative expenses (124.7) (93.3) (72.9) Net operating income (loss) 429.2 35.9 (0.4) Financial income (expenses) and holding gains

(losses)

Generated by assets 12.7 16.5 14.4 Generated by liabilities (125.5) (140.0) (162.9)

Gain on extinguishment of former debt — 179.2 — Adjustment to present value of notes (21.5) 57.1 — Adjustment to present value of the retroactive tariff

increase arising from the application of the new electricity rate schedule and from the Payment Plan Agreement with the Province of Buenos Aires (29.6) — —

Loss from the purchase and redemption of notes (10.2) — — Adjustment to present value of purchased and

redeemed notes (8.6)

— — Other income (expenses), net 1.0 (22.9) (0.7) Net income (loss) before income tax 247.4 125.9 (149.6) Income tax (125.0) 167.2 — Net income (loss) Ps. 122.5 Ps. 293.1 Ps. (149.6) Year ended December 31, 2007 compared with year ended December 31, 2006.

Net sales

Net sales increased Ps. 603.6 million (43.8%) to Ps. 1,981.9 million in the year ended December 31, 2007 from Ps. 1,378.3 million in the year ended December 31, 2006. Net energy sales represented approximately 98.3% of our net sales in 2007 (compared to 97.7% in 2006); with late payment charges, pole leases, and connection and reconnection charges representing the remaining balance. Energy sales increased by 43.7% (Ps. 600.2 million) to Ps. 1.972,7 million in the year ended December 31, 2007 from Ps. 1,372.5 million in the year ended December 31, 2006. This increase was mainly due to:

• the application from February 1, 2007 of the increase in our distribution margins, or VAD, including the additional increase resulting from the implementation of the CMM for the period from November 2005 to April 2006 (which together represented a 38.3% overall increase in our VAD charged to our non-residential customers);

• the accrual of the full amount corresponding to the retroactive portion of the VAD increase (including CMM for the period from November 2005 to April 2006) charged to our non residential customers for the period from November 1, 2005 through January 31, 2007, which amounted to Ps. 218.6 million, of which, as of December 31, 2007, we had invoiced Ps. 47.3 million;

• the recognition in October 2007 of an additional 9.63% increase in our VAD corresponding to the implementation of the CMM for the period from May 2006 to April 2007. Such VAD increase amounting to Ps.49.6 is effective since May 1, 2007; and

• a 7.5% increase in the volume of energy sold in 2007, compared to the volume sold in 2006.

In October 2007, the ENRE allowed the company to recognize the CMM adjustment for the period from May 2006 to April 2007 (9.63%) applicable starting May 1, 2007. However, this increase has not been incorporated into our tariff structure and, as a result, we are not billing our customers for this increase in the VAD. Instead, the ENRE has authorized us to retain all or a portion of the funds that we are required to collect and transfer to the Stabilization Fund of the electricity market (pursuant to the Plan de Uso Racional de la Energía Eléctrica, - Rational Use of Electric Energy Plan or PUREE -) to cover this May 2007 CMM increase and any future CMM increases granted by the ENRE until the new tariff structure is established pursuant to the Integral Tariff Revision process (Revisión

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Tarifaria Integral, or RTI) contemplated by the Adjustment Agreement. Once the new tariff structure is adopted, we will be required to compensate the amounts deducted from the PUREE. In November 2007, we accrued the full amount of the retroactive portion of the May 2007 CMM increase for the period from May 1, 2007 to October 31, 2007. Therefore, in our results as of December 31, 2007, Ps. 49.6 million has been recorded and we collected Ps. 33.2 million by compensation through PUREE, corresponding to the period between September and December 2007.

Volume of energy sold increased by 7.5% to 17,886 GWh in the year ended December 31, 2007 from 16,632 GWh in the year ended December 31, 2006. The increase in volume is attributable to a 5.6% increase in the average GWh consumption per customer and a 1.8% increase in the number of our customers in 2007.

The main increase was attributable to residential customers, whose demand grew 14.4% in the year ended December 31, 2007 compared to the same period in 2006, representing 40% of the energy we dispatched and 29% of our revenues.

Electric power purchases

The amount of electric power purchases increased 11.4% to Ps. 889.9 million for the year ended December 31, 2007 from Ps. 799.1 million in the year ended December 31, 2006, mainly due to the effect of a 10.5% increase in the volume of electricity purchased, from 15,491.4 GWh in the year ended December 31, 2006 to 17,122.4 GWh in the year ended December 31, 2007 (excluding wheeling system demand). This increase is mainly attributable to an 8.2% increase in demand (calculated as the purchase of energy by us and our customers under the wheeling system).

Energy losses increased to 11.6% in the year ended December 31, 2007 from 11.1% in the year ended December 31, 2006, reflecting primarily an increase in technical losses associated with the higher level of demand in 2007.

Gross margin

Our gross margin increased significantly (88.5%) to Ps. 1,092.0 million in the year ended December 31, 2007 from Ps. 579.3 million in the year ended December 31, 2006. This increase is largely due to an increase in the volume of energy and power capacity sold and to the application of the VAD increase and the CMM adjustment described above.

Transmission and distribution expenses

Transmission and distribution expenses increased 15.3% to Ps. 417.6 million in the year ended December 31, 2007 from Ps. 362.1 million in the year ended December 31, 2006, mainly due to a Ps. 29.0 million increase in salaries and social security taxes (attributable to an increase in compensation and to a recategorization of some of our selling and administrative employees as transmission and distribution employees), a Ps. 20.4 million increase in outsourcing, attributable mainly to the greater activity by our contractors and to a Ps. 2.8 million increase in the consumption of materials associated with preventive maintenance due to an increase in material prices and an increase in maintenance activity.

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The following table sets forth the principal components of our transmission and distribution expenses for the years indicated:

Year ended December 31,

2007

% on 2007 net sales

(excluding unbilled

retroactive adjustment) (1) 2006

% on 2006 net sales

(in millions of Pesos) Salaries and social security taxes Ps. 125.8 30.1% 6.9% Ps. 96.8 26.7% 7.0%Supplies 22.9 5.5% 1.3% 20.1 5.5% 1.5%Outsourcing 74.2 17.8% 4.1% 53.8 14.9% 3.9%Depreciation of property, plant & equipment 169.5 40.6% 9.4% 171.2 47.3% 12.4%Others 25.2 6.0% 1.4% 20.2 5.6% 1.5%

Total Ps. 417.6 100.0% 23.1% Ps. 362.1 100.0% 26.3%

1) Calculated on the basis of net sales excluding the unbilled amount of the retroactive portion of the VAD increase charged to our non-

residential customers, but including the full amount of the May 2007 CMM (Ps.49.6 million), which results in net sales of Ps. 1,810.6 million. These amounts are not intended to be representative of what they would have been if the retroactive tariff increase had been in effect only during the reported period.

Selling expenses

Our selling expenses are related to customer services provided at our commercial offices, billing, invoice mailing, collection and collection procedures, as well as allowances for doubtful accounts. Selling expenses increased 37.2 % to Ps. 120.6 million in the year ended December 31, 2007 from Ps. 87.9 million in the year ended December 31, 2006, primarily as a result of a Ps. 19.1 million increase in our allowance for doubtful accounts attributable to the recording of an allowance for the full amount of receivables resulting from the supply of electricity to shantytowns that are not covered by the 2006 Framework Agreement (Acuerdo Marco) in light of the fact that the 2007 framework agreement has not yet been signed. We also recorded a Ps. 4.9 million increase in salaries and social security taxes, a Ps. 4.3 million increase in outsourcing attributable to price increases in our outsourcing services contracts, and a Ps. 2.0 million increase in taxes and charges due to the increase in municipal and the ENRE contributions. Our past due receivables decreased from 5.2 average days of sale in 2006 to 4.0 in 2007.

The following table sets forth the principal components of our selling expenses for the years indicated:


2007

% on 2007 net sales

(excluding unbilled


% on 2006 net

sales (in millions of Pesos) Salaries and social security taxes Ps. 25.4 21.0% 1.4% Ps. 20.5 23.3% 1.5%Allowance for doubtful accounts 30.7 25.4% 1.7% 11.6 13.2% 0.8%Outsourcing 29.4 24.4% 1.6% 25.1 28.6% 1.8%Taxes and charges 11.1 9.2% 0.6% 9.1 10.3% 0.7%Others 24.0 20.0% 1.3% 21.6 24.7% 1.6%

Total Ps. 120.6 100.0% 6.7% Ps. 87.9 100.0% 6.4% 1) Calculated on the basis of net sales excluding the unbilled amount of the retroactive portion of the VAD increase charged to our non-

residential customers, but including the full amount of the May 2007 CMM (Ps.49.6 million), which results in net sales of Ps. 1,810.6

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million. These amounts are not intended to be representative of what they would have been if the retroactive tariff increase had been in effect only during the reported period.

Administrative expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, systems operation, maintenance and advertising expenses. Administrative expenses increased 33.7% to Ps. 124.7 million in the year ended December 31,2007 from Ps. 93.3 million in the year ended December 31, 2006, primarily as a result of a Ps. 12.3 million increase in taxes on financial transactions due to an increase in collections and payments, a Ps. 6.0 million increase in outsourcing attributable to price increases in our outsourcing services contracts, a Ps. 5.4 million increase in advertising expenses (including institutional relations, radio advertising and community service programs) and a Ps. 4.9 million increase in salaries and social security taxes primarily attributed to an increase in compensation.

The following are the principal components of our administrative expenses for the years indicated:


2007

% on 2007 net sales

(excluding unbilled


% on 2006 net sales

(in millions of Pesos) Salaries and social security taxes Ps. 36.5 29.3% 2.0% Ps. 31.6 33.9% 2.3%Computer services 11.4 9.2% 0.6% 8.1 8.7% 0.6%Outsourcing 10.9 8.7% 0.6% 4.9 5.3% 0.4%Tax on financial transactions 31.5 25.3% 1.7% 19.2 20.5% 1.4%Advertising expenses 15.4 12.3% 0.8% 10.0 10.7% 0.7%Others 19.0 15.2% 1.0% 19.5 20.9% 1.4%

Total Ps. 124.7 100.0% 6.9% Ps. 93.3 100.0% 6.8% (1) Calculated on the basis of net sales excluding the unbilled amount of the retroactive portion of the VAD increase charged to our non-

residential customers, but including the full amount of the May 2007 CMM (Ps.49.6 million), which results in net sales of Ps. 1,810.6 million. These amounts are not intended to be representative of what they would have been if the retroactive tariff increase had been in effect only during the reported period.

Net operating income (loss)

Our net operating income increased significantly from Ps. 35.9 million in the year ended December 31, 2006 to Ps. 429.2 million in the year ended December 31, 2007. This increase is largely due to the application of the VAD increase and the CMM adjustments described above and, to a lesser extent, the increase in energy and power capacity sold, which more than offset a Ps. 55.5 million increase in transmission and distribution expenses, a Ps. 31.4 million increase in administrative expenses and a Ps. 32.7 million increase in selling expenses.

Financial income (expenses) and holding gains (losses)

Financial income and holding gains generated by assets were Ps. 12.7 million in the year ended December 31, 2007, compared to Ps. 16.5 million in the year ended December 31, 2006. This decrease of Ps. 3.8 million is primarily due to a decrease of Ps. 3.8 million in the exchange results (Ps. 0.9 million exchange losses in the year ended December 31, 2007, compared to a Ps. 2.6 million exchange gain in the year ended December 31, 2006).

Financial expenses generated by liabilities which include financial interest, exchange results and other expenses, were Ps. 125.5 million in the year ended December 31,2007 compared to Ps. 140.0 million in the year ended December 31, 2006. This Ps. 14.5 million decrease is primarily the result of:

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• A Ps. 26.8 million decrease in interest expenses, mainly resulting from lesser adjustment by VAD increases in fines and penalties (Ps. 18.1 million in the year ended December 31,2007 compared to Ps. 47.0 million in the year ended December 31, 2006);

• A Ps. 4.3 million decrease in financial expenses (which expenses for the year ended December 31, 2006 incorporated Ps. 10.1 million of costs relating to our initial public equity offering); and,

• An increase of Ps. 16.6 million in exchange losses (Ps. 29.9 million in the year ended December 31, 2007, compared to the Ps. 13.3 million in the year ended December 31, 2006).

Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires

The retroactive portion of the tariff increase, which amounts in aggregate to Ps. 218.6 million, is being invoiced in 55 consecutive monthly installments to our non-residential customers, starting in February 2007. As of December 31, 2007, Ps. 47.3 million of the retroactive tariff adjustment has been invoiced to our non-residential customers.

In addition, in October 2006, we entered into a payment plan agreement with the Province of Buenos Aires with respect to amounts owed to us by the Province of Buenos Aires under the 2006 framework agreement, which amounted to Ps. 27.1 million. The amounts due under the payment plan agreement are being invoiced in 18 installments, starting in January 2007. As of December 31, 2007, the Province of Buenos Aires has paid Ps. 18.6 million.

In accordance with Argentine GAAP, we account for these long term financing plans at their net present value, which we calculate at a discount rate of 10.5 %, recording the resulting non-cash charge as an adjustment to present value of these two receivables. We recorded a total non-cash charge of Ps. 29.6 million in the year ended December 31, 2007 as adjustment to present value of these receivables.

Gain on extinguishment of former debt

Our results of operations for the year ended December 31, 2006 included a net gain of Ps. 179.2 million related to the restructuring of our outstanding financial debt. We did not record any similar gain or loss in the year ended December 31, 2007.

Loss from the purchase and redemption of notes and adjustment to present value of purchase and redeemed notes

In 2007 in several transactions, we repurchased U.S. $43.7 million principal amount of our outstanding Fixed Rate Par Notes due 2016 and U.S. $218.0 million principal amount of our outstanding Discount Notes due 2014. We also redeemed U.S. $22.0 million principal amount of our outstanding Discount Notes due 2014. These transactions generated a net loss of Ps. 18.8 million.

Adjustment to present value of notes

We record our financial debt on our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each year end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money. In 2006, we restructured all of our outstanding debt after receiving approval from holders of 100% of our defaulted debt. We did not record any adjustment to present value before 2006 because our financial debt was in default. The adjustment to present value of the future cash flows of the debt issued in the restructuring, using a market interest rate of 10% in 2006 and 10.5% in 2007, generated an accounting loss of Ps. 21.5 million in the year ended December 31, 2007 and an accounting gain of Ps. 57.1 million in the year ended December 31, 2006 related to the non-cash adjustment to present value of payments due on our debt instruments issued in April 2006.

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Other income (expenses), net

Other income (expenses), net, includes mainly voluntary retirements, severance payments and accrual for lawsuits. We recorded a gain of Ps. 1.0 million in the year ended December 31, 2007 compared to a loss of Ps. 22.9 million in the year ended December 31, 2006, mainly comprised by accrued litigation (Ps. 16.8 million) and voluntary retirements (Ps. 7.2 million) which were partially offset by the reimbursement of certain capex incurred in connection with the power lines removal required by the urban highway company, Autopistas Urbanas S.A. (Ps. 7.2 million), which expenses were recorded in the same year end and by the recognition by Electricité de France (EDF) of a credit in respect of the technical assistance fees already paid by us for the period from September 2005 to September 2007 and the recovery of expenses related to the public offering of capital stock (Ps. 14.5 million).

Income tax

We recorded an income tax charge of Ps. 125.0 million in the year ended December 31, 2007, compared to a gain of Ps. 167.2 million in the year ended December 31, 2006. The income tax gain recorded in the year ended December 31, 2006 resulted from the partial reversal of the allowance for impairment of value of deferred tax assets (which was mainly due to the fact that management estimated on December 31, 2006, that our tax loss carry-forward would be partially offset against future taxable income as a result of the anticipated increase in our VAD at the time).

The income tax charge of Ps. 125.0 million recorded in the year ended December 31, 2007 is attributable to:

(i) the reversal of the deferred tax asset related to the use of the tax loss carry-forward due to a significant increase in our taxable income which was partially offset by a tax deduction for the ENRE fines and penalties in 2007; and,

(ii) an increase in the allowance for impairment of deferred tax assets due to the fact that management estimated that a higher portion of our tax loss carry-forward would not be offset against future taxable income before expiring at the end of 2007.

Net income (loss)

We recorded net income of Ps. 122.5 million in the year ended December 31, 2007, compared to net income of Ps. 293.1 million in the year ended December 31, 2006. This decrease is mainly attributable to the recording of a Ps.125.0 million income tax charge in 2007 (compared to Ps. 167.2 million income tax gain in 2006), which more than offset a significant increase in our pre-tax net income resulting from the application of the VAD increase charged to our non-residential customers (including all the CMM adjustments) and the recording of the full amount of the retroactive portion of the increase in VAD charged to our non-residential customers for the period from November 1, 2005 to January 31, 2007.

Year ended December 31, 2006 compared with year ended December 31, 2005

Net sales

Our net sales increased 9.2% to Ps. 1,378.3 million in the year ended December 31, 2006, from Ps. 1,262.2 million in the year ended December 31, 2005, due to a 4.7% increase in energy sales and a 65.3% reduction in fines and penalties. Net energy sales represented 97.7% of our net sales in the year ended December 31, 2006 and 98.1% in the year ended December 31, 2005. Late payment charges, pole leases and connection charges represented the remainder of our net sales.

Energy sales increased 4.7% to Ps. 1,372.5 million in the year ended December 31, 2006, from Ps. 1,311.0 million in the year ended December 31, 2005, primarily as a result of a 6.1% increase in the volume of energy sold (16,632 GWh sold in the year ended December 31, 2006 from 15,677 GWh sold in the year ended December 31, 2005). The increase in volume in 2006 compared to 2005 is attributable to:

• a 4.3% increase in the average GWh consumption per customer, which we believe is due to the general improvement in macroeconomic conditions in Argentina; and

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• a 1.7% increase in the number of our customers.

Electric power purchases

Our electric power purchases increased 5.5% to Ps. 799.1 million for the year ended December 31, 2006 from Ps. 757.7 million for the year ended December 31, 2005, primarily due to a 5.8% increase in the volume of electricity purchased (excluding wheeling system demand) (15,489 GWh in the year ended December 31, 2006 from 14,639 GWh in the year ended December 31, 2005) resulting from an increase in demand, which we believe was attributable to an improvement in macroeconomic conditions in Argentina and to a shift by a number of our wheeling system customers (for whom we do not purchase energy) to the industrial category of customers. The shift of our wheeling system customers to industrial customers resulted in a 7.6% increase in energy purchased in the industrial customer category. Total energy demand (including wheeling system demand) increased 6.1% in 2006.

Gross margin

Our gross margin increased 14.8% to Ps. 579.3 million in the year ended December 31, 2006 from Ps. 504.5 million in the year ended December 31, 2005. Our gross margin as a percentage of net sales increased to 42.0% in the year ended December 31, 2006 from 40.0% in the year ended December 31, 2005, due to a reduction in fines and penalties and an increase in energy sales and pole leases.

Transmission and distribution expenses

Transmission and distribution expenses increased 4.6% to Ps. 362.1 million in the year ended December 31, 2006 from Ps. 346.1 million in the year ended December 31, 2005 due to a Ps. 22.5 million increase in salaries and social security taxes attributable to an increase in compensation required by the terms of our collective bargaining agreements and applicable labor regulations, and a Ps. 15.5 million increase in outsourcing attributable to price increases in outsourcing service contracts and increases in projects to make improvements to our network in November and December of 2006 and in our program to address any service issues more quickly and effectively during the summer months. These increases were partially offset by a Ps. 19.8 million decrease related to fees owed to EDF S.A., following the renegotiation of our operating agreement with EDF S.A. in September 2005. We anticipate further increases in salaries and social security taxes in our transmission and distribution activities in the near future, which we will seek to recover through the Cost Monitoring Mechanism contemplated by the Adjustment Agreement.

The following are the principal components of our transmission and distribution expenses for the periods indicated:

Year ended December 31, 2006 2005 (in millions of Pesos and in %) Salaries and social security taxes .......................... Ps. 96.8 26.7% Ps. 74.3 21.5% Supplies consumption............................................ 20.1 5.6% 16.6 4.8% Outsourcing ........................................................... 53.8 14.9% 38.3 11.1% Depreciation of property, plant and

equipment ........................................................... 171.2 47.3% 175.6 50.7% Technical assistance fee/operating agreement(1) ... 7.1 2.0% 26.9 7.8% Others..................................................................... 13.1 3.6% 14.4 4.1%

Total.................................................................... Ps. 362.1 100.0% Ps. 346.1 100.0% _______________________ (1) Replaced operator fee as from 2005.

Administrative expenses

Our administrative expenses include, among others, expenses associated with accounting, payroll administration, personnel training, legal actions and administrative systems maintenance, taxes on financial transactions and advertising.

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Administrative expenses increased 28.0% to Ps. 93.3 million in the year ended December 31, 2006 from Ps. 72.9 million in the year ended December 31, 2005, primarily as a result of:

• a Ps. 3.8 million (24.2%) increase in other expenses attributable mainly to a Ps. 3.5 million increase in depreciation of property, plant and equipment;

• a Ps. 6.6 million (26.4%) increase in salaries and social security taxes attributable to an increase in compensation required by the terms of our collective bargaining agreements and applicable labor regulations;

• a Ps. 5.9 million increase in advertising expenses (including institutional relations, radio advertising and community service programs principally related to a special program targeting efficient energy use among our customers); and

• a Ps. 1.9 million (30.6%) increase in computer services due mainly to the scheduled renewal of our software licenses.

The following are the principal components of our administrative expenses for the periods indicated:

Year ended December 31, 2006 % 2005 % (in millions of Pesos) Salaries and social security taxes .................................................................. Ps. 31.6 33.9% Ps. 25.0 34.3% Computer services ......................................................................................... 8.1 8.7 6.2 8.5 Outsourcing ................................................................................................... 4.9 5.3 4.8 6.6 Advertising expenses..................................................................................... 10.0 10.7 4.1 5.6 Tax on financial transactions......................................................................... 19.2 20.6 17.1 23.4 Others............................................................................................................. 19.5 20.9 15.7 21.4

Total............................................................................................................ Ps. 93.3 100.0% Ps. 72.9 100.0%

Selling expenses

Our selling expenses include expenses related to services to customers at our commercial offices, billing management, invoice mailing, collection, and collection procedures, as well as allowances for doubtful accounts.

Selling expenses increased 2.2% to Ps. 87.9 million in the year ended December 31, 2006 from Ps. 86.0 million in the year ended December 31, 2005, primarily as a result of a Ps. 3.0 million increase in outsourcing attributable to a price increase in outsourcing services contracts and a Ps. 2.1 million increase in salaries and social security taxes attributable to an increase in compensation required by the terms of our collective bargaining agreements and applicable labor regulations. These increases were partially offset by a Ps. 6.4 million decrease in our allowance for doubtful accounts attributable to a decline in late payments. Our allowances for doubtful accounts represented 8.6% of our trade receivables at December 31, 2006, compared to 8.0% at December 31, 2005.

The following are the principal components of our selling expenses for the periods indicated:

Year ended December, 2006 % 2005 % (in millions of Pesos) Salaries and social security taxes .................................................................. Ps. 20.5 23.3% Ps. 18.4 21.4%Allowance for doubtful accounts .................................................................. 11.6 13.2 18.0 20.9 Outsourcing ................................................................................................... 25.1 28.6 22.1 25.7 Taxes and charges.......................................................................................... 9.1 10.3 9.0 10.5 Others............................................................................................................. 21.6 24.6 18.5 21.4

Total............................................................................................................ Ps. 87.9 100.0% Ps. 86.0 100.0%

Net operating income (loss)

Net operating income increased to Ps. 35.9 million in the year ended December 31, 2006 from a loss of Ps. 0.4 million in the year ended December 31, 2005, primarily as a result of the Ps. 74.8 million (14.8%) increase in our gross margin, which was partially offset by the Ps. 20.4 million (28.0%) increase in administrative expenses and a Ps. 16.0 million (4.6%) increase in transmission and distribution expenses.

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Financial income (expenses) and holding gains (losses)

Financial income and holding gains generated by assets represented a gain of Ps. 16.5 million in the year ended December 31, 2006, compared to a gain of Ps. 14.4 million in the year ended December, 2005, due primarily to an increase in interest income to Ps. 13.9 million in 2006 from Ps. 12.9 million in 2005, which was mainly attributable to interest earned on past due receivables.

Financial expenses generated by liabilities primarily include financial interest, exchange gains and losses, adjustments to fines and penalties, if any, and other expenses. Financial expenses generated by liabilities for the year ended December 31, 2006 represented a loss of Ps. 140.0 million compared to a loss of Ps. 162.9 million in the year ended December 31, 2005. This improvement was primarily due to a significant reduction in interest expense (to Ps. 54.3 million in 2006 from Ps. 119.5 million in 2005) as a result of our debt restructuring, and to a lower variation in the value of the Peso against the U.S. Dollar and a reduction in our U.S. Dollar-denominated debt, which resulted in lower exchange losses (Ps. 13.3 million in the year ended December 31, 2006 compared to Ps. 29.0 million in the year ended December 31, 2005). These results were partially offset by a Ps. 47.0 million increase attributable to an adjustment we made to our fines and penalties in order to comply with the Adjustment Agreement and by an increase in financial expenses (to Ps. 25.4 million in the year ended December 31, 2006 from Ps. 14.1 million in the year ended December 31, 2005), mainly attributable to a Ps. 8.0 million financial assistance fee paid to EASA and to expenses related to our initial public offering totaling Ps. 10.7 million. We were required to make an adjustment to a portion of our accrued fines and penalties to reflect the recent increase to our VAD pursuant to the Adjustment Agreement and the May 2006 CMM.

Financial debt result, net

Our results of operations for the year ended December 31, 2006 include the gain related to the extinguishment of former debt. We recorded a non-recurring net gain of Ps. 179.2 million in 2006, reflecting the recognition of a Ps. 55.3 million waiver of principal amount on our financial debt, a Ps. 75 million waiver of accrued interest on our financial debt and a Ps. 65.7 million waiver of penalties related to the non-payment of our financial debt, which more than offset Ps. 16.8 million in related restructuring costs.

Adjustment to present value of notes

We recorded a gain of Ps. 57.1 million as a result of the adjustment to present value of payments due on our new debt instruments issued in our debt restructuring. We did not record any adjustment to present value in the year ended December 31, 2005 because our financial debt was in default. See “—Critical accounting policies and estimates—Financial debt.”

Other income (expenses), net

Other (expenses) income, net, includes principally voluntary retirements and terminations, severance, revenues from outsourcing services we provide to third parties, net revenues or expenses from technical transportation services between electricity distribution companies and accrual for lawsuits. We recorded other expenses, net, of Ps. 22.9 million in the year ended December 31, 2006, compared to other expenses, net, of Ps. 0.7 million in the year ended December 31, 2005, primarily as a result of the forgiveness of the debt with EDF concerning an operator compensation fee of Ps. 25.9 million owed to EDF for services rendered in 2005, which was renegotiated in September 2005.

Income tax

We recorded a Ps. 167.2 million income tax gain in the year ended December 31, 2006 due to the partial reversal of the allowance for impairment of deferred tax assets, the effect of which is recognized in our statement of income in accordance with Argentine GAAP. This partial reversal was a consequence of the effect of the ratification of the Adjustment Agreement in January 2007 and the effect of the restructuring of our debt in April 2006, which will generate taxable income that will offset the tax loss carryforwards that arose in 2002.

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Net income (loss)

We recorded net income of Ps. 293.1 million for the year ended December 31, 2006, compared to net loss of Ps. 149.6 million for the year ended December 31, 2005, primarily as a result of the gains recorded in connection with the restructuring of our outstanding financial debt (including the adjustment to present value of the notes issued in the restructuring) and the related recognition in income of the partial reversal of the allowance for impairment of deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

Sources and uses of funds

Historically, our sources of liquidity have been cash flow from operations and long-term borrowings. However, our ability to access the capital and bank loan markets was effectively eliminated as a result of the economic crisis in Argentina and our resulting default on our then-outstanding financial debt, as well as the Argentine government’s imposition of transfer restrictions on payments of foreign financial obligations. We have recovered the ability to incur new financial debt with the closing of our financial debt restructuring in April 2006. See “—Debt.”

We expect to make capital expenditures amounting to approximately U.S. $85 million on average per year over the next five years. Our principal uses of cash are expected to be capital expenditures and our financial debt service obligations. We expect that our principal source of liquidity will be cash flow from operations and, to a lesser extent, short-term and long-term borrowings, which we expect will be sufficient to meet our capital requirements in the near future. In particular, we may need to incur indebtedness in the long-term to refinance a portion of our outstanding debt as it becomes due. However, we are subject to limitations on our ability to incur new debt and to use our excess cash under the terms of our restructured debt instruments. See “—Debt.”

The table below reflects our cash position at the dates indicated and the net cash provided by (used in) operating, investing and financing activities during the years indicated:

Year ended December 31, 2007 2006 2005 (in millions of Pesos) Cash at the beginning of the year.................................................................. Ps. 32.7 Ps. 308.1 Ps. 251.1 Net cash provided by operating activities..................................................... 427.2 215.0 181.5

Of which: Financial interest paid, net of interest capitalized .............................. (25.5) (26.7) (46.5)

Net cash used in investing activities ............................................................. (336.9) (179.7) (124.5) Net cash used in financing activities............................................................. (21.8) (310.8) — Cash at the end of the year ............................................................................ Ps. 101.2 Ps. 32.7 Ps. 308.1

On April 24, 2006, we completed a comprehensive restructuring of all of our outstanding financial debt, pursuant to which we made significant cash payments to holders of our then-outstanding debt as part of the consideration of the restructuring.

Net cash provided by operating activities

Net cash provided by operating activities increased by 98.7 % to Ps. 427.2 million in the year ended December 31, 2007, compared to Ps. 215.0 million in the year ended December 31, 2006. This increase is attributable to positive adjustments to net income for non-cash charges in the year ended December 31, 2007, including Ps. 174.4 million for depreciation of property, plant and equipment, Ps. 125.0 million for income taxes, Ps. 69.5 million for exchange difference, interest and penalties on loans, Ps. 31.9 million for the repurchases of notes, Ps. 29.8 million for the adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and of the Payment Plan Agreement with the Province of Buenos Aires, and Ps. 21.5 million for adjustment to present value of notes, among others, which more than offset a negative change in assets and liabilities of Ps. 113.1 million in the year ended December 31, 2007. This negative change in operating assets and liabilities is primarily due to a Ps. 205.9 million increase in accounts receivable related to the recognition of the retroactive portion of the VAD increase in the year ended December 31, 2007 and, to a lesser extent, a Ps. 18.4 million increase in supplies and a Ps. 10.8 million increase in other receivables, which were partially offset by a Ps. 52.7 million

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increase in trade accounts payable, a Ps 33.9 million increase in other liabilities and allowances, and a Ps. 22.4 million increase in taxes payable.

Net cash provided by operating activities increased 18.5% to Ps. 215.0 million in 2006, from Ps. 181.5 million in 2005. This significant increase in cash flow is attributable mainly to a positive change in operating assets and liabilities of Ps. 127.1 million in 2006 compared to a change of Ps. 57.2 million in 2005, in addition to the decrease in the amount of financial interest paid, net of interest capitalized (Ps. 26.7 million) as a consequence of the debt restructuring process in 2006, compared to financial interest of Ps. 46.5 million paid in 2005. The principal changes in operating assets and liabilities that contributed to the positive cash flow in 2006 were:

• a Ps. 67.1 million increase in trade accounts payable (compared to a Ps. 54.4 million increase in 2005), which reflected principally increased energy purchases due to growing demand in our area,

• a Ps. 91.7 million increase in other liabilities (compared to a Ps. 36.8 million increase in 2005), attributable primarily to an increase in unpaid fines owed to the ENRE (Ps. 24.5 million), an adjustment (Ps. 47.0 million) attributable to the amount of fines and penalties payable pursuant to the ratification of the Adjustment Agreement and fees and expenses related to our debt restructuring and our initial public offering (Ps. 11.1 million), and

• a Ps. 25.2 million increase in salaries and social security taxes payable (compared to a Ps. 4.5 million increase in 2005), as a consequence of a greater provision for paid holidays and higher debt for early retirements.

The positive impact of these changes were partially offset by:

• a Ps. 39.0 million increase in trade receivables in 2006 (compared to a similar amount in 2005) attributable mainly to an increase in energy sales, and

• a Ps. 23.1 million increase in other receivables due primarily to payments of tax on presumptive minimum income (Ps. 19.9 million), which we expect to be able to set off against future income tax liabilities.

Net cash provided by operating activities was Ps. 181.5 million in the year ended December 31, 2005, despite a net loss of Ps. 149.6 million for the year. Our operating cash flow is attributable to positive adjustments to our net loss for non-cash charges in the year ended December 31, 2005, including Ps. 178.4 million for depreciation of property, plant and equipment and Ps. 139.0 million for exchange difference, interest and penalties on loans, as well as to a positive change in assets and liabilities of Ps. 57.2 million, which was partially offset by Ps. 46.5 million in financial interest paid.

The principal changes in assets and liabilities that contributed to the positive cash flow in 2005 were:

• a Ps. 54.4 million increase in trade accounts payable in 2005,

• a Ps. 23.6 million increase in taxes payable in 2005,

• a Ps. 36.8 million increase in other liabilities in 2005, and

• a slight increase in salaries and social security taxes and accrued litigation in 2005.

This positive impact was partially offset by:

• a Ps. 37.1 million increase in our trade receivables in 2005, which reflected an increase in amounts owed to us by the Argentine government and the Province of Buenos Aires under the framework agreement for electricity provided to shantytowns,

• a Ps. 27.2 million increase in other receivables in 2005, which reflected an increase in pre-judgment attachments by the ENRE for unpaid fines (which we record as receivables until a final decision is rendered), and

• a slight increase in supplies.

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Net cash used in investing activities

Net cash used in investing activities increased by 87.5 % to Ps. 336.9 million for the year ended December 31, 2007 from Ps. 179.7 million for the year ended December 31, 2006. This increase was principally due to a 73.4% increase in supplies, a 54.5% increase in network maintenance and improvements and a 43.0% increase in legal requirements.

During 2006, net cash used in investing activities increased by 44.3% to Ps. 179.7 million from Ps. 124.5 million in 2005. Net cash used in investing activities decreased by 0.5% to Ps. 124.5 million for the year ended December 31, 2005 from Ps. 125.1 million for the year ended December 31, 2004.

The changes in net cash used in investing activities in each of these periods were primarily due to variations in our capital expenditures in accordance with the investment plan initially contemplated by the Adjustment Agreement. See “—Capital expenditures.”

Net cash used in financing activities

On April 24, 2006, we completed a comprehensive restructuring of all of our outstanding financial debt, pursuant to which we made significant cash payments (Ps. 310.8 million) to holders of our then-outstanding debt as part of the restructuring.

On April 30, 2007, we completed a capital increase (in the form of an initial public offering in local and international markets) pursuant to which we received Ps. 181.8 million in cash contributions. In May 2007, we used a portion of the proceeds of the capital increase (Ps. 110.9 million) to repurchase part of our outstanding financial debt.

On October 9, 2007 we issued our U.S. $220,000,000 10.5% Senior Notes due 2017. We used the proceeds from that offering to repurchase U.S. $204.0 million aggregate principal amount of our Discount Notes due 2014, which were redeemed in full through several transactions during the period from October through December 2007. We used the balance of the proceeds from the October debt offering or capital expenditures and working capital purposes.

Capital expenditures

Our concession does not require us to make mandatory capital expenditures. Our concession does, however, set forth specific quality standards that become progressively more stringent over time, which require us to make additional capital expenditures. Financial penalties are imposed on us for non-compliance with the terms of our concession, including quality standards.

Prior to our privatization, a low level of capital expenditures and poor maintenance programs adversely affected the condition of our assets. After our privatization in 1992, we developed an aggressive capital expenditure plan to update the technology of our productive assets, renew our facilities and expand energy distribution services, automate the control of the distribution network and improve customer service. Following the crisis, however, the freeze of our distribution margins and the pesification of our tariffs and our inability to obtain financing, coupled with increasing energy losses, forced us to curtail our capital expenditure program and make only those investments that were necessary to permit us to comply with quality of service and safety and environmental requirements, despite increases in demand in recent years.

We are currently subject to limitations on the amount of non-mandatory capital expenditures we may make in a given year pursuant to the terms of our restructured debt instruments. Under these debt instruments, we may make the following amounts (or its equivalent in other currencies) of non-mandatory capital expenditures:

• U.S. $88 million in 2008,


• U.S. $90 million in each of 2010 and 2011,

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• U.S. $87 million in 2015, and

• U.S. $90 million in 2016.

In addition, we may carry over unused amounts of permitted capital expenditures and use these amounts to make additional capital expenditures in future years, so long as these additional capital expenditures do not exceed the amount of permitted capital expenditures for the prior year. We are not subject to any limitations on the amount of capital expenditures we are required to make pursuant to our concession and applicable laws or regulations.

We believe that the limits on capital expenditures in the restructuring indenture currently exceed our anticipated expenditures during each specified period.

Our capital expenditures consist of net cash used in investing activities during a specified period plus supplies purchased in prior periods and used in such specified period. The following table sets forth our actual capital expenditures for the years indicated:

Year ended December 31, 2007 2006 2005 (in millions of Pesos) Supplies ........................................................................................... Ps. 235.3 Ps. 146.1 Ps. 62.3Network maintenance and improvements ...................................... 70.0 45.3 40.5Legal requirements(1) ....................................................................... 12.3 8.6 8.3Communications and telecontrol .................................................... 7.0 8.8 4.6Others............................................................................................... 18.1 6.9 8.8

Total........................................................................................... Ps. 342.7 Ps. 215.7 Ps. 124.5_______________________ (1) Capital expenditures required to be made to comply with the ENRE quality standard and other regulations.

Pursuant to the Adjustment Agreement, we were required to make capital expenditures totaling approximately Ps. 204 million in 2006. Although the Adjustment Agreement was not in force in 2006, we complied with our capital expenditure requirements under the Adjustment Agreement in 2006, except for the commencement of the Malaver project, which was subject to the ratification of the Adjustment Agreement.

In 2007, in accordance with our capital expenditure program, we invested Ps. 342.7 million. Energy demand increased by 8.2% and power demand increased by 6.8% in 2007. In order to keep pace with this growth in demand, an important portion of our investments were designed to meet the demands of the increase in our customer base and to improve our grid. In addition, we made investments in order to meet our quality standards levels and to maintain the level of past due receivables. Likewise, important investments were made to eliminate DPC transformers.

Our capital expenditure program for 2008 contemplates total expenditures of Ps. 305 million. We can give no assurance that actual expenditure will not be lower or exceed our current estimate.

Debt

The economic crisis in Argentina had a material adverse effect on our operations. The devaluation of the Argentine Peso caused the Peso value of our U.S. Dollar-denominated indebtedness to increase significantly, resulting in significant foreign exchange losses and a significant increase, in Peso terms, in our debt service requirements. At the same time, our cash flow remained Peso-denominated and our distribution margins were frozen and pesified by the Argentine government pursuant to the Public Emergency Law. Moreover, the economic crisis in Argentina had a significant adverse effect on the overall level of economic activity in Argentina and led to deterioration in the ability of our customers to pay their bills. These developments caused us to announce on September 15, 2002 the suspension of principal payments on our debt. On September 26, 2005, our board of directors decided to suspend interest payments on our debt until the restructuring of this debt was completed.

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The purpose of the restructuring was to restructure all, or substantially all, of our outstanding debt, in order to obtain terms that will enable us to service our debt. We believe that the restructuring was the most effective and equitable means of addressing our financial difficulties for the benefit of the company and our creditors. We developed a proposal that we believed was necessary to address our financial and liquidity difficulties, while we continued to pursue tariff negotiations with the Argentine government to improve our financial condition and operating performance.

On January 20, 2006, we launched a voluntary exchange offer and consent solicitation to the holders of our outstanding financial debt. All of these holders elected to participate in the restructuring and, as a result, on April 24, 2006, we exchanged all of our then-outstanding financial debt for three series of newly-issued notes, which we refer to as the restructuring notes:

• U.S. $123,773,586 Fixed Rate Par Notes due December 14, 2016 (of which U.S. $80,047,997 remains outstanding as of December 31, 2007), with approximately 50% of the principal due and payable at maturity and the remainder due in semiannual installments commencing June 14, 2011, and bearing interest starting at 3% and stepping up to 10% over time;

• U.S. $12,656,086 Floating Rate Par Notes due December 14, 2019 (of which U.S. $12,656,086 remains outstanding as of December 31, 2007), with the same payment terms as the Fixed Rate Par Notes and bearing interest at LIBOR plus a spread, which starts at 1% in 2008 and steps up to 2% over time; and

• U.S. $239,999,985 Discount Notes due December 14, 2014 (as of December 31, 2007, none of our Discount Notes due 2014 were outstanding), with 60% of the principal due and payable at maturity and the remainder due in semiannual installments commencing on June 14, 2008, and bearing interest at a fixed rate that starts at 3% and steps up to 12% over time.

We are subject to a number of restrictive covenants under the terms of the restructuring notes, including the following:

• limitations on our ability to sell or pledge assets or make investments in third parties;

• limitations on our ability to incur new indebtedness;

• limitations on our ability to make capital expenditures;

• limitations on our ability to pay dividends;

• limitations on our ability to repurchase our common shares; and

• limitations on our ability to enter into transactions with shareholders and affiliates other than on an arm’s length basis.

Upon a change of control (as defined in the indenture for the restructuring notes), each holder of the restructuring notes will have the right to require us to repurchase all or a portion of that holder’s notes at par plus accrued and unpaid interest and additional amounts (as defined in the indenture), if any, pursuant to an offer made by us on terms set forth in the indenture.

In addition, the terms of the restructuring notes require us to apply our excess cash (as defined in the indenture for the restructuring notes) to specific uses, including prepayments or repurchases of the notes. The indenture for the restructuring notes defines excess cash for these purposes as our earnings before interest expenses, taxes, depreciation and amortization charges (EBITDA, as defined in the indenture for the restructuring notes) during a given six-month period, after adjustments to reflect negative or positive changes in our working capital and deductions for borrowings, scheduled debt payments, prepayments, redemptions or repurchases of our debt, capital expenditures, certain permitted investments, taxes and other cash expenses, in each case during the same six-month period. If we generate excess cash (as defined in the indenture) during any six-month period in which our leverage ratio (defined in the indenture as our total indebtedness over our 12-month EBITDA) is greater than 2.5, we will be required to use a portion of our excess cash to prepay or repurchase the restructuring notes. If our leverage ratio is:

• greater than 2.5, but not greater than 3.0, we must apply 50% of our excess cash to prepay or repurchase restructuring notes;

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• greater than 3.0, but not greater than 3.5, we must apply 75% to prepay or repurchase restructuring notes, unless we commit to use 50% of the excess cash for capital expenditures, in which case we must apply the remaining 50% to prepay or repurchase restructuring notes, and

• greater than 3.5, we must apply all of our excess cash to prepay or repurchase restructuring notes.

We are entitled to use any excess cash not allocated to debt prepayments or repurchases as set forth above for any purpose at our discretion, including dividend payments. In addition, most of the restrictive covenants set forth in the restructuring indenture will be suspended or adjusted if we attain an international investment grade rating on our long-term debt or if our leverage ratio (as defined in the indenture) is equal or lower to 2.5.

Following the closing of our initial public offering in May 2007, through various market transactions, we repurchased a part of our outstanding Fixed Rate Par Notes due 2016 and Discount Notes due 2014.

In October 2007, we completed an offering of U.S. $220 million aggregate principal amount of our 10.5% Senior Notes due 2017, which we refer to as the senior notes. The terms of the senior notes are substantially similar to those of our restructuring notes, except that the senior notes are not subject to the covenants relating to mandatory prepayments with excess cash and limitation on capital expenditures.

Following the closing of our October 2007 offering, we used a substantial portion of the proceeds from that offering to redeem in full our Discount Notes due 2014 in several transactions throughout the period from October through December 2007.

In addition, during 2007, we repurchased in U.S. $43.7 million principal amount of our Fixed Rate Par Notes due December 14, 2016 in several transactions.

As of December 31, 2007, the aggregate principal amount of our outstanding debt was U.S. $312.7 million.

We are currently in compliance with all of our financial debt covenants. Due to the recognition in revenues during 2007 of the retroactive portion of the VAD increase (including CMM), which amounted in aggregate to Ps. 218.6 million, we believe that these covenants will be suspended effective January 1, 2008, although we expect, based on current conditions, our Leverage Ratio to exceed 2.5 by July 1, 2008.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of our significant accounting policies is included in notes 2 and 3 of our audited financial statements, which are included in this annual report. The preparation of financial statements requires our management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying footnotes. Our estimates and assumptions are based on historical experiences and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of our financial condition and results and require management’s most subjective judgments. Our most critical accounting policies and estimates are described below.

Allowance for doubtful accounts

Our trade receivables include services billed but not collected, and services accrued but not billed as of the end of each period, net of an allowance for doubtful accounts. The allowance for doubtful accounts is assessed based on the historical levels of collections for services billed through the end of each period and subsequent collections. Future adjustments to the allowance may be necessary if future economic conditions differ substantially from the assumptions used in the assessment for each period. The related charges to the allowance for doubtful accounts are included in selling expenses.

Year ended December 31, 2007 2006 2005 (in millions of Ps. ) Allowance for doubtful accounts: Beginning balance ............................................... 25.6 20.2 33.8

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Year ended December 31, 2007 2006 2005 (in millions of Ps. ) Additions.............................................................. 30.1 10.9 18.0 Retirements .......................................................... (15.7) (5.5) (31.6) Ending balance .................................................... 40.0 25.6 20.2

As of December 31, 2007, 2006 and 2005, the allowance for doubtful accounts was Ps. 40.0 million, Ps. 25.6 million and Ps. 20.2 million, respectively. During 2007, 2006 and 2005, the additions to the allowance for doubtful accounts amounted to Ps. 30.1 million, Ps. 10.9 million, Ps. 18.0 million, respectively, and the retirements amounted to Ps. 15.7 million, Ps. 5.5 million and Ps. 31.6 million, respectively. The increase in 2007 is primarily the result of uncertainty on the collectability of the electricity provided to Shantytowns during 2007, which will be dependent on the outcome of ongoing negotiations with respect to a new framework agreement. See “Item 4. Information on the Company—Framework agreement (Shantytowns).” During 2005, there was a recovery of the allowance for doubtful accounts amounting to approximately Ps. 8.0 million, mainly due to the effects of the framework agreement, which led to changes in management’s prior assessment of our ability to collect the related accounts receivables.

Revenue recognition

We recognize our revenues from operations, which relate primarily to electricity distribution, on an accrual basis. These revenues include energy supplied (whether billed or unbilled) at year-end, valued on the basis of applicable tariffs. We also recognize revenues from other components of our distribution services, such as new connections, pole rentals and the transportation of energy to other distribution companies. We recognize revenues when our revenue earning process has been substantially completed, the amount of revenues may be reasonably measured and we believe we are entitled to enjoy the economic benefit derived from such revenues. During 2007, we recognized the retroactive increase in revenues resulting from the tariff increase pursuant to the ratification of the Adjustment Agreement when the ENRE issued its resolution authorizing our new tariff schedule with respect to non-residential customers for the period from November 2005 through January 31, 2007, and subsequently published such resolution in the Argentine Official Gazette on February 5, 2007.

On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the National Energy Secretariat. This resolution establishes that the amounts paid by us for the Quarterly Adjustment Coefficient (CAT) implemented by Section 1 of Law Nº 25,957, as well as the amounts corresponding to the CMM for the period from May 2006 through April 2007, have to be deducted from the funds collected under the PUREE, until their transfer to the tariff is granted by the regulatory authority. The resolution also establishes that the CMM adjustment for the period from May 2006 through April 2007, in effect as of May 1, 2007, amounts to 9.63%. Additionally, on October 25, 2007 the ENRE issued Resolution Nº 710/2007, which approves the use of the PUREE as a CMM compensation mechanism. In accordance with this resolution, we recognize the revenues resulting from the 9.63% CMM adjustment and collected through the PUREE funds.

Impairment of long-lived assets

We periodically evaluate the carrying value of our long-lived assets for impairment. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recovered. Until December 31, 2005, we considered the carrying value of the long-lived assets to be impaired when the expected undiscounted cash flows were less than their carrying value. In that event, a loss would be recognized based on the amount by which the carrying value exceeded the fair market value of the long-lived assets. Fair market value was determined as of December 31, 2007 primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. We have made projections in order to determine the recoverable value of our non current assets based on the estimated outcome of the RTI. As from January 1, 2006, the comparison of carrying values and recoverable values of certain assets are calculated using discounted cash flows instead of undiscounted cash flows. No impairment was recognized during the periods presented. We do not foresee likely circumstances in the near future that would result in the recognition of an impairment of long-lived assets.

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Accrued litigation

We recognize contingent liabilities with respect to existing or potential claims, lawsuits and other legal proceedings and record an accrual for litigation when it is probable that future costs will be incurred and these costs can be reasonably estimated. These accruals are based on the most recent developments, our assessment of the likely outcome of the litigation and our counsel’s advice in dealing with, litigating and settling this and other similar legal matters. Changes to the accrual may be necessary if future events differ substantially from the assumptions used in the assessment for each period. In 2007, we recorded a net increase to our accrual for litigation of Ps. 16.2 million due to new litigation and changes in our valuation of existing litigation. Our accrual for litigation amounted to Ps. 82.7 million at December 31, 2007, Ps. 66.5 million at December 31, 2006 and Ps. 57.0 million at December 31, 2005.

Income tax and tax on presumptive minimum income

Until December 31, 2002, we determined our income tax charge by applying the legal tax rate of 35% to our taxable income for the year. During this period, the effect of temporary differences between book value and the taxable basis of our assets and liabilities was not considered. Since 2003, current generally accepted accounting principles in Argentina require us to determine the income tax charge under the deferred tax method. This method involves the recognition of certain assets and liabilities in cases where there is a temporary difference between the accounting valuation and the tax valuation of those assets and liabilities, excluding differences in price levels on assets and liabilities as adjusted for inflation and their historical tax basis, which are treated as permanent differences.

As of December 31, 2005 and 2004, a valuation allowance had been recorded in our financial statements to reduce the deferred tax assets. Based on available information as of the end of each of those years, it was more likely than not that these deferred tax assets would not be realized. The amount of the valuation allowance is based on various factors, such as historical taxable income, projected future taxable income, the experience with previous tax audits and different interpretations of tax regulations by the tax authority. As of December 31, 2006, the valuation allowance of the deferred tax assets was partially reversed mainly due to the fact that, as a consequence of the ratification of the Adjustment Agreement in January 2007 and the renegotiation of our financial debt in April 2006, we have expected to generate taxable income allowing us to offset a significant portion of the tax loss carryforwards we generated in 2002 before such offset becomes barred by the applicable statute of limitations. The reversal of the deferred tax asset related to the tax loss carryforward due to a significant increase in our taxable income, which was partially offset by the tax deduction of the ENRE penalties in 2007. The table below summarizes our tax loss carryforwards as of December 31, 2007, in thousands of Pesos:

Amount Tax Rate

35% Year

Expiring Tax loss carryforward in 2002 ................................. 98,519 34,482 2007 Tax loss carryforward in 2005 ................................. 23,761 8,316 2010 Total tax loss carryforward as of

December 31, 2007............................................... 122,280 42,798 _______________________

Labor cost liabilities

Labor cost liabilities and early retirement payables correspond to the following charges:

• paid leave for accumulated vacation;

• bonuses to employees with a specified number of years of employment and who are included in our collective bargaining agreements;

• benefits to employees (pension plan) which are included in our collective bargaining agreements, to be given at the time of retirement; and

• early retirement payables.

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Our accruals for early retirement payables amounted to Ps. 8.0 million at December 31, 2007, Ps. 8.1 million at December 31, 2006 and Ps. 3.0 million at December 31, 2005.

Liabilities related to bonuses and benefits to employees (pension plans) are calculated considering all rights accrued by the beneficiaries of both plans as of period end based on an actuarial report issued by an independent professional as of that date. These liabilities are recorded as bonuses accrued and provisions for benefits to personnel, respectively. Our liabilities related to bonuses and benefits to employees (pension plans) amounted to Ps. 19.1 million at December 31, 2007, Ps. 14.5 million at December 31, 2006 and Ps. 10.8 million at December 31, 2005. Actuarial calculations are typically based on the following key assumptions: employee turnover, actual salary increases, mortality ages, disability studies, retirement age probability studies, discount rates and inflation. These assumptions change as market and economic conditions change. See notes 3 and 26 to our audited financial statements included elsewhere in this annual report for further information on our labor cost liabilities.

Financial debt

We record our financial debt in our balance sheet at the fair value reflecting our management’s best estimate of the amounts expected to be paid at each period end. The fair value is determined as the present value of the future cash flows to be paid (including payment of interest) under the terms of the debt discounted at a rate commensurate with the risk of the debt instrument and time value of money. During the year ended December 31, 2006, we recorded the restructuring of debt after receiving consents to our restructuring from holders of 100% of our defaulted debt. The debt extinguishment generated a one-time gain of Ps. 179.2 million. We did not record any adjustment to present value before the year ended December 31, 2006 because our financial debt was in default. The adjustment to present value of the future cash flows of the debt issued in the restructuring, using a market interest rate of 10.5% for the year ended December 31, 2007 and 10% for the year ended December 31, 2006, generated a charge of Ps. 21.5 million in 2007 and a gain of Ps. 57.1 million in the year ended December 31, 2006.

During 2007 we used a portion of the proceeds of our initial public offering to repurchase U.S. $36 million aggregate principal amount of our Discount Notes due 2014. In addition, we repurchased U.S. $43.7 million aggregate principal amount of our Fixed Rate Par Notes due 2016.

On October 9, 2007 we issued our U.S. $220 million 10.5% Senior Notes due 2017. We used the proceeds from that offering to repurchase and redeem in full our Discount Notes due 2014. We used the balance of the proceeds from the October debt offering for capital expenditures and working capital purposes.

As of December 31, 2007 we recorded a loss of Ps. 10.2 million related to these repurchases and redemptions. In addition, the adjustment to present value of the cash flows of these repurchased and redeemed notes, using a market interest rate of 10.5% for the year ended December 31, 2007, generated a charge of Ps. 8.6 million.

PRINCIPAL DIFFERENCES BETWEEN ARGENTINE GAAP AND U.S. GAAP

Our financial statements are prepared in accordance with generally accepted accounting principles in the City of Buenos Aires, Argentina, which we refer to as Argentine GAAP and which differ in certain significant respects from U.S. GAAP. Note 26 to our audited financial statements included elsewhere in this annual report, provides a description of the significant differences between Argentine GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income (loss) and shareholders’ equity as of December 31, 2007, 2006 and 2005 and for the years then ended. The principal differences between Argentine GAAP and U.S. GAAP as they relate to us in these years are the results of our debt restructuring, the treatment of deferred income taxes, the capitalization of interest, the treatment of asset retirement obligations, capital transaction, operator’s compensation, our expenses related to our initial public offering and the treatment of certain pension plan liabilities in accordance with the Financial Accounting Standards Board (FASB) Statement No. 158. Each of these differences affects either net income (loss) or shareholders’ equity. See note 26 to our audited financial statements included elsewhere in this annual report for a discussion of these differences and the effect on our results of operations and financial position.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have any off-balance sheet arrangements as of December 31, 2007.

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TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual liabilities and commitments as of December 31, 2007. Peso amounts have been translated from U.S. Dollar amounts at the buying rate for U.S. Dollars quoted by Banco Nación on December 31, 2007 of Ps. 3.149 to U.S. $1.00.

Payments due by period

Total Less than

1 year 1-3

years 4-5

years After

5 years (in millions of Pesos) Long term debt obligations (1) ......................................... Ps. 1,895.4 88.8 187.7 250.0 1,368.9Accrued fines and penalties(2) ........................................ 281.4 — — — —Financial assistance fees(3) .............................................. 21.7 7.9 13.8 — —Operating leases(4) ............................................................. 2.8 2.1 0.5 0.3 —Capital expenditures(5) ...................................................... — — — — —Accrued Litigation(6).......................................................... 36.0 — 36.0 — —Others.................................................................................... — — — — —

Total ................................................................................... Ps. 2,237.3 Ps. 98.8 Ps. 238.0 Ps. 250.3 Ps. 1,368.9_______________________ (1) Includes amortization of principal and interest payments, including our management’s current estimates of future market

rates in respect of our floating rate debt (which amounted to U.S. $12.6 million as of December 31, 2007). We record our debt obligations on our balance sheet at their net present value in accordance with Argentine GAAP. As a result, the amounts shown do not reflect the nominal amount owed under our debt instruments. See “—Debt” for a description of these restructuring notes, including amortization and interest payment terms and mandatory prepayment with excess cash provisions. All of our indebtedness is unsecured. None of our indebtedness is guaranteed. We expect to pay approximately U.S. $27.8 million of interest in 2008.

(2) Includes adjustments made to reflect the ratification of the Adjustment Agreement. We were required to make an adjustment to a portion of our accrued fines and penalties totaling Ps. 47.0 million to reflect the recent increase to our VAD pursuant to the Adjustment Agreement and the May 2006 CMM and Ps. 18.1 million to reflect the CMM adjustment for the period May 2006 – April 2007. In addition, pursuant to the terms of the Adjustment Agreement, the Argentine government agreed, subject to the fulfillment of certain conditions, to forgive, upon the completion of the RTI, approximately Ps. 71.4 million of our accrued fines and penalties and allow us to pay the remaining Ps. 210.0 million of these fines and penalties in semi-annual installments over a 7-year period commencing 180 days after the RTI comes into effect. Because the Adjustment Agreement was not ratified until January 2007, we have recalculated the amounts of accrued fines and penalties subject to the payment plan under the terms of the Adjustment Agreement as well as the amounts subject to forgiveness. See “Item 4. Information on the Company—Our concession —Fines and penalties.”

(3) Fees payable under our financial services agreement with EASA, our controlling shareholder. This agreement expires in 2010. See “Related party transactions.”

(4) Minimum required lease payments. (5) Our concession does not require us to make any specified amount of capital expenditures, but requires us to meet certain

quality and other service standards. See “—Capital expenditures.” (6) Represents a contingent liability for the tax claim that we have with the Argentine Tax Authority related to the income tax

deduction of the allowance for bad debts for the three fiscal years ended December 31, 1996, December 31, 1997 and December 31, 1998. This tax claim is based on the fact that we could not demonstrate that the accounts receivable had collectability risk factors as it is described by the Argentine Income Tax Law. The amount recorded for this tax claim includes interests and penalties accrued as of December 31, 2007.

Item 6. Directors, Senior Management and Employees

DIRECTORS AND SENIOR MANAGEMENT

Board of directors

Our business and affairs are managed by our board of directors in accordance with our bylaws and the Argentine Companies Law. Our bylaws provide that our board of directors will consist of twelve directors and up to

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the same number of alternate directors. Pursuant to the Argentine Companies Law, a majority of our directors must be residents of Argentina.

Our bylaws provide that holders of our Class A shares are entitled to elect seven directors and up to seven alternate directors, one of which must be independent in accordance with CNV regulations, holders of our Class B and Class C shares are entitled to elect five directors and up to five alternate directors, one of which must be independent in accordance with CNV regulations. Holders of Class C shares vote jointly as a single class with the holders of Class B shares in the election of directors. In the absence of a director elected by holders of a class of shares, any alternate director elected by holders of the same class may legally attend and vote at meetings of our board of directors. The board of directors elects among its members a chairman and a vice president.

Directors and alternate directors serve for one-year periods, indefinitely renewable.

Our directors and alternate directors are as follows:

Name Position Age Year of appointment

(class electing director) Alejandro Macfarlane............................................ Chairman and CEO 41 2008 (Class A) Marcos Marcelo Mindlin** .................................. Vice Chairman 43 2008 (Class A) Damián Miguel Mindlin**.................................... Director 41 2008 (Class A) Gustavo Mariani .................................................... Director 36 2008 (Class A) Luis Pablo Rogelio Pagano................................... Director 54 2008 (Class A) Eduardo Llanos* ................................................... Director 64 2008 (Class A) Maximiliano Alejandro Fernández* ..................... Director 47 2008 (Class A) Ricardo Alejandro Torres..................................... Director 48 2008 (Class B/C) Diego Martín Salaverri.......................................... Director 43 2008 (Class B/C) Edgardo Alberto Volosín ...................................... Director 54 2008 (Class B/C) Ignacio Chojo Ortiz*............................................. Director 62 2008 (Class B/C) Rafael Mancuso*................................................... Director 65 2008 (Class B/C) Javier Douer........................................................... Alternate Director 33 2008 (Class A) Pablo Díaz ............................................................. Alternate Director 49 2008 (Class A) Brian Henderson.................................................... Alternate Director 62 2008 (Class A) Jorge Miguel Grecco ............................................. Alternate Director 49 2008 (Class A) Ariel Schapira........................................................ Alternate Director 45 2008 (Class A) Ricardo Sericano ................................................... Alternate Director 59 2008 (Class A) Maia Chmielewski................................................. Alternate Director 27 2008 (Class B/C) Gabriel Cohen........................................................ Alternate Director 49 2008 (Class B/C) Alejandro Mindlin**............................................. Alternate Director 31 2008 (Class B/C) Carlos Correa Urquiza*......................................... Alternate Director 37 2008 (Class B/C) Eduardo Maggi...................................................... Alternate Director 51 2008 (Class B/C)

______________________ * Independent under Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. ** The following family relationships exist within the board of directors: Marcos Marcelo Mindlin, Damián Miguel Mindlin and

Alejandro Mindlin are brothers.

The following is a brief description of our current directors’ and alternate directors’ background, experience and principal business activities:

Alejandro Macfarlane. Mr. Macfarlane has been the Chairman of the board of directors and CEO of Edenor since 2005. He serves as President of ADEERA, the pre-eminent electricity distributors association of Argentina, since September 2005. Mr. Macfarlane is also a member of the board of directors of Macro Bansud Bank. He was a board member of YPF S.A. and has been a member of YPF Foundation since 1999. He is the President of Grupo AM S.A., a corporate and institutional relationships consulting firm. He is member and Director of the Instituto para el Desarrollo Empresarial Argentino (Argentinean Business Development Institute or IDEA) and a member of the Consejo Argentino para las Relaciones Internacionales (Argentinean Council for International Relationships or CARI).

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Marcos Marcelo Mindlin. Mr. Mindlin has been a member of the board of directors of Edenor since 2005. Mr. Mindlin has been the Vice Chairman of Edenor since 2005. Mr. Mindlin currently serves as the Chairman of Pampa Holding S.A. and as Chairman of the Cámara Argentina de Energía (CADE), an Argentine energy services institution. Mr. Mindlin is also a member of the board of directors of each of Hidroeléctrica Los Nihuiles S.A., Hidroeléctrica Diamante S.A. and Central Térmica Güemes S.A. From 1991 to 2003, Mr. Mindlin was the Founding Partner, Vice Chairman and CFO of IRSA Inversiones y Representaciones S.A., a leading Argentine real estate firm, and Director of Banco Hipotecario S.A., the leading mortgage bank in the country. In November 2003, Mr. Mindlin resigned from the IRSA Group to focus his efforts on Grupo Dolphin S.A., an Argentine investment advisory and private equity firm created in 1990 based in Argentina of which Mr. Mindlin is a founding shareholder. Currently, he serves as member of the board of directors and President of EASA, IEASA, Dolphin Energía and Grupo Dolphin S.A. He also serves as Director of Pampa Holding S.A., Pampa Advisors S.A., Citelec S.A., Transener, Transba S.A. and Dolphin Finance S.A. Mr. Mindlin received an MBA from the Universidad del CEMA (Centro de Estudios Macroeconómicos) and a degree in Business Administration from the Universidad de Buenos Aires.

Damián Miguel Mindlin. Mr. Mindlin has been a member of the board of directors of Edenor since 2005. Mr. Mindlin is a shareholder and Director of Grupo Dolphin S.A., an Argentine investment advisory and private equity firm founded in 1990, and is Vice Chairman of Pampa Holding S.A. Mr. Mindlin is also a member of the board of directors of each of Hidroeléctrica Los Nihuiles S.A., Hidroeléctrica Diamante S.A. and Central Térmica Güemes S.A. Since November 2003 Mr. Mindlin has served as Vice Chairman of the board of directors and investment portfolio manager of Grupo Dolphin S.A. Mr. Mindlin also serves as a member of the board of directors of Pampa Advisors S.A., Electricidad Argentina S.A. and Citelec S.A., and as an alternate member of the board of directors of Compañía de Transporte de Energia Eléctrica en Alta Tension S.A. (Transener). He is also a member of the board of directors of Dolphin Finance S.A.

Gustavo Mariani. Mr. Mariani has been a member of the board of directors of Edenor since 2005. Mr. Mariani is a member of the board of directors and a Managing Director of Grupo Dolphin S.A., an Argentine investment advisory and private equity firm. He joined Grupo Dolphin S.A. in 1993, as an analyst and then served as a portfolio manager. He served as Financial and Corporate Director of IRSA Inversiones y Representaciones S.A. Currently, he also serves as member of the board of directors of each of EASA, IEASA, Dolphin Energia, Transba, Pampa Holding S.A., Pampa Advisors S.A., Citelec, Transener, Transba and Dolphin Finance S.A., and Alternate Director for Transener S.A. and Citelec S.A. Mr. Mariani has an MBA from Universidad del CEMA (Centro de Estudios Macroeconómicos) and a degree in Economics from the Universidad de Belgrano in Buenos Aires. He is a Chartered Financial Analyst (CFA) since 1998.

Luis Pablo Rogelio Pagano. Mr. Pagano has been a member of the board of directors of Edenor since 2005. Mr. Pagano is the Chief Financial Officer of Edenor and is also a Managing Director of Grupo Dolphin S.A. Prior to joining Grupo Dolphin S.A. in 2002, Mr. Pagano held various positions, including General Partner and Managing Director for Newbridge Latin America, Investment Banking Director for Deutsche Morgan Grenfell in Argentina, Vice President and Investment Banking Director for Citibank N.A. and Chief Financial Officer for Argentina, Brazil, Paraguay, Uruguay and Chile of Bank of America, NTSA. Mr. Pagano received an MBA from the Instituto de Estudios Superiores de la Empresa (IESE), in Spain and both a CPA and BA in Business Administration from the Universidad Católica Argentina.

Eduardo Llanos. Mr. Llanos has been a Director of Edenor since 2008. Mr. Llanos has served as an Internal Auditor of Grupo Telefónica and Grupo Telefé since 2003. From 1969 to 2000, Mr. Llanos worked at Arthur Andersen / Pistrelli, Diaz y Asociados, in the Auditing Division and the Tax Division. When he left Arthur Andersen, Mr. Llanos was an International Partner, the Director of Tax Practice for Argentina, Chile, Uruguay, Paraguay and Boliva and the Director of Operations in Bolivia. From 2000 to 2003, Mr. Llanos was a partner at Estudio E. Llanos y Asociados. Throughout his career, Mr. Llanos has taught tax and public finance classes at Universidad de Buenos Aires, Universidad Nacional de Lomas de Zamora and Universidad de Morón. Mr. Llanos graduated with a degree in public accounting from Universidad de Buenos Aires in 1971.

Maximiliano Alejandro Fernández. Mr. Fernández has been a Director of Edenor since 2007 and has served as a Director of EASA since 2005. He has been an associate at Impsat Fiber Network since 1998, and currently serves as President of Red Alternative S.A. Mr. Fernández served as the chairperson of Alternative Gratis S.A, which he founded along with IRSA, until its merger in 2005. Since 1991, he has worked as an independent contractor in the

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telecommunications industry, and, together with Martín Varsavsky, founded, and until 1995 directed, VIATEL S.R.L. Each of the companies mentioned is a telecommunications company. Mr. Fernández is an industrial engineer and graduate of La Universidad de Buenos Aires.

Ricardo Alejandro Torres. Mr. Torres has been a Director of Edenor since 2007, and served as an Alternate Director from 2006 through 2007. Mr. Torres has been Chief Executive Officer of Pampa Holding S.A. since November 2005, before which he was a partner of Darwin Inversiones S.A. From 1993 through 2001, Mr. Torres was Chief Financial Officer of IRSA Inversiones y Representaciones S.A. and a Director of Alto Palermo S.A., Brazil Realty Empreendimentos e Participações S.A., Abril S.A. and Inversora Bolívar S.A. Mr. Torres was also a Professor of Finance and Taxes at the Faculty of Economic Sciences of the University of Buenos Aires. He currently serves as a member of the board of directors of Pampa Advisors S.A. and Educaria, a private equity fund specializing in the education sector. Mr. Torres is a public accountant with a degree from the University of Buenos Aires and holds a Masters degree in Business Administration from the Universidad Austral.

Diego Martín Salaverri. Mr. Salaverri has been a member of the board of directors of Edenor since 2007. He is a founding partner of the Argentine law firm of Errecondo, Salaverri, Dellatorre, González & Burgio. He earned a degree in law in 1988 from the Universidad Católica Argentina, Buenos Aires. He is member of the board of directors of Pampa Holding S.A. and a member of the supervisory committee of Dolphin Creditos S.A., Dolphin Creditos Holding S.A and, until 2007, was a member of the board of directors of EASA. Mr. Salaverri resigned from his position as director of EASA at the November 14, 2007 meeting of the board of directors of EASA. Mr. Salaverri is also an Alternate Member of the statutory audit committee of Compañía Buenos Aires S.A. and GSF S.A. and a member of the board of directors of Laboratorios Northia SACIFIA.

Edgardo Alberto Volosín. Mr. Volosín has been a member of the board of directors of Edenor since 2005. In addition, Mr. Volosín served as Director of Human Resources and Legal Affairs of Edenor since our privatization in 1992 through July 2002 and currently serves as Director of Corporate Affairs, a position which he has held since August 2002. Mr. Volosín holds a degree in Law from the Universidad de Belgrano in Buenos Aires.

Ignacio Chojo Ortiz. Mr. Chojo Ortiz has been a member of the board of directors of Edenor since 2005. He is also the President of the audit committee. He serves also as regular Director at Grupo Bapro S.A. (Province of Buenos Aires Bank Group), and also at Provincia Seguros de Vida S.A. Mr. Chojo Ortiz holds a degree as Public Accountant from the Universidad Provincial de Mar del Plata.

Rafael Mancuso. Mr. Mancuso has been a member of the board of directors of Edenor since 2007. He has served as the General Manager of OSTEE since 1993. He was the General Undersecretary of the Sindicato de Luz y Fuerza de la Capital Federal (Electric Light and Power Labor Union of the City of Buenos Aires) from 1991 through 1999, for which he also has served as Secretary of Social Responsibility since 1993. Mr. Mancuso served as a member of the board of directors of Central Puerto from 1993 through 1997.

Javier Douer. Mr. Douer has been an Alternate Director of Edenor since 2005. He has held various positions with Grupo Dolphin S.A. since 2000 and currently is Chief Administrative Officer for a group of portfolio companies. Mr. Douer holds a Bachelor’s degree in Business Administration from the Universidad de Palermo, in Buenos Aires, as well as a Master’s degree in Capital Markets from the Universidad de Buenos Aires.

Pablo Díaz. Mr. Díaz has been an Alternate Director of Edenor since 2005. Mr. Díaz currently serves as an Advisor to the President of Grupo Dolphin S.A. and he also serves as a Director at Citelec S.A., Transener, and as an Alternate Director for Transba. Previously, he was an Advisor at the federal Subsecretaría de Energía Eléctrica (the federal Undersecretary for Electrical Energy) and has held various positions in the electricity industry.

Brian Henderson. Mr. Henderson has been an Alternate Director of Edenor since 2005. He has been a Technical Advisor to the Grupo Dolphin S.A. since 2003 and is also a Director of Citelec and Transba and an Alternate Director of Transener S.A. In addition, Mr. Henderson is the Chairman of the Argentine British Chamber of Commerce. Mr. Henderson has extensive experience in all aspects of private power, including equipment supply and construction, having worked in multiple electricity projects around the world. Mr. Henderson has a degree in Electrical Engineering from Hebburn College.

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Jorge Miguel Grecco. Mr. Grecco has been an Alternate Director of Edenor since 2006. Mr. Grecco has served as Director of External Relations of Edenor since 2005. Mr. Grecco has also held positions in various media companies, including Grupo América, Grupo Cimeco, Infobae, Perfíl, Clarín, El Heraldo de Buenos Aires, Trespuntos and Somos. Mr. Grecco is also a professor of journalism at the University of Belgrano and is a published author.

Ariel Schapira. Mr. Schapira has been an Alternate Director of Edenor since 2007. In addition, since 2007, Mr. Shapira has served as the Director of New Business for Grupo Dolphin S.A. Previously, he served as the Regional Director for Latinamérica de Telefónica Móviles S.A. (2004-2007), Vice President of Marketing and Customer Operations of Bellsouth International in Atlanta (2001-2004), Manager of Marketing and New Business for Compañía de Rediocomunicaciones Móviles S.A. (Movicom Bellsouth) (1995-2001), CEO and General Manager of Radiomensaje S.A. (a joint-venture with Motorola) (1995-1997), and General Manager of Pouyet Tecsel S.A. (1991-1995). Mr. Schapira is an industrial engineer. He graduated from la Universidad de Buenos Aires.

Ricardo Sericano. Mr. Sericano has been an Alternate Director at Edenor since 2007. In addition, he has served as the Technical Director of Edenor since December 2006. Previously, he served as Manager of Engineering and Investment and Manager of Supplies and Logistics. Before the privatization of the company, Mr. Sericano served in various offices at ITALO and SEGBA. He is a mechanical-electrical engineer. He received his degree in 1972 from la Facultad de Ingeniería de la Universidad de Buenos Aires, where he also taught for 23 years.

Maia Chmielewski. Ms. Chmielewski has been an Alternate Director at Edenor since 2007. She also serves as an Alternate Director of CIESA S.A. and CPB S.A. Ms. Chmielewski serves in the investment group of Pampa Holding S.A. Ms. Chmielewski holds both a Bachelor’s degree in Business Economics and in Economics from the Universidad Torcuato Di Tella in Buenos Aires.

Gabriel Cohen. Mr. Cohen has been an Alternate Director of Edenor since 2005. He also has served since 2004 on the board of directors of Citelec, and as Alternate Director of Transba. In addition, he worked at Citibank, N.A. for fifteen years, serving at the bank’s offices in Buenos Aires and Paris, where he has acquired sound experience in debt restructuring processes. Mr. Cohen holds a degree in Business Administration from the Universidad de Buenos Aires.

Alejandro Mindlin. Mr. Mindlin has been an Alternate Director of Edenor since 2005. Mr. Mindlin serves in the investment group of Pampa Holding S.A. and is also a Director of EASA, Citelec S.A. and Transba. Prior to joining Pampa Holding S.A., Mr. Mindlin served in the marketing group of Grupo Dolphin S.A. Mr. Mindlin has a BA in Middle Eastern History and Languages from the Tel Aviv University, as well as a Film Director’s degree.

Carlos Florencio Correa Urquiza. Mr. Correa Urquiza has been an Alternate Director at Edenor since 2005. Mr. Correa Urquiza currently serves as Senior Trader at the Financial Operations Direction of the Banco Hipotecario S.A. (National Mortgage Bank). From 1994 to 1999, he served as Director of the department’s consulting back office for Consultores Asset Management. Mr. Correa Urquiza holds a Master’s degree in Banking Management from the Universidad del CEMA (Centro de Estudios Macroeconómicos), and has a degree in Business Administration from the Universidad de Belgrano in Buenos Aires.

Eduardo Maggi. Mr. Maggi has been an Alternate Director at Edenor since 2007. He was appointed Director of Operations of Edenor in 2001. Mr. Maggi currently serves as a Director of SACME, which is responsible for the management of regional high-voltage distribution in the greater Buenos Aires metropolitan area and for coordinating, controlling and supervising the operation of the generation, transmission and sub-transmission network in the City of Buenos Aires. Previously, Mr. Maggi served as Director of Operations of two of Edenor’s operation areas, San Martín and Morón. Mr. Maggi began his career at Edenor as a technical manager. Mr. Maggi received a degree in Engineering from the Universidad Tecnológica Nacional and an MBA from the Universidad del Salvador y Deusto.

BOARD PRACTICES

The duties and responsibilities of the members of our board of directors are set forth in Argentine law and our bylaws. Under Argentine law, directors must perform their duties with loyalty and the diligence of a prudent business person. Directors are prohibited from engaging in activities that compete with our company without

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express authorization of a shareholders’ meeting. Certain transactions between directors and our company are subject to ratification procedures established by Argentine law.

On May 22, 2001, the Argentine government enacted the Transparency Decree with the aim of creating an adequate legal framework to strengthen the level of protection of investors in the market. Other objectives of the Transparency Decree were to promote the development, liquidity, stability, solvency and transparency of the market, generating procedures to guarantee the efficient distribution of savings and good practices in the administration of corporations.

The Transparency Decree imposes the following duties on members of the board of directors of Argentine public companies:

• a duty to disclose all material events related to the company, including any fact or situation which is capable of affecting the value or trading of the securities of the company;

• a duty of loyalty and diligence;

• a duty of confidentiality; and

• a duty to consider the general interests of all shareholders over the interests of controlling shareholders.

There are no agreements between our company and the members of our board of directors that provide for any benefits upon termination of their designation as directors.

None of our directors maintains service contracts with us except as described in “Item 7. Major Shareholders and Related Party Transactions – Related Party Transactions.”

The significant differences between our corporate governance practices and the NYSE standards are listed on

our website in compliance with the NYSE requirements.

Executive committee

On October 4, 2007, our board of directors created an executive committee, as contemplated by our by-laws and Law 19.550, and delegated to the executive committee the authority to take certain actions on behalf of the board. The executive committee complements the work of the board by executing certain day-to-day tasks required for overseeing our company. By creating an executive committee, the board sought to increase the efficiency with which our company is directed. The Executive Committee consists of Alejandro Macfarlane, Marcos Marcelo Mindlin, Damián Mindlin, Gustavo Mariani and Rogelio Pagano.

Audit committee

Pursuant to the Transparency Decree and CNV rules, Argentine public companies must appoint an audit committee (comité de auditoría) composed of at least three members of the board of directors, a majority of which must be independent in accordance with Argentine law.

Pursuant to our bylaws, one director is appointed by holders of our Class A shares and one by holders of our Class B shares. Our audit committee’s duties include:

• monitoring our internal control, administrative and accounting systems;

• supervising the application of our risk management policies;

• providing the market adequate information regarding conflicts of interests that may arise between our company and our directors or controlling shareholders;

• rendering opinions on transactions with related parties; and

• supervising and reporting to regulatory authorities the existence of any kind of conflict of interest.

The members of our audit committee are:

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Name Position Class electing member Ignacio Chojo Ortiz(1) ............................................................ President Class B Maximiliano Alejandro Fernández(1) .................................... Member Class A Eduardo Llanos(1)................................................................... Member Class A (1) Independent under Argentine law and under Rule 10A-3 under the Securities Exchange Act of 1934.

Senior management

The following table sets forth information regarding our senior management:

Name Current Position Age Alejandro Macfarlane ................................................................... Chief Executive Officer 41 Luis Pablo Rogelio Pagano........................................................... Chief Financial Officer 54 Ricardo Sericano........................................................................... Technical Director 59 Eduardo Maggi.............................................................................. Director of Operations 51 Gustavo Gené................................................................................ Principal Accounting Officer 51 Jorge Miguel Grecco..................................................................... Director of External Relations 49 Edgardo Alberto Volosín.............................................................. Director of Corporate Affairs 54

Gustavo Gené began working at Edenor at the time of our privatization in 1992 and currently serves as the Principal Accounting Officer of Edenor. Mr. Gené served as Vice President of Strategic Planning from 1998 to 2002, and again from 2005 through May 2006. From 2002 to 2005, Mr. Gené was the Vice President of Planning and Control in the Regional Americas division of Electricité de France. Mr. Gené is a licensed public accountant and holds a degree in Administration and a Masters in Administration and Strategic Planning from the University of Buenos Aires.

Supervisory committee

Argentine law requires certain corporations, such as our company, to have a supervisory committee (Comisión Fiscalizadora). The supervisory committee is responsible for overseeing compliance with our bylaws, shareholders’ resolutions and Argentine law and, without prejudice to the role of external auditors, is required to present to the shareholders at the annual ordinary general meeting a written report on the reasonableness of the financial information of the Company’s annual report and the financial statements presented to the shareholders by our board of directors. The members of the supervisory committee are also authorized to attend board of directors, audit committee and shareholders’ meetings, call extraordinary shareholders’ meetings, and investigate written complaints of shareholders holding at least 2% of our outstanding shares. Pursuant to Argentine law, the members of the supervisory committee must be licensed attorneys or certified public accountants.

Our bylaws provide that our supervisory committee must consist of three members and three alternate members, elected by our shareholders at an ordinary meeting. Members of our supervisory committee are elected to serve one-year terms and may be re-elected. Pursuant to our bylaws, holders of our Class A shares are entitled to appoint two members and two alternate members of the supervisory committee and holders of our Class B and Class C shares are entitled to collectively appoint one member and one alternate member.

The members and alternate members of our supervisory committee are:

Name Position Year of appointment

(class electing member) Javier Errecondo ............................................................ Member 2008 (Class A) José Daniel Abelovich(1) ................................................ Member 2008 (Class A) Marcelo Javier Ruiz (1)................................................... Member 2008 (Class B/C) Santiago Dellatorre ....................................................... Alternate member 2008 (Class A) Marcelo Fuxman(1) ......................................................... Alternate member 2008 (Class A) Roberto Daniel Murmis(1) ............................................. Alternate member 2008 (Class B/C)

_______________________ (1) Independent under Argentine law.

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Javier Errecondo is a founding partner of the Argentine law firm Errecondo, Salaverri, Dellatorre, González & Burgio. He earned a degree in law in 1985 from the Universidad de Buenos Aires. He is a Director of EDEN S.A., a member of the statutory audit committees of IEASA, Dolphin Energía and Pampa Holding S.A., Desarrollos Caballito S.A., Pegasus Realty S.A., O.P.M. Inmobiliaria S.A., Entertainment Depot S.A., FinanGroup S.A., GSF S.A., Grupo Union S.A., Credit Group S.A., Freddo S.A. and AESEBA S.A. and an alternate member of the statutory audit committees of Dolphin Créditos S.A., Dolphin Créditos Holding S.A., EASA, Construred S.A. BA Mall S.R.L. and Cablevisión S.A.

José Daniel Abelovich is a senior partner of the audit firm Abelovich, Polano & Asociados and a member of the statutory audit committee of Pampa Holding S.A.

Marcelo Javier Ruiz is a partner at the Argentine law firm Pastoriza, Eviner, Cangueiro & Ruiz Abogados. He earned a degree in law from the Universidad Católica Argentina and a masters’ degree in International Business Law (LLM) from the London School of Economics and Political Science in England. He was a founding partner of Arthur Andersen (Legal Advisors) and is a member of the Society for Advanced Legal Studies (SALS) in England, the International Bar Association in London, England, and the Editorial Board of the Journal of Money Laundering Control in England, among others.

Santiago Dellatorre is a founding partner of the Argentine law firm Errecondo, Salaverri, Dellatorre, González & Burgio. He has been a member of the board of directors at Cablevisión since 2005. Between 1994 and 1995, Mr. Dellatorre worked as an international associate at the United States law firm Shearman & Sterling LLP. Mr. Dellatorre received his law degree with honors from the Universidad Católica Argentina in 1990. He is a Director of Cablevisión S.A. and EDEN S.A., a member of the statutory audit committee of Empresa de Energía Río Negro S.A. (EdERSA). In addition, he is an alternate member of the statutory audit committee of Dolphin Energía S.A., EASA and GSF S.A.

Marcelo Fuxman holds a CPA degree. He is an independent counselor of the audit firm of Abelovich, Polano & Asociados and is a member of the statutory audit committee of Pampa Holding S.A.

Roberto Daniel Murmis is an associate at the Argentine law firm Estudio Abelovich, Polano & Asociados. He is a certified public accountant and graduated from the Universidad de Buenos Aires. He was formerly associated with Harteneck, López y Cía., an affiliate of Coopers & Lybrand. Mr. Murmis is a member of the Subcommittee for the Commission on Tax Studies and Professional Economic Sciences of the City of Buenos Aires. He teaches Tax Theory and Techniques at the Universidad de Buenos Aires and is an advisor to the Secretary of Public Revenues for the Federal Ministry of Economy.

COMPENSATION

Our board of directors does not have a compensation or remuneration committee. The aggregate remuneration paid to the members and alternate members of our board of directors, the members and alternate members of our supervisory committee and our senior management during 2007 was approximately Ps. 11.4 million.

EMPLOYEES

As of December 31, 2007, we had 2,465 full-time employees and 43 part-time employees, for a total of 2,508 employees. At December 31, 2006 we had 2,369 full-time employees and 91 part-time employees, for a total of 2,460 employees, and at December 31, 2005 we had 2,410 full-time employees and 65 part-time employees, for a total of 2,475 employees. As of December 31, 2007, approximately 78% of our full-time employees are subject to two collective bargaining agreements. After the privatization, an employee reduction plan was implemented to reduce the number of employees from 6,368 employees at the time of the privatization. The employee reductions were primarily effected through an early retirement program. In addition, we implemented an early retirement plan for those employees who had made the payments required by law and had less than five years before retirement, offering them monthly payments of 80% of their pre-retirement net salary. Access to this plan is conditioned upon our own approval and the prior separation from our company under an agreement signed before the Argentine Ministry of Labor. In July 1995, we signed two collective bargaining agreements with Sindicato de Luz y Fuerza and Asociación del Personal Superior de SEGBA. The collective bargaining agreements reduced the number of job categories from 300 to six and provided for staff evaluations and compensation based on performance for the first

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time in Argentina. In 2005, we signed two new collective bargaining agreements with the Sindicato de Luz y Fuerza and Asociación del Personal Superior de SEGBA, which were approved by the Ministry of Labor and Social Security on October 5, 2006 and November 17, 2006. These agreements expired at the end of 2007. We are currently in negotiation with the Sindicato de Luz y Fuerza and Asociación del Personal Superior de SEGBA, and currently expect to reach new agreements in the first semester of 2008. These renegotiations have focused primarily on disputes over employee salaries. We believe we currently maintain good relations with our labor force. We cannot guarantee that we will not experience any conflicts with our employees in the future, including with our unionized employees in the context of future negotiations of our collective bargaining agreements, which could result in events such as strikes or other disruptions that could have a negative impact on our operations.

We have outsourced a number of activities related to our business to third party contractors as we seek to maintain a flexible cost base that allows us both to maintain a lower cost base and gives us the ability to respond more quickly to changes in our market. We had approximately 3,612 third-party employees under contract with our company as of December 31, 2007, 3,156 as of December 31, 2006 and 2,995 as of December 31, 2005. We calculate our number of third-party employees based on the number of employees we have under contract, which does not directly relate to the number of third-party employees performing services for our company at any given time, as we only pay for services of these employees on an as-needed basis although they remain under contract for specified periods. Although we have very strict policies regarding compliance with labor and social security obligations by our contractors, we are not in a position to ensure that, if conflicted, contractors’ employees will not initiate legal actions to seek indemnification from us based upon a number of judicial rulings issued by labor courts in Argentina recognizing joint and several liability between the contractor and the entity to which it is supplying services under certain circumstances. As of December 31, 2007, contractors’ employees were seeking indemnification from us for an aggregate amount of Ps. 41.4 million, including legal fees and interest and as of such date we have recorded accruals for an aggregate amount of Ps. 24.6 million to cover the liabilities we may have in connection with such claims.

SHARE OWNERSHIP

None of the members of our board of directors or our senior management beneficially own any shares of our capital stock except for Messrs. Luis Pablo Rogelio Pagano, Alejandro Macfarlane and Diego Martín Salaverri, each of whom beneficially owns Class B shares representing, in aggregate, less than one percent of our capital stock. See “Item 7. Major Shareholders and Related Party Transactions.” Item 7. Major Shareholders and Related Party Transactions

The following table sets forth information relating to the ownership of our common shares as of the date of this annual report.

Class Shares (%) Electricidad Argentina S.A.(1) ..................................... A 462,292,111 51.0%Employee Stock Participation Program...................... C 1,952,604 0.2%Public........................................................................... B 442,210,385 48.8%Total............................................................................. 906,455,100 100.0%

_______________________ (1) All of the Class A shares have been pledged to the Argentine government to secure our obligations under our concession and cannot be transferred without the prior approval of the ENRE. See “Item 4. Information on the Company—Our concession —Our obligations.” Electricidad Argentina S.A. (EASA) is an Argentine corporation wholly owned by Dolphin Energía and IEASA. Dolphin Energía holds 90% of the voting stock and 92.3% of the total outstanding stock of EASA, and IEASA holds the remainder. Pampa Holding S.A. currently owns 100% of the capital stock of Dolphin Energía and IEASA.

Each class of shares entitles holders to one vote per share.

As of December 31, 2007, we had approximately 14,601,855 ADSs outstanding, representing 292,037,100 Class B shares or 32.2% of our outstanding capital stock.

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Acquisition by Dolphin Energía and IEASA

In September 2005, Dolphin Energía and IEASA purchased a controlling stake in the company from EDFI. Until September 28, 2007, Dolphin Energía and IEASA were controlled by the principal members of Grupo Dolphin, Marcos Marcelo Mindlin, Damián Miguel Mindlin and Gustavo Mariani. Such principal members had significant experience investing in Argentine energy sector dating back to 2004.

Initial Public Offering

In April 2007, we completed the initial public offering of our Class B ordinary shares in the form of American Depository Shares (ADSs). We and a group of our shareholders sold 18,050,097 ADSs, representing 361,001,940 ordinary Class B shares, in a offering in the United States and other jurisdictions outside of Argentina, and the Employee Stock Participation Program sold 81,208,416 ordinary class B shares in a simultaneous offering in Argentina. The ADSs are listed on the New York Stock Exchange under the symbol “EDN” and the Class B shares are listed on the BASE under the same symbol. We received approximately U.S. $61.4 million from the initial public offering, before costs. Of this amount, we used approximately U.S. $36 million to repurchase some of our Discount Notes due 2014. The remainder of the proceeds from the initial public offering was used to repurchase some of our Fixed Rate Par Notes due 2016 and for capital expenditures. After the initial public offering, our controlling shareholder continues to own 51% and the public owns approximately 49% of our ordinary shares.

Acquisition by Pampa Holding S.A.

On June 22, 2007, the principal members of Grupo Dolphin, Marcos Marcelo Mindlin, Damián Miguel Mindlin and Gustavo Mariani, signed a stock subscription agreement with Pampa Holding S.A., pursuant to which they agreed to transfer all of the stock of Dolphin Energía and IEASA to Pampa Holding S.A. in exchange for common stock of Pampa Holding S.A. On August 30, 2007, the shareholders of Pampa Holding S.A. approved this transfer of shares, and the CNV and the BASE approved the public offering and listing of the shares in September 2007. The transaction was consummated on September 28, 2007, and as a result, Pampa Holding S.A. owns 100% of the capital stock of each of Dolphin Energía and IEASA, which in turn collectively own all of the capital stock of EASA, our controlling shareholder. The ratio of exchange of common shares of Pampa Holding S.A. and shares of Dolphin Energía and IEASA was determined using the respective averages of the closing prices of Pampa Holding S.A.’s and our shares on the Buenos Aires Stock Exchange during a 10-trading day period ending on August 15, 2007, taking into account, in the case of shares of Dolphin Energía and IEASA, EASA’s stake in our company, the net present value of EASA’s outstanding indebtedness and the net present value of fees to be paid by us to EASA under the Financial Services Agreement dated April 4, 2006 between our company and EASA. See “Related party transactions—Financial services agreement with EASA.”

The former shareholders of Dolphin Energía and IEASA, Messrs. Marcos Marcelo Mindlin, Damián Mindlin and Gustavo Mariani, are the controlling shareholders of Grupo Dolphin and are managers of Pampa Holding S.A., an Argentine public company with a market capitalization of Ps. 3,708.7 million as of December 31, 2007. Pampa Holding S.A. was acquired in November 2005 by certain principals of Grupo Dolphin to serve as a corporate vehicle for private equity investments in Argentina. Through companies under their control, Messrs. Marcos Marcelo Mindlin, Damián Mindlin and Gustavo Mariani currently control approximately 15% of the common stock of Pampa Holding S.A. In addition, Messrs. Marcos Marcelo Mindlin, Damián Mindlin and Gustavo Mariani, together with Pampa Holding S.A.’s chief executive officer, hold warrants to purchase, in the aggregate, approximately 20% of the common stock of Pampa Holding S.A. (on a fully diluted basis). The board of directors of Pampa Holding S.A. consists of nine directors, of which five are affiliated with Grupo Dolphin, including Mr. Marcelo Mindlin, who serves as Chairman of the board of directors, and Messrs. Damian Mindlin and Gustavo Mariani, each of whom serves as a Vice-Chairman of the board of directors. The principal executive officers of Pampa Holding S.A., including its chief executive officer, are also affiliated with Grupo Dolphin.

In addition to its indirect stake in us, Pampa Holding S.A. currently owns several investments in the Argentine electricity sector, including a 50% interest in the controlling shareholder of the principal electricity transmission company in Argentina, Compañía de Transporte de Energía Eléctrica en Alta Tensión S.A. (Transener), controlling stakes in four generation plants located in the Salta, Mendoza and Neuquén provinces (Hidroeléctrica Los Nihuiles S.A., Hidroeléctrica Diamante S.A., Central Térmica Güemes S.A. and Loma de la Lata S.A.).

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Employee Stock Participation Program

At the time of the privatization of SEGBA (our predecessor), the Argentine government allocated all of our Class C shares, representing 10% of our outstanding capital stock, to establish an employee stock participation program (Programa de Propiedad Participada, or PPP), pursuant to Law No. 23,696 and regulations thereunder, through which certain eligible employees (including former employees of SEGBA who became employees of our company) were each entitled to receive a specified number of our Class C shares, calculated in accordance with a formula that considered a number of factors, including the employee’s salary level, position and seniority. In order to implement the PPP, a general transfer agreement, a share syndication agreement and a trust agreement were executed.

Pursuant to the transfer agreement, participant employees were allowed to defer payment for the Class C shares over time. As a guarantee for the payment of the deferred purchase price, the Class C shares were pledged in favor of the Argentine government. Furthermore, under the original trust agreement, the Class C shares were placed in trust by the Argentine government with Banco Nación, acting as trustee for the Class C shares, for the benefit of the participant employees and the Argentine government. In addition, pursuant to the share syndication agreement, all political rights of the participant employees (including the right to vote at our ordinary and extraordinary shareholders’ meetings) were to be exercised collectively until the payment in full of the deferred purchase price and the release of the pledge in favor of the Argentine government. On April 27, 2007, the participant employees paid the deferred purchase price of all of the Class C shares in full to the Argentine government and, accordingly, the pledge was released and the share syndication agreement was terminated.

According to the regulations applicable to the Employee Stock Participation Program, participant employees who terminated their employment with our company before the payment in full of the deferred purchase price to the Argentine government were required to transfer their shares to the Guarantee and Repurchase Fund, at a price calculated pursuant to a formula set forth in the transfer agreement. As of the date of payment of the deferred purchase price, the Guarantee and Repurchase Fund had not paid in full the amounts due to the former participant employees for the transfer of their Class C Shares.

A number of former employees of SEGBA and our company have brought claims against the Guaranty and Repurchase Fund, the Argentine government and, in certain limited cases, our company, in each case relating to the administration of our Employee Stock Participation Program. The plaintiffs who are former employees of SEGBA were not deemed eligible by the relevant authorities to participate in the Employee Stock Participation Program at the time of its creation, which determination these plaintiffs dispute and are seeking compensation for. The plaintiffs who are former employees of our company are either seeking payment of amounts due to them by the Guaranty and Repurchase Fund for share transfers that occurred upon their retirement from our employment or disputing the calculation of the amounts paid to them by the Guaranty and Repurchase Fund. In several of these claims, the plaintiffs have obtained attachment orders or injunctive relief against the Guaranty and Repurchase Fund over approximately 1,567,231 Class C shares and Ps. 709,149 of the funds on deposit in the fund, in each case up to the amount of their respective claims. As of December 31, 2007, all of these claims amounted in aggregate to approximately Ps. 20 million. Because the outcome of these proceedings has not yet been determined, the Argentine government instructed Banco Nación to create a Contingency Fund to hold a portion of the proceeds of the offering of Class B shares by the Employee Stock Participation Program pending the outcome of these legal proceedings.

According to the agreements, laws and decrees that govern the Employee Stock Participation Program, our Class C shares may only be held by our employees. Upon the closing of our initial public offering, substantially all of our Class C shares were converted into Class B shares and sold. In accordance with these agreements, laws and decrees, the rights previously attributable to the Class C shares have been combined with those attributable to the Class B shares, and holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares in the election of directors. Only 1,952,604 Class C shares remain outstanding, representing 0.2% of our capital stock.

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RELATED PARTY TRANSACTIONS

Financial Services Agreement with EASA

On April 4, 2006, we entered into a Financial Services Agreement with EASA pursuant to which EASA shall provide us with advisory services, as well as services related to the potential development of new lines of business compatible with our corporate objectives. The services to be performed by EASA include assistance and advice in respect of our financial performance, our finance management team and our financial decision-making process, our engagement of financial advisory services firms and the development of new financial products, the restructuring of our commercial and financial debt, feasibility, profitability and implementation of new businesses, hedging and derivatives strategies, relationship with foreign and local financial institutions, financial aspects of tariffs renegotiation and concession contract process and our annual budget.

The term of the agreement is 5 years from September 2005, with each party having the right to terminate it at any time without cause with 60 days prior notice. The consideration to be received by EASA is U.S. $2 million per year, plus Argentine value added tax, and will be payable in advance in October of each year, or as otherwise agreed by the parties, with the first payment (for services rendered in the 12-month period from September 2005) being paid upon approval of the agreement by the audit committees and boards of directors of both our company and EASA, approvals which have both been obtained. The payment related to the first year of services was made on April 19, 2006.

In April 2008, our board of directors approved an amendment to the EASA agreement increasing the amount to be paid by us in consideration for the services provided by EASA to U.S. $2.5 million, plus Argentine value added tax, payable retroactively from January 1, 2008. No other terms of the contract have been modified.

Agreement with Comunicaciones y Consumos S.A.

On March 16, 2007 we entered into an agreement with Comunicaciones y Consumos S.A. (CYCSA), an Argentine company wholly owned by Messrs. Marcelo Mindlin, Damian Mindlin and Gustavo Mariani, pursuant to which we granted CYCSA the exclusive right to provide telecommunication services to our customers through the use of our network in accordance with Federal Decree 764/2000, which contemplates the integration of voice, data and imaging services through the existing infrastructure of electricity distribution companies such as ours. Under the terms of this agreement, CYCSA will be responsible for all expenses relating to the maintenance and adaptation of our network for use in providing its telecommunications services. The agreement will be valid for ten years commencing from the later of the date on which the ENRE approves the terms of the agreement and the date on which CYCSA’s telecommunications license is granted approval. The two pending approvals must be obtained within 180 days of the signing of the agreement. This timeframe was extended by 180 days until May 8, 2008, pursuant to a resolution of our board of directors at the November 7, 2007 meeting. We expect to receive the required approvals before the expiration of the extended timeframe. The agreement also provides for automatic renewal at the expiration of each term for subsequent five-year periods, unless either party gives notice not less than 120 days prior to the expiration of such term. Under the agreement, CYCSA will be required to make periodic requests for access to our network, which we will evaluate and grant based on available capacity in our network. In return for the use of our network, CYCSA will compensate us with 2% of its annual charges to customers, before taxes, as well as 10% of any profits derived from its services. In addition, CYCSA will indemnify us for any liability arising from the rendering of its services through our network.

Operating and technical assistance agreements

At the time of the privatization of our company in 1992, we entered into a 10-year operating agreement with EDF S.A., among others, for the provision of technical advisory services to our company. The term of this operating agreement was extended through August 2007. In connection with EDFI’s sale of its controlling stake in our company to Dolphin Energía S.A., on September 15, 2005 the operating agreement was terminated and EDF S.A. waived Ps. 25.9 million in fees owed by our company at that time pursuant to the operating agreement. On the same date, we entered into a technical assistance agreement with EDF S.A. pursuant to which EDF S.A. agreed to make available to us the same technical assistance, know-how, expertise and knowledge in the field of electric power installation, distribution and commercialization service management that it made available to third parties, including technical manuals and software. The technical assistance agreement was initially scheduled to terminate

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on the earlier of a sale by Dolphin Energía of its controlling interest in our company to a third party and September 15, 2010. On December 27, 2007, the initial agreement was amended to shorten the term of the contract so that it expires on December 31, 2008. Under the terms of the technical assistance agreement, we will pay EDF S.A. an aggregate amount of U.S. $10,000,000 as technical assistance fees in five annual installments of U.S. $2,000,000 each. The first two installments were paid on January 9, 2006, and December 19, 2006. However, in the course of negotiating the December 27, 2007 amendment, EDF S.A. agreed to grant us a credit of U.S. $2,100,000 of the U.S. $4,000,000 we had paid. Of the remaining U.S. $6,000,000 we owed to EDF S.A., we deducted a total of U.S. $4,600,000, which was comprised of: (i) the U.S. $2,100,000 credit described above, and (ii) a receivable for U.S. $2,500,000, owed to us by EDF International as a reimbursement for the expenses we incurred during the year ended December 31, 2006 in relation to our initial public offering. The U.S. $2,500,000 receivable was accounted for in accordance with the agreement that initial public offering expenses may be offset against services rendered by any affiliate of EDF International. After making such deduction, on December 28, 2007, we paid EDF S.A. the remaining U.S. $1,400,000 under the technical assistance agreement.

Item 8. Financial Information

See “Item 18. Financial Statements” beginning on page F-1.

LEGAL AND ADMINISTRATIVE PROCEEDINGS

Legal proceedings

In the normal course of business, we are a party to lawsuits of various types. Our management evaluates the merit of each claim and assesses the likely outcome, recording an accrual in our financial statements for the related contingent liability when an unfavorable decision is probable and the amount may be reasonably estimated. At December 31, 2007, we had established accruals in the aggregate amount of Ps. 82.7 million to cover potential losses from such claims and legal proceedings. Except as disclosed below, we are not a party to any legal proceedings or claims that may have a material adverse effect on our financial position or results of operations.

Tax claims

On December 1, 2003, the Provincial Board of Electric Power of the Province of Buenos Aires initiated a claim against us in the amount of Ps. 51.2 million, which does not include surcharges, interest or penalties accrued in respect of this amount after the date of the claim. At December 31, 2003, the amount of surcharges and interest accrued on the claim, including applied penalties, was Ps. 310 million. In addition, on April 23, 2007, the Board notified us of an additional claim for Ps. 4.0 million, without including surcharges, interest or penalties accrued. The claims are based on an alleged failure to collect, as collection agent, in respect of certain taxes established by Decree Laws No. 7290/67 and No. 9038/78 between July 1997 and June 2001 and between July 2001 and June 2002, respectively. On December 23, 2003, we filed an appeal of the Board’s decision with the provincial Tax Court of Appeals of La Plata, and enforcement of the judgment was suspended pending the outcome of the appeal. On June 14, 2007, the Court granted our appeal and rejected the Board’s tax claim against the Company. On June 27, 2007 the provincial Tax Court of Appeals of Buenos Aires rendered a favorable decision in relation to our appeal. This decision reaffirms a recent decision by the Supreme Court of the Republic of Argentina in an unrelated case that held that the regulations were unconstitutional due to the commitment assumed by the Province of Buenos Aires to not tax the transfer of electric power. We have not established any accruals in our financial statements for this claim.

The Argentine federal tax authorities have challenged certain income tax deductions for allowance for doubtful accounts on our income tax returns for fiscal years 1996, 1997 and 1998, and have assessed additional taxes of approximately Ps. 9.3 million. Tax related contingencies are subject to interest charges and, in some cases, fines. We have appealed the tax authorities’ ruling before the Argentine federal tax court. During the appeal process payment for such claim is suspended. We have accounted for an accrual in our financial statements for the contingent tax liability related to this claim, including interest and penalties.

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Environmental claims

On May 24, 2005, three of our employees were indicted on charges of PCB-related environmental contamination dangerous to human health, which is a crime under Argentine law. In connection with this alleged infraction, the judge sought a pre-judgment attachment of our assets in the amount of Ps. 150 million to cover the potential cost of environmental damages and estimated clean-up costs. On May 30, 2005, we appealed the charges against our employees as well as the attachment order. On December 15, 2005, the court of appeals dismissed the charges against all three defendants for lack of evidence and, accordingly, vacated the attachment order. The decision by the court of appeals also stated that the trial judge should order the acquittal of two public officers of the ENRE, who had been indicted on related charges. This decision was appealed to the National Criminal Appellate Court (Tribunal de Casación), the highest appellate body for this matter, which on April 5, 2006 ruled that the appeal of the decision relating to our employees and our company was not admissible because decisions rendered on grounds of lack of evidence are not reviewable. On July 16, 2007, the Company was notified that on July 11, 2007, the trial judge issued acquittals for all of the Company’s officials and employees that had been indicted. On appeal on March 25, 2008, the First Court of the Federal Circuit of San Martín (Sala I de la Cámara Federal de San Martín) upheld the acquittals and confirmed the finding that there had been insufficient evidence to prove any PCB contamination. This decision was appealed on April 18, 2008 by the Attorney General (Minsterio Público) before the First Court of the Federal Circuit of San Martín. We have not accounted for any accruals in our financial statements for this claim.

Proceedings challenging the renegotiation of our concession

In November 2006, two Argentine consumer associations, Asociación Civil por la Igualdad y la Justicia (ACIJ) and Consumidores Libres Cooperativa Limitada de Provisión de Servicios de Acción Comunitaria, brought an action against us and the Argentine government before a federal administrative court seeking to block the ratification of the Adjustment Agreement on the grounds that the approval mechanism was unconstitutional. On March 26, 2007, the federal administrative court dismissed these claims and ruled in our favor on the grounds that the adoption of Executive Decree No. 1957/06, which ratified the Adjustment Agreement, rendered this action moot. ACIJ appealed this decision on April 12, 2007, and the appeal was decided in our favor. However, on April 14, 2008, ACIJ filed another complaint challenging the procedures utilized by the Argentine Congress in approving the Adjustment Agreement. Specifically, the claim alleges that Article 4 of Law 24.790, which authorized the Congress to tacitly approve agreements negotiated between the Argentine government and public service companies, such as us, violates the congressional procedures established in Article 82 of the Constitution. ACIJ has requested that the Adjustment Agreement be renegotiated and submitted to Congress for its express approval. We can give no assurance that this complaint or other potential future actions or requests for injunctive relief will not reverse the adjustments we have obtained or block any further adjustments to our tariffs.

DIVIDENDS

Under Argentine corporate law, declaration and payment of annual dividends, to the extent the distribution of available earnings complies with the requirements of applicable Argentine corporate law, is determined by our shareholders at the annual ordinary shareholders’ meeting. Generally, but not necessarily, the board of directors makes a recommendation with respect to the payment of dividends. We have not declared or paid any dividends since August 14, 2001.

Under the terms of our financial debt, we are not entitled to distribute any dividends until April 24, 2008, unless our leverage ratio (as defined in our debt instruments) is 2.5 or lower or we attain an international investment grade rating on our long term debt from an internationally recognized rating agency. Thereafter, we are only permitted to distribute dividends under certain circumstances depending on our leverage ratio based on our financial statements prepared in accordance with Argentine GAAP. If our leverage ratio (defined in our debt instruments as our total indebtedness over our 12-month EBITDA) is 2.5 or lower, or we attain an international investment grade rating on our long term debt from an internationally recognized rating agency, we will not be subject to any restrictions under our debt instruments on our ability to distribute dividends. However, if our leverage ratio is greater than 2.5, we will only be entitled to pay dividends if we generate excess cash (as defined in our debt instruments). In this case, we may pay dividends out of excess cash as follows:

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• if our leverage ratio is greater than 2.5, but not greater than 3.0, we may apply 50% of our excess cash to pay dividends;

• if our leverage ratio is greater than 3.0, but not greater than 3.5, we may apply 25% of our excess cash to pay dividends; and

• if our leverage ratio is greater than 3.5, we may not pay dividends.

Also, pursuant to the Adjustment Agreement, we cannot make any dividend payments without the ENRE’s prior approval during the period in which we are conducting the RTI.

Amount available for distribution

Dividends may be lawfully declared and paid only out of our retained earnings stated in our yearly financial statements prepared in accordance with Argentine GAAP and CNV regulations and approved by the annual ordinary shareholders’ meeting.

According to Argentine Corporations Law and our by-laws we are required to maintain a legal reserve of 20% of our then-outstanding capital stock. The legal reserve is not available for distribution to shareholders. Under Argentine corporate law and our by-laws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order:

(i) to comply with the legal reserve requirement;

(ii) to pay the accrued fees of the members of the board of directors and supervisory committee;

(iii) to pay any amounts owed to our employees under the “Bonos de Participación para el Personal”;

(iv) for voluntary or contingent reserves, as may be resolved from time to time by our shareholders at the annual ordinary shareholders’ meeting; and

(v) the remainder of the net income for the year may be distributed as dividends on common shares or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.

Bonos de Participación para el Personal are bonds issued to our employees, according to the provisions of our by-laws, that entitle each holder of the bonds to a pro rata portion of 0.5% of our earnings, after payments of taxes.

The board of directors submits our financial statements for the preceding fiscal year, together with reports thereon by the supervisory committee, at the annual ordinary shareholders’ meeting for approval. Within four months of the end of each fiscal year, an ordinary shareholders’ meeting must be held to approve the financial statements and determine the allocation of our net income for such year.

Under applicable CNV regulations, cash dividends must be paid to shareholders within 30 days of the shareholders’ meeting approving such dividends. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of the authorization of the CNV for the public offering of the shares arising from such dividends. The statute of limitations to the right of any shareholder to receive dividends declared by the shareholders’ meeting is 3 years from the date in which they have been made available to the shareholder.

SIGNIFICANT CHANGES

Except as identified in this annual report on Form 20-F, no significant change in our financial condition has occurred since the date of the most recent consolidated audited financial statements contained in this annual report.

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Item 9. The Offer and Listing

Since April 26, 2007, our Class B shares and the ADSs have been listed on the Buenos Aires Stock Exchange and the NYSE, respectively. The ADSs have been issued by the Bank of New York as depositary. Each ADS represents 20 Class B shares.

OFFER AND LISTING DETAILS

The following table sets forth, for the period commencing with our initial public offering on April 30, 2007, the annual high and low market prices for the ADSs on the New York Stock Exchange and the shares on the Buenos Aires Stock Exchange.

Buenos Aires Stock

Exchange New York Stock

Exchange Pesos per Share U.S. dollars per ADS High Low High Low

2007 ............................................................................................ 4.00 2.70 25.87 16.93

The following table sets forth, for the periods indicated, the reported high and low sales prices for our shares on the Buenos Aires Stock Exchange and the reported high and low sales prices for the ADSs on the New York Stock Exchange.

Buenos Aires Stock



2007 Second Quarter ............................................................................ 3.39 2.70 22.29 16.96 Third Quarter ............................................................................... 3.82 2.75 24.98 17.00 Fourth Quarter ............................................................................. 4.00 3.42 25.87 21.21

The following table sets forth, for the months indicated, the reported high and low sales price for our shares on the Buenos Aires Stock Exchange and the reported high and low sales prices for the ADSs on the New York Stock Exchange.

Buenos Aires Stock



2007 December..................................................................................... 3.65 3.42 23.00 21.21 2008 January......................................................................................... 3.51 3.22 22.22 20.20 February....................................................................................... 3.40 3.03 21.55 18.45 March........................................................................................... 3.18 2.80 20.05 16.93 April............................................................................................. 3.30 2.96 20.87 18.20 May.............................................................................................. 3.00 2.60 18.96 15.28 June(1)........................................................................................... 2.67 2.00 16.62 12.30 (1) Represents the corresponding sale prices from June 1 through June 20.

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MARKETS

Trading on the Buenos Aires Stock Exchange

Trading in the Argentine securities market

The securities market in Argentina is comprised of 11 stock exchanges consisting of the BCBA, Bahía Blanca, Corrientes, Córdoba, La Plata, La Rioja, Mendoza, Rosario, Santa Fe, Mar del Plata and Tucumán. Six of these exchanges (Buenos Aires, Rosario, Córdoba, Mendoza, Santa Fe, and La Rioja) have affiliated stock markets and, accordingly, are authorized to quote publicly offered securities. Securities listed on these exchanges include corporate equity and bonds and government securities.

The BCBA is the principal and longest-established exchange in Argentina and is currently the fourth largest exchange in Latin America in terms of market capitalization. The BCBA began operating in 1854 and accounts for approximately 95% of all equity trading in Argentina. Bonds listed on the BCBA may simultaneously be listed on the Mercado Abierto Electrónico, the Argentine over-the-counter market, or MAE, pursuant to an agreement between BCBA and MAE which stipulates that equity securities are to be traded exclusively on the BCBA while debt securities (both public and private) may be traded on both the MAE and the BCBA. In addition, through separate agreements with the BCBA, all of the securities listed on the BCBA may be listed and subsequently traded on the Córdoba, Rosario, Mendoza, La Plata and Santa Fe exchanges, by virtue of which many transactions originating on these exchanges relate to BCBA-listed companies and are subsequently settled in Buenos Aires. Although companies may list all of their capital stock on the BCBA, controlling shareholders in Argentina typically retain the majority of a company’s capital stock, resulting in a relatively small percentage of active trading of the companies’ stock by the public on the BCBA.

Argentina’s equity markets have historically been comprised of individual investors, though in recent years, there has been an increase in the level of investment by banks and insurance companies in these markets. The participation of Argentine pension funds represents an increasing percentage of the BCBA market, however, Argentine mutual funds (fondos comunes de inversión) continue to have very low participation. As of December 31, 2007, 76 companies had equity securities listed on the BCBA, of which the ten most traded companies accounted for approximately 74.3% of the total market capitalization during 2006.

The Buenos Aires Stock Market, or Mercado de Valores de Buenos Aires (MERVAL) is the largest stock market in Argentina and is affiliated with the BCBA. MERVAL is a corporation consisting of 133 shareholder members who are the sole individuals or entities authorized to trade, either as principals or agents, in the securities listed on the BCBA. Trading on the BCBA is conducted either through the traditional auction system from 11:00 a.m. to 5:00 p.m. on trading days, or through the Sistema Integrado de Negociación Asistida por Computación (Computer-Assisted Integrated Negotiation System, or SINAC). SINAC is a computer trading system that permits trading in both debt and equity securities and is accessed by brokers directly from workstations located in their offices. Currently, all transactions relating to listed negotiable obligations and listed government securities can be effectuated through SINAC. In order to control price volatility, MERVAL imposes a 15-minute suspension on trading when the price of a security registers a variation in price between 10% and 15% and between 15% and 20%. Any additional 5% variation in the price of a security will result in additional 10-minute successive suspension periods.

Regulation of the Argentine securities market

The Argentine securities market is regulated and overseen by the Comisión Nacional de Valores, or CNV, pursuant to Law No. 17,811, as amended, which in addition to having created the CNV governs the regulation of security exchanges, as well as stockbroker transactions, market operations, the public offering of securities, corporate governance matters relating to public companies and the trading of futures and options. Argentine pension funds and insurance companies are regulated by separate government agencies, whereas financial institutions are regulated primarily by the Central Bank.

In Argentina, debt and equity securities traded on an exchange or the over-the-counter market must, unless otherwise instructed by their shareholders, be deposited with Caja de Valores S.A. (Stock Exchange Incorporated), a corporation owned by the BCBA, MERVAL and certain provincial exchanges. Caja de Valores S.A. is the central

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securities depositary of Argentina and provides central depositary facilities, as well as acting as a clearinghouse for securities trading and as a transfer and paying agent for securities transactions. Additionally, Caja de Valores S.A. handles the settlement of securities transactions carried out by the BCBA and operates the computerized exchange information system mentioned above.

Despite a change in the legal framework of Argentine securities trading in the early 1990s, which permitted the issuance and trading of new financial products in the Argentine capital markets, including commercial paper, new types of corporate bonds and futures and options, there is still a relatively low level of regulation of the market for Argentine securities and investors’ activities in such markets and enforcement of them has been extremely limited. Because of the limited exposure and regulation in these markets, there may be less publicly available information about Argentine companies than is regularly published by or about companies in the United States and certain other countries. However, the CNV has taken significant steps to strengthen disclosure and regulatory standards for the Argentine securities market, including the issuance of regulations prohibiting insider trading and requiring insiders to report on their ownership of securities, with associated penalties for noncompliance.

In order to improve Argentine securities market regulation, the Argentine government issued Decree No. 677/01 on June 1, 2001, which provided certain guidelines and provisions relating to capital markets transparency and best practices. Decree No. 677/01 applies to individuals and entities that participate in the public offering of securities, as well as to stock exchanges. Among its key provisions, the decree broadens the definition of a “security,” governs the treatment of negotiable securities, obligates publicly listed companies to form audit committees comprised of three or more members of the board of directors (the majority of whom must be independent under CNV regulations), authorizes market stabilization transactions under certain circumstances, governs insider trading, market manipulation and securities fraud and regulates going-private transactions and acquisitions of voting shares, including controlling stakes in public companies.

Before offering securities to the public in Argentina, an issuer must meet certain requirements established by the CNV with regard to the issuer’s assets, operating history and management, among others, and only securities for which an application for a public offering has been approved by the CNV may be listed on a stock exchange. Despite these requirements imposed by the CNV, CNV approval does not imply any kind of certification as to the quality of the securities or the solvency of the issuer, although issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements and various other periodic reports with the CNV and the stock exchange on which their securities are listed, as well as to report to the CNV and the relevant stock exchange any event related to the issuer and its shareholders that may affect materially the value of the securities traded.

Item 10. Additional Information

MEMORANDUM AND ARTICLES OF INCORPORATION

Set forth below is a brief summary of certain significant provisions of our bylaws and Argentine law. This description does not purport to be complete and is qualified by reference to our bylaws, which have been filed as an exhibit to this annual report. For a description of the provisions of our bylaws relating to our board of directors and statutory auditors, see “Item 6. Directors, Senior Management and Employees.”

Description of capital stock

We are a public service company incorporated on July 21, 1992 as a sociedad anónima, a stock corporation, duly incorporated under the laws of Argentina for a 95−year period and registered on August 3, 1992 with the Public Registry of Commerce of the City of Buenos Aires under Nr. 7041 of Book 111, Volume A of Sociedades Anónimas.

As of the date of this annual report, our capital stock consists of Ps. 906,455,100, represented by 462,292,111 book-entry Class A common shares, with a par value of one peso each and the right to one vote per share, 442,210,385 book-entry Class B common shares, with a par value of one peso each and the right to one vote per share, and 1,952,604 book-entry Class C common shares, with a par value of one peso each and the right to one vote per share. Under our bylaws, we are required to ensure, unless the ENRE approves otherwise, that Class A common shares represent 51% of our outstanding capital stock and that new Class A, Class B and Class C shares are issued

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pro rata to the percentage of the outstanding capital stock represented by them prior to a capital increase, unless a general or special shareholder’s meeting approves otherwise. All outstanding shares are fully paid.

Our shareholders authorized a capital increase of 83,161,020 common shares on June 7, 2006 composed of 42,412,120 Class A common shares, 32,432,797 Class B common shares and 8,316,102 Class C common shares. Substantially all Class C shares will be converted into Class B shares upon the closing of the Argentine offering. Our Class B shares have been listed on the Buenos Aires Stock Exchange since 1995 although they have never been traded effectively on that exchange or any other market. Holders of Class A common shares may convert any Class B common shares they may hold into Class A shares, on a one−for−one basis, if such conversion would be required to maintain at all times 51% of the outstanding capital stock of Edenor. Our Class A shares have been pledged in favor of the Argentine Government to secure our obligations under our concession and may not be transferred, even to shareholders of the same class, without the prior approval of the ENRE. Under the Adjustment Agreement, these shares may not be transferred until the approval of the RTI.

Upon the closing of our IPO, substantially all Class C shares were converted into Class B shares. The rights previously attributable to the Class C shares were combined with those attributable to the Class B shares, and holders of the remaining Class C shares vote jointly as a single class with the holders of Class B shares in the election of directors.

Corporate purpose

Article 4 of our by-laws establishes that our corporate purpose is to engage in the distribution and sale of electricity within our concession area. We can also acquire the capital stock of other electric distribution companies, subject to regulatory approval, lease our network to provide power line communication or other voice, data and image transmission services, and render operating, advisory, training, maintenance, consultancy, management services and know-how related to the distribution of electricity both in Argentina and abroad. These activities may be conducted directly by us or through subsidiaries or affiliates. In addition, we may act as trustees of trusts created under Argentine law to the extent they are related to credit facilities granted to vendors and service providers acting in the distribution and sale of electricity who have guaranties granted by reciprocal guaranty companies owned by us.

Shareholders’ liability

Shareholder liability for a company’s losses is limited to the value of the shareholder’s shareholding in the company. However, under Argentine corporate law, shareholders who have a conflict of interest with the company with respect to certain matters and who do not abstain from voting on such matters may be held liable for damages to the company, provided that their votes were necessary for the adoption of the relevant decision. In addition, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine law or the company’s bylaws (or regulations, if any) may be held jointly and severally liable for damages to the company, other shareholders or third parties resulting from the resolution. See also “Item 3. Key Information—Risk factors—Risks related to our ADSs and common shares—Our shareholders may be subject to liability for certain votes of their securities.”

Appraisal rights

Whenever our shareholders approve:

• a merger or spin-off in which we are not the surviving corporation, unless the acquiror shares are authorized for public offering or listed on any stock exchange;

• a transformation of our corporate legal status;

• a fundamental change in our by-laws;

• a change in our domicile outside Argentina;

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• a voluntary termination of the public offering or listing authorization;

• a decision in favor of our continuation upon delisting or cancellation of our public offering authorization; or

• a total or partial recapitalization following a mandatory reduction of our capital or liquidation

any shareholder that voted against such action or did not attend the relevant meeting may exercise appraisal rights, that is, the rights to withdraw from the company and have its shares cancelled in exchange for the book value of its shares, determined on the basis of our latest balance sheet prepared, or that should have been prepared, in accordance with Argentine laws and regulations, provided that such shareholder exercises its appraisal rights within the time frame set forth below.

Appraisal rights must be exercised within five days following the meeting at which the resolution was adopted, in the event of a dissenting shareholder that voted against such resolution, or within 15 days following such meeting in the case of a dissenting shareholder that did not attend the meeting and who can prove that it was a shareholder at the date of the meeting. In the case of mergers or spin-offs involving an entity authorized to make public offering of its shares, appraisal rights may not be exercised if the shares to be received as a result of the transaction are listed in any stock exchange. Appraisal rights are terminated if the resolution giving rise to such rights is overturned at another shareholders’ meeting held within 60 days as from the meeting at which the resolution was adopted.

Payment of appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except where the resolution was to delist the capital stock of the company, in which case the payment period is reduced to 60 days from the date of the relevant resolution.

Because of the absence of legal precedent directly on point, there is doubt as to whether holders of ADSs will be able to exercise appraisal rights either directly or through the depositary with respect to Class B shares represented by ADSs.

Redemption or repurchase

According to the Transparency Decree, a sociedad anónima may acquire its own shares, provided that the public offering and listing thereof has been authorized, subject to the following terms and conditions and other regulations that may be issued by the CNV. The conditions are: (a) the shares to be acquired should be fully paid; (b) there shall be a resolution of the board of directors to such effect, (c) the acquisition shall be made out of net profits or voluntary reserves; (d) the total amount of shares acquired by the company, including previously acquired shares, shall not exceed 10% of the capital stock or such lower percentage determined by the CNV. The shares acquired in excess of such limit shall be disposed of within 90 days after the date of the acquisition originating the excess.

The shares acquired by the company shall be disposed of by the company within a maximum term of three years counted as from the date of the acquisition thereof. Upon disposition of the shares, the company shall make a preemptive rights offering of such shares. The offer is not mandatory if the shares are issued in connection with a compensation plan or program for the company’s employees or if the shares are distributed among all shareholders in proportion to their shareholding. If shareholders do not exercise in whole or in part, their preemptive rights, the sale shall be made in a stock exchange.

Preemptive and accretion rights

Under Argentine law, shareholders of any given class of common shares have preemptive rights, on a pro rata basis, to subscribe shares of the same class owned by them, and accretion rights, on a pro rata basis, to subscribe additional shares of its class or other classes of shares not subscribed by other shareholders of the same class. Preemptive rights and accretion rights may be waived only by each shareholder on a case-by-case basis. Alternatively, pursuant to the Argentine companies law, in exceptional cases and on a case by case basis when required for the best interest of the company, the shareholders at an extraordinary meeting with a special majority may decide to limit or suspend shareholders, preemptive rights, provided that the resolution is included in the meeting’s agenda and the shares to be issued are paid in kind or are issued to cancel preexisting obligations.

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In the event of a capital increase, our by-laws provide that holders of Class A, Class B and Class C shares have preemptive rights, on a pro rata basis, to subscribe new Class A, Class B or Class C shares, as the case may be, in order to maintain their pro rata interest in the company, unless otherwise decided in a general or extraordinary shareholders’ meeting. The holders of our Class A shares, in any capital increase, must exercise their preemptive rights to maintain at least 51% of our capital stock outstanding after giving effect to the capital increase, unless otherwise authorized by the ENRE or to the extent any other legal mechanism is used to secure the 51% ownership of our capital stock. In order for the participant employees of the PPP to participate in this offering, all of our Class C shares (including shares of PPP participants who will not participate in this offering) will be converted into Class B shares.

Pursuant to Argentine law, if approved by an extraordinary shareholders’ meeting, companies authorized to make a public offering of their securities may shorten the period during which preemptive rights may be exercised from 30 to 10 days following the publication of the offering in the Argentine Official Gazette and a newspaper of wide circulation in Argentina. Preemptive rights are exercisable following such publication (which must be made for three days) for a period of 30 days, provided the period is not reduced in the manner described above.

Shareholders who have exercised their preemptive rights have the right to exercise accretion rights, on a pro rata basis, with respect to any unsubscribed shares. Shares not subscribed by shareholders by virtue of preemptive or accretion rights may be offered to third parties. EASA and certain of our selling shareholders have assigned their preemptive and accretion rights to the international underwriters.

Holders of ADSs may be restricted in their ability to exercise preemptive rights if a prospectus under the Securities Act relating thereto has not been filed or is not effective or an exemption is not available.

Voting rights

Under our bylaws, each class of common shares entitles the holder thereof to one vote per share at any meeting of our shareholders. Under Argentine corporate law, a shareholder is required to abstain from voting on any resolution in which its direct or indirect interests conflict with that of, or are different from, the company. In the event that such shareholder votes on such resolution, and such resolution would not have been approved without such shareholder’s vote, the resolution may be declared void by a court and such shareholder may be held liable for damages to the company, other shareholders and third parties.

Registration requirements of foreign companies holding Class B shares

Under Argentine regulations, foreign companies that hold shares directly (and not as ADSs) in an Argentine company must register with the Inspección General de Justicia (the public registry of commerce) to exercise certain shareholder rights, including voting rights. The registration requires the filing of corporate and accounting documents in order to demonstrate that the foreign shareholder is not a special purpose vehicle organized solely to conduct business solely in Argentina, is entitled to conduct business in its place of incorporation and meets certain foreign assets requirements.

Liquidation rights

In the case of our liquidation or dissolution our assets will be applied to satisfy our outstanding liabilities and then proportionally distributed among holders of our common stock without distinction of classes.

Ordinary and extraordinary shareholders meetings

Shareholders’ meetings may be ordinary meetings or extraordinary meetings. We are required to convene and hold an ordinary meeting of shareholders within four months of the close of each fiscal year to consider the matters specified in the first two paragraphs of Section 234 of the Argentine corporate law, such as the approval of our financial statements, allocation of net income for such fiscal year, approval of the reports of the board of directors and the statutory audit committee and election, performance and remuneration of directors and members of the statutory audit committee. In addition, pursuant to Public Offering Transparency Decree 677/2001, at an ordinary shareholders’ meetings, our shareholders must consider (i) the disposition of, or creation of any lien over, our assets as long as such decision has not been performed under the ordinary course of business and (ii) the execution of

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administration or management agreements and whether to approve any agreement by virtue of which the assets or services provided to us are paid partially or totally with a percentage of our income, results or earnings, if the payment is material when measured against the volume of the ordinary course of business and our shareholders’ equity. Other matters which may be considered at an ordinary meeting convened and held at any time include the responsibility of directors and members of the statutory audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the authority of an ordinary meeting including, without limitations, the amendment of our by-laws, issuance of debentures, early dissolution, merger, spin off, reduction of capital stock and redemption of shares, transformation from one type of entity to another, appointment, removal and retribution of the liquidators and limitation or suspension of shareholders’ preemptive rights.

Special shareholders meetings of classes of shares

In the event a shareholder’s meeting is held to adopt any resolution affecting the rights of a class of shares, the consent or ratification of shareholders of that class is required and a special shareholder’s meeting shall be held. The special shareholder’s meetings shall be governed by the rules provided for the ordinary shareholder’s meetings.

Notices of meetings

Notices of shareholders’ meetings are governed by the provisions of Argentine Corporations Law. Furthermore, notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentine newspaper of wide circulation and in the bulletin of the Buenos Aires Stock Exchange, at least 20 but not more than 45 days prior to the date on which the meeting is to be held. Such notice must include information regarding the type of meeting to be held, the date, time and place of such meeting and the agenda. If quorum is not available at such meeting, a notice for a second meeting, which must be held within 30 days of the date on which the first meeting was called, must be published for three days, at least eight days before the date of the second meeting. The above−described notices of shareholders’ meetings may be effected simultaneously for the second meeting to be held on the same day as the first meeting, only in the case of ordinary meetings and special shareholder’s meetings of a relevant class of shares. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote of shares entitled to vote.

Quorum and voting requirements

The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available at the first meeting a second meeting may be held at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for an extraordinary shareholders’ meeting on first call is 70% of the shares entitled to vote, and if such quorum is not available, a second meeting may be held, for which the quorum is 35% of the shares entitled to vote.

Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of shares present that are entitled to vote on such action, except that: the approval of a majority of shares with voting rights (for these purposes non−voting preferred shares shall have voting rights), without application of multiple votes, is required at both the first and second meeting for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in our bylaws, (iii) our anticipated dissolution, (iv) the total or partial redemption of shares, or (v) the transformation of our corporate legal status, in which cases resolutions shall be adopted by the affirmative vote of the majority of shares with the right to vote. Preferred shares will be entitled to one vote in these circumstances. Moreover, pursuant to our by-laws, the extension of the company’s duration, the withdrawal from public offering or delisting, the total or partial recapitalization, the merger or spin-off (including if we are the surviving entity) or the termination of the concession agreement for the distribution and sale of electricity, on first and second calls, shall be taken by the affirmative vote of shares representing at least 80% of the outstanding shares entitled to vote, whether present or not at the shareholder’s meeting, without application of multiple votes, if applicable. An amendment to our by-laws requires the prior approval of the ENRE. Shareholder’s meetings shall approve amendments “ad-referendum” of the ENRE.

Shareholders’ meetings may be called by the board of directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of the statutory audit

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committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock in which case the meeting must take place within 40 days of such shareholders’ request. If the board or the statutory audit committee fails to call a meeting following such a request, a meeting may be ordered by the CNV or by the courts. In order to attend a meeting, a shareholder must also deposit with us a certificate of book-entry shares registered in its name and issued by Caja de Valores S.A. at least three business days prior to the date on which the meeting is to be held. If so entitled to attend a meeting, a shareholder may be represented by proxy. Proxies may not be granted to our board, members of the statutory audit committee, officers or employees.

Election of directors

Our board of directors must have 12 acting directors and the number of alternate directors that the shareholders may resolve in a general annual ordinary meeting or at a class annual ordinary meeting, such number not to exceed the number of acting directors. All directors are elected to serve for one fiscal year. Holders of Class A common shares are entitled to elect, in a general annual ordinary meeting or at an annual ordinary meeting of Class A holders 7 directors one of which must be independent in accordance with CNV regulations and our by-laws. Holders of Class B common shares are entitled to elect, in a general annual ordinary meeting or at an annual ordinary meeting of Class B holders 4 directors one of which must also be independent in accordance with CNV regulations and our by-laws. Holders of Class C common shares are entitled to elect, in a general annual ordinary meeting or at an annual ordinary meeting of Class C holders 1 director until the percentage of our capital stock represented by Class C common shares decreases below 6% at which moment holders of Class C common shares will be required to vote together with holders of Class B common shares to elect, as a common class, 5 directors. Upon the closing of the Argentine offering (to the extent consummated), substantially all Class C shares will have been converted into Class B shares and a nominal amount of Class C shares will remain outstanding. Accordingly, any rights previously attributable to the Class C shares will have been combined with those attributable to the Class B shares, and holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares in the election of directors.

Form and transfer

Our current capital stock is represented by book-entry shares. Our shareholders are required to hold their shares through book-entries directly made by Caja de Valores in the stock registry of the company carried by Caja de Valores or through book-entries with brokers, banks and other entities approved by the CNV that have accounts with Caja de Valores, or with the participants of the Caja de Valores. Caja de Valores is in charge of maintaining a stock registry on our behalf based on information received from shareholders that chose to hold their shares directly by registration on the stock registry of the company and from participants of the Caja de Valores, and in accordance with Argentine law only those holders listed in the stock registry either directly or through participants of the Caja de Valores will be recognized as shareholders. Shares held by participants of the Caja de Valores have the same rights as shares recorded in our shareholders’ register.

Certain Differences between Argentine and U.S. Corporate Law

Investors should be aware that Argentine Corporate Law and the Argentine Securities Market Law, both of which apply to us, differ in certain material respects from laws generally applicable to U.S. corporations and their shareholders.

Mergers, Consolidations, and Similar Arrangements

Under Argentine law, a company is permitted to merge with another company only if a majority of the shares representing the company’s outstanding capital stock approve the merger at a duly convened general extraordinary shareholders’ meeting. In addition, a higher threshold requiring the approval of greater than a majority of shares may be imposed under the company’s bylaws. Our bylaws provide that in the event of a merger or spin-off, 85% of our company’s voting shares must approve such decision. In addition, under our bylaws, dissenting shareholders are only entitled to appraisal rights if the shares that they would receive as a consequence of the merger are not allowed to become publicly traded. Our bylaws also provide that appraisal rights may be exercised within five days by shareholders who are present at the shareholders’ meeting and who vote against the merger, and within fifteen days by shareholders who were absent from the meeting, but who were shareholders at the time of the meeting.

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In contrast, under Delaware law, with certain exceptions, a merger, consolidation, or sale of all or substantially all of the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. Under Delaware law, a shareholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which the shareholder may receive payment in the amount of the fair market value of the shares held by the shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction. Delaware law also provides that a parent corporation, by resolution of its board of directors and without any shareholder vote, may merge with any subsidiary of which it owns at least 90% of each class of capital share. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights.

Anti-Takeover Provisions

Although a specific rule does not exist regarding anti-takeover provisions under Argentine law, public companies are allowed to include provisions in their bylaws in order to restrict the ability of third parties to acquire control of the company. The company’s bylaws may provide that in order to take certain actions, a supermajority is required with respect to the shares entitled to vote thereon. Pursuant to the CNV rules, any group or individual that directly or indirectly seeks to acquire an amount of voting shares of a company (including rights to subscribe to such shares or options to acquire such shares), that could result in substantial participation rights with respect to the capital stock of such company, is required to, prior to the acquisition and within ten days of seeking to acquire such company, conduct a mandatory public offering.

In contrast, under Delaware law, corporations can implement shareholder rights plans and other measures, including staggered terms for directors and super-majority voting requirements, to prevent takeover attempts. Delaware law also prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the shareholder became an interested shareholder unless:

• prior to the date of the transaction in which the shareholder became an interested shareholder, the board of directors of the corporation approves either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder;

• upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owns at least 85% of the voting stock of the corporation, excluding shares held by directors, officers, and employee stock plans; or

• at or after the date of the transaction in which the shareholder became an interested shareholder, the business combination is approved by the board of directors and authorized at a shareholders’ meeting by at least 66 2/3% of the voting stock which is not owned by the interested shareholder.

Shareholders’ Suits Class Action Lawsuits

Under Argentine law, class action lawsuits are not permitted. In contrast, under Delaware law, class actions and derivative actions are generally available to shareholders for purposes of, among other things, breaches of fiduciary duty, corporate waste and other actions or omissions that conflict with applicable law. In these kinds of actions, the court generally has discretion to permit the winning party to recover attorneys’ fees incurred in connection with the action. Shareholder Proposals

Under Argentine law, directors are nominated by shareholders, and there is no special provision restricting the manner in which nominations may be made. Pursuant to our bylaws, shareholders of our Class A shares are entitled to elect seven directors (and up to seven alternate directors), holders of our Class B shares are entitled to elect four directors (and up to four alternate directors) and holders of our Class C shares are entitled to elect one director (and one alternate director), provided they hold at least 6% of our outstanding capital stock. In the event holders of our Class C shares hold less than 6% of our outstanding capital stock, they must vote with the holders of Class B shares

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to elect five directors (and up to five alternate directors). Upon the closing of the Argentine offering (to the extent consummated), substantially all Class C shares will have been converted into Class B shares and a nominal amount of Class C shares will remain outstanding. Accordingly, any rights previously attributable to the Class C shares will have been combined with those attributable to the Class B shares, and holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares in the election of directors.

In contrast, Delaware law does not include a provision restricting the manner in which nominations for directors may be made by shareholders or the manner in which business may be brought before a meeting. Calling of Special Shareholders’ Meetings

Under Argentine law and our bylaws, a shareholders’ meeting may be convened by the board of directors or by the statutory audit committee. Under our bylaws, shareholders representing at least 5% of our outstanding capital stock may request that the board of directors or the statutory audit committee call a shareholders’ meeting to discuss the matters indicated in the written request. The request must indicate the subject to be dealt with and the board of directors or the statutory audit committee must convene a shareholders’ meeting to be held within forty days after receipt of the request. If the board of directors or the statutory audit committee fails to convene a shareholders’ meeting, the meeting may be called by the public authority or judicially.

Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of

incorporation or bylaws to call a special meeting of shareholders. Cumulative Voting

Under Argentine law, cumulative voting for the election of one third of the vacant directors is permitted. Under Delaware law, cumulative voting for the election of directors is permitted only if expressly authorized in the certificate of incorporation. Approval of Corporate Matters by Written Consent

Under Argentine law, a shareholder is not allowed to take action or vote by written consent. Delaware law permits shareholders to take action by written consent of holders of outstanding shares having more than the minimum number of votes necessary to take the action at a shareholders’ meeting at which all voting shares were present and voted. Amendment of Certificate of Incorporation

Under Argentine law, it is not possible to amend a company’s certificate of incorporation (acta constitutiva). However, the provisions that govern an Argentine company are contained in each company’s bylaws, which may be amended in the manner described below. Under Delaware law, a company’s certificate of incorporation generally may be amended by a vote of the majority of shareholders entitled to vote thereon (unless otherwise provided in the certificate of incorporation), subsequent to a resolution of the board of directors proposing such amendment. Amendment of Bylaws

Under Argentine law, amending a company’s bylaws requires shareholder approval at an extraordinary shareholders’ meeting. Argentine law requires that at least 60% of the voting shares (unless the bylaws require a higher threshold), at first call, or 30% at second call (unless the bylaws require a higher or lower threshold), which represent the company’s outstanding capital stock, be present at the meeting and that the resolutions be approved by an absolute majority of the present shares (unless the bylaws require a higher threshold). Pursuant to our bylaws, the quorum for an extraordinary shareholders meeting, at first call, is 70% of the voting shares, and at second call, 35%. Resolutions, in both cases, will be taken by the absolute majority of the voting shares present at the meeting. In certain cases, resolutions must be taken by 80% of the voting shares, present or not at the meeting.

Under Delaware law, holders of a majority of the voting power of a corporation and, if so provided in the certificate of incorporation, the directors of the corporation, have the power to adopt, amend, and repeal the bylaws of a corporation.

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Staggered board of directors

Argentine law permits companies to have a staggered board of directors. Delaware law also permits corporations to have a staggered board of directors.

MATERIAL CONTRACTS

We are party to various contracts in the ordinary course of business. In the past two years, we have not entered into any material contracts.

EXCHANGE CONTROLS

Prior to December 1989, the Argentine foreign exchange market was subject to exchange controls. From December 1989 until April 1991, Argentina had a freely floating exchange rate for all foreign currency transactions, and the transfer of dividend payments in foreign currency abroad and the repatriation of capital were permitted without prior approval of the Central Bank. From April 1, 1991, when the Convertibility Law became effective, until December 21, 2001, when the Central Bank decided to close the foreign exchange market, the Argentine currency was freely convertible into U.S. Dollars.

On December 3, 2001, the Argentine government imposed a number of monetary and currency exchange control measures through Decree 1570/01, which included restrictions on the free disposition of funds deposited with banks and tight restrictions on transferring funds abroad without the Central Bank’s prior authorization subject to specific exceptions for transfers related to foreign trade. Beginning in January 2003, the Central Bank has gradually eased these restrictions and expanded the list of transfers of funds abroad that do not require its prior authorization. However, in June 2003 the Argentine government instituted restrictions on capital flows into Argentina, which mainly consisted of a prohibition against the transfer abroad of any funds until 180 days after their entry into the country.

In June 2005, the Argentine government issued Decree 616/05, which established additional restrictions over all capital flows that could result in the decreased availability of international credit. Pursuant to the decree, all private sector indebtedness of physical persons or corporations in Argentina are required to be agreed upon and repaid not prior to 365 days from the date of entry of the funds into Argentina, regardless of the form of repayment. The decree outlines several types of transaction that are exempt from its requirements, including foreign trade financings, foreign trade balances of those entities authorized to carry out foreign exchange, and primary offerings of debt securities issued pursuant to a public offering and listed on a self-regulated market.

In addition, the decree stipulates that all capital inflows within the private sector to the local exchange market of physical persons or corporations within Argentina, as well as all capital inflows of non-residents received by the local exchange market destined for local money holdings, acquisition of active or passive private sector financings (financial or non-financial), excluding foreign direct investment and primary offerings of debt securities issued pursuant to a public offering and listed on a self-regulated market and investments in securities issued by the public sector that are acquired in secondary markets, must meet certain requirements, including those outlined below:

• such funds may be transferred only outside the local exchange market after a 365-day period from the date of entry of the funds into Argentina;

• any amounts resulting from the exchange of such funds are to be credited to an account within the Argentine banking system;

• a non-transferable, non-interest-bearing deposit must be maintained for a term of 365 calendar days, in an amount equal to 30% of any inflow of funds to the local foreign exchange market arising from certain enumerated transactions; and

• such deposit shall be in U.S. dollars in any of the financial entities of Argentina and may not be used as collateral or guaranty for any credit transaction. Any breach to the provisions of Decree 616/05 is subject to criminal penalties of the Exchange Regime.

In addition, on November 16, 2005, the Ministry of Economy and Production issued Resolution 637/05, pursuant to which Decree 616/05 was regulated, providing that any inflow of funds to the local exchange market in connection with an initial public offering of securities, bonds or certificates issued by a trustee under a trust, whether or not such

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trust is publicly offered and listed in a self-regulated market, shall comply with all requirements provided for section 4 of Decree 616/05 whenever such requirements are applicable to the inflow of funds to the local exchange market in connection with the acquisition of any of the assets under the trust.

Money laundering

On April 13, 2000, the Argentine Congress passed Law No. 25,246 (the Law of Money Laundering), which establishes an administrative criminal system and supercedes various sections of the Argentine Penal Code. This law defines money laundering as a crime, stating that a crime is committed whenever a person converts, transfers, manages, sells, encumbers, or otherwise uses money, or any other assets, connected with a crime in which that person has not participated, with the possible result that the original or substituted assets may appear to be of a legitimate origin, provided the value of the assets exceeds Ps. 50,000, whether such amount results from one or more transactions.

In addition, the Law of Money Laundering created the Financial Information Unit, which is charged with the handling and the transmission of information in order to prevent the laundering of assets originating from:

• Crimes related to illegal trafficking and commercialization of narcotics (Law No. 23,737);

• Crimes related to arms trafficking (Law No. 22,415);

• Crimes related to the activities of an illegal association as defined in Article 210 bis of the Penal Code;

• Illegal acts committed by illegal associations (Article 210 of the Penal Code) organized to commit crimes for with political or racial objectives;

• Crimes of fraud against the Public Administration (Article 174, Section 5 of the Penal Code);

• Crime against the Public Administration under Chapters VI, VII, IX and IX bis of Title XI of Book Two of the Penal Code;

• Crimes of underage prostitution and child pornography under Articles 125, 125 bis, 127 bis and 128 of the Penal Code.

The principal objective of the Law of Money Laundering is to prevent money laundering. Like other international money laundering laws, Argentine law does not designate sole responsibility to the Argentine government for the monitoring of these criminal activities, but rather also delegates certain obligations to various private sector entities such as banks, stockbrokers, stock market entities, and insurance companies. These obligations essentially consist of information gathering functions, such as:

• obtaining from clients documents that indisputably prove the identity, legal status, domicile and other information, to accomplish any type of activity intended;

• reporting any suspicious activity or operation;

• keeping any monitoring activities in connection with a proceeding pursuant to the Money Laundering Law confidential from both clients and third parties.

In addition, Central Bank regulations require that Argentine banks undertake certain minimum procedures to prevent money laundering.

TAXATION

The following summary contains a description of the material Argentine and U.S. federal income tax consequences of the acquisition, ownership and disposition of common shares or ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase common shares or ADSs. The summary is based upon the tax laws of Argentina and regulations thereunder and on the tax laws of the United States and regulations thereunder as in effect on the date hereof, which are subject to change. Investors should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of common shares or ADSs.

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Although there is at present no income tax treaty between Argentina and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. No assurance can be given, however, as to whether or when a treaty will enter into force or how it will affect the U.S. holders of common shares or ADSs.

Argentine Tax Considerations

The following discussion is a summary of the material Argentine tax considerations relating to the purchase, ownership and disposition of our Class B common shares or ADSs.

Dividends tax

Dividends paid on our Class B common shares or ADSs, whether in cash, property or other equity securities, are not subject to income tax withholding, except for dividends paid in excess of our taxable accumulated income up to the previous fiscal period, which are subject to withholding at the rate of 35% in respect of such excess. This is a final tax and it is not applicable if dividends are paid in shares (acciones liberadas) rather than in cash.

Capital gains tax

Due to certain amendments made to the Argentine Income Tax Law, it is not entirely clear whether certain amendments concerning payment of income tax on capital gains arising from the sale, exchange or other disposition of shares are in effect or not. Although Opinion No. 351 of the National Treasury General Attorney Office clarified the legal status of certain matters affecting the tax treatment of capital gains certain issues still remain unclear.

Resident individuals. Under what we believe to be a reasonable interpretation of existing applicable tax laws and regulations: (i) income derived from the sale, exchange or other disposition of our Class B common shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax, and (ii) although there still exists uncertainty regarding this issue, income derived from the sale, exchange or other disposition of our Class B common shares or ADSs by resident individuals who sell or dispose of Argentine shares on a regular basis should be exempt from Argentine income tax.

Foreign beneficiaries. Capital gains obtained by non resident individuals or foreign entities from the sale, exchange or other disposition of our Class B common shares or ADSs are exempt from income tax. Pursuant to a reasonable construction of the AITL, and although the matter is not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as “offshore entities” for purposes of Argentine tax laws. For this purpose, an offshore entity is any foreign legal entity which pursuant to its by-laws or to the applicable regulatory framework (i) its principal activity is to invest outside the jurisdiction of its incorporation and/or (ii) cannot perform in such jurisdiction certain transactions.

Local entities. Capital gains obtained by Argentine entities in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina derived from the sale, exchange or other disposition of our Class B common shares or ADSs are subject to income tax at the rate of 35%. Losses arising from the sale of our Class B common shares or ADSs can be applied only to offset such capital gains arising from sales of shares or ADSs.

Personal Assets tax

Argentine entities, such as us, have to pay the personal assets tax on behalf of all individuals and entities for the holding of our shares at December 31 of each year. The applicable tax rate is 0.5% and is levied on the equity value (valor patrimonial proporcional), or the book value, of the shares arising from the latest financial statements. Pursuant to the Personal Assets Tax Law, we are entitled to seek reimbursement of such paid tax from the applicable foreign shareholders, even by withholding and/or foreclosing the shares, or by withholding dividends.

Value added tax

The sale, exchange or other disposition of our Class B common shares or ADSs and the distribution of dividends are exempted from the value added tax.

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Transfer taxes

The sale, exchange or other disposition of our Class B common shares or ADSs is not subject to transfer taxes.

Stamp taxes

Stamp taxes may apply in certain Argentine provinces in case transfer of our Class B common shares or ADSs is performed or executed in such jurisdictions by means of written agreements. Transfer of our Class B common shares or ADSs is exempted from stamp tax in the City of Buenos Aires.

Other taxes

There are no Argentine inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B common shares or ADSs. In addition, neither the minimum presumed income tax nor any local gross turnover tax is applicable to the ownership, transfer or disposition of our Class B common shares or ADSs.

Tax treaties

Argentina has signed tax treaties for the avoidance of double taxation with Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, Russia and the United Kingdom. There is currently no tax treaty or convention in effect between Argentina and the United States. It is not clear when, if ever, a treaty will be ratified or entered into effect. As a result, the Argentine tax consequences described in this section will apply, without modification, to a holder of our Class B common shares or ADSs that is a U.S. resident. Foreign shareholders located in certain jurisdictions with a tax treaty in force with Argentina may be exempted from the payment of the personal assets tax.

United States Federal Income Tax Considerations

This summary describes the material U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of ADSs. This summary applies to a holder only if such holder holds the ADSs as capital assets for tax purposes. This summary does not apply to investors that are members of a class of holders subject to special rules, such as:

• a dealer in securities or currencies;

• a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;

• a bank;

• a life insurance company;

• a tax-exempt organization;

• a person that holds ADSs that are a hedge or that are hedged against interest rate or currency risks;

• a person that holds ADSs as part of a straddle or conversion transaction for tax purposes;

• a person who is liable for the alternative minimum tax;

• a person whose functional currency for U.S. tax purposes is not the U.S. Dollar; or

• a person that owns or is deemed to own 10% or more of any class of our stock.

This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. Investors should consult their own tax advisors concerning the consequences of purchasing, owning, and disposing of ADSs in their particular circumstances, including the possible application of state, local, non-U.S. or other tax laws. For purposes of this summary, an investor is a “U.S. holder” if such investor is a beneficial owner of an ADS and is:

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• a citizen or resident of the United States;

• a U.S. domestic corporation; or

• otherwise subject to U.S. federal income tax on a net income basis with respect to income from the ADS.

If a partnership holds our ADSs, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. An investor who is a partner of a partnership holding our ADSs should consult its own tax advisor.

In general, an investor is the beneficial owner of ADSs, such investor will be treated as the beneficial owner of the common stock represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if such investor exchanges an ADS for the common stock represented by that ADS.

Dividends

The gross amount of cash dividends that investors receive (prior to deduction of Argentine taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income. Dividends paid in Argentine Pesos will be included in an investor’s income in a U.S. Dollar amount calculated by reference to the exchange rate in effect on the date of the depositary’s receipt of the dividend, regardless of whether the payment is in fact converted into U.S. Dollars. If such a dividend is converted into U.S. Dollars on the date of receipt, investors generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. Subject to certain exceptions for short-term (60 days or less) and hedged positions, the U.S. Dollar amount of dividends received by an individual U.S. holder in respect of ADSs before January 1, 2011 generally will be subject to taxation at a maximum rate of 15% if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The ADSs are listed on the New York Stock Exchange and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2006 or 2007 taxable years. In addition, based on our audited financial statements and our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not anticipate becoming a PFIC for our 2008 taxable year.

Based on existing guidance, it is not entirely clear whether dividends received with respect to the common shares will be treated as qualified dividends, because the common shares are not themselves listed on a U.S. exchange. In addition, the U.S. Treasury has announced its intention to promulgate rules pursuant to which holders of ADSs and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because such procedures have not yet been issued, it is not clear whether we will be able to comply with them. U.S. holders of ADSs should consult their own tax advisors regarding the availability of the reduced dividend tax rate in the light of their own particular circumstances.

Distributions of additional shares in respect of ADSs that are made as part of a pro-rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Sale or Other Disposition

Upon a sale or other disposition of ADSs, an investor will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. Dollar value of the amount realized and such investor’s tax basis, determined in U.S. Dollars, in the ADSs. Generally, such gain or loss realized on the sale or other disposition of ADSs will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the ADSs were held for more than one year. The ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder before January 1, 2011 generally is subject to taxation at a maximum rate of 15%.

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Foreign Tax Credit Considerations

Investors should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to make effective use of foreign tax credits. If no such rules apply, investors may claim a credit against their U.S. federal income tax liability for Argentine taxes withheld from cash dividends on the ADSs, so long as they have owned the ADSs (and not entered into specified kinds of hedging transactions) for at least a 16-day period that includes the ex-dividend date. Instead of claiming a credit, investors may, at their election, deduct such Argentine taxes in computing their taxable income, subject to generally applicable limitations under U.S. tax law. The calculation of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of deductions, involve the application of complex rules that depend on a U.S. holder’s particular circumstances. Investors should consult their own tax advisors regarding the creditability or deductibility of such taxes.

U.S. Information Reporting and Backup Withholding Rules

Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (1) is a corporation or other exempt recipient or (2) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Investors may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim or refund with the Internal Revenue Service and filing any required information.

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

American depositary receipts

The Bank of New York is the depositary for the American Depositary Shares, also referred to as ADSs. Each ADS represents 20 Class B common shares (or a right to receive 20 Class B common shares) deposited with the principal Buenos Aires office of Banco Río de la Plata S.A., as custodian for the depositary in Argentina. Each ADS will also represent any other securities, cash or other property which may be held by the depositary. The depositary’s office at which the ADRs are administered is located at 101 Barclay Street, 22W, New York, NY 10280.

The depositary is required to keep books at its corporate trust office for the registration of ADSs and transfers of ADSs which at all reasonable times shall be open for inspection by the holders of ADSs, provided that such inspection shall not be for the purpose of communicating with holders in the interest of a business or object other than the business of Edenor or a matter related to the deposit agreement or the receipts.

Investors hold ADSs directly either by having an American Depositary Receipt, also referred to as an ADR, which is a certificate evidencing a specific number of ADSs, registered in the investor’s name, or by having ADSs registered in the investor’s name in the Direct Registration System. Investors also hold ADSs indirectly by holding a security entitlement in ADSs through the investor’s broker or other financial institution. If investors hold ADSs directly, they are ADS registered holders. This description assumes that such investors are ADS registered holders. If investors hold the ADSs indirectly, the investors must rely on the procedures of their broker or other financial institution to assert their rights as ADS registered holders described in this section. Investors should consult with their broker or financial institution to learn what those procedures are.

The Direct Registration System, or DRS, is a system administered by The Depository Trust Company, also referred to as DTC, pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.

We do not treat ADS holders as one of our shareholders and ADS holders do not have shareholder rights. Argentine law governs shareholder rights. The depositary is the holder of the common shares underlying the ADSs. Holders of ADSs have ADS holder rights. A deposit agreement among us, the depositary, the ADS holder, and the beneficial owners of ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

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The following is a summary of the material provisions of the deposit agreement. For more complete information, investors should read the entire deposit agreement and the form of ADR.

Dividends and other distributions

How will investors receive dividends and other distributions on the shares?

The depositary has agreed to pay to ADS holders the cash dividends or other distributions it or the custodian receives on common shares or other deposited securities, after deducting its fees and expenses described below. ADS holders will receive these distributions in proportion to the number of common shares your ADSs represent.

Cash

The depositary will convert any cash dividend or other cash distribution we pay on the common shares into U.S. Dollars, if it can do so on a reasonable basis and can transfer the U.S. Dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. It may hold the foreign currency it cannot convert for the account of the ADR holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest.

Before making a distribution, the depositary will deduct any withholding taxes that must be paid. See “—Taxation.” It will distribute only whole U.S. Dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, holders of ADSs may lose some or all of the value of the distribution.

Shares

The depositary may distribute additional ADSs representing any common shares we distribute as a dividend or free distribution. The depositary will only distribute whole ADSs. It will try to sell common shares, in lieu of delivering a fractional ADS and distribute the net proceeds in the same way as it does with cash. The depositary may also sell a portion of the distributed common shares to pay its fees and expenses in connection with the distribution. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new common shares.

Rights to purchase additional common shares

If we offer holders of our securities any rights to subscribe for additional common shares or any other rights, the depositary may make these rights available to holders of ADSs. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse. In that case, holders of ADSs will receive no value for them.

If the depositary makes rights to purchase common shares available to holders of ADSs, it will exercise the rights and purchase the common shares on their behalf. The depositary will then deposit the shares and deliver ADSs to the investor. It will only exercise rights if the investor pays it the exercise price and any other charges the rights require the investor to pay.

U.S. securities laws may restrict transfers and cancellation of the ADSs representing common shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

Other Distributions

The depositary will send to holders of ADSs anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may

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decide to hold what we distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to holders of ADSs unless it receives satisfactory evidence from us that it is legal to make that distribution. The depositary may sell a portion of the distributed property to pay its fees and expenses in connection with the distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders. We have no obligation to register ADSs, common shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, common shares, rights or anything else to ADS holders. This means that holders of ADSs may not receive the distributions we make on our common shares or any value for them if it is illegal or impractical for us to make them available to holders of ADSs.

Deposit, withdrawal and cancellation

How are ADSs issued?

The depositary will deliver ADSs if the investor or the investor’s broker deposits common shares or evidence of rights to receive common shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will register the appropriate number of ADSs in the names the investor requests.

How do ADS holders cancel ADSs and obtain shares?

If an investor surrenders ADSs to the depositary, upon payment of the investor’s fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, the depositary will deliver the common shares and any other deposited securities underlying the surrendered ADSs to the investor or a person the investor designates at the office of the custodian. Or, at the investor’s request, risk and expense, the depositary will deliver the deposited securities at its office, if feasible.

How do ADS holders interchange between certified ADSs and uncertified ADSs?

Investors may surrender their ADRs to the depositary for the purpose of exchanging their ADR for uncertificated ADSs. The depositary will cancel that ADR and will send to the ADS registered holder a statement confirming that the ADS registered holder is the registered holder of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to the ADS registered holder an ADR evidencing those ADSs.

Voting rights

How do holders ADSs vote?

Holders of ADSs may instruct the depositary to vote the number of common shares their ADSs represent. If we ask for the instructions of the holders of the ADSs, the depositary will notify the holders of the ADSs of shareholders’ meetings and the upcoming vote and arrange to deliver our voting materials to the holder of the ADSs. Those materials will describe the matters to be voted on and explain how holders of ADSs may instruct the depositary to vote the shares or other deposited securities underlying their ADSs as the holder of the ADSs directs by a specified date. For instructions to be valid, the depositary must receive them on or before the date specified.

The depositary will try, as far as practical, subject to Argentine law and the provisions of our by-laws or similar documents, to vote or to have its agents vote the number of common shares or other deposited securities represented by the ADSs as the holder of the ADSs instructs. Otherwise, the holder of the ADSs will not be able to exercise their right to vote unless they withdraw the shares underlying their ADSs. In the absence of the instruction of the holder of the ADSs, our company may request the depositary to vote as we instruct at the corresponding meeting. The holder of the ADSs may otherwise not know about the meeting far enough in advance to withdraw the shares. We will use our best efforts to request that the depositary notify holders of ADSs of upcoming votes and ask for the instructions of holders of ADSs.

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If we timely ask the depositary to solicit the instructions of holders of ADSs and the depositary does not receive voting instructions from the holder of the ADSs by the specified date, the depositary will consider the holder of the ADSs to have authorized and directed it to vote the number of deposited securities represented by their ADSs in favor of all resolutions proposed by our board of directors or, if not so proposed, to vote in the same manner as the majority of all other shares voted in respect of this resolution. The depositary will vote as described in the preceding sentence unless we notify the depositary that:

• we do not wish the depositary to vote those deposited securities;

• we think there is substantial shareholder opposition to the particular question; or

• we think the particular question would have an adverse impact on our shareholders.

Fees and expenses

Persons depositing common shares or holders of ADRs will be required to pay certain fees and expenses, as described in the table below, which the depositary is entitled to deduct prior to making any cash dividend or other cash distribution on the deposited shares.

Persons depositing common shares or ADS holders must pay:

For:

$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)

• Issuance of ADSs, including issuances resulting from a distribution of common shares or rights or other property

• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates

$0.02 (or less) per ADS. • Any cash distribution to the holder of the ADSs

$0.02 (or less) per ADS per year. • Depositary services

A fee equivalent to the fee that would be payable if securities distributed to the holder of ADSs had been common shares and the shares had been deposited for issuance of ADSs

• Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADR holders

Registration or transfer fees • Transfer and registration of common shares on our common share register to or from the name of the depositary or its agent when the holder of ADSs deposits or withdraw common shares.

Expenses of the depositary in converting foreign currency to U.S. Dollars

Expenses of the depositary • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)

Taxes and other governmental charges the depositary or the custodian have to pay on any ADSs or common share underlying ADSs, for

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Persons depositing common shares or ADS holders must pay:

For:

example, stock transfer taxes, stamp duty or withholding taxes

Any charges incurred by the depositary or its agents for servicing the deposited securities

• No charges of this type are currently made in the Argentine market

The Bank of New York, as depositary, has agreed to reimburse us for expenses we incur that are related to establishment and maintenance of the ADS program, including investor relations expenses and stock market application and listing fees. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not related to the amount of fees the depositary collects from investors.

The depositary collects fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees related to making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

Payment of taxes

The depositary may deduct the amount of any taxes owed from any payments to the holder of ADSs. It may also sell deposited securities, by public or private sale, to pay any taxes owed. The holder of ADSs will remain liable if the proceeds of the sale are not enough to pay the taxes. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to the holder of ADSs any proceeds, or send to the holder of ADSs any property, remaining after it has paid the taxes.

Reclassifications, recapitalizations and mergers

If we: Then:

Change the nominal or par value of our common shares

Reclassify, split up or consolidate any of the deposited securities

Distribute securities on the common shares that are not distributed to the holders of ADSs

Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action

The cash, shares or other securities received by the depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities.

The depositary may distribute some or all of the cash, shares or other securities it received. It may also deliver new ADRs or ask the holder of ADSs to surrender their outstanding ADRs in exchange for new ADRs identifying the new deposited securities.

Limitations on obligations and liability

Limits on our obligations and the obligations of the depositary; limits on liability to holders of ADRs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

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• are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

• are not liable if either of us is prevented or delayed by law or circumstances beyond our control from performing our obligations under the deposit agreement;

• are not liable if either of us exercises discretion permitted under the deposit agreement;

• have no obligation to become involved in a lawsuit or other proceeding related to the ADRs or the deposit agreement on behalf of holders of ADSs or on behalf of any other party; and

• may rely upon any documents we believe in good faith to be genuine and to have been signed or presented by the proper party.

In the deposit agreement, we agree to indemnify the depositary for acting as depositary, except for losses caused by the depositary’s own negligence or bad faith, and the depositary agrees to indemnify us for losses resulting from its negligence or bad faith.

Requirements for depositary actions

Before the depositary will deliver or register a transfer of an ADR, make a distribution on an ADR, or permit withdrawal of common shares, the depositary may require:

• payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any common shares or other deposited securities;

• satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

• compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs generally when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

The right of holders of ADSs to receive the common shares underlying their ADRs

Holders of ADSs have the right to surrender their ADSs and withdraw the underlying common shares at any time except:

When temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of common shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our common shares.

When holder of ADSs seeking to withdraw common shares owe money to pay fees, taxes and similar charges.

When it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADRs or to the withdrawal of common shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-release of ADSs

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying common shares. This is called a Pre-Release of the ADSs. The depositary may also deliver common shares upon the receipt and cancellation of pre-released ADSs (even if the ADSs are surrendered before the Pre-Release transaction has been terminated). A Pre-Release is terminated as soon as the underlying common shares are delivered to the Depositary. The depositary may receive ADSs instead of common shares to satisfy a Pre-Release. The depositary may pre-release ADSs only under the following conditions: (a) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer (i) owns the common

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shares or ADSs to be deposited; (ii) transfers all beneficial right, title and interest in such common shares or ADSs, as the case may be, to the Depositary in its capacity as such and for the benefit of the Beneficial Owners, and (iii) will not take any action with respect to such common shares or ADSs, as the case may be, that is inconsistent with the transfer of ownership (including, without the consent of the Depositary, disposing of common shares or ADSs, as the case may be, other than in satisfaction of such Pre-Release), ; (b) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; (c) the depositary must be able to terminate the pre-release on not more than five business days’ notice and (d) Pre-Release is subject to such further indemnities and credit regulations as the Depositary deems appropriate. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of Pre-Release, although the depositary may disregard the limit from time to time, if it thinks it is appropriate to do so.

Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System, or Profile, will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership shall be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. Profile is a required feature of DRS which allows a DTC participant, claiming to act on behalf of a registered holder of ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS registered holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not verify, determine or otherwise ascertain that the DTC participant, which is claiming to be acting on behalf of an ADS registered holder in requesting registration of transfer and delivery described in the paragraph above, has the actual authority to act on behalf of the ADS registered holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement, shall not constitute negligence or bad faith on the part of the depositary.

Shareholder communications and inspection of register of holders of ADSs

The holders of ADSs are holders of deposited securities. As such, the depositary will make available for inspection by the holders of ADSs at its office all communications that it receives from us that we make generally available to holders of deposited securities. The depositary will send holders of ADSs copies of those communications if we ask it to. Holders of ADSs have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

Amendment and termination

We may agree with the depositary to amend the deposit agreement and the ADRs without the consent of holders of ADSs for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADR holders, it will not become effective for outstanding ADRs until 30 days after the depositary notifies ADR holders of the amendment. At the time an amendment becomes effective, the holders of ADSs are considered, by continuing to hold their ADR, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

The depositary will terminate the deposit agreement if we ask it to do so. The depositary may also terminate the deposit agreement if the depositary has told us that it would like to resign and we have not appointed a new depositary bank within 60 days. In either case, the depositary must notify the holder of ADSs at least 30 days before termination.

After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: (a) advise the holders of ADSs that the deposit agreement is terminated, (b) collect distributions on the deposited securities, (c) sell rights and other property, and (d) deliver common shares and other deposited securities

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upon surrenders of ADRs. One year after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADR holders that have not surrendered their ADRs. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination our only obligations will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay.

DOCUMENTS ON DISPLAY

The materials included in this annual report on Form 20-F, and exhibits thereto, may be inspected and copied at the Securities and Exchange Commission’s public reference room in Washington, D.C. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. The Securities and Exchange Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and information statements and other information regarding us. The reports and information statements and other information about us can be downloaded from the Securities and Exchange Commission’s website.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Market risk generally represents the risk that losses may occur in the value of financial instruments as a result of movements in interest rates, foreign currency exchange rates or commodity prices. We are exposed to changes in financial market conditions in the normal course of our business due to our use of certain financial instruments as well as transactions incurred in various foreign currencies.

As of December 31, 2007, we have no material exposure to interest rate risk because only approximately 4.0% of our outstanding financial debt bears interest at variable rates. In addition, we have no material exposure to commodity price risk because our commodities represent less than 1.1% of our operating expenses.

Foreign currency risk

We have a material exposure to exchange rate fluctuations between the Peso and the U.S. Dollar. We intend to manage part of such risk by maintaining cash and deposits in U.S. Dollars, although our cash and deposits in U.S. Dollars amounted to approximately U.S. $27.7 million at December 31, 2007. We expect that our ability to maintain cash and deposits in U.S. Dollars will improve due to the ratification of the Adjustment Agreement. In addition, approximately 4% of our operating expenses are denominated in U.S. Dollars. These costs are principally related to supplies, computer services, insurance and communications.

As of December 31, 2007, the potential loss to us that would result from a hypothetical 10% change in foreign currency exchange rates, after giving effect to the impact of the change on our asset and liabilities denominated in foreign currency as of December 31, 2007, would be approximately Ps. 94.1 million, primarily due to the increase in the principal amount of, and debt service payments on our foreign currency indebtedness described above. The effect of such change on our financial expenses is difficult to quantify given the adjustment mechanisms of the CMM and the integral tariff revision relating to our costs, both of which would be triggered indirectly by an increase in foreign currency exchange rates. The terms of our notes issued in the context of our debt restructuring allow us to suspend all principal and interest payments on these notes for 12 months in the event of a 20% or greater devaluation of the Peso in any consecutive 12-month period.

118

Item 12. Description of Securities Other than Equity Securities

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

The economic crisis in Argentina had a material adverse effect on our operations. The devaluation of the Argentine Peso caused the Peso value of our U.S. Dollar-denominated indebtedness to increase significantly, resulting in significant foreign exchange losses and a significant increase, in Peso terms, in our debt service requirements. At the same time, our cash flow remained Peso-denominated and our distribution margins were frozen and pesified by the Argentine government pursuant to the Public Emergency Law. Moreover, the economic crisis in Argentina had a significant adverse effect on the overall level of economic activity in Argentina and led to deterioration in the ability of our customers to pay their bills. These developments caused us to announce on September 15, 2002 the suspension of principal payments on our debt. On September 26, 2005, our board of directors decided to suspend interest payments on our debt until the restructuring of this debt was completed.

On January 20, 2006, we launched a voluntary exchange offer and consent solicitation to the holders of our outstanding financial debt. All of these holders elected to participate in the restructuring and, as a result, on April 24, 2006, we exchanged all of our then-outstanding financial debt for three series of newly-issued notes, which we refer to as the restructuring notes. For a description of our outstanding debt following the restructuring see “Item 5.—Liquidity and Capital Resources—Debt.”

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Use of Proceeds

On April 30, 2007, we completed an initial public offering. We received U.S. $57.7 million in net proceeds from the offering. We did not receive any proceeds from the sale of our shares and ADSs by our selling shareholders in the offering. We used all of the net proceeds we received from the offering to repurchase a part of our outstanding Fixed Rate Par Notes due 2016 and Discount Notes due 2014 in various market repurchase transactions during 2007 and to make capital expenditures.

Item 15. Controls and Procedures

(a) Disclosure Controls and Procedures

We have evaluated, with the participation of our chief executive officer and chief financial officer, the design and operation of our disclosure controls and procedures as of December 31, 2007.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that as of December 31, 2007, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Annual Report on Internal Control Over Financial Reporting

This annual report does not include a report of management’s assessment regarding internal controls over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

119

(c) Attestation Report of the Registered Public Accounting Firm

Not applicable.

(d) Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

Our board of directors has determined that Eduardo Llanos, an independent member of our board of directors, under Argentine law and Rule 10A-3, is an “audit committee financial expert” as defined in Item 16A of Form 20F under the Securities and Exchange Act of 1934. See “Item 6. Directors, Senior Management and Employees – Directors and Senior Management – Audit Committee.”

Item 16B. Code of Ethics

Our company adopted a code of ethics in 2003, which applies to all of our employees, including our principal executive, financial and accounting officers. Following the recent initial public offering of our company’s shares and ADSs, we are currently reviewing and updating our code of ethics, and expect to post a copy of our revised code of ethics, in both English and Spanish, on our website at http://www.edenor.com.ar, as soon as practicable.

Item 16C. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table summarizes the aggregate fees billed to us by Deloitte & Co., S.R.L., and its affiliates as principal auditors, which we collectively refer to as Deloitte, during the fiscal years ended December 31, 2007 and 2006:

Year ended December 31, 2007(1) 2006(2) Audit fees .......................................................................................................... Ps. 800,500 Ps. 3,940,501 Audit-related fees .............................................................................................. 707,725 87,424 Tax fees ............................................................................................................. 94,600 64,000 Other fees .......................................................................................................... – –

Total......................................................................................................... Ps. 1,602,825 Ps. 4,091,925 ____________________ (1) Includes the amount in fees billed in U.S. dollars, which, for the convenience of the reader, have been converted into Pesos at the buying rate for U.S. Dollars quoted by Banco Nación on December 31, 2007 of Ps. 3.15 to U.S. $1.00. (2) Includes the amount in fees billed in U.S. dollars, which, for the convenience of the reader, have been converted into Pesos at the buying rate for U.S. Dollars quoted by Banco Nación on December 31, 2006 of Ps. 3.06 to U.S. $1.00.

All of our audit fees, audit-related fees, tax fees and other fees contained in the above table were billed by Deloitte & Co., S.R.L, an independent registered public accounting firm.

Audit-related fees in the above table are the aggregate fees for services provided in connection with various corporate transactions and filings with the Securities and Exchange Commission, such as review of corporate filings and the delivery of customary comfort letters in connection with those transactions.

Tax fees in the above table are fees for general tax advice.

120

Audit Committee Pre-Approval Policies and Procedures

We have adopted pre-approval policies and procedures under which all audit and non-audit services provided by our external auditors must be pre-approved by the audit committee as set forth in our internal policies. Any service proposals submitted by external auditors need to be discussed and approved by the audit committee during its meetings, which take place at least four times a year. Once the proposed service is approved, we formalize the engagement of services. The approval of any audit and non-audit services to be provided by our external auditors is specified in the minutes of our audit committee. In addition, the members of our board of directors are briefed on matters discussed by the different committees of our board.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Neither we nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

PART III

Item 17. Financial Statements

The Registrant has responded to Item 18 in lieu of this Item.

Item 18. Financial Statements

Reference is made to pages F-1 to F-86 of this annual report.

Item 19. Exhibits

Documents filed as exhibits to this annual report:

1.1 Corporate bylaws of Edenor, S.A. (estatutos sociales) (English translation) (previously filed as Exhibit 3.1 to Edenor’s Registration Statement on Form F-1 (File No. 333-141894) on April 4, 2007 and incorporated by reference herein.)

2.1 Form of Deposit Agreement among Edenor, S.A., The Bank of New York, as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the form of American Depositary Receipts (previously filed as Exhibit 4.1 to Edenor’s Amendment No. 2 to Registration Statement on Form F-1 (File No. 333-141894) on April 20, 2007 and incorporated by reference herein.)

2.2 Indenture dated April 24, 2006, between Empresa Distribuidora y Comercializadora Norte S.A., as Issuer, and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Santander Río S.A., as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina.

2.3 Indenture dated October 9, 2007, between Empresa Distribuidora y Comercializadora Norte S.A., as Issuer, and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Santander Río S.A., as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina.

2.4 Registration Rights Agreement, dated October 9, 2007, between Edenor, S.A. and Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as Representatives of the Initial Purchasers.

12.1 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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13.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

F-1

Index to financial statements Audited Financial Statements Page

Report of Independent Registered Public Accounting Firm ........................................................................................ F-2

Balance Sheets as of December 31, 2007 and 2006..................................................................................................... F-4

Statements of Income for the years ended December 31, 2007, 2006 and 2005......................................................... F-6

Statements of Changes in Shareholders’ Equity for the years ended December 31, 2007, 2006 and 2005 ............... F-7

Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005.................................................. F-7

Notes to the Financial Statements................................................................................................................................. F-8

F-2

INDEPENDENT AUDITORS’ REPORT

Deloitte & Co. S.R.L. Florida 234, Piso 5° C1005AAF Ciudad Autónoma de Buenos Aires Argentina Tel: (54-11) 4320-2700 Fax: (54-11) 4325-8081 www.deloitte.com

Report of Independent Registered Public Accounting Firm TO THE BOARD OF DIRECTORS OF EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.: We have audited the accompanying balance sheets of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. (an Argentine Corporation) (the “Company”) as of December 31, 2007 and 2006, and the related statements of income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. These financial statements 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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. In our opinion, such financial statements present fairly, in all material respects, the financial position of EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in accordance with generally accepted accounting principles in Buenos Aires City, Argentina. As described in Note 17 b), on January 8, 2007, Decree No. 1957/06, which was signed by the President of Argentina on December 28, 2006, was published in the Official Gazette. Pursuant to such Decree, the Federal Government ratified the Adjustment Agreement for the renegotiation of the concession agreement signed by the Company. Additionally, on February 5, 2007 the Official Gazette published ENRE Resolution No. 51/2007 which approves the Company’s new electricity rate schedule that was effective for electricity consumption beginning as from February 1, 2007. Revenues from the retroactive tariff increase deriving from the implementation of the new electricity rate schedule applicable to non-residential consumption for the period of November 1, 2005 through January 31, 2007 amounting to thousands of Argentine pesos 218.591, have been fully recognized in the financial statements for the year ended December 31, 2007. Additionally, as described in Notes 11 and 17 a), as per Resolution N° 1037/2007 of the National Energy Secretariat, the Company recorded as revenue thousands of Argentine pesos 49.646 corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007. Deloitte & Co. S.R.L. - Registro de Soc. Com. CPCECABA - T° 1 Folio 3

A member firm of Deloitte Touche Tohmatsu

F-3

Accounting principles generally accepted in Buenos Aires City, Argentina vary in certain significant respects from accounting principles generally accepted in the United States of America (US GAAP). A description of the significant differences between such principles and those accounting principles generally accepted in the United States of America and the effect of those differences on the determination of the results of operations for each of the three years in the period ended December 31, 2007 and on the determination of shareholders’ equity and the financial position as of December 31, 2007, 2006 and 2005, and the additional disclosures required under US GAAP, are set forth in Note 26 to the accompanying financial statements. Buenos Aires City, Argentina June 25, 2008 Deloitte & Co. S.R.L.

Daniel Horacio Recanatini (Partner) Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its Member Firms.

F-8

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.

(EDENOR S.A.)

NOTES TO THE FINANCIAL STATEMENTS

(amounts stated in thousands of Argentine pesos, except as otherwise indicated)

1. ORGANIZATION AND START UP OF THE COMPANY In compliance with Law N° 24,065 and in agreement with the reform process of the Argentine Federal Government and the privatization program of Argentine state-owned companies, the entire business of generation, transportation, distribution and sale of electric power carried on by Servicios Eléctricos del Gran Buenos Aires S.A. (SEGBA) was declared to be subject to privatization; the operation was divided into seven business units: three for the distribution and four for the generation of electric power. On May 14, 1992, the Ministry of Economy and Public Works and Utilities, by Resolution N° 591/92, approved the Bidding Terms and Conditions (Bid Package) of the International Public Bidding for the sale of the Class "A" shares, representing 51% of the capital stock of Empresa Distribuidora Norte S.A. (hereinafter, “EDENOR” or “the Company”) and Empresa Distribuidora Sur S.A. (EDESUR S.A.), two of the three electric power distribution companies into which SEGBA had been divided. EDF International (EDF S.A.), Empresa Nacional Hidroeléctrica del Ribagorzana, S.A. (ENHER), Astra Compañía Argentina de Petróleo S.A. (ASTRA), Socièté D'Amenagement Urbain et Rural (SAUR), Empresa Nacional de Electricidad S.A. (ENDESA) and J.P. Morgan International Capital Corporation formed Electricidad Argentina S.A. (EASA) to bid for the Class "A" shares of EDENOR, a company organized on July 21, 1992 by Decree N° 714/92 of the Federal Government. EASA was awarded the Class “A” shares of EDENOR based on a bid of US$ 427,973,000 (equivalent to the same amount in Argentine pesos as of such date). The corresponding contract for the transfer of 51% of EDENOR’s capital stock was executed on August 6, 1992. The award as well as the transfer contract was approved on August 24, 1992 by Decree N° 1,507/92 of the Federal Government. Finally, on September 1, 1992, EASA took over the operations of EDENOR. In accordance with the provisions of Decree N° 282/93 of the Federal Government, dated February 22, 1993, the recorded values of assets, liabilities and net capital arising from the transfer of SEGBA, were determined on the basis of the price actually paid for 51% of EDENOR’s capital stock (represented by the totality of Class “A” shares). This price was also used as the basis to determine the value of the remaining 49% of the capital stock. In order to determine the value of the assets transferred from SEGBA, the amount of liabilities assumed was added to the value of the total capital stock of 831,610, determined as indicated above. Management estimates that the amounts of the assets transferred from SEGBA represented their fair values as of the date of the privatization. The corporate purpose of EDENOR is to engage in the distribution and sale of electricity within the concession area. Furthermore, the Company may subscribe or acquire shares of other electricity distribution companies, subject to the approval of the regulatory agency, lease the network to provide electricity transmission or other voice, data and image transmission services, and render advisory, training, maintenance, consulting, and management services and know-how related to the distribution of electricity both in Argentina and abroad. These activities may be conducted directly by EDENOR or through subsidiaries or related companies. In addition, the Company may act as trustee of trusts created under Argentine laws, including extending secured credit facilities to service vendors and suppliers acting in the distribution and sale of electricity, who have been granted guarantees by reciprocal guarantee companies owned by the Company.

F-9

On June 12, 1996, the Extraordinary Shareholders’ Meeting approved the change of the Company’s name to Empresa Distribuidora y Comercializadora Norte S.A. (EDENOR S.A.) so that the new name would reflect the description of the Company’s core business. The amendment to the Company’s by-laws as a consequence of the change of name was approved by the National Regulatory Authority for the Distribution of Electricity (ENRE - Ente Nacional Regulador de la Electricidad), through Resolution N° 417/97 and registered with the Public Registry of Commerce on August 7, 1997. On May 4 and June 29, 2001, EDF International S.A. (a wholly-owned subsidiary of EDF) acquired all the shares of EASA and EDENOR held by ENDESA Internacional, YPF S.A. (surviving company of ASTRA) and SAUR. Therefore, the direct and indirect interest of EDF International S.A. (EDFI) in EDENOR increased to 90%. On June 29, 2005, the Board of Directors of EDF approved a draft agreement with Dolphin Energía S.A. (Dolphin) pursuant to which it would assign 65% of EDENOR’s capital stock (held by EDFI) through the transfer of all Class “A” common shares held by EASA and 14% of the Class “B” common shares. In this manner, EDFI would retain a 25% interest in EDENOR. The remaining 10% would be kept by the employees according to the Employee Stock Ownership Program (ESOP). The closing of the agreement took place upon its approval by the corresponding French and Argentine governmental authorities. On September 15, 2005, by virtue of the stock purchase-sale agreement entered into by EDFI and Dolphin and Dolphin’s subsequent partial assignments of its interest in EASA and EDENOR to IEASA S.A. (IEASA) and New Equity Ventures LLC (NEV), the formal take over by Dolphin took place, together with the change in the Company’s indirect control through the acquisition of 100% of the capital stock of EASA, which is the controlling company of EDENOR, by Dolphin (90%) and IEASA (10%) (See last paragraph of this Note). Furthermore, as a result of the aforementioned agreement, the ownership of the Company’s Class “B” common shares (representing 39% of its capital stock) changed with 14% of the Company’s capital stock now being held by NEV and the remaining 25% being kept by EDFI. On April 28, 2006, the Company’s Board of Directors decided to initiate the public offering of part of the Company’s capital stock in local and international markets, including, but not limited to the trading of its shares in the Buenos Aires Stock Exchange (BCBA) and the New York Stock Exchange (NYSE), United States of America. On June 7, 2006, the Ordinary and Extraordinary Shareholders’ Meeting resolved to increase capital stock up to ten percent (10%), request authorization for the public offering from both the National Securities Commission (CNV) and the Securities and Exchange Commission (SEC) of the United States of America, as well as authorization to trade from both the Buenos Aires Stock Exchange and the New York Stock Exchange, entrusting the Board of Directors with the task of taking the necessary steps to implement such resolutions. Additionally, it was decided that an American Depositary Receipts (ADRs) program, represented by American Depositary Shares (ADSs) would be created and that it would be the responsibility of the Board of Directors to determine the terms and conditions and the scope of the program. On June 14, 2007, the Board of Directors held a meeting in which a final report on Edenor’s capital increase and public offering process, which ended on May 7, 2007 at 3 p.m., date on which the preferential subscription period established for the Company’s shareholders expired, was presented. As a result of the above-mentioned process, the Company’s Class B shares and American Depositary Shares (“ADSs”), representing Class B shares, are currently traded at the Buenos Aires Stock Exchange and the New York Stock Exchange, respectively. The final capital increase, as resolved by the above-mentioned Board of Directors’ meeting, amounted to nine percent (9%) which is represented by 74,844,900 (seventy-four million eight hundred forty-four thousand nine hundred) new shares subscribed at the international primary offering, fully placed as 3,742,245 ADS. It was also informed that 207,902,540 Class B shares were placed at the international secondary offering as of such date. The aforementioned issuance was carried out at a price of 2.62 per share. Taking into account that the nominal value of each share is 1.00, an additional paid-in capital, amounting to 121,249, has been recorded.

F-10

For the year ended December 31, 2007 and in accordance with the provisions of section Nº 202 of the Argentine Business Organizations Law Nº 19,550 , expenses incurred by the Company in relation to this process amounted to 14,321 have been offset against the aforementioned additional paid-in capital. Therefore, the balance of the additional paid-in capital, net of expenses as of that date, amounts to 106,928. The Class “B” shareholders NEV and EDFI sold at the international secondary offering 49,401,480 and 179,049,520 Class “B” shares, respectively. Additionally, on May 1, 2007, the shareholders NEV and EDFI sold 57,706,040 Class “B” shares at the international secondary offering when the international underwriters fully exercised the over-allotment option (green shoe) contemplated in the prospectus for the public offering and section 2 of the underwriting agreement. With regard to the Company’s Class “C” shares held by the Employee Stock Ownership Program (ESOP), on April 29, 2007 the ESOP was partially cancelled in advance in conformity with a procedure set forth by the Federal Government, and on April 30, 2007, an amount of 81,208,416 shares, which had been converted into Class “B” shares on April 27, 2007, was sold at the domestic secondary offering. As of the date of issuance of these financial statements, an amount of 1,952,604 Class “C” shares, representing 0.22% of the Company’s capital stock, remains outstanding. Consequently, as of December 31, 2007, the Company’s capital stock, represented by 906,455,100 shares is held as follows:

a) 51% of the Company’s capital stock, represented by 462,292,111 Class “A” shares, which have been pledged in favor of the Argentine Government as evidenced by the certificate issued by Caja de Valores, is held by EASA,

b) 48.78% of the Company’s capital stock, represented by 442,210,356 Class “B” shares is

traded in the market,

c) 0.22% of the Company’s capital stock, represented by 1,952,604 Class “C” shares is held by Banco Nación as trustee of the Employee Stock Ownership Program, and

d) 19 and 10 Class “B” shares are held by NEV and EDFI, respectively.

Furthermore, Dolphin and IEASA contributed 38,170,909 Class “B” shares of the Company, that had been transferred to them by NEV, to EASA, which is the controlling company. On April 27, 2007, the contributed shares were converted into Class “A” shares to ensure that EASA continues to hold 51% of all the Class “A” shares outstanding. Notwithstanding the fact that the abovementioned capital increase is in the process of registration, on April 30, 2007, the Company requested that Caja de Valores S.A. register the new Class “A” shares and extend thereto the regulatory pledge in favor of the Argentine Government, in compliance with the Bidding Terms and Conditions of the International Public Bidding, the provisions of the Concession Agreement of Edenor S.A., and the terms of the related pledge agreements signed on August 31, 1992 and July 14, 1994 which, in accordance with their second clause, EASA was required to extend the first-priority preferred security interest to any Class “A” Shares of the Company that EASA would acquire on a date subsequent to those of said Agreements. Moreover, section 19 of the Adjustment Agreement entered into by the Company and the Argentine Government, which was ratified by Decree Nº 1957/2006, stipulates that the pledge on the Company’s shares in favor of the Argentine Government granted as security for the performance of the Concession Agreement will be extended to include the performance of the obligations assumed by the Company in such Adjustment Agreement. The Company was notified that on June 22, 2007, the shareholders of Dolphin Energía S.A. and IEASA S.A. (that own 100% of the stock of Electricidad Argentina S.A., the controlling company of Edenor S.A.) and Pampa Holding S.A. entered into a memorandum of understanding whereby it was agreed that the totality of the capital stock of Dolphin Energía S.A. and IEASA S.A. would be exchanged for common shares of Pampa Holding S.A.

F-11

Furthermore, the Company received a notice from EASA whereby it was informed that the exchange for shares described in the preceding paragraph had formally been agreed-upon on September 28, 2007 under a Stock Subscription Agreement entered into among Pampa Holding S.A., Marcos Marcelo Mindlin, Damián Miguel Mindlin, Gustavo Mariani, Latin American Energy LLC, New Equity Ventures LLC and Deutsche Bank AG, London Branch. Moreover, on such date, Pampa Holding S.A. acquired 100% of the capital stock of Dolphin Energía S.A. and IEASA S.A, which together own 100% of the capital stock of EASA. 2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS

Financial statements presentation These financial statements have been prepared in accordance with accounting principles generally accepted in the Autonomous City of Buenos Aires, Argentina (hereinafter “Argentine GAAP”) and the criteria established by the National Securities Commission (CNV), taking into account that which is mentioned in the following paragraphs. As from January 1, 2003 and as required by General Resolution N° 434/03 of the CNV, the Company reports the results of its operations, determines the values of its assets and liabilities and determines its profit and loss in conformity with the provisions of Technical Resolutions (TR) N° 8, 9 and 16 through 18 (amended text June 2003). As from January 1, 2004, the Company has applied the provisions of TR N° 21 of the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) as approved by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (CPCECABA), with specific few exceptions and clarifications introduced by General Resolution N° 459/04 of the CNV. The CNV through its General Resolutions N° 485/05 and 487/06 decided to implement certain changes in the Argentine GAAP effective for fiscal years or interim periods beginning as from January 1, 2006, by requiring the application of TR N° 6, 8, 9, 11, 14, 16, 17, 18, 21, and 22 and Interpretations 1, 2, 3, and 4, of the FACPCE with the amendments introduced by such Federation through April 1, 2005 (Resolution N° 312/05) and adopted by the CPCECABA (Resolution CD N° 93/05) with certain amendments and clarifications. Among the aforementioned changes the following can be noted: i) the comparison between the original values of certain assets and their recoverable values, using discounted cash-flows; ii) the consideration of the difference between the accounting and tax values resulting from the adjustment for inflation included in non-monetary assets, as a temporary difference, allowing the Company to either recognize a deferred tax liability or to disclose the effect of such accounting change in a note to the financial statements and (iii) the capitalization of interest cost on certain assets (only those assets that require an extended period of time to be produced or acquired would qualify) during the term of their construction and until they are in condition to be used. The Company has completed its analysis of the impact of the application of the change mentioned in the preceding paragraph under (i) on its property, plant and equipment and has determined that said change does not have a significant impact on the Company’s financial position or net income for the year ended December 31, 2007 and 2006, given that the fair value - defined as the discounted value of net cash flows arising from both the use of the assets and their final disposal-, exceeds their recorded value (Note 3.h). With regard to item (ii), the Company has decided to disclose said effect in a note to the financial statements. Had the Company chosen to recognize the effect of the adjustment for inflation of its property, plant and equipment as a temporary difference, a deferred tax liability of approximately 438,877 and 469,668 would have been recorded, a debit to prior year adjustment (unappropriated retained earnings - accumulated deficit) amounting to 470,177 and 503,075; and a credit to net income for the year, under the income tax account, amounting to 31,300 and 33,407, in December 31, 2007 and 2006 respectively, would have been recorded.

F-12

Additionally, had the Company elected to recognize a deferred tax liability, and excluding the effects of the allowance for impairment of value of deferred tax assets, in subsequent years, the Company would have recorded an income tax expense that would have been lower than the income tax expense that will be recorded as a result of maintaining the criterion applied up to the moment, whose distribution in subsequent years has been estimated as follows:

Year Effect on deferred tax result Nominal value

2008 27,541 2009 26,396 2010 25,011 2011 24,084

2012 – 2016 106,866 2017 – 2021 88,058 Remainder 140,921

Total 438,877 Consideration of the effects of inflation The financial statements fully reflect the effects of the changes in the purchasing power of the currency through August 31, 1995. As from such date, and in accordance with Argentine GAAP and the requirements of control authorities, the restatement of the financial statements to reflect the effects of inflation was discontinued until December 31, 2001. As from January 1, 2002, and in accordance with Argentine GAAP, it was established that inflation adjustment be reinstated and that the accounting basis restated as a result of the change in the purchasing power of the currency through August 31, 1995, as well as transactions with original date as from such date through December 31, 2001, be considered as restated as of the latter date. The financial statements have been restated to reflect the effects of inflation based on the variations of the Domestic Wholesale Price Index. On March 25, 2003, the Federal Government issued Decree N° 664 establishing that financial statements for fiscal years ending as from such date had to be prepared in nominal currency. Consequently, and in accordance with Resolution Nº 441 of the CNV, the Company discontinued the restatement of its financial statements as from March 1, 2003. This criterion does not agree with Argentine GAAP which establishes that financial statements were to be restated through September 30, 2003. The Company has estimated that the effect of not having restated the financial statements through September 30, 2003 is not significant on the financial statements. Changes in Argentine GAAP On May 24, 2006 the Board of the CPCECABA approved TR N° 23 "Argentine GAAP – Employee benefits upon termination of labor relationship and other long-term benefits”. This TR is in effect for the Company’s financial statements for fiscal years or interim periods beginning as from January 1, 2007. The application of said resolution does not have a significant valuation impact on the Company’s financial statements. The amounts corresponding to the personnel benefits plan (pension plan) implemented by the Company are as follow (Notes 3.o and 8): The periodical components of the personnel benefits plan for the years ended December 31, 2007 and 2006 that are disclosed in Other expense, net under Voluntary retirements - terminations (Note 12) are as follow:

2007 2006 Cost 1,125 813 Interest 2,874 1,816 Amortization of recognized net actuarial loss 760 208 4,759 2,837

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The detail of the variations in the Company’s payment obligations under the personnel benefits plan as of December 31, 2007 and 2006 is as follows:

2007 2006 Payment commitment under the personnel benefits plan at the beginning of the year

15,352 9,703

Cost 1,125 813 Interest 2,874 1,816 Actuarial loss 761 3,703 Benefits paid to participating employees (1,029) (683) Payment commitment under the personnel benefits plan at the end of the year

19,083 15,352

Payment commitment under the personnel benefits plan at the end of the year

19,083 15,352

Unrecognized net actuarial loss (5,716) (5,714) Total personnel benefits plan (pension plan) (Note 8) 13,367 9,638

Future payment commitment required under the personnel benefits plan is as follow:

Years of retirement

2008 2,480 2009 2,553 2010 3,054 2011 3,389 2012 4,070

2013-2017 14,787 Payment commitment under the personnel benefits plan projected for the 2008 fiscal year are as follow:

2008 Cost 1,306 Interest 3,977 Amortization of recognized net actuarial loss 761 6,044

The following information shows the effect of increase/decrease by 1% the discount rate used for the year’s projections:

Payment commitment under the personnel benefits plan at the end of 2007

19,083

Effect of 1% increase 18,050 Effect of 1% decrease 20,261

Actuarial assumptions used were the following:

2007 2006 Discount rate 21% 19% Salary increase 20% 15% Inflation 14% 12%

The actuarial method used by the Company is the “Projected Unit Credit Method”. As of December 31, 2007 and 2006, the Company does not have any assets related to the personnel benefit plan (pension plan).

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3. VALUATION CRITERIA

The main valuation criteria used in the preparation of the financial statements are as follow:

a) Cash and banks:

− In local currency: at nominal value. − In foreign currency: at the exchange rate in effect as of the end of each year. The corresponding

detail is disclosed in Note 25 - Exhibit G. b) Current investments:

Current investments include:

− Time deposits, which include the portion of interest income accrued through the end of each year; those denominated in foreign currency have been valued at the rate of exchange in effect as of the end of each year,

− Money market funds, which have been valued at the prevailing market price as of the end of each year, and

− Notes receivable (Euro Commercial Paper), which have been valued at the prevailing market price as of the end of the year translated into pesos at the rate of exchange in effect as of year-end.

c) Trade receivables:

− Services rendered and billed but not collected, and services rendered but unbilled as of the end of each year, at nominal value, except for the ones indicated in the following paragraph;

− Services rendered but unbilled as of the end of the year ended December 31, 2007, arising from the retroactive increase deriving from the application of the new electricity rate schedule (Note 17.b) have been valued on the basis of the best estimate of the amount to be collected, discounted at a 10.5% annual nominal rate, which, in accordance with the Company’s criterion, reasonably reflects market assessments of the time value of money and risks specific to the receivable. A similar procedure was followed with the amount included in the payment plan agreement signed with the Province of Buenos Aires under the Framework Agreement (Note 13).

The amounts thus determined: 1. are net of an allowance for doubtful accounts, as described in more detail in paragraph i) of

this Note. 2. consider the effects of that which is stated in Note 13.

d) Other receivables and liabilities (excluding loans):

− In local currency: at nominal value. − In foreign currency: at the exchange rate in effect as of the end of each year (Note 25 -

Exhibit G). Trade accounts payable have been valued at nominal value including, if any, interest expense accrued as of the end of each year. The values thus obtained do not differ significantly from those that would have been obtained if the Argentine GAAP had been applied, inasmuch as they establish that trade accounts payable must be valued at their estimated cash price at the time of the transaction, plus interest and implicit financing components accrued on the basis of the internal rate of return determined at such opportunity. Other receivables and liabilities have been valued at their nominal value including, if any, interest income or expense accrued as of the end of each year. The values thus obtained do not differ significantly from those that would have been obtained if the Argentine GAAP had been applied,

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inasmuch as they establish that other receivables and liabilities must be valued on the basis of the best estimate amount to be collected and paid, respectively, discounted at a rate that reflects the time value of money and the risks specific to the transaction estimated at the time of their being recorded in assets and liabilities, respectively.

e) Municipal Bonds

As of December 31, 2006, the Municipal Financial Restructuring Bonds (Bonos de Saneamiento Financiero Municipal) issued pursuant to Law N° 11,752 were valued at the conversion value established in the Economic Emergency and Foreign Currency Exchange System Reform Law N° 25,561 (i.e. face value converted into pesos at the rate of 1.40 Argentine Pesos per US Dollar), restated for inflation as of such year-end, including the inflation-linked CER (“benchmark stabilization coefficient”) adjustment and interest accrued through the end of that year at an annual rate of 4%. Due to impairment indicators, as of December 31, 2006, the Company recorded an allowance to reduce the value of the above-mentioned bonds to their expected recoverable amount of 5,918 (Note 3.i and Note 25 - Exhibit E). On January 4, 2007 the Company sold the aforementioned bonds at a value of 5,947.

f) Supplies:

At acquisition cost restated to reflect the effects of inflation as indicated in Note 2. The consumption of supplies has been valued based on the average cost method.

The Company has classified supplies into current and non-current depending on whether they will be used for maintenance or capital expenditures. The carrying value of supplies, taken as a whole, does not exceed their recoverable value.

g) Non-current investments:

It represents the 50% interest held in the related company SACME S.A. (a company organized by means of equal contributions by distribution companies EDENOR S.A. and EDESUR S.A. in accordance with the Bid Package). SACME S.A. is in charge of monitoring the electric power supplied to the aforementioned distributors. As of December 31, 2007 and 2006, the investment in SACME has been recorded at its equity value. In order to determine the equity value, the audited financial statements of SACME S.A. as of December 31, 2007 and 2006 have been used. The accounting principles used by SACME are similar to those applied by EDENOR for the preparation of its financial statements.

h) Property, plant and equipment: Property, plant and equipment transferred by SEGBA on September 1, 1992 were valued as of the privatization date as described below, and restated to reflect the effects of inflation as indicated in Note 2. The total value of the assets transferred from SEGBA was allocated to individual assets accounts on the basis of engineering studies conducted by the Company. The total value of property, plant and equipment has been determined based on the US$ 427 million price effectively paid by EASA for the acquisition of 51% of the Company’s capital stock at acquisition date. Such price was used to value the entire capital stock of EDENOR at 832 million pesos, which, when added to the fair value of the debts assumed by the Company under the SEGBA Privatization Bid Package for 139.2 million less the fair value of certain assets received from SEGBA for 103.2 million, valued property plant and equipment at 868 million. SEGBA neither prepared separate financial statements nor maintained financial information or records with respect to its distribution operations or the operations in which the assets transferred to

F-16

EDENOR were used. Accordingly, it was not possible to determine the historical cost of transferred assets.

Additions subsequent to such date have been valued at acquisition cost restated to reflect the effects of inflation as indicated in Note 2, net of the related accumulated depreciation. Depreciation has been calculated by applying the straight-line method over the estimated useful life of the assets which was determined on the basis of the above-mentioned engineering studies. Furthermore, in order to improve the disclosure of the account, the Company has made certain changes in the classification of property, plant and equipment, based on each technical process. In accordance with the provisions of TR N° 17, financial costs in relation to any given asset may be capitalized when such asset is in the process of production, construction, assembly or completion, and such processes, due to their nature, take long periods of time; those processes are not interrupted; the period of production, construction, assembly or completion does not exceed the technically required period; the necessary activities to put the asset in a condition to be used or sold are not substantially complete; and the asset is not in condition so as to be used in the production or start up of other assets, depending on the purpose pursued with its production, construction, assembly or completion. The Company capitalized financial costs on property, plant and equipment from 1997 to 2001, in 2006 and during the year ended December 31, 2007. Financial costs capitalized for the year ended December 31, 2007 and 2006 amounted to 12,665 and 9,283, respectively. During the years ended December 31, 2007 and 2006, direct and indirect costs capitalized amounted to 32,528 and 25,508 respectively.

The recorded value of property, plant and equipment, taken as a whole, does not exceed their recoverable value.

i) Allowances (Note 25 - Exhibit E):

- Deducted from current assets:

• for doubtful accounts: it has been recorded to adjust the valuation of trade receivables and other receivables up to their estimated recoverable value. The amount of the allowance has been determined based on the historical series of collections for services billed through the end of each year and collections subsequent thereto.

- Deducted from non-current assets:

• for impairment of value of deferred tax assets: as of December 31, 2007 and 2006 the Company has partially impaired the deferred tax asset with a valuation allowance. (Note 3.n)

• for impairment of value of Municipal Bonds: due to impairment indicators, as of December 31, 2006 the Company recorded an allowance to reduce the value of such bonds to their expected recoverable amount (Note 3.e).

• for impairment of value of Argentine bonds 2004: due to the public voluntary debt swap, the Company assessed in 2004 an allowance for impairment of these bonds.

j) Accrued litigation:

Amounts have been accrued for several contingencies. The Company is a party to certain lawsuits and administrative proceedings in several courts and government agencies, including with respect to certain tax contingencies arising from the ordinary course of business. The Argentine tax authority (“AFIP”) has challenged certain income tax deductions related to allowances for doubtful accounts made by the Company on its income tax returns for fiscal years 1996, 1997 and 1998, and has assessed additional taxes for approximately 9,300. Tax related contingencies are subject to interest charges and, in some cases, to fines. This matter is currently on appeal to the tax court. During the appeal process, payment of such claim has been suspended.

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The Company is also a party to civil and labor lawsuits in the ordinary course of business. At the end of each year, management evaluates these contingencies and records an accrual for related potential losses when: (i) payment thereof is probable, and (ii) the amount can be reasonably estimated. The Company estimates that any loss in excess of amounts accrued in relation to the above matters will not have a material adverse effect on the Company’s result of operations or its financial position. The evolution of the accrued litigation account has been disclosed in Note 25 - Exhibit E.

k) Loans:

As of December 31, 2007 and 2006, the notes resulting from the restructuring process (Note 14) have been valued on the basis of the best estimate of the amount to be paid, discounted at annual nominal rates of 10.5% and 10%, respectively, which, in accordance with the Company’s criterion, reasonably reflect market assessments of the time value of money and specific debt risks as of each of those dates.

Under Argentine GAAP, the exchange of debt instruments under substantially different conditions is considered as an extinguishment of the former debt (i.e., debt before restructuring). The extinguishment of the former debt generated a gain of 179,243 as of December 31, 2006, however the adjustment to present value of future cash flows of the notes, at the applicable market rate in effect, generated a gain of 57,138 and a loss of 21,495 as of December 31, 2006 and 2007, respectively. During the year ended December 31, 2007, as a result of both the issuance of medium-term corporate notes due in 2017 for US$ 220,000 thousand (Note 23), and the public offering process described in Note 1, the Company, as required in the trust agreement for the issuance of corporate notes, has purchased and redeemed at market prices and in successive operations all “discount notes” and part of the “fixed rate par notes” for a nominal value of US$ 240,000 thousand and US$ 43,726 thousand, respectively. After the aforementioned purchase and redemption, the principal outstanding balance of the notes resulting from the restructuring process amounts to US$ 92,704 thousand. The aforementioned operations generated a loss of US$ 3,248 thousand equivalent to 10,228, which has been included in the statement of income for the year ended December 31, 2007 (Note 14) in the account Loss from the purchase and redemption of notes.

l) Shareholders' equity accounts:

These accounts have been restated to reflect the effects of inflation as indicated in Note 2, except for the "Shareholders’ Contributions - Nominal value" and “Additional Paid-in Capital” accounts which have been maintained at their nominal value. The excess of the adjusted value of Capital Stock over its nominal value has been included in the “Shareholders’ Contributions – Adjustment to Capital” account.

m) Statement of income accounts:

− The accounts that accumulate monetary transactions for the 2007, 2006 and 2005 fiscal years

have been disclosed at their nominal values. − The charges for non-monetary assets consumed have been valued at cost restated to reflect the

effects of inflation on the basis of the date of acquisition of such assets, as indicated in Note 2. − Financial income (expense) and holding gains (losses) have been disclosed separately under

income (expense) generated by assets and by liabilities. − The adjustment to present value of the notes is stated at nominal value. − The gain on extinguishment of former debt of the 2006 fiscal year is stated at nominal value. − The adjustment to present value of trade receivables related to both the application of the

retroactive tariff increase agreed upon in the Adjustment Agreement and the payment plan agreement signed with the Province of Buenos Aires for amounts deriving from the Framework Agreement for the 2007 fiscal year is stated at nominal value.

− The adjustment to present value of purchased and redeemed notes for the 2007 fiscal year is

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stated at nominal value. − The loss from the purchase and redemption of notes for the 2007 fiscal year is stated at nominal

value. n) Income tax and tax on minimum presumed income:

The Argentine GAAP requires the application of the deferred tax method to account for income tax. This method consists of recognizing deferred tax assets and liabilities when temporary differences arise from the valuation of assets and liabilities for accounting and tax purposes. Regarding the restatement of property, plant and equipment to reflect the effects of inflation, the Company has applied Resolution MD (the Board) N° 11/03 of the CPCECABA and General Resolution N° 487/06 of the CNV (see Note 2 – Changes in Argentine GAAP).

As of December 31, 2007, the allowance for impairment of value of deferred tax assets amounted to 34,482, which represents the portion of the tax loss generated in 2002 whose offset against future taxable income will not be possible after the filing of the 2007 income tax return, due to the fact that it will become statute-barred.

As of December 31, 2006, the allowance for impairment of value of deferred tax assets amounted to 32,261 is based on (i) the estimated future taxable income, which includes the effects of the Company's estimate of the Adjustment Agreement and the tariff increase granted by the Federal Government through Decree No. 1957/06 and ENRE Resolution No. 51/2007 (Notes 17.b), and (ii) the taxable income arising from the gain on extinguishment of former debt as it is described in caption k of this Note. As of December 31, 2005 a valuation allowance has been recorded to reduce the deferred tax assets to zero. Based on the available evidence as of this date, it was more likely than not that the deferred tax assets will not be realized. The reconciliation between the income tax as charge to the statement of income for the years ended December 31, 2007, 2006 and 2005, and the amount that would result from applying the tax rate in effect (35%) to the income before taxes for each year, is as follows: 2007 2006 2005 Income tax calculated at the tax rate in effect on the income before taxes

86,605

44,060

(52,361)

Permanent differences Adjustment for inflation of property, plant and equipment

31,300

33,407

34,253

Accruals and other 4,858 35,277 0 Income tax 122,763 112,744 (18,108) Increase (Decrease) in the allowance for impairment of value of deferred tax assets

2,221

(279,926) 18,108

Income tax for the year 124,984 (167,182) 0

Allowance for impairment of value of deferred tax assets

Balance at beginning of year 32,261 312,187 294,079 Increase (Decrease) in the allowance for impairment of value of deferred tax assets

2,221

(279,926)

18,108

Balance at end of year 34,482 32,261 312,187

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Additionally, the breakdown of deferred tax assets and liabilities as of December 31, 2007 and 2006 is as follows: 2007 2006 Non-current deferred tax assets Tax-loss carry forward 42,798 143,886 Allowance for doubtful accounts 12,906 6,426 Accruals 45,926 93,179 Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule and other trade receivables

10,366

0 Supplies valuation 50 159

112,046 243,650 Non-current deferred tax liabilities Current investments (250) 0 Property, plant and equipment (22,642) (24,209) Adjustment to present value of the notes (12,475) (19,998) (35,367) (44,207) Net deferred tax assets before allowance for impairment of value of deferred tax assets

76,679

199,443

Allowance for impairment of value of deferred tax assets (34,482) (32,261) Net deferred tax assets 42,197 167,182

Tax losses to be carried forward as of December 31, 2007 are as follow:

Amount Tax rate 35% Year

expiring Tax loss carry forward 2002 98,519 34,482 2007 Tax loss carry forward 2005 23,761 8,316 2010 Total tax losses as of December 31, 2007 122,280 42,798

As tax losses become statute-barred within five years, the aforementioned tax losses may be applied to offset any future taxable income that may arise within such five-year term. Additionally, the Company determines the tax on minimum presumed income by applying the current rate of 1% on the Company’s taxable assets as of the end of the year. The tax on minimum presumed income and the income tax complement each other. The Company’s tax obligation for a given year will be equal to the higher of these taxes. However, should the tax on minimum presumed income exceed income tax in any given fiscal year, such excess will be eligible for credit against a partial payment of any excess of the income tax over the tax on minimum presumed income that may arise in any of the ten subsequent fiscal years. For the year ended December 31, 2007 the Company has estimated a tax on minimum presumed income charge of 15,879, whereas for the year ended December 31, 2006 and 2005 the charge amounted to 19,872 and 18,200, respectively. The corresponding outstanding tax credits as of the end of each year have been included in Other non-current receivables.

ñ) Operating leases: As lessee, EDENOR has lease contracts (buildings) which classify as operating leases.

Common characteristics of these lease contracts are that lease payments (installments) are established as fixed amounts, there are neither purchase option clauses nor renewal term clauses (except for the Handling and Energy Transformation Center contract that has an automatic renewal clause for five-year term) and there are prohibitions such as: transferring or sub-leasing the building,

F-20

changing its use and/or making any kind of modifications thereto. All operating lease contracts have cancelable terms and lease periods of two or three to thirteen years. Buildings are for commercial offices, the warehouse, the headquarters building (comprised of administration, commercial and technical offices), the Handling and Energy Transformation Center (two buildings and a plot of land located within the perimeter of Central Puerto Nuevo and Puerto Nuevo) and Las Heras substation. As of December 31, 2007, 2006, and 2005, future minimum lease payments with respect to operating leases are as follow:

2007 2006 2005 2006 - - 1,574 2007 - 2,569 1,434 2008 2,052 856 594 2009 179 180 39 2010 147 147 39 2011 147 147 39 2012 147 147 39 2013 147 147 39

Total minimum lease payments 2,819 4,193 3,799 Total rental expenses for all operating leases for the years ended December 31, 2007, 2006 and 2005 are as follow:

2007 2006 2005 Total rental expenses 2,405 2,624 3,531

As lessor, Edenor has entered into several operating lease contracts with certain cable television companies granting them the right to use poles of the Company’s network. Most of such lease contracts include automatic renewal clauses.

As of December 31, 2007, 2006 and 2005, future minimum lease collections with respect to operating leases are as follow:

2007 2006 2005 2006 - - 8,021 2007 - 8,133 6,590 2008 9,680 987 30 2009 7,576 62 7 2010 14 0 0 2011 9 0 0 2012 9 0 0

Total minimum lease collections 17,283 9,182 14,648 Total rental income for all operating leases for the years ended December 31, 2007, 2006 and 2005, is as follows:

2007 2006 2005 Total rental income (Note 11) 10,745 14,315 8,312

o) Labor cost liabilities and Early retirements payable:

They include the following charges:

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− for supplementary benefits of paid leaves of absence derived from accumulated vacation, − for seniority-based bonus to be granted to employees with a specified number of years of

employment, as stipulated in collective bargaining agreements in effect (as of December 31, 2007 and 2006, the accrual for such bonuses amounted to 5,684 and 4,847 respectively), and

− for other personnel benefits (pension plan) to be granted to employees upon retirement, as stipulated in collective bargaining agreements in effect (as of December 31, 2007 and 2006, the accrual for these benefits amounted to 13,367 and 9,638 respectively).

Liabilities related to the above-mentioned seniority-based bonus and other personnel benefits (pension plans) to be granted to employees, have been determined taking into account all rights accrued by the beneficiaries of both plans as of December 31, 2007 and 2006, respectively, on the basis of an actuarial study conducted by an independent actuary as of December 31, 2007. Such liabilities have been disclosed under the “Salaries and social security taxes” account as seniority-based bonus and other personnel benefits, respectively (Note 8). Early retirements payable corresponds to individual optional agreements. After employees reach a specific age, the Company may offer them this option. The related accrued liability represents future payment obligations which as of December 31, 2007 and 2006 amount to 2,394 and 2,320 (current) and 5,643 and 5,802 (non-current), respectively (Note 8).

p) Customer deposits and contributions:

Customer deposits: Under the Concession Agreement, the Company is allowed to receive customer deposits in the following cases:

1. When the power supply is requested and the user is unable to provide evidence of his legal ownership of the premises;

2. When service has been suspended more than once in one-year period; 3. When the power supply is reconnected and the Company is able to verify the illegal use of the

service (fraud). 4. When the customer is undergoing liquidated bankruptcy or reorganization proceedings.

The Company has decided not to request customer deposits from residential T1 tariff customers.

Customer deposits may be either paid in cash or through the customer’s bill, and accrue monthly interest at a specific rate of Banco de la Nación called “reference” rate. When a customer requests that the supply service be disconnected, the customer’s deposit is credited (principal amount plus any interest accrued through the date of reimbursement). Any balance outstanding at the time of requesting the disconnection of the supply service is deducted from the amount so credited. Similar procedures are followed when the supply service is disconnected due to customer inability to pay for the electricity consumed. Consequently, the Company recovers, either fully or partially, any amount owed for electric power consumption. When the conditions for which the Company is allowed to receive customer deposits no longer exist, the principal amount plus any interest accrued thereon are credited to the customer’s account.

Customer contributions:

The Company receives advances from certain customers for services to be provided based on individual agreements. Such advances are stated at nominal value as of the end of each year.

q) Revenue recognition:

Revenues from operations are recognized on an accrual basis and derive mainly from electricity distribution. Such revenues include electricity supplied, whether billed or unbilled, at the end of each year and have been valued on the basis of applicable tariffs.

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The Company also recognizes revenues from other concepts included in distribution services, such as new connections, pole rental, transportation of electricity to other distribution companies, etc. All revenues are recognized when the Company’s revenue earning process has been substantially completed, the amount of revenues may be reasonably measured, and the economic benefits associated with the transaction flow to the Company. During the year ended December 31, 2007, the Company recognized revenues from the retroactive tariff increase deriving from the application of the new electricity rate schedule to non-residential consumption for the period of November 2005 through January 31, 2007 (Note 17.b) as it was during this fiscal year that the new electricity rate schedule to be applied as from February 1, 2007, was approved by Resolution No. 51/2007 of the ENRE. On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the National Energy Secretariat. Said resolution establishes that the amounts paid by the Company for the Quarterly Adjustment Coefficient (CAT) implemented by Section 1 of Law Nº 25,957, as well as the amounts corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007 (Note 17 b and c) has to be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), until their transfer to the tariff is granted by the regulatory authority. The resolution also establishes that the MMC adjustment for the period May 2006 through April 2007, in effect as from May 1, 2007, amounts to 9.63 %. Additionally, on October 25, 2007 the ENRE issued Resolution Nº 710/2007 which approves the MMC compensation mechanism established in the aforementioned Resolution Nº 1037/2007 of the National Energy Secretariat.

r) Estimates:

The preparation of the financial statements in accordance with Argentine GAAP requires the Company’s Board of Directors and Management to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results and amounts may differ from the estimates used in the preparation of the financial statements.

s) Earnings per common share:

It has been computed on the basis of the number of shares outstanding as of December 31, 2007, which amounts to 906,455,100 shares, December 31, 2006 which amounted to 831,610,200 shares, and December 31, 2005, which amounts to 831,610,200 shares. There is no earning (loss) per share dilution, as the Company has issued neither preferred shares nor corporate notes convertible into common shares.

t) Segment information:

In accordance with the provisions of TR No. 18, the Company is required to disclose segment information provided certain requirements are met. This Resolution establishes the criterion to be followed for reporting information on operating segments in annual financial statements, and requires the reporting of selective information on operating segments in interim financial reports. Operating segments are those components of a company’s activity about which different financial information may be obtained, whether for the allocation of resources or the determination of an asset’s performance. TR N° 18 also establishes the criterion to be applied by a company to disclose its products and services, geographical areas and major customers.

The Company is a natural monopoly that operates in a single business segment, electricity distribution and sale in a specific urban geographical area, pursuant to the terms of the concession agreement that governs the provision of this public service. The Company’s activities have similar economic characteristics and are similar as to the nature of their products and services and the electricity distribution process, the type or category of customers, the geographical area and the

F-23

methods of distribution. Management evaluates the Company’s performance based on net income. Accordingly, the disclosure of information as described above is not necessary. For future fiscal years, the management will evaluate if the new agreements with Comunicaciones y Consumos S.A. and Prestamos y Servicios S.A., described in Note 15, represent new business segments. As of December 31, 2007, no transactions had been completed related to these agreements.

u) Risk management:

The Company operates mainly in Argentina. Its business may be affected by inflation, currency devaluation, regulations, interest rates, price controls, changes in governmental economic policies, taxes and other political and economic-related issues affecting the country. The majority of the Company’s assets are either non-monetary or denominated in Argentine pesos, whereas the majority of its liabilities are denominated in U.S. dollars. As of December 31, 2007, a minimum portion of the Company’s debts accrues interest at floating rates; consequently the Company’s exposure to interest rate risk is limited. As of December 31, 2007 and 2006, the Company has not entered into any foreign currency forward contracts or floating interest rate forward contracts.

v) Concentration risks:

The Company’s accounts receivable derived primarily from the sale of electric power. No single customer accounted for more than 10% of sales for the years ended December 31, 2007 and 2006. The collectability of trade receivables balances related to the Framework Agreement, which amount to 4,579 and 45,552 as of December 31, 2007 and 2006, respectively, as disclosed in Notes 4 and 13, is subject to compliance with the terms of such Framework Agreement. In addition, the aforementioned Framework Agreement expired on December 31, 2006. As from such date the Company has been negotiating the renewal of such agreement with the Government of the Province of Buenos Aires and the Federal Government. However, the Company has continued supplying electricity to low income areas and shantytowns. Related to employees who are union members As of December 31, 2007, approximately 78% of the Company’s employees were union members. Although the relationship with unions is currently stable, the Company may not ensure that there will be no work disruptions or strikes in the future, which could have a material adverse effect on the Company’s business and the results of operations. Furthermore, collective bargaining agreements signed with unions expired at the end of the 2007 fiscal year. There is no guarantee that the Company will be able to negotiate new collective bargaining agreements under the same terms as those currently in place or that there will be no strikes during or before the negotiation process. The Bid Package sets forth the responsibilities of both SEGBA and the Company in relation to the personnel transferred by SEGBA through Resolution N° 26/92 of the Energy Secretariat. According to the Bid Package, SEGBA will be fully liable for any labor and social security obligations accrued or originated in events occurred before the take-over date, as well as for any other obligations deriving from lawsuits in process at such date. In December 1998, new collective bargaining agreements were signed with the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía. These agreements would be in effect for a term of five years to commence as from the date of approval and until the signing of a new agreement. The Ministry of Labor and Social Security approved the agreements signed with both the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía on March 11, 1999 (through Resolution N° 31) and October 15, 1999 (through Resolution N° 318/99), respectively.

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During 2005, two new collective bargaining agreements were signed with the Sindicato de Luz y Fuerza de la Capital Federal and the Asociación de Personal Superior de Empresas de Energía, which expired on December 31, 2007 and October 31, 2007, respectively. These agreements were approved by the Ministry of Labor and Social Security on November 17, 2006 and October 5, 2006, respectively. As of the date of issuance of these financial statements, meetings aimed at negotiating the renewal terms of both collective bargaining agreements, are being held with the above-mentioned unions.

w) Foreign currency translation/ transactions:

The Company accounts for foreign currency denominated assets and liabilities and related transactions as follows: The accounting measurements of purchases, sales, payments, collections, other transactions and outstanding balances denominated in foreign currency are translated into pesos using the exchange rates described below. Thus, the resulting amount in pesos represents the amount collected or to be collected, paid or to be paid. For translation purposes, the following exchange rates are used: a) the exchange rate in effect at the date of the transaction, for payments, collections and other transactions denominated in foreign currency; and b) the exchange rate in effect at the date of the financial statements, for assets and liabilities denominated in foreign currency. For transactions and balances denominated in foreign currency, the bid price is used for assets, and the offer price is used for liabilities. The effect of such translations has been included in the Statements of Income as “Exchange difference” under “Financial income (expense) and Holding gains (losses)”.

4. TRADE RECEIVABLES

The detail of trade receivables as of December 31, 2007 and 2006 is as follows:

2007 2006 Current: Receivables from sales of electricity:

Billed 177,263 112,706 Unbilled Sales of electricity 123,641 92,803 Retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b item d)

44,101

0

Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 3.c)

(2,526)

0

Framework Agreement (Notes 3.c and 13) 4,579 45,552 Framework Agreement - Payment plan agreement with the Province of

Bs. As. (Note 13)

13,557

0 Adjustment to present value of the Framework Agreement - Payment plan agreement with the Province of Bs. As. (Note 3.c)

(212)

0

National Fund of Electricity (Note 17.a) 3,036 23,015 Cannon payable for the expansion of the network, transportation and others (Note 17.b)

12,628

11,882

In litigation 9,918 10,603 Subtotal 385,985 296,561

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Less: Allowance for doubtful accounts (Note 25 - Exhibit E) (40,006) (25,623) 345,979 270,938

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2007 2006

Non-Current: Receivables from sales of electricity: Unbilled Retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b item d)

127,180

0

Adjustment to present value of the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 3.c)

(26,880)

0

100,300 0

5. OTHER RECEIVABLES

The detail of other receivables as of December 31, 2007 and 2006 is as follows:

2007 2006 Current:

Prepaid expenses (1) 1,910 1,305 Advances to suppliers 224 1,082 Advances to personnel 685 238 Related parties (2) (Note 15) 448 4,877 Prepaid Technical Assistance Services (3) 15,182 4,338 Preliminary attachments - ENRE - (Note 17.a) 59 67 Municipal Bonds (Note 3.e) 0 11,836 Allowance for impairment of value of Municipal Bonds (Note 25 -

Exhibit E) 0 (5,918)

Other debtors (4) 7,271 10,837 Allowance for other doubtful accounts (Note 25 - Exhibit E) (2,900) (2,300)

Other (5) 3,111 3,859 25,990 30,221

Non-current: Other debtors (Note 16.c) 0 3,077

Tax credit on minimum presumed income (Note 3.n) 101,910 86,031 Net deferred tax assets (Note 3.n) 76,679 199,443

Allowance for impairment of value of deferred tax assets (Note 25 - Exhibit E)

(34,482) (32,261)

Other 0 185 144,107 256,475

(1) Includes 101 in foreign currency (Note 25 - Exhibit G) as of December 31, 2006. (2) Includes 4,429 in foreign currency (Note 25 - Exhibit G) as of December 31, 2006. (3) In foreign currency (Note 25 - Exhibit G) as of December 31, 2007 and 2006, respectively. (4) Includes 769 in foreign currency (Note - 25 Exhibit G) as of December 31, 2007. (5) Includes 754 in foreign currency (Note 25 - Exhibit G) as of December 31, 2006.

6. TRADE ACCOUNTS PAYABLE

The detail of trade accounts payable as of December 31, 2007 and 2006 is as follows:

2007 2006 Current:

Payables for purchase of electricity and other purchases (1) 221,098 158,371 Unbilled electric power purchases 82,191 92,877 Customer contributions (Note 3.p) 11,759 16,123 Other 1,104 269

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316,152 267,640

Non-Current:

Customer deposits (Note 3.p) 35,466 31,250 (1) Includes 34,633 and 16,271 in foreign currency (Note 25 - Exhibit G) as of December 31, 2007

and 2006, respectively. Also, includes balances with SACME S.A. for 757 and 676 as of December 31, 2007 and 2006, respectively and balances with Errecondo, Salaverri, Dellatorre, Gonazalez & Burgio for 74 and 16 as of December 31, 2007 and 2006 (Note 15).

7. LOANS The detail of loans as of December 31, 2007 and 2006 is as follows:

2007 2006 Current:

Bank overdraft: Principal 12,200 0 Interest 16 0

Subtotal 12,216 0

Notes: In foreign currency (Note 25 - Exhibit G and Note 14)

Interest (Note 14) 17,074 2,029 29,290 2,029 2007 2006

Non-current: Notes: In foreign currency (Note 25 - Exhibit G and Notes 14 and 23)

Fixed Rate Notes – Class 7 692,779 0 Fixed and Incremental Rate Par Notes – Class A 228,262 225,009 Fixed and Incremental Rate Par Notes – Class B 23,810 153,986 Floating Rate Par Notes – Class A 39,854 38,753 Fixed and Incremental Rate Discount Notes – Class A 0 466,409 Fixed and Incremental Rate Discount Notes – Class B 0 268,471

Subtotal 984,705 1,152,628 Adjustment to present value of notes (35,643) (57,138) Notes at present value 949,062 1,095,490

8. SALARIES AND SOCIAL SECURITY TAXES

The detail of salaries and social security taxes as of December 31, 2007 and 2006 is as follows: 2007 2006 Current:

Salaries payable and accruals 51,870 44,423 Social Security (ANSES) 5,640 4,703 Early retirements payable (Note 3.o) 2,394 2,320

59,904 51,446

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Non-Current (Note 3.o):

Other personnel benefits (Note 2) 13,367 9,638 Seniority-based bonus 5,684 4,847 Early retirements payable 5,643 5,802

24,694 20,287

9. TAXES

The detail of taxes as of December 31, 2007 and 2006 is as follows:

2007 2006 Current:

Provincial, municipal and federal contributions and taxes 25,212 19,568 Value Added Tax (VAT) 22,411 11,935 Tax on minimum presumed income 6,786 6,507 Withholdings 5,077 4,894 Municipal taxes 20,823 15,044 Other 4,332 4,244

84,641 62,192

10. OTHER LIABILITIES

The detail of other liabilities as of December 31, 2007 and 2006 is as follows: 2007 2006 Current:

Technical Assistance (1) (Note 15) 0 4,465 Capital expenditures fund – CAMMESA (Note 17.b) 1,931 0 Fees related to the initial public offering of capital stock (2) 818 3,820 Fees related to debt restructuring (Note 25 - Exhibit G) 0 7,299 Fees related to the issuance of Corporate Notes (3) (Note 25 - Exhibit G and Note 23)

4,176 0

Program for the rational use of electric power (PUREE) 91 6,926 Other (4) 2,694 3,870 9,710 26,380

Non-current:

ENRE penalties (Note 17 a and b) 281,395 241,079

(1) In foreign currency (Note 25 - Exhibit G) as of December 31, 2006. The 4,465 correspond to a balance with Electricidad Argentina S.A. as of December 31, 2006 (Note 15).

(2) Includes 818 and 3,764 in foreign currency (Note 25 - Exhibit G) as of December 31, 2007 and 2006, respectively.

(3) In foreign currency (Note 25 - Exhibit G) as of December 31, 2007. (4) Includes 1,855 and 2,435 in foreign currency (Note 25 - Exhibit G) as of December 31, 2007 and

2006, respectively. Also, includes balances with Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio for 628 and 208 as of December 31, 2007 and 2006, respectively (Note 15).

11. NET SALES

The breakdown of net sales for the years ended December 31, 2007, 2006 and 2005 is as follows:

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2007 2006 2005

Sales of electricity (1) 1,948,737 1,347,295 1,238,241 Late payment charges 17,099 12,557 11,617 Pole leases 10,745 14,315 8,312 Connection charges 3,986 2,586 2,642 Reconnection charges 1,361 1,573 1,398

1,981,928 1,378,326 1,262,210

(1) Net of ENRE penalties for 23,940, 25,200 and 72,736 for the years ended December 31, 2007, 2006 and 2005, respectively (Note 17). As of December 31, 2007, includes 218,591 related to the retroactive tariff increase arising from the application of the new electricity rate schedule (Note 17.b. item d), and 49,646 related to the Cost Monitoring Mechanism (MMC) (Note 17.a).

12. OTHER INCOME (EXPENSE) – NET The breakdown of other income (expense), net for the years ended December 31, 2007, 2006 and 2005 is as follows:

2007 2006 2005 Forgiveness of operator's compensation (Note 15) Non operating income

0 1,467

0 4,093

25,852 1,337

Commissions on municipal taxes collection 1,761 1,537 1,479 Net expense from technical services (1,770) (437) 995 Voluntary retirements and terminations (7,192) (14,122) (7,962) Severance paid (4,283) (3,019) (8,508) Accrued litigation (16,750) (13,400) (10,050) Supplies recovered from third parties 0 5,782 0 Rebate of technical assistance services and financial expenses EDF International (Note 15)

14,845 0 0

Income from reimbursements of network replacement (Note 17.a)

7,203 0 0

Disposal of property, plant and equipment (1,105) (650) (335) Other 7,180 (2,728) (3,460) 996 (22,944) (652)

13. FRAMEWORK AGREEMENT

On January 10, 1994, the Company, together with EDESUR S.A., the Argentine Federal Government and the Government of the Province of Buenos Aires signed a Framework Agreement aimed at resolving the issue of supplying electricity to low-income areas and shantytowns. Pursuant to such Framework Agreement, the Company is entitled to receive compensation from a Special Fund for any non-payments of electricity supplied to low-income areas and shantytowns. The ENRE approved this Framework Agreement through Resolution N° 6 dated January 20, 1994, which was then ratified by both the Federal Government through Decree N° 584 dated April 22, 1994 and the Government of the Province of Buenos Aires through Decree N° 1,445 dated June 2, 1994. In accordance with Section 5 of the above-mentioned Agreement, the Company waived its right to any claims and/or collection of bills, adjustments, surcharges and interest arising or accrued from September 1, 1992 through January 31, 1994, as a result of direct connections, power theft, unrecorded consumption or any other form of misappropriation of electricity or illegal use thereof. The economic value assigned to the above-mentioned waiver amounted to 20,000, for which purpose a Special Fund was set up. The cost of this Special Fund was borne by the Argentine Federal Government and the Province of Buenos Aires which contributed a percentage of the bills effectively collected from users in low-income areas and shantytowns. The four-year duration of this Special Fund, which commenced as from the date on which

F-30

the Framework Agreement went into effect, ended on June 30, 1998. The Company has been fully compensated for the economic effect derived from the above-mentioned waiver. As permitted by Section 13 of the Agreement, which stipulates that the terms and conditions of the Agreement may be subject to review and/or adjustments under certain circumstances, and taking into account that not all of the objectives of the Agreement could be completely fulfilled within the originally stipulated period, although most of them had been accomplished, and considering also that new shantytowns had appeared which had to be recognized, the parties agreed to extend the term of the Agreement for an additional fifty-month period ending August 31, 2002. During such additional period the original provisions of the Framework Agreement and the Regulations continued to be in effect. Furthermore, a new population census was conducted so as to identify those shantytowns which up to then had not been recognized. Said census has been completed and approved by the regulatory agency. Furthermore, the above-mentioned extension of the Framework Agreement was approved by the Argentine Federal Government through Decree N° 93 dated January 25, 2001. As from the expiration date of the above-mentioned Agreement, the Company continues supplying electricity to low-income areas and shantytowns. On October 6, 2003, the Company signed a new Framework Agreement with the Argentine Federal Government and the Government of the Province of Buenos Aires for a term of four years, which retroactively covered all the services provided as from September 1, 2002. This Agreement may be renewed for another four-year term should the parties so agree. The new Agreement, whose terms and conditions are similar to those of the previous agreement, was ratified by both the Federal Executive Power and the Government of the Province of Buenos Aires through Decree N° 1972 dated December 29, 2004 (published in the Official Gazette on January 5, 2005) and Decree N° 617 dated April 5, 2005 (published in the Official Gazette on May 23, 2005), respectively. Receivables under the new Agreement as of December 31, 2007 and 2006 amounted to 4,579 and 45,552, respectively. During the year ended December 31, 2007, the Company collected 5,828 from the Federal Government. On October 26, 2006, the Company entered into a Payment Plan Agreement with the Government of the Province of Buenos Aires which establishes the conditions according to which the Province of Buenos Aires will honor its obligation to the Company under the Framework Agreement expired on December 31, 2006. In such agreement, the Company claims a debt amounting to 27,114, for the period September 2002 through June 2006, which the Province agrees to verify in accordance with the provisions of chapter VI -section 13 and related sections- of the Fund Regulations of the new Agreement. Furthermore, the Province agrees to pay the debt resulting from the aforementioned verification, in 18 equal, consecutive and monthly installments. The aforementioned payment plan agreement stipulates that together with the payment of the first six installments, the Province of Buenos Aires must pay the amounts resulting from the electricity provided to low-income areas and shantytowns during the last semester of 2006, which amounted to 5,815. The Company waived its right to interest accrued from the date on which the New Framework Agreement went into effect through the commencement of the agreed-upon installment plan. The aforementioned waiver is subject to the compliance of the Government of the Province of Buenos Aires with the agreed-upon installment plan. The aforementioned agreement was approved by the Company’s Board of Directors on November 7, 2006 and published in the Official Gazette of the Province of Buenos Aires on May 29, 2007. On April 24, 2007, the Company received a payment of 5,346, which includes the first three installments of the aforementioned payment plan for a total amount of 4,519. Furthermore, on June 21 and October 24, 2007 the Province of Buenos Aires made payments of 8,722 and 4,519, respectively, on account of the total debt arising from the Framework Agreement. The aforementioned Framework Agreement expired on December 31, 2006. As from such date the Company has been negotiating the renewal of such agreement with the Government of the Province of

F-31

Buenos Aires and the Federal Government. However, the Company has continued supplying electricity to low-income areas and shantytowns.

14. RESTRUCTURING OF FINANCIAL DEBT On January 19, 2006, the Board of Directors approved the launching of a solicitation of consent for the restructuring of the Company’s financial debt through the exchange of such debt for a combination of cash and notes (the Restructuring) pursuant to a voluntary exchange offer (the Voluntary Exchange Offer) and/or an out-of-court reorganization agreement (Acuerdo Preventivo Extrajudicial) (the APE). Furthermore, the holders of Gain Trust Notes due in 2005, which represented an interest in the private corporate note issued by the Company and held by a financial trust, were offered to directly participate in the Restructuring by exchanging their Gain Trust Notes for Floating Rate Notes due in 2006, and then exchanging such Notes for the consideration offered in the Restructuring.

The Restructuring

The Company made an exchange offer and launched a solicitation of consent to execute an APE with eligible holders of its outstanding financial debt. An APE is an insolvency procedure available to debtors under the Argentine Bankruptcy Law (LCQ) consisting of an out-of-court reorganization agreement between a debtor and creditors holding at least two thirds of unsecured debt, which is subject to judicial confirmation. Upon judicial confirmation, the APE becomes binding on all unsecured and non-preferred creditors, including non-consenting creditors, whether or not such creditors have participated in the negotiation or execution of the APE. Creditors holding more than 65% of the Company’s outstanding financial debt (including accrued and unpaid interest and applicable penalties, if any) have committed, by signing support agreements with the Company, to tender their debt in the Voluntary Exchange Offer and give their consent to the APE, should this procedure be initiated. The Company could carry out the Restructuring in accordance with one of the following three alternatives: • If creditors holding at least 66% but less than 93% of the aggregate outstanding amount give their

consent to the Restructuring, the Company, the Supporting Creditors and the APE Representative, on behalf of Consenting Creditors, will promptly execute the Restructuring Agreement, and the Company may, at its own option, either proceed with a Mandatory Exchange through the APE or an In-APE Exchange on the Consummation Date or on the In-APE Exchange Date, respectively, subject in each case to the fulfillment of the Conditions to the APE Restructuring Alternatives;

• If creditors holding at least 93% but less than 98% of the aggregate outstanding amount give their consent to the Restructuring, the Company may, at its own option, either proceed with an In-APE Exchange (subject to the fulfillment of the Conditions to the APE Restructuring Alternatives) on the In-APE Exchange Date or carry out the Voluntary Exchange Offer (subject to the fulfillment of the Conditions to the Voluntary Exchange Offer) on the Voluntary Exchange Date; or

• If creditors holding at least 98% of the aggregate outstanding amount give their consent to the Restructuring, the Company will carry out the Voluntary Exchange Offer (subject to the fulfillment of the Conditions to the Voluntary Exchange Offer) on the Voluntary Exchange Date.

Each of these alternatives was subject to the fulfillment of certain conditions, including all necessary regulatory approvals. On February 22, 2006, the Company informed that creditors holding 100% of the Company’s outstanding financial debt (including accrued and unpaid interest and applicable penalties) had accepted the restructuring process of the financial debt, either by directly giving their consent and/or signing support agreements with the Company. Consequently, in accordance with the degree of acceptance received, the Company carried out the Restructuring following the third alternative mentioned above.

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The Company carried out the Restructuring through the exchange of the outstanding financial debt held by consenting creditors, at such creditors’ option, subject to proration and reallocation, for one or a combination of the following alternatives, which include the issuance of notes under the current corporate notes program: • The Fixed Rate Par Option: For each US$ 1,000 principal amount of outstanding financial debt,

creditors received Fixed Rate Par Notes for a nominal value of US$ 1,000. The amount of Fixed Rate Par Notes issued under the Restructuring was not subject to a maximum amount. Interest on Fixed Rate Par Notes will be payable semiannually in arrears at an annual fixed rate, as detailed in the table below, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

Year Annual Interest Rate on

Fixed Rate Par Notes Annually Scheduled

Amortization 1 3.0% 0.0% 2 4.0% 0.0% 3 5.0% 0.0% 4 6.0% 0.0% 5 8.0% 0.0% 6 9.0% 10.0% 7 9.5% 10.0%

8 through 11 10.0% 10.0%, 10.0%, 10.0%, 50.0%

An amount of US$ 123.8 million in notes, comprised of two classes (Class “A” amounting to US$ 73.5 million and Class “B” amounting to US$ 50.3 million), was issued under this option.

• The Floating Rate Par Option: For each US$ 1,000 principal amount of outstanding financial debt, creditors received Floating Rate Par Notes for a nominal value equal to (i) US$ 1,000 plus (ii) any accrued and unpaid interest as of December 31, 2005 (excluding penalty interest and additional amounts, if any) in respect of such US$ 1,000 principal amount of outstanding financial debt (or, in the case of Gain Trust Notes, any accrued and unpaid interest as of December 31, 2005 (excluding any penalty interest and additional amounts, if any) in respect of such US$ 1,000 principal amount of Gain Trust Notes). A maximum of US$ 50 million principal amount of outstanding financial debt could be exchanged under this option. Interest on Floating Rate Par Notes will be payable semiannually in arrears at an annual rate equal to LIBOR plus a spread, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

Year Annual Spread

Floating Rate Par Notes Annually Scheduled

Amortization 1 0.0% 0.0% 2 0.0% 0.0% 3 1.0% 0.0%

4 through 6 1.5% 0.0%, 0.0%, 5.0% 7 through 14 2.0% 5.0%, 5.0%, 5.0%, 5.0%, 5.0% 10.0%,

10.0%, 50.0% An amount of US$ 12.7 million in notes was issued under this option.

• The Combination Option: For each US$ 1,000 principal amount of outstanding financial debt,

creditors received (i) a cash payment of US$ 283 and (ii) Discount Notes for a nominal value of US$ 667. A fixed amount of US$ 360 million principal amount of outstanding financial debt could be exchanged under this option. Interest on Discount Notes will be payable semiannually in arrears at an annual fixed rate, and principal will be due and payable in semiannual installments based on the amortization schedule detailed in the table below:

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Year Discount Applicable to

Annual Interest Rate Annually Scheduled

Amortization 1 3.0% 0.0% 2 3.5% 0.0% 3 10.0% 5.0%

4 11.0% 5.0% 5 through 9 12.0% 5.0%, 5.0%, 10.0%, 10.0%, 60.0%

An amount of US$ 240 million in notes, comprised of two classes (Class “A” amounting to US$ 152.3 million and Class “B” amounting to US$ 87.7 million), was issued under this option.

The Company did not make any payment or capitalized any accrued and unpaid interest or any other accrued and unpaid additional amount on any outstanding debt exchanged under the restructuring, other than as set forth in the above options. Finally, on April 24, 2006, the Company made a cash payment of US$ 102,000 thousand to those creditors who had chosen the Combination Option, and an additional payment of US$ 4,736 thousand to those creditors who had validly given their consent and tendered their outstanding financial debt, pursuant to the terms of the restructuring proposal. The latter amount represents interest accrued on the original debt principal amount at the interest rate applicable to the notes for the period extending from January 1, 2006 to the date of issuance of the notes, which was, April 24, 2006. Furthermore, in conformity with the options selected by the financial creditors and after applying the pro-ration and allocation mechanism, EDENOR issued the notes under the Global Corporate Notes Program. As a result of the restructuring process, the defaulted debt prior to the restructuring, which amounted to US$ 540.9 million as of February 22, 2006, was reduced to US$ 376.4 million, with an average term of more than 8 years, at an average cost of 8% and final maturity in 2019. During the year ended December 31, 2007, as a result of both the issuance of medium-term corporate notes due in 2017 for US$ 220,000 thousand (Note 23), and the public offering process described in Note 1, the Company, as required in the trust agreement for the issuance of corporate notes, has purchased and redeemed at market prices and in successive operations, all “discount notes due in 2014” and part of the “fixed rate par notes” for a nominal value of US$ 283,726 thousand. After the aforementioned purchase and redemption, the principal outstanding balance of the financial debt amounts to US$ 92,704 thousand. Therefore, the Company’s post-restructuring and post-purchase and redemption debt structure as of December 31, 2007 was comprised of the following Notes:

Type Class Debt structure Debt purchase and Post-purchase and Balance as of Decemberin thousands redemption redemption debt structure 31, 2007 (Note 7)

of us$ in thousands of us$ in thousands of us$ in thousands of pesosA 73,485 (998) 72,487 228,262

Fixed Rate Par Note B 50,289 (42,728) 7,561 23,810

Floating Rate Par Note A 12,656 0 12,656 39,854

A 152,322 (152,322) 0 0

Discount Note B 87,678 (87,678) 0 0

Total 376,430 (283,726) 92,704 291,926 The principal amortization schedule broken down by year of total debt, including the aforementioned repurchases and without considering possible adjustments, prepayments, redemptions or cancellations, is detailed in the table below:

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Year Amount in

thousands of US$

2011 8,638 2012 8,638 2013 8,638 2014 8,638 2015 8,638 2016 40,654 2017 1,266 2018 1,266 2019 6,328

92,704 As of December 31, 2007, the loss resulting from the purchase and redemption of notes amounted to 10,228 which has been included in the statement of income for the year ended as of that date (Note 3.k). Main covenants As established in the trust agreement for the issuance of corporate notes, the main covenants assumed in relation to this transaction are the following: - Based on the level of excess cash (leverage ratio) and subject to maintaining an established

minimum cash balance of US$ 15 million, the Company will be subject to the following conditions:

If EDENOR’s Leverage Ratio (defined as Total Financial Debt to Consolidated EBITDA) is higher than 3.5, any excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes.

If the Leverage Ratio is equal to or lower than 3.5, but higher than 3.0, the Company, at its discretion, will apply any excess cash as follows:

A minimum of 50% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 50% of such excess cash shall be used to make permitted capital expenditures, regulatory capital expenditures or additional capital expenditures;

A minimum of 75% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 25% of such excess cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

If the Leverage Ratio is equal to or lower than 3.0, but higher than 2.5, the Company, at its discretion, will apply any excess cash as follows: A minimum of 50% of such excess cash shall be applied, at the Company’s discretion, either for the purchase of notes through market purchases or for the optional redemption of notes; and a maximum of 50% of such excess cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

If the Leverage Ratio is equal to or lower than 2.5, the Company is exempt from complying with the above-mentioned conditions and therefore any excess cash may be applied at its discretion.

- The Company may make permitted capital expenditures up to an agreed-upon annual amount. - Upon the occurrence of an Adverse Event, EDENOR, at its discretion, may elect to defer, reschedule

and capitalize up to one year of principal amortization payments and one year of interest payments

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on any or all series of notes by written notice to the holders on each payment date or prior thereto. This provision may be invoked only once in respect of both an Adverse Cash Flow Event and an Adverse Devaluation Event during the term of the Notes. Adverse Cash Flow Event means the occurrence of any event or series of events that are outside the Company’s control and result in the Company’s inability to meet its debt service obligations, to the extent that the minimum cash balance is maintained. Adverse Devaluation Event means any measure or series of measures taken by the Argentine government, general market conditions or any other event that results in a 20% or larger devaluation of the Peso in any period of 12 consecutive months after the Issuance Date as compared to its value as of January 1, 2006.

- The Company may incur additional indebtedness subject to certain conditions that are described in

the trust agreement for the issuance of the corporate notes. - Restricted Payments: No dividends shall be paid until April 24, 2008 or until such time when the

Company’s Leverage Ratio is lower than 2.5, whichever occurs first. Fees payable under the technical assistance agreement shall not exceed US$ 2 million. Payments to EASA shall not exceed US$ 2.5 million in any fiscal year.

- The Company may suspend compliance with any covenants provided that its leverage ratio is equal

to or lower than 2.5. - In the case that the Company carries out a primary equity public offering and as long as the

Company’s Leverage ratio is higher than 2.5, the Company shall be required to apply 25% of the net cash proceeds of the base offering amount to purchase notes through market purchases, taking into account that the Company shall have a two-year period to make the aforementioned purchases of notes through market purchases and the Company shall have no obligation to make the aforementioned purchases of notes at a price greater than the nominal value of the Notes.

As of the date of issuance of these financial statements, the Company is in compliance with its obligations as stipulated in the trust agreement related to the corporate notes issued after the restructuring of the financial debt.

15. BALANCES AND TRANSACTIONS WITH RELATED PARTIES In the normal course of business, the Company carries out transactions with related parties. As of December 31, 2007 and 2006, the outstanding balances with related parties are as follow:

2007 2006 Other receivables (Note 5)

Electricidad Argentina S.A. 0 4,429 SACME S.A. 448 448

Total 448 4,877

Trade accounts payable (Note 6)

Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio

(74)

(16)

SACME S.A. (757) (676) Total (831) (692)

Other liabilities (Note 10)

Electricidad Argentina S.A. 0 (4,465) Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio

(628)

(208)

Total (628) (4,673)

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Transactions carried out with related parties for the years ended December 31, 2007, 2006 and 2005 are as follow:

2007 2006 2005 Other income Electricidad Argentina S.A. 8 4 117 EDF Global Solución 0 0 80

Total 8 4 197 Expenses from services SACME S.A. (3,337) (2,334) (1,954) EDF Global Solución 0 (659) (4,161) Electricidad Argentina S.A. (275) 0 (5,780) EDF S.A (**) (3,727) (7,128) (26,912) Errecondo, Salaverri, Delatorre, Gonzalez & Burgio 0 (1,392) (300) Estudio Beccar Varela 0 (30) (6)

Total (7,339) (11,543) (39,113) Financial expenses, interest and penalties

EDF International (**) 0 (7,873) (18,752) Electricidad Argentina S.A. (6,219) (8,133) 0 Errecondo, Salaverri, Dellatorre, Gonzalez & Burgio Estudio Beccar Varela

(4,352) 0

(244) (245)

0 0

Total (10,571) (16,495) (18,752)

Financial debt restructuring result EDF International (**) 0 38,114 0

Adjustment to present value of notes (*)

EDF International (**) 12,658 0

(*) Includes calculation of present value of the financial debt as of December 4, 2006, date on which it was transferred by EDF International. (**) As from the international secondary offering described in Note 1, EDF S.A. and EDF International are no longer a related party. Operating and Technical Assistance Agreements In compliance with the provisions of both the Bid Package and the Transfer Contract, the Company has entered into an Operating Agreement with EDF International and ENHER, pursuant to which EDF International and ENHER would provide technical advisory services concerning the distribution and sale of electricity and would commit their experience and know-how to the achievement of an efficient and competitive management. On July 16, 1999, ENHER assigned its rights and obligations arising from the above mentioned Operating Agreement to its controlling company ENDESA S.A. On May 4, 2001, in compliance with that which has been mentioned in Note 1, ENDESA S.A. assigned its rights and obligations under the Operating Agreement to EDF International, thus leaving EDF International as the sole operator. This Operating Agreement had an initial 10-year term as from September 1, 1992, which was extended until August 31, 2007.

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The Company has registered said extension in the National Institute of Copyright (INPI) - Technology Transfer Division under number 9894. On September 15, 2005, EDF International transferred the shares held in EASA (the controlling company of Edenor) and 14% of EDENOR’s shares to Dolphin. In connection with such transfer, the parties agreed to terminate the aforementioned Agreement and reduce the amount owed to EDF International for unpaid fees which amounted to 25,852. However, since the Company still wished to have access to EDF S.A.’s know-how, experience and technical knowledge in the field of electricity distribution and sale, the Company and EDF S.A. entered into a new Technical Assistance Agreement for a period of 5 years or for such period during which Dolphin continued to be the controlling company of Electricidad Argentina S.A. In accordance with the terms of the Technical Assistance Agreement, EDENOR would pay EDF S.A. an amount of US$ 10,000,000 as technical assistance fees in five equal annual installments of US$ 2,000,000. The first annual payment was made on January 9, 2006 and the second payment was made on December 14, 2006. On December 7, 2005, the Company registered the new agreement in the National Institute of Copyright (INPI) - Technology Transfer Division under number 11,197. On December 27, 2007, the Company and EDF S.A. signed an amendment to the aforementioned Agreement, pursuant to which the parties agreed that, due to circumstances beyond their control, during 2006 and 2007 the amount of services required by the Company and provided by EDF S.A. within the scope of the Technical Assistance Agreement had been significantly lower than the originally expected by the parties. Otherwise, during 2008, EDF S.A. will be required to provide further services related to the Revision of the Company Tariff Structure process, the changes made to the Company’s commercial and invoicing system and the broadening of the Company’s investment plan. Consequently, the Company requested and EDF S.A. granted the following: (i) that EDF S.A. recognize a rebate of US$ 2,100 thousand, equivalent to 6,613, in relation to the US$ 4,000 thousand already paid for the Technical Assistance Agreement, and (ii) that during the year 2008 EDF S.A. continues providing services under the terms and conditions of the aforementioned Agreement, whose expiration date was fixed for December 31, 2008. Based on the significant amount of work that is expected, the Company agreed to pay EDF S.A. an amount of US$ 6,000 thousand. From such amount, the Company deducted a total amount of US$ 4,600 thousand, equivalent to 14,485 (Note 12) composed by: (i) the aforementioned rebate for US$ 2,100 thousand, and (ii) a receivable for US$ 2,500 thousand, recognized by EDF International in favor to the Company as a reimbursement of the expenses related to the initial public offering of capital stock incurred during the year ended December 31, 2006, which according to the IPO expenses agreement shall be creditable against any services rendered by any EDF International’s affiliate. Consequently, on December 28, 2007, the Company paid EDF S.A. the amount of US$ 1,400 thousand. Agreement with Electricidad Argentina S.A. (controlling company) On April 4, 2006, the Company and EASA entered into an agreement pursuant to which EASA will provide technical advisory services on financial matters as from September 19, 2005 and for a term of five years. In consideration of these services, EDENOR will pay EASA an annual amount of US$ 2,000 thousand plus VAT. Any of the parties may terminate the agreement at any time by giving 60 days’ notice, without having to comply with any further obligations or paying any indemnification to the other party. Agreement with Comunicaciones y Consumos S.A. On March 16, 2007, the Company and Comunicaciones y Consumos S.A. (CYCSA) entered into an agreement pursuant to which the Company granted CYCSA the exclusive right to provide telecommunications services to the Company customers through the use of the Company’s network in accordance with the provisions of Decree Nº 764/2000 of the Federal Government, which contemplates the integration of voice, data and image transmission services through the existing infrastructure of electricity distribution companies such as the Company’s network. In accordance with the terms of the agreement, CYCSA will be responsible for all maintenance expenses and expenses related to the adapting

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of the Company’s network for the rendering of such telecommunications services. The term of the agreement will be ten years to commence from the date on which CYCSA is granted the license to render telecommunications services. The agreement will be automatically renewed upon expiration date for subsequent periods of five years, unless notice to the contrary is given by any of the parties no less than 120 days prior to the expiration of the corresponding period. In accordance with the agreement, CYCSA shall periodically request access to the Company’s network. Such request will be evaluated by the Company and access will be granted based on the available capacity of the network. In consideration of the use of the network, CYCSA will grant the Company 2% of the annual charges collected from customers, before taxes, as well as 10% of the profits obtained from the rendering of the services. Furthermore, CYCSA will indemnify the Company for any obligation arising from the rendering of the services through the Company’s network. The agreement was signed on condition that CYCSA was to obtain the telecommunications license within a period of 180 days from the signing thereof, period which, in accordance with the terms of the agreement, could be extended. In line with that, the Board of Directors’ meeting held on November 7, 2007 authorized the extension of the period for obtaining the aforementioned license which, nevertheless, continues to be a condition in order for the agreement to be valid and go into effect. Agreement with Préstamos y Servicios S.A. On March 16, 2007, the Company entered into an agreement with Préstamos y Servicios S.A. (PYSSA), a company engaged in the rendering of financial services, pursuant to which the Company granted PYSSA the exclusive right to conduct its direct and marketing services through the use of the Company’s facilities and mailing services. As part of the agreement, the Company agreed to provide physical space in some of its offices so that PYSSA be able to offer financial and loan services to the Company customers. Furthermore, the Company agreed to include PYSSA marketing material in the mail sent to customers, including the invoices. The term of the agreement is 5 years, which will be automatically renewed for subsequent periods of five years, unless any of the parties gives notice to the other of his intention to terminate the agreement no less than 120 days prior to the expiration of the corresponding period. In accordance with the terms of the agreement, PYSSA will pay the Company 2% of the monthly charges collected from customers, before taxes, as well as 10% of the profits obtained from its services. Furthermore, PYSSA agreed to indemnify the Company for any obligation arising from the rendering of its services. The agreement established that its term was subject to the authorization of the ENRE, which pronounced favorably through Resolution Nº 381/2007.

Agreement with EDF Global Solución S.A.

On May 4, 2005, EDENOR and EDF Global Solución S.A. (EDFGS), at that time a wholly-owned subsidiary of EDF, entered into a management agreement pursuant to which EDFGS would manage EDENOR's buildings and facilities, including integral maintenance and cleaning tasks, management of documentation and buildings operations. EDENOR would pay EDFGS a monthly fee of approximately 300 plus VAT for the above-mentioned services. The Agreement would expire in a three-year term to commence as from May 1, 2005, but could be extended, at EDENOR's request for additional periods of three years. On November 1, 2006, EDENOR could terminate the agreement on giving 60 days' notice, without having to comply with any further obligations or paying damages, provided any of the following events were to occur: (i) the services provided by EDFGS were no longer required by the Company or (ii) after an analysis of market prices for the services provided, the resulting offer were lower than the price agreed-upon with EDFGS, and EDFGS did not make an equivalent offer within 30 days.

16. CAPITAL STOCK a) General As of December 31, 2007, the Company’s outstanding capital stock amounts to 906,455,100 shares, represented by 462,292,111 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 442,210,385 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 1,952,604 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share. Each and every share maintains the same voting rights, i.e. one vote per share. There are no preferred shares of any kind, dividends and/or preferences in the event of liquidation, privileged participation rights, prices and dates, or unusual voting

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rights. Moreover, there are no significant terms of contracts allowing for either the issuance of additional shares or any commitment of a similar nature. The capital increase of 74,844,900 shares resolved by the Board of Directors in the meeting held on June 14, 2007, as per the powers granted by the Shareholders’ Meeting held on June 7, 2006, was registered with the pertinent regulatory authorities on September 18, 2007 (Note 1). As of December 31, 2006, the Company’s outstanding capital stock amounted to 831,610,200 shares, represented by 424,121,202 common, book-entry Class A shares with a par value of one peso each and the right to one vote per share; 324,327,978 common, book-entry Class B shares with a par value of one peso each and the right to one vote per share; and 83,161,020 common, book-entry Class C shares with a par value of one peso each and the right to one vote per share. b) Restriction on the transfer of the Company’s common shares The Company’s by-laws provide that Class “A” shareholders may transfer their shares only with the prior approval of the ENRE. The ENRE must communicate its decision within 90 days upon submission of the request for such approval, otherwise the transfer will be deemed approved. Furthermore, Caja de Valores S.A. (the Public Register Office), which keeps the Share Register of the shares, is entitled (as stated in the Company’s by-laws) to reject such entries which, at its criterion, do not comply with the rules for the transfer of common shares included in (i) the Argentine Business Organizations Law, (ii) the Concession Agreement and (iii) the Company’s by-laws. In addition, Class “A” shares are pledged during the entire term of the concession as security for the performance of the obligations assumed under the Concession Agreement. Additionally, in connection with the issuance of Class 2 Corporate Notes, EASA is required to be the beneficial owner and owner of record of not less than 51% of EDENOR’s issued, voting and outstanding shares. Section ten of the Adjustment Agreement signed with the Grantor of the Concession and ratified through Decree No. 1957/06, stipulates that from the signing of the agreement through the ending of the Contractual Transition Period, the majority shareholders may not modify their ownership interest nor sell their shares. c) Employee Stock Ownership Program (ESOP) At the time of the privatization of SEGBA (the Company’s predecessor), the Argentine Government assigned the Company’s Class C shares, representing 10% of the Company’s outstanding capital stock, for the creation of an Employee Stock Ownership Program (ESOP) in compliance with the provisions of Law N° 23,696 and its regulatory decrees. Through this program, certain eligible employees (including former SEGBA employees who had been transferred to the Company) were entitled to receive a specified number of Class C shares, to be calculated on the basis of a formula that took into consideration a number of factors including employee salary, position and seniority. In order to implement the ESOP, a general transfer agreement, a voting trust agreement and a trust agreement were signed. Pursuant to the general transfer agreement, participating employees were allowed to defer payment of the Class C shares over time. As security for the payment of the deferred purchase price, the Class C shares were pledged in favor of the Argentine government. This pledge was released on April 27, 2007 upon full payment to the Argentine Government of the deferred purchase price of all Class C shares. Additionally, in accordance with the terms of the original trust agreement, the Class C shares were held in trust by Banco Nación, acting as trustee, for the benefit of the ESOP participating employees and the Argentine Government. Furthermore, in accordance with the voting trust agreement, all political rights of participating employees (including the right to vote at ordinary and extraordinary shareholders’ meetings) were to be jointly exercised until full payment of the deferred purchase price and release of the pledge in favor of the Argentine Government. On April 27, 2007, ESOP participating employees fully paid the deferred purchase price to the Argentine Government, accordingly, the pledge was released and the voting trust agreement was terminated.

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In accordance with the regulations applicable to the ESOP, participating employees who retired before full payment of the deferred purchase price to the Argentine Government was made, were required to transfer their shares to the Guarantee and Repurchase Fund (Fondo de Garantía y Recompra) at a price to be calculated in accordance with a formula established in the general transfer agreement. As of the date of payment of the deferred purchase price, the Guarantee and Repurchase Fund had not fully paid the amounts due to former ESOP participating employees for the transfer of their Class C shares. A number of former employees of both SEGBA and the Company have brought legal actions against the Guarantee and Repurchase Fund, the Argentine Government and, in few cases, against the Company, in each case in relation to the administration of the Employee Stock Ownership Program. The plaintiffs who are former employees of SEGBA were not deemed eligible by the corresponding authorities to participate in the Employee Stock Ownership Program at the time of its creation. This decision is being disputed by the plaintiffs who are therefore seeking compensation. The plaintiffs who are former employees of the Company are claiming payment for the unpaid amounts owed to them by the Guarantee and Repurchase Fund either due to non-payment of the transfer of their shares upon retirement in favor of the Guarantee and Repurchase Fund or incorrect calculation of amounts paid to them by the Guarantee and Repurchase Fund. In several of these claims, the plaintiffs have obtained attachment orders or preliminary injunctions against the Guarantee and Repurchase Fund on Class C shares and funds deposited in such Fund. Due to the fact that the resolution of these legal proceedings is still pending, the Federal Government has instructed Banco Nación to create a Contingency Fund so that a portion of the proceeds of the offering of the Employee Stock Ownership Program Class C shares be kept during the course of the legal actions. No accrual for litigation has been recorded in the financial statements in connection with the legal actions brought against the Company as the Company’s management believes that EDENOR is not responsible for the above-mentioned claims. In accordance with the agreements, laws and decrees that govern the Employee Stock Ownership Program, the Class C shares may only be held by personnel of the Company, therefore before the public offering of the Class C shares that had been separated from the Program, such shares were converted into Class B shares and sold. In conformity with the by-laws, the political rights previously attributable to Class C shares are at present jointly exercised with those attributable to Class B shares and the holders of the remaining Class C shares will vote jointly as a single class with the holders of Class B shares when electing directors and supervisory committee members. As of December 31, 2007, 1,952,604 Class C shares, representing 0.22% of the Company’s capital stock, are outstanding.

17. REGULATORY FRAMEWORK a) General

The Company's business is regulated by Law N° 24,065, which created the ENRE. In this connection, the Company is subject to the regulatory framework provided under the aforementioned Law and the regulations issued by the ENRE. The ENRE is empowered to: a) approve and control tariffs, and b) control the quality of both the service and the technical product, as established in the Concession Agreement. Failure to comply with the provisions of such Agreement and the rules and regulations governing the Company's business will make the Company liable to penalties that may include the forfeiture of the concession. As from September 1, 1996, there has been a change in the methods applied to control the quality of both the product and the service provided by the Company. Within this new framework, compensation between areas and circuits of different quality is not allowed, instead, the specific quality provided to individual customers, rather than an average customer value, must be measured. As a result, fines will be credited to users affected by service deficiencies in future bills. Penalties are imposed in connection with the following major issues:

1. Deviation from quality levels of technical product, as measured by voltage levels and network

variations; 2. Deviation from quality levels of technical service, as measured by the average interruption

frequency per Kilovatios (KVA) and total interruption time per KVA;

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3. Deviation from quality levels of commercial service, as measured by the number of claims and complaints made by customers, service connection times, the number of estimated bills and billing mistakes;

4. Failure to comply with information gathering and processing requirements so as to evaluate the quality of both the technical product and the technical service;

5. Failure to comply with public safety regulations. As of December 31, 2007 and 2006, the Company has accrued the penalties for resolutions not yet issued by the ENRE corresponding to the six-month control periods elapsed through those dates. As of December 31, 2007 and 2006, the Company has applied the adjustment contemplated in the Temporary Tariff Regime (TTR) (Note 17.b item vii). As of December 31, 2007 and 2006, liabilities for penalties amounting to 281,395 and 241,079, respectively, have been included in non-current liabilities (Note 10).

In addition, as of December 31, 2007, the Company’s management has considered that the ENRE has complied with the obligation to suspend lawsuits aimed at collecting penalties.

Furthermore, the Company has been notified of certain preliminary attachments levied on funds deposited in its bank accounts as a consequence of the executory proceedings brought by the ENRE against the Company for imposed and unpaid penalties in the amount of 59 and 67 as of December 31, 2007 and 2006, respectively (Note 5). Additionally, after December 31, 2007 and until the date of issuance of these financial statements, the Company has not been notified of any other attachments (Note 17.b).

Moreover, on July 12, 2006 the National Energy Secretariat issued Resolution N° 942/2006 which modifies the allocation of any excess funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), which provides for the application of both tariff incentives and penalties aimed at encouraging customers to reduce consumption. As from July 1, 2006, such excess funds may be applied against the amounts receivable that the Company maintains in the Trade receivables account as Unbilled –National Fund of Electricity, for “Quarterly Adjustment Coefficient of the National Fund of Electricity” (section 1 of Law N° 25,957) for 3,036 and 23,015 as of December 31, 2007 and 2006, respectively. On August 10, 2006 the ENRE issued Resolution Nº 597/2006 which regulates the aforementioned Resolution N° 942/2006 of the National Energy Secretariat and establishes the compensation mechanism to be used.

On October 4, 2007 the Official Gazette published Resolution N° 1037/2007 of the National Energy Secretariat. Said resolution establishes that the amounts paid by the Company for the Quarterly Adjustment Coefficient (CAT) implemented by Section 1 of Law Nº 25,957, as well as the amounts corresponding to the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007 (items b and c of this note) has to be deducted from the funds resulting from the difference between surcharges billed and discounts made to customers, deriving from the implementation of the Program for the Rational Use of Electric Power (PUREE), until their transfer to the tariff is granted by the regulatory authority. The resolution also establishes that the MMC adjustment for the period May 2006 through April 2007, applicable as from May 1, 2007, amounts to 9.63 %.

Additionally, on October 25, 2007 the ENRE issued Resolution Nº 710/2007 which approves the MMC compensation mechanism established in the aforementioned Resolution Nº 1037/2007 of the National Energy Secretariat.

Section 21 of the Concession Agreement clearly stipulates that any change, replacement or modification of a distribution company network must be reimbursed by the third party requesting such change, replacement or modification. Income from this concept, which amounts to 7,203, has been included in the statement of income in the account Other Income (Expense) – Net (Note 12). b) Concession The term of the concession is 95 years and may be extended for an additional maximum period of 10 years. The term of the concession is divided into management periods: a first period of 15 years and subsequent periods of 10 years. At the end of each management period, the Class “A” shares representing

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51% of EDENOR’s capital stock, currently held by EASA, must be offered for sale through a public bidding. If EASA makes the highest bid, it will continue to own the Class “A” shares, and no further disbursements will be necessary. On the contrary, if EASA is not the highest bidder, then the bidder who makes the highest bid must pay EASA the amount of the bid in accordance with the conditions of the public bidding. The proceeds of the sale of Class “A” shares will be delivered to EASA after deducting any amounts receivable to which the Grantor of the concession may be entitled. In accordance with the provisions of the Concession Agreement, the Company shall take the necessary measures to guarantee the supply and availability of electricity so as to meet demand in due time and in accordance with stipulated quality levels, for which purpose the Company shall be required to guarantee sources of supply. For such purpose, the Company has the exclusive right to render electric power distribution and sales services within the concession area to all users who are not authorized to obtain their power supply from the Electric Power Wholesale Market (MEM), thus being obliged to supply all the electric power that may be required. In addition, the Company shall allow free access to its facilities to any MEM agents whenever required, under the terms of the Concession. No specific fee must be paid by the Company under the Concession Agreement during the term of the Concession. On January 6, 2002, the Federal Executive Power passed Law N° 25,561 whereby adjustment clauses denominated in US dollars or any other foreign currencies, indexation clauses based on price indexes from other countries, as well as any other indexation mechanisms stipulated in the contracts entered into by the Federal Government, including those related to public utilities, were declared null and void as from such date. The resulting prices and rates were converted into Argentine pesos at a rate of 1 peso per US dollar. Furthermore, Law N° 25,561 authorized the Federal Executive Power to renegotiate public utility contracts taking certain requirements into account. In accordance with the provisions of Laws N° 25,972, 26,077 and 26,204, both the declaration of economic emergency and the period to renegotiate public utility contracts were extended through December 31, 2005, 2006 and 2007, respectively. As a part of the renegotiation process, the Unit of Renegotiation and Analysis of Public Utility Contracts (UNIREN) proposed the signing of an Adjustment Agreement that would be the basis of a comprehensive renegotiation agreement of the Concession Agreement. The Company satisfied the regulatory agency’s requirements; provided an answer to the proposal and attended the public hearing convened for such purpose, rejecting in principle the proposal on the grounds that it did not properly address the need to redefine the terms of the agreement as contemplated by the law. Nevertheless, the Company ratified its willingness to reach an understanding that would restore the financial and economic equation of the concession agreement. On September 21, 2005, the Company signed the Adjustment Agreement within the framework of the process of renegotiation of the Concession Agreement set forth in Law N° 25,561 and supplementary regulations. Due to the appointment of a new Economy and Production Minister, on February 13, 2006 a new copy of the Adjustment Agreement was signed under the same terms as those stipulated in the agreement signed on September 21, 2005.

The Adjustment Agreement establishes the following:

i) the implementation of a Temporary Tariff Regime (RTT) effective as from November 1, 2005,

including a 23% average increase in the distribution margin, which may not result in an increase in the average tariff of more than 15%, and an additional 5% average increase in the value added distribution (VAD), allocated to certain specified capital expenditures;

ii) the requirement that during the term of said temporary tariff regime, dividend payment be subject to the approval of the regulatory authority;

iii) the establishment of a “social tariff” for the needy and the levels of quality of the service to be rendered;

iv) the suspension of the claims and legal actions filed by the Company and its shareholders in national or foreign courts due to the effects caused by the Economic Emergency Law;

v) the carrying out of a Revision of the Company Tariff Structure (RTI) which will result in a new tariff regime that will go into effect on a gradual basis and remain in effect for the following 5 years. In accordance with the provisions of Law N° 24,065, the National Electric Power Regulatory Authority will be in charge of such review;

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vi) the implementation of a minimum investment plan in the electric network for an amount of 178.8 million to be fulfilled by EDENOR during 2006, plus an additional investment of 25.5 million should it be required (item f below);

vii) the adjustment of the penalties imposed by the ENRE that are payable to customers as discounts, which were notified by such regulatory agency prior to January 6, 2002 as well as of those that have been notified, or whose cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect;

viii) the waiver of the penalties imposed by the ENRE that are payable to the Argentine State, which have been notified, or their cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect;

ix) the payment of the penalties imposed by the ENRE, which are described in paragraph vii above, in fourteen semiannual installments, which represent approximately two-thirds of the penalties imposed by the ENRE before January 6, 2002 as well as of those that have been notified, or whose cause or origin has arisen in the period between January 6, 2002 and the date on which the Adjustment Agreement goes into effect, subject to compliance with certain requirements.

Said agreement was ratified by the Federal Executive Power through Decree No. 1957/06, signed by the President of Argentina on December 28, 2006 and published in the Official Gazette on January 8, 2007. This agreement stipulates the terms and conditions that, upon compliance with the other procedures required by the regulations, will be the fundamental basis of the Comprehensive Renegotiation of the Concession Agreement of electric power distribution and sale within the federal jurisdiction, between the Federal Executive Power and the Company. Additionally, on February 5, 2007 the Official Gazette published Resolution N° 51/2007 of the ENRE which approves the Company’s new electricity rate schedule applicable for consumption recorded as from February 1, 2007. This document provides for the following: a) A 23% average increase in distribution costs, service connection costs and service reconnection costs

in effect which the Company collects as the holder of the concession of the public service of electric power distribution, except for the residential tariffs;

b) Implementation of an additional 5% average increase in distribution costs, to be applied to the execution of the works and infrastructure plan detailed in Appendix II of the Adjustment Agreement. In this regard, the Company has set up the required fund, which as of December 31, 2007 amounts to 12,420. This amount is net of the amounts transferred to CAMMESA for 20,479;

c) Implementation of the Cost Monitoring Mechanism (MMC) contemplated in Appendix I of the Adjustment Agreement, which for the six-month period beginning November 1, 2005 and ending April 30, 2006, shows a percentage of 8.032%. This percentage will be applied to non-residential consumption recorded from May 1, 2006 through January 31, 2007;

d) Invoicing in 55 equal and consecutive monthly installments of the differences arising from the application of the new electricity rate schedule for non-residential consumption recorded from November 1, 2005 through January 31, 2007 (items i) and ii) above) and from May 1, 2006 through January 31, 2007 (item iii) above);

e) Invoicing of the differences corresponding to deviations between foreseen physical transactions and those effectively carried out and of other concepts related to the Wholesale Electric Power Market (MEM), such as the Specific fee payable for the expansion of the network, Transportation and Others, included in Trade Receivables under Receivables from sales of electricity as Unbilled (Note 4);

f) Presentation, within a period of 45 calendar days from the issuance of this resolution, of an adjusted annual investment plan, in physical and monetary values, in compliance with the requirements of the Adjustment Agreement.

In the year ended December 31, 2006 the Company has recorded the adjustment of the penalties described in paragraphs a) and c) of this note, for an amount of 46,972. In the year ended December 31, 2007, the Company has recorded the adjustment of penalties deriving from the application of the Cost Monitoring Mechanism (MMC) for the period May 2006 through April 2007, for an amount of 18,084. Revenues from the retroactive tariff increase deriving from the implementation of the new electricity rate schedule applicable to non-residential consumption for the period of November 1, 2005 through January

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31, 2007, have been fully recognized in the financial statements for the year ended December 31, 2007. Such amount, which totals 218,591, will be invoiced in 55 equal and consecutive monthly installments, as described in item d) of paragraph b) of this note. As of December 31, 2007, the installments corresponding to the months of February through December 2007 for a total of 47,310 have already been billed. On April 30, 2007, the Official Gazette published Resolution No. 434/2007 of the Energy Secretariat which adjusts the time periods set forth in the Adjustment Agreement signed by the Company and the Grantor of the Concession and ratified by Decree No. 1957 of the Federal Government dated December 28, 2006. In this regard, the aforementioned Resolution provides that the contractual transition period established in the Adjustment Agreement will be in effect from January 6, 2002 to the date on which the Revision of the Company Tariff Structure (RTI) contemplated in the aforementioned Adjustment Agreement, goes into effect. Furthermore, the Resolution establishes that the new electricity rate schedule resulting from the RTI will go into effect on February 1, 2008. It also stipulates that, in the event that the tariff resulting from the RTI is higher than the tariff established in section 4 of the Adjustment Agreement, the transfer of the increase to the tariff will be made in accordance with the provisions of section 13.2 of the Adjustment Agreement, which establish that the first adjustment will take effect as from February 1, 2008 and the second will take effect six months later, maintaining the percentages agreed-upon in the Adjustment Agreement. As of the date of issuance of these financial statements, no resolution has been issued related to the application of the electricity rate schedule resulting from the RTI which was expected to be in effect since February 1, 2008. The aforementioned resolution requires the Company to present an investment plan before May 1, 2007 (which has already been complied with), and the extension of the obligations and commitments set forth in section 22 of the Adjustment Agreement until the date on which the electricity rate schedule resulting from the RTI goes into effect, allowing the Company and its shareholders to resume the claims suspended as a consequence of the Adjustment Agreement if the new electricity rate schedule does not go into effect in the aforementioned time period.

Furthermore, on July 7, 2007 the Official Gazette published Resolution N° 467/07 of the ENRE pursuant to which the first management period is extended for 5 years to commence as from the date on which the Revision of the Company Tariff Structure (RTI) goes into effect. Its original maturity would have taken place on August 31, 2007.

On September 19, 2007, the Energy Secretariat by Note No. 1006/07 requested that the Company comply with the provisions of Resolutions Nº 1875 and 223/07 of the aforementioned Secretariat, dated December 5, 2005 and January 26, 2007, respectively. In accordance with the aforementioned resolutions, the Company must transfer to CAMMESA, 61.96% of the total amount of the special fund set up in compliance with Clause 4.7 of the Adjustment Agreement, plus any interest accrued on the financial investments made by the Company with such funds. Such funds will be used for the execution of the works for connecting Central Costanera and Central Puerto electricity generation plants with Malaver substation. As of December 31, 2007, the Company recorded 20,478 in Property, plant and equipment (Note 25 - Exhibit A) in the Construction in process account, and 1,931 in Other liabilities in the Capital Expenditures fund – CAMMESA account (Note 10). c) Concession of the use of real property

Pursuant to the Bid Package, SEGBA granted the Company the free use of real property for periods of 3, 5 and 95 years, with or without a purchase option, based on the characteristics of each asset, and the Company would be responsible for the payment of any taxes, charges and contributions levied on such properties and for the taking out of insurance against fire, property damage and third-party liability, to SEGBA’s satisfaction.

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The Company may make all kind of improvements to the properties, including new constructions, upon SEGBA’s prior authorization, which will become the grantor’s property when the concession period is over, and the Company will not be entitled to any compensation whatsoever. SEGBA may terminate the gratuitous bailment contract after demanding the performance by the Company of any pending obligation, in certain specified cases contemplated in the Bid Package. At present, as SEGBA’s residual entity has been liquidated, these presentations and controls are made to the National Agency of Public Properties (ONABE). As of the date of issuance of these financial statements, the Company had acquired for an amount of 12,765, nine of these properties whose gratuitous bailment contracts had expired. The title deeds of eight of these properties have been executed at a price of 12,375. As for the remaining property, a down payment of 117 has been made while the outstanding amount of 273 will be payable upon the execution of the title deed on a date to be set by the Ministry of Economy.

18. CASH FLOW INFORMATION a) Cash and cash equivalents:

For the preparation of the Statement of Cash Flows, the Company considers as cash equivalents all highly liquid investments with original maturities of three months or less.

As of December 31, 2007



Cash and Banks 3,459 481 11,659 Time deposits 12,087 1,360 278,238 Money market funds 0 30,832 18,242 Notes receivable (Euro Commercial Paper)

85,652

0

0

Total cash and cash equivalents in the Statement of Cash Flows

101,198

32,673

308,139

b) Interest paid and collected: For the years ended

December 31, 2007 2006 2005 Interest paid during the year (*) (38,149) (35,951) (46,494) Interest collected during the year 3,175 2,175 2,038 (*) Capitalized in Property, plant and equipment 12,665, 9,283 and 0 as of December 31, 2007, 2006 and 2005, respectively (Notes 2 and 3.h).

19. INSURANCE COVERAGE As of December 31, 2007, the Company holds the following insurance policies for purposes of safeguarding its assets and commercial operations:

Risk covered Amount insured

Comprehensive (1) US$ 417,516,597 Mandatory life insurance $ 17,570,250 Theft of securities US$ 100,000 Vehicles (theft, third party liability and damages) $ 7,719,700 Land freight US$ 2,000,000 Imports freight $ 2,250,000

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(1) Includes: fire, partial theft, tornado, hurricane, earthquake, earth tremors, flooding and debris removal from facilities on facilities providing actual service, except for high, medium and low voltage networks.

20. CLAIM OF THE PROVINCE OF BUENOS AIRES BOARD OF ELECTRIC POWER

On December 1, 2003, the Board of Electric Power of the Province of Buenos Aires (Board) filed a claim against EDENOR in the amount of 284,364 that includes surcharges and interest as of the date of the claim, and imposed penalties for an amount of 25,963, due to the Company’s alleged failure to act as collecting agent of certain taxes established by Decrees-law N° 7290/67 and 9038/78 from July 1997 through June 2001. On December 23, 2003, the Company appealed the Board's decision with the Tax Court of the Province of Buenos Aires, which had the effect of temporarily suspending the Company’s obligation to pay. Such appeals were filed on the grounds that the Federal Supreme Court had declared that the regulations established by the aforementioned Decrees-law were unconstitutional, as they were incompatible with the Province of Buenos Aires’ commitment not to levy any taxes on the transfer of electricity. On March 20, 2007, the Board of Electric Power of the Province of Buenos Aires amended the original complaint to include an additional claim in the amount of 7,720 that includes surcharges and interest as of the date of the claim for the period of July 2001 through June 2002 –extending the claim to certain Company Directors. On June 27, 2007, the Tax Court of the Province of Buenos Aires pronounced in favor of the appeal duly lodged by the Company. Therefore, no accrual has been recorded for these claims as the Company’s management believes that there exist solid arguments to support its position.

21. LEGAL ACTION FOR ALLEGED ENVIRONMENTAL POLLUTION

On May 24, 2005, three of EDENOR’s employees were indicted on charges of polychlorinated biphenyl (PCB)-related environmental contamination. In connection with this alleged violation, the judge ordered a preliminary attachment on the Company's assets in the amount of 150 million to cover the potential cost of damage repair, environmental restoration and court costs. On May 30, 2005, the Company filed appeals against both the charges brought against its employees and the attachment order. On December 15, 2005, the Court of Appeals dismissed the charges against all three defendants and, accordingly, revoked the attachment order against the Company’s assets. The decision of the Court of Appeals, which was based on the fact that the existence of pollution could not be proved, also established that the trial judge should order the acquittal of two ENRE public officers who had been indicted on related charges. An appeal against this decision was filed in the Tribunal de Casación (the highest appellate body for this matter), which on April 5, 2006 ruled that the appeal against the decision regarding EDENOR’s employees and the Company was not admissible. On July 16, 2007, the Company was notified that on July 11, 2007 the Investigating Judge ruled the definitive acquittal of all Company officials and employees that had been indicted in the case, thus ordering the closing of the case. This decision may be appealed. The Company’s management estimates that there are no legal grounds for any action against the Company or its employees in connection with this matter. Accordingly, no accrual has been recorded in the financial statements.

22. RESTRICTIONS ON THE DISTRIBUTION OF EARNINGS

In accordance with the provisions of Law N° 19,550, 5% of the net income for the year must be appropriated to the legal reserve, until such reserve equals 20% of capital stock. The Ordinary Shareholder’s Meeting held on April 16, 2007, did not appropriate any amount to said legal reserve as of December 31, 2006, due to the existence of accumulated losses as of the end of that year.

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Moreover, in accordance with the provisions of Law N° 25,063, passed in December 1998, dividends to be distributed, whether in cash or in kind, in excess of accumulated taxable profits as of the fiscal year-end immediately preceding the date of payment or distribution, shall be subject to a final 35% income tax withholding, except for those dividends distributed to shareholders who are residents of countries benefited from conventions for the avoidance of double taxation, who will be subject to a lower tax rate. For income tax purposes, accumulated taxable income shall be the unappropriated retained earnings as of the end of the year immediately preceding the date on which the above-mentioned law went into effect, less dividends paid plus the taxable income determined as from such year and dividends or income from related companies in Argentina. Since the restructuring of the Company’s financial debt referred to in Note 14, the Company is not allowed to distribute dividends until April 24, 2008 or until such time when the Company’s leverage ratio is lower than 2.5, whichever occurs first. As from such date/time, distribution of dividends will only be allowed under certain circumstances depending on the Company’s indebtedness ratio. Certain restrictions on the distribution of dividends by the Company and the need for approval by the ENRE for any distribution have been disclosed in Note 17.b).

23. CORPORATE NOTES PROGRAM

The Annual General Shareholders’ Meeting held on February 23, 2006, approved the extension of the Global Medium-Term Corporate Notes Issuance Program for a Maximum Amount outstanding at any time of up to US$ 600,000 thousand (or its equivalent in any other currency). Said extension was also approved by the CNV through Resolution N° 15,359 issued by the CNV’s Board of Directors on March 23, 2006. On June 14, 2007, the Company’s Board of Directors approved the updating of the Trust Agreement for the issuance of corporate notes that had been duly approved by the CNV, as required by section 76 of Chapter VI of the CNV’s Regulations. On June 1, 2007, the Company filed with the CNV a new version of the trust agreement together with accounting and financial information as well as other relevant data on the Company as of March 31, 2007. On June 28, 2007, the Company’s Board of Directors approved the issuance and public offering, within the framework of the Program and under the terms of Law No. 23,576 as amended, of fixed rate Corporate Notes for a nominal value of up to US$ 250,000 thousand with maximum maturity in 2017. On October 9, 2007, the Company issued and carried out the public offering of Class 7 Corporate Notes for US$ 220,000 thousand. The 10-year term Corporate Notes were issued at an issue price of 100% of the principal amount, and accrue interest as from the date of issuance at a fixed rate of 10.5% per annum, payable on April 9 and October 9 of each year, with the first interest payment maturing on April 9, 2008. Principal will be amortized by a lump sum payment at maturity date, on October 9, 2017. The Company has requested authorization for the trading of the Corporate Notes on the Buenos Aires Stock Exchange, the Mercado Abierto Electrónico S.A. (the OTC market of Argentina), the Luxembourg Stock Exchange, and the Euro MTF Market, which is the alternative market of the Luxembourg Stock Exchange. Furthermore, the Company may request authorization for the listing of the Corporate Notes on the PORTAL Market as well as authorization for their trading and/or negotiation on any other stock exchange and/or self-regulated market of Argentina and/or abroad. Most of the net proceeds from the sale of the Corporate Notes were used for the purchase, payment or redemption of the Company’s outstanding Discount Corporate Notes due in 2014 (Note 14). Main Covenants:

1) Negative Covenants The terms and conditions of the Corporate Notes include a series of negative covenants that limit the Company’s actions with regard to, among others, the following:

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- encumbrance or authorization to encumber its property or assets;

- incurrence of indebtedness, in certain specified cases;

- sale of the Company’s assets related to its main business;

- carrying out transactions with shareholders or related parties;

- making certain payments (including, among others, dividends, purchases of Edenor’s common shares or payments on subordinated debt).

2) Suspension of Covenants

Certain negative covenants stipulated in the trust agreement will be suspended or adjusted if: (a) The Company’s long-term debt rating is raised to Investment Grade, or (b) The Company’s Level of Indebtedness is equal to or lower than 2.5. If the Company subsequently losses its Investment Grade rating or its Level of Indebtedness is higher than 2.5, as applicable, the suspended negative covenants will be once again in effect. However, the reinstatement of the covenants will not affect those acts which the Company may have performed during the suspension of such covenants. 3) Registration Rights

In accordance with the Registration Rights Agreement, the Company has agreed to file with the Securities and Exchange Commission (SEC), within a period of 300 days from the original date of issuance of the Corporate Notes, an application requesting authorization for an authorized exchange offer of the Corporate Notes for news notes of the same class registered with the SEC in accordance with the Securities Act, representing the same outstanding debt and subject to similar terms and conditions. The exchanged corporate notes would have no restrictions concerning their transfer and would be freely transferable after the authorized exchange offer by those Corporate Notes holders who are not related parties of the Company.

For the year ended December 31, 2007, expenses incurred by the Company in relation to the public offering of Class 7 Corporate Notes amount to 7,403. Of such amount, payment of 4,176 is still pending (Note 10).

24. BREAKDOWN OF TEMPORARY INVESTMENTS, RECEIVABLES AND LIABILITIES BY COLLECTION AND PAYMENT TERMS As required by the CNV’s regulations, the balances of the accounts below as of December 31, 2007, are as follow:

Term

Investments Receivables

(1) Loans

Other payables

(2) With no explicit due date 0 0 0 281,395 With due date

Past due: Up to three months 0 50,014 0 0

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From three to six months 0 10,359 0 0 From six to nine months 0 5,818 0 0 From nine to twelve months 0 5,006 0 0 Over one year 0 100,935 0 0

Total past due 0 172,132 0 0

To become due:

Up to three months 97,739 231,155 29,290 447,593 From three to six months 0 3,964 0 13,794 From six to nine months 0 3,808 0 4,511 From nine to twelve months 0 3,816 - 4,510 Over one year 0 278,889 949,062 60,160

Total to become due 97,739 521,632 978,352 530,568

Total with due date 97,739 693,764 978,352 530,568

Total 97,739 693,764 978,352 811,963

(1) Excludes allowances (2) Comprises total liabilities except accrued litigation and debt notes.

Due to the financial debt restructuring mentioned in Note 14, Corporate Notes accrue interest at floating and fixed rates, which amount to an average of approximately 10.19%; only 4.05% of the debt accrues interest at a floating rate whereas the remaining accrues interest at a fixed rate.

25. OTHER INFORMATION

The followings exhibits present additional financial statement disclosure required under Argentine GAAP:

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26. SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ARGENTINE GAAP AND US GAAP

The Company’s financial statements have been prepared in accordance with Argentine GAAP and the regulations of the CNV, which differs in certain respects from US GAAP. Such differences involve certain methods for measuring the amounts shown in the financial statements, as well as additional disclosures required by US GAAP and the regulations of the SEC.

As discussed in Note 2, under Argentine GAAP, the financial statements are presented in constant pesos based on the application of therein mentioned resolutions. This reconciliation, as permitted by SEC regulations, does not include the effects of inflation on US GAAP net loss and shareholders’ equity.

I. Differences in Valuation Methods

The principal differences between Argentine GAAP and US GAAP are described below together with an explanation, where appropriate, of the method used in the determination of the adjustments that affect net income (loss) and total stockholders’ equity. References below to “SFAS” are to Statements of Financial Accounting Standards issued by the Financial Accounting Standards Board in the United States of America while references to “EITF” are consensuses on issues issued by the Emerging Issues Task Force in the United States of America.

a) Deferred income taxes

As discussed in Note 3.n, under Argentine GAAP the Company accounts for income taxes using the liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized for that component of deferred tax assets which is not recoverable. This Argentine GAAP is similar to US GAAP set forth in SFAS No. 109, “Accounting for Income Taxes.” However, under Argentine GAAP as discussed in Note 2, the CNV through its General Resolutions N° 485/05 and 487/06 decided to implement certain changes in the Argentine GAAP effective for fiscal years or interim periods beginning as from January 1, 2006, by requiring the application of TR N° 6, 8, 9, 11, 14, 16, 17, 18, 21, and 22 and Interpretations 1, 2, 3, and 4, of the FACPCE with the amendments introduced by such Federation through April 1, 2005 (Resolution N° 312/05) and adopted by the CPCECABA (Resolution CD N° 93/05) with certain amendments and clarifications. Among the aforementioned changes it is included the consideration of the difference between the accounting and tax values resulting from the adjustment for inflation included in non-monetary assets, as a temporary difference, allowing the Company to either recognize a deferred tax liability or to disclose the effect of such accounting change in note 2 to the financial statements. The Company has completed its analysis of the impact of the application of the change mentioned in the preceding paragraph and it has decided to disclose said effect in a note to the financial statements and keep treating it as a permanent difference for deferred income tax purposes. Under US GAAP, the Company applies EITF 93-9, “Application of FASB Statement No.109 in Foreign Financial Statements Restated for General Price-Level Changes,” which requires such differences to be treated as temporary differences in calculating deferred income taxes. In addition, the US GAAP adjustment includes the effect on deferred income taxes of the described below reconciling items, as appropriate. Under Argentine GAAP, the realization of deferred income tax assets depends on the generation of future taxable income when temporary differences would be deductible. Accordingly, the Company has

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considered the reversal of the deferred income tax liabilities and taxable income projections based on its estimates, which includes the effects of the tariff increase as described in Note 3 n.

As of December 31, 2007, the allowance for impairment of value of deferred tax assets represents the portion of the tax loss generated in 2002 whose offset against future taxable income will not be possible after the filing of the 2007 income tax return, due to the fact that it will become statute-barred.

Based on such projections, as of December 31, 2006, the allowance for impairment of value of deferred tax assets has been partially reversed based on (i) the estimated future taxable income, which includes the effects of the Company's estimate of the Adjustment Agreement and the tariff increase granted by the Federal Government through Decree No. 1957/06 and ENRE Resolution No. 51/2007, and (ii) the taxable income arising from the gain on extinguishment of former debt as it is described in caption k of Note 3. Under US GAAP, the Company applies the principles of Statement of Financial Accounting Standards No. 109 (“SFAS No. 109”), “Accounting for Income Taxes,” which requires a comprehensive liability method of accounting for income taxes. Under the comprehensive liability method, deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities.

Deferred tax assets are also recognized for tax loss carry forwards. Under SFAS No. 109, deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

SFAS No. 109 provides for more specific rules in determining the valuation allowance for deferred tax assets. Under this pronouncement, an enterprise must use judgment in considering the relative impact of negative and positive evidence to determine if a valuation allowance is needed or not. Additionally, anticipating future income from events beyond the Company’s control (such as the tariff increase above described) and anticipated forgiveness of indebtedness (such as certain penalties imposed by ENRE which will be forgiven, as described in Note 17.b are generally not considered when assessing the realizability of deferred tax assets.

In addition, under Argentine GAAP, deferred tax assets and liabilities are classified as non current items, while under US GAAP these amounts are classified as current or non-current based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to tax loss carry-forwards, shall be classified according to the expected reversal date of the temporary difference.

On December 31, 2006, the Company adopted SFAS No.158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R)”, as described in Note 26.II.e). As a result, a deferred tax asset amounting to 2,000, related to the tax effect on the unrecognized net actuarial loss, was recorded under US GAAP. On December 31, 2007, the deferred tax asset recorded under US GAAP amounted to 2,001.

The effect of the foregoing US GAAP adjustments on net income (loss) and shareholders’ equity are included in the Note 26.I.h) below.

b) Interest capitalized – net

Through December 31, 2005, the capitalization of financial costs was discretionary under Argentina GAAP. The Company decided to capitalize interest in property, plant and equipments from 1997 to 2001, but subsequently, discontinued such capitalization in 2001 as more fully described in Note 3 h). As from January 1, 2006, and as required by CNV General Resolution N° 485, the capitalization of financial costs is mandatory, thus, the Company capitalized financial costs during the years ended December 31, 2006 and December 31, 2007.

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Under US GAAP, the Company applied SFAS No. 34, “Capitalization of Interest Cost”, whereby interest capitalization on assets is mandatory for those assets which require a period of time to get them ready for their intended use.

The effect of this US GAAP adjustment on net income (loss) and shareholders’ equity are presented in the Note 26.I.h).

c) Asset retirement obligations - net

Under Argentine GAAP, in accordance with FAPCE TR 17, EDENOR capitalized in property, plant and equipments the costs associated with the removal of polychlorinated biphenyl (PCB) included in the transformers when the removal is requested.

Capitalization of these costs is based on the fact that, if a transformer containing PCB is to be purchased, the de-chlorination cost would be a necessary cost to have the equipment ready for operation. If de-chlorination cost had not been incurred, the equipment (i.e. transformers) should have been written off.

Under US GAAP, the Company adopted SFAS No. 143 “Accounting for Asset Retirement Obligations” (“SFAS 143”), which provides guidance on financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs, effective January 1, 2003. SFAS 143 requires the Company to record the fair value of the legal obligation associated with certain environmental restorations required upon closure of its facilities. The fair value of the liability is estimated by discounting the future estimated expenditures related to the restoration activities. The Company then measures changes in the liability due to passage of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. The interest rate used to measure that change is the credit –adjusted risk- free rate that existed when the liability, or portion thereof, was initially measured. That amount is recognized as an increase in the carrying amount of the liability and the expense is classified as an operating item in the statement of income, referred to as accretion expense. At the same time SFAS 143 requires the Company to capitalize the new costs arising as the result of additional liabilities incurred, such as the capitalization of new equipment, and subsequently allocate that asset retirement cost to expense over the life of the assets based on the useful life of the assets.

The Company uses transformers with PCB. Argentine Law requires that the Company eliminates or reduces to an acceptable level the PCB contained in any of its transformers by the end of 2010. Accordingly, EDENOR plans to remove PCB from its transformers by the end of 2008. The Company has determined that PCB removal represents an asset retirement obligation as defined by SFAS No. 143.

Thus, under US GAAP an additional asset and liability should be recognized as of December 31, 2007 and 2006.

Effects on US GAAP net income (loss) and shareholders´ equity includes:

1. the amortization of the asset retirement costs which is included in depreciation expense; and;

2. the effects of re-measuring the liability due to the passage of time are included as interest expense.

The adoption of FASB Interpretation No. 47 “Accounting for Conditional Assets Retirement Obligation” (FIN 47) in the year ended December 31, 2005 did not result in a change of the amounts previously determined in accordance with SFAS No. 143.

The effect of this US GAAP adjustment on net income (loss) and shareholders’ equity are presented in the Note 26.I.h) below.

d) Troubled debt restructuring

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As explained in Note 14, on February 22, 2006, the Company obtained the consent from 100% of its bond holders for the restructuring of financial debt amounting to US$ 540.9 million as of that date.

Under Argentine GAAP, the restructuring of the financial debt was treated as an exchange of debt instruments with substantially different terms. As a result, the Company de-recognized the former debt from the balance sheet and recognized the new debt at their present value discounted at a 10% market interest rate. The gain on extinguishment of former debt (net of restructuring costs) recorded as of December 31, 2006 amounted to 179.2 million (Note 3.k). Under US GAAP, the restructuring of the debt was accounted for in accordance with SFAS No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings (“SFAS 15”), as the creditors made certain concessions due to the financial difficulties of the Company. SFAS No. 15 requires that a comparison be made between the future cash outflows associated with the new debt instruments (including interest), and the recorded amount of the payables (including interest, penalties and withholding income tax) at the time of restructuring. A gain on a troubled debt restructuring is only recognized when the carrying amount of the payable at the time of restructuring exceeds the total future cash payments specified by the new debt terms. Since the total future cash outflows associated with the new debt instruments exceeded the carrying value of the old debts, no gain on restructuring was recorded under US GAAP. As a result, the carrying amount of the new debt instruments under US GAAP is greater than the amount recorded under Argentine GAAP and a new effective interest rate was determined, which equates the present value of the future cash payments specified by the new debt instruments with the carrying amount of the old debt.

Additionally, for US GAAP purposes, the debt restructuring was completed on April 24, 2006, which was the date when the cash tender and early payment took effect and the new notes were issued. In addition to the reversal of the gain recognized under Argentina GAAP, interest expense for the year ended December 31, 2007 and from February 22, 2006 to December 31, 2006, was increased by approximately Ps. 33.4 million and Ps. 37.7 million, respectively, for US GAAP purposes. The tax basis of the new notes (before the adjustment to present value, see below) is the same as its carrying amount under Argentine GAAP; which differs from the carrying amount under US GAAP as explained above. Thus, the deferred tax asset attributable to such difference amounting to Ps. 25,832 and Ps. 64,425 at December 31, 2007 and 2006, respectively, was included in deferred income tax in Note 26.I.h) below. The adjustment to present value of the notes, which under Argentine GAAP generated a (loss) /gain in the years ended December 31, 2007 and 2006 of Ps. (21,495) and Ps. 57,138, respectively, as stated in note 3.k, were reversed for US GAAP purposes. During 2007, the Company purchased and redeemed notes as stated in note 3.k and under Argentine GAAP recorded (i) a loss from the purchase and redemption of notes amounting to Ps. 10.2 million, and (ii) a loss to adjust the purchased and redeemed notes to present value amounting to Ps. 8.6 million. This debt was being accounted for as a troubled debt restructuring under US GAAP and therefore, for the year ended December 31, 2007, the Argentine GAAP loss and present value adjustments were reversed and a gain on extinguishment of former debt was recorded because the carrying amount of the debt exceeded the future cash flows for Ps. 66,803.

Under US GAAP, the deferred income tax effect on the trouble debt restructuring (including the adjustment to present value) amounting to 25,832, was recorded.

The effect of these US GAAP adjustments on net income (loss) and shareholders’ equity is presented in the Note 26.I.h) below.

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e) Accounting for costs of securities offering

In 2007, as discussed in Note 1, under Argentina GAAP costs associated with the IPO amounting to 14,321 have been offset against the additional paid in capital. In 2006 under Argentina GAAP the costs associated with the IPO submission were accounted for as an expense as incurred. These costs amounting to 10,604, including those costs related to aborted filings, are included in the statement of income for the year ended December 31, 2006. Under US GAAP, specific incremental costs directly attributable to a proposed or actual offering of securities may properly be deferred and charged against the gross proceeds of the offering in compliance with SAB Nº1, Topic 5-A. According to SAB Nº1, Topic 5-A, deferred costs of an aborted offering may not be deferred and charged against proceeds of a subsequent offering. However, a short postponement (up to 90 days) does not represent an aborted offering. The date of the last aborted filing was June 23, 2006, which can not be considered as a short postponement, thus, IPO costs amounting to 10,291 were not capitalized.

As of December 31 2006, specific incremental costs associated to the final and definitive filing amounting to 313 have been identified and capitalized in accordance to SAB Nº1, Topic 5-A, until the IPO process is completed .

During 2007, deferred cost capitalized in accordance to SAB Nº1, Topic 5-A, amounting to 14,634 were charged against the gross proceeds of the IPO completed on May 7, 2007.

The effect of this US GAAP adjustment on net income (loss) and shareholders’ equity are presented in the Note 26.I.h) below.

f) Capital transaction - Operator's compensation

Under Argentine GAAP, during the second half of 2005, the forgiveness of Operator's compensation amounting to 25,852, as described in Note 15, was accounted for as other income and included in other expense, net.

Under US GAAP, the forgiveness of the Operator's compensation resulting from the transaction between the former majority shareholder, EDFI and the new majority shareholder, Dolphin Group, is considered a capital transaction in accordance with footnote 1 of Accounting Principles Board Opinion No. 26 "Early Extinguishment of Debt".

The effect of this US GAAP adjustment on net income (loss) is presented in the Note 26.I.h) below. There are no reconciling items in term of shareholders' equity.

g) Accounting for stock transferred by Argentine government to employees

Under Argentine GAAP, there are no specific rules governing the accounting to be followed by employers when a principal shareholder transfers shares to a company’s employees (Note 16.c).

Under US GAAP, the Company has elected to follow Accounting Principles Board Opinion No. 25 (“APB No. 25”), “Accounting for Stock Issued to Employees” and related interpretations, as permitted by SFAS No. 123 .In accordance with AIN-APB No. 25 “Accounting for Stock Issued to Employees – Accounting Interpretations of APB No. 25” the economic substance of a plan establish by the principal stockholders is substantially the same for the Company and the employee, whether the plan is adopted by the Company or a principal stockholder. Consequently, the Company should account for this type of plan when one is established or financed by a principal stockholder unless (1) the relationship between the stockholder and the company’s employee is one which would normally result in generosity, (2) the stockholder has an obligation to the employee which is completely unrelated to the latter’s employment, or (3) the company

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clearly does not benefit the transaction. The rationale established in this Interpretation has been applied to other situations in which a principal stockholder for the benefit of the company. SAB No. 79 (SAB Topic 5T) requires any transaction undertaken by a company’s principal stockholder for the benefit of the company to be accounted for according to its substance and not its form. Under APB No. 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Company’s stock and the exercise price. SFAS No. 123 defines a “fair value” based method of accounting for an employee stock option or similar equity investment.

The Argentine Government agreed to establish a Share Ownership Plan, principally for the benefit of the former employees of SEGBA transferred to the Company. Under the terms of the plan, employees eligible to participate acquired the shares of the Company previously held by the Government for an amount significantly less than the market value of the shares on September 1, 1992 (“grant date”). The purchase price formula was originally established during the privatization.

Had the Company been required by SEC regulations to include reconciliation between Argentine GAAP and US GAAP for the fiscal year 1992, it would have included as a reconciling item a charge amounting to 6,653 in the Statement of Income. However, this charge represented a reclassification between equity accounts, and consequently, it had no impact on shareholders’ equity or cash flows determined under US GAAP. The charge was calculated based upon the difference between the estimated total price per share paid by EASA as of the grant date and the purchase price to be paid by eligible employees.

There have been no additional grants of stocks to employees since September 1, 1992.

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h) Effects of conforming to US GAAP

The reconciliation of reported net income (loss) required to conform to US GAAP is as follows:

As of December, 2007 2006 2005

Net income (loss) in accordance with Argentine GAAP 122,458 293,066 (149,601) (a) Deferred income tax (Note 26.II.a) 25,129 (39,171) 8,105 (b) Interest capitalized – net (Note 26.II.b) (5,095) (5,095) 4,516 (c) Asset retirement obligations – net (Note 26.II.c) (500) (885) (1,212)(d) Troubled debt restructuring (Note 26.II.d) 73,805 (293,519) - (e) Accounting for costs of securities offering (Note 26.I.e) - 313 - (f) Capital Transaction-Operator’s compensation (Note 26.I.f) - - (25,852) Net income (loss) in accordance with US GAAP 215,797 (45,291) (164,044) The reconciliation to conform shareholders’ equity amounts to US GAAP is as follows: As of December, 2007 2006 2005 Shareholder’s equity in accordance with Argentine GAAP 1,974,581 1,670,350 1,377,284 (a) Deferred income tax (Note 26.II.a) (362,223) (387,352) (350,181) (b) Interest capitalized- net (Note 26.II.b) 84,684 89,778 94,873 (c) Asset retirement obligations - net (Note 26.II.c) (4,536) (4,036) (3,151) (d) Troubled debt restructuring (Note 26.II.d) (219,714) (293,519) - (e) Pension Plan (Note 26.II. e)(*) (5,716) (5,714) - (f) Accounting for costs of securities offering (Note 26.I. e) - 313 - (g) Capital transaction-Operator’s compensation ( Note 26.I. f) - - - Shareholder’s equity in accordance with US GAAP 1,467,076 1,069,820 1,118,825

(*) The deferred income tax effects of 2,001 and 2,000, as of December 31, 2007 and 2006 respectively, were included in the line “Deferred income tax”.

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The changes in shareholders’ equity in US GAAP as of December 31, 2007, December 31, 2006 and December 31, 2005, are as follows: As of December, 2007 2006 2005 Shareholder’s equity in accordance with US GAAP - Beginning balance 1,069,820 1,118,825 1,257,017 Net income (loss) for the year in accordance with US GAAP 215,797 (45,291) (164,044) Capital increase 74,845 Additional paid in capital 106,928 - 25,852 Accumulated Other Comprehensive Income – Pension Plan adjustment, net of tax benefit (Note 26.II.e) (1) (3,714) - Accounting for costs of securities offering (Note 26.I.e) (313) - - Shareholder’s equity in accordance with US GAAP – Ending balance 1,467,076 1,069,820 1,118,825 The Company has no other comprehensive income (loss) and, accordingly, comprehensive loss equals net loss.

II. Additional disclosure requirements a) Deferred income taxes

The benefit for income taxes included in the condensed statement of income and accounted for in accordance with US GAAP is as follows:

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Deferred tax assets (liabilities) as of December 31, 2007 are summarized as follows:

Deferred tax assets (liabilities) as of December 31, 2006 are summarized as follows:

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Deferred tax assets (liabilities) as of December 31,2005 are summarized as follows:

A reconciliation of the Argentine Statutory Income Tax rate to the Company’s effective tax rate on net loss is as follows:

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US GAAP deferred tax assets (liabilities) as of December 31, 2007 and 2006 breakdowns are summarized below:

b) Interest capitalized – net

In accordance with SFAS 34, “Capitalization of Interest Cost”, interests on loans related to works in progress has been capitalized on the qualifying asset (assets that require an extended period of time to acquire or produce), during the term of construction until they were in condition to be used, as follows:

As of December 31, 2007 2006 2005 Interest expense incurred under US GAAP 56,424 93,583 111,560 Interest capitalized under US GAAP 12,665 9,283 9,440

Effect on US GAAP adjustment in net income (loss) is as follows:

As of December 31, 2007 2006 2005 Interest capitalized under US GAAP - - 9,440 Depreciation on interest capitalized (5,095) (5,095) (4,924) Interest capitalized – net (Note 26.I.h) (5,095) (5,095) 4,516

Effect on US GAAP adjustment on shareholders’ equity is a follows:

As of December 31, 2007 2006 2005 Interest capitalized 125,294 125,294 125,294 Depreciation on interest capitalized (40,610) (35,516) (30,421) Interest capitalized – net (Note 26.I.h) 84,684 89,778 94,873

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c) Asset retirement obligations

Under US GAAP, a decrease in asset and an additional liability should be recognized as of December 31, 2007, and an additional asset and liability should be recognized as of December 31, 2006 and 2005 as follows:

As of December, 31 2007 2006 2005

Asset retirement costs (409) 2,502 5,654 Less: accumulated depreciation (1,309) (1,330) (1,205)

Net book value (1,718) 1,172 4,449 Asset retirement obligation (2,818) (5,208) (7,600)Net Shareholder’s equity impact (Note 26.I.h) (4,536) (4,036) (3,151)

The effects on US GAAP adjustments in net income (loss) and shareholders equity are shown in paragraph below as follows:

1. Amortization of asset retirement costs included in depreciation expense; 2. Effects of re-measuring the liability due to the passage of time are reflected as interest expense.

Effects on US GAAP adjustments in net income (loss) is as follows:

For the years ended as of December 31, 2007 2006 2005

Depreciation of asset retirement costs 21 (125) (283) Accrued interest (521) (760) (929)

Total impact (Note 26.I.h) (500) (885) (1,212) Effects on US GAAP adjustments on shareholders’ equity under Argentine GAAP is as follows:

As of December 31, 2007 2006 2005

Accumulated depreciation of asset retirement costs (1,309) (1,330) (1,205) Accrued interest (3,227) (2,706) (1,946)

Total impact (Note 26.I.h) (4,536) (4,036) (3,151)

The following table shows changes in asset retirement obligation for the years ended December 31, 2007, 2006 and 2005:

Balance as of January 1, 2005 9,294 Accrued interest 929 Payments (2,623) Balance as of December 31, 2005 7,600 Accrued interest 760 Payments (3,152) Balance as of December 31, 2006 5,208 Accrued interest 521 Payments (2,911) Balance as of December 31, 2007 2,818

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d) Troubled debt restructuring

The reconciliation between financial debt under US GAAP and Argentine GAAP as of December 31, 2007 and 2006 is as follows:

As of December 31, 2007 2006

Financial debt (current and non current) under Argentine GAAP 978,352 1,097,519

Waiver of principal 55,314 55,314 Waiver of unpaid accrued interest 77,658 77,658 Waiver of unpaid accrued penalties 65,726 65,726 Adjustment to present value of the notes 35,643 57,138 Interest expense 71,036 37,683 Loss from the purchase and redemption of notes (10,228) - Adjustment to present value of purchased and redeemed notes (8,632) - Gain on debt restructuring (66,803) -

Financial debt (current and non current) under US GAAP 1,198,066 1,391,038

Total impact in shareholders’ equity (Note 26.I.h.) 219,714 293,519

Effects of US GAAP adjustments in net income (loss) under Argentine GAAP are as follows: For the year ended December 31, 2007 2006 2005

Waiver of principal (55,314) -Waiver of unpaid accrued interest (77,658) -Waiver of unpaid accrued penalties (65,726) -Adjustment to present value of the notes 21,495 (57,138) -Interest expense (33,353) (37,683) -Loss from the purchase and redemption of notes 10,228 - -Adjustment to present value of purchased and redeemed notes 8,632 - -Gain on debt restructuring 66,803 - -Total impact (Note 26.I.h) 73,805 (293,519) -

e) Pension Plan

As indicated in Note 3.o, the Company has a pension plan for benefits to personnel (employee pension plan). Employee pension costs are recognized in accordance with SFAS 87 “Employers’ Accounting for Pensions.” SFAS 87 requires the use of an actuarial method for determining defined benefit pension costs and provides for the deferral of actuarial gains and losses (in excess of a specific corridor) that result from changes in assumptions or actual experience differing from assumed. SFAS 87 also provides for the prospective amortization of costs related to changes in the benefit plan, as well as the obligation resulting from transition and requires disclosure of the components of periodic pension costs and the funded status of pension plans. In addition, SFAS No. 88 “Curtailment of Defined Benefit Plans and for Termination of Benefits” requires the immediate recognition of deferred pension costs when some or all of the following

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conditions are met: (a) pension obligations are settled; (b) defined benefits are no longer earned under the plan and the plan is not replaced by other defined benefit plan; (c) there are no remaining plan assets; and (d) employees are terminated or the plan ceases to exist.

On December 2003, the FASB issued SFAS 132 Revised 2003, “Employers’ Disclosures about Pensions and other Postretirement Benefits: an amendment of SFASB Statements No. 87, 88 and 106,” which revises employers’ disclosures about pension plans and other postretirement benefits plans. It does not change the measurement or recognition of those plans required by SFAS 87, “Employers’ Accounting of Pensions, SFAS 88, Employers’ Accounting for Settlements and Curtailments of Defined Pension Plans and for Termination Benefits,” and SFAS 106, “Employers’ Accounting for Postretirement Benefits Other Than Pension”. SFAS 132 “Revised” retains the disclosure requirements contained in SFAS 132. It requires additional disclosures to those in the original SFAS 132 about assets, obligations, cash flow, and net periodic benefit cost of defined benefit pension plans and other defined postretirement plans. The required information should be provided separately for pension.

The Company has a pension plan covering substantially all of its employees under collective bargain agreement mentioned in Note 3.v. SFAS 87 “Employers’ Accounting for Pensions” has been applied from and after January 1, 2003. However, amortization of the net transition obligation existing at January 1, 1993 has been computed retroactively as if it had been established on January 1, 1989, which is the date that SFAS 87 first became effective for non−US pension funds.

In accordance with US GAAP, actual results that differ from Company’s assumptions are accumulated and amortized over future periods and generally affect Company’s recognized expenses and recorded obligations in such future periods. While we believe that our assumptions are appropriate, significant differences in actual results or significant changes in Company’s assumptions may materially affect our pension and other postretirement obligations.

During 2005, two new collective bargain agreements were signed with the Sindicato de Luz y Fuerza de la Capital Federal (Electric Light and Power Labor Union – City of Buenos Aires) and the Asociación de Personal Superior de Empresas de Energía (Association of Supervisory Personnel of Energy Companies) expiring December 31, 2007 and October 31, 2007, respectively. On November 17, 2006 and October 5, 2006 the agreements signed with the Electric Light and Power Labor Union – City of Buenos Aires and the Association of Supervisory Personnel of Energy Companies have been ratified by the Ministry of Labor and Social Security, respectively.

As of the date of issuance of this annual report, meetings aimed at negotiating the renewal terms of both collective bargaining agreements, are being held with the above-mentioned unions. On December 31, 2006, the Company adopted SFAS No.158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS No. 158”). Under provisions of SFAS No. 158 the Company fully recognized the underfunded status of defined-benefit pension and postretirement plans as a liability in the financial statements reducing the Company’s shareholders’ equity through Accumulated OCI account. Unrecognized actuarial losses and gains are recognized in the statements of income during the expected average remaining working lives of the employees participating in the plans and the live expectancy of retired employees.

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The components of net periodic benefit cost under Argentina GAAP and US GAAP for 2007, 2006 and 2005 are as follows:

As of December 31, 2007 2006 2005 Components of net year benefit cost Service cost 1,125 813 689 Interest cost 2,874 1,816 1,186 Recognized net actuarial loss 760 208 169 Net year benefit cost 4,759 2,837 2,044

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The change in benefit obligations for the years ended December 31, 2007, 2006 and 2005 is as follows:

As of December 31, 2007 2006 2005 Benefit obligation – beginning of year 15,352 9,703 7,902 Service cost 1,125 813 689 Interest cost 2,874 1,816 1,186 Actuarial loss 761 3,703 495 Benefits paid to participants (1,029) (683) (569) Benefit obligation – end of year 19,083 15,352 9,703

As of December 31, 2007 2006 2005 Projected benefit obligation 19,083 15,352 9,703 Unrecognized net actuarial loss - - (2,219) Other personnel benefits 19,083 15,352 7,484

The adoption of SFAS 158 (see above) on December 31, 2006 resulted in the recognition of the “unrecognized actuarial loss” amounting to 5,714 as adjustment to accumulated other comprehensive loss, and a deferred tax asset of approximately 2,000, also in accumulated other comprehensive loss or a net charge of 3,714 as adjustment to accumulated other comprehensive loss. As of December 31, 2007, the Company recognized a net charge of 1 as adjustment to accumulated other comprehensive loss corresponding to the net actuarial loss for the year.

The following table shows changes in accumulated other comprehensive loss for the years ended December 31, 2007 and 2006: Balance as of January 1, 2006 0 Application of SFAS 158 3,714 Balance as of December 31, 2006 3,714 Net actuarial loss for the year 1 Balance as of December 31, 2007 3,715

The following yearly pension benefits payments are expected to be made:

The components of the projected net periodic pension benefit costs for 2008 are as follows:

Service cost 1,306 Interest cost 3,977 Amortization of net actuarial loss 761 Net year benefit cost 6,044

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The following table shows the effect of a 1% change in discount rate on our projected benefit obligation for the periods indicated:

Assumptions

2007 2006 2005 Weighted-discount rate 21.0% 18.0% 18.0% Weighted-salary increase 20.0% 16.0% 13.0% Weighted-long term inflation 14.0% 12.0% 12.0% Actuarial Method: Projected Unit Credit Method

The Company does not make plan contributions or maintain separate assets to fund the benefits at retirement. The net periodic pension costs are recognized as employees render the services necessary to earn pension benefits.

f) Basic and diluted earnings per share

As mentioned in Note 3.s, under Argentine GAAP, the Company is required to disclose earnings per share information in accordance with FACPCE TR 18 for all the periods presented. Under US GAAP, basic and diluted earnings per share are presented in conformity with SFAS No. 128 “Earnings per share” (SFAS No. 128) and SEC Staff Accounting Bulletin No. 98 (SAB No. 98) for all years presented. Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin No. 98, ordinary shares and convertible preferred shares issued or granted for nominal consideration prior to the anticipated effective date of an initial public offering must be included in the calculation of basic and diluted earnings per share as if they had been outstanding for all periods presented. To date, the Company has not had any issuance or grants for nominal consideration.

The following tables set forth the computation of basic and diluted earning (loss) per common share under US GAAP for the years presented:

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There are no dilutive potential equity shares.

g) Segment information

As stated in Note 3.t., under Argentine GAAP, the Company is required to disclose segment information in accordance with RT 18. It establishes standards for reporting information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial reports issued to shareholders. Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in deciding how to allocate resources and assess performance. The statement also establishes standards for related disclosures about a company’s products and services, geographical areas and major customers.

Under US GAAP, criteria set by Statement of Financial Accounting Standards No. 131 “Disclosure about segments of an enterprise and related information” are applicable. The Company segment information is based on the components of a company about which separate financial information is available and the management’s analysis for making operating decisions.

The Company is a natural monopoly that operates in a single business segment, electricity distribution, in a specific geographical urban area and under the terms of the concession contract by which this public service is controlled. The Company activities have similar economic characteristics and are similar in terms of the nature of their products and services, the nature of the electricity distribution process, the type or class of customer, the geographical area, and methods of distribution. The management evaluates Company’s performance based on net income.

For future fiscal years, the management will evaluate if the new agreements with Comunicaciones y Consumos S.A. and Prestamos y Servicios S.A., described in Note 15, represent new business segments. As of December 31, 2007, no transactions had been completed related to these agreements.

Thus, under Argentine GAAP and US GAAP applicable accounting standards related to segment information are not different.

h) Cash flow information

Under Argentine GAAP, the Company is required to present the statements of cash flows in the primary financial statements in accordance with TR 9, as amended. Guidance set forth in TR 9 (as amended) is similar to the guidelines set forth in SFAS No. 95 as described in Note 18.a, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Under US GAAP, the total amounts of cash and cash equivalents at the end of the year shown in the statements of cash flows are required to be the same amounts as similarly titled line items shown in the balance sheets, as of those dates. Note 18 to the financial statements includes a reconciliation between the balances included as cash in the balance sheets to the total amounts of cash and cash equivalents for each of the three years shown in the statements of cash flows.

Non-cash investing activities includes 36,111 related to supplies purchased in prior years that were assigned to constructions in process in 2006. There are no non-cash investing activities in 2005.

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The following table presents the reconciliation of the statement of cash flows between Argentine GAAP and US GAAP:

i) Disclosure about fair value of financial instruments

Under US GAAP Statement of Financial Accounting Standards No. 105, “Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of credit risk” (“SFAS No. 105”), requires reporting entities to disclose certain information about financial instruments with off-balance sheet risk of accounting loss. Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments”, (“SFAS No. 107”), requires disclosure of fair value information about financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Financial instruments include such items as cash and cash equivalents, investments in debt and equity securities, accounts receivable and other instruments. SFAS No.133 superseded SFAS No. 105 and SFAS No. 119 and amended SFAS No. 107 including the disclosure requirements of credit risk concentrations (Note 3. v).

In accordance with Statement of Financial Accounting Standards No. 107, “Disclosures about fair value of financial instruments”, information is provided about the fair value of certain financial instruments for which it is practicable to estimate such value. The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

There are certain limitations inherent in the fair value data since while the data represents management's best estimates, the data is subjective, involving Company’s management estimates related to current economic and market conditions. The methods and assumptions used to estimate the fair values are as follows:

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Cash, time deposits, money market funds, trade receivables, other receivables, short term trade accounts payable and short term other liabilities: the carrying amounts approximate fair value due to the short term maturity of these instruments. Client deposits: these long term payables have not a fair value different from their carrying amount.

Loans: the carrying amount approximates the fair value due to the Company’s financial debt was

accounted at present value as it is described in Note 3.k.

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j) Statement of Income classification differences between Argentine GAAP and US GAAP

Net Sales Under Argentine GAAP, during the year ended December 31, 2007, the Company recognized revenues amounting to 218,591 from the retroactive tariff increase deriving from the application of the new electricity rate schedule to non-residential consumption for the period of November 2005 through January 31, 2007 (Note 17.b). Due to the fact that such tariff increase is being invoiced in 55 equal and consecutive monthly installments an adjustment to present value related to this matter and related to the Payment Plan Agreement with the Province of Buenos Aires (Note 13) amounting to 29,618 was recorded and included as a separate line below operating income. For US GAAP purposes, the discount resulting from the determination of present value at the date of both transactions offsets revenues. Additionally, the amortization of such discounts should be reported as interest. Under Argentine GAAP, penalties have been deducted from sales. For US GAAP purposes, penalties are included as transmission and distribution expenses. Under Argentine GAAP, the electricity distributed to shantytowns was recorded as sales. Under US GAAP the conditions to recognize revenue are not met, thus, such sales have been eliminated in the Statement of Income.

As a result of these differences, net sales under US GAAP would have been 1,936,980, 1,403,526 and 1,334,946 for the years ended December 31, 2007, 2006 and 2005 respectively.

Gross margin

Under Argentine GAAP, transmission and distribution expenses have been included as an operating expense, but excluded from gross margin calculation. Under US GAAP, such expenses have been included for the gross margin calculation. Under Argentine GAAP, the Company recognized revenues from the retroactive tariff increase at gross amount. Since such tariff increase is being invoiced in 55 installments as it was explained above, the Company recorded a discount to present value in a separate line below operating income. For US GAAP purposes, such discount offset the gross amount of the tariff increase recorded as revenues. Under Argentine GAAP, the electricity distributed to shantytowns was recorded as sales. Under US GAAP the conditions to recognize revenue are not met, thus, such sales have been eliminated in the Statement of Income. As a result of these differences, gross margin under US GAAP would have been 569,641, 154,129 and 151,932 for the years ended December 31, 2007, 2006 and 2005 respectively. Operating income Under Argentine GAAP, the adjustment to present value of the retroactive tariff increase and the Payment Plan Agreement with the Province of Buenos Aires amounting to 29,618 has been included in a separate line below operating income. Under US GAAP, the adjustment to present value of the retroactive tariff increase offsets revenues and the amortization of the discount derived from the present value adjustment was included as interest. Under Argentine GAAP, certain operating expenses have been included as other expenses – net, excluded from operating income. Under US GAAP, such expenses have been included as operating expenses-net and for determining operating income.

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Under Argentine GAAP, a full allowance for bad debt has been recorded to offset the receivable related to sales of electricity distributed to shantytowns. Under US GAAP the sales and related allowance have to be eliminated in the Statement of Income.

As a result of these differences, operating income (loss) under US GAAP would have been 362,131, (39,990) and (33,078) for the years ended December 31, 2007, 2006 and 2005 respectively.

Financial income (expense) net and holding gains

Under Argentine GAAP the adjustment ENRE penalties as it is described in footnote to the Statements of Income has been included as Financial (expense), net and holding gains. Under US GAAP, such adjustment has been included in penalties as part of Transmission and Distribution Expenses.

Under Argentine GAAP, the adjustment to present value of the retroactive tariff increase and the Payment Plan Agreement with the Province of Buenos Aires amounting to 29,618 has been included in a separate line below operating income. Under US GAAP, the adjustment to present value of the retroactive tariff increase offsets revenues and the amortization of the discount derived from the present value adjustment was included as interest.

As a result of this disclosure difference, Financial (expense), net and holding gains under US GAAP would have been 46,479 and 133,312 for years ended December 31, 2007 and 2006 respectively.

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The condensed statements of income for the years ended December 31, 2007, 2006 and 2005 under US GAAP are as follows:

The condensed balance sheets under US GAAP as of December 31, 2007 and December 31, 2006 are as follows:

December 31, 2007

December 31, 2006

Current Assets 536,705 546,964 Property, plant and equipment, net 3,175,672 3,016,372 Other non-current assets 346,563 201,535 Current liabilities 573,668 469,980 Non-current liabilities 2,018,199 2,225,071 Shareholders’ equity 1,467,076 1,069,820

k) Valuation of Property, plant and equipment

Under Argentine GAAP, assets transferred through the privatization of SEGBA were valued at their fair value on the privatization date as described in Note 3.h.

Under US GAAP, following the accommodation allowed as published in the S.E.C. International Reporting and Disclosure Issues in the Division of Corporation Finance as revised on November 1, 2004, when reliable fixed asset records are not available and cannot be reasonably produced, the registrant may use the opening fair value balances as its costs basis. Thereafter, the assets are reported in the usual manner with respect to depreciation and evaluation of impairment.

Based on the foregoing, there is no difference between US GAAP and Argentine GAAP.

l) SFAS Interpretation No. 48, “Accounting for uncertainty in income taxes – an interpretation of FASB Statement No. 109” (“FIN 48”)

FIN 48 defines the criteria an individual tax position must meet for any part of the benefit of such position to be recognized in the financial statements. FIN 48 establishes “a more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. FIN 48 also provides guidance, among other things, on the measurement of the income tax benefit associated with uncertain tax positions, de-recognition, classification, interest and penalties and financial statement disclosures. The Company implemented FIN 48 in January, 2007. As it is defined in this interpretation, the Company

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has reassessed whether the “more-likely-than-not” recognition threshold has been met before a tax benefit can be recognized and how much of a tax benefits to recognize in the financial statements. The adoption of FIN 48 did not have an impact on the Company’s financial position. There were no unrecognized tax benefits as of the date of adoption and as of December 31, 2007. The reconciliation of the beginning and ending balances of recognized uncertain tax position as of December 31, 2007, is the following:

Und

er Argenti

ne tax regime, as of December 31, 2007, fiscal years 2001 through 2006 remain subject to examination by the Federal Administration of Public Revenues (“AFIP”).

m) SFAS No. 157, Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which clarifies the definition of fair value, establishes guidelines for measuring fair value, and expands disclosures regarding fair value measurements. SFAS No. 157 does not require any new fair value measurements and eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS No. 157 will be effective for the Company on January 1, 2008. The Company is currently evaluating the impact of adopting SFAS No. 157 but does not believe the adoption of SFAS 157 will have a material impact on its financial position.

n) SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for the Company on January 1, 2008. The Company is evaluating the impact that the adoption of SFAS No. 159 will have on the financial statements, but does not believe the adoption of SFAS No. 159 will have a material impact on its financial position.

o) Recent and new accounting pronouncements

On December 2007, Statement of Financial Accounting Standards No. 141 (revised 2007) “Business Combinations” was issued. The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. This Statement applies to all transactions or other events in which an entity (the acquirer) obtains control of one or more businesses (the acquiree). SFAS 141(R) replaces FASB Statement No. 141, Business Combinations. The provisions of this Statement becomes effective for business combinations for which the acquisition date (date that the acquirer achieves control) is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. This Statement does not affect Financial Statements as of December 31, 2007, and December 31, 2006, as it becomes effective for the fiscal year beginning as of January 1, 2009. On December 2007, SFAS 160 “Noncontrolling Interest in Consolidated Financial Statements – an amendment of ARB No. 51” was issued. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement is effective for fiscal

Recognized uncertain tax position, opening balance 33,791 Gross increase due to interest on prior year uncertain tax position 2,236

Recognized uncertain tax position, ending balance 36,027

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years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this Statement is the same as that of the related Statement 141(R). The Company estimates that this statement will not have an impact on its financial position, because it does not have noncontrolling interest in any subsidiary.

On February 2008, the FASB Staff Position (FSP) establishes the following: to defer the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for certain nonpublic enterprises including nonpublic not-for-profit organizations. This FSP defers the effective date of Interpretation 48 for nonpublic enterprises included within this FSP’s scope to the annual financial statements for fiscal years beginning after December 15, 2007. The provisions of this Statement do not apply to the Company’s case as it is already applying FIN 48 as by definition the Company already is a public enterprise.

On February 2008, FASB Staff Position (FSP) FAS 157-1 “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” was issued. This Statement establishes that SFAS No. 157 does not apply under SFAS No. 13 and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under Statement 13. The Board acknowledges that for the time being the term fair value used in Statement 13 will be defined differently than in Statement 157. This FSP shall be effective upon the initial adoption of Statement 157 (fiscal years beginning after November 15, 2007). The Company does not believe that the adoption of this FSP will have a material impact on its financial position, as it does not require any new fair values measurements and only eliminates inconsistencies between prior accounting pronouncements. On February 2008, FASB Staff Position (FSP) FAS 157-2, “Effective date of FASB Statement No. 157” was issued. This FSP delays the effective date of FASB Statement No. 157, Fair Value Measurements, for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This FSP defers the effective date of Statement 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this position. The Company estimates that this statement will not have an impact on its financial position, as it does not change any provisions of Statement 157, and only delays its effective date to a group of certain assets and liabilities. On February 2008, FASB Staff Position (FSP) FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” was issued. The objective of this FSP is to provide guidance on accounting for a transfer of a financial asset and a repurchase financing. This FSP presumes that an initial transfer of a financial asset and a repurchase financing are considered part of the same arrangement (linked transaction) under Statement 140. However, if certain criteria are met, the initial transfer and repurchase financing shall not be evaluated as a linked transaction and shall be evaluated separately under Statement 140. The Board’s objective in developing the criteria is to permit a transfer of a financial asset and a repurchase financing to be considered separately if there is a valid business or economic purpose for the counterparties to enter into two transactions separately and the repurchase financing does not return control of the previously transferred financial asset to the initial transferor. The Board decided that this FSP should be effective for fiscal years, and interim periods within those fiscal years, beginning on or after November 15, 2008, and interim periods within those fiscal years. This FSP prohibits early adoption. This FSP shall be applied prospectively to initial transfers and repurchase financings for which the initial transfer is executed on or after the beginning of the fiscal year in which this FSP is initially applied. Therefore, the Board proposed that this FSP should be applied to any existing repurchase financings as of the effective date of this FSP as a cumulative-effect adjustment. This Statement does not affect Financial Statements as of December 31, 2007, and December 31, 2006, as it becomes effective for the fiscal year beginning as of January 1, 2009. On January 2008, Statement 133 Implementation Issue No. E23, “Issues Involving the Application of the Shortcut Method under Paragraph 68” - Effective for hedging relationships designated on or after January 1, 2008, was issued. This Implementation Issue amends the accounting and reporting standards of Statement 133 “Accounting for Derivative Instruments and Hedging Activities”, paragraph 68. Company’s

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management estimates that this statement will not have any impact on its financial position. In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not anticipate that the adoption of this new statement at the required effective date will have a significant effect in its results of operations, financial position or cash flows. On May 9, 2008, the FASB issued SFAS No. 162. This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). Under the new statement the hierarchy is as follows: Level A — FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, AICPA Accounting Research Bulletins and APB Opinions that are not superseded by actions of the FASB, and rules and interpretive releases of the SEC for SEC registrants. Level B — FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position. Level C — AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the EITF, and Topics discussed in Appendix D of EITF Abstracts. Level D — Implementation Guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry. The Company does not anticipate that the adoption of this new statement at the effective date will have a significant effect in its financial statements.

p) Subsequent events

Absorption of accumulated deficit The Ordinary and Extraordinary Shareholders’ Meeting held on April 14, 2008 resolved to absorb the accumulated deficit existing as of December 31, 2007 for 88,611. Taking into account the order of preference established by the regulations of the National Securities Commission, the Company absorbed the accumulated deficit with the Additional paid-in capital, which as of December 31, 2007 amounted to 106,928 and was sufficient to carry out the aforementioned absorption.

Agreement for the provision of technical advisory services with Electricidad Argentina S.A. (controlling company)

At the meeting held on April 22, 2008, the Board of Directors approved the addenda to the agreement for the provision of technical advisory services dated March 14, 2008.

The aforementioned addenda stipulate that the amount to be paid by the Company in consideration of the services provided by Electricidad Argentina S.A. has been increased to US$ 2,500,000 plus VAT, payable retroactively as from January 1, 2008. The rest of the contractual terms have not been modified (Note 15). Agreement with the Ministerio de Planificación Federal, Inversión Pública y Servicios

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On April 4, 2008, we entered into an agreement with the Ministerio de Planificación Federal, Inversión Pública y Servicios (the Ministry of Federal Planning, Public Investment and Services) to build a new 500/220 kV transformer station at el Partido de Tigre. This new transformer station will serve to connect our network with the Sistema Argentino de Interconexión (Argentine Interconnection System or SADI).

Exhibit 2.2

INDENTURE

DATED APRIL 24, 2006

BETWEEN

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.,

AS ISSUER

AND

THE BANK OF NEW YORK,

AS TRUSTEE, CO-REGISTRAR AND PAYING AGENT

AND

BANCO RÍO DE LA PLATA S.A.,

AS REGISTRAR, TRANSFER AND PAYING AGENT IN ARGENTINA AND REPRESENTATIVE OF THE TRUSTEE IN ARGENTINA

___________________________

U.S. $123,773,586 Fixed Rate Par Notes due December 14, 2016 U.S. $12,656,086 Floating Rate Par Notes due December 14, 2019

U.S. $239,999,985 Discount Notes due December 14, 2014

___________________________

TABLE OF CONTENTS

Page

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Article 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................... 2

1.1 Definitions....................................................................................................................................... 2

1.2 Rules of Construction.................................................................................................................... 24

1.3 Compliance Certificates and Opinions.......................................................................................... 25

1.4 Form of Documents delivered to Trustee...................................................................................... 25

1.5 Acts of Holders; Record Dates...................................................................................................... 26

1.6 Notices, etc., to Trustee and Company.......................................................................................... 26

1.7 Notice to Holders .......................................................................................................................... 27

1.8 Trust Indenture Act Deemed to Apply and Control ...................................................................... 27

1.9 Waiver of Certain Covenants ........................................................................................................ 28

1.10 Effect of Headings and Table of Contents .................................................................................... 28

1.11 Successors and Assigns................................................................................................................. 28

1.12 Separability Clause ....................................................................................................................... 28

1.13 Benefits of Indenture..................................................................................................................... 29

1.14 Governing Law ............................................................................................................................. 29

1.15 Legal Holidays .............................................................................................................................. 29

1.16 Conversion of Currency ................................................................................................................ 29

1.17 Agent for Service; Submission to Jurisdiction .............................................................................. 30

1.18 Waiver of Immunity...................................................................................................................... 30

1.19 Foreign Exchange Restrictions ..................................................................................................... 30

1.20 Resignation and Appointment of Agents ...................................................................................... 31

Article 2. FORM OF NOTES ....................................................................................................................... 32

2.1 Forms of the Notes........................................................................................................................ 32

2.2 Notes Issuable in Series ................................................................................................................ 32

Article 3. THE NOTES................................................................................................................................. 32

3.1 Title and Terms ............................................................................................................................. 32

3.2 Denominations .............................................................................................................................. 36

3.3 Execution, Authentication, Delivery and Dating .......................................................................... 36

3.4 Registration, Registration of Transfer and Exchange Generally................................................... 37

3.5 Mutilated, Destroyed, Lost and Stolen Notes................................................................................ 40

3.6 Payment of Interest; Interest Rights Preserved ............................................................................. 41

3.7 Persons Deemed Owners .............................................................................................................. 41

3.8 Cancellation .................................................................................................................................. 42

3.9 Computation of Interest ................................................................................................................ 42

3.10 Common Code/ISIN Numbers...................................................................................................... 42

TABLE OF CONTENTS (continued)

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3.11 Prescription ................................................................................................................................... 42

3.12 Information From Holders of Notes.............................................................................................. 42

3.13 Special Provision Regarding Title VI of the Argentine Income Tax Law .................................... 44

Article 4. SATISFACTION AND DISCHARGE......................................................................................... 45

4.1 Satisfaction and Discharge of Indenture ....................................................................................... 45

4.2 Application of Trust Money.......................................................................................................... 45

Article 5. REMEDIES................................................................................................................................... 46

5.1 Events of Default .......................................................................................................................... 46

5.2 Acceleration of Maturity; Rescission and Annulment .................................................................. 47

5.3 Collection of Indebtedness and Suits for Enforcement by Trustee ............................................... 48

5.4 Trustee May File Proofs of Claim................................................................................................. 48

5.5 Trustee May Enforce Claims Without Possession of Notes.......................................................... 49

5.6 Application of Money Collected................................................................................................... 49

5.7 Enforcement by Holders of Notes................................................................................................. 49

5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest............................... 50

5.9 Restoration of Rights and Remedies ............................................................................................. 50

5.10 Rights and Remedies Cumulative ................................................................................................. 50

5.11 Delay or Omission Not Waiver..................................................................................................... 50

5.12 Control by Holders........................................................................................................................ 50

5.13 Waiver of Past Defaults ................................................................................................................ 51

5.14 Undertaking for Costs ................................................................................................................... 51

5.15 Waiver of Stay or Extension Laws................................................................................................ 51

5.16 Adverse Event............................................................................................................................... 51

Article 6. THE TRUSTEE ............................................................................................................................ 52

6.1 Certain Duties and Responsibilities .............................................................................................. 52

6.2 Notice of Defaults ......................................................................................................................... 53

6.3 Certain Rights of Trustee .............................................................................................................. 53

6.4 Not Responsible for Issuance of Notes ......................................................................................... 54

6.5 May Hold Notes ............................................................................................................................ 54

6.6 Money Held in Trust ..................................................................................................................... 54

6.7 Compensation and Reimbursement............................................................................................... 54

6.8 Disqualification; Conflicting Interests .......................................................................................... 55

6.9 Corporate Trustee Required; Eligibility........................................................................................ 55

6.10 Resignation and Removal; Appointment of Successor ................................................................. 55

6.11 Acceptance of Appointment by Successor.................................................................................... 56


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6.12 Merger, Conversion, Consolidation or Succession to Business .................................................... 57

6.13 Preferential Collection of Claims against Company ..................................................................... 57

6.14 Trustee’s Application for Instructions from the Company............................................................ 57

6.15 Appointment of Co-Trustee .......................................................................................................... 58

Article 7. HOLDERS’ LISTS ....................................................................................................................... 59

7.1 Company to Furnish Trustee Names and Addresses of Holders ................................................... 59

7.2 Preservation of Information; Communications to Holders ........................................................... 59

Article 8. SUPPLEMENTAL INDENTURES.............................................................................................. 59

8.1 Supplemental Indentures Without Consent of Holders ................................................................. 59

8.2 Supplemental Indentures With Consent of Holders ...................................................................... 60

8.3 Execution of Supplemental Indentures ......................................................................................... 61

8.4 Effect of Supplemental Indentures................................................................................................ 61

8.5 Conformity with Trust Indenture Act and the Negotiable Obligations Law................................. 61

8.6 Reference in Notes to Supplemental Indentures ........................................................................... 61

8.7 Notice of Supplemental Indentures ............................................................................................... 61

8.8 Meetings of Holders...................................................................................................................... 62

Article 9. COVENANTS .............................................................................................................................. 63

9.1 Mandatory Prepayment With Excess Cash ................................................................................... 63

9.2 Mandatory Market Purchases upon Public Equity Offering ......................................................... 65

9.3 Limitation on Liens....................................................................................................................... 66

9.4 Limitations on Indebtedness ......................................................................................................... 67

9.5 Limitations on Asset Sales ............................................................................................................ 68

9.6 Limitation on Transactions with Shareholders and Affiliates ....................................................... 68

9.7 Limitation on Capital Expenditures .............................................................................................. 69

9.8 Limitation on Restricted Payments ............................................................................................... 69

9.9 Delivery of Financial Statements .................................................................................................. 70

9.10 Notices of Default ......................................................................................................................... 70

9.11 Maintenance of Notes Listing ....................................................................................................... 70

9.12 Corporate Existence ...................................................................................................................... 71

9.13 Conduct of Business...................................................................................................................... 71

9.14 Maintenance of Properties ............................................................................................................ 71

9.15 Maintenance of Insurance ............................................................................................................. 71

9.16 Payment of Taxes and Other Claims............................................................................................. 71

9.17 Designation of Restricted and Unrestricted Subsidiaries .............................................................. 71

9.18 Limitation of Applicability of Certain Covenants......................................................................... 72


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9.19 Limitations on Mergers, Consolidations, Sales and Conveyances................................................ 73

9.20 Payment of Additional Amounts................................................................................................... 74

9.21 Money for Note Payments to be Held in Trust ............................................................................. 75

9.22 Ranking of Notes .......................................................................................................................... 76

Article 10. REDEMPTION OF NOTES......................................................................................................... 76

10.1 Applicability of Article ................................................................................................................. 76

10.2 Redemption at the Company’s Option .......................................................................................... 76

10.3 Repurchase at the Option of Holders Upon a Change of Control ................................................. 77

10.4 Market Purchases .......................................................................................................................... 78

10.5 Selection by Trustee of Notes to be Redeemed............................................................................. 78

10.6 Notice of Redemption ................................................................................................................... 78

10.7 Deposit of Redemption Price ........................................................................................................ 79

10.8 Notes Payable on Redemption Date.............................................................................................. 79

10.9 Notes Redeemed in Part ................................................................................................................ 79

10.10 Redemptions and Purchases of the Notes ..................................................................................... 79

Article 11. DEFEASANCE AND COVENANT DEFEASANCE ................................................................. 79

11.1 Company’s Option to Effect Defeasance or Covenant Defeasance .............................................. 79

11.2 Defeasance and Discharge ............................................................................................................ 80

11.3 Covenant Defeasance.................................................................................................................... 80

11.4 Conditions to Defeasance or Covenant Defeasance...................................................................... 80

11.5 Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous Provisions...................................................................................................................................... 81

11.6 Reinstatement................................................................................................................................ 82

Article 12. MISCELLANEOUS PROVISIONS............................................................................................. 82

12.1 No Liability of Directors, Officers, Employees, Incorporators, Members, and Stockholders.................................................................................................................................. 82

12.2 Tax Treatment ............................................................................................................................... 82

v

Exhibit

EXHIBIT A .....................................................................................................................................Exhibit A-1 EXHIBIT B ....................................................................................................................................Exhibit B-1

Annex

ANNEX A .......................................................................................................................................Annex A-1 ANNEX B .......................................................................................................................................Annex B-1 ANNEX C .......................................................................................................................................Annex C-1

Note: This table of contents shall not, for any purpose, be deemed to be part of this Indenture

THIS INDENTURE, dated as of April 24, 2006.

BETWEEN:

(1) EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A., a sociedad anónima organized under the laws of the Republic of Argentina (the Company), having its legal domicile at Azopardo 1025, City of Buenos Aires, Argentina;

(2) THE BANK OF NEW YORK, a New York banking corporation incorporated under the laws of New York, as trustee (the Trustee), paying agent (the Paying Agent) and co-registrar (the Co-Registrar); and

(3) BANCO RÍO DE LA PLATA S.A., an Argentine financial institution, incorporated as a sociedad anónima organized under the laws of the Republic of Argentina (Banco Río), as registrar (the Registrar), transfer agent (the Transfer Agent) and paying agent in Argentina (the Paying Agent in Argentina) and representative of the Trustee in Argentina.

RECITALS OF THE COMPANY:

(A) WHEREAS, the creation of the Program (as defined below) was pursuant to resolutions adopted on August 5, 1994 at an extraordinary meeting of the Company’s shareholders, which were ratified by resolutions adopted on September 23, 1996 at an ordinary meeting of the Company’s shareholders; the CNV approved the creation of the Program by Resolution No. 130 dated November 5, 1996 for an aggregate principal amount of up to U.S. $300,000,000, and the Company created a Global Medium Term Note Program (the Program) for the issuance of obligaciones negociables (negotiable obligations) in an aggregate principal amount of up to U.S. $300,000,000 (or its equivalent in other currencies); WHEREAS, the maximum amount of the Program was increased to U.S. $600,000,000 (or its equivalent in other currencies) by resolutions adopted on September 15, 1997 at an extraordinary meeting of the Company’s shareholders, which was approved by the CNV by Certificate 193 on February 27, 1998; WHEREAS, as the initial term of the Program expired on November 5, 2001, the Company’s shareholders approved a five-year extension of its term to November 5, 2006 by resolutions adopted on June 7, 2001 at an extraordinary meeting of the Company’s shareholders, which was approved by the CNV by Resolution No. 286 dated September 4, 2001; WHEREAS, the current term of the Program will expire on November 5, 2006, and the Company approved an additional five-year extension of the Program to 2011 by a resolution adopted at an extraordinary meeting of the Company’s shareholders on February 23, 2006, which was approved by the CNV by Resolution No. 15,359 dated March 23, 2006;

(B) WHEREAS, pursuant to the Program the Company has duly authorized the execution and delivery of the Fixed Rate Par Notes due 2016 in an aggregate principal amount of U.S. $123,773,586 (the Fixed Rate Par Notes), the Floating Rate Par Notes due 2019 (the Floating Rate Par Notes) in an aggregate principal amount of U.S. $12,656,086 and the Discount Notes due 2014 in an aggregate principal amount of U.S. $239,999,985 (the Discount Notes and together with the Fixed Rate Par Notes and the Floating Rate Par Notes, the Notes) and this Indenture, and the execution and delivery of notes in the aggregate principal amount of U.S. $30 million for cash pursuant to a public offering in Argentina;

(C) WHEREAS, the Fixed Rate Par Notes, the Floating Rate Par Notes and Discount Notes shall rank pari passu with one another;

(D) WHEREAS, all things necessary to make the Notes, when duly issued and executed by the Company and authenticated by the Trustee and duly delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done;

(E) WHEREAS, pursuant to an Information Memorandum dated January 20, 2006, as amended and supplemented from time to time (the Information Memorandum), and a Spanish-language document for distribution in Argentina dated January 20, 2006, as amended and supplemented from time to time (the

7

Argentine Information Memorandum), the Company has solicited from the holders of Outstanding Debt (as defined herein) consents to exchange such Outstanding Debt for the Notes;

(F) WHEREAS, the holders of Outstanding Notes (as defined herein) will receive Notes which will initially be represented by global certificates in fully registered form and holders of Outstanding Loans (as defined herein) will receive Notes that will initially be represented by separate global certificates in fully registered form, and the Company has obtained the authorization of the CNV (as defined herein) for the public offer of such Notes in Argentina pursuant to Resolution No. 15,359 and has obtained or will obtain the authorization for their listing on the Buenos Aires Stock Exchange, admission for trading on the Mercado Abierto Electrónico S.A., listing on the Luxembourg Stock Exchange and admission for trading on the Euro MTF, the alternative market of the Luxembourg Stock Exchange;

(G) WHEREAS, the Company will issue a series of Fixed Rate Par Notes, a series of Floating Rate Par Notes and a series of Discount Notes, and each is referred to herein as a Series of Notes, and each Series may be divided into two tranches, one tranche for Notes issued in respect of Outstanding Notes, and one tranche for Notes issued in respect of Outstanding Loans, and each is referred to herein as a Tranche;

(H) WHEREAS, (i) the purpose of EDENOR S.A. is to provide electric power distribution and commercial services within the Northern area of the City Buenos Aires and certain departments in the province of Buenos Aires, under the terms of the Concession Agreement governing this public utility, as well as advisory services and other activities and businesses related to the distribution and sale of electric power; (ii) the Company was incorporated as a sociedad anónima under the laws of Argentina on July 21, 1992 and registered with the Public Registry of Commerce on August 3, 1992, under No. 7041, Book 111, Volume A of “Sociedades Anónimas,” is domiciled in Argentina, has a term of duration of 95 years and its registered offices are located at Azopardo 1025, City of Buenos Aires, Argentina C1107ADQ, and (iii) as of December 31, 2005 the Company had a capital stock of Pesos 831,610 thousand and a total shareholders’ equity of Pesos 1,377,284 thousand, and

(I) WHEREAS, the Trustee has agreed to act as Trustee under this Indenture on the following terms and conditions;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the exchange of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

1.1 Definitions

Act, when used with respect to any Holder, has the meaning specified in Section 1.5 (Acts of Holders; Record Dates).

Additional Amounts has the meaning specified in Section 9.20 (Payment of Additional Amounts).

Additional Capital Expenditure means any capital expenditure used or useful to the business of the Company that is not contemplated by (and is in excess of) the Permitted Capital Expenditure and Regulatory Capital Expenditures.

Adverse Cash Flow Event means the occurrence of any event or series of events that (i) are outside the control of the Company and (ii) result in the Company’s inability to meet its debt service obligations, while maintaining the Minimum Cash Balance.

Adverse Devaluation Event means any act or series of acts taken by the Argentine government, general market conditions or any other event which results in real devaluation of the Peso of 20% or more in any

8

period of 12 consecutive months after the Issuance Date as compared to January 1, 2006. The calculation of the real devaluation of the Peso will be based on the average Exchange Rate and the average of the United States Consumer Price Index and the Argentine Consumer Price Index for the relevant 12-month period (based on the last Business Day of each month during such period).

Adverse Event means an Adverse Cash Flow Event or an Adverse Devaluation Event.

Adverse Event Period means the period commencing on the first Interest Payment Date that the Company elects to reschedule payments of principal and/or interest pursuant to an Adverse Event up to, but not including, the date on which the Company resumes scheduled payments of principal or interest, as the case may be.

Affiliate means, with respect to any Person, a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such Person. For purposes of this definition, the term control shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether by ownership of share capital, by contract, by the power to appoint or remove a majority of the members of the governing body of that Person or otherwise; provided that, for the purposes of Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) only, the direct or indirect ownership of ten percent (10%) or more of the voting share capital of a Person is deemed to constitute control of that Person, and “controlling” and “controlled” have corresponding meanings.

AFIP means the Argentine federal tax authority (Administración Federal de Ingresos Públicos).

Applicable Procedures means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of any Depositary for such Note, in each case to the extent applicable to such transaction and as in effect from time to time.

Argentine GAAP means generally accepted accounting principles in Argentina consistently applied as adopted by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires) and in accordance with the accounting regulations adopted by the CNV.

Argentine Government means the government of the Republic of Argentina or any agency or instrumentality thereof or any company controlled by the Argentine Government.

Argentine Government Obligations means obligations issued or directly and fully guaranteed or insured by the Republic of Argentina or by any agent or instrumentality thereof; provided that the full faith and credit of the Republic of Argentina is pledged in support thereof.

Asset Sale means any sale, lease, transfer or other disposition of any assets by the Company or any Restricted Subsidiary, including by means of a Sale and Leaseback Transaction or of a merger, consolidation or similar transaction or distribution of assets (other than Cash or Cash Equivalents or shares in the Company or any Restricted Subsidiary), to any Person (each of the above referred to as a disposition); provided that the following are not included in the definition of “Asset Sale”:

(a) the disposition by the Company or any Restricted Subsidiary in the ordinary course of business of (i) Cash and Cash Equivalents or Permitted Investments, (ii) inventory and other assets acquired and held for resale in the ordinary course of business, (iii) damaged, worn out or obsolete assets, (iv) assets that are exchanged for or otherwise replaced in accordance with industry practice by comparable or superior assets within a reasonable time or (v) rights granted to others pursuant to leases or licenses;

(b) the sale or discount of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof of overdue and unpaid accounts receivable;

9

(c) the lease, assignment or sublease of any real or personal property in the ordinary course of business;

(d) a transaction permitted by Section 9.19 (Limitations on Mergers, Consolidations, Sales and Conveyances)including the disposition by the Company of all or substantially all of its assets;

(e) any Restricted Payment permitted under Section 9.8 (Limitation on Restricted Payments)or any Permitted Investments; or

(f) dispositions of assets in any fiscal year with a fair market value in the aggregate not to exceed U.S. $5 million (or its equivalent in other currencies).

Board of Directors means the board of directors of the Company or any committee of the Board of Directors authorized to act on its behalf.

Board Resolution means a copy of a resolution ratified by an officer of the Company, or by a notary public duly adopted by the Board of Directors and in full force and effect on the date of such ratification, and delivered to the Trustee.

Buenos Aires Stock Exchange or BASE means the Bolsa de Comercio de Buenos Aires.

Business Day means any day except a Saturday, Sunday or other day on which commercial banks are authorized or required by law or regulation to close in New York City or in the city of Buenos Aires.

CAMMESA means CAMME S.A. (Compañia Administradora del Mercado Mayorista Eléctrico S.A.).

Capital Expenditure means (i) any Permitted Capital Expenditures, Regulatory Capital Expenditures or Additional Capital Expenditures made by the Company or any of its Restricted Subsidiaries or (ii) any binding commitment (subject only to customary conditions) by the Company or any of its Restricted Subsidiaries to make Permitted Capital Expenditures, Regulatory Capital Expenditures or Additional Capital Expenditures, but only to the extent such capital expenditures are actually made within 12 months from the date of the signing of such binding commitment.

Capital Lease means, with respect to any Person, any lease of any property that, in conformity with Argentine GAAP, is required to be capitalized on the balance sheet of such Person.

Capital Stock means capital stock or other equity participation, including partnership interests, or warrants, options or other rights to acquire capital stock or other equity participations, but excluding any debt security that is convertible into, or exchangeable for, capital stock or other such equity participations.

Cash and Cash Equivalents means:

(a) any official currencies received or acquired in the ordinary course of business including, without limitation, Pesos, Euro, Dollars or any other currency of countries in which the Company or its Subsidiaries has material operations;

(b) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations, or securities issued directly and fully guaranteed or insured by any member of the European Union, or any agency or instrumentality thereof (provided that the full faith and credit of such member is pledged in support of those securities) or other sovereign debt obligations (other than those of Argentina) rated “A” or higher or such similar equivalent or higher rating by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act, in each case with maturities not exceeding one year from the date of acquisition;

10

(c) Argentine Government Obligations (including those of the Central Bank), or quasi-currencies, bonds and other obligations issued, guaranteed or insured by any province or municipality of Argentina, or certificates representing an ownership interest in any of the foregoing with maturities not exceeding one year from the date of acquisition and which obligations can be applied in payment of taxes or other obligations under Argentine Laws;

(d) (i) demand deposits, (ii) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers’ acceptance with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of Argentina or any state thereof and that are eligible to receive and hold deposits of Argentine pension and/or retirement funds (administradoras de fondos de jubilaciones y pensiones);

(e) (i) demand deposits, (ii) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers’ acceptances with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or any state thereof or under the laws of any member state of the European Union, or under the laws of any country in which the Company has operations in each case whose head office’s senior short term debt is rated Investment Grade by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act;

(f) repurchase obligations with a term of not more than 30 days for underlying securities of the type described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (e) above;

(g) commercial paper rated Investment Grade by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act and maturing within six months after the date of acquisition;

(h) money market funds at least 95% of the assets of which consist of investments of the type described in clauses (a) through (g) above;

(i) corporate obligations that are eligible to be purchased and/or held for investment by Argentine pension and/or retirement funds (administradoras de fondos de jubilaciones y pensiones); and

(j) substantially similar investments, of comparable credit quality, denominated in the currency of any jurisdiction in which the Company or its Subsidiaries conducts business.

Cash and Cash Equivalents Balance means, as of any date, the closing amount of Cash and Cash Equivalents (but excluding clause (c) of the definition of “Cash and Cash Equivalents”) of the Company and its Subsidiaries as currently reported on the Company’s consolidated balance sheet under the accounts “Cash and Banks” and “Current Investments” based on the Company’s financial statements prepared in accordance with Argentine GAAP less the Minimum Cash Balance.

Cash Offer means the separate public offering in Argentina of Notes for cash, which launched on April 13, 2006 and expired on April 20, 2006.

Central Bank means the Banco Central de la República Argentina, the Argentine Central Bank.

Certificated Notes Legend means the following legend to be placed upon a Certificated Note:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS

11

PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.

Change of Control means the occurrence of an event which causes any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act), other than Electricidad Argentina S.A. (EASA), to become a direct holder or owner of (x) more than fifty percent (50%) of the ordinary shares of the Company or (y) a number of ordinary shares of the Company that affords such person or group the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the members of the Board of Directors; provided, however, that, notwithstanding the above, should the Argentine Government acquire more than 50% of the outstanding shares of the Company (directly or indirectly), such acquisition shall constitute a Change of Control.

Change of Control Offer has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Change of Control Payment has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Change of Control Payment Date has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Change in Working Capital means, for any Excess Cash Period, the amount equal to the Working Capital as of the end of such period minus the Working Capital at the beginning of such period.

Clearstream means Clearstream Banking, société anonyme, Luxembourg and its successors.

CNV means Comisión Nacional de Valores (the Argentine National Securities Commission).

Commodity Agreement means any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities or raw materials used by the Company (other than energy).

Company means the Person named as the Company in the first paragraph of this instrument at Empresa Distribuidora y Comercializadora Norte S.A., Azopardo 1025, Ciudad de Buenos Aires, C1107ADQ, Buenos Aires, Argentina, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.

Company Request or Company Order means a written request or order signed on behalf of the Company by an Officer of the Company and delivered to the Trustee.

Concession Agreement means the concession agreement dated August 5, 1992 between the Republic of Argentina, represented by the Argentine Secretary of Energy (Secretaría de Energía) and the Company, which grants the Company the exclusive right to distribute electricity to all users within the Company’s designated service area for a period of 95 years.

Consolidated Total Indebtedness means, at any date, the sum of (i) the aggregate principal amount outstanding of the Company and its Restricted Subsidiaries’ Peso-denominated Indebtedness (at the Prevailing Exchange Rate as of the most recent quarterly financial statement), on a consolidated basis, as of the most recent fiscal quarter for which financial statements are available, plus (ii) the Peso Average of the aggregate principal amount outstanding of the Company and its Restricted Subsidiaries’ non Peso-denominated Indebtedness, on a consolidated basis, as of the most recent fiscal quarter for which financial statements are available, plus, if applicable, (iii) the amount of any Peso-denominated Indebtedness and the Peso equivalent (at the Prevailing Exchange Rate as of the date of determination) of any outstanding non-Peso denominated Indebtedness that was Incurred after the date of the most recent fiscal quarter for which financial statements are available, minus (iv) the amount of any Peso-denominated Indebtedness and the

12

Peso-equivalent (at the Prevailing Exchange Rate) of any non-Peso Indebtedness that was paid in full after the date of the most recent fiscal quarter for which financial statements are available.

Corporate Trust Office means the office of the Trustee at The Bank of New York, Corporate Trust Department—Global Finance Unit, 101 Barclay Street, Floor 21 West, New York, New York 10286, United States of America at which at any particular time its corporate trust business shall be principally administered.

CSSF means the Commission de surveillance du secteur financier of Luxembourg, as from time to time constituted.

Debt Prepayment means any payment of the outstanding principal amount of Notes, together with accrued interest and any Additional Amounts, if any, which payment shall be applied to the remaining scheduled amortization payments of the Notes in direct order of maturity, with such payment being made in accordance with the limitations in Section 9.1 (Mandatory Prepayment With Excess Cash), and pro rata among the Holders of Notes of the relevant Series of Notes based on the next remaining scheduled amortization payments.

Default means any event that, with giving of any notice, the passage of time, or both, would be an Event of Default.

Defaulted Interest has the meaning specified in Section 3.6 (Payment of Interest; Interest Rights Preserved).

Depositaries shall mean The Depository Trust Company (DTC), Euroclear and Clearstream their respective nominees and the successors of any of the foregoing; Depositary will refer to DTC, Euroclear or Clearstream, as the case may be.

Discount Notes means the Notes due 2014 to be issued by the Company at a discount, in an aggregate principal amount of U.S. $239,999,985.

Discount Notes Applicable Annual Interest Rate means the rate set forth below:

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Interest Payment Date Discount Notes Applicable

Annual Interest Rate

June 14, 2006 3.0%

December 14, 2006 3.0% June 14, 2007 3.5%

December 14, 2007 3.5% June 14, 2008 10.0% December 14, 2008 10.0% June 14, 2009 11.0% December 14, 2009 11.0% June 14, 2010 12.0% December 14, 2010 12.0% June 14, 2011 12.0% December 14, 2011 12.0% June 14, 2012 12.0% December 14, 2012 12.0% June 14, 2013 12.0% December 14, 2013 12.0% June 14, 2014 12.0% December 14, 2014 12.0%

Discount Notes Scheduled Amortization has the meaning specified in Section 3.1 (Title and Terms).

Disqualified Stock means, with respect to any Person, any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, carries the right to any mandatory dividend or distribution payment (other than a right that is expressly subject to compliance by the Company with its obligations under this Indenture), matures or is mandatorily redeemable, in whole or in part, pursuant to a sinking fund obligation or otherwise, is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the relevant note.

Dollars, U.S. Dollars and the signs $ or U.S. $ mean the lawful currency of the United States.

EBITDA means, for any period, the consolidated operating income (loss) for the Company and its Restricted Subsidiaries for such period plus, without duplication and to the extent deducted in determining such consolidated operating income (loss), the sum of (a) consolidated amortization of intangible assets for such period, (b) consolidated depreciation of fixed assets for such period, (c) consolidated amortization of other non-current assets for such period and (d) any other non-cash charges that were deducted in computing consolidated operating income (loss) (excluding any non-cash charge which requires an accrual or reserve for cash charges for any future period). EBITDA is calculated based on the consolidated financial statements of the Company and its Restricted Subsidiaries as of the end of such period, prepared in accordance with Argentine GAAP.

ENRE means the Ente Nacional Regulador de la Electricidad (the Argentine Electricity Regulator).

Equity Interests means all Capital Stock and all warrants or options with respect to, or other rights to purchase, Capital Stock, but excluding Indebtedness convertible into equity.

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Euro, euro and the sign € mean the single lawful currency of member states of the European Union as constituted by the treaty establishing the European Community, being the Treaty of Rome, as amended from time to time.

Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear system and its successors.

Event of Default has the meaning specified in Section 5.1 (Events of Default).

Excess Cash means (a) in respect of any given Excess Cash Period other than the initial Excess Cash Period, the amount equal to the sum, without duplication, of any Excess Cash that has not been utilized in the preceding Excess Cash Period (excluding any Excess Cash that is being applied to Debt Prepayments and/or Discount Buybacks or that is committed to Capital Expenditures or reserved for declared dividends or distributions), plus/minus the following consolidated items for the Company and its Restricted Subsidiaries:

(i) EBITDA; plus/minus

(ii) any negative/positive Change in Working Capital; plus

(iii) sum of dividends and interest income received; minus

(iv) all income taxes and other similar taxes accrued (and unpaid) or paid during such Excess Cash Period (including advance payments); provided that if any such taxes paid in cash during such period were previously deducted as accrued and unpaid taxes, such paid taxes will not be deducted pursuant to this clause; plus

(v) any cash proceeds from Indebtedness Incurred as permitted under this Indenture; minus

(vi) the aggregate amount of net financial expenses paid in cash (excluding deferred charges and financial interest) plus/minus financial and holding gains/losses on cash and cash equivalents; minus

(vii) all principal and interest payments, including premiums and additional amounts, if any (including any direct taxes on interest payments), redemptions or repayments of principal and/or market repurchases of debt under the Notes (including Debt Prepayments, Optional Redemptions, Change of Control Offers and Market Purchases (but not including securities, instruments or other obligations (and related Hedging Contracts) received in compromise or settlement of debts created in the ordinary course of business or by reason of a composition or readjustment of debts or reorganization of another Person) and other Indebtedness of the Company or its Restricted Subsidiaries paid in cash during such Excess Cash Period using cash generated or borrowed in such Excess Cash Period; minus

(viii) all amounts paid in cash during such Excess Cash Period to settle, purchase or otherwise retire or pay Outstanding Debt held by Non-Consenting Creditors; minus

(ix) all Permitted Capital Expenditures and all Regulatory Capital Expenditures made during such Excess Cash Period or scheduled to be made in the following Excess Cash Period; provided that if any such capital expenditures made during such period were previously deducted as scheduled capital expenditures, such capital expenditures will not be deducted pursuant to this clause; minus

(x) all amounts paid in cash pursuant to a Discount Buyback during such Excess Cash Period or required to be paid in the following Excess Cash Period; provided that if any such

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payments made during such period were previously deducted, such payments will not be deducted pursuant to this clause; minus

(xi) all Permitted Investments made during such Excess Cash Period pursuant to clauses (a), (c), (e), (f), (g), (h) (to the extent the acquired obligations were not applied in payments of taxes or other obligations under Argentine law during such period), (i) or (j) of the definition of Permitted Investments; plus/minus

(xii) any cash collateral required to be released/posted during such period in connection with Hedging Contracts and/or Commodity Agreements; minus

(xiii) any Restructuring Expenses accrued (and unpaid) or paid in cash during such Excess Cash Period; provided that if any such expenses paid in cash during such period were previously deducted as accrued and unpaid expenses, such paid expenses shall not be deducted pursuant to this clause; minus

(xiv) without duplication, any other expenses paid in cash during the period and not included in the calculation of operating income; plus/minus

(xv) any decrease/increase in the In-APE Reserve during such Excess Cash Period; minus

(xvi) the amount of Restricted Payments that have accrued or dividends that have been proposed by our Board of Directors or declared by our shareholders, as the case may be, as of such date of determination with respect to the immediate preceding fiscal year or relevant period, which Restricted Payments or dividends were otherwise permitted by Section 9.8 (Limitation on Restricted Payments), such amounts determined on a consolidated basis including us and our Subsidiaries; minus

(xvii) the amount, if any, necessary to replenish the Cash and Cash Equivalents Balance to the Minimum Cash Balance, excluding any tax provisions as determined in (iv) above.

(b) in respect of the initial Excess Cash Period, without duplication, the amount of Excess Cash calculated for such period pursuant to the preceding clause (a), minus (x) all amounts paid in cash to settle, purchase or otherwise retire or pay our Outstanding Debt on or prior to the Restructuring Exchange Date or the In-APE Exchange Date, minus (y) the initial In-APE Reserve.

All such items shall be determined in Pesos in accordance with Argentine GAAP. In the event Argentine GAAP should require in the future the application of inflation adjustments, calculations made hereunder shall be made using non-inflation adjusted figures.

For the purposes of determining Excess Cash, to the extent any cash amounts included in items (iii) through (xvii) above are included in the calculation of Change in Working Capital, such amount shall not be duplicated in calculating items (iii) through (xvii) above.

Excess Cash Period means, in respect of any Calculation Date, the six-month period prior to such Calculation Date.

Fixed Rate Par Annual Scheduled Amortization has the meaning specified in Section 3.1 (Title and Terms).

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Fixed Rate Par Applicable Annual Interest Rate means the rate set forth below:

Interest Payment Date Fixed Rate Par Applicable

Annual Interest Rate June 14, 2006 3.0% December 14, 2006 3.0% June 14, 2007 4.0% December 14, 2007 4.0% June 14, 2008 5.0% December 14, 2008 5.0% June 14, 2009 6.0% December 14, 2009 6.0% June 14, 2010 8.0% December 14, 2010 8.0% June 14, 2011 9.0% December 14, 2011 9.0% June 14, 2012 9.50% December 14, 2012 9.50% June 14, 2013 10.00% December 14, 2013 10.00% June 14, 2014 10.0% December 14, 2014 10.0% June 14, 2015 10.0% December 14, 2015 10.0% June 14, 2016 10.0% December 14, 2016 10.0%

Fixed Rate Par Notes means the Notes due 2016 to be issued by the Company at par, in an aggregate principal amount of U.S. $123,773,586.

Floating Rate Par Annual Scheduled Amortization has the meaning specified in Section 3.1 (Title and Terms).

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Floating Rate Annual Spread means the rate set forth below:

Interest Payment Date Floating Rate

Annual Spread

June 14, 2006 0.0% December 14, 2006 0.0% June 14, 2007 0.0% December 14, 2007 0.0% June 14, 2008 1.0% December 14, 2008 1.0% June 14, 2009 1.5% December 14, 2009 1.5% June 14, 2010 1.5% December 14, 2010 1.5% June 14, 2011 1.5% December 14, 2011 1.5% June 14, 2012 2.0% December 14, 2012 2.0% June 14, 2013 2.0% December 14, 2013 2.0% June 14, 2014 2.0% December 14, 2014 2.0% June 14, 2015 2.0% December 14, 2015 2.0% June 14, 2016 2.0% December 14, 2016 2.0% June 14, 2017 2.0% December 14, 2017 2.0% June 14, 2018 2.0% December 14, 2018 2.0% June 14, 2019 2.0% December 14, 2019 2.0%

Floating Rate Par Notes means the Notes due 2019 to be issued by the Company at par, in an aggregate principal amount of U.S. $12,656,086.

Global Note means a Note that is registered in the Note Register in the name of one or more Depositaries.

Global Notes Legend means the following legend to be placed upon a Global Note:

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE REFERRED TO HEREINAFTER.

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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGESTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

Guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other financial obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take or pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided that the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course of business or guarantees of performance that do not include any contingent payment obligation. The term “Guarantee” used as a verb has a corresponding meaning.

Hedging Contract means (i) any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates or (ii) any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates, in each case entered into in the ordinary course of business and not for speculative purposes.

Holder means a Person in whose name a Note is registered in the Note Register.

In-APE Reserve means, in the event the Company seeks to, or is required to, consummate the Restructuring pursuant to an In-APE Exchange, an amount equal to the aggregate amount of cash that would have been paid to Non-Consenting Creditors pursuant to the terms of the Restructuring had all such Holders elected to voluntarily participate in the Restructuring on the In-APE Exchange Date and during the period thereafter until homologación of the APE.

Incur means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise) assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to Argentine GAAP or the regulations of the CNV, of any such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided, however, that (i) a change in Argentine GAAP or in the regulations of the CNV that results in an obligation of such Person that exists at such time being reclassified as Indebtedness shall not be deemed an Incurrence of such Indebtedness, (ii) with respect to Peso-denominated Indebtedness, an increase, whether periodically or otherwise, in the nominal principal amount of such Indebtedness as a result of and in proportion to the devaluation of the Peso against the U.S. Dollar or the rate of inflation in Argentina shall not be deemed an Incurrence of such Indebtedness and (iii) with respect to Indebtedness previously Incurred, a change in the U.S. Dollar equivalent of such Indebtedness shall not be deemed an Incurrence of such Indebtedness.

Indebtedness means, with respect to any Person, without duplication:

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(a) all obligations of such Person for borrowed money;

(b) all obligations of such Person evidenced by bonds, debentures, Notes or other similar instruments;

(c) all obligations of such Person for the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business;

(d) all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments, excluding obligations in respect of trade letters of credit or bankers’ acceptances issued in respect of trade payables;

(e) all sales of Receivables and Related Assets of such Person together with any obligation of such Person to pay any discount, interest, fees, indemnities, penalties, recourse, expenses or other amounts in connection therewith (except to the extent such sales of Receivables and Related Assets are non-recourse);

(f) all obligations of such Person under Hedging Contracts;

(g) Disqualified Stock of such Person;

(h) all Indebtedness of others secured by any Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; and

(i) all Indebtedness of other Persons Guaranteed by such Person to the extent so Guaranteed.

The amount of Indebtedness of any Person will be deemed to be:

(a) with respect to Indebtedness secured by a Lien on an asset of such Person but not otherwise the obligation, contingent or otherwise, of such Person, the lesser of (x) the fair market value of such asset on the date the Lien attached or (y) the amount of such Indebtedness;

(b) with respect to any Indebtedness issued with original issue discount, the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness;

(c) with respect to any Hedging Contract, the net amount payable if such Hedging Contract terminated at that time due to default by such Person;

(d) with respect to any sale of Receivables and Related Assets, the amount of the unrecovered capital or principal investment of the purchase excluding amounts representative of yield or interest earned on such investment; and

(e) otherwise, the outstanding principal amount thereof.

The outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted.

Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture.

Insolvency Law means any law (together with the rules and regulations made pursuant thereto) of any jurisdiction (including any political subdivision thereof) relating to bankruptcy, insolvency, winding up, liquidation, reorganization, or any other similar procedure relating to the relief of debtors.

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Interest Payment Date means June 14 and December 14 of each year, commencing on the first such date to occur after the Issuance Date; provided that if any Interest Payment Date would fall on a day other than a Business Day, such Interest Payment Date shall be the next succeeding Business Day with the same force and effect as if made on such June 14 or December 14, as applicable, with no accrual of interest for the period between such date and such immediately succeeding Business Day.

Interest Period means, (a) initially, the period commencing on (and including) the Issuance Date and ending on (but excluding) the first Interest Payment Date and (b) thereafter, each subsequent period commencing on (and including) the last day of the immediately preceding Interest Period and ending on (but excluding) the next Interest Payment Date.

Investment means:

(a) any direct or indirect advance, loan or other extension of credit to another Person;

(b) any capital contribution to another Person, by means of any transfer of cash or other property or in any other form;

(c) any purchase or acquisition of Equity Interests or Indebtedness of another Person or other instruments or securities issued by another Person, including the receipt of any of the above as consideration for the disposition of assets or rendering of services; or

(d) any Guarantee of any obligation of another Person, but only when payment has been made thereunder or such arrangement would be classified and accounted for as a liability on the balance sheet of the guarantor.

For the avoidance of doubt, Investments do not include capital expenditures (which are separately restricted under Section 9.7 (Limitation on Capital Expenditures)).

If the Company or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary so that, after giving effect to that sale or disposition, such Person is no longer a Subsidiary of the Company, or designates any Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the provisions of this Indenture, all remaining Investments of the Company and its Restricted Subsidiaries in such Person shall be deemed to have been made at that time.

Investment Grade means a rating of BBB-/Baa3 or higher or such similar equivalent or higher rating by an internationally recognized statistical rating organization including a statistical rating organization recognized by the SEC as a “nationally recognized statistical rating organization.”

Issuance Date means the date of original issuance of the Notes under this Indenture in connection with the Restructuring.

Judgment Currency has the meaning specified in Section 1.16 (Conversion of Currency).

Leverage Ratio means, as of any Calculation Date, for the Company and its Restricted Subsidiaries on a consolidated basis based on financial statements issued in accordance with Argentine GAAP, the ratio of (i) Consolidated Total Indebtedness (excluding any Indebtedness Incurred in connection with bonds or other collateral posted pursuant to paragraph (g) of Section 5.1 (Events of Default)) on such date (calculated without giving effect to the discount to net present value applied to restructured debt under Argentine GAAP) to (ii) EBITDA for the most recently completed period of four consecutive fiscal quarters.

LIBOR means, for any Interest Period, the average (expressed as a percentage per annum) of the rates for deposits in Dollars for a period equal to or nearest the number of days in such Interest Period that appears on Reuters Screen LIBO Page at approximately 11:00 a.m., London time, on the date that is two London Banking Days prior to the first day of such Interest Period. If the Reuters Screen LIBO Page does not

21

include such a rate or is unavailable on the date that is two London Banking Days prior to the first day of such Interest Period, LIBOR for such Interest Period will be the average (expressed as a percentage per annum) of the rates for deposits in Dollars for a period equal to or nearest the number of days in such Interest Period that appears on the Telerate Page 3750 at approximately 11:00 a.m., London time, on the date of determination. If the Reuters Screen LIBO Page and the Telerate Page 3750 do not include such a rate or are unavailable, the Company will request the principal London office of each of three major banks in the London interbank market, as selected by the Company, to provide such bank’s offered quotation (expressed as a percentage per annum), as of approximately 11:00 a.m., London time, on the date that is two London Banking Days prior to the first day of such Interest Period, to prime banks in the London interbank market for deposits in a Representative Amount in Dollars for a period equal to or nearest the number of days in such Interest Period. If at least two such offered quotations are so provided, LIBOR for such Interest Period will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided, the Company will request each of three major banks in New York City, as selected by the Company, to provide such bank’s rate (expressed as a percentage per annum), as of approximately 11:00 a.m., New York City time, on the date that is two New York Banking Days prior to the first day of such Interest Period, for loans in a Representative Amount in Dollars to leading European banks for a period equal to or nearest the number of days in such Interest Period. If at least two such rates are so provided, LIBOR for such Interest Period will be the arithmetic mean of such rates. If fewer than two such rates are so provided, then the LIBOR for such Interest Period will be LIBOR in effect with respect to the immediately preceding Interest Period.

London Banking Day means any day on which dealings in Dollar deposits are carried out in he London interbank market.

Lien means, with respect to any asset, any mortgage, assignment, security interest, pledge, lien, encumbrance, trust, or any preferential arrangement having the practical effect of constituting a security interest with respect to such asset.

Luxembourg means the Grand Duchy of Luxembourg.

MAE means the Mercado Abierto Electrónico S.A, the Argentine over-the-counter market.

Major Asset Sale means any sale, transfer or other disposition of all or substantially all of the assets of the Company.

Mandatory Investment means any Investment that the Company or any Restricted Subsidiary is required to make as a result of any law, regulation, rule or decree of any governmental body or any body responsible for the regulation of the electricity market in Argentina, including, but not limited to the Argentine Energy Secretariat, the ENRE and/or CAMMESA.

Market Purchase means the purchase of any Notes available for sale in the secondary market through broker dealers or similar intermediaries.

Maturity, when used with respect to an amount of principal of any Note, means the date on which such principal amount of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

Minimum Cash Balance means U.S. $15 million.

Moody’s means Moody’s Investors Service, Inc. and its successors and assigns.

Negotiable Obligations Law means Argentine Law No. 23,576, as amended by Argentine Law No. 23,962 and as further amended.

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Net Cash Proceeds means, with respect to any Asset Sale or Sale and Leaseback Transaction, the proceeds of such Asset Sale or Sale and Leaseback Transaction in the form of Cash and Cash Equivalents (including (i) payments in respect of deferred payment obligations to the extent corresponding to principal, but not interest, when received in the form of Cash and Cash Equivalents and (ii) proceeds from the conversion of other consideration received when converted to Cash and Cash Equivalents), net of, without duplication,

(a) brokerage commissions and other fees and expenses related to such Asset Sale or Sale and Leaseback Transaction, including, without limitation, reasonable fees and expenses of counsel, accountants, currency exchange agents and investment bankers,

(b) any required payment to the Republic of Argentina pursuant to the Concession Agreement or any provisions for taxes and all other governmental charges and claims of any nature whatsoever, payable as a result of such Asset Sale or Sale and Leaseback Transaction;

(c) payments required to be made as a result of such Asset Sale or to repay Indebtedness at the time of such Asset Sale or Sale and Leaseback Transaction that is secured by a Lien on the property or assets sold or is required to be repaid out of the proceeds of such Asset Sale or Sale and Leaseback Transaction; and

(d) appropriate amounts to be provided as a reserve against liabilities associated with such Asset Sale, including pension and other post employment benefit liabilities, liabilities related to environmental, tax or regulatory matters and indemnification obligations associated with such Asset Sale or Sale and Leaseback Transaction, with any subsequent reduction of the reserve other than by payments made and charged against the reserved amount to be deemed a receipt of Cash and Cash Equivalent.

New York Banking Day means any London Banking Day on which commercial banks are not authorized or required to close in New York City.

Non-Global Note means a Note that is not a Global Note.

Note or note means any Fixed Rate Par Note, Floating Rate Par Note or Discount Note.

Notice of Default means a written notice of the kind specified in Section 6.2 (Notice of Defaults).

Note Register and Registrar have the respective meanings specified in Section 3.4 (Registration, Registration of Transfer and Exchange Generally).

Officer means, when used with respect to the Company, the president, general manager, chief financial officer, general accountant, treasurer, any member of the Board of Directors, or any of their respective attorneys-in-fact designated by the Company.

Officers’ Certificate means a certificate signed by any two Officers of the Company. One of the Officers giving an Officers’ Certificate shall be the principal executive, financial or accounting officer of the Company.

Opinion of Counsel means an opinion in writing signed by legal counsel who may be an employee of or counsel to the Company or other counsel.

Optional Redemption has the meaning set forth in Section 10.2 (Redemption at the Company’s Option).

Outstanding, when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:

(a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

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(b) Notes for the payment or redemption of which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside, segregated and held in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed prior to the maturity thereof, written notice of such redemption has been duly given pursuant to this Indenture, or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Notes in substitution for which other Notes shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of 3.6 (Payment of Interest; Interest Rights Preserved) (except with respect to any such Note as to which proof satisfactory to the Trustee is presented that such Note is held by a Person in whose hands such Note is a legal, valid and binding obligation of the Company),

provided, however, that in determining whether the Holders of the requisite aggregate principal amount of the Notes of any or all Series then Outstanding have concurred in any request consent or waiver under this Indenture, Notes that are owned by the Company or any other obligor on the Notes or any Affiliate of the Company with respect to which such determination is being made or by any Person directly or indirectly controlling or controlled by or under control or indirect common control with the Company or any other obligor on the Notes with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such request, consent or waiver, only Notes that a Responsible Officer of the Trustee knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes or any Affiliate of the Company. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all securities, if any, known by the Company to be owned or held by or for the account of any of the above-described Persons; and the Trustee shall be entitled to accept such Issuer Order as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are Outstanding for the purpose of any such determination.

Outstanding Debt means the Outstanding Notes and the Outstanding Loans.

Outstanding Loans means any and all loans incurred by Edenor that were, or were eligible to be, exchanged for Notes pursuant to the Restructuring.

Outstanding Notes means Edenor’s Series 2A Floating Rate Notes due 2003 and Floating Rate Notes due 2006.

Paying Agent means the Principal Paying Agent (and its successors and assigns) and any other qualified Persons authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company.

Permitted Business means any business permitted as of December 31, 2005 by the Company’s bylaws or by its Restricted Subsidiaries’ bylaws, and any business providing electricity transmission and/or distribution services or other services provided through or using the Company’s transmission and distribution system or network or any business reasonably related, incidental, complementary or ancillary thereto.

Permitted Capital Expenditures means, in any given year, the following capital expenditures by the Company or any Restricted Subsidiary for investment in the business of the Company or any Restricted Subsidiary:

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(a) U.S. $50 million (or its equivalent in other currencies) for 2005, U.S. $70 million (or its equivalent in other currencies) for 2006, U.S. $82 million (or its equivalent in other currencies) for 2007, U.S. $88 million (or its equivalent in other currencies) for 2008, U.S. $99 million (or its equivalent in other currencies) for 2009, U.S. $90 million (or its equivalent in other currencies) for 2010, U.S. $90 million (or its equivalent in other currencies) for 2011, U.S. $86 million (or its equivalent in other currencies) for 2012, U.S. $90 million (or its equivalent in other currencies) for 2013, U.S. $86 million (or its equivalent in other currencies) for 2014, U.S. $87 million (or its equivalent in other currencies) for 2015, and U.S. $90 million (or its equivalent in other currencies) for 2016 (collectively, the Scheduled Permitted Capital Expenditures), plus

(b) for any fiscal year, the amount (if any) by which (i) the aggregate amount of Permitted Capital Expenditures for the immediately preceding fiscal year exceeds (ii) the aggregate amount of capital expenditures actually made during such preceding fiscal year (excluding those made by application of Net Cash Proceeds and excluding any Regulatory Capital Expenditures made in such period) calculated based on the exchange rate in effect at the end of the Company’s most recently completed fiscal quarter, (Carry over Amount); provided that for any fiscal year, the maximum Carry over Amount shall be the amount of Scheduled Permitted Capital Expenditures for the immediately preceding fiscal year.

Permitted Investments means:

(a) any Investment in the Company or in a Restricted Subsidiary of the Company that is engaged in a Permitted Business;

(b) any Investment in Cash and Cash Equivalents;

(c) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment,

(i) such Person becomes a Restricted Subsidiary of the Company engaged in a Permitted Business, or

(ii) such Person is merged or consolidated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Company or one of its Restricted Subsidiaries engaged in a Permitted Business,

(d) Investments received as non-cash consideration in an Asset Sale made pursuant to and in compliance with Section 9.5 (Limitations on Asset Sales) or received as non-cash consideration in a refinancing of an existing Investment;

(e) any Mandatory Investment;

(f) (i) receivables owing to the Company or any of its Restricted Subsidiaries if created or acquired in the ordinary course of business, (ii) Hedging Contracts, Commodity Agreements and any Cash and Cash Equivalents or other cash management investments or liquid or portfolio securities pledged on collateral pursuant to Hedging Contracts or Commodity Agreements, (iii) endorsements for collection or deposit in the ordinary course of business, (iv) securities, instruments or other obligations (and related Hedging Contracts) received in compromise or settlement of debts created in the ordinary course of business, or by reason of a composition or readjustment of debts or reorganization of another Person, or in satisfaction of claims or judgments, and (v) securities, instruments or other obligations received in the ordinary course of business and related Hedging Contracts received in connection with mandatory or voluntary exchange offers set up by the federal, provincial or municipal government of Argentina;

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(g) payroll, travel and other loans or advances to, or Guarantees issued to support the obligations of, officers and employees, in each case in the ordinary course of business;

(h) national, provincial or other Argentine Government Obligations (including those of the Central Bank), or quasi-currencies, bonds and other obligations issued, guaranteed or insured by any province or municipality of Argentina, or certificates representing an ownership interest in any of the foregoing;

(i) Investments in securities of corporate issuers accounted for as marketable securities owned by the Company on the Issuance Date or purchased with the Net Cash Proceeds of any sale of such marketable securities or of any subsequent sales of marketable securities permitted to be purchased with the Net Cash Proceeds of marketable securities covered by this clause (i);

(j) in addition to Investments listed above, Investments in an aggregate amount, taken together with all other Investments made in reliance on this clause (j), not to exceed U.S. $10 million (or its equivalent in other currencies) (net of, with respect to the Investment in any particular Person made pursuant to this clause, the cash return thereon received after the Issuance Date as a result of any sale for cash, repayment, redemption, liquidating distribution or other cash realization not to exceed the amount of such Investments in such Person made after the Issuance Date in reliance on this clause); or

(k) any Notes repurchased pursuant to or in accordance with the terms of this Indenture.

Permitted Refinancing Indebtedness means an extension or renewal of, replacement of, or substitution for, or issue of Indebtedness in exchange for, or the net proceeds of which are used to repay, redeem, repurchase, refinance, extend or refund, including by way of defeasance (all of the above, for purposes of this clause, “refinance”) then outstanding Indebtedness of the Company or any of its Restricted Subsidiaries incurred or existing under Section 9.4 (Limitations on Indebtedness); provided that (i) the Indebtedness so Incurred (A) does not exceed the amount so refinanced or (B) is used exclusively to refinance scheduled principal or interest payments up to the amount of the scheduled principal or interest payments being refinanced; (ii) such Indebtedness is Incurred by the same entity which Incurred the Indebtedness which is being refinanced, and no additional security, collateral guarantees or other support is provided; and (iii) such Indebtedness shall have a Weighted Average Life to Maturity that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being refinanced.

Person means any individual, corporation, partnership, joint venture, association, company, trust, unincorporated organization or government or any agency or political subdivision thereof.

Peso Average means, with respect to the amount of any non-Peso-denominated Indebtedness, the amount of Pesos obtained by converting the aggregate principal amount of any such non-Peso-denominated Indebtedness into Pesos at an average exchange rate determined by reference to the exchange rate for the buying of Pesos, as reported by Banco de la Nación Argentina, on each day for which rates are available during the period corresponding to the relevant period used to calculate EBITDA in connection with any calculation or determination of the Leverage Ratio.

Peso, pesos or Ps. means the freely transferable lawful currency of Argentina.

Predecessor Note of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 3.6 (Payment of Interest; Interest Rights Preserved) in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note;

Prevailing Exchange Rate means the exchange rate for converting pesos into Dollars published as the selling rate (tipo vendedor) by Banco de la Nación Argentina, or, if such exchange rate is not published by

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Banco de la Nación Argentina or reflects a rate of exchange that differs from the average rates available in the free exchange market on such day by 10% or more, the average rates for such day.

Principal Paying Agent means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company and, initially, the Trustee.

Process Agent has the meaning specified in Section 1.17 (Agent for Service; Submission to Jurisdiction).

Property means any asset, revenue or any other property, whether tangible or intangible, real or personal, including, without limitation, any right to receive income.

Public Equity Offering means a primary underwritten public offering of Qualified Equity Interests (i) pursuant to a registration statement (other than a registration statement filed on Form F-4 or S-8) filed with the SEC or (ii) in accordance with Argentine laws, rules and regulations.

Qualified Equity Interests means all Capital Stock of a Person other than Disqualified Stock.

Rating Agencies means S&P and Moody’s;

Receivables and Related Assets means any account receivable (whether now existing or arising thereafter) of the Company or any Restricted Subsidiary, and any assets, related thereto, including all collateral securing such accounts receivable, all contracts and contract rights and all Guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.

Record Date means the end of business on the fifteenth day preceding the applicable Interest Payment Date, whether or not such day is a Business Day; provided that in the event the first Interest Payment Date occurs less than fifteen days after the Issuance Date, the Record Date shall mean the date on or prior to the Issuance Date which shall be specified by the Company.

Redemption Date, when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

Redemption Price, when used with respect to any Note to be redeemed, means the price at which such Note is to be redeemed pursuant to this Indenture.

Regulation S means Regulation S under the Securities Act.

Regulation S Certificate means a certificate substantially in the form set forth in Annex A hereto.

Regulation S Global Note has the meaning specified in Section 2.1 (Forms of the Notes).

Regulation S Notes means any Notes that are not Restricted Notes.

Regulatory Capital Expenditures means any capital expenditures made by the Company or any of its Restricted Subsidiaries in order to comply with applicable laws and regulations.

Related Proceeding has the meaning specified in Section 1.17 (Agent for Service; Submission to Jurisdiction).

Representative Amount means a principal amount of not less than U.S. $1,000,000 for a single transaction in the relevant market at the relevant time.

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Required Currency means the currency in which the Notes are denominated and in which payment is to be made in respect thereof at Maturity.

Responsible Officer, when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

Restricted Global Note has the meaning specified in Section 2.1 (Forms of the Notes).

Restricted Note means any Note required pursuant to Section 3.4(c) (Registration, Registration of Transfer and Exchange Generally) to bear a Restricted Notes Legend, including, but not limited to the Restricted Global Note.

Restricted Notes Certificate means a certificate substantially in the form set forth in Annex B hereto.

Restricted Notes Legend means the following legend to be placed upon a Restricted Note:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE TRANSFEROR OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

Restructuring means the Company’s restructuring of the Outstanding Debt, as described in the Information Memorandum.

Restructuring Expenses means all costs and expenses incurred in connection with the negotiation, implementation, execution, delivery and performance of the Restructuring, including but not limited to the fees of any advisors, accountants, printers and legal counsel, travel expenses and costs related to the conservation and preservation of the Company’s assets subject to priority payment under Section 240 of the ABL and excluding any costs or expenses incurred with respect of Affiliates.

Restricted Subsidiary means any direct or indirect Subsidiary of the Company, other than an Unrestricted Subsidiary.

Rule 144 means Rule 144 under the Securities Act.

Rule 144A means Rule 144A under the Securities Act.

S&P means Standard & Poor’s Ratings Services and its successors and assigns.

Sale and Leaseback Transaction means, with respect to the Company or any Restricted Subsidiary, any transaction or series of related transactions (excluding, however, any such transaction between the

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Company and one or more Restricted Subsidiaries or between or among any two or more Restricted Subsidiaries) pursuant to which the Company or any Restricted Subsidiary sells or transfers any property in connection with the leasing, or the resale against installment payments, or as part of an arrangement involving the leasing or resale against installment payments of such Property to the seller or transferor and which transaction or series of transactions is accounted for as a Capital Lease.

SEC means the United States Securities and Exchange Commission.

Security Currency has the meaning specified in Section 1.16 (Conversion of Currency).

Securities has the meaning specified in Section 1.19 (Foreign Exchange Restrictions).

Securities Act means the United States Securities Act of 1933, as amended, including the rules and regulations of the SEC promulgated thereunder.

Securities Act Legend means a Restricted Notes Legend or a Regulation S Legend.

Significant Subsidiary means any Subsidiary that would be a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X under the Securities Act, as such Regulation is in effect on the Issuance Date.

Special Record Date for the payment of any Defaulted interest means a date fixed by the Trustee pursuant to Section 3.6 (Payment of Interest; Interest Rights Preserved).

Stated Maturity, when used with respect to any amount of principal of any Note or any interest payment thereon, means the date specified in such Note as the date on which such principal amount or such interest payment is due and payable.

Subordinated Indebtedness means any Indebtedness of the Company that is expressly subordinated in right of payment to the Notes pursuant to a Subordination Agreement.

Subordination Agreement means any written agreement pursuant to which the Indebtedness being subordinated thereunder is made subordinated in right of payment and priority to the Notes.

Subsidiary means:

(a) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time directly or indirectly owned by the Company, or

(b) any other Person (other than a corporation) in which the Company, directly or indirectly at the date of determination thereof, has at least a majority ownership interest.

Successor Note of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced by such particular Note. For the purposes of this definition, any Note authenticated and delivered under Section 3.6 (Payment of Interest; Interest Rights Preserved) in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

Supervisory Committee means the Comisión Fiscalizadora of the Company.

Taxes means any present or future taxes, levies, imposts, duties, charges, assessments or fees of any nature that are imposed by any government or other taxing authority.

Trust Indenture Act means the U.S Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that, in the event the Trust Indenture Act of 1939 is amended

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after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as so amended.

Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee.

Unrestricted Notes Certificate means a certificate substantially in the form set forth in Annex C hereto.

Unrestricted Subsidiary means any Subsidiary of the Company that at the time of determination has been designated an Unrestricted Subsidiary and such designation has not been revoked in accordance with Section 9.17 (Designation of Restricted and Unrestricted Subsidiaries).

U.S. Government Obligations means obligations issued or directly and fully guaranteed or insured by the United States of America or by any agent or instrumentality thereof; provided that the full faith and credit of the United States of America is pledged in support thereof.

Voting Stock means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

Weighted Average Life to Maturity means, when applied to any Indebtedness at any date, the number of years (calculated to the nearest one-twelfth) obtained by dividing:

(a) the then outstanding aggregate principal amount or liquidation preference, as the case may be, of such Indebtedness into

(b) the sum of the products obtained by multiplying:

(i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal or liquidation preference, as the case may be, including payment at final maturity, in respect thereof, by

(ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

Working Capital means, as of any date, the amount equal to the consolidated current assets (excluding consolidated cash and cash equivalents, and credits related to income tax and similar taxes) minus the consolidated current liabilities (excluding current financial debt, provisions and liabilities related to income tax and similar taxes) of the Company and its Restricted Subsidiaries based on the Company’s financial statements prepared in accordance with Argentine GAAP.

1.2 Rules of Construction

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article 1 or elsewhere in this Indenture have the meanings assigned to them;

(b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with Argentine GAAP;

(d) words in the singular include the plural, and words in the plural include the singular;

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(e) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Annex, Exhibit or other subdivision;

(f) mentioning anything after “include”, “includes” or “including” does not limit what else might be included, and the use of “or” is not exclusive;

(g) provisions apply to successive events and transactions;

(h) references herein to Sections, Annexes or Exhibits are references to Sections of or Annexes or Exhibits to this Indenture;

(i) unless the context otherwise requires, any reference to a statute, rule or regulation refers to the same (including any successor statute, rule or regulation thereto) as it may be amended from time to time; and

(j) whenever in this Indenture there is referenced, in any context, the payment of principal, premium or interest, or any other amount under or with respect to any Note, that reference shall be deemed to include the payment of Additional Amounts to the extent that Additional Amounts are, were or would be payable in respect thereof.

1.3 Compliance Certificates and Opinions

Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Trustee may require an Officers’ Certificate or an Opinion of Counsel.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include substantially:

(a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

1.4 Form of Documents delivered to Trustee

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Company,

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unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

1.5 Acts of Holders; Record Dates

To the extent permitted by law, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1 (Certain Duties and Responsibilities)) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient

The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders)) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action.

The ownership of Notes shall be proved by the Note Register.

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.

1.6 Notices, etc., to Trustee and Company

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(a) the Trustee, by any Holder or by the Company, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention Corporate Trust Department,

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(b) the Company, by the Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company, Attention: Chief Financial Officer; or

(c) either the Trustee or the Company, by the other party, shall be sufficient for every purpose hereunder if given by facsimile transmission, receipt, confirmed by telephone followed by an original copy delivered by guaranteed overnight courier to the addresses set forth in (a) or (b) above, as the case may be; if to the Trustee at facsimile number 212-815-5802/3 or at any other facsimile number previously furnished in writing to the Company by the Trustee; and if to the Company at facsimile number (54-11) 4346-5325/5303 or at any other facsimile number previously furnished in writing to the Trustee by the Company.

1.7 Notice to Holders

The Company is required to give notice to the Trustee of any event that requires notice to be given to the Holders of the Notes in sufficient time for the Trustee to provide such notice to such Holders in the manner provided in this Indenture. All notices regarding the Notes will be given to the Holders of the Notes by the Trustee.

Except in the case of meetings which shall be governed by the Section 8.8 (Meetings of Holders) all notices regarding the Notes will be deemed to have been duly given to the holders of the Notes if:

(a) in writing and mailed, first class postage prepaid, to each Holder of a Note at the address of such Holder as it appears in the Note Register, not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice and any such notice shall be deemed to have been given on the date of such publication (as defined below); and

(b) for so long as applicable Argentine laws or regulations so require, in the case of Argentine Holders upon publication:

(i) in the Daily Bulletin of the Buenos Aires Stock Exchange or in the Bulletin of the MAE in Buenos Aires (so long as the Notes are listed on the Buenos Aires Stock Exchange or admitted to trading on the MAE, as the case may be); and/or

(ii) in a leading newspaper having general circulation in Buenos Aires (which is expected to be La Nación); and/or

(iii) in the Official Gazette (Boletin Oficial) of the Republic of Argentina;

(c) for so long as any Series of Notes to which such notice relates are admitted to trading on the Euro MTF, the alternative market of the Luxembourg Stock Exchange and the rules of such exchange so require, upon publication in the English language in a leading newspaper having general circulation in Luxembourg (which is expected to be the d’Wort or the Tageblatt) or, if in any such case publication in Luxembourg is not practicable, in one other leading English language daily newspaper with general circulation in Europe, each such newspaper being published on each Business Day in morning editions, whether or not it shall be published in Saturday, Sunday or holiday editions.

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All notices will also be given to the relevant clearing systems for delivery to owners of beneficial interests in the Notes through DTC, and/or Euroclear and Clearstream, Luxembourg.

Notices will be deemed to have been given on the date of publication as aforesaid or, if published on different dates, on the date of the last such publication.

The Company will cause all such other publications of such notices as may be required from time to time by applicable Argentine law, including, without limitation, those required under the regulations issued by the CNV, the Luxembourg Stock Exchange and the Buenos Aires Stock Exchange.

1.8 Trust Indenture Act Deemed to Apply and Control

Whether or not expressly stated with respect to any particular provision, this Indenture, the Company, and the Trustee shall be deemed for all purposes hereof to be subject to and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were required to be qualified under the Trust Indenture Act

If any provision of this Indenture limits, qualifies or conflicts with the duties that would be imposed by section 318(c) of the Trust Indenture Act the duties imposed by such section shall be deemed to control as if the Trust Indenture Act shall be applicable hereto.

If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded in indentures required to be qualified under the Trust Indenture Act, the provision contained in this Indenture shall apply.

Whenever this Indenture refers to a provision of the Trust Indenture Act, such provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“Commission” means the SEC as defined herein;

“indenture securities” means the Notes;

“indenture security holder” means a Holder;

“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and

“obligor” on the indenture securities means the Company or any other successor obligor in respect of the Notes.

1.9 Waiver of Certain Covenants

The Company may omit in any particular instance to comply with any covenant or condition contained in this Indenture if before the time for such compliance the Holders of at least a majority in aggregate principal amount of any Series of Notes shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the Company’s obligations and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. Any waiver under this Section 1.9 may be granted (i) by written consent of Holders of not less than a majority of the then outstanding aggregate principal amount of such Series of Notes, or (ii) by consent of a majority of the Holders of such Series of Notes present or represented at a meeting of Holders of Notes as provided in Section 8.8 (Meetings of Holders), in each case in compliance with Section 8.2 (Supplemental Indentures With Consent of Holders).

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1.10 Effect of Headings and Table of Contents

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

1.11 Successors and Assigns

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

1.12 Separability Clause

In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way he affected or impaired thereby.

1.13 Benefits of Indenture

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.14 Governing Law

(a) The Negotiable Obligations Law governs the requirements for the Notes to qualify as obligaciones negociables thereunder while such law, together with Argentine Law No. 19,550, as amended, and other applicable Argentine laws and regulations, govern the capacity and corporate authorization of the Company to execute and deliver the Notes and this Indenture and the authorization and other requirements of the CNV for the public offering of the Notes in Argentina.

(b) As to all other matters, this Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York, United States of America.

1.15 Legal Holidays

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, on account of such delay.

1.16 Conversion of Currency

The Company covenants and agrees that the following provisions shall apply to conversion of currency in the case of the Notes and this Indenture:

(a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due under this Indenture or under the Notes from one currency into another currency, the Company has agreed and each Holder agrees, to the fullest extent that the Company and each Holder may effectively do so, that the rate of exchange used shall be the rate at which, in accordance with normal banking procedures, such Holder could purchase the first currency with such other currency in the city that is the principal financial center of the country of issue of the first currency on the day, two Business Days preceding the day on which final judgment is given, which is also a day on which banks are open in Argentina.

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(b) In the event of the winding-up of the Company at any time while any amount owing under the Notes and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company shall indemnify and hold the Holders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the equivalent of the amount in the Required Currency due or contingently due under the Notes and this Indenture (other than under this clause (b)) is calculated for the purposes of such winding-up and (ii) the final date for the filing of proofs of claim in such winding-up. For the purpose of this clause (b), the final date for the filing of proofs of claim in the winding-up of the Company shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date at which liabilities of the Company may be ascertained for such winding-up before payment by the liquidator or otherwise in respect thereto.

(c) To the extent permitted by applicable law, the Company’s obligation in respect of any sum payable by the Company to a Holder shall, notwithstanding any judgment in a currency, (the Judgment Currency), other than that in which such sum is denominated in accordance with the applicable provisions of this Indenture, (the Security Currency), be discharged only to the extent that on the Business Day following receipt by such Holder of any sum adjudged to be so due in the Judgment Currency, such Holder may in accordance with normal banking procedures purchase the Security Currency with the Judgment Currency. If the amount of the Security Currency so purchased is less than the sum originally due to such Holder in the Security Currency, determined in the manner set forth above, the Company has agreed, as a separate obligation and notwithstanding any such judgment, to indemnify such Holder against such loss, and if the amount of the Security Currency so purchased exceeds the sum originally due to such Holder, such Holder agrees to remit to the Company such excess; provided that such Holder shall have no obligation to remit any such excess as long as the Company shall have failed to pay such Holder any obligation due and payable under this Indenture in which case any such excess may be applied to such obligations of the Company under this Indenture or the Notes.

1.17 Agent for Service; Submission to Jurisdiction

(a) Any suit, action or proceeding against the Company or its properties, assets or revenues with respect to the Notes or this Indenture (a Related Proceeding) may be brought in the Supreme Court of the State of New York, County of New York, or in the United States District Court for the Southern District of New York, or in the courts of Argentina that sit in the City of Buenos Aires as the person bringing such Related Proceeding may elect in its sole discretion. The Company has consented to the non-exclusive jurisdiction of each such court for the purpose of any Related Proceeding and has irrevocably waived any objection to the laying of venue of any Related Proceeding brought in any such court and to the fullest extent it may effectively do so and the defense of an inconvenient forum to the maintenance of any Related Proceeding or any such suit, action or proceeding in any such court.

(b) The Company has agreed that service of all writs, claims, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System (the Process Agent), and the Company irrevocably appointed the Process Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Company has agreed to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing in this Indenture shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.

(c) The Company irrevocably waives trial by jury in any legal action or proceeding relating to this Indenture or the Notes.

1.18 Waiver of Immunity

(a) To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified above, to any immunity from suit, from the jurisdiction of any such court, from

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attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States).

(b) The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process is effected upon the Company in the manner specified above or as otherwise permitted by law.

1.19 Foreign Exchange Restrictions

(a) In the event of any foreign exchange restriction or prohibition in Argentina, the Company shall make any and all payments of any Note in Dollars to be made outside Argentina by:

(i) purchasing, with pesos, “Bonos Externos Globales de la República Argentina” issued by Argentina and payable in Dollars or any other public or private securities issued in Argentina and denominated in Dollars, or any other securities (collectively, the Securities) and selling such instruments outside Argentina for Dollars; or

(ii) any other legal mechanism for the acquisition of Dollars in any exchange market.

(b) In addition, in the event of any foreign exchange restriction or prohibition in Argentina, any Holder of Notes may elect to receive the payment in an amount equivalent to the peso amount necessary for purchasing Securities and the reasonable and customary cost of transferring and selling such Securities outside Argentina for Dollars in an amount equivalent to the sums due and payable under the Notes. Such payment will discharge and satisfy the Company’s payment obligations to such Holders on such payment date. In each case, all reasonable and customary costs, including any taxes, relative to such operations to obtain foreign currency will be borne by the Company.

(c) In addition, in the event of any restriction or prohibition in Argentina to pay in foreign currency any obligations under the Notes to any Holder of Notes that is not a resident in Argentina, the Company shall make its best efforts to obtain the corresponding authorization of the Central Bank to make such payments in Dollars. However, if such authorization cannot be obtained after reasonable attempts, the Company shall pay such Holder the peso equivalent amount of the foreign currency amount due on the relevant payment date.

(d) Such payments in pesos will be calculated using the U.S. $/ Peso exchange rate quoted by Reuters Screen “ARSVH=” ASK SIDE (Valor Hoy Mercado) at 12:00 p.m. New York City time on the payment date; provided that (i) if the U.S. $/ Peso exchange rate does not appear on such Reuters Screen, the U.S. $/ Peso exchange rate shall mean, with respect to the payment date, the U.S. $/ Peso exchange rate which appears on Bloomberg L.P. (Bloomberg Screen (ARS currency)-ASK SIDE-PCS Composite (NY)) at 12:00 p.m. New York City time on such payment date. Such payment in pesos will fully discharge and satisfy the Company’s payment obligation to such holder on the payment date and shall not constitute an Event of Default.

1.20 Resignation and Appointment of Agents

The Company may terminate at any time the appointment of any or all of the Registrar, Co-Registrar and any Paying Agent, with or without cause, by giving to the Registrar, Co-Registrar or Paying Agent, as the case may be, at least 90 days’ prior written notice to that effect unless the relevant agent agrees to accept less notice; provided that (i) in the case of termination of the appointment of the Registrar or the Co-Registrar, no such termination shall take effect until a new Registrar or Co-Registrar, as the case may be, has been appointed and has accepted such appointment,

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and (ii) the effective date of such termination may not occur within 21 days before or after an Interest Payment Date nor during such time as an Event of Default shall have occurred and be continuing.

The Registrar, Co-Registrar and any Paying Agent may at any time resign from such capacities by giving written notice to the Company, specifying the date on which its desired resignation shall become effective; provided, however, that (i) such date shall never be less than 90 days from the date on which such notice is received by the Company, unless the Company agrees to accept less notice, (ii) the effective date of such resignation may not occur within 21 days before or after an Interest Payment Date and (iii) in any event, the resignation may not take effect prior to the appointment of a successor Registrar, Co-Registrar or Paying Agent, as the case may be, and the acceptance thereof of such appointment.

If the Registrar, Co-Registrar or any Paying Agent, as the case may be, resigns or is removed and the Company has not appointed a successor agent within 15 days of the expiration of the relevant notice, then the relevant Registrar, Co-Registrar or Paying Agent, as the case may be, may appoint, or may petition a court of competent jurisdiction for the appointment of, a reputable institution as the successor agent. Upon its removal or resignation, the Registrar, Co-Registrar or any Paying Agent, as the case may be, shall be entitled to the payment by the Company of its compensation and indemnification for the services rendered hereunder.

As long as any Series of Notes is Outstanding, the Company will maintain a co-registrar and a paying agent in New York City, New York, United States. Initially, The Bank of New York shall act as such Co-Registrar and Paying Agent in New York City, New York, United States. As long as it is required by Argentine law or by the CNV, the Company will maintain a registrar, a transfer agent, a paying agent and a representative of the Trustee in Buenos Aires, Argentina. Initially, Banco Río shall act as such Registrar, Transfer Agent, Paying Agent in Argentina, and representative of the Trustee in Buenos Aires, Argentina. As long as any Series of Notes is listed on the Luxembourg Stock Exchange, the Company will maintain a Paying Agent in Luxembourg. Initially, The Bank of New York (Luxembourg) S.A. shall act as such Paying Agent in Luxembourg.

ARTICLE 2. FORM OF NOTES

2.1 Forms of the Notes

The Notes shall be in substantially the forms set forth in Exhibits A and B hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. The Notes will be issued as (a) Notes issued in exchange for Outstanding Notes and Notes issued in exchange for Outstanding Loans; (b) Restricted Notes or Regulation S Notes and (c) Fixed Rate Par Notes, Floating Rate Par Notes or Discount Notes, in each case, as applicable and in accordance with Exhibits A and B hereto.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provision of this Indenture, the provisions of this Indenture, shall govern and be controlling among the parties hereof.

The Notes will be initially represented by global certificates in fully registered form admitted to public offering in Argentina and listed on the Buenos Aires Stock Exchange, the MAE and the Luxembourg Stock Exchange.

2.2 Notes Issuable in Series

The Notes may be issued in multiple Series. All Notes to be issued pursuant to this Indenture, having the same maturity, interest payment dates and other terms (including terms as to form and listing of the Notes), shall constitute a single Series of Notes pursuant to this Indenture (each a Series). There shall be up to three series of

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Notes issued under this Indenture: (i) a Series of Notes designated Fixed Rate Par Notes, (ii) a Series of Notes designated Floating Rate Par Notes and (iii) a Series of Notes designated Discount Notes.

ARTICLE 3. THE NOTES

3.1 Title and Terms

The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited by the maximum authorized aggregate principal amount of Notes to be issued under the Program. On the Issuance Date, the Company shall issue U.S. $123,773,586 million aggregate principal amount of Fixed Rate Par Notes, U.S. $12,656,086 aggregate principal amount of Floating Rate Par Notes and U.S. $239,999,985 aggregate principal amount of Discount Notes.

The Notes shall be known and designated as the Fixed Rate Par Notes, the Floating Rate Par Notes and the Discount Notes of the Company and their Stated Maturity shall be December 14, 2016, December 14, 2019 and December 14, 2014, respectively. The Notes will provide that principal will be due and payable in semiannual installments on June 14 and December 14 of each year commencing on the first Interest Payment Date to occur following (i) the fifth anniversary of the Issuance Date, in the case of the Fixed Rate Par Notes and the Floating Rate Par Notes and (ii) the second anniversary of the Issuance Date, in the case of the Discount Notes, based on the Fixed Rate Par Notes Annual Scheduled Amortization (as set forth below), the Floating Rate Par Notes Annual Scheduled Amortization (as set forth below) and the Discount Notes Annual Scheduled Amortization (as set forth below), as applicable. The Fixed Rate Par Notes shall bear interest at the Fixed Rate Par Applicable Annual Interest Rate, the Floating Rate Par Notes shall bear interest at a per annum rate equal to LIBOR plus the Floating Rate Annual Spread and the Discount Notes shall bear interest at the Discount Notes Applicable Annual Interest Rate, payable from the Issuance Date payable semi-annually in arrears on June 14 and December 14, commencing on the first such date to occur after the Issuance Date, until the principal thereof is paid in full or made available for payment. Default interest, to the extent that the payment of such interest shall be legally enforceable, shall accrue at the rate of 2% per annum plus the Fixed Rate Par Applicable Annual Interest Rate, LIBOR plus the Floating Rate Annual Spread or the Discount Notes Applicable Annual Interest Rate, as applicable, on any overdue principal and premium or interest payment until such date on which such overdue principal and premium or interest payment is paid in full.

Payments with respect to the Notes will be made by wire transfer of immediately available funds to the accounts specified by the Holder of such Notes or if no account is specified, by mailing a check to each Holder’s address in the Registrar. All such payments are subject to the provisions in Section 1.15 (Legal Holidays) relating to legal holidays.

The Notes shall be redeemable as provided in Article 10.

The Notes shall be subject to defeasance and covenant defeasance as provided in Article 11.

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The Fixed Rate Par Annual Scheduled Amortization for each Interest Payment Date are set forth as follows:

Interest Payment Date

Fixed Rate Par Annual Scheduled

Amortization*

June 14, 2006 0.00% December 14, 2006 0.00% June 14, 2007 0.00% December 14, 2007 0.00% June 14, 2008 0.00% December 14, 2008 0.00% June 14, 2009 0.00% December 14, 2009 0.00% June 14, 2010 0.00% December 14, 2010 0.00% June 14, 2011 5.00% December 14, 2011 5.00% June 14, 2012 5.00% December 14, 2012 5.00% June 14, 2013 5.00% December 14, 2013 5.00% June 14, 2014 5.00% December 14, 2014 5.00% June 14, 2015 5.00% December 14, 2015 5.00% June 14, 2016 25.00% December 14, 2016 25.00%

(*) Annual Scheduled Amortization based at all times on the original principal amount of the Fixed Rate Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with this Indenture.

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The Floating Rate Par Annual Scheduled Amortization for each Interest Payment Date are set forth as follows:


Floating Rate Par Annual Scheduled

Amortization*


(*) Annual Scheduled Amortization based at all times on the original principal amount of the Floating Rate Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with this Indenture.

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The Discount Rate Annual Scheduled Amortization for each Interest Payment Date are set forth as follows:


Discount Rate Annual Scheduled

Amortization*

June 14, 2006 0.00% December 14, 2006 0.00% June 14, 2007 0.00% December 14, 2007 0.00% June 14, 2008 2.50% December 14, 2008 2.50% June 14, 2009 2.50% December 14, 2009 2.50% June 14, 2010 2.50% December 14, 2010 2.50% June 14, 2011 2.50% December 14, 2011 2.50% June 14, 2012 5.00% December 14, 2012 5.00% June 14, 2013 5.00% December 14, 2013 5.00% June 14, 2014 30.00% December 14, 2014 30.00%

(*) Annual Scheduled Amortization based at all times on the original principal amount of the Discount Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with this Indenture.

3.2 Denominations

The Notes shall be issuable only in global or in definitive registered form without coupons and only in denominations of U.S. $1.00 and integral multiples thereof.

3.3 Execution, Authentication, Delivery and Dating

The Notes shall be executed on behalf of the Company by a member of the Board of Directors and a member of the Supervisory Committee (a Syndic) of the Company. The signature of such Director and Syndic on the Notes may be manual, or by facsimile.

Notes bearing the manual or facsimile signatures of individuals who were at any time the proper Directors or Syndics of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such positions prior to the authentication and delivery of such Notes or did not hold such positions at the date of authentication and delivery of such Notes.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company (as set forth above) to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee, in accordance with such Company Order, shall authenticate and deliver such Notes as provided in this Indenture and not otherwise. The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee (a) being advised by counsel determines that such action may not lawfully be taken or (b) acting in good faith through its board of directors or

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board of trustees, executive committee, or a trust committee of directors or trust officers shall determine that such action would expose the Trustee to personal liability to Holders.

Each Note shall be dated the date of its authentication.

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for in Exhibit A hereto executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

3.4 Registration, Registration of Transfer and Exchange Generally

(a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee and any Paying Agent a register (the Note Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration and transfer of Notes. Banco Río, as the trustee representative in Argentina is hereby appointed Registrar for the purpose of registering and transferring Notes as herein provided. The Co-Registrar shall also maintain a record of all registration and transfer of the Note. The Co-Registrar shall give prompt notice to the Registrar and the Registrar shall likewise give prompt notice to the Co-Registrar of any registration of ownership, exchange or transfer of the Notes.

Upon surrender of any Note for registration of transfer at an office of the Registrar, and subject to the other provisions of this Section 3.4, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount, each such Note bearing such legends as are required by this Indenture.

At the option of the Holder, and subject to the other provisions of this Section 3.4, Notes may be exchanged for other Notes of the same Series and Tranche of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, and subject to the other provisions of this Section 3.4, the Company shall execute and the Trustee shall authenticate and deliver the Notes which the Holder making the exchange is entitled to receive.

All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt and, subject to the other provisions of this Section 3.4, entitled to the same benefits under this Indenture and the Negotiable Obligations Law, as the Notes surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Registrar, duly executed, by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of Notes, but the Company, the Trustee or the Paying Agent may require (i) payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 3.3, 3.4, 8.5 or 10.10 not involving any transfer and (ii) appropriate endorsements and transfer documents.

The Company shall not be required to (i) register the transfer of or exchange any Note during a period beginning at the opening of 15 Business Days before (A) the due date for any payment of principal of or interest on the Notes and ending at the close of business on such due date or (B) the day of the mailing of a notice of redemption of Notes selected for redemption under Section 10.6 (Notice of Redemption) and ending at the close of business on the day of such mailing, or (ii) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(b) Notwithstanding any other provisions of this Indenture or the Notes, transfers and exchanges of Notes and beneficial interests therein of the kinds specified in this Section 3.4(b) shall be made only in accordance

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with this Section 3.4(b). Transfers and exchanges subject to this Section 3.4(b) shall also be subject to the other provisions of this Indenture that are not inconsistent with this Section 3 4(b).

(i) Restricted Global Note to Regulation S Global Note. If the Holder of a beneficial interest in the Restricted Global Note wishes at any time to transfer such interest in whole or in part to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Regulation S Global Note, such transfer may be effected only in accordance with the provisions of this clause (b)(i) and Section 3.4(c) and subject to the Applicable Procedures. Upon receipt by the Trustee, as Registrar, of (A) an order, in a form satisfactory to the Trustee, given by the agent member of the Depositary holding a beneficial interest in the Restricted Global Note directing that the principal amount represented by such Regulation S Global Note be increased by a specified amount and that the principal amount represented by such Restricted Global Note be reduced by an equal amount and (B) a Regulation S Certificate, satisfactory to the Trustee and duly executed by such agent member of such beneficial interest or his attorney in fact duly authorized in writing, then the Trustee, as Registrar but subject to Section 3.4(c), shall reduce the principal amount of such Restricted Global Note and increase the principal amount of such Regulation S Global Note by such specified principal amount.

(ii) Regulation S Global Note to Restricted Global Note. If the agent member of the Depositary holding a beneficial interest in the Regulation S Global Note wishes at any time to transfer such interest in such Note in whole or in part to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Note, such transfer may be effected only in accordance with this clause (b)(ii) and Section 3.4(c) and subject to the Applicable Procedures. Upon receipt by the Trustee, as Registrar, of (A) an order, in a form satisfactory to the Trustee, given by the agent member of the Depositary holding of a beneficial interest in the Regulation S Global Note directing that the principal amount represented by such Regulation S Global Note be reduced by a specified amount and that the principal amount represented by such Restricted Global Note be increased by an equal amount and (B) a Restricted Notes Certificate, satisfactory to the Trustee, and duly executed by such agent member of such beneficial interest or his attorney in fact duly authorized in writing, then the Trustee, as Registrar, but subject to Section 3.4(c), shall reduce the principal amount of such Regulation S Global Note and increase the principal amount of such Restricted Global Note by such specified principal amount.

(iii) Non-Global Note for Non-Global Note. If issued, a Non-Global Note may be transferred, in whole or in part, to a Person who takes delivery in the form of another Non-Global Note, provided that a Non-Global Note that bears a Securities Act Legend may be transferred, in whole or in part, only (A) if the Trustee shall have received a Restricted Notes Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Restricted Note or (B) if the Trustee shall have received a Regulation S Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Regulation S Note.

(iv) Global Note for Non-Global Note. A Global Note may be exchanged, in whole but not in part, for one or more Non-Global Notes only as provided in Section 3.4(d).

(v) Non-Global Note for Global Note. Non-Global Notes may be exchanged, in whole or in part, for beneficial interests in a Global Note, provided that a Non-Global Note that bears a Securities Act Legend may be transferred, in whole or in part, only (A) if the Trustee shall have received a Restricted Notes Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Restricted Note or (B) if Trustee shall have received a Regulation S Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Regulation S Note.

(c) Restricted Notes and their Successor Notes shall bear a Restricted Notes Legend and Regulation S Notes and their Successor Notes shall bear a Regulation S Legend, subject to the following:

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(i) Subject to the following clauses of this Section 3.4(c), a Note that is issued in exchange for a Global Note or any interest therein shall bear the Securities Act Legend borne by such Global Note.

(ii) Subject to the following clauses of this Section 3.4(c), a new Non-Global Note that is issued in exchange for either a Non-Global Note or a Global Note or any portion thereof, upon transfer or otherwise, shall bear the Securities Act Legend borne by such other Note.

(iii) Securities that are sold or otherwise disposed of pursuant to an effective registration statement under the Securities Act shall not bear a Securities Act Legend.

(iv) After the applicable restricted period under Rule 144(k), a new Note that does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note (other than a Global Note) or any portion thereof that bears such a legend if the Trustee has received an Unrestricted Notes Certificate duly executed by the Holder of such legended Note or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall authenticate and deliver such a new Note in exchange for or in lieu of such other Note as provided in this Article 3.

(v) A new Note that does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note (other than a Global Note) or any portion thereof that bears such a legend if, in the Company’s judgment, placing such a legend upon such new Note is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Company, shall authenticate and deliver such a new Note as provided in this Article 3.

(vi) Notwithstanding the foregoing provisions of this Section 3.4(c), a Successor Note of a Note that does not bear a particular form of Securities Act Legend shall not bear such form of legend unless the Company has reasonable cause to believe that such Successor Note is a “restricted security” within the meaning of Rule 144, in which case the Trustee, at the written direction of the Company, shall authenticate and deliver a new Note bearing a Restricted Notes Legend in exchange for such Successor Note as provided for in this Article 3.

(d) The following provisions shall apply only to Global Notes:

(i) Each Global Note authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Note shall constitute a single Note for all purposes of this Indenture.

(ii) Notwithstanding any other provision in this Indenture or the Notes, no Global Note may be exchanged in whole or in part for Notes registered, and no transfer of a Global Note in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless:

(A) the Depositary has notified the Company that it is unwilling or unable to continue as depositary for such Global Note or has ceased to be a clearing agency registered under the Exchange Act, and, in either case, the Company thereupon fails to appoint a successor depositary within 120 days after the date of such notice;

(B) the Depositary so requests following an Event of Default;

(C) the owner of an interest in a Global Note requests such exchange in writing delivered through the Depositary following an Event of Default; or

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(D) the Company executes and delivers a Company Order stating that all Global Notes shall be exchanged in whole for Non-Global Notes.

(iii) A Global Note may not be exchanged for a Non-Global Note other than as provided in Section 3.4(d)(ii) above.

(iv) Non-Global Notes issued in exchange for a Global Note or any portion thereof pursuant to clause (ii) above shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any Securities Act Legends required hereunder. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar, for cancellation. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Non-Global Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

(v) All Non-Global Notes issued in exchange for a Global Note or any portion thereof shall be registered in such names as the Depositary shall instruct (which instruction shall reflect the instruction of the Holder of the Notes) the Trustee or the Paying Agent (without any liability on the Trustee’s or the Paying Agent’s part). Every Note authenticated and delivered in exchange for or in lieu of a Global Note or any portion thereof, pursuant to Sections 3.3, 3.4, 8.5 or 10.10 hereof or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note.

(vi) In the event of the occurrence of any of the events specified in clause (ii) above, the Company will promptly make available to the Trustee a reasonable supply of Non-Global Notes in definitive, fully registered form, without interest coupons. The Company will pay the cost of preparing, printing, packaging and delivering the Non-Global Notes.

3.5 Mutilated, Destroyed, Lost and Stolen Notes

If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding.

If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Note and (b) such Note or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a protected purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding.

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. If exchanges of Notes pursuant to this Section 3.5 are done in Luxembourg, such exchanges will be exchanged by the Trustee via the Luxembourg Agent.

Upon the issuance of any new Note under this Section 3.5, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Note issued pursuant to this Section 3.5 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

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The provisions of this Section 3.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

3.6 Payment of Interest; Interest Rights Preserved

Interest on any Note which is payable and is punctually paid or duly provided for on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered in the Notes Register at the close of business on the Record Date for such interest.

Any interest on any Note which is payable but is not punctually paid or duly provided for on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered in the Notes Register at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided for in this clause 3.6(a). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to he mailed, first-class postage prepaid, to each Holder at his address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b); or

(b) the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause 3.6(b), such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section 3.6, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

3.7 Persons Deemed Owners

Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered in the Notes Register as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and, subject to Section 3.4 (Registration, Registration of Transfer and Exchange Generally), interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

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3.8 Cancellation

All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee or any Paying Agent and shall be promptly cancelled by it. The Company may, at any time, deliver to the Trustee or any Paying Agent for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 3.8, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of in accordance with the Trustee’s customary procedures unless directed by a Company Order.

3.9 Computation of Interest

Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

3.10 Common Code/ISIN Numbers

In issuing the Notes, the Company may use “common code” and/or “ISIN” numbers (if then generally in use), and, if so, “common code” and/or “ISIN” numbers shall be included in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “common code” or “ISIN” numbers.

3.11 Prescription

(a) Claims filed in Argentina courts against the Company for payment of principal in respect of the Notes (including Additional Amounts) shall be prescribed unless made within ten years of the due date for payment of such principal. Claims for the payment of interest shall be prescribed unless made within four years of the due date for payment of such interest.

(b) Claims filed in the courts of the State of New York will be subject to the applicable statute of limitations for such claims.

3.12 Information From Holders of Notes

(a) Each holder of Notes shall provide to the Company, in writing, the following information (i) as promptly as practicable upon acquiring such Notes, but no later than fifteen Business Days prior to the first scheduled payment date after each acquisition; (ii) promptly upon any change in the information previously provided but in no case later than the fifteenth Business Day prior to the first scheduled payment date relating to such change and (iii) no later than fifteen Business Days after December 31 of each year with respect to such information as of December 31 of such year.

(i) name, address, and residence for tax purposes, including any relevant certificates, forms or other evidence legally required with respect to information reporting or withholding with respect to such holder’s jurisdiction for tax purposes and whether it is an individual or legal person;

(ii) in case of a holder other than a non-Argentine holder, whether it is an individual, an entity governed under Section 49 of the Argentine Income Tax law or an entity governed under Law 21, 526;

(iii) in case of a foreign legal person holding Notes, it shall state whether it is a banking or financial institution, and, if so, it shall also state (x) whether it is located in a country the relevant governmental authority of which has adopted the international standards approved by the Basle

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Committee on Banking Regulations and Supervisory Practices (the International Standards), (y) whether it is located in a jurisdiction not deemed to be a low tax jurisdiction according to the Argentine income tax law and its regulatory decree, or whether it is located in a jurisdiction that has entered into an agreement of exchange of information with Argentina and if, pursuant to the applicable secrecy laws or regulations of such jurisdiction, banks can disclose information upon request of tax authorities, and (z) whether such banking or financial institution is under the supervision of the relevant central bank or equivalent agency;

(iv) in case of Notes held by a resident of a country that has in force a tax treaty with Argentina, and according to such treaty, an exemption from all or part of the applicable tax, duty, assessment or governmental charge is available, such holder shall provide the information and documentation that allows the application of such tax treaty (notwithstanding the foregoing, upon acquiring the Notes, and every 15 months or more frequently as may be requested by the AFIP, such holder shall provide the statement required by General Resolution No. 3497 issued by the AFIP (or any similar rule or provision that may be imposed in the future), duly certified and legalized by the corresponding tax authority, on the terms and conditions set forth in such resolution; and

(v) any other information, documents or evidence that may be requested by the Company pursuant to applicable law, statute, treaty or regulation of Argentina, or any written administrative instruction of the AFIP, (whether or not such holder or Person is lawfully able to do so) to provide information, documents or other evidence, in the form and conditions as required under applicable law, statute, treaty or regulation of Argentina or written administrative instruction of the AFIP concerning the nationality, residence, identity, or connection with Argentina of such holder or Person or other significant information which is required or imposed by law, statute, treaty or regulation of Argentina or written administrative instruction of the AFIP as a precondition to exemption from all or part of such tax, duty, assessment or governmental charge or that may allow the Company to determine the tax treatment of the payments to such holder in respect of the Notes.

(b) Each holder of Notes who is a foreign legal person shall provide to the Company in writing, (i) as promptly as practicable upon acquiring the Notes but not later than fifteen Business Days prior to the first scheduled payment date after such acquisition (ii) no later than fifteen Business Days after December 31 of each year with respect to such information as of December 31 of such year and (iii) promptly upon any change in the information previously provided:

(i) whether its country of residence requires securities to be held in registered form (regimen de nominatividad de titulos valores) and, if not, such holder shall also state;

(ii) whether it is an insurance company, open-end investment fund, pension fund or bank or financial entity the head office of which is located in a country whose relevant governmental authority has adopted the International Standards.

If neither (i) nor (ii) is applicable to such holder, it shall state and declare whether pursuant to its by-laws or juridical nature (naturaleza juridica), such holder (A) does not, as its principal activity, invest outside the jurisdiction of its incorporation or (B) is not prohibited from performing certain transactions under its by-laws or applicable laws and regulations of the jurisdiction of its incorporation.

(c) As a proof of the exemptions mentioned in subclause (b) above, each holder of the Notes shall submit:

(i) if its country of residence does require securities to be held in registered form, a certificate issued by the relevant authority of the jurisdiction of incorporation which states that the shares or other securities representing the capital of such holder, or in the case of a permanent establishment, the securities representing the capital of its parent company, are considered to be in registered form by the applicable law in the country of its incorporation;

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(ii) if such holder is an insurance company, open-end investment fund or pension fund, it shall submit the by-laws or articles of incorporation of such holder and its parent company;

(iii) if such holder is a banking or financial institution, it shall submit a certificate from the relevant central bank or the relevant authority of the country of incorporation or the parent company, certified by an authorized professional, stating whether the jurisdiction of its incorporation has adopted the International Standards; or

(iv) if such holder declares that pursuant to its by-laws or its juridical nature, such holder (A) does not, as its principal activity, invest outside the jurisdiction of its incorporation or (B) is not prohibited from performing certain transactions under its by-laws or applicable laws and regulations of the jurisdiction of its incorporation, such holder shall submit its by-laws and articles of incorporation. In the case of permanent establishment, it may submit a certificate certifying as to such declarations issued by its parent company duly certified by an authorized professional.

(d) The documents to be provided pursuant to this Section 3.12 shall be notarized and, if executed outside of Argentina, either apostilled in accordance with the Hague convention or consularized by the Argentine Consulate of the country of incorporation of such entities.

(e) If the holder of Notes do not timely provide all or part of the information, documents or evidence that may be required by the Company from time to time as described in this Section 3.12, the Company will not pay any Additional Amounts and will withhold or deduct the maximum amount that may be required by Argentine law in the absence of such information, documents or evidence. The Company will inform the Trustee in writing if the Company will not be obligated to pay any Additional Amounts in respect of any holder pursuant to the information received from such holder.

3.13 Special Provision Regarding Title VI of the Argentine Income Tax Law

(a) Holders of Notes who elect to receive payment of principal and/or interest or the redemption price, if any, in Argentina, must file an application at the specified domicile of the Paying Agent in Argentina between the fifth and the third Business Day prior to the relevant Interest Payment Date or redemption date therefor or at maturity in order to receive such payment on the relevant Interest Payment Date or redemption date or at maturity. Such filing shall be made by completing an application for payment, which is available at the specified domicile of the Paying Agent in Argentina. The Paying Agent must notify the Trustee in writing no later than two Business Days prior to such relevant payment date that such election has been made together with all relevant information regarding the Notes. In the event that any such Holder shall fail to make such filing between the fifth and third Business Day prior to the relevant Interest Payment Date or redemption date or at maturity, as applicable, such Holder shall be entitled to receive the relevant payment on the third Business Day after such filing with the Paying Agent has taken place.

(b) Notwithstanding any other provision in Section 3.6 (Payment of Interest; Interest Rights Preserved), all payments to be made by the Paying Agent in Argentina with respect to Notes shall be in cash or by wire transfer to an account of the Holder in a bank located in Argentina (provided that the Holder has provided the Paying Agent in Argentina with sufficient information concerning such account and bank not less than five Business Days prior to the relevant Interest Payment Date or redemption date therefore or maturity).

(c) Any Holder of the Notes subject to Title VI of the Argentine Income Tax Law (text of 1997 as restated) must (i) present its Notes exclusively to the Paying Agent in Argentina; (ii) comply with the preceding paragraphs; and (iii) comply with the terms and conditions set forth in Section 3.12 (Information From Holders of Notes) in order to receive payments of principal and/or interest thereof or the redemption price thereof.

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ARTICLE 4. SATISFACTION AND DISCHARGE

4.1 Satisfaction and Discharge of Indenture

This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

(a) either:

(i) all Notes previously issued, authenticated and delivered (other than (A) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 (Payment of Interest; Interest Rights Preserved), (B) Notes for whose payment money has previously been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.2 (Redemption at the Company’s Option) or (C) Notes that have been subject to defeasance under Article 11 (Defeasance and Covenant Defeasance) have been delivered to the Trustee for cancellation; or

(ii) all such Notes not previously delivered to the Trustee for cancellation:

(A) have become due and payable; or

(B) will become due and payable at their Stated Maturity within one year; or

(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company;

and the Company, in the case of (A), (B) or (C) in subclause (ii) above, has irrevocably deposited or caused to be deposited with the Trustee as funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes not previously delivered to the Trustee or any Paying Agent for cancellation, for principal (and premium, if any) and interest, and Additional Amounts, if any, to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7 (Compensation and Reimbursement) and, if money shall have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of this Section, the obligations of the Trustee under Section 4.2 (Application of Trust Money) and the last paragraph of Section 10.2 (Redemption at the Company’s Option) shall survive such satisfaction and discharge.

4.2 Application of Trust Money

Subject to the provisions of the last paragraph of Section 10.2 (Redemption at the Company’s Option), all money deposited with the Trustee pursuant to Section 4.1 (Satisfaction and Discharge of Indenture) shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee.

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ARTICLE 5. REMEDIES

5.1 Events of Default

Each of the following events with respect to any Series of Notes shall be an Event of Default in connection with such Series of Notes:

(a) default in the payment of any principal, interest or Additional Amounts, if applicable, of any of the Notes of such Series when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for five calendar days; provided, however, that any failure to make any principal payment under circumstances provided for, and in compliance with, Section 5.16 (Adverse Event) shall not constitute an Event of Default; or

(b) any failure to comply with the provisions of Sections 9.19 (Limitations on Mergers, Consolidations, Sales and Conveyances); or

(c) any failure on the part of the Company to duly observe or perform any of the covenants or agreements of the Company under this Indenture (other than those referred to in (a) and (b) above) for a period of more than 30 calendar days after the date on which written notice thereof requiring the Company to remedy the same shall have been given to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount Outstanding of the relevant Series of Notes; or

(d) there occurs with respect to any Indebtedness (including any other Series of Notes but excluding any Outstanding Debt) of the Company or its Restricted Subsidiaries having a principal amount of U.S. $30 million (or its equivalent in other currencies) or more in the aggregate for all such Indebtedness of all such Persons (i) an event of default that results in the acceleration of the maturity of such Indebtedness or (ii) failure to make a principal payment when due and such defaulted payment is not made, waived or extended within the applicable grace period; or

(e) there shall have been a revocation, cancellation, termination or suspension for more than twenty (20) consecutive days of the Concession Agreement; or

(f) there shall have been entered against the Company or any of its Restricted Subsidiaries a final judgment, decree or order by a court of competent jurisdiction from which no appeal may be taken or, within the applicable period to appeal, is taken for the payment of money, or the forfeiture of property with an aggregate value in excess of U.S. $30 million (or its equivalent in other currencies) and 60 calendar days shall have passed since the entry of the order without it being satisfied, discharged or stayed (a Judgment), provided that this clause (f) shall not apply to any Judgment relating to Outstanding Debt; or

(g) a distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is levied, enforced or sued out on or against any part of the property, assets or revenues of the Company or any of its Restricted Subsidiaries, which, if executed or consummated, would have a material adverse effect on the Company’s ability to make scheduled principal and interest payments on the Notes, unless (i) such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is discharged or stayed within 90 days of notice to the Company or such Restricted Subsidiary, as the case may be, or (ii) if such distress, attachment, execution, seizure before judgment or legal or extrajudicial process shall not have been discharged or stayed within such 90-day period, the Company or such Restricted Subsidiary, as the case may be, shall have contested in good faith by appropriate proceedings such distress, attachment, execution, seizure before judgment or legal process; provided that if such distress, attachment, execution, seizure before judgment or legal process shall not have been discharged or stayed within 365 days of notice to the Company or such Restricted Subsidiary, as the case may be, the Company or such Restricted Subsidiary shall have posted a bond or other appropriate collateral which shall have substituted such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process within such time period;

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(h) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary shall, after the Issuance Date:

(i) make a general assignment for the benefit of its creditors,

(ii) be adjudicated bankrupt or insolvent, or

(iii) (A) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors pursuant to a “concurso preventivo de acreedores,” (B) other than in connection with the Restructuring, seek approval of its creditors for an “acuerdo preventivo extrajudicial” through any means, including the distribution of an offering circular or similar disclosure materials to creditors in connection with such “acuerdo preventivo extrajudicial,” (C) other than in connection with the Restructuring, file for court endorsement of an “acuerdo preventivo extrajudicial,” (D) apply for or consent to the appointment (in a similar court proceeding) of a receiver, trustee, liquidator or the like for itself or its property or (E) other than in connection with the Restructuring, make a similar court filing seeking to take advantage of any applicable Insolvency Law;

(i) after the Issuance Date and without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors (other than in connection with the Restructuring), the appointment of a trustee, a receiver, liquidator or the like of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or of all of the assets thereof or other like relief in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary under any applicable bankruptcy or Insolvency Law, and either

(i) such proceeding shall not be actively contested by the Company or such Restricted Subsidiary in good faith, or

(ii) any order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing;

(j) any condemnation, seizure, compulsory purchase or expropriation, or taking into custody or control, by any governmental authority or agency of assets or share capital of the Company or its Restricted Subsidiaries which, in the aggregate, would be likely to have a material adverse effect upon the business and results of operations of the Company and its Restricted Subsidiaries taken as a whole; or

(k) a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary.

5.2 Acceleration of Maturity; Rescission and Annulment

If an Event of Default occurs and is continuing with respect to any Series of Notes, the Trustee may and, at the written direction or request of the Holders of not less than 25% of the then Outstanding aggregate principal amount of such Series of Notes, shall, by notice in writing to the Company, declare the principal amount of, and interest accrued on such Series of Notes to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable upon the date that such written notice is received by or on behalf of the Company.

After a declaration of acceleration of any Series of Notes, but before a judgment or decree of the money due in respect of such Series of Notes has been obtained, the Holders of not less than a majority of the then Outstanding aggregate principal amount of such Series of Notes may rescind by written notice to the Trustee an acceleration and its consequences if (i) all existing Events of Default (other than the nonpayment of principal and interest and any Additional Amounts on such Series of Notes, which have become due solely by virtue of such acceleration) have

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been cured or waived and (ii) if the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

For purposes of Section 5.1 and this Section 5.2, the Fixed Rate Par Notes and the Floating Rate Par Notes will be deemed to constitute a single Series of Notes voting as a single class, and the Fixed Rate Par Notes and Floating Rate Par Notes will be aggregated for the quorums and majorities specified in this Section 5.2.

5.3 Collection of Indebtedness and Suits for Enforcement by Trustee

The Company covenants that if:

(a) a default occurs in the payment of interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days; or

(b) a default occurs in the payment of the principal of (or premium, if any, on) any Note at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Notes, the aggregate amount then due and payable on such Notes for principal (and premium, if any) and interest, to the extent that payment of default interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and interest, at the default interest rate applicable to such Notes, and (iii) such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If the Company fails to pay such amounts immediately upon demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the amounts so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other successor obligor of such Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor of the Notes, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

The Trustee shall not be bound to institute any proceedings or take any other actions described in the two preceding paragraphs of this Section 5.3 unless (a) it shall have been so directed by the Holders of a majority in aggregate principal amount of a Series of Notes then Outstanding pursuant (and subject) to Section 5.12 (Control by Holders) and (b) it shall have received an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such direction.

5.4 Trustee May File Proofs of Claim

In case of any judicial proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act, the Negotiable Obligations Law and Law 24,522, as amended, in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7 (Compensation and Reimbursement).

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No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

5.5 Trustee May Enforce Claims Without Possession of Notes

Notwithstanding the actions set forth in Article 29 of the Negotiable Obligations Law, all rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as Trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

5.6 Application of Money Collected

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

(a) FIRST: To the payment of all amounts due to the Trustee under Section 6.7 (Compensation and Reimbursement).

(b) SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes and Additional Amounts, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively.

(c) THIRD: The balance, if any, to the Company (without prejudice to, or liability in respect of, any question as to how such payment to the Company shall be dealt with as between the Company and any other Person) or to such party as a court of competent jurisdiction shall direct in writing.

5.7 Enforcement by Holders of Notes

No Holder of any Note will have any right by virtue of or by availing itself of any provision of this Indenture or the Notes to institute any suit, action or proceeding in equity or at law, or otherwise, upon or under or with respect to this Indenture, or the Notes, or for any remedy thereunder, unless:

(a) such Holder previously shall have given to the Trustee written Notice of Default and of the continuance thereof,

(b) the Holders of not less than 25% of the aggregate principal amount of the Notes then Outstanding of the affected Series of Notes shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee under this Indenture and shall have offered to the Trustee an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and

(c) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to this Indenture.

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5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest

Notwithstanding any other provision in this Indenture and any provision of any Note, the right of any Holder of any Note of any Series to receive payment of the principal of and interest on such Note (including Additional Amounts) on or after the respective due dates expressed in such Note, or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such Holder. To that effect, any beneficial owner of Global Notes will have the right to obtain evidence of its beneficial ownership interest in a Global Note in accordance with Argentine Decree 677/01, as amended (including for initiating summary proceedings (acción ejecutiva) in the manner provided by the Negotiable Obligations Law), and for such purposes, such beneficial owner will be treated as the owner of that portion of the Global Note which represents its beneficial ownership interest therein.

5.9 Restoration of Rights and Remedies

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

5.10 Rights and Remedies Cumulative

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.6 (Payment of Interest; Interest Rights Preserved), no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

5.11 Delay or Omission Not Waiver

No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

5.12 Control by Holders

The Holders of a majority in principal amount of the Notes then Outstanding shall, upon offering to the Trustee indemnity reasonably satisfactory to it, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture or shall not be adverse in any material respect to the Trustee;

(b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and

(c) such right shall not impair the right of any individual Holder to file suits against the Company in accordance with Article 29 of the Negotiable Obligations Law.

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5.13 Waiver of Past Defaults

Subject to Section 5.2 (Acceleration of Maturity; Rescission and Annulment), the Holders of not less than a majority in principal amount of the Notes then Outstanding may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default:

(a) in the payment of the principal of (or premium, if any) or interest on any Note; or

(b) in respect of a covenant or provision hereof which under Section 8.2 (Supplemental Indentures With Consent of Holders) cannot be modified or amended without the consent of the Holder of each Note affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

5.14 Undertaking for Costs

In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section 5.14 nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee.

5.15 Waiver of Stay or Extension Laws

To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified herein, to any immunity from suit, from the jurisdiction of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States). The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process if effected upon the Company in the manner specified above or as otherwise permitted by law.

5.16 Adverse Event

Upon the occurrence of an Adverse Cash Flow Event or an Adverse Devaluation Event, the Company may, at its option, elect to defer, reschedule and capitalize up to one year of principal amortization payments and one year of interest payments on any or all Series of Notes by written notice to the Trustee on or prior to the date such payment is due. In such event, the relevant principal and interest payments deferred shall be rescheduled and capitalized over the remaining scheduled principal payments on such Series of Notes in proportion to the remaining amortization schedule of such Series of Notes. The Company may invoke this clause no more than once in respect of an Adverse Cash Flow Event and no more than once in respect of an Adverse Devaluation Event during the term of the Notes and will be obligated to resume payments no later than the third Interest Payment Date after the option is exercised. During an Adverse Event Period, (i) any obligation to make payments pursuant to Section 9.1 (Mandatory Prepayment With Excess Cash) will be suspended, (ii) the Company will not make any Market Purchases of Notes and (iii) the Company and its Restricted Subsidiaries will continue to comply with Article 9 (Covenants) (subject to clause (i) above), except that the Company will not pay any cash dividends or make any cash distributions to its shareholders that it would otherwise be permitted to pay or make under this Indenture and clauses (a)(iv), (c)(i) and, in respect of the Company only, (c)(ii) of Section 9.8 (Limitation on Restricted Payments) will not apply, except for

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payments to EASA in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $0.2 million, in any fiscal year, and (B) paragraphs (c) (but only if the Adverse Event occurs after the fifth anniversary of the Issuance Date and the Company is not otherwise required under any applicable rules or regulations or by any relevant authorities to maintain a strategic operator) and (d) of Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) will not apply, except for payments to EASA in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $0.2 million in any fiscal year.

ARTICLE 6. THE TRUSTEE

6.1 Certain Duties and Responsibilities

The Trustee shall be eligible to act as trustee for the Notes under Article 13 of the Negotiable Obligations Law. The duties and responsibilities of the Trustee shall be as provided by this Indenture and, where applicable, the Trust Indenture Act and the Negotiable Obligations Law. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.1. Under no circumstances will the Trustee be liable to the Company for any consequential loss (being loss of business, goodwill, opportunity or profit), even if advised of the possibility of such loss or damage.

Except upon the occurrence and continuation of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee.

The duties of the Trustee’s Representative shall be determined solely by law and/or the express provisions of this Indenture or as it may agree in writing from time to time with the Trustee, and the Trustee’s Representative needs to perform only those duties that are specifically set forth by law and/or in this Indenture and those agreed in writing with the Trustee. No implied covenants or obligations shall be read into this Indenture against the Representative of the Trustee in Argentina. The Trustee’s Representative shall have only the faculties and powers stated by law and herein below. It is further acknowledged that the Trustee’s Representative is not and shall not be considered as if it were a Trustee’s general attorney.

The duties and faculties of the Trustee’s Representative up to the date hereof are only those stated by law and: (i) receive from Holders, the Company, agents, and any governmental or regulatory authority or entity any and all letters, claims, requests, memorandums or any other document directed to the Trustee, (ii) transmit, deliver or notify the Trustee of the reception of any and all of the mentioned documents by facsimile, promptly but in no event later than 3 business days from receipt, and (iii) respond or answer such letters, claims, requests, memorandums or documents, following the express written instructions of the Trustee and only if such instructions are given by the Trustee.

The Trustee’s Representative shall not be liable for any action it takes or omits to take with diligence and in good faith, which it believes to be authorized or within its discretion, rights or powers.

The Company agrees to indemnify the Trustee’s Representative for, and to hold it harmless against, any loss, liability or expense, including, without limitation, the fees and expenses of legal counsel, incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance of its commitments hereunder, the performance of its duties hereunder and/or the exercise of it's rights hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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6.2 Notice of Defaults

The Trustee shall give the Holders written notice of any Default hereunder as and to the extent provided by the Trust Indenture Act (each such notice, a Notice of Default); provided, however, that in the case of any default of the character specified in Section 5.1(c) (Events of Default), no such notice to Holders shall be given until at least 30 calendar days after the occurrence thereof.

6.3 Certain Rights of Trustee

Subject to the provisions of Section 6.1 (Certain Duties and Responsibilities):

(a) the Trustee may rely and will be protected in acting or refraining from acting upon any resolution of the Board of Directors, Company Order, Officers’ Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Company mentioned in this Indenture will be sufficiently evidenced by a Company Order (unless other evidence in respect thereof is specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by an Officer or an assistant secretary of the Company;

(c) the Trustee may consult with counsel and experts and any advice or opinion of Counsel or expert will be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it under this Indenture in good faith and in accordance with such advice or Opinion of Counsel or expert, as the case may be;

(d) in the administration of this Indenture, whenever the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may request and, in the absence of bad faith, rely upon a certificate signed by an Officer;

(e) the Trustee will be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders of Notes pursuant to the provisions of this Indenture, unless such Holder of Notes have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred therein or thereby;

(f) the Trustee will not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(g) prior to the occurrence of an Event of Default under this Indenture and after the curing or waiving of all Events of Default, the Trustee will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority of the aggregate principal amount of the Notes affected then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding, the reasonable expenses of every such investigation will be paid by the Company or, if paid by the Trustee or any predecessor trustee, will be repaid by the Company upon demand;

(h) the Trustee may perform the services required to be rendered by it hereunder either directly or through attorneys-in-fact or agents not regularly in its employ and the Trustee shall not be liable for any misconduct or negligence on the part of any such attorney or agent appointed by it with due care hereunder;

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(i) the Trustee shall have no liability for interest on, or have any responsibility to invest, any monies received by it pursuant to any of the provisions of this Indenture or the Notes; and

(j) except as otherwise specifically provided herein, (i) all references in this Indenture to the Trustee shall be deemed to refer to the Trustee in its capacity as Trustee and in its capacities as Registrar and Paying Agent and (ii) every provision of this Indenture relating to the conduct or affecting the liability or offering protection, immunity or indemnity to the Trustee shall be deemed to apply with the same force and effect to the Trustee acting in its capacities as Registrar and Paying Agent.

6.4 Not Responsible for Issuance of Notes

The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. Subject to the obligations imposed on the Trustee by paragraph (c) of Section 13 of the Negotiable Obligations Law, the Trustee has reviewed an English translation of the resolution of the Company’s shareholders meetings dated February 23, 2006 and of the resolutions of the Board of Directors dated January 19, 2006, and confirms that the terms and conditions of the Notes issued hereunder reflect accurately the terms of the resolution or resolutions adopted by the shareholders and the Board of Directors of the Company, respectively. The Trustee makes no representation as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any of the notes or of the proceeds thereof.

6.5 May Hold Notes

The Trustee, any Paying Agent, any Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 6.8 (Disqualifications; Conflicting Interests) and 6.13 (Preferential Collection of Claims against Company), may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent.

6.6 Money Held in Trust

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company in writing.

6.7 Compensation and Reimbursement

The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to compensation equal to U.S. $15,000 per annum or such other amount as shall be agreed to in writing between the Trustee and the Company (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation, expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee, the Representative, the Registrar, the Co-Registrar, any and all Paying Agent, and each of their respective predecessors for, and to hold it harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on their income) incurred without negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and their duties hereunder or the administration of the Restructuring Documents, including any liability any of them may incur as a result of failure to withhold, pay or report any tax, assessment or other governmental charge and the costs and expenses of defending themselves against or investigating any claim of liability in the premises. The obligations of the Company under this Section 6.7 to compensate the Trustee and to indemnify the Trustee, the Representative, the Registrar, the Co-Registrar, any and all Paying Agents, the Authenticating Agent, and each of their respective predecessors and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and

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discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby subordinated to such senior claim.

The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each Agent, Representative, custodian and other Person employed by the Trustee or any such Agent, Representative or custodian in accordance with this Indenture to act hereunder.

The Company shall pay to the Trustee’s Representative from time to time, and the Trustee’s Representative shall be entitled to, such compensation for its acceptance of this Indenture and its services hereunder as the Trustee’s Representative and the Trustee shall from time to time agree in writing. The Company shall reimburse the Trustee’s Representative promptly upon request for all reasonable disbursements, advances and expenses incurred or made by or on behalf of it in addition to the compensation for its services. Such expenses may include the reasonable compensation, disbursements and expenses of Trustee’s Representative’s agents, counsel and other persons not regularly in its employ.

6.8 Disqualification; Conflicting Interests

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either

(a) eliminate such interest within 90 days;

(b) if this Indenture has been qualified under the Trust Indenture Act, apply to the SEC for permission to continue as trustee with respect of the Notes; or

(c) resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

Notwithstanding the above, in no case will the Trustee be deemed to have duly performed its obligations under this Indenture if, upon acquiring a conflicting interest, the Trustee gives preference to its own interest.

6.9 Corporate Trustee Required; Eligibility

There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and that has a combined capital and surplus of at least $50,000,000 and its Corporate Trust Office in New York. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then, for the purposes of this Section 6.9, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

This Indenture shall always have a Trustee that satisfies the requirements of Sections 310(a)(1), (2) and (5) of the Trust Indenture Act as if this Indenture were required to be qualified under the Trust Indenture Act. For the purposes of this Indenture, the Trustee will be deemed to be subject to Section 310(b) of the Trust Indenture Act; provided, however that any indenture or indentures under which other securities of, or certificates of interest or participation in other securities of, the Company are outstanding shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act if the requirements for such exclusion, as set forth in Section 310(b)(1) of Trust Indenture Act are met.

6.10 Resignation and Removal; Appointment of Successor

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until (i) the CNV has approved such appointment and (ii) the acceptance of appointment by the successor Trustee under Section 6.11 (Acceptance of Appointment by Successor).

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(b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Notes then Outstanding, delivered to the Trustee and to the Company.

(d) If at any time:

(i) the Trustee shall fail to comply with Section 6.8 (Disqualification; Conflicting Interests) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(ii) the Trustee shall cease to be eligible under Section 6.9 (Corporate Trustee Required; Eligibility) and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee, or (B) subject to Section 5.14 (Undertaking for Costs), any Holder who has been a bona fide Holder of a Note for at least six months may, on his behalf and on behalf of all other similarly situated Holders, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then Outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If, within one year after such resignation, removal or incapacity, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Notes then Outstanding delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

(f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.7 (Notice to Holders) and to the CNV including by publication in the leading daily newspaper in Luxembourg. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office (including the address of its representative in Argentina).

6.11 Acceptance of Appointment by Successor

Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee, but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument

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transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

The successor trustee shall be eligible to act as trustee under Section 13 of the Negotiable Obligations Law.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

Upon acceptance of the appointment of any successor trustee, the Company, at its expense, shall give notice thereof to the Holders as provided in Section 1.7 (Notice to Holders) (which notice shall include the successor trustee’s corporate trust office and its representative in Argentina) and to the CNV including by publication in the leading daily newspaper in Luxembourg.

As long as it is required by Argentine law and CNV regulations, the successor trustee must have a representative office in Argentina.

6.12 Merger, Conversion, Consolidation or Succession to Business

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article and under Article 13 of the Negotiable Obligations Law, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case any of the Notes shall not have been authenticated by such predecessor Trustee, any successor Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

6.13 Preferential Collection of Claims against Company

If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

6.14 Trustee’s Application for Instructions from the Company

Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless before taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted.

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6.15 Appointment of Co-Trustee

It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture or the Notes, and in particular in case of the enforcement thereof on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted or take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or institution as a separate or co-trustee. The following provisions of this Section are adopted to these ends.

In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and Lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercise such powers, rights and remedies, and only to the extent that the Trustee by the laws of any jurisdiction is incapable of exercising such powers, rights and remedies and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.

Should any instrument in writing from the Company be required by the separate or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Company; provided, that if an Event of Default shall have occurred and be continuing, if the Company does not execute any such instrument within 15 days after request therefor, the Trustee shall be empowered as an attorney-in-fact for the Company to execute any such instrument in the Company’s name and stead. In case any separate or co-trustee or a successor to either shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate or co-trustee.

Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(a) all rights and powers, conferred or imposed upon the Trustee shall be conferred or imposed upon and may be exercised or performed by such separate trustee or co-trustee; and

(b) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder.

Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article.

Any co-trustee must be entitled to act as trustee under Article 13 of the Negotiable Obligations Law.

Any separate trustee or co-trustee may at any time appoint the Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

To the extent required by Argentine law or by the CNV, the Trustee shall appoint a representative for the Trustee in Argentina. The Registrar in Argentina must keep a duplicate of the Notes Register in the Spanish language.

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ARTICLE 7. HOLDERS’ LISTS AND REPORTS BY TRUSTEE

7.1 Company to Furnish Trustee Names and Addresses of Holders

The Company will furnish or cause to be furnished to the Trustee:

(a) semi-annually, not more than 15 days after each Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Record Date; and

(b) at such other times as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished,

excluding from any such list names and addresses received by the Trustee in its capacity as Registrar.

7.2 Preservation of Information; Communications to Holders

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders) and the names and addresses of Holders received by the Trustee and the representative of the Trustee in Argentine in its capacity as Co-Registrar and Registrar, respectively. The Trustee may destroy any list furnished to it as provided in Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders) upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Notes, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.

(c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

ARTICLE 8. SUPPLEMENTAL INDENTURES

8.1 Supplemental Indentures Without Consent of Holders

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes.

(a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Notes; or

(b) to add to the covenants of the Company for the benefit of the Holders or otherwise provide additional rights to the Holders, or to surrender any right or power herein conferred upon the Company; or

(c) to secure or guarantee the Notes; or

(d) to comply with any requirements of the SEC in order to effect and maintain the qualification of this Indenture under the Trust Indenture Act; or

(e) to provide for uncertificated Notes in addition to or in place of certificated Notes, or

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(f) to evidence the appointment of a co-trustee pursuant to Section 6.15 (Appointment of Co-Trustee) hereof; or

(g) to modify the restrictions on and procedures for resales and other transfers of this Note to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted Notes generally; provided that such action pursuant to this clause (g) shall not adversely affect the interests of Holders in any material respect;

(h) to cure any ambiguity, omission, defect or inconsistency; or

(i) to make any change that does not, in the opinion of the Trustee, adversely affect the rights of any Holder in any material respect.

8.2 Supplemental Indentures With Consent of Holders

With the consent of the Holders of not less than a majority in aggregate principal amount of all Series of Notes or the Notes of any affected Series, as the case may be, then Outstanding as expressed at a Meeting of the Holders, and communicated to the Company by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Note then Outstanding affected thereby:

(a) extend the final maturity of any Notes or the date on which any installment of principal is due,

(b) reduce the principal amount of any Notes,

(c) reduce the rate or extend the time of payment of interest on any Notes,

(d) change the obligation to pay Additional Amounts,

(e) change the currency of payment of principal of or interest on the Notes (including Additional Amounts),

(f) change the governing law,

(g) impair or affect the right of any Holder of Notes to institute suit for the payment thereof,

(h) change any prepayment provision that would alter the pro rata sharing of payments required thereby,

(i) modify the number of Holders necessary to waive an Event of Default,

(j) reduce the percentage in principal amount of Notes then Outstanding of any Series that is required for the adoption of a resolution at a meeting of Holders of such Series,

(k) reduce the percentage in principal amount of Notes then Outstanding of any Series that is required form a quorum at a meeting of Holders of such Series,

(l) reduce the percentage in principal amount of Notes then Outstanding of any Series that is required to request the calling of a meeting of Holders of such Series, or

(m) modify the provisions of this Indenture with respect to modification and waiver, except to increase any percentage or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby.

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Promptly after the execution by the Company and the Trustee of any supplemental indenture, the Company shall give notice thereof to the Holders of Notes of each Series affected thereby as specified in this Indenture (as described under Section 1.7 (Notice to Holders) setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act of Holders shall approve the substance thereof.

8.3 Execution of Supplemental Indentures

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1 (Certain Duties and Responsibilities)) shall be fully protected in relying upon, in addition to the documents required by Section 1.3 (Compliance Certificates and Opinions), an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

8.4 Effect of Supplemental Indentures

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

8.5 Conformity with Trust Indenture Act and the Negotiable Obligations Law

Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act and the Negotiable Obligations Law.

8.6 Reference in Notes to Supplemental Indentures

Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may bear a notation as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Notes then Outstanding.

8.7 Notice of Supplemental Indentures

Promptly after execution by the Company of any supplemental indenture pursuant to Sections 8.1 (Supplemental Indentures Without Consent of Holders) and 8.2 (Supplemental Indentures With Consent of Holders), the Company shall transmit to the Holders and to the CNV a notice setting forth the substance of the supplemental indenture. Notices will also be published in a daily leading newspaper having general circulation in Luxembourg, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require. To the extent permitted by law, any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

8.8 Meetings of Holders

(a) A meeting of Holders of Notes of any Series may be called at any time and from time to time pursuant to Section 14 of the Negotiable Obligations Law and this Section 8.8 to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other actions provided by this Indenture to be made, given or taken by Holders of the Notes of such Series. In addition, the Company may at any time call a meeting of Holders of the Notes of any Series for the purpose of entering into an acuerdo preventivo

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extrajudicial under Argentine law with respect to the Notes, to enter into a supplemental indenture as provided in Article 8, or to obtain a waiver of any provision of this Indenture or the Notes. The meetings will be held in the City of Buenos Aires; provided, however, that each of the Company and the Trustee may determine to hold any such meeting simultaneously in the City of Buenos Aires and in New York City and/or any other city by any means of telecommunications which permits the participants to hear and speak to each other, and any such simultaneous meeting shall be deemed to constitute a single meeting for purposes of the quorum and voting percentages applicable to such meeting. In addition, the Company shall upon the written request of the Trustee or of Holders of at least 5% in aggregate principal amount of any Series of Notes at the time Outstanding call such a meeting and such meeting shall be convened within 40 days from the date such request is received by the Company. If a meeting is held pursuant to the request of the Holders, the agenda for such meeting shall be that set forth in the request made by such Holders, provided, however, that matter not included in the agenda may be included if approved by Holders of each of the Notes. In the event the Board of Directors of the Company fails to call such meeting at the request of Holders, the meeting may be called by the CNV or by a competent court. The Trustee by and through its designated representative may attend any meeting called pursuant to this Section 8.8(a).

(b) For so long as applicable Argentine laws and regulations so require, notice of any meeting, setting forth the date, time and place of such meeting and the agenda therefore (which shall describe in general terms the action proposed to be taken at such meeting), shall be called by publications in the Official Gazette of the Republic of Argentina (Boletín Oficial de la República Argentina), the Buenos Aires Stock Exchange Daily Bulletin and in a newspaper of wide circulation in Argentina (expected to be La Nación) during five (5) days within a period of no more than 30 days nor less than 10 days before the day scheduled for the meeting, Notices will also be published in a daily leading newspaper having general circulation in Luxembourg, so long as the Notes are admitted to trading on the Euro MTF, the alternative market of the Luxembourg Stock Exchange, and the rules of such exchange so require. In addition, notice of any meeting under this Section 8.8 shall be provided to the Trustee in the manner provided for in Section 1.6 (Notices, etc., to Trustee and Company) of this Indenture.

(c) To be entitled to vote at any meeting of Holders of Notes a Person shall be (i) a Holder of one or more Notes as of the record date in accordance with the Negotiable Obligation Law, or (ii) a Person appointed by an instrument in writing as proxy by such Holder of one or more Notes; provided that a person appointed as chairman of a meeting may not be appointed as proxy.

(d) The Holders, whether present or represented by proxy, entitled to vote 60% in aggregate principal amount of the Notes at the time Outstanding (or such greater percentage as may be required under applicable Argentine law) will initially be required for a quorum at any such meeting. In the absence of a quorum at any such meeting, the meeting may be adjourned for a period of not less than 10 days nor more than 30 days, as determined by the chairman of the meeting, except in the case of ordinary meetings where the first and second call meeting may be held on the same day. At any meeting adjourned for lack of quorum, the persons entitled to vote 30% of the aggregate principal amount of the Notes at the time Outstanding (or such greater percentage as may be required under applicable Argentine law) shall constitute a quorum at any such reconvened adjourned meeting. Notice of reconvening of any adjourned meeting shall be given as provided above, except that such notice need only be published for only 3 days and not less than 8 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of any adjourned meeting shall state expressly the aggregate principal amount of Notes of each Series that shall constitute a quorum at such meeting,

(e) Any Holder of Notes who has executed an instrument in writing appointing a Person as proxy shall be deemed to be present for the purposes of determining a quorum and be deemed to have voted; provided that such Holder shall be considered as present and voting only with respect to the matters covered by such instrument in writing. Any resolution passed or decision taken at any meeting of Holders of Notes of an individual Series of Notes duly held in accordance with this Section 8.8 shall, if otherwise in compliance with this Indenture, be binding on all the Holders of such Series, whether or not present or represented at the meeting.

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(f) The appointment of any proxy shall be proved by having the signature of the Person executing the proxy certified by any notary public, bank, trust company satisfactory to the Company or judicially certified in the manner provided under Argentine law. The holding of Notes shall be proved by the Notes Register maintained in accordance with Section 3.7 (Persons Deemed Owners) or by a certificate or certificates of the Trustee; provided that the holding of a beneficial interest in a Global Note shall be proved by a certificate or certificates of the Depositary.

(g) At any such meeting at which the proper quorum is present, any resolution to modify or amend, or to waive compliance with, any of the provisions of any Series of Notes or this Indenture shall be effectively passed and decided if approved by the persons entitled to vote not less than a majority of the aggregate principal amount then Outstanding of such Series of Notes present at the meeting, except for those provisions requiring consent of all Holders of Notes of any Series so affected as described under Section 8.2 (Supplemental Indentures With Consent of Holders).

(h) A representative of the Trustee shall act as the temporary chairman of the meeting. If the Trustee fails to designate a representative to act as temporary chairman of the meeting, the Company shall designate a member of the Supervisory Committee to act as temporary chairman of the meeting. If the Company fails to designate such a Person, the CNV or competent court shall designate a Person to act as chairman. The permanent chairman of the meeting shall be elected by vote of the Holders of a majority in the then Outstanding aggregate principal amount of the Notes of the relevant Series represented at the meeting. At any meeting of Holders of Notes of any Series, each Holder of Notes of such Series or proxy shall be entitled to one vote for each U.S. $1.00 principal amount of the Notes of such Series held or represented by such Holder of Notes; provided that no vote shall be cast or counted at any meeting in respect of any Note challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote except as a Holder of Notes or proxy. Any meeting of Holders of Notes duly called at which a quorum is present may be adjourned from time to time, and the meeting may be held as so adjourned with the presence of the same Holders of Notes that were present in the initial meeting without further notice.

ARTICLE 9. COVENANTS

9.1 Mandatory Prepayment With Excess Cash

If on any June 30 or December 31 (each, a Calculation Date) after the Issuance Date and in each case no later than the next Interest Payment Date following such Calculation Date (a Mandatory Prepayment Date):

(a) the Leverage Ratio is greater than 3.5, then any Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions;

(b) the Leverage Ratio is equal to or less than 3.5, but greater than 3.0, the Company will apply any Excess Cash as follows, at its discretion:

(i) (A) a minimum of 50% of such Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) a maximum of 50% of such Excess Cash shall be applied to or committed for Capital Expenditures; or

(ii) (A) a minimum of 75% of such Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) a maximum of 25% of such Excess Cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends; or

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(c) the Leverage Ratio is equal to or less than 3.0, but greater than 2.5, (A) a minimum of 50% of such Excess Cash, shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) a maximum of 50% of such Excess Cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

provided that any Excess Cash not applied pursuant to paragraphs (a), (b)(i)(A), (b)(ii)(A) or (c)(A) above on or prior to any Mandatory Prepayment Date will be applied pro rata to (i) a Debt Prepayment (on a pro rata basis) of Fixed Rate Par Notes and Floating Rate Par Notes no later than twenty (20) days following the applicable Mandatory Prepayment Date, and (ii) subject to compliance with applicable securities laws and regulations, a Discount Buyback (as defined below). Upon expiration of the Discount Buyback, any remaining Excess Cash will be used by the Company, (x) until such time as there are no Fixed Rate Par Notes and Floating Rate Par Notes outstanding, to make a Debt Prepayment of, at its discretion, Fixed Rate Par Notes or Floating Rate Par Notes, and (y) thereafter, for any purpose (including for payment of dividends or other cash distributions to its shareholders), at the Company’s discretion, except that if on any Calculation Date:

(i) the Leverage Ratio is greater than 3.5, then the Company will not be entitled to use Excess Cash for the payment of dividends or other cash distributions to its shareholders;

(ii) the Leverage Ratio is equal to or less than 3.5, but greater than 3.0., the Company will be entitled to use up to 25% of Excess Cash for the payment of dividends or other cash distributions to its shareholders;

(iii) the Leverage Ratio is equal to or less than 3.0, but greater than 2.5, the Company will be entitled to use up to 50% of Excess Cash for the payment of dividends or other cash distributions to its shareholders; and

(iv) the Leverage Ratio is equal to or less than 2.5, the Company will not be restricted from using any and all Excess Cash for the payment of dividends or other cash distributions to its shareholders;

in each case, except for any dividend payments or other cash distributions to its shareholders otherwise permitted pursuant to paragraph (a) of Section 9.8 (Limitation on Restricted Payments).

All Debt Prepayments in respect of a given Series of Notes will be made in direct order of maturity (i.e., such principal payment will be considered a payment of the next principal installment due, rather than being applied pro rata across all future payments).

The first Calculation Date shall be the first June 30 or December 31 after the Issuance Date.

Excess Cash will be calculated in pesos based on the Company’s financial statements in accordance with Argentine GAAP. For purposes of determining the amount of cash to be applied by the Company pursuant to this provision, the Excess Cash will be converted into dollars using the Prevailing Exchange Rate as of the relevant Calculation Date. To the extent that any authorization of the Central Bank required to make any such payment is not obtained on or prior to the relevant Mandatory Prepayment Date, the Company will deposit the Excess Cash to be applied to Market Purchases, Optional Redemptions, Debt Prepayments or Discount Buybacks, as applicable, as described above in a trust account, to be opened and maintained by the Trustee, on the Mandatory Prepayment Date, and such funds will be held by the trustee of such trust for the benefit of the Holders of the Notes, until such payment can be made. Any investment income earned by the trust will be added to the Excess Cash amount payable to Holders of Notes. The Company will use commercially reasonable efforts to obtain any required authorization of the Central Bank prior to each Mandatory Prepayment Date, and, if such approval is not obtained prior to a Mandatory Prepayment Date, the Company shall use commercially reasonable efforts to obtain such approval within 90 days after such Mandatory Prepayment Date. In the event that the Company is unable to receive the authorization of the Central Bank within such 90-day period, the Company will, no later than 30 days after the end of such 90-day

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period, make such payment by following the procedures as set forth under Section 1.19 (Foreign Exchange Restrictions).

Any such delay in payment shall not constitute an Event of Default, and no past due interest will be payable to Holders of Notes in respect of any such amount. At the request of the Company, the trustee for the trust mentioned above will apply the funds held in the trust account to purchase U.S. Dollars and apply such funds to scheduled payments of principal and interest on the Notes if permitted by the Central Bank.

Discount Buyback means an offer to repurchase Discount Notes, on a pro rata basis, up to the amount of Excess Cash, at a price equal to 100% of the outstanding principal amount thereof by sending, no later than twenty (20) days following the applicable Mandatory Prepayment Date, by first-class mail, a notice to each Holder, with a copy to the Trustee, stating, among other things, the purchase date (the Buyback Purchase Date), which must be no earlier than 30 days from the date the notice is mailed.

On the Buyback Purchase Date, the Company will, to the extent lawful:

(a) accept for payment all Discount Notes or portions thereof properly tendered free and clear of any and all liens, restrictions, charges, pledges, security interests, encumbrances or rights of any kind of third parties pursuant to the Discount Buyback; and

(b) deposit with the Trustee funds in an amount equal to the Discount Buyback in respect of all Discount Notes or portions thereof so tendered.

To the extent Holders of Discount Notes, that are the subject of a Discount Buyback properly tender Discount Notes in an aggregate amount exceeding the amount of Excess Cash allocated to a Discount Buyback pursuant to the provisions of Section 9.1 (Mandatory Prepayment With Excess Cash), the Company will purchase the Discount Notes on a pro rata basis (based on amounts tendered). If only a portion of a Discount Note is purchased pursuant to a Discount Buyback, a new Discount Note in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder of the Discount Note thereof upon cancellation of the original Discount Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made, as appropriate).

To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 9.1 (Mandatory Prepayment With Excess Cash) the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Indenture by doing so.

9.2 Mandatory Market Purchases upon Public Equity Offering

If at any time (i) the Company consummates a Public Equity Offering and (ii) the Leverage Ratio immediately after giving effect to such transaction on a pro forma basis, as certified by the Company’s auditors, is greater than 2.5, the Company shall use 25% of the net cash proceeds from the sale of the base amount of offered securities (not including any upsize or greenshoe) in such Public Equity Offering (after payment of all expenses, commissions and the like incurred in connection therewith) to purchase Notes through Market Purchases within two years after the consummation of such Public Equity Offering; provided that the Company will have no obligation to purchase Notes at a price greater than the face value of such Notes; provided further that, during the two-year period following the consummation of the Public Equity Offering, the Company shall maintain the proceeds to be used for the purchase of Notes through Market Purchases in a trust account to be opened and maintained by the Trustee and to be released only to purchase Notes in accordance with this covenant.

9.3 Limitation on Liens

The Company will not, and will not permit any of its Restricted Subsidiaries to incur, assume or suffer to exist, any Lien upon its property, assets or revenues, whether now owned or hereafter acquired, securing any Indebtedness of any Person, unless the Notes are equally and ratably secured by such Liens, other than the following (Permitted Liens):

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(a) Liens for taxes, assessments or governmental charges or claims or fines not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of the Company or such Restricted Subsidiary, as the case may be, to the extent required by Argentine GAAP;

(b) Liens created by any Restricted Subsidiaries over their assets solely in favor of the Company or another Restricted Subsidiary;

(c) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(d) Liens arising by reason of (1) any judgment, decree or order of any court, so long as such Lien is being contested in good faith and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (2) any embargo preventivo or any other interlocutory or temporary attachment order or measure in connection with an action or proceeding during the pendency of such action or proceeding; (3) security for payment of workers’ compensation or other insurance or obligations arising from other social security laws; and (4) operation of law in favor of warehousemen, landlords, mechanics, material men, laborers, employees or suppliers or other similar liens imposed by law or by contract incurred in the ordinary course of business for sums which are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof, and, in each case, for which adequate reserves are maintained on the books of the Company or such Restricted Subsidiary, as the case may be, to the extent required by Argentine GAAP;

(e) leases or subleases granted to others, easements, rights of way, zoning and similar covenants and restrictions and other similar encumbrances or title defects, which do not materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Company and its Restricted Subsidiaries;

(f) Liens on any property acquired by the Company or any Restricted Subsidiary as a result of a Permitted Capital Expenditure and/or a Regulatory Capital Expenditure which are created, incurred or assumed contemporaneously with such acquisition to secure or provide for the payment of all or any part of the purchase price of such property; provided that (i) such Lien is created and the Indebtedness secured thereby is Incurred within 90 days after that acquisition, and (ii) no such Lien shall extend to or cover any physical assets or equipment other than the physical assets or equipment being acquired;

(g) Liens on property at the time the Company or any of its Restricted Subsidiaries acquires such property, including any acquisition by means of a merger or consolidation of such Person with or into the Company or a Restricted Subsidiary; provided that such Liens are not created in contemplation of such acquisition and do not extend to any other property of the Company or any Restricted Subsidiary existing immediately prior to such acquisition;

(h) escrow deposits, trusts or similar accounts created or established pursuant to this Indenture or for the payment of debt service obligations under the Notes;

(i) any banker’s right of set-off arising from operation of law with respect to deposits made in the ordinary course of business by the Company;

(j) Liens securing obligations under Hedging Contracts;

(k) any interest or title of a lessor under any Capital Lease;

(l) Liens resulting from attachments or other proceedings initiated by any Holder of Outstanding Debt who elects not to participate in the Restructuring in respect of a claim for payment on such Outstanding Debt;

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(m) Liens in existence on the Issuance Date and identified in Schedule A attached hereto and any renewals or extensions thereof, so long as (A) such renewal or extension Lien does not extend to any property other than that originally subject to the Liens being renewed or extended and (B) the principal amount of the Indebtedness secured by such Lien, if applicable, is not increased;

(n) Liens to secure any Permitted Refinancing Indebtedness which is Incurred to refinance any Indebtedness which has been secured by a Lien permitted under this Section 9.3; provided that such new Liens are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced, and do not extend to any property or assets other than property or assets securing the Indebtedness refinanced by such Permitted Refinancing Indebtedness;

(o) Liens required under this Indenture; and

(p) Liens created or established in order to comply with any applicable rule, regulation, order, resolution, decree, directive or instruction of any federal, provincial or municipal government of Argentina, or any agency or instrumentality thereof, in connection with the conduct of a Permitted Business;

provided that, notwithstanding the foregoing, any Lien, of any nature or source, on the concession granted pursuant to the Concession Agreement shall not be considered a Permitted Lien.

9.4 Limitations on Indebtedness

The Company will not, and will not permit any of its Restricted Subsidiaries to, incur any Indebtedness, except for the following Indebtedness (Permitted Indebtedness):

(a) Indebtedness outstanding on the Issuance Date and identified in Schedule A attached hereto;

(b) Indebtedness Incurred pursuant to the Restructuring (including the Notes) other than any Notes issued pursuant to the Cash Offer;

(c) Permitted Refinancing Indebtedness;

(d) Subordinated Indebtedness;

(e) Indebtedness Incurred in any year for purposes of financing Permitted Capital Expenditures or Regulatory Capital Expenditures in an aggregate principal amount not to exceed the amount of Permitted Capital Expenditures that the Company is permitted to make under this Indenture during such year;

(f) Indebtedness in respect of Hedging Contracts;

(g) Indebtedness with respect to letters of credit, bankers’ acceptances and similar obligations issued in the ordinary course of business and not supporting Indebtedness, including performance bonds and letters of credit supporting performance bonds;

(h) Indebtedness of the Company or any of its Restricted Subsidiaries owed to the Company or any of its Restricted Subsidiaries so long as such Indebtedness continues to be owed to the Company or a Restricted Subsidiary and which, if the obligor is the Company and such Indebtedness is owed to such Restricted Subsidiary, is subordinated in right of payment and priority to the Notes, pursuant to a Subordination Agreement; and

(i) Indebtedness Incurred for general corporate purposes in an aggregate principal amount not to exceed U.S. $50 million (or its equivalent in other currencies) at any time outstanding.

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9.5 Limitations on Asset Sales

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale (including a Major Asset Sale) unless:

(a) the Asset Sale is for fair market value, as determined in good faith by the Board of Directors;

(b) at least 75% of the value of the consideration therefrom is in the form of Cash and Cash Equivalents; provided that (i) any non-cash consideration received is for fair market value and (ii) the receipt of such non-cash consideration is otherwise permitted under this Indenture; and

(c) immediately before and immediately after giving effect to such Asset Sale, no Default or Event of Default shall have occurred and be continuing.

Within 180 days after the receipt of any Net Cash Proceeds from an Asset Sale (other than a Major Asset Sale or a Sale and Leaseback Transaction), the Company or any Restricted Subsidiary shall, at its election, apply the Net Cash Proceeds of such Asset Sale to (i) purchase, prepay or redeem Notes through Market Purchases or Optional Redemption transactions or through a Debt Prepayment of Fixed Rate Par Notes or Floating Rate Par Notes or a Discount Buyback or (ii) (A) acquire or commit to acquire all or substantially all of the assets of a Permitted Business, or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Permitted Business, or (B) make or commit to make Permitted Capital Expenditures or Regulatory Capital Expenditures or otherwise acquire or commit to acquire assets that are to be used by the Company or a Restricted Subsidiary in a Permitted Business; provided that, if the Company receives Net Cash Proceeds from Asset Sales in an aggregate amount in excess of U.S. $20 million in any fiscal year, the Company shall apply such excess for the purposes set forth in clauses (i) provided that any Debt Prepayment will be made on a pro rata basis with a Discount Buyback) or (ii)(A) above; and provided, further that the Company shall not make any Asset Sale of Receivables or Related Assets.

The Company shall apply any Net Cash Proceeds of any Sale and Leaseback Transaction, of the Company’s election, to purchase, prepay or redeem Notes through Market Purchases or Optional Redemption transactions or through a Debt Prepayment.

9.6 Limitation on Transactions with Shareholders and Affiliates

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, renew or extend any transaction or arrangement including the purchase, sale, lease or exchange of property or assets, or the rendering of any service, with any Affiliate of the Company (other than SACME) except upon terms not less favorable to the Company or such Restricted Subsidiary than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company. If any such transaction or series of related transactions has an aggregate value in excess of U.S. $10 million, prior to such transaction, the Company will obtain a favorable written opinion from (i) the audit committee of the Company, which committee shall include at least two independent members of the Board of Directors and (ii) at least one independent consultant that the terms of the transaction are consistent with those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

The foregoing paragraphs do not apply to:

(a) any transaction between the Company and any of its Restricted Subsidiaries or between Restricted Subsidiaries of the Company;

(b) any transaction or payment required pursuant to Argentine laws and regulations to be made on terms different than in comparable arm’s-length transactions;

(c) any payments made pursuant to the Technical Assistance Agreement, dated September 15, 2005, between EDF and the Company, or pursuant to a technical service or operating agreement with the then current

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strategic operator on or prior to the fifth anniversary of the Issuance Date (or later, if the Company is required under any applicable rules or regulations or by any relevant authorities to engage a strategic operator after such fifth anniversary); in an aggregate amount not to exceed U.S. $2.0 million (or its equivalent in other currencies), net of withholding taxes, in any fiscal year; or

(d) any payments to EASA in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $2.5 million (or its equivalent in other currencies) in any fiscal year.

9.7 Limitation on Capital Expenditures

The Company will not, and will not cause or permit any Restricted Subsidiary to, make any capital expenditure other than Permitted Capital Expenditures, Regulatory Capital Expenditures and, to the extent permitted under (and funded by) Section 9.1 (Mandatory Prepayment With Excess Cash), and funded by Excess Cash, Additional Capital Expenditures.

Notwithstanding the foregoing, the Company and any Restricted Subsidiary may apply Net Cash Proceeds from any Asset Sale (other than a Major Asset Sale) and any proceeds from casualty events for capital expenditures in excess of Permitted Capital Expenditures in accordance with the provisions set forth under Section 9.5 (Limitations on Asset Sales) without regard to this Section 9.7 and the application of such amounts will not reduce the aggregate amount of Permitted Capital Expenditures that may be made in any fiscal year under this covenant.

9.8 Limitation on Restricted Payments

The Company will not and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, take any of the following actions (each, a Restricted Payment):

(a) declare or pay any dividend or return of capital or make any distribution on or in respect of Equity Interests of the Company or any Restricted Subsidiary to Holders of such Equity Interests other than (i) any dividends or distributions in the form of Qualified Equity Interests of the Company, (ii) dividends, distributions or returns of capital payable to the Company or a Restricted Subsidiary, (iii) dividends, distributions or returns of capital made on a pro rata basis to the Company and its Restricted Subsidiaries on the one hand, and minority Holders of Equity Interests of a Restricted Subsidiary on the other hand or (iv) any payments permitted to be made pursuant to Section 9.6 (Limitation on Transactions with Shareholders and Affiliates);

(b) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company;

(c) repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Indebtedness, other than (i) scheduled payments of interest or principal (provided no Default or Event of Default shall have occurred and be continuing), (ii) any intercompany Indebtedness between or among the Company and/or any Restricted Subsidiaries or (iii) any payments permitted to be made pursuant to Section 9.6 (Limitation on Transactions with Shareholders and Affiliates); or

(d) make any Investments (other than Permitted Investments).

in each case other than as permitted pursuant to Section 9.1 (Mandatory Prepayment With Excess Cash); provided that the Company will not pay any dividends or other cash distributions to its shareholders (other than any payments to EASA permitted to be made under paragraph (d) of Section 9.6 (Limitation on Transactions with Shareholders and Affiliates)) until the earlier of (i) the second anniversary of the Issuance Date and (ii) December 31, 2008.

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9.9 Delivery of Financial Statements

The Company will furnish to the Trustee:

(a) as soon as available, but in any event within 120 days after the end of each fiscal year (December 31) of the Company, a copy of the consolidated balance sheet of the Company as of the end of such year and the related consolidated statements of income and cash flows for such fiscal year, audited by independent accountants selected by the Company and of internationally recognized standing;

(b) as soon as available, but in any event within 75 days after the end of each of the first three fiscal quarters of the Company, a copy of the unaudited consolidated balance sheet of the Company as of the end of each such quarter and the related unaudited consolidated statements of income and cash flows of the Company for such quarter and the portion of the fiscal year through such date;

(c) concurrently with the delivery of the financial statements for each fiscal year and the second fiscal quarter of the Company referred to in clauses (a) and (b), respectively above, a certificate of the Company’s independent accountants certifying the calculation of the Leverage Ratio and Excess Cash; and

(d) concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate of the general manager or chief financial officer of the Company stating (i) whether, to the best of such officer’s knowledge, anything came to his or her attention (except for the Restructuring) to cause him or her to believe that there existed on the date of such statements a Default or an Event of Default, and if so, specifying the nature and period of existence thereof.

All of the financial statements referred to in (a) and (b) above are to be complete and correct in all material respects, to be prepared in reasonable detail and in accordance with Argentine GAAP applied consistently throughout the periods reflected therein and to be delivered in both the English and Spanish languages.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

9.10 Notices of Default

The Company will use reasonable efforts to notify the Trustee by facsimile or electronic mail (receipt confirmed telephonically or by electronic mail or electronic mail receipt) promptly after it becomes aware of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of an Officer of the Company setting forth the details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto.

9.11 Maintenance of Notes Listing

The Company will use its reasonable best efforts to obtain and maintain a listing on the Buenos Aires Stock Exchange, the admission to trading on the Mercado Abierto Electrónico S.A., a listing on the Luxembourg Stock Exchange and the admission to trading on the Euro MTF, the alternative market of the Luxembourg Stock Exchange. In the event that the Notes are admitted to trading on Euro MTF, the Company will use commercially reasonable efforts to maintain such listing; provided that the Company may terminate such listing and delist the Notes from Euro MTF if it determines that the provisions of the European Transparency Obligations Directive (2003/2004/COD) or other applicable legislation becomes unduly onerous or burdensome, in which case the Company will use commercially reasonable efforts to obtain an alternative admission to listing, trading and/or quotation for the Notes by another listing authority, exchange and/or system within or outside the European Union, as it may decide and to the extent feasible.

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9.12 Corporate Existence

Except as otherwise permitted under this Indenture and referred to below under Section 9.19 (Limitations on Mergers, Consolidations, Sales and Conveyances), the Company, at all times, will do all things necessary to preserve and keep in full force and effect its corporate existence and preserve and keep in full force and effect in all respects all material licenses and permits necessary to the proper conduct of its business and its rights (charter and statutory) and franchises and such rights and franchises of its Restricted Subsidiaries necessary to the proper conduct of the business of the Company and such Subsidiaries, as a whole.

9.13 Conduct of Business.

The Company and its Restricted Subsidiaries will not engage in any business other than a Permitted Business.

9.14 Maintenance of Properties

The Company will cause all material tangible properties used in the conduct of its business or the business of any of its Significant Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements and improvements thereof, all as in the Company’s judgment may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that this covenant will not prevent the Company or any of its Subsidiaries from discontinuing the operation or maintenance of any of such properties if such discontinuance is desirable in the conduct of its business and the business of its Subsidiaries taken as a whole and not adverse in any material respect to the holders of the Notes.

9.15 Maintenance of Insurance

The Company will, and will cause each of its Subsidiaries to, maintain insurance in such amounts and covering such risks as is usually carried by electricity transmission and distribution companies, subject to any applicable laws and regulations of Argentina.

9.16 Payment of Taxes and Other Claims

The Company will, and will cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or its Subsidiaries; provided, however, that neither the Company nor any Subsidiary will be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim which is being contested in good faith and, if appropriate, by appropriate legal proceedings and adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, to the extent required by Argentine GAAP.

9.17 Designation of Restricted and Unrestricted Subsidiaries.

(a) The Company may designate any Subsidiary, including a newly acquired or created Subsidiary, to be an Unrestricted Subsidiary under this Indenture if:

(i) the Restricted Subsidiary is not a Significant Subsidiary;

(ii) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such designation;

(iii) such Subsidiary does not own any Capital Stock of the Company or any Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the Company or any Restricted Subsidiary; and

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(iv) the Subsidiary is not party to any transaction or arrangement with the Company or any Restricted Subsidiary that would not be permitted under Section 9.6 (Limitation on Transactions with Shareholders and Affiliates).

If the Subsidiary being designated as an Unrestricted Subsidiary is, at the time of designation, a Restricted Subsidiary, the consequences set forth in paragraph (c) apply. Once so designated, the Subsidiary will remain an Unrestricted Subsidiary, subject to paragraph (b).

(b) (i) A Subsidiary previously designated an Unrestricted Subsidiary which fails to meet the qualifications set forth in paragraph (a) above will be deemed to become at that time a Restricted Subsidiary, subject to the consequences set forth in paragraph (d).

(ii) The Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary if the designation would not cause a Default

(c) Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary:

(i) all existing investments of the Company and the Restricted Subsidiaries therein valued at the Company’s proportional share of the fair market value of its assets less liabilities will be deemed made at that time;

(ii) all existing Indebtedness of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time, and all Liens on property of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time,

(iii) all existing transactions between it and the Company or any Restricted Subsidiary will be deemed entered into at that time; and

(iv) it will cease to be subject to the provisions of this Indenture and the Notes as a Restricted Subsidiary.

(d) Upon an Unrestricted Subsidiary becoming, or being deemed to become, a Restricted Subsidiary:

(i) all of its Indebtedness and Disqualified Stock will be deemed incurred at that time for purposes of Section 9.4 (Limitations on Indebtedness);

(ii) Investments therein previously charged under Section 9.8 (Limitation on Restricted Payments), as adjusted to reflect any change in the Company’s proportional share of the fair market value of its assets less liabilities, will be credited thereunder; and

(iii) it will thenceforward be subject to the provisions of this Indenture and the Notes as a Restricted Subsidiary.

Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary shall, unless so noted by the Company, be deemed to include the designation of all of the Subsidiaries of such Subsidiary. Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Trustee by delivering to the Trustee a copy of the resolutions of the Board of Directors giving effect to the designation and an Officers’ Certificate certifying that the designation complied with the foregoing provisions, not later than the next succeeding delivery of financial statements as required under Section 9.9 (Delivery of Financial Statements).

9.18 Limitation of Applicability of Certain Covenants

Notwithstanding the foregoing, the obligations of the Company and its Restricted Subsidiaries to comply with the covenants described above under the captions Sections 9.1 (Mandatory Prepayment With Excess Cash), 9.4

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(Limitations on Indebtedness), 9.5 (Limitations on Asset Sales), 9.7 (Limitation on Capital Expenditures) and 9.8 (Limitation on Restricted Payments) (collectively, the Suspended Covenants) will be suspended and cease to have any further effect during the period (the Suspended Period) from and after the first date that either (a) the Company attains from at least one of the Rating Agencies, a rating on its long-term debt denominated in currencies other than pesos that is Investment Grade or (b) the Leverage Ratio (as certified by the Company’s auditors) is equal to or lower than 2.5 and until, as applicable, the date (the Reversion Date) on which either (i) none of the Rating Agencies provide the Company’s non-peso denominated long-term debt an Investment Grade rating or (ii) the Leverage Ratio is greater than 2.5. On the Reversion Date, the Company and its Restricted Subsidiaries’ obligation to comply with the Suspended Covenants shall be reinstated; provided, however, that the Suspended Covenants will not be of any effect with regard to actions of the Company or its Restricted Subsidiaries taken during the Suspension Period, and no Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period.

On the Reversion Date, all Indebtedness incurred while the Suspended Covenants were suspended will be classified to have been incurred pursuant to one of the paragraphs set forth in Section 9.4 (Limitations on Indebtedness) (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reversion Date and after giving effect to Indebtedness outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be incurred pursuant to Section 9.4 (Limitations on Indebtedness) such Indebtedness will be deemed to have been outstanding on the Issuance Date, so that it is classified as permitted under paragraph (a) of Section 9.4 (Limitation on Indebtedness).

9.19 Limitations on Mergers, Consolidations, Sales and Conveyances

The Company will not enter into any merger, consolidation, spin-off or reorganization with any Person (whether or not the Company is the surviving or continuing Person) or sell, assign, transfer or otherwise convey or dispose of all or substantially all of its and its Restricted Subsidiaries’ assets, taken as a whole, whether by one transaction or a series of transactions, to any Person unless:

(a) the surviving or transferee Person (if not the Company) is a sociedad anónima organized under the laws of Argentina;

(b) the surviving or transferee Person (if not the Company) shall have expressly assumed, by a document executed and delivered to the Trustee in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes and this Indenture;

(c) immediately after giving effect to such transaction or series of transactions on a pro forma basis, (A) no Default or Event of Default shall have occurred and be continuing, and (B) the Leverage Ratio of the Company or such surviving entity will be equal to or lower than the Leverage Ratio of the Company immediately prior to such transaction, as certified by the Company’s auditors;

(d) the rating of the Notes by any Rating Agency shall not have been downgraded as a result of such transaction or series of transactions within sixty (60) days of the public announcement of such transaction or series of transactions; and

(e) the surviving or transferee Person shall have delivered to the Trustee an Officers’ Certificate stating that such merger, consolidation, sale, assignment, transfer or other conveyance or disposition complies with this covenant and this Indenture.

Upon the occurrence of any of the transactions permitted by the preceding paragraph, the surviving or transferee Person (if not the Company) will succeed to and become substituted for the Company, and may exercise every right and power of the Company, with the same effect as if it had been named in the Notes and this Indenture. Following such transaction, the Company will be released from its liability as obligor on the Notes and under this Indenture.

In the event of any such sale, assignment, transfer, conveyance or disposition, the Company, as the predecessor entity, may be dissolved, wound-up or liquidated at any time thereafter.

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9.20 Payment of Additional Amounts

Except as provided in the paragraph below, each payment by the Company in respect of the Notes shall, except as required by law, be made without withholding or deduction for or on account of any Taxes imposed by Argentina or any political subdivision or taxing authority thereof or therein (Argentine Taxes). If any Argentine Taxes are required to be withheld or deducted from any such payment, the Company shall pay such additional amounts (Additional Amounts) as may be necessary to ensure that the net amount actually received by the Holder after such withholding or deduction is equal to the amount that the Holder would have received had no withholding or deduction been required, provided, however that no such Additional Amounts shall be payable in respect of:

(a) any Taxes that would not have been so imposed but for the presentation by the Holder of any such Note for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;

(b) any Taxes imposed by reason of the Holder’s failure to comply with the provisions under Section 3.12 (Information From Holders of Notes);

(c) any Taxes imposed on a Holder by reason of any connection between the Holder and the taxing jurisdiction other than the mere acquisition, holding or disposition of such Notes, or the receipt of principal or interest in respect thereof;

(d) any estate, inheritance, gift, sales, transfer, personal property tax or any similar tax, assessment or governmental charge;

(e) any Taxes that are payable otherwise than by withholding or deduction from payments on or in respect of the Notes; or

(f) the Personal Assets Tax under Argentine tax law, if the Company is compelled by law to make any withholding or deduction for or on account of, or is obligated to act as “substitute obligor” for, such tax.

In no event, shall the Company pay Additional Amounts with respect to any payment under any Notes to any Holder thereof, to the extent any such Tax is required to be deducted, withheld or otherwise imposed, above the amount resulting from the grossed-up deduction or withholding that would be imposed on a Person set forth in Section 93(c)(1) of the Argentine Income Tax Law or any amendment to such section in effect at the time of such payment.

The Company will also make such withholding or deduction compelled by applicable law and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.

The Company will furnish to the Trustee, within 60 days after the date of receipt of written request from the Holders of the Notes through the Trustee, copies of such receipts evidencing the payment of any Taxes so deducted or withheld in such form as provided in the normal course by the taxing authority imposing such Taxes and as is reasonably available to the Company to the Trustee. The Trustee will make such evidence available to the Holders of Notes upon request.

The Company covenants that if the Company or the Trustee or any Paying Agent is required by law to make any deduction or withholding on payments of principal of or interest on the Notes for or on account of any Argentine tax, duty, assessment or other governmental charge, the Company shall, at least 10 Business Days prior to the first payment on which such deduction or withholding is applicable, (and at least 10 Business Days prior to each succeeding payment date or any redemption date or maturity date if there has been any change with respect to the matters set forth in the below-mentioned Officer’s Certificate) deliver to the Trustee (with a copy to any other Paying Agent) an Officer’s Certificate specifying the amount so required to be deducted or withheld and certifying that the Company shall pay such deduction or withholding.

The Company hereby covenants to indemnify the Trustee (and each other Paying Agent) for, and to hold the Trustee harmless against any loss, liability or expense incurred without negligence or bad faith on the Trustee’s part arising

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out of actions taken or omitted by any of them in reliance on any Officer’s Certificate furnished pursuant to this Section 9.20 or the failure of the Trustee to receive on a timely basis such Officer’s Certificate or any information or documentation requested by it or otherwise required by applicable laws or regulations to be obtained, furnished or filed in respect of any tax, duty, assessment or other governmental charge pursuant to the foregoing provisions of this Section 9.20.

The indemnification obligations of the Company under this Section 9.20 shall survive the payment of the Notes, the termination of this Indenture and the resignation or removal of the Trustee.

The Company will pay any present or future stamp, or documentary taxes, that arise in Argentina from the execution, delivery or registration of the Notes or any other document or instrument referred to in the Notes.

If any Holder of Notes does not timely provide all or part of the information, documents or evidence that may be required by the Company from time to time under Section 3.12 (Information From Holders of Notes), the Company will not pay any Additional Amounts and will withhold or deduct the maximum amount that may be required by Argentine law in the absence of such information, documents or evidence. The Company will inform the Trustee in writing if the Company will not be obligated to pay any Additional Amounts in respect of any Holder pursuant to this paragraph.

9.21 Money for Note Payments to be Held in Trust

If the Company shall at any time act as its own Paying Agent, it will, on or before each payment date of the principal of (and premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled to such payment a sum sufficient to pay the principal (and premium, if any) or interest due until such sums shall he paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act

Whenever the Company shall have one or more Paying Agents, it will, prior to each payment date of the principal of (and premium, if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. Principal and interest shall be considered paid on the date due if on such date the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds in accordance with this Indenture U.S. Dollars designated for and sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

The Company will cause each Paying Agent, other than the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 9.21, that such Paying Agent will:

(a) hold all sums held by it for the payment of the principal of (and premium, if any) or interest, or any other amounts due on Notes, in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(b) give the Trustee notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal (and premium, if any) or interest or any other amounts due on the Notes; and

(c) at any time during the continuance of any such default, upon the written request of the Trustee, immediately pay to the Trustee all sums so held in trust by such Paying Agent.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same term as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

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Any money deposited with the Trustee or any Paying Agent, or held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Note which remains unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the city of Buenos Aires, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

9.22 Ranking of Notes

The Company will ensure that its obligations under the Notes will at all times constitute direct, unconditional and unsubordinated obligations of the Company ranking at least pari passu in priority of payment, in right of security upon liquidation and in all other respects among themselves and with all other unsecured indebtedness of the Company now or hereafter outstanding, except to the extent that such other indebtedness may be preferred by mandatory provisions of applicable law or subordinated by its terms.

ARTICLE 10. REDEMPTION OF NOTES

10.1 Applicability of Article

Redemption of Notes, at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article 10.

10.2 Redemption at the Company’s Option

(a) The Company may redeem at any time and from time to time, any Fixed Rate Par Notes or Floating Rate Par Notes, in whole or in part, at its option, without payment of any premium or penalty, at a redemption price equal to 100% of the outstanding principal amount thereof (adjusted to take into account any prepayments or repurchases), together with accrued interest and Additional Amounts, if any, to the date on which the redemption is made (a Par Optional Redemption). Notice of redemption will be given as described under Section 1.7 (Notice to Holders) below not less than five Business Days prior to the date fixed for redemption with notice to the Trustee to be given 45 days prior to the date fixed for redemption.

(b) The Company may redeem, at any time and from time to time, any Discount Notes, in whole or in part, at its option, without payment of any penalty at a redemption price equal to the following redemption prices (expressed as percentages of the outstanding principal amount thereof (adjusted to take into account any prepayments or repurchases)):

At the end of year 1: 104.85% At the end of year 2: 110.73% At the end of year 3: 110.77% At the end of year 4: 110.10% At the end of year 5: 108.33% At the end of year 6: 106.34% At the end of year 7: 104.24% At the end of year 8: 101.94%

together with accrued interest and Additional Amounts, if any, to the date on which the redemption is made (a Discount Optional Redemption, and together with a Par Optional Redemption, an Optional Redemption).

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(c) Subject to the foregoing, in the case of any Optional Redemption of less than all of any Series of Notes, Notes of such Series will be redeemed on a pro rata basis, or will be selected for redemption by the Trustee in compliance with the requirements of the principal securities exchange, if any, on which such Notes are listed, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate. If any Series of Notes is to be redeemed only in part, the notice of redemption relating to Notes of such Series shall state the portion of the principal amount thereof to be redeemed. Notes in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Notes. Interest, if any, will cease to accrue on the Notes or portions thereof called for redemption on the later of the redemption date or the date on which the relevant redemption price is effectively paid to Holders of Notes or portions thereof called.

10.3 Repurchase at the Option of Holders Upon a Change of Control

If a Change of Control occurs, each Holder of the Notes will have the right to require the Company to repurchase all or any part (equal to U.S. $1.00 or an integral multiple of U.S. $1.00) of that Holder’s Notes pursuant to an offer (the Change of Control Offer) made by the Company on the terms set forth in this Indenture. In the Change of Control Offer, the Company will offer to purchase such Holder’s Notes at a purchase price in cash equal to 100% of the aggregate principal amount of such Notes to be repurchased plus accrued and unpaid interest and Additional Amounts, if any, on such Notes to be repurchased to the date of purchase, subject to the rights of Holders of such Notes on the relevant record date to receive interest due on the relevant interest payment date (the Change of Control Payment). Within 30 days following a Change of Control, the Company will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase the applicable Notes on a date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the Change of Control Payment Date), pursuant to the procedures required by this Indenture and described in such Change of Control Offer Notice. To the extent that the provisions of any securities laws or regulations to be issued in the future conflict with the Change of Control provisions of this Indenture, the Company will make the Change of Control Offer in accordance with the applicable provisions of the securities laws and regulations (and the terms set forth herein that do not conflict with such provisions) and will not be deemed to have breached its obligations under the Change of Control provisions of this Indenture by virtue of such compliance.

On the Change of Control Payment Date, the Company will, to the extent lawful:

(a) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(b) deposit with the Trustee an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(c) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

The Trustee will promptly deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to this Indenture as described under Section 10.2 (Redemption at the Company’s Option), unless and until there is a default in payment of the applicable redemption price.

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10.4 Market Purchases

The Company may at any time and from time to time purchase Notes pursuant to Market Purchases. Any Notes purchased by the Company pursuant to this Indenture shall be surrendered within 10 days of purchase to the Trustee for cancellation.

10.5 Selection by Trustee of Notes to be Redeemed

If less than all of the Notes are to be redeemed at any time, the Trustee will select the particular Notes or portions (equal to U.S. $1,000 or any integral multiple thereof) as follows:

(a) if the Notes are listed on one or more securities exchanges, in compliance with the requirements, if any, of the principal securities exchange on which the Notes are listed (as set forth in an Officers’ Certificate delivered by the Company to the Trustee); or

(b) if the Notes are not so listed or if such requirements are not so certified, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate.

The Trustee shall promptly notify the Company and each Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed.

10.6 Notice of Redemption

Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at his address appearing in the Note Register. In addition, the Company shall, at least 30 and not more than 60 days before the Redemption Date, cause notice of such redemption to be published in the Daily Bulletin of the Buenos Aires Stock Exchange and a leading newspaper having a general circulation in Argentina (expected to be La Nación) and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, a newspaper having a general circulation in Luxembourg (expected to be the d’Wort), with a copy to the Trustee. Notices of redemption may not be conditional.

All notices of redemption shall identify the Note and state:

(a) the Redemption Date;

(b) the Redemption Price;

(c) a brief statement setting forth the Company’s right to effect such redemption and, if any conditions to such redemption apply, the Company’s basis therefor;

(d) if less than all the Notes then Outstanding are to be redeemed, the identification (and, in the case of partial redemption of any Notes, the principal amounts) of the particular Notes to be redeemed;

(e) that on the Redemption Date the Redemption Price will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and after said date; and

(f) unless all of the Notes are Global Notes, the place or places where such Notes are to be surrendered for payment of the Redemption Price.

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Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.

10.7 Deposit of Redemption Price

On or before 12:00 noon, New York time, at least one Business Day prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.20 (Payment of Additional Amounts)) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on and any Additional Amounts, all the Notes which are to be redeemed on that date.

10.8 Notes Payable on Redemption Date

Notice of redemption having been given as aforesaid, the New Debt so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price together with accrued interests and Additional Amounts, if any therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price, accrued interest and any Additional Amounts) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date and any Additional Amounts; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes or one or more Predecessor Notes, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.6 (Payment of Interest; Interest Rights Preserved) and to Lenders, if applicable.

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Note.

10.9 Notes Redeemed in Part

Any Note that is not a Global Note and that is to be redeemed only in part shall be surrendered at an office or agency of the Company (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. If any Global Note is to be redeemed in part, the Paying Agent shall forward such Global Note to the Trustee who shall make a notation on Schedule A thereof to reduce the principal amount at maturity of such Global Note by an amount equal to the redeemed portion of the Global Note, provided that the Global Note shall be in an authorized denomination.

10.10 Redemptions and Purchases of the Notes

In this Indenture and the Notes, the Company’s obligations to prepay or repurchase the Notes shall be construed to give effect to the Company’s concurrent obligation to purchase or prepay the Notes and all other outstanding Notes of the Series to which the Notes relate, on a pro rata basis..

ARTICLE 11. DEFEASANCE AND COVENANT DEFEASANCE

11.1 Company’s Option to Effect Defeasance or Covenant Defeasance

The Company may at its option by Board Resolution, at any time, elect to have either Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) applied to the Notes then Outstanding upon compliance with the conditions set forth below in this Article 11.

85

11.2 Defeasance and Discharge

Upon the Company’s exercise of the option provided in Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) applicable to this Section 11.2, the Company shall be deemed to have been discharged from its obligations with respect to any Series of Notes then Outstanding on the date the conditions set forth below are satisfied with respect to such Series of Notes (hereinafter, “defeasance”). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Series of Notes then Outstanding and to have satisfied all its other obligations under such Series of Notes and this Indenture insofar as such Series of Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders of such Series of Notes to receive, solely from the trust fund described in Section 11.4 (Conditions to Defeasance or Covenant Defeasance) and as more fully set forth in such Section 11.4 (Conditions to Defeasance or Covenant Defeasance), payments in respect of the principal of (and premium, if any) and interest and Additional Amounts, if any, on such Series of Notes when such payments are due;

(b) the Company’s obligations with respect to such Series of Notes under Sections 3.4 (Registration, Registration of Transfer and Exchange Generally), 3.5 (Mutilated, Destroyed, Lost and Stolen Notes), 3.6 (Payment of Interest; Interest Rights Preserved);

(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and

(d) this Article 11.

Subject to compliance with this Article 11, the Company may pursuant to Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) elect to have this Section 11.2 applied to the Notes then Outstanding notwithstanding its prior election pursuant to Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) to have Section 11.3 (Covenant Defeasance) applied to the Notes then Outstanding.

11.3 Covenant Defeasance

Upon the Company’s exercise of the option provided in Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) applicable to this Section.

(a) the Company shall be released from its obligations under Article 9 (Covenants); and

(b) the occurrence of an event specified in Section 5.1(d) (Events of Default) (with respect to Article 9) shall not be deemed to be an Event of Default on and after the date the conditions set forth below are satisfied (hereinafter, “covenant defeasance”).

For this purpose, such covenant defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such section or clause, whether directly or indirectly by reason of any reference elsewhere herein to any such section or clause or by reason of any reference in any such section or clause to any other provision herein or in any other document, but the remainder of this Indenture and such Notes shall be unaffected thereby.

11.4 Conditions to Defeasance or Covenant Defeasance

The following shall be the conditions to application of either Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) to the Notes:

(a) The Company shall irrevocably have deposited or caused to be deposited with the Trustee funds in trust, for the benefit of Holders of the respective Series of Notes, cash in dollars or U.S. Government Obligations, or a combination thereof, sufficient, in the opinion of a recognized firm of independent certified public

86

accountants, to pay and discharge the principal of and each installment of interest (and Additional Amounts) on such Notes on the stated maturity of such principal or installment of Interest in accordance with the terms of this Indenture and of such Series of Notes;

(b) in the case of defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling or (ii) since the date of this Indenture there has been a change in the applicable United States federal income tax law, in either case to the effect that the Holders of the respective outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to United States federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;

(c) in the case of covenant defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the respective outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to United States federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and or covenant defeasance had not occurred;

(d) no Event of Default or event which with the giving of notice, lapse of time or satisfaction or any other condition or any combination of the foregoing would become an Event of Default shall have occurred and be continuing on the date of such deposit or will occur as a result of such deposit or, insofar as Events of Defaults resulting from bankruptcy or insolvency events are concerned, at any time during the period ending on the 121st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period);

(e) such defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in this Indenture and for purposes of the Trust Indenture Act with respect to any securities of the Company;

(f) such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound;

(g) the Company shall have delivered to the Trustee an Officers’ Certificate stating that all conditions precedent provided for relating to either defeasance or covenant defeasance, as the case may be, have been complied with and no violations under instruments or agreements governing any other outstanding Indebtedness of the Company would result as a consequence of such defeasance or covenant defeasance, as the case may be;

(h) the Company has delivered to the Trustee, subject to certain exceptions set forth in this Indenture, an opinion of its Argentine counsel to the effect that after two years following the deposit, the trust funds deposited in accordance with Argentine law No. 24,441 will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally under the laws of Argentina; and

(i) the Company shall have paid or duly provided for payment of all amounts then due to the Trustee pursuant to the terms of this Indenture.

11.5 Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous Provisions

Subject to the provisions of the last paragraph of Section 10.2 (Redemption at the Company’s Option), all Dollars and Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (collectively, for purposes of this Section 11.5, the Trustee) pursuant to Section 11.4 (Conditions to Defeasance or Covenant Defeasance) in respect of the Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes, of all sums due and to become due thereon in respect of

87

principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Dollars or the Government Obligations deposited with the Trustee pursuant to Section 11.4 (Conditions to Defeasance or Covenant Defeasance) or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Notes.

Anything in this Article 11 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any Dollars or Government Obligations held by it as provided in Section 11.4 (Conditions to Defeasance or Covenant Defeasance) which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance.

11.6 Reinstatement

If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 11 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance); provided, however, that if the Company makes any payment of principal of (and premium, if any) or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or the Paying Agent.

ARTICLE 12. MISCELLANEOUS PROVISIONS

12.1 No Liability of Directors, Officers, Employees, Incorporators, Members, and Stockholders

No director, officer, employee, member of the Statutory Audit Committee, incorporator, member or stockholder of the Company will have any liability for any obligations of the Company under the Notes or this Indenture, or for any claim based on, in respect of, or by reason of, such obligations. Each holder of the Notes by accepting such Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws of the United States and it is the view of the SEC that such a waiver is against public policy. In addition, the waiver may not be effective to waive liabilities for any damage caused to Holders in violation of the Negotiable Obligations Law.

12.2 Tax Treatment.

The Company agrees, and by acceptance of a beneficial ownership interest in the Notes each Holder and each beneficial owner of the Notes will be deemed to have agreed, for United States federal income tax purposes (1) to treat the Notes as indebtedness that is subject to Treasury Regulations section 1.1275-4 (the Contingent Debt Regulations), (2) with respect to the Notes, to accrue interest with respect to the Notes as original issue discount on a constant yield basis and (3) with respect to the Notes, to be bound by the “comparable yield” and the “projected payment schedule” within the meaning of the Contingent Debt Regulations, as determined by the Company. A Holder or beneficial owner may obtain the issue price, amount of original issue discount, issue date, yield to maturity, and, as applicable, the comparable yield and projected payment schedule for the Notes by submitting a written request for such information to the Company at the following address: Azopardo 1025, City of Buenos Aires (C1107ADQ), Argentina, Attention: Chief Financial Officer.

Edenor Indenture

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. By: /s/ Rogelio Pagano

Rogelio Pagano Title: Director de Finanzas y Control THE BANK OF NEW YORK, as Trustee By: /s/ Patricia Phillips-Coward

Patricia Phillips-Coward Title: Assistant Vice President BANCO RÍO DE LA PLATA S.A., as representative of the Trustee in Argentina By: /s/ Claudio A. Cesario

Claudio A. Cesario Title: Gerente Principal By: /s/ Nicolas Del Campo

Nicolas Del Campo Title: Gerente Departamental

Schedule A-1

SCHEDULE A

[See Attached]

Exhibit A-1

EXHIBIT A

[Form of Face of Note]

[RESTRICTED / REGULATION S] [FIXED RATE PAR / FLOATING RATE PAR / DISCOUNT] NOTE

Empresa Distribuidora y Comercializadora Norte S.A.

(incorporated in the City of Buenos Aires, Argentina, with Limited Liability (sociedad anónima) under the laws of the Republic of Argentina on July 21, 1992, for a term of duration of 95 years, and registered with the Public Registry of Commerce on August 3, 1992 under No. 7,041, Book 111, Volume A of Sociedades Anónimas and with principal offices at Azopardo 1025, City of Buenos Aires, Argentina)

Cusip No. [ ] ISIN No. [ ] No. [ ] U.S. $[ ]

Series: [Fixed Rate Par] [Floating Rate Par] [Discount] Note for an aggregate principal amount of U.S. $ (the Notes)

[Legend if the Note is a Restricted Note:


[Legend if the Note is a Global Note:


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGESTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS

Exhibit A-2

MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]

[Legend if the Note is a Certificated Note:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.]

Empresa Distribuidora y Comercializadora Norte S.A., a sociedad anónima duly organized and existing under the laws of Argentina (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or to its registered assigns, the principal sum of U.S. $[ ] or such lesser amount as shall remain Outstanding after giving effect to any scheduled payment of principal or any cancellation, redemption or prepayment of this Note in accordance with the Indenture, and to pay interest thereon from [ ] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 14 and December 14 in each year, at the [Fixed Rate Par Notes] [Floating Rate Par Notes] [Discount Notes] Interest Rate (as defined below), until the principal hereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 2% per annum plus the applicable [Fixed Rate Par Notes] [LIBOR plus the Floating Rate Par Notes] [Discount Notes] Interest Rate on any overdue principal and premium and on any overdue installment of interest until paid. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Record Date for such interest, which shall be the May 30 or November 30 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Payments of principal will be due and payable in semiannual installments on June 14 and December 14 of each year in accordance with the amortization schedule set forth below:

Exhibit A-3

[If Note is a Fixed Rate Par Note, insert the following table:


Fixed Rate Par Annual Scheduled

Amortization*

June 14, 2006 0.00% December 14, 2006 0.00% June 14, 2007 0.00% December 14, 2007 0.00% June 14, 2008 0.00% December 14, 2008 0.00% June 14, 2009 0.00% December 14, 2009 0.00% June 14, 2010 0.00% December 14, 2010 0.00% June 14, 2011 5.00% December 14, 2011 5.00% June 14, 2012 5.00% December 14, 2012 5.00% June 14, 2013 5.00% December 14, 2013 5.00% June 14, 2014 5.00% December 14, 2014 5.00% June 14, 2015 5.00% December 14, 2015 5.00% June 14, 2016 25.00% December 14, 2016 25.00%

(*) Annual Scheduled Amortization based at all times on the original principal amount of the Fixed Rate Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with the Indenture.]

Exhibit A-4

[If Note is a Floating Rate Par Note, insert the following table:


Floating Rate Par Annual Scheduled

Amortization*


(*) Annual Scheduled Amortization based at all times on the original principal amount of the Floating Rate Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with the Indenture.]

Exhibit A-5

[If Notes are Discount Notes, insert the following table:


Discount Rate Annual Scheduled

Amortization*

June 14, 2006 0.00% December 14, 2006 0.00% June 14, 2007 0.00% December 14, 2007 0.00% June 14, 2008 2.50% December 14, 2008 2.50% June 14, 2009 2.50% December 14, 2009 2.50% June 14, 2010 2.50% December 14, 2010 2.50% June 14, 2011 2.50% December 14, 2011 2.50% June 14, 2012 5.00% December 14, 2012 5.00% June 14, 2013 5.00% December 14, 2013 5.00% June 14, 2014 30.00% December 14, 2014 30.00%

(*) Annual Scheduled Amortization based at all times on the original principal amount of the Discount Notes and is subject to adjustments to reflect Debt Prepayments made in accordance with the Indenture.]

Interest on the Notes shall be computed based on a 360-day year of twelve 30-day months. The [Fixed Rate Par Notes] [Floating Rate Par Notes] [Discount Notes] Interest Rate means, for any interest period ending on an Interest Payment Date, the rate set forth below opposite the year in which such Interest Payment Date occurs:

Exhibit A-6

[If Note is a Fixed Rate Par Note, insert the following table:

Interest Payment Date Fixed Rate Par Applicable

Annual Interest Rate June 14, 2006 3.0% December 14, 2006 3.0% June 14, 2007 4.0% December 14, 2007 4.0% June 14, 2008 5.0% December 14, 2008 5.0% June 14, 2009 6.0% December 14, 2009 6.0% June 14, 2010 8.0% December 14, 2010 8.0% June 14, 2011 9.0% December 14, 2011 9.0% June 14, 2012 9.50% December 14, 2012 9.50% June 14, 2013 10.00% December 14, 2013 10.00% June 14, 2014 10.0% December 14, 2014 10.0% June 14, 2015 10.0% December 14, 2015 10.0% June 14, 2016 10.0% December 14, 2016 10.0%

Exhibit A-7

[If Note is a Floating Rate Par Note, insert the following table:

Interest Payment Date Floating Rate

Annual Spread


Exhibit A-8

[If Notes are Discount Notes, insert the following table:

Interest Payment Date Discount Notes Interest Rate

June 14, 2006 3.0%

December 14, 2006 3.0% June 14, 2007 3.5%

December 14, 2007 3.5% June 14, 2008 10.0% December 14, 2008 10.0% June 14, 2009 11.0% December 14, 2009 11.0% June 14, 2010 12.0% December 14, 2010 12.0% June 14, 2011 12.0% December 14, 2011 12.0% June 14, 2012 12.0% December 14, 2012 12.0% June 14, 2013 12.0% December 14, 2013 12.0% June 14, 2014 12.0% December 14, 2014 12.0%

Payments in respect of this Note will be made by wire transfer of immediately available funds to the accounts specified by the Holder of this Note, or, if no account is specified, by mailing a check to each Holder’s address in the Registrar. All such payments are subject to the provisions in Section 1.15 (Legal Holidays) of the Indenture relating to legal holidays.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated: [ ], 2006

By: Name: Title: Member of the Board of Directors

By: Name: Title: Member of the Statutory Audit Committee

Exhibit A-9

CERTIFICATE OF AUTHENTICATION

This note is one of the Notes of the Series designated herein and referred to in the within-mentioned Indenture.

The Bank of New York, AS TRUSTEE

By: (Authorized Signatory Name)

Name: Title:

Exhibit A-10

[If Note is a Global Note, insert the following:

SCHEDULE A

SCHEDULE OF PRINCIPAL AMOUNT

The initial principal amount at maturity of this Note shall be U.S. $[ ]. The following decreases/increases in the principal amount at maturity of this Note have been made:

Date of Decrease/Increase

Decrease in Principal Amount at Maturity

Increase in Principal Amount at Maturity

Total Principal Amount at Maturity

Following such Decrease/Increase

Notation Made by or on Behalf of Trustee

]

Exhibit B-1

EXHIBIT B

[Form of Reverse of Note]

Reverse of Note

1. This Note is a negotiable obligation under Argentine Law No. 23,576, as amended (the Negotiable Obligations Law). This Note is one of a duly authorized issue of Notes of the Company designated as its [Fixed Rate Par Notes] [Floating Rate Par Notes] [Discount Notes] (herein called the Notes) issued and to be issued under an Indenture, dated as of [ ], 2006 (herein called the Indenture), between the Company, The Bank of New York, as Trustee (herein called the Trustee, which term includes any successor trustee under the Indenture) and Banco Río de la Plata, S.A. (as representative of the Trustee in Argentina, Registrar, Transfer and Paying Agent and herein called the Paying Agent, which term includes any successor paying agent under the Indenture) to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. References to Sections herein are references to Sections of the Indenture.

2. In accordance with Section 10.2 (Redemption at the Company’s Option) of the Indenture, at any time from time to time, the Company may, at its option, without payment of any premium or penalty, make an offer to redeem [For Fixed Rate Par Notes and Floating Rate Par Notes: any [Fixed Rate Par Notes] [Floating Rate Par Notes] then Outstanding at a redemption price equal to 100% of the outstanding principal amount thereof (adjusted to take into account any prepayments or repurchases) plus accrued but unpaid interest and Additional Amounts, if any, to the date on which the redemption is made] [For Discount Notes: any Discount Notes then Outstanding at a redemption price equal to the following redemption prices (expressed as percentages of the outstanding principal amount thereof (adjusted to take into account any prepayments or repurchases) plus accrued but unpaid interest and Additional Amounts, if any, to the date on which the redemption is made:

At the end of year 1: 104.85% At the end of year 2: 110.73% At the end of year 3: 110.77% At the end of year 4: 110.10% At the end of year 5: 108.33% At the end of year 6: 106.34% At the end of year 7: 104.24% At the end of year 8: 101.94%

3. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

4. In accordance with Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control) of the Indenture, if a Change of Control occurs, each Holder of the Notes will have the right to require the Company to repurchase all or any part (equal to U.S. $1.00 or an integral multiple of U.S. $1.00) of that Holder’s Notes pursuant to an offer (the Change of Control Offer) made by the Company on the terms set forth in the Indenture. In the Change of Control Offer, the Company will offer to purchase such Holder’s Notes at a purchase price in cash equal to 100% of the aggregate principal amount of such Notes to be repurchased plus accrued and unpaid interest and Additional Amounts, if any, on such Notes to be repurchased to the date of purchase, subject to the rights of Holders of such Notes on the relevant record date to receive interest due on the relevant interest payment date (the Change of Control Payment). Within 30 days following a Change of Control, the Company will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase the applicable Notes on a date specified in the notice, which date will be no earlier than 30 days and no later

Exhibit B-2

than 60 days from the date such notice is mailed (the Change of Control Payment Date), pursuant to the procedures required by the Indenture and described in such Change of Control Offer Notice. To the extent that the provisions of any securities laws or regulations to be issued in the future conflict with the Change of Control provisions of the Indenture, the Company will make the Change of Control Offer in accordance with the applicable provisions of the securities laws and regulations (and the terms set forth herein that do not conflict with such provisions) and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.





5. The Trustee will promptly deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

6. The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the Indenture as described under Section 10.2 (Redemption at the Company’s Option) of the Indenture, unless and until there is a default in payment of the applicable redemption price.

7. The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness of this Note or (ii) certain covenants and Events of Default with respect to this Note, in each case upon compliance with certain conditions set forth therein.

8. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of all Series of Notes or the Notes of any affected Series, as the case may be, then Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

9. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

Exhibit B-3

10. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office of the Registrar, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes executed by the Company and authenticated and delivered by the Trustee, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

11. The Notes are issuable only in registered form without coupons in denominations of U.S. $1.00 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same.

12. No service charge shall be made for any registration of transfer or exchange of Notes, but the Company, the Trustee or the Paying Agent may require (i) payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 3.3 (Execution, Authentication, Delivery and Dating), 3.4 (Registration, Registration of Transfer and Exchange Generally), 8.5 (Conformity with Trust Indenture Act and the Negotiable Obligations Law) or 10.10 (Redemptions and Purchases of Notes) of the Indenture not involving any transfer and (ii) appropriate endorsements and transfer documents.

13. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered in the Notes Register as the owner of this Note for the purpose of receiving payment of principal of (and premium, if any) and, subject to Section 3.4 (Registration, Registration of Transfer and Exchange Generally) of the Indenture, interest on such Note and for all other purposes whatsoever, whether or not this Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

14. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

15. THE NEGOTIABLE OBLIGATIONS LAW GOVERNS THE LEGAL REQUIREMENTS FOR THIS NOTE TO QUALIFY AS AN “OBLIGACIÓN NEGOCIABLE” THEREUNDER WHILE SUCH LAW, TOGETHER WITH ARGENTINE LAW NO. 19,550, AS AMENDED AND OTHER ARGENTINE LAWS AND REGULATIONS, GOVERN THE CAPACITY AND CORPORATE AUTHORIZATION OF THE COMPANY TO EXECUTE AND DELIVER THIS NOTE AND THE INDENTURE AND THE AUTHORIZATION OF THE CNV FOR THE PUBLIC OFFERING OF THIS NOTE IN ARGENTINA. AS TO ALL OTHER MATTERS, THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

16. Each of the following events with respect to any series of Notes shall be an event of default (Events of Default) in connection with such series of Notes:

(a) default in the payment of any principal, interest or Additional Amounts, if applicable, of any of the Notes of such Series when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for five calendar days; provided, however, that any failure to make any principal payment under circumstances provided for, and in compliance with, Section 5.16 (Adverse Event) of the Indenture shall not constitute an Event of Default; or

(b) any failure to comply with the provisions of Section 9.19 (Limitations on Mergers, Consolidations, Sales and Conveyances) of the Indenture; or

Exhibit B-4

(c) any failure on the part of the Company to duly observe or perform any of the covenants or agreements of the Company under the Indenture (other than those referred to in (a) and (b) above) for a period of more than 30 calendar days after the date on which written notice thereof requiring the Company to remedy the same shall have been given to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount Outstanding of the relevant Series of Notes; or

(d) there occurs with respect to any Indebtedness (including any other Series of Notes but excluding any Outstanding Debt) of the Company or its Restricted Subsidiaries having a principal amount of U.S. $30 million (or its equivalent in other currencies) or more in the aggregate for all such Indebtedness of all such Persons (i) an event of default that results in the acceleration of the maturity of such Indebtedness or (ii) failure to make a principal payment when due and such defaulted payment is not made, waived or extended within the applicable grace period; or

(e) there shall have been a revocation, cancellation, termination or suspension for more than twenty (20) consecutive days of the Concession Agreement; or

(f) there shall have been entered against the Company or any of its Restricted Subsidiaries a final judgment, decree or order by a court of competent jurisdiction from which no appeal may be taken or, within the applicable period to appeal, is taken for the payment of money, or the forfeiture of property with an aggregate value in excess of U.S. $30 million (or its equivalent in other currencies) and 60 calendar days shall have passed since the entry of the order without it being satisfied, discharged or stayed (a Judgment), provided that this clause (f) shall not apply to any Judgment relating to Outstanding Debt; or

(g) a distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is levied, enforced or sued out on or against any part of the property, assets or revenues of the Company or any of its Restricted Subsidiaries, which, if executed or consummated, would have a material adverse effect on the Company’s ability to make scheduled principal and interest payments on the Notes, unless (a) such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is discharged or stayed within 90 days of notice to the Company or such Restricted Subsidiary, as the case may be, or (b) if such distress, attachment, execution, seizure before judgment or legal or extrajudicial process shall not have been discharged or stayed within such 90-day period, the Company or such Restricted Subsidiary, as the case may be, shall have contested in good faith by appropriate proceedings such distress, attachment, execution, seizure before judgment or legal process; provided that if such distress, attachment, execution, seizure before judgment or legal process shall not have been discharged or stayed within 365 days of notice to the Company or such Restricted Subsidiary, as the case may be, the Company or such Restricted Subsidiary shall have posted a bond or other appropriate collateral which shall have substituted such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process within such time period;

(h) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary shall, after the Issuance Date:



(iii) (A) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors pursuant to a “concurso preventivo de acreedores,” (B) other than in connection with the Restructuring, seek approval of

Exhibit B-5

its creditors for an “acuerdo preventivo extrajudicial” through any means, including the distribution of an offering circular or similar disclosure materials to creditors in connection with such “acuerdo preventivo extrajudicial,” (C) other than in connection with the Restructuring, file for court endorsement of an “acuerdo preventivo extrajudicial,” (D) apply for or consent to the appointment (in a similar court proceeding) of a receiver, trustee, liquidator or the like for itself or its property or (E) other than in connection with the Restructuring, make a similar court filing seeking to take advantage of any applicable Insolvency Law;

(i) after the Issuance Date and without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors (other than in connection with the Restructuring), the appointment of a trustee, a receiver, liquidator or the like of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or of all of the assets thereof or other like relief in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary under any applicable bankruptcy or Insolvency Law, and either:



(j) any condemnation, seizure, compulsory purchase or expropriation, or taking into custody or control, by any governmental authority or agency of assets or share capital of the Company or its Restricted Subsidiaries which, in the aggregate, would be likely to have a material adverse effect upon the business and results of operations of the Company and its Restricted Subsidiaries taken as a whole; or

(k) a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary.

17. If an Event of Default shall have occurred and is continuing with respect to the Fixed Rate Par Notes, Floating Rate Par Notes or the Discount Notes, respectively, the Trustee may and, at the written direction or request of the Holders of not less than 25% of the then Outstanding aggregate principal amount of the Fixed Rate Par Notes, the Floating Rate Par Notes or the Discount Notes, respectively, shall, by notice in writing to the Company declare the principal amount of, and interest accrued on all such Fixed Rate Par Notes, Floating Rate Par Notes or Discount Notes, respectively, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable upon the date that such written notice is received by or on behalf of the Company.

18. After a declaration of acceleration of the Fixed Rate Par Notes, the Floating Rate Par Notes or the Discount Notes, respectively, but before a judgment or decree of the money due to respect of such Fixed Rate Par Notes, Floating Rate Par Notes or Discount Notes has been obtained, the Holders of not less than a majority of the then Outstanding aggregate principal amount of the Fixed Rate Par Notes, the Floating Rate Par Notes or the Discount Notes, respectively, may rescind by written notice to the Trustee an acceleration and its consequences if (i) all existing Events of Default (other than the nonpayment of principal and interest and any Additional Amounts on such Fixed Rate Par Notes, Floating Rate Par Notes or Discount Notes, respectively, which have become due solely by virtue of such acceleration) have been cured or waived and (ii) if the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

Exhibit B-6

For purposes of the provisions of “Events of Default” in paragraph 16, the Fixed Rate Par Notes and the Floating Rate Par Notes will be deemed to constitute a single Series of Notes, and the Fixed Rate Par Notes and Floating Rate Par Notes will be aggregated for the quorums and majorities specified above in paragraphs 17 and 18.

19. The Company covenants that if:



the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of this Note, (i) the aggregate amount then due and payable on this Note for principal (and premium, if any) and interest, (ii) to the extent that payment of default interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and interest, at the default interest rate applicable to this Note, and (iii) such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

20. If the Company fails to pay such amounts immediately upon demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the amounts so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other successor obligor of this Note and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor of the Notes, wherever situated.

21. If an Event of Default occurs and is continuing, the Trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

22. The Trustee shall not be bound to institute any proceedings or take any other actions described in the two preceding paragraphs unless (a) it shall have been so directed by the Holders of a majority in aggregate principal amount of a Series of Notes then Outstanding pursuant (and subject) to Section 5.12 (Control by Holders) of the Indenture and (b) it shall have received an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such direction.

23. In case of any judicial proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act, the Negotiable Obligations Law and Law 24,522, as amended, in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7 (Compensation and Reimbursement) of the Indenture.

24. No provision of the Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition

Exhibit B-7

affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

25. All rights of action and claims under the Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

26. No Holder of any Note will have any right by virtue of or by availing itself of any provision of the Indenture or the Notes to institute any suit, action or proceeding in equity or at law, or otherwise, upon or under or with respect to the Indenture, or the Notes, or for any remedy thereunder, unless:


(b) the Holders of not less than 25% of the aggregate principal amount of the Notes then Outstanding of the affected Series of Notes shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee under the Indenture and shall have offered to the Trustee an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and

(c) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to the Indenture.

27. Notwithstanding any other provision in the Indenture and any provision of this Note, the right of any Holder of any Note of any Series to receive payment of the principal of and interest on this Note (including Additional Amounts) on or after the respective due dates expressed in this Note, or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such Holder. To that effect, any beneficial owner of Global Notes will have the right to obtain evidence of its beneficial ownership interest in a Global Note in accordance with Argentine Decree 677/01, as amended (including for initiating summary proceedings (acción ejecutiva) in the manner provided by the Negotiable Obligations Law), and for such purposes, such beneficial owner will be treated as the owner of that portion of the Global Note which represents its beneficial ownership interest therein.

28. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under the Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such ease, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

29. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.6 (Payment of Interest; Interest Rights Preserved) of the Indenture, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Exhibit B-8

30. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.

31. The Holders of a majority in principal amount of the Notes then Outstanding shall, upon offering to the Trustee indemnity satisfactory to it, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

(a) such direction shall not be in conflict with any rule of law or with the Indenture or shall not be adverse in any material respect to the Trustee; and



32. Subject to Section 5.2 (Acceleration of Maturity; Rescission and Annulment) of the Indenture, the Holders of not less than a majority in principal amount of the Notes then Outstanding may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default:


(b) in respect of a covenant or provision which under Section 8.2 (Supplemental Indentures With Consent of Holders) of the Indenture cannot be modified or amended without the consent of the Holder of each Note affected.

33. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

34. In any suit for the enforcement of any right or remedy under the Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this paragraph nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee.

35. To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified above, to any immunity from suit, from the jurisdiction of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States). The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process if effected upon the Company in the manner specified above or as otherwise permitted by law.

36. Upon the occurrence of an Adverse Cash Flow Event or an Adverse Devaluation Event, the Company may, at its option, elect to defer, reschedule and capitalize up to one year of principal amortization payments and one year of interest payments on any or all Series of Notes by written notice to the Trustee on or prior to

Exhibit B-9

the date such payment is due. In such event, the relevant principal and interest payments deferred shall be rescheduled and capitalized over the remaining scheduled principal payments on such Series of Notes in proportion to the remaining amortization schedule of such Series of Notes.

37. The Company may invoke the option contained in paragraph 36 no more than once in respect of an Adverse Cash Flow Event and no more than once in respect of an Adverse Devaluation Event during the term of the Notes and will be obligated to resume payments no later than the third Interest Payment Date after the option in paragraph 36 is exercised.

38. During an Adverse Event Period, (i) any obligation to make payments pursuant to Section 9.1 (Mandatory Prepayment With Excess Cash) of the Indenture will be suspended, (ii) the Company will not make any Market Purchases of Notes and (iii) the Company and its Restricted Subsidiaries will continue to comply with Article 9 (subject to clause (i) above), except that the Company will not pay any cash dividends or make any cash distributions to its shareholders that it would otherwise be permitted to pay or make under the Indenture and clauses (a)(iv), (c)(i) and, in respect of the Company only, (c)(ii) of Section 9.8 (Limitation on Restricted Payments) of the Indenture will not apply, except for payments to EASA in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $0.2 million, in any fiscal year, and (B) paragraph (c) (but only if the Adverse Event occurs after the fifth anniversary of the Issuance Date and the Company is not otherwise required under any applicable rules or regulations or by any relevant authorities to maintain a strategic operator) and (d) of Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture will not apply, except for payments to EASA in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $0.2 million in any fiscal year.

39. If on any June 30 or December 31 (each, a Calculation Date) after the Issuance Date and in each case no later than the next Interest Payment Date following such Calculation Date (a Mandatory Prepayment Date):

(a) the Leverage Ratio is greater than 3.5, then any Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions;

(b) the Leverage Ratio is equal to or less than 3.5, but greater than 3.0, the Company will apply any Excess Cash as follows, at its discretion:

(i) (A) a minimum of 50% of such Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) of the Indenture a maximum of 50% of such Excess Cash shall be applied to or committed for Capital Expenditures; or

(ii) (A) a minimum of 75% of such Excess Cash shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) of the Indenture a maximum of 25% of such Excess Cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends; or

(c) the Leverage Ratio is equal to or less than 3.0, but greater than 2.5, (A) a minimum of 50% of such Excess Cash, shall be applied, at the Company’s discretion, to purchase Notes through Market Purchases or Optional Redemption transactions; and (B) after the Leverage Ratio has been certified in accordance with paragraph (c) of Section 9.9 (Delivery of Financial Statements) of the Indenture a maximum of 50% of such Excess Cash shall be used entirely at the Company’s discretion, including, without limitation, for the payment of dividends;

Exhibit B-10

provided that any Excess Cash not applied pursuant to paragraphs (a), (b)(i)(A), (b)(ii)(A) or (c)(A) above on or prior to any Mandatory Prepayment Date will be applied pro rata to (i) a Debt Prepayment (on a pro rata basis) of Fixed Rate Par Notes and Floating Rate Par Notes no later than twenty (20) days following the applicable Mandatory Prepayment Date, and (ii) subject to compliance with applicable securities laws and regulations, a Discount Buyback (as defined below). Upon expiration of the Discount Buyback, any remaining Excess Cash will be used by the Company, (x) until such time as there are no Fixed Rate Par Notes and Floating Rate Par Notes outstanding, to make a Debt Prepayment of, at its discretion, Fixed Rate Par Notes or Floating Rate Par Notes, and (y) thereafter, for any purpose (including for payment of dividends or other cash distributions to its shareholders), at the Company’s discretion, except that if on any Calculation Date:

(a) the Leverage Ratio is greater than 3.5, then the Company will not be entitled to use Excess Cash for the payment of dividends or other cash distributions to its shareholders;

(b) the Leverage Ratio is equal to or less than 3.5, but greater than 3.0., the Company will be entitled to use up to 25% of Excess Cash for the payment of dividends or other cash distributions to its shareholders;

(c) the Leverage Ratio is equal to or less than 3.0, but greater than 2.5, the Company will be entitled to use up to 50% of Excess Cash for the payment of dividends or other cash distributions to its shareholders; and

(d) the Leverage Ratio is equal to or less than 2.5, the Company will not be restricted from using any and all Excess Cash for the payment of dividends or other cash distributions to its shareholders;

in each case, except for any dividend payments or other cash distributions to its shareholders otherwise permitted pursuant to paragraph (a) of Section 9.8 (Limitation on Restricted Payments) of the Indenture.

40. All Debt Prepayments in respect of a given Series of Notes will be made in direct order of maturity (i.e., such principal payment will be considered a payment of the next principal installment due, rather than being applied pro rata across all future payments).

41. The first Calculation Date shall be the first June 30 or December 31 after the Issuance Date.

42. Excess Cash will be calculated in pesos based on the Company’s financial statements in accordance with Argentine GAAP. For purposes of determining the amount of cash to be applied by the Company pursuant to this provision, the Excess Cash will be converted into dollars using the Prevailing Exchange Rate as of the relevant Calculation Date. To the extent that any authorization of the Central Bank required to make any such payment is not obtained on or prior to the relevant Mandatory Prepayment Date, the Company will deposit the Excess Cash to be applied to Market Purchases, Optional Redemptions, Debt Prepayments or Discount Buybacks, as applicable, as described above in a trust account, to be opened and maintained by the Trustee, on the Mandatory Prepayment Date, and such funds will be held by the trustee of such trust for the benefit of the Holders of the Notes, until such payment can be made. Any investment income earned by the trust will be added to the Excess Cash amount payable to Holders of Notes. The Company will use commercially reasonable efforts to obtain any required authorization of the Central Bank prior to each Mandatory Prepayment Date, and, if such approval is not obtained prior to a Mandatory Prepayment Date, the Company shall use commercially reasonable efforts to obtain such approval within 90 days after such Mandatory Prepayment Date. In the event that the Company is unable to receive the authorization of the Central Bank within such 90-day period, the Company will, no later than 30 days after the end of such 90-day period, make such payment by following the procedures as set forth under Section 1.19 (Foreign Exchange Restrictions) of the Indenture.

Exhibit B-11

43. Any such delay in payment shall not constitute an Event of Default, and no past due interest will be payable to Holders of Notes in respect of any such amount. At the request of the Company, the trustee for the trust mentioned above will apply the funds held in the trust account to purchase U.S. Dollars and apply such funds to scheduled payments of principal and interest on the Notes if permitted by the Central Bank.

44. Discount Buyback means an offer to repurchase Discount Notes, on a pro rata basis, up to the amount of Excess Cash, at a price equal to 100% of the outstanding principal amount thereof by sending, no later than twenty (20) days following the applicable Mandatory Prepayment Date, by first-class mail, a notice to each Holder, with a copy to the Trustee, stating, among other things, the purchase date (the Buyback Purchase Date), which must be no earlier than 30 days from the date the notice is mailed.

On the Buyback Purchase Date, the Company will, to the extent lawful:

(A) accept for payment all Discount Notes or portions thereof properly tendered free and clear of any and all liens, restrictions, charges, pledges, security interests, encumbrances or rights of any kind of third parties pursuant to the Discount Buyback; and

(B) deposit with the Trustee funds in an amount equal to the Discount Buyback in respect of all Discount Notes or portions thereof so tendered.

To the extent Holders of Discount Notes properly tender Discount Notes in an aggregate amount exceeding the amount of Excess Cash allocated to a Discount Buyback pursuant to the provisions of Section 9.1 (Mandatory Prepayment With Excess Cash) of the Indenture, the Company will purchase the Discount Notes on a pro rata basis (based on amounts tendered). If only a portion of a Discount Note is purchased pursuant to a Discount Buyback, a new Discount Note in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder of the Discount Note thereof upon cancellation of the original Discount Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made, as appropriate).

45. To the extent that the provisions of any securities laws or regulations conflict with the provisions of Section 9.1 (Mandatory Prepayment With Excess Cash) of the Indenture the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by doing so.

46. If at any time (i) the Company consummates a Public Equity Offering and (ii) the Leverage Ratio immediately after giving effect to such transaction on a pro forma basis, as certified by the Company’s auditors, is greater than 2.5, the Company shall use 25% of the net cash proceeds from the sale of the base amount of offered securities (not including any upsize or greenshoe) in such Public Equity Offering (after payment of all expenses, commissions and the like incurred in connection therewith) to purchase Notes through Market Purchases within two years after the consummation of such Public Equity Offering; provided that the Company will have no obligation to purchase Notes at a price greater than the face value of such Notes; provided further that, during the two-year period following the consummation of the Public Equity Offering, the Company shall maintain the proceeds to be used for the purchase of Notes through Market Purchases in a trust account to be opened and maintained by the Trustee and to be released only to purchase Notes in accordance with this covenant.

47. The Company will not, and will not permit any of its Restricted Subsidiaries to incur, assume or suffer to exist, any Lien upon its property, assets or revenues, whether now owned or hereafter acquired, securing any Indebtedness of any Person, unless the Notes are equally and ratably secured by such Liens, other than the following (Permitted Liens):

(a) Liens for taxes, assessments or governmental charges or claims or fines not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of the Company or

Exhibit B-12

such Restricted Subsidiary, as the case may be, to the extent required by Argentine GAAP;





(f) Liens on any property acquired by the Company or any Restricted Subsidiary as a result of a Permitted Capital Expenditure and/or a Regulatory Capital Expenditure which are created, incurred or assumed contemporaneously with such acquisition to secure or provide for the payment of all or any part of the purchase price of such property; provided that (i) such Lien is created and the Indebtedness secured thereby is Incurred within 90 days after that acquisition, and (ii) no such Lien shall extend to or cover any physical assets or equipment other than the physical assets or equipment being acquired;


(h) escrow deposits, trusts or similar accounts created or established pursuant to the Indenture or for the payment of debt service obligations under the Notes;



Exhibit B-13

(k) any interest or title of a lessor under any Capital Lease;

(l) Liens resulting from attachments or other proceedings initiated by any holder of Outstanding Debt who elects not to participate in the Restructuring in respect of a claim for payment on such Outstanding Debt;

(m) Liens in existence on the Issuance Date and identified in Schedule A attached to the Indenture and any renewals or extensions thereof, so long as (A) such renewal or extension Lien does not extend to any property other than that originally subject to the Liens being renewed or extended and (B) the principal amount of the Indebtedness secured by such Lien, if applicable, is not increased;

(n) Liens to secure any Permitted Refinancing Indebtedness which is Incurred to refinance any Indebtedness which has been secured by a Lien permitted under this paragraph; provided that such new Liens are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced, and do not extend to any property or assets other than property or assets securing the Indebtedness refinanced by such Permitted Refinancing Indebtedness;

(o) Liens required under the Indenture; and

(p) Liens created or established in order to comply with any applicable rule, regulation, order, resolution, decree, directive or instruction of any federal, provincial or municipal government of Argentina, or any agency or instrumentality thereof, in connection with the conduct of a Permitted Business.


48. The Company will not, and will not permit any of its Restricted Subsidiaries to, incur any Indebtedness, except for the following Indebtedness (Permitted Indebtedness):

(a) Indebtedness outstanding on the Issuance Date and identified in Schedule A attached to the Indenture;

(b) Indebtedness Incurred pursuant to the Restructuring (including the Notes) other than any Notes issued pursuant to the Cash Offer;

(c) Permitted Refinancing Indebtedness;

(d) Subordinated Indebtedness;

(e) Indebtedness Incurred in any year for purposes of financing Permitted Capital Expenditures or Regulatory Capital Expenditures in an aggregate principal amount not to exceed the amount of Permitted Capital Expenditures that the Company is permitted to make under the Indenture during such year;

(f) Indebtedness in respect of Hedging Contracts;

(g) Indebtedness with respect to letters of credit, bankers’ acceptances and similar obligations issued in the ordinary course of business and not supporting Indebtedness, including performance bonds and letters of credit supporting performance bonds;

(h) Indebtedness of the Company or any of its Restricted Subsidiaries owed to the Company or any of its Restricted Subsidiaries so long as such Indebtedness continues

Exhibit B-14

to be owed to the Company or a Restricted Subsidiary and which, if the obligor is the Company and such Indebtedness is owed to such Restricted Subsidiary, is subordinated in right of payment and priority to the Notes, pursuant to a Subordination Agreement; and


49. The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale (including a Major Asset Sale) unless:


(b) at least 75% of the value of the consideration therefrom is in the form of Cash and Cash Equivalents; provided that (i) any non-cash consideration received is for fair market value and (ii) the receipt of such non-cash consideration is otherwise permitted under the Indenture; and


50. Within 180 days after the receipt of any Net Cash Proceeds from an Asset Sale (other than a Major Asset Sale or a Sale and Leaseback Transaction), the Company or any Restricted Subsidiary shall, at its election, apply the Net Cash Proceeds of such Asset Sale to (i) purchase, prepay or redeem Notes through Market Purchases or Optional Redemption transactions or through a Debt Prepayment of Fixed Rate Par Notes or Floating Rate Par Notes or a Discount Buyback or (ii) (A) acquire or commit to acquire all or substantially all of the assets of a Permitted Business, or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Permitted Business, or (B) make or commit to make Permitted Capital Expenditures or Regulatory Capital Expenditures or otherwise acquire or commit to acquire assets that are to be used by the Company or a Restricted Subsidiary in a Permitted Business; provided that, if the Company receives Net Cash Proceeds from Asset Sales in an aggregate amount in excess of U.S. $20 million in any fiscal year, the Company shall apply such excess for the purposes set forth in clauses (i) provided that any Debt Prepayment will be made on a pro rata basis with a Discount Buybank) or (ii)(A) above; and provided, further that the Company shall not make any Asset Sale of Receivables or Related Assets.

The Company shall apply any Net Cash Proceeds of any Sale and Leaseback Transaction, of the Company’s election, to purchase, prepay or redeem Notes through Market Purchases or Optional Redemption transactions or through a Debt Prepayment.

51. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, renew or extend any transaction or arrangement including the purchase, sale, lease or exchange of property or assets, or the rendering of any service, with any Affiliate of the Company (other than Sociedad Anónima Centro de Movimiento de Energía (SACME)) except upon terms not less favorable to the Company or such Restricted Subsidiary than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

52. If any such transaction or series of related transactions has an aggregate value in excess of U.S. $10 million, prior to such transaction, the Company will obtain a favorable written opinion from (i) the audit committee of the Company, which committee shall include at least two independent members of the Board of Directors and (ii) at least one independent consultant that the terms of the transaction are consistent with those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

Exhibit B-15

53. Paragraphs 51 and 52 do not apply to:



(c) any payments made pursuant to the Technical Assistance Agreement, dated September 15, 2005, between EDF and the Company, or pursuant to a technical service or operating agreement with the then current strategic operator on or prior to the fifth anniversary of the Issuance Date (or later, if the Company is required under any applicable rules or regulations or by any relevant authorities to engage a strategic operator after such fifth anniversary); in an aggregate amount not to exceed U.S. $2.0 million (or its equivalent in other currencies), net of withholding taxes, in any fiscal year; or

(d) any payments to Electricidad Argentina S.A. (EASA) in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $2.5 million (or its equivalent in other currencies) in any fiscal year.

54. The Company will not, and will not cause or permit any Restricted Subsidiary to, make any capital expenditure other than Permitted Capital Expenditures, Regulatory Capital Expenditures and, to the extent permitted under (and funded by) Section 9.1 (Mandatory Prepayment With Excess Cash) of the Indenture, and funded by Excess Cash, Additional Capital Expenditures.

55. Notwithstanding the foregoing, the Company and any Restricted Subsidiary may apply Net Cash Proceeds from any Asset Sale (other than a Major Asset Sale) and any proceeds from casualty events for capital expenditures in excess of Permitted Capital Expenditures in accordance with the provisions set forth under Section 9.5 (Limitations on Asset Sales) of the Indenture without regard to paragraph 54 and this paragraph and the application of such amounts will not reduce the aggregate amount of Permitted Capital Expenditures that may be made in any fiscal year under paragraph 54 and this paragraph..

56. The Company will not and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, take any of the following actions (each, a Restricted Payment):

(a) declare or pay any dividend or return of capital or make any distribution on or in respect of Equity Interests of the Company or any Restricted Subsidiary to Holders of such Equity Interests other than (i) any dividends or distributions in the form of Qualified Equity Interests of the Company, (ii) dividends, distributions or returns of capital payable to the Company or a Restricted Subsidiary, (iii) dividends, distributions or returns of capital made on a pro rata basis to the Company and its Restricted Subsidiaries on the one hand, and minority Holders of Equity Interests of a Restricted Subsidiary on the other hand or (iv) any payments permitted to be made pursuant to Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture;


(c) repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Indebtedness, other than (i) scheduled payments of interest or principal (provided no Default or Event of Default shall have occurred and be continuing), (ii) any intercompany Indebtedness between or among the Company and/or any Restricted Subsidiaries or (iii) any payments

Exhibit B-16

permitted to be made pursuant to Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture; or

(d) make any Investments (other than Permitted Investments).

in each case other than as permitted pursuant to Section 9.1 (Mandatory Prepayment With Excess Cash) of the Indenture; provided that the Company will not pay any dividends or other cash distributions to its shareholders (other than any payments to EASA permitted to be made under paragraph (d) of Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture) until the earlier of (i) the second anniversary of the Issuance Date and (ii) December 31, 2008.

57. The Company will furnish to the Trustee:


(b) as soon as available, but in any event within 75 days after the end of each of the first three fiscal quarters of the Company, a copy of the unaudited consolidated balance sheet of the Company as of the end of each such quarter and the related unaudited consolidated statements of income and cash flows of the Company for such quarter and the portion of the fiscal year through such date; and

(c) concurrently with the delivery of the financial statements for each fiscal year and the second fiscal quarter of the Company referred to in clauses (a) and (b), respectively above, a certificate of the Company’s independent accountants certifying the calculation of the Leverage Ratio and Excess Cash; and

(d) concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate of the general manager or chief financial officer of the Company stating (i) whether, to the best of such officer’s knowledge, anything came to his or her attention (except for the Restructuring) to cause him or her to believe that there existed on the date of such statements a Default or an Event of Default, and if so, specifying the nature and period of existence thereof.


58. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

59. The Company will use reasonable efforts to notify the Trustee by facsimile or electronic mail (receipt confirmed telephonically or by electronic mail or electronic mail receipt) promptly after it becomes aware of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of an Officer of the Company setting forth the details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto.

Exhibit B-17

60. The Company will use its reasonable best efforts to obtain and maintain a listing on the Buenos Aires Stock Exchange, the admission to trading on the Mercado Abierto Electrónico S.A., a listing on the Luxembourg Stock Exchange and the admission to trading on the Euro MTF, the alternative market of the Luxembourg Stock Exchange. In the event that the Notes are admitted to trading on Euro MTF, the Company will use commercially reasonable efforts to maintain such listing; provided that the Company may terminate such listing and delist the Notes from Euro MTF if it determines that the provisions of the European Transparency Obligations Directive (2003/2004/COD) or other applicable legislation becomes unduly onerous or burdensome, in which case the Company will use commercially reasonable efforts to obtain an alternative admission to listing, trading and/or quotation for the Notes by another listing authority, exchange and/or system within or outside the European Union, as it may decide and to the extent feasible.

61. Except as otherwise permitted under the Indenture and referred to below under Section 9.19 (Limitations on Mergers, Consolidations, Sales and Conveyances) of the Indenture, the Company, at all times, will do all things necessary to preserve and keep in full force and effect its corporate existence and preserve and keep in full force and effect in all respects all material licenses and permits necessary to the proper conduct of its business and its rights (charter and statutory) and franchises and such rights and franchises of its Restricted Subsidiaries necessary to the proper conduct of the business of the Company and such Subsidiaries, as a whole.

62. The Company and its Restricted Subsidiaries will not engage in any business other than a Permitted Business.

63. The Company will cause all material tangible properties used in the conduct of its business or the business of any of its Significant Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements and improvements thereof, all as in the Company’s judgment may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that this covenant will not prevent the Company or any of its Subsidiaries from discontinuing the operation or maintenance of any of such properties if such discontinuance is desirable in the conduct of its business and the business of its Subsidiaries taken as a whole and not adverse in any material respect to the holders of the Notes.

64. The Company will, and will cause each of its Subsidiaries to, maintain insurance in such amounts and covering such risks as is usually carried by electricity transmission and distribution companies, subject to any applicable laws and regulations of Argentina.

65. The Company will, and will cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or its Subsidiaries; provided, however, that neither the Company nor any Subsidiary will be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim which is being contested in good faith and, if appropriate, by appropriate legal proceedings and adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, to the extent required by Argentine GAAP.

66. The Company may designate any Subsidiary, including a newly acquired or created Subsidiary, to be an Unrestricted Subsidiary under the Indenture if:

(a) the Restricted Subsidiary is not a Significant Subsidiary;

(b) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such designation;

(c) such Subsidiary does not own any Capital Stock of the Company or any Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the Company or any Restricted Subsidiary; and

Exhibit B-18

(d) the Subsidiary is not party to any transaction or arrangement with the Company or any Restricted Subsidiary that would not be permitted under Section 9.6 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture.


67. (a) A Subsidiary previously designated an Unrestricted Subsidiary which fails to meet the qualifications set forth in paragraph 66 above will be deemed to become at that time a Restricted Subsidiary, subject to the consequences set forth in paragraph 69.

(b) the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary if the designation would not cause a Default.

68. Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary:

(a) all existing Investments of the Company and the Restricted Subsidiaries therein valued at the Company’s proportional share of the fair market value of its assets less liabilities will be deemed made at that time;

(b) all existing Indebtedness of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time, and all Liens on property of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time;

(c) all existing transactions between it and the Company or any Restricted Subsidiary will be deemed entered into at that time; and

(d) it will cease to be subject to the provisions of the Indenture and the Notes as a Restricted Subsidiary.

69. Upon an Unrestricted Subsidiary becoming, or being deemed to become, a Restricted Subsidiary:

(a) all of its Indebtedness and Disqualified Stock will be deemed incurred at that time for purposes of Section 9.4 (Limitations on Indebtedness) of the Indenture;

(b) Investments therein previously charged under Section 9.8 (Limitation on Restricted Payments) of the Indenture, as adjusted to reflect any change in the Company’s proportional share of the fair market value of its assets less liabilities, will be credited thereunder; and

(c) it will thenceforward be subject to the provisions of the Indenture and the Notes as a Restricted Subsidiary.

Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary shall, unless so noted by the Company, be deemed to include the designation of all of the Subsidiaries of such Subsidiary. Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Trustee by delivering to the Trustee a copy of the resolutions of the Board of Directors giving effect to the designation and an Officers’ Certificate certifying that the designation complied with the foregoing provisions, not later than the next succeeding delivery of financial statements as required under Section 9.9 (Delivery of Financial Statements) of the Indenture.

70. Notwithstanding the foregoing, the obligations of the Company and its Restricted Subsidiaries to comply with the covenants described above under the captions Sections 9.1 (Mandatory Prepayment With Excess Cash), 9.4 (Limitations on Indebtedness), 9.5 (Limitations on Asset Sales), 9.7 (Limitation on Capital

Exhibit B-19

Expenditures) and 9.8 (Limitation on Restricted Payments) (collectively, the Suspended Covenants) will be suspended and cease to have any further effect during the period (the Suspended Period) from and after the first date that either (a) the Company attains from at least one of the Rating Agencies, a rating on its long-term debt denominated in currencies other than pesos that is Investment Grade or (b) the Leverage Ratio (as certified by the Company’s auditors) is equal to or lower than 2.5 and until, as applicable, the date (the Reversion Date) on which either (i) none of the Rating Agencies provide the Company’s non-Peso denominated long-term debt an Investment Grade rating or (ii) the Leverage Ratio is greater than 2.5. On the Reversion Date, the Company and its Restricted Subsidiaries’ obligation to comply with the Suspended Covenants shall be reinstated; provided, however, that the Suspended Covenants will not be of any effect with regard to actions of the Company or its Restricted Subsidiaries taken during the Suspension Period, and no Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period.

71. On the Reversion Date, all Indebtedness incurred while the Suspended Covenants were suspended will be classified to have been incurred pursuant to one of the paragraphs set forth in Section 9.4 (Limitations on Indebtedness) of the Indenture (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reversion Date and after giving effect to Indebtedness outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be incurred pursuant to Section 9.4 (Limitations on Indebtedness) of the Indenture such Indebtedness will be deemed to have been outstanding on the Issuance Date, so that it is classified as permitted under paragraph (a) of Section 9.4 (Limitations on Indebtedness) of the Indenture.

72. The Company will not enter into any merger, consolidation, spin-off or reorganization with any Person (whether or not the Company is the surviving or continuing Person) or sell, assign, transfer or otherwise convey or dispose of all or substantially all of its and its Restricted Subsidiaries’ assets, taken as a whole, whether by one transaction or a series of transactions, to any Person unless:


(b) the surviving or transferee Person (if not the Company) shall have expressly assumed, by a document executed and delivered to the Trustee in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes and the Indenture;



(e) the surviving or transferee Person shall have delivered to the Trustee an Officers’ Certificate stating that such merger, consolidation, sale, assignment, transfer or other conveyance or disposition complies with this covenant and the Indenture.

73. Upon the occurrence of any of the transactions permitted by the preceding paragraph, the surviving or transferee Person (if not the Company) will succeed to and become substituted for the Company, and may exercise every right and power of the Company, with the same effect as if it had been named in the Notes and the Indenture. Following such transaction, the Company will be released from its liability as obligor on the Notes and under the Indenture.

Exhibit B-20

74. In the event of any such sale, assignment, transfer, conveyance or disposition, the Company, as the predecessor entity, may be dissolved, wound-up or liquidated at any time thereafter.

75. Except as provided in the paragraph below, each payment by the Company in respect of the Notes shall, except as required by law, be made without withholding or deduction for or on account of any Taxes imposed by Argentina or any political subdivision or taxing authority thereof or therein (Argentine Taxes). If any Argentine Taxes are required to be withheld or deducted from any such payment, the Company shall pay such additional amounts (Additional Amounts) as may be necessary to ensure that the net amount actually received by the holder after such withholding or deduction is equal to the amount that the holder would have received had no withholding or deduction been required, provided, however that no such Additional Amounts shall be payable in respect of:

(a) any Taxes that would not have been so imposed but for the presentation by the holder of any such Note for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later;

(b) any Taxes imposed by reason of the holder’s failure to comply with the provisions under Section 3.12 (Information From Holders of Notes) of the Indenture;

(c) any Taxes imposed on a holder by reason of any connection between the holder and the taxing jurisdiction other than the mere acquisition, holding or disposition of such Notes, or the receipt of principal or interest in respect thereof;

(d) any estate, inheritance, gift, sales, transfer, personal property tax or any similar tax, assessment or governmental charge;

(e) any Taxes that are payable otherwise than by withholding or deduction from payments on or in respect of the Notes; or

(f) the Personal Assets Tax under Argentine tax law, if the Company is compelled by law to make any withholding or deduction for or on account of, or is obligated to act as “substitute obligor” for, such tax.

76. In no event, shall the Company pay Additional Amounts with respect to any payment under any Notes to any holder thereof, to the extent any such Tax is required to be deducted, withheld or otherwise imposed, above the amount resulting from the grossed-up deduction or withholding that would be imposed on a Person set forth in Section 93(c)(1) of the Argentine Income Tax Law or any amendment to such section in effect at the time of such payment.

77. The Company will also make such withholding or deduction compelled by applicable law and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.

78. The Company will furnish to the Trustee, within 60 days after the date of receipt of written request from the holders of the Notes through the Trustee, copies of such receipts evidencing the payment of any Taxes so deducted or withheld in such form as provided in the normal course by the taxing authority imposing such Taxes and as is reasonably available to the Company to the Trustee. The Trustee will make such evidence available to the holders of Notes upon request.

79. The Company covenants that if the Company or the Trustee or any Paying Agent is required by law to make any deduction or withholding on payments of principal of or interest on the Notes for or on account of any Argentine tax, duty, assessment or other governmental charge, the Company shall, at least 10 Business Days prior to the first payment on which such deduction or withholding is applicable, (and at least 10 Business Days prior to each succeeding payment date or any redemption date or maturity date if there has been any change with respect to the matters set forth in the below-mentioned Officer’s Certificate)

Exhibit B-21

deliver to the Trustee (with a copy to any other Paying Agent) an Officer’s Certificate specifying the amount so required to be deducted or withheld and certifying that the Company shall pay such deduction or withholding.

80. The Company hereby covenants to indemnify the Trustee (and each other Paying Agent) for, and to hold the Trustee harmless against any loss, liability or expense incurred without negligence or bad faith on the Trustee’s part arising out of actions taken or omitted by any of them in reliance on any Officer’s Certificate furnished pursuant to this Section or the failure of the Trustee to receive on a timely basis such Officer’s Certificate or any information or documentation requested by it or otherwise required by applicable laws or regulations to be obtained, furnished or filed in respect of any tax, duty, assessment or other governmental charge pursuant to the foregoing provisions of Section 9.20 (Payment of Additional Amounts) of the Indenture.

81. The indemnification obligations of the Company under Section 9.20 (Payment of Additional Amounts) of the Indenture shall survive the payment of the Notes, the termination of the Indenture and the resignation or removal of the Trustee.

82. The Company will pay any present or future stamp, or documentary taxes, that arise in Argentina from the execution, delivery or registration of the Notes or any other document or instrument referred to in the Notes.

83. If any Holder of Notes does not timely provide all or part of the information, documents or evidence that may be required by the Company from time to time under Section 3.12 (Information From Holders of Notes) of the Indenture, the Company will not pay any Additional Amounts and will withhold or deduct the maximum amount that may be required by Argentine law in the absence of such information, documents or evidence. The Company will inform the Trustee in writing if the Company will not be obligated to pay any Additional Amounts in respect of any Holder pursuant to this paragraph.

84. If the Company shall at any time act as its own Paying Agent, it will, on or before each payment date of the principal of (and premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled to such payment a sum sufficient to pay the principal (and premium, if any) or interest due until such sums shall he paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

85. Whenever the Company shall have one or more Paying Agents, it will, prior to each payment date of the principal of (and premium, if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. Principal and interest shall be considered paid on the date due if on such date the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds in accordance with the Indenture U.S. Dollars designated for and sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of the Indenture.

86. The Company will cause each Paying Agent, other than the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of Section 9.21 (Money for Note Payments to be Held in Trust) of the Indenture, that such Paying Agent will:


Exhibit B-22



87. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of the Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same term as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

88. Any money deposited with the Trustee or any Paying Agent, or held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Note which remains unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of this Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the city of Buenos Aires, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

89. Claims filed in Argentina courts against the Company for payment of principal in respect of the Notes (including Additional Amounts) shall be prescribed unless made within ten years of the due date for payment of such principal. Claims for the payment of interest shall be prescribed unless made within four years of the due date for payment of such interest.

90. Claims filed in the courts of the State of New York will be subject to the applicable statute of limitations for such claims.

91. In the event of any foreign exchange restriction or prohibition in Argentina, the Company shall make any and all payments of any Note in Dollars to be made outside Argentina by:

(a) purchasing, with pesos, “Bonos Externos Globales de la República Argentina” issued by Argentina and payable in Dollars or any other public or private securities issued in Argentina and denominated in Dollars, or any other securities (collectively, the Securities) and selling such instruments outside Argentina for Dollars; or

(b) any other legal mechanism for the acquisition of Dollars in any exchange market.

(c) In addition, in the event of any foreign exchange restriction or prohibition in Argentina, any Holder of Notes may elect to receive the payment in an amount equivalent to the Peso amount necessary for purchasing Securities and the reasonable and customary cost of transferring and selling such Securities outside Argentina for Dollars in an amount equivalent to the sums due and payable under the Notes. Such payment will discharge and satisfy the Company’s payment obligations to such Holders on such payment date. In each case, all reasonable and customary costs, including any taxes, relative to such operations to obtain foreign currency will be borne by the Company.

Exhibit B-23

(d) In addition, in the event of any restriction or prohibition in Argentina to pay in foreign currency any obligations under the Notes to any Holder of Notes that is not a resident in Argentina, the Company shall make its best efforts to obtain the corresponding authorization of the Central Bank to make such payments in Dollars. However, if such authorization cannot be obtained after reasonable attempts, the Company shall pay such Holder the Peso equivalent amount of the foreign currency amount due on the relevant payment date.

(e) Such payments in pesos will be calculated using the U.S. $/ Peso exchange rate quoted by Reuters Screen “ARSVH=” ASK SIDE (Valor Hoy Mercado) at 12:00 p.m. New York City time on the payment date; provided that (i) if the U.S. $/ Peso exchange rate does not appear on such Reuters Screen, the U.S. $/ Peso exchange rate shall mean, with respect to the payment date, the U.S. $/ Peso exchange rate which appears on Bloomberg L.P. (Bloomberg Screen (ARS currency)-ASK SIDE-PCS Composite (NY)) at 12:00 p.m. New York City time on such payment date. Such payment in pesos will fully discharge and satisfy the Company’s payment obligation to such holder on the payment date and shall not constitute an Event of Default.

92. Any suit, action or proceeding against the Company or its properties, assets or revenues with respect to the Notes or the Indenture (a Related Proceeding) may be brought in the Supreme Court of the State of New York, County of New York, or in the United States District Court for the Southern District of New York, or in the courts of Argentina that sit in the City of Buenos Aires, as the person bringing such Related Proceeding may elect in its sole discretion. The Company has consented to the non-exclusive jurisdiction of each such court for the purpose of any Related Proceeding and has irrevocably waived any objection to the laying of venue of any Related Proceeding brought in any such court and to the fullest extent it may effectively do so and the defense of an inconvenient forum to the maintenance of any Related Proceeding or any such suit, action or proceeding in any such court.

93. The Company has agreed that service of all writs, claims, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System (the Process Agent), and the Company irrevocably appointed the Process Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Company has agreed to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing in the Indenture shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.

94. The Company irrevocably waives trial by jury in any legal action or proceeding relating to the Indenture or the Notes.

95. The Company will ensure that its obligations under the Notes will at all times constitute direct, unconditional and unsubordinated obligations of the Company ranking at least pari passu in priority of payment, in right of security upon liquidation and in all other respects among themselves and with all other unsecured indebtedness of the Company now or hereafter outstanding, except to the extent that such other indebtedness may be preferred by mandatory provisions of applicable law or subordinated by its terms.

Annex A-1

ANNEX A

FORM OF REGULATION S CERTIFICATE

(For transfers pursuant to Section 3.4(b)(i), (iii) and (v) of the Indenture)

The Bank of New York 101 Barclay Street, Floor 21 West New York, New York 10286 Attn: Corporate Trust Administration—Global Finance Unit

Re: • (the Notes)

Reference is made to the Indenture, dated • (the Indenture), between the Company and The Bank of New York, as Trustee. Terms used herein and defined in the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933, as amended (the Securities Act) are used herein as so defined.

This certificate relates to U.S. $ principal amount of Notes, which are evidenced by the following certificate(s) (the Specified Notes):

COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).

The person in whose name this certificate is executed below (the Undersigned) hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes, (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so or (iii) it is the Holder of a Global Note and has received a certification to the effect set forth below. Such beneficial owner or owners are referred to herein collectively as the “Owner”. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be transferred to a person (the Transferee) who will take delivery in the form of a Regulation S Note. In connection with such transfer, the Owner hereby certifies or has certified that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 904 of Regulation S or Rule 144 under the Securities Act and with all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies or has certified as follows:

Annex A-2

(1) Rule 904 Transfers

If the transfer is being effected in accordance with Rule 904 of Regulation S:

(A) the Owner is not a distributor of the Notes, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

(B) the offer of the Specified Notes was not made to a person in the United States;

(C) either:

(i) at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or

(ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the International Notes Market Association or another designated offshore Notes market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

(D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof; and

(E) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.


If the transfer is being effected pursuant to Rule 144:

(A) the transfer is occurring after • [insert date one year after Issuance Date] and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after • [insert date two years after Issuance Date], and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

Dated: (Print the name of the Undersigned, as such term is defined in the second paragraph of this certificate.)

By: Name: Title:

(If the Undersigned is a corporation, partnership or fiduciary, the title of the person signing on behalf of the Undersigned must be stated.)

Annex B-1

ANNEX B

FORM OF RESTRICTED NOTES CERTIFICATE

(For transfers pursuant to Section 3.4(b)(ii), (iii) and (v) of the Indenture)


Re: • (the Notes)



COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).

The person in whose name this certificate is executed below (the Undersigned) hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes, (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so or (iii) it is the Holder of a Global Note and has received a certification to the effect set forth below. Such beneficial owner or owners are referred to herein collectively as the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be transferred to a person (the Transferee) who will take delivery in the form of a Restricted Note. In connection with such transfer, the Owner hereby certifies or has certified that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 144A or Rule 144 under the Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies or has certified that:

(l) Rule 144A Transfers

If the transfer is being effected in accordance with Rule 144A:

(A) the Specified Notes are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a “qualified institutional buyer” within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and

(B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer.

Annex B-2



(A) the transfer is occurring after • [insert date one year after Issuance Date] and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after • [insert date two years after Issuance Date], and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.



By: Name: Title:


Annex C-1

ANNEX C

FORM OF UNRESTRICTED NOTES CERTIFICATE

(For removal of Securities Act legends pursuant to Section 3.4(c)(iv) of the Indenture)


Re. • (the Notes)



COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).


The Owner has requested that the Specified Notes be exchanged for Notes bearing no Securities Act legend pursuant to Section 3.4(c)(iv)of the Indenture. In connection with such exchange, the Owner hereby certifies or has certified that the exchange is occurring after • [insert date two years after Issuance Date], and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges or has acknowledged that any future transfers of the Specified Notes must comply with all applicable securities laws of the states of the United States and other jurisdictions.



By: Name: Title:


Exhibit 2.3

INDENTURE

DATED October 9, 2007

BETWEEN

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.,

AS ISSUER

AND

THE BANK OF NEW YORK,

AS TRUSTEE, CO-REGISTRAR AND PAYING AGENT

AND

BANCO SANTANDER RÍO S.A.

AS REGISTRAR, TRANSFER AND PAYING AGENT IN ARGENTINA AND REPRESENTATIVE OF THE TRUSTEE IN ARGENTINA

___________________________

U.S. $220,000,000 10.5% Notes due October 9, 2017 ___________________________

TABLE OF CONTENTS

Page

i

ARTICLE 1. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........................... 2 1.1 Definitions....................................................................................................................................... 2 1.2 Rules of Construction.................................................................................................................... 19 1.3 Compliance Certificates and Opinions.......................................................................................... 19 1.4 Form of Documents delivered to Trustee...................................................................................... 20 1.5 Acts of Holders; Record Dates...................................................................................................... 20 1.6 Notices, etc., to Trustee and Company.......................................................................................... 21 1.7 Notice to Holders .......................................................................................................................... 21 1.8 Trust Indenture Act Deemed to Apply and Control ...................................................................... 22 1.9 Waiver of Certain Covenants ........................................................................................................ 23 1.10 Effect of Headings and Table of Contents .................................................................................... 23 1.11 Successors and Assigns................................................................................................................. 23 1.12 Separability Clause ....................................................................................................................... 23 1.13 Benefits of Indenture..................................................................................................................... 23 1.14 Governing Law ............................................................................................................................. 23 1.15 Legal Holidays .............................................................................................................................. 24 1.16 Conversion of Currency ................................................................................................................ 24 1.17 Agent for Service; Submission to Jurisdiction .............................................................................. 24 1.18 Waiver of Immunity...................................................................................................................... 25 1.19 Foreign Exchange Restrictions ..................................................................................................... 25 1.20 Resignation and Appointment of Agents ...................................................................................... 26

ARTICLE 2. FORM OF NOTES ....................................................................................................................... 27 2.1 Forms of the Notes........................................................................................................................ 27 2.2 Further Issues ................................................................................................................................ 27

ARTICLE 3. THE NOTES................................................................................................................................. 27 3.1 Title and Terms ............................................................................................................................. 27 3.2 Denominations .............................................................................................................................. 28 3.3 Execution, Authentication, Delivery and Dating .......................................................................... 28 3.4 Registration, Registration of Transfer and Exchange Generally................................................... 28 3.5 Mutilated, Destroyed, Lost and Stolen Notes................................................................................ 32 3.6 Payment of Interest; Interest Rights Preserved ............................................................................. 32 3.7 Persons Deemed Owners .............................................................................................................. 33 3.8 Cancellation .................................................................................................................................. 33 3.9 Computation of Interest ................................................................................................................ 33


Page

3.10 Common Code/ISIN Numbers...................................................................................................... 33 3.11 Prescription ................................................................................................................................... 34 3.12 Special Provision Regarding Title VI of the Argentine Income Tax Law .................................... 34

ARTICLE 4. SATISFACTION AND DISCHARGE......................................................................................... 34 4.1 Satisfaction and Discharge of Indenture ....................................................................................... 34 4.2 Application of Trust Money.......................................................................................................... 35

ARTICLE 5. REMEDIES................................................................................................................................... 35 5.1 Events of Default .......................................................................................................................... 35 5.2 Acceleration of Maturity; Rescission and Annulment .................................................................. 37 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee ............................................... 37 5.4 Trustee May File Proofs of Claim................................................................................................. 38 5.5 Trustee May Enforce Claims Without Possession of Notes.......................................................... 38 5.6 Application of Money Collected................................................................................................... 38 5.7 Enforcement by Holders of Notes................................................................................................. 39 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest............................... 39 5.9 Restoration of Rights and Remedies ............................................................................................. 39 5.10 Rights and Remedies Cumulative ................................................................................................. 39 5.11 Delay or Omission Not Waiver..................................................................................................... 40 5.12 Control by Holders........................................................................................................................ 40 5.13 Waiver of Past Defaults ................................................................................................................ 40 5.14 Undertaking for Costs ................................................................................................................... 40 5.15 Waiver of Stay or Extension Laws................................................................................................ 41 5.16 Knowledge of Default or Event of Default ................................................................................... 41

ARTICLE 6. THE TRUSTEE ............................................................................................................................ 41 6.1 Certain Duties and Responsibilities .............................................................................................. 41 6.2 Notice of Defaults ......................................................................................................................... 42 6.3 Certain Rights of Trustee .............................................................................................................. 42 6.4 Not Responsible for Issuance of Notes ......................................................................................... 43 6.5 May Hold Notes ............................................................................................................................ 43 6.6 Money Held in Trust ..................................................................................................................... 43 6.7 Compensation and Reimbursement............................................................................................... 43 6.8 Disqualification; Conflicting Interests .......................................................................................... 44 6.9 Corporate Trustee Required; Eligibility........................................................................................ 44 6.10 Resignation and Removal; Appointment of Successor ................................................................. 45 6.11 Acceptance of Appointment by Successor.................................................................................... 46

ii


Page

6.12 Merger, Conversion, Consolidation or Succession to Business .................................................... 46 6.13 Preferential Collection of Claims against Company ..................................................................... 46 6.14 Trustee’s Application for Instructions from the Company............................................................ 47 6.15 Appointment of Co-Trustee .......................................................................................................... 47

ARTICLE 7. HOLDERS’ LISTS AND REPORTS BY TRUSTEE .................................................................. 48 7.1 Company to Furnish Trustee Names and Addresses of Holders ................................................... 48 7.2 Preservation of Information; Communications to Holders ........................................................... 48

ARTICLE 8. SUPPLEMENTAL INDENTURES.............................................................................................. 48 8.1 Supplemental Indentures Without Consent of Holders ................................................................. 48 8.2 Supplemental Indentures With Consent of Holders ...................................................................... 49 8.3 Execution of Supplemental Indentures ......................................................................................... 50 8.4 Effect of Supplemental Indentures................................................................................................ 50 8.5 Conformity with Trust Indenture Act and the Negotiable Obligations Law................................. 50 8.6 Reference in Notes to Supplemental Indentures ........................................................................... 50 8.7 Notice of Supplemental Indentures ............................................................................................... 50 8.8 Meetings of Holders...................................................................................................................... 51

ARTICLE 9. COVENANTS .............................................................................................................................. 52 9.1 Limitation on Liens....................................................................................................................... 52 9.2 Limitations on Indebtedness ......................................................................................................... 54 9.3 Limitations on Asset Sales ............................................................................................................ 55 9.4 Limitation on Transactions with Shareholders and Affiliates ....................................................... 55 9.5 Limitation on Restricted Payments ............................................................................................... 56 9.6 Delivery of Financial Statements .................................................................................................. 56 9.7 Notices of Default ......................................................................................................................... 57 9.8 Maintenance of Notes Listing ....................................................................................................... 57 9.9 Corporate Existence ...................................................................................................................... 57 9.10 Conduct of Business...................................................................................................................... 57 9.11 Maintenance of Properties ............................................................................................................ 58 9.12 Maintenance of Insurance ............................................................................................................. 58 9.13 Payment of Taxes and Other Claims............................................................................................. 58 9.14 Designation of Restricted and Unrestricted Subsidiaries. ............................................................. 58 9.15 Limitation of Applicability of Certain Covenants......................................................................... 59 9.16 Limitations on Mergers, Consolidations, Sales and Conveyances................................................ 60 9.17 Payment of Additional Amounts................................................................................................... 60 9.18 Money for Note Payments to be Held in Trust ............................................................................. 62

iii


Page

9.19 Ranking of Notes .......................................................................................................................... 63

ARTICLE 10. REDEMPTION OF NOTES......................................................................................................... 63 10.1 Applicability of Article ................................................................................................................. 63 10.2 Redemption at the Company’s Option .......................................................................................... 63 10.3 Repurchase at the Option of Holders Upon a Change of Control ................................................. 64 10.4 Redemption for Taxation Reasons ................................................................................................ 65 10.5 Market Purchases .......................................................................................................................... 65 10.6 Selection by Trustee of Notes to be Redeemed............................................................................. 65 10.7 Notice of Redemption ................................................................................................................... 66 10.8 Deposit of Redemption Price ........................................................................................................ 66 10.9 Notes Payable on Redemption Date.............................................................................................. 67 10.10 Notes Redeemed in Part ................................................................................................................ 67 10.11 Redemptions and Purchases of the Notes ..................................................................................... 67

ARTICLE 11. DEFEASANCE AND COVENANT DEFEASANCE ................................................................. 67 11.1 Company’s Option to Effect Defeasance or Covenant Defeasance .............................................. 67 11.2 Defeasance and Discharge ............................................................................................................ 67 11.3 Covenant Defeasance.................................................................................................................... 68 11.4 Conditions to Defeasance or Covenant Defeasance...................................................................... 68 11.5 Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous

Provisions...................................................................................................................................... 69 11.6 Reinstatement................................................................................................................................ 70

ARTICLE 12. MISCELLANEOUS PROVISIONS............................................................................................. 70 12.1 No Liability of Directors, Officers, Employees, Incorporators, Members, and

Stockholders.................................................................................................................................. 70

iv

Exhibit

EXHIBIT A .....................................................................................................................................Exhibit A-1 EXHIBIT B ....................................................................................................................................Exhibit B-1

Annex

ANNEX A .......................................................................................................................................Annex A-1 ANNEX B .......................................................................................................................................Annex B-1 ANNEX C .......................................................................................................................................Annex C-1

Note: This table of contents shall not, for any purpose, be deemed to be part of this Indenture

v

THIS INDENTURE, dated as of October 9, 2007.

BETWEEN:

(1) EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A., a sociedad anónima organized under the laws of the Republic of Argentina (the Company), having its legal domicile at Azopardo 1025, City of Buenos Aires, Argentina;

(2) THE BANK OF NEW YORK, a New York banking corporation incorporated under the laws of New York, as trustee (the Trustee), paying agent (the Paying Agent) and co-registrar (the Co-Registrar); and

(3) BANCO SANTANDER RÍO S.A., an Argentine financial institution, incorporated as a sociedad anónima organized under the laws of the Republic of Argentina (Banco Santander Río), as registrar (the Registrar), transfer agent (the Transfer Agent) and paying agent in Argentina (the Paying Agent in Argentina) and representative of the Trustee in Argentina.

RECITALS OF THE COMPANY:

(A) WHEREAS, the creation of the Program (as defined below) was pursuant to resolutions adopted on August 5, 1994 at an extraordinary meeting of the Company’s shareholders, which were ratified by resolutions adopted on September 23, 1996 at an ordinary meeting of the Company’s shareholders; the CNV approved the creation of the Program by Resolution No. 130 dated November 5, 1996 for an aggregate principal amount of up to U.S. $300,000,000, and the Company created a Global Medium Term Note Program (the Program) for the issuance of obligaciones negociables (negotiable obligations) in an aggregate principal amount of up to U.S. $300,000,000 (or its equivalent in other currencies); WHEREAS, the maximum amount of the Program was increased to U.S. $600,000,000 (or its equivalent in other currencies) by resolutions adopted on September 15, 1997 at an extraordinary meeting of the Company’s shareholders, which was approved by the CNV by Certificate 193 on February 27, 1998; WHEREAS, as the initial term of the Program expired on November 5, 2001, the Company’s shareholders approved a five-year extension of its term to November 5, 2006 by resolutions adopted on June 7, 2001 at an extraordinary meeting of the Company’s shareholders, which was approved by the CNV by Resolution No. 286 dated September 4, 2001; WHEREAS, On February 23, 2006, the Company’s shareholders approved an additional five-year extension of the Program to March 23, 2011, which was approved by the CNV by Resolution No. 15,359 dated March 23, 2006;

(B) WHEREAS, pursuant to the Program the Company has duly authorized the execution and delivery of the 10.5% Notes due 2017 in an aggregate principal amount of U.S. $220,000,000 (the Notes) and this Indenture;

(C) WHEREAS, all things necessary to make the Notes, when duly issued and executed by the Company and authenticated by the Trustee and duly delivered hereunder, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done;

(D) WHEREAS, the Notes will initially be represented by global certificates in fully registered form and the Company has obtained the authorization of the CNV (as defined herein) for the public offer of such Notes in Argentina and has obtained or will obtain the authorization for their listing on the Buenos Aires Stock Exchange, admission for trading on the Mercado Abierto Electrónico S.A., listing on the Luxembourg Stock Exchange and admission for trading on the Euro MTF market of the Luxembourg Stock Exchange;

(E) WHEREAS, (i) the purpose of EDENOR S.A. is to provide electric power distribution and commercial services within the Northern area of the City Buenos Aires and certain departments in the province of Buenos Aires, under the terms of the Concession Agreement governing this public utility, as well as advisory services and other activities and businesses related to the distribution and sale of electric power and (ii) the Company was incorporated as a sociedad anónima under the laws of Argentina on July 21,

1992 and registered with the Public Registry of Commerce on August 3, 1992, under No. 7041, Book 111, Volume A of “Sociedades Anónimas,” is domiciled in Argentina, has a term of duration of 95 years and its registered offices are located at Azopardo 1025, City of Buenos Aires, Argentina C1107ADQ, and

(F) WHEREAS, the Trustee has agreed to act as Trustee under this Indenture on the following terms and conditions;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the exchange of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

2

1. ARTICLE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

1.1 Definitions

Act, when used with respect to any Holder, has the meaning specified in Section 1.5 (Acts of Holders; Record Dates).

Additional Amounts has the meaning specified in Section 9.17 (Payment of Additional Amounts).

Additional Notes has the meaning specified in Section 2.2 (Further Issues).

Affiliate means, with respect to any Person, a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with such Person. For purposes of this definition, the term control shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether by ownership of share capital, by contract, by the power to appoint or remove a majority of the members of the governing body of that Person or otherwise; provided that, for the purposes of Section 9.4 (Limitation on Transactions with Shareholders and Affiliates) only, the direct or indirect ownership of ten percent (10%) or more of the voting share capital of a Person is deemed to constitute control of that Person, and “controlling” and “controlled” have corresponding meanings.

AFIP means the Argentine federal tax authority (Administración Federal de Ingresos Públicos).

Applicable Interest Rate means has the meaning specified in Section 3.1 (Title and Terms).

Applicable Procedures means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of any Depositary for such Note, in each case to the extent applicable to such transaction and as in effect from time to time.

Argentine GAAP means generally accepted accounting principles in Argentina consistently applied as adopted by the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires (Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires) and in accordance with the accounting regulations adopted by the CNV.

Argentine Government means the government of the Republic of Argentina or any agency or instrumentality thereof or any company controlled by the Argentine Government.

Argentine Government Obligations means obligations issued or directly and fully guaranteed or insured by the Republic of Argentina or by any agent or instrumentality thereof; provided that the full faith and credit of the Republic of Argentina is pledged in support thereof.

Argentine Taxes has the meaning specified in Section 10.4 (Redemption for Taxation Reasons).

Argentine Tax Jurisdiction has the meaning specified in Section 10.4 (Redemption for Taxation Reasons).

Asset Sale means any sale, lease, transfer or other disposition of any assets by the Company or any Restricted Subsidiary, including, without limitation, by means of a Sale and Leaseback Transaction or of a merger, consolidation or similar transaction or distribution of assets (other than Cash or Cash Equivalents or shares in the Company or any Restricted Subsidiary), to any Person (each of the above referred to as a disposition), provided that the following are not included in the definition of “Asset Sale”:

(a) the disposition by the Company or any Restricted Subsidiary in the ordinary course of business of (i) Cash and Cash Equivalents or Permitted Investments, (ii) inventory and other assets acquired and held for resale in the ordinary course of business, (iii) damaged, worn out or obsolete assets, (iv) assets that are exchanged for or otherwise replaced in accordance with industry practice by comparable or superior assets within a reasonable time or (v) rights granted to others pursuant to leases or licenses;

(b) the sale or discount of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof of overdue and unpaid accounts receivable;

(c) dispositions of Receivables and Related Assets in connection with a Permitted Receivables Financing;

(d) the lease, assignment or sublease of any real or personal property in the ordinary course of business;

(e) a transaction permitted by Section 9.16 (Limitations on Mergers, Consolidations, Sales and Conveyances);

(f) any Restricted Payment permitted under Section 9.5 (Limitation on Restricted Payments) or any Permitted Investments; or

(g) dispositions of assets in any fiscal year with a fair market value in the aggregate not to exceed U.S. $5 million (or its equivalent in other currencies).

Board of Directors means the board of directors of the Company or any committee of the Board of Directors authorized to act on its behalf.

Board Resolution means a copy of a resolution ratified by an officer of the Company, or by a notary public duly adopted by the Board of Directors and in full force and effect on the date of such ratification, and delivered to the Trustee.

Buenos Aires Stock Exchange or BASE means the Bolsa de Comercio de Buenos Aires.


CAMMESA means CAMME S.A. (Compañia Administradora del Mercado Mayorista Eléctrico S.A.).

Capital Stock means capital stock or other equity participation, including partnership interests, or warrants, options or other rights to acquire capital stock or other equity participations, but excluding any debt security that is convertible into, or exchangeable for, capital stock or other such equity participations.

3

Cash and Cash Equivalents means:

(a) any official currencies received or acquired in the ordinary course of business including, without limitation, Pesos, Euro, Dollars or any other currency of countries in which the Company or its Subsidiaries has material operations;

(b) U.S. Government Obligations or certificates representing an ownership interest in U.S. Government Obligations, or securities issued directly and fully guaranteed or insured by any member of the European Union, or any agency or instrumentality thereof (provided that the full faith and credit of such member is pledged in support of those securities) or other sovereign debt obligations (other than those of Argentina) rated “A” or higher or such similar equivalent or higher rating by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act, in each case with maturities not exceeding one year from the date of acquisition;

(c) Argentine Government Obligations (including those of the Central Bank), or quasi-currencies, bonds and other obligations issued, guaranteed or insured by any province or municipality of Argentina, or certificates representing an ownership interest in any of the foregoing with maturities not exceeding one year from the date of acquisition and which obligations can be applied in payment of taxes or other obligations under Argentine Laws;

(d) (i) demand deposits, (ii) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers’ acceptance with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of Argentina or any state thereof and that are eligible to receive and hold deposits of Argentine pension and/or retirement funds (administradoras de fondos de jubilaciones y pensiones);

(e) (i) demand deposits, (ii) time deposits and certificates of deposit with maturities of one year or less from the date of acquisition, (iii) bankers’ acceptances with maturities not exceeding one year from the date of acquisition, and (iv) overnight bank deposits, in each case with any bank or trust company organized or licensed under the laws of the United States or any state thereof or under the laws of any member state of the European Union, or under the laws of any country in which the Company has operations in each case whose head office’s senior short term debt is rated Investment Grade by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act;

(f) repurchase obligations with a term of not more than 30 days for underlying securities of the type described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (e) above;

(g) commercial paper rated Investment Grade by at least one nationally recognized statistical rating organization as contemplated in Rule 436 under the Securities Act and maturing within six months after the date of acquisition;

(h) money market funds at least 95% of the assets of which consist of investments of the type described in clauses (a) through (g) above;

(i) corporate obligations that are eligible to be purchased and/or held for investment by Argentine pension and/or retirement funds (administradoras de fondos de jubilaciones y pensiones); and

(j) substantially similar investments, of comparable credit quality, denominated in the currency of any jurisdiction in which the Company or its Subsidiaries conducts business.

Central Bank means the Banco Central de la República Argentina, the Argentine Central Bank. 4

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Certificated Notes Legend means the following legend to be placed upon a Certificated Note:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.

Change of Control means the occurrence of an event which causes any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act), other than Electricidad Argentina S.A. (EASA), to become a direct holder or owner of (x) more than fifty percent (50%) of the ordinary shares of the Company or (y) a number of ordinary shares of the Company that affords such person or group the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the members of the Board of Directors; provided, however, that, notwithstanding the above, should the Argentine Government acquire more than 50% of the outstanding shares of the Company (directly or indirectly), such acquisition shall constitute a Change of Control.

Change of Control Offer has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Change of Control Payment has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Change of Control Payment Date has the meaning specified in Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control).

Clearstream means Clearstream Banking, société anonyme, Luxembourg and its successors.


Commodity Agreement means any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities or raw materials used by the Company (other than energy).

Company means the Person named as the Company in the first paragraph of this instrument at Empresa Distribuidora y Comercializadora Norte S.A., Azopardo 1025, Ciudad de Buenos Aires, C1107ADQ, Buenos Aires, Argentina, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Company shall mean such successor Person.

Company Request or Company Order means a written request or order signed on behalf of the Company by an Officer of the Company and delivered to the Trustee.

Concession Agreement means the concession agreement dated August 5, 1992 between the Republic of Argentina, represented by the Argentine Secretary of Energy (Secretaría de Energía) and the Company, which grants the Company the exclusive right to distribute electricity to all users within the Company’s designated service area for a period of 95 years.

Consolidated Total Indebtedness means, at any date, the sum of (i) the aggregate principal amount outstanding of the Company and its Restricted Subsidiaries’ Peso-denominated Indebtedness on a consolidated basis, as of the most recent fiscal quarter for which financial statements are available, plus (ii) the Peso Average of the aggregate principal amount outstanding of the Company and its Restricted Subsidiaries’ non Peso-denominated Indebtedness, on a consolidated basis, as of the most recent fiscal quarter for which financial statements are available, plus, if applicable, (iii) the amount of any Peso-denominated Indebtedness and the Peso equivalent (at the Prevailing Exchange Rate as of the date of determination) of any outstanding non-Peso denominated Indebtedness that was Incurred after the date of

the most recent fiscal quarter for which financial statements are available, minus (iv) the amount of any Peso-denominated Indebtedness and the Peso-equivalent (at the Prevailing Exchange Rate) of any non-Peso Indebtedness that was paid in full after the date of the most recent fiscal quarter for which financial statements are available.

Corporate Trust Office means the office of the Trustee at The Bank of New York, Corporate Trust Department—Global Finance Unit, 101 Barclay Street, Floor 4 East, New York, New York 10286, United States of America at which at any particular time its corporate trust business shall be principally administered.

CSSF means the Commission de surveillance du secteur financier of Luxembourg, as from time to time constituted.


Defaulted Interest has the meaning specified in Section 3.6 (Payment of Interest; Interest Rights Preserved).

Depositaries shall mean DTC, Euroclear and Clearstream their respective nominees and the successors of any of the foregoing; Depositary will refer to DTC, Euroclear or Clearstream, as the case may be.

Disqualified Stock means, with respect to any Person, any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, carries the right to any mandatory dividend or distribution payment (other than a right that is expressly subject to compliance by the Company with its obligations under this Indenture), matures or is mandatorily redeemable, in whole or in part, pursuant to a sinking fund obligation or otherwise, is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the relevant note.

Dollars, U.S. Dollars and the signs $ or U.S. $ mean the lawful currency of the United States.

DTC means The Depository Trust Company, a New York Corporation.

EBITDA means, for any period, the consolidated operating income (loss) for the Company and its Restricted Subsidiaries for such period plus, without duplication and to the extent deducted in determining such consolidated operating income (loss), the sum of (a) consolidated amortization of intangible assets for such period, (b) consolidated depreciation of fixed assets for such period, (c) consolidated amortization of other non-current assets for such period and (d) any other non-cash charges that were deducted in computing consolidated operating income (loss) (excluding any non-cash charge which requires an accrual or reserve for cash charges for any future period). EBITDA is calculated based on the consolidated financial statements of the Company and its Restricted Subsidiaries as of the end of such period, prepared in accordance with Argentine GAAP.

ENRE means the Ente Nacional Regulador de la Electricidad (the Argentine Electricity Regulator).

Equity Interests means all Capital Stock and all warrants or options with respect to, or other rights to purchase, Capital Stock, but excluding Indebtedness convertible into equity.

Euro, euro and the sign € mean the single lawful currency of member states of the European Union as constituted by the treaty establishing the European Community, being the Treaty of Rome, as amended from time to time.

Euroclear means Euroclear Bank S.A./N.V., as operator of the Euroclear system and its successors.

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Event of Default has the meaning specified in Section 5.1 (Events of Default).

Exchange Act means the U.S. Securities Exchange Act of 1934, as amended.

Global Note means a Note that is registered in the Note Register in the name of one or more Depositaries.

Global Notes Legend means the following legend to be placed upon a Global Note:


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

Guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other financial obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take or pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof, in whole or in part; provided that the term “Guarantee” does not include endorsements for collection or deposit in the ordinary course of business or guarantees of performance that do not include any contingent payment obligation. The term “Guarantee” used as a verb has a corresponding meaning.

Hedging Contract means (i) any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates or (ii) any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates, in each case entered into in the ordinary course of business and not for speculative purposes.

Holder means a Person in whose name a Note is registered in the Note Register.

Incur means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise) assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation or the recording, as required pursuant to Argentine GAAP or the regulations of the CNV, of any such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided, however, that (i) a change in Argentine GAAP or in the regulations of the CNV that results in an obligation of such Person that exists at such time being reclassified as Indebtedness shall not be deemed an Incurrence of such Indebtedness, (ii) with respect to Peso-denominated Indebtedness, an increase, whether periodically or

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otherwise, in the nominal principal amount of such Indebtedness as a result of and in proportion to the devaluation of the Peso against the U.S. Dollar or the rate of inflation in Argentina shall not be deemed an Incurrence of such Indebtedness and (iii) with respect to Indebtedness previously Incurred, a change in the U.S. Dollar equivalent of such Indebtedness shall not be deemed an Incurrence of such Indebtedness.

Indebtedness means, with respect to any Person, without duplication:

(a) all obligations of such Person for borrowed money;

(b) all obligations of such Person evidenced by bonds, debentures, Notes or other similar instruments;

(c) all obligations of such Person for the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business;

(d) all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments, excluding obligations in respect of trade letters of credit or bankers’ acceptances issued in respect of trade payables;

(e) all obligations of such Person under Hedging Contracts;

(f) Disqualified Stock of such Person;

(g) all Indebtedness of others secured by any Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

(h) all obligations of such Person under any receivables financing, including any Permitted Receivables Financing; and

(i) all Indebtedness of other Persons Guaranteed by such Person to the extent so Guaranteed.

The amount of Indebtedness of any Person will be deemed to be:

(a) with respect to Indebtedness secured by a Lien on an asset of such Person but not otherwise the obligation, contingent or otherwise, of such Person, the lesser of (x) the fair market value of such asset on the date the Lien attached or (y) the amount of such Indebtedness;

(b) with respect to any Indebtedness issued with original issue discount, the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness;

(c) with respect to any Hedging Contract, the net amount payable if such Hedging Contract terminated at that time due to default by such Person;

(d) with respect to any sale of Receivables and Related Assets, the amount of the unrecovered capital or principal investment of the purchase excluding amounts representative of yield or interest earned on such investment; and

(e) otherwise, the outstanding principal amount thereof.

The outstanding principal amount of any particular Indebtedness shall be counted only once and any obligations arising under any Guarantee, Lien, letter of credit or similar instrument supporting such Indebtedness shall not be double counted.

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Indenture means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture.

Insolvency Law means any law (together with the rules and regulations made pursuant thereto) of any jurisdiction (including any political subdivision thereof) relating to bankruptcy, insolvency, winding up, liquidation, reorganization, or any other similar procedure relating to the relief of debtors.

Interest Expense means, for any period, the aggregate amount of (i) the consolidated cash interest expense to be paid or non-cash interest expense to be accrued of the Company and its Restricted Subsidiaries during such period in respect of Indebtedness, (x) including, without limitation, (a) amortization of original issue discount on any Indebtedness, (b) the interest portion of any deferred payment obligation, (c) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and (d) the net costs associated with obligations set out in Hedging Contracts, including the amortization of capitalized hedged costs, all net of interest income, and (y) excluding (a) any interest expense in respect of debt securities that have been repurchased by the Company and (b) any adjustments to regulatory fines and penalties that are recorded as interest expense, (ii) all but the principal component of rent under Sale and Leaseback Transactions paid, accrued or scheduled to be paid or to be accrued by the Company or any Restricted Subsidiary during such period, and (iii) cash and non-cash dividends paid, declared, accrued or accumulated on any Disqualified Stock of the Company or a Restricted Subsidiary, except for dividends payable in Qualified Equity Interests of the Company or paid to the Company or to a Wholly-Owned Restricted Subsidiary.

Interest Expense Coverage Ratio means, as of any date of determination, for the Company and its Restricted Subsidiaries on a consolidated basis based on financial statements issued in accordance with Argentine GAAP, the ratio of (x) the aggregate amount of EBITDA for the four fiscal quarters immediately prior to such date of determination for which internal financial statements are available (the reference period) to (y) the aggregate Interest Expense during such reference period.

In making the foregoing calculation,

(a) pro forma effect will be given to any Indebtedness Incurred during or after the reference period to the extent the Indebtedness is outstanding or is to be Incurred on such date of determination as if the Indebtedness had been Incurred on the first day of the reference period;

(b) pro forma calculations of interest on Indebtedness bearing a floating interest rate will be made as if the rate in effect on such date of determination (taking into account any Hedging Contract applicable to the Indebtedness if the Hedging Contract has a remaining term of at least 12 months) had been the applicable rate for the entire reference period;

(c) Interest Expense related to any Indebtedness no longer outstanding or to be repaid or redeemed on such date of determination, except for Interest Expense accrued during the reference period under a revolving credit to the extent of the commitment thereunder (or under any successor revolving credit) in effect on the transaction date, will be excluded;

(d) pro forma effect will be given to

(i) the creation, designation or redesignation of Restricted and Unrestricted Subsidiaries,

(ii) the acquisition or disposition of companies, divisions or lines of businesses by the Company and its Restricted Subsidiaries, including any acquisition or disposition of a company, division or line of business since the beginning of the reference period by a Person that became a Restricted Subsidiary after the beginning of the reference period, and

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(iii) the discontinuation of any discontinued operations but, in the case of Interest Expense, only to the extent that the obligations giving rise to Interest Expense will not be obligations of the Company or any Restricted Subsidiary following the transaction date

that have occurred since the beginning of the reference period as if such events had occurred, and, in the case of any disposition, the proceeds thereof applied, on the first day of the reference period. To the extent that pro forma effect is to be given to an acquisition or disposition of a company, division or line of business, the pro forma calculation will be based upon the most recent four full fiscal quarters for which the relevant financial information is available.

Interest Payment Date means April 9 and October 9 of each year, commencing on April 9, 2008; provided that if any Interest Payment Date would fall on a day other than a Business Day, such Interest Payment Date shall be the next succeeding Business Day with the same force and effect as if made on such April 9 or October 9, as applicable, with no accrual of interest for the period between such date and such immediately succeeding Business Day.


Investment means:

(a) any direct or indirect advance, loan or other extension of credit to another Person;

(b) any capital contribution to another Person, by means of any transfer of cash or other property or in any other form;

(c) any purchase or acquisition of Equity Interests or Indebtedness of another Person or other instruments or securities issued by another Person, including the receipt of any of the above as consideration for the disposition of assets or rendering of services; or

(d) any Guarantee of any obligation of another Person, but only when payment has been made thereunder or such arrangement would be classified and accounted for as a liability on the balance sheet of the guarantor.

If the Company or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary so that, after giving effect to that sale or disposition, such Person is no longer a Subsidiary of the Company, or designates any Restricted Subsidiary as an Unrestricted Subsidiary in accordance with the provisions of this Indenture, all remaining Investments of the Company and its Restricted Subsidiaries in such Person shall be deemed to have been made at that time.

Investment Grade means a rating of BBB-/Baa3 or higher or such similar equivalent or higher rating by an internationally recognized statistical rating organization including a statistical rating organization recognized by the SEC as a “nationally recognized statistical rating organization.”

Issuance Date means the date of original issuance of the Notes under this Indenture.

Judgment Currency has the meaning specified in Section 1.16 (Conversion of Currency).

Leverage Ratio means, as of any date of determination, for the Company and its Restricted Subsidiaries on a consolidated basis based on financial statements issued in accordance with Argentine GAAP, the ratio of (i) Consolidated Total Indebtedness (excluding any Indebtedness Incurred in connection with bonds or other collateral posted pursuant to paragraph (g) of Section 5.1 (Events of Default)) on such date (calculated without giving effect to the discount to net present value applied to restructured debt under

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Argentine GAAP) to (ii) EBITDA for the most recently completed period of four consecutive fiscal quarters.

Lien means, with respect to any asset, any mortgage, assignment, security interest, pledge, lien, encumbrance, trust, or any preferential arrangement having the practical effect of constituting a security interest with respect to such asset (other than the ownership interest of the lessor in any Sale and Leaseback Transaction).

Luxembourg means the Grand Duchy of Luxembourg.

MAE means the Mercado Abierto Electrónico S.A, the Argentine over-the-counter market.

Mandatory Investment means any Investment that the Company or any Restricted Subsidiary is required to make as a result of any officially published law, regulation, rule, decree, directive or resolution first promulgated, proposed or issued after October 1, 2007 of any governmental body or any body responsible for the regulation of the electricity market in Argentina, including, but not limited to the Argentine Secretary of Energy, the ENRE and/or CAMMESA.

Maturity, when used with respect to an amount of principal of any Note, means the date on which such principal amount of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

Moody’s means Moody’s Latin America Calificadora de Riesgo S.A. and its successors and assigns.

Negotiable Obligations Law means Argentine Law No. 23,576, as amended by Argentine Law No. 23,962 and as further amended.

Net Cash Proceeds means, with respect to any Asset Sale, the proceeds of such Asset Sale in the form of Cash and Cash Equivalents (including (i) payments in respect of deferred payment obligations to the extent corresponding to principal, but not interest, when received in the form of Cash and Cash Equivalents and (ii) proceeds from the conversion of other consideration received when converted to Cash and Cash Equivalents), net of, without duplication,

(a) brokerage commissions and other fees and expenses related to such Asset Sale, including, without limitation, reasonable fees and expenses of counsel, accountants, currency exchange agents and investment bankers;

(b) any required payment to the Republic of Argentina pursuant to the Concession Agreement or any provisions for taxes and all other governmental charges and claims of any nature whatsoever, payable as a result of such Asset Sale;

(c) payments required to be made as a result of such Asset Sale or to repay Indebtedness at the time of such Asset Sale that is secured by a Lien on the property or assets sold or is required to be repaid out of the proceeds of such Asset Sale; and

(d) appropriate amounts to be provided as a reserve against liabilities associated with such Asset Sale, including pension and other post employment benefit liabilities, liabilities related to environmental, tax or regulatory matters and indemnification obligations associated with such Asset Sale, with any subsequent reduction of the reserve other than by payments made and charged against the reserved amount to be deemed a receipt of Cash and Cash Equivalent.

New York Banking Day means any London Banking Day on which commercial banks are not authorized or required to close in New York City.

Non-Global Note means a Note that is not a Global Note.

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Note or note means any of the Company’s 10.5% Notes due 2017.

Notice of Default means a written notice of the kind specified in Section 6.2 (Notice of Defaults).

Note Register and Registrar have the respective meanings specified in Section 3.4 (Registration, Registration of Transfer and Exchange Generally).

Offering Memorandum means the final offering memorandum relating to the Notes dated October 1, 2007.

Officer means, when used with respect to the Company, the president, general manager, chief financial officer, general accountant, treasurer, any member of the Board of Directors, or any of their respective attorneys-in-fact designated by the Company.

Officers’ Certificate means a certificate signed by any two principal executive, financial or accounting Officers of the Company.

Opinion of Counsel means an opinion in writing signed by legal counsel who may be an employee of or counsel to the Company or other counsel, but in the case of U.S. federal law, will be reputable U.S. counsel knowledgeable in the relevant field.

Optional Redemption has the meaning set forth in Section 10.2 (Redemption at the Company’s Option).

Outstanding, when used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:

(a) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(b) Notes for the payment or redemption of which money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside, segregated and held in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed prior to the maturity thereof, written notice of such redemption has been duly given pursuant to this Indenture, or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Notes in substitution for which other Notes shall have been authenticated and delivered, or which shall have been paid, pursuant to the terms of 3.6 (Payment of Interest; Interest Rights Preserved) (except with respect to any such Note as to which proof satisfactory to the Trustee is presented that such Note is held by a Person in whose hands such Note is a legal, valid and binding obligation of the Company),

provided, however, that in determining whether the Holders of the requisite aggregate principal amount of the Notes then Outstanding have concurred in any request consent or waiver under this Indenture, Notes that are owned by the Company or any other obligor on the Notes or any Affiliate of the Company with respect to which such determination is being made or by any Person directly or indirectly controlling or controlled by or under control or indirect common control with the Company or any other obligor on the Notes with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such request, consent or waiver, only Notes that a Responsible Officer of the Trustee knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes or any Affiliate of the Company. In case of a dispute as to such right, the advice of

counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all securities, if any, known by the Company to be owned or held by or for the account of any of the above-described Persons; and the Trustee shall be entitled to accept such Issuer Order as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are Outstanding for the purpose of any such determination.

Paying Agent means the Principal Paying Agent (and its successors and assigns) and any other qualified Persons authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company.

Permitted Business means any business permitted as of October 1, 2007 by the Company’s bylaws or by its Restricted Subsidiaries’ bylaws, and any business providing electricity transmission and/or distribution services or other services provided through or using the Company’s distribution system or network or any business reasonably related, incidental, complementary or ancillary thereto.

Permitted Investments means:

(a) any Investment in the Company or in a Restricted Subsidiary of the Company that is engaged in a Permitted Business;

(b) any Investment in Cash and Cash Equivalents;

(c) any Investment by the Company or any Subsidiary of the Company in a Person, if as a result of such Investment,

(i) such Person becomes a Restricted Subsidiary of the Company engaged in a Permitted Business, or

(ii) such Person is merged or consolidated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Company or one of its Restricted Subsidiaries engaged in a Permitted Business,

(d) Investments received as non-cash consideration in an Asset Sale made pursuant to and in compliance with Section 9.3 (Limitations on Asset Sales) or received as non-cash consideration in a refinancing of an existing Investment;

(e) any Mandatory Investment;

(f) (i) receivables owing to the Company or any of its Restricted Subsidiaries if created or acquired in the ordinary course of business, (ii) Hedging Contracts, Commodity Agreements and any Cash and Cash Equivalents or other cash management investments or liquid or portfolio securities pledged on collateral pursuant to Hedging Contracts or Commodity Agreements, (iii) endorsements for collection or deposit in the ordinary course of business, (iv) securities, instruments or other obligations (and related Hedging Contracts) received in compromise or settlement of debts created in the ordinary course of business, or by reason of a composition or readjustment of debts or reorganization of another Person, or in satisfaction of claims or judgments, and (v) securities, instruments or other obligations received in the ordinary course of business and related Hedging Contracts received in connection with mandatory or voluntary exchange offers set up by the federal, provincial or municipal government of Argentina;

(g) payroll, travel and other loans or advances to, or Guarantees issued to support the obligations of, officers and employees, in each case in the ordinary course of business;

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(h) national, provincial or other Argentine Government Obligations (including those of the Central Bank), or quasi-currencies, bonds and other obligations issued, guaranteed or insured by any province or municipality of Argentina, or certificates representing an ownership interest in any of the foregoing;

(i) Investments in securities of corporate issuers accounted for as marketable securities owned by the Company on the Issuance Date or purchased with the Net Cash Proceeds of any sale of such marketable securities or of any subsequent sales of marketable securities permitted to be purchased with the Net Cash Proceeds of marketable securities covered by this clause (i);

(j) in addition to Investments listed above, Investments in an aggregate amount, taken together with all other Investments made in reliance on this clause (j), not to exceed U.S. $10 million (or its equivalent in other currencies) (net of, with respect to the Investment in any particular Person made pursuant to this clause, the cash return thereon received after the Issuance Date as a result of any sale for cash, repayment, redemption, liquidating distribution or other cash realization not to exceed the amount of such Investments in such Person made after the Issuance Date in reliance on this clause);

(k) Investments in a Receivables Entity that are necessary or desirable to effect any Permitted Receivables Financing; and

(l) any Notes repurchased pursuant to or in accordance with the terms hereof.

Permitted Receivables Financing means any receivables financing facility, factoring program or arrangement, including a Receivables Entity, pursuant to which Receivables and Related Assets of Edenor or any of its Restricted Subsidiaries are sold to or are financed by third parties, provided that the aggregate consideration received in any such sale or financing is at least equal to the fair market value of the Receivables and Related Assets sold, less customary discounts, reserves or amounts reflecting the implicit interest rate.

Permitted Refinancing Indebtedness means an extension or renewal of, replacement of, or substitution for, or issue of Indebtedness in exchange for, or the net proceeds of which are used to repay, redeem, repurchase, refinance, extend or refund, including by way of defeasance (all of the above, for purposes of this clause, refinance) then outstanding Indebtedness of the Company or any of its Restricted Subsidiaries incurred or existing under Section 9.2 (Limitations on Indebtedness); provided that (i) the Indebtedness so Incurred (A) does not exceed the amount so refinanced or (B) is used exclusively to refinance scheduled principal or interest payments up to the amount of the scheduled principal or interest payments being refinanced; (ii) such Indebtedness is Incurred by the same entity which Incurred the Indebtedness which is being refinanced, and no additional security, collateral guarantees or other support is provided; and (iii) such Indebtedness shall have a Weighted Average Life to Maturity that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being refinanced.

Person means any individual, corporation, partnership, joint venture, association, company, trust, unincorporated organization or government or any agency or political subdivision thereof.

Peso Average means, with respect to the amount of any non-Peso-denominated Indebtedness, the amount of Pesos obtained by converting the aggregate principal amount of any such non-Peso-denominated Indebtedness into Pesos at an average exchange rate determined by reference to the exchange rate for the buying of Pesos, as reported by Banco de la Nación Argentina, on each day for which rates are available during the period corresponding to the relevant period used to calculate EBITDA in connection with any calculation or determination of the Leverage Ratio.

Peso, pesos or Ps. means the freely transferable lawful currency of Argentina.

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Predecessor Note of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 3.6 (Payment of Interest; Interest Rights Preserved) in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note;

Prevailing Exchange Rate means the exchange rate for converting pesos into Dollars published as the selling rate (tipo vendedor) by Banco de la Nación Argentina, or, if such exchange rate is not published by Banco de la Nación Argentina or reflects a rate of exchange that differs from the average rates available in the free exchange market on such day by 10% or more, the average rates for such day.

Principal Paying Agent means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Notes on behalf of the Company and, initially, the Trustee.

Process Agent has the meaning specified in Section 1.17 (Agent for Service; Submission to Jurisdiction).

Property means any asset, revenue or any other property, whether tangible or intangible, real or personal, including, without limitation, any right to receive income.

Public Equity Offering means a primary underwritten public offering of Qualified Equity Interests (i) pursuant to a registration statement (other than a registration statement filed on Form F-4 or S-8) filed with the SEC or (ii) in accordance with Argentine laws, rules and regulations.

Qualified Equity Interests means all Capital Stock of a Person other than Disqualified Stock.

Rating Agencies means S&P and Moody’s;

Receivables and Related Assets means any account receivable (whether now existing or arising thereafter) of the Company or any Restricted Subsidiary, or any assets, related thereto, including all collateral securing such accounts receivable, all contracts and contract rights and all Guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.

Receivables Entity means an Unrestricted Subsidiary of the Company

(1) that is designated a Receivables Entity by the Board of Directors,

(2) that does not engage in, and whose charter prohibits it from engaging in, any activities other than Permitted Receivables Financings and any activity necessary, incidental or related thereto,

(3) no portion of the Indebtedness or any other obligation, contingent or otherwise, of which

(i) is guaranteed by the Company or any Restricted Subsidiary,

(ii) is recourse to or obligates the Company or any Restricted Subsidiary in any way, or

(iii) subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, and

(4) with respect to which neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve its financial condition or cause it to achieve certain levels of operating results,

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other than, in respect of clauses (3) and (4), pursuant to customary representations, warranties, covenants and indemnities entered into in connection with a Permitted Receivables Financing. For the avoidance of doubt, any sale or financing of Receivables and Related Assets by a Receivables Entity shall be subject to same restrictions set forth in this Indenture with respect to any such sale or financing made directly by the Company or any of its Restricted Subsidiaries.


Redemption Date, when used with respect to any Note to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

Redemption Price, when used with respect to any Note to be redeemed, means the price at which such Note is to be redeemed pursuant to this Indenture.

Regulation S means Regulation S under the Securities Act.

Regulation S Certificate means a certificate substantially in the form set forth in Annex A hereto.

Regulation S Global Note has the meaning specified in Section 2.1 (Forms of the Notes).

Regulation S Notes means any Notes that are not Restricted Notes.

Regulatory Capital Expenditures means any capital expenditures made by the Company or any of its Restricted Subsidiaries under any officially published law, regulation, rule, decree, directive or resolution first promulgated, proposed or issued after October 1, 2007 of any governmental body or any body responsible for the regulation of the electricity market in Argentina, including, but not limited to the Argentine Secretary of Energy, ENRE and/or CAMMESA.

Related Proceeding has the meaning specified in Section 1.17 (Agent for Service; Submission to Jurisdiction).

Representative Amount means a principal amount of not less than U.S. $1,000,000 for a single transaction in the relevant market at the relevant time.

Required Currency means the currency in which the Notes are denominated and in which payment is to be made in respect thereof at Maturity.

Responsible Officer, when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

Restricted Global Note has the meaning specified in Section 2.1 (Forms of the Notes).

Restricted Note means any Note required pursuant to Section 3.4 (Registration, Registration of Transfer and Exchange Generally) to bear a Restricted Notes Legend, including, but not limited to the Restricted Global Note.

Restricted Notes Certificate means a certificate substantially in the form set forth in Annex B hereto.

Restricted Notes Legend means the following legend to be placed upon a Restricted Note:

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Restricted Payment has the meaning specified in Section 9.5 (Limitation on Restricted Payments).

Restricted Subsidiary means any direct or indirect Subsidiary of the Company, other than an Unrestricted Subsidiary.

Restructuring Indenture means the indenture, dated as of April 24, 2006, among the Company and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Río de la Plata S.A. as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina.

Rule 144 means Rule 144 under the Securities Act.

Rule 144A means Rule 144A under the Securities Act.

S&P means Standard & Poor’s International Ratings LLC.

Sale and Leaseback Transaction means, with respect to the Company or any Restricted Subsidiary, any transaction or series of related transactions (excluding, however, any such transaction between the Company and one or more Restricted Subsidiaries or between or among any two or more Restricted Subsidiaries) pursuant to which the Company or any Restricted Subsidiary sells or transfers any property in connection with the leasing, or the resale against installment payments, or as part of an arrangement involving the leasing or resale against installment payments of such Property to the seller or transferor.

SEC means the United States Securities and Exchange Commission.

Security Currency has the meaning specified in Section 1.16 (Conversion of Currency).

Securities has the meaning specified in Section 1.19 (Foreign Exchange Restrictions).

Securities Act means the United States Securities Act of 1933, as amended, including the rules and regulations of the SEC promulgated thereunder.

Securities Act Legend means a Restricted Notes Legend.

Significant Subsidiary means any Subsidiary that would be a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X under the Securities Act, as such Regulation is in effect on the Issuance Date.

Special Record Date for the payment of any Defaulted interest means a date fixed by the Trustee pursuant to Section 3.6 (Payment of Interest; Interest Rights Preserved).

Stated Maturity, when used with respect to any amount of principal of any Note or any interest payment thereon, means the date specified in such Note as the date on which such principal amount or such interest payment is due and payable.

Subordinated Indebtedness means any Indebtedness of the Company that is expressly subordinated in right of payment to the Notes pursuant to a Subordination Agreement.

Subordination Agreement means any written agreement pursuant to which the Indebtedness being subordinated thereunder is made subordinated in right of payment and priority to the Notes.

Subsidiary means:

(a) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the time directly or indirectly owned by the Company, or

(b) any other Person (other than a corporation) in which the Company, directly or indirectly at the date of determination thereof, has at least a majority ownership interest.

Successor Note of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced by such particular Note. For the purposes of this definition, any Note authenticated and delivered under Section 3.6 (Payment of Interest; Interest Rights Preserved) in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

Supervisory Committee means the Comisión Fiscalizadora of the Company.

Taxes means any present or future taxes, levies, imposts, duties, charges, assessments or fees of any nature that are imposed by any government or other taxing authority.

Trust Indenture Act means the U.S Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that, in the event the Trust Indenture Act of 1939 is amended after such date, Trust Indenture Act means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as so amended.

Trustee means the Person named as the Trustee in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee.

Unrestricted Notes Certificate means a certificate substantially in the form set forth in Annex C hereto.

Unrestricted Subsidiary means any Subsidiary of the Company that at the time of determination has been designated an Unrestricted Subsidiary and such designation has not been revoked in accordance with Section 9.14 (Designation of Restricted and Unrestricted Subsidiaries).

U.S. Government Obligations means obligations issued or directly and fully guaranteed or insured by the United States of America or by any agent or instrumentality thereof; provided that the full faith and credit of the United States of America is pledged in support thereof.

Voting Stock means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

Weighted Average Life to Maturity means, when applied to any Indebtedness at any date, the number of years (calculated to the nearest one-twelfth) obtained by dividing:

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(a) the then outstanding aggregate principal amount or liquidation preference, as the case may be, of such Indebtedness into

(b) the sum of the products obtained by multiplying:

(i) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal or liquidation preference, as the case may be, including payment at final maturity, in respect thereof, by

(ii) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

Wholly-Owned means, with respect to any Subsidiary of any Person, such Subsidiary if all of the Outstanding Capital Stock in such Subsidiary (other than any directors’ qualifying shares or similar shares, ownership of which by a specified person is mandated by law) is owned by such Person or one or more Wholly-Owned Subsidiaries of such Person.

1.2 Rules of Construction

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article 1 or elsewhere in this Indenture have the meanings assigned to them;

(b) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with Argentine GAAP;

(d) words in the singular include the plural, and words in the plural include the singular;

(e) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section, Annex, Exhibit or other subdivision;

(f) mentioning anything after “include”, “includes” or “including” does not limit what else might be included, and the use of “or” is not exclusive;

(g) provisions apply to successive events and transactions;

(h) references herein to Sections, Annexes or Exhibits are references to Sections of or Annexes or Exhibits to this Indenture;

(i) unless the context otherwise requires, any reference to a statute, rule or regulation refers to the same (including any successor statute, rule or regulation thereto) as it may be amended from time to time; and

(j) whenever in this Indenture there is referenced, in any context, the payment of principal, premium or interest, or any other amount under or with respect to any Note, that reference shall be deemed to include the payment of Additional Amounts to the extent that Additional Amounts are, were or would be payable in respect thereof.

1.3 Compliance Certificates and Opinions

Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Trustee may require an Officers’ Certificate or an Opinion of Counsel.

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Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include substantially:

(a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

1.4 Form of Documents delivered to Trustee

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

1.5 Acts of Holders; Record Dates

To the extent permitted by law, any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1 (Certain Duties and Responsibilities)) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution

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of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient

The Company may, in the circumstances permitted by the Trust Indenture Act, fix any day as the record date for the purpose of determining the Holders entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action, or to vote on any action, authorized or permitted to be given or taken by Holders. If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or, in the case of any such vote, prior to such vote, the record date for any such action or vote shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders)) prior to such first solicitation or vote, as the case may be. With regard to any record date, only the Holders on such date (or their duly designated proxies) shall be entitled to give or take, or vote on, the relevant action.

The ownership of Notes shall be proved by the Note Register.

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.

1.6 Notices, etc., to Trustee and Company

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(a) the Trustee, by any Holder or by the Company, shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention Corporate Trust Department,

(b) the Company, by the Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company, Attention: Chief Financial Officer; or

(c) either the Trustee or the Company, by the other party, shall be sufficient for every purpose hereunder if given by facsimile transmission, receipt, confirmed by telephone followed by an original copy delivered by guaranteed overnight courier to the addresses set forth in (a) or (b) above, as the case may be; if to the Trustee at facsimile number 212-815-5802/3 or at any other facsimile number previously furnished in writing to the Company by the Trustee; and if to the Company at facsimile number (54-11) 4346-5325/5358 or at any other facsimile number previously furnished in writing to the Trustee by the Company.

1.7 Notice to Holders

The Company is required to give notice to the Trustee of any event that requires notice to be given to the Holders of the Notes in sufficient time for the Trustee to provide such notice to such Holders in the manner provided in this Indenture. All notices regarding the Notes will be given to the Holders of the Notes by the Trustee.

Except in the case of meetings which shall be governed by the Section 8.8 (Meetings of Holders) all notices regarding the Notes will be deemed to have been duly given to the Holders of the Notes if:

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(a) in writing and mailed, first class postage prepaid, to each Holder of a Note at the address of such Holder as it appears in the Note Register, not earlier than the earliest date and not later than the latest date prescribed for the giving of such notice and any such notice shall be deemed to have been given on the date of such publication (as defined below); and

(b) for so long as applicable Argentine laws or regulations so require, in the case of Argentine Holders upon publication:

(i) in the Daily Bulletin of the Buenos Aires Stock Exchange or in the Bulletin of the MAE in Buenos Aires (so long as the Notes are listed on the Buenos Aires Stock Exchange or admitted to trading on the MAE, as the case may be); and/or

(ii) in a leading newspaper having general circulation in Buenos Aires (which is expected to be La Nación); and/or

(iii) in the Official Gazette (Boletin Oficial) of the Republic of Argentina;

(c) for so long as any Notes to which such notice relates are admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange and the rules of such exchange so require, upon publication in the English language in a leading newspaper having general circulation in Luxembourg (which is expected to be the d’Wort or the Tageblatt) or, if in any such case publication in Luxembourg is not practicable, in one other leading English language daily newspaper with general circulation in Europe, each such newspaper being published on each Business Day in morning editions, whether or not it shall be published in Saturday, Sunday or holiday editions, or alternatively, on the website of the Luxembourg Stock Exchange at http://www.bourse.lu.

All notices will also be given to the relevant clearing systems for delivery to owners of beneficial interests in the Notes through DTC, and/or Euroclear and Clearstream, Luxembourg.

Notices will be deemed to have been given on the date of publication as aforesaid or, if published on different dates, on the date of the last such publication.

The Company will cause all such other publications of such notices as may be required from time to time by applicable Argentine law, including, without limitation, those required under the regulations issued by the CNV, the Luxembourg Stock Exchange and the Buenos Aires Stock Exchange.

1.8 Trust Indenture Act Deemed to Apply and Control

Whether or not expressly stated with respect to any particular provision, this Indenture, the Company, and the Trustee shall be deemed for all purposes hereof to be subject to and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were required to be qualified under the Trust Indenture Act

If any provision of this Indenture limits, qualifies or conflicts with the duties that would be imposed by section 318(c) of the Trust Indenture Act the duties imposed by such section shall be deemed to control as if the Trust Indenture Act shall be applicable hereto.

If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded in indentures required to be qualified under the Trust Indenture Act, the provision contained in this Indenture shall apply.

Whenever this Indenture refers to a provision of the Trust Indenture Act, such provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“Commission” means the SEC as defined herein;

“indenture securities” means the Notes;

“indenture security holder” means a Holder;

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“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and

“obligor” on the indenture securities means the Company or any other successor obligor in respect of the Notes.

1.9 Waiver of Certain Covenants

The Company may omit in any particular instance to comply with any covenant or condition contained in this Indenture if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Notes shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the Company’s obligations and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect. Any waiver under this Section 1.9 may be granted (i) by written consent of Holders of not less than a majority of the then outstanding aggregate principal amount of the Notes, or (ii) by consent of a majority of the Holders of the Notes present or represented at a meeting of Holders of Notes as provided in Section 8.8 (Meetings of Holders), in each case in compliance with Section 8.2 (Supplemental Indentures With Consent of Holders).

1.10 Effect of Headings and Table of Contents

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

1.11 Successors and Assigns

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

1.12 Separability Clause

In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way he affected or impaired thereby.

1.13 Benefits of Indenture

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture.

1.14 Governing Law

(a) The Negotiable Obligations Law governs the requirements for the Notes to qualify as obligaciones negociables thereunder while such law, together with Argentine Law No. 19,550, as amended, and other applicable Argentine laws and regulations, govern the capacity and corporate authorization of the Company to execute and deliver the Notes and this Indenture and the authorization and other requirements of the CNV for the public offering of the Notes in Argentina.

(b) As to all other matters, this Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York, United States of America.

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1.15 Legal Holidays

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, on account of such delay.

1.16 Conversion of Currency

The Company covenants and agrees that the following provisions shall apply to conversion of currency in the case of the Notes and this Indenture:

(a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum due under this Indenture or under the Notes from one currency into another currency, the Company has agreed and each Holder agrees, to the fullest extent that the Company and each Holder may effectively do so, that the rate of exchange used shall be the rate at which, in accordance with normal banking procedures, such Holder could purchase the first currency with such other currency in the city that is the principal financial center of the country of issue of the first currency on the day, two Business Days preceding the day on which final judgment is given, which is also a day on which banks are open in Argentina.

(b) In the event of the winding-up of the Company at any time while any amount owing under the Notes and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company shall indemnify and hold the Holders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the equivalent of the amount in the Required Currency due or contingently due under the Notes and this Indenture (other than under this clause (b)) is calculated for the purposes of such winding-up and (ii) the final date for the filing of proofs of claim in such winding-up. For the purpose of this clause (b), the final date for the filing of proofs of claim in the winding-up of the Company shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date at which liabilities of the Company may be ascertained for such winding-up before payment by the liquidator or otherwise in respect thereto.

(c) To the extent permitted by applicable law, the Company’s obligation in respect of any sum payable by the Company to a Holder shall, notwithstanding any judgment in a currency, (the Judgment Currency), other than that in which such sum is denominated in accordance with the applicable provisions of this Indenture, (the Security Currency), be discharged only to the extent that on the Business Day following receipt by such Holder of any sum adjudged to be so due in the Judgment Currency, such Holder may in accordance with normal banking procedures purchase the Security Currency with the Judgment Currency. If the amount of the Security Currency so purchased is less than the sum originally due to such Holder in the Security Currency, determined in the manner set forth above, the Company has agreed, as a separate obligation and notwithstanding any such judgment, to indemnify such Holder against such loss, and if the amount of the Security Currency so purchased exceeds the sum originally due to such Holder, such Holder agrees to remit to the Company such excess; provided that such Holder shall have no obligation to remit any such excess as long as the Company shall have failed to pay such Holder any obligation due and payable under this Indenture in which case any such excess may be applied to such obligations of the Company under this Indenture or the Notes.

1.17 Agent for Service; Submission to Jurisdiction

(a) Any suit, action or proceeding against the Company or its properties, assets or revenues with respect to the Notes or this Indenture (a Related Proceeding) may be brought in the Supreme Court of the State of New York, County of New York, or in the United States District Court for the Southern District of New York, or in the courts of Argentina that sit in the City of Buenos Aires, or in accordance with the provisions of Section 38 of Decree No. 677/2001, as the person bringing such Related Proceeding may elect in its sole

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discretion. The Company has consented to the non-exclusive jurisdiction of each such court for the purpose of any Related Proceeding and has irrevocably waived any objection to the laying of venue of any Related Proceeding brought in any such court and to the fullest extent it may effectively do so and the defense of an inconvenient forum to the maintenance of any Related Proceeding or any such suit, action or proceeding in any such court.

(b) The Company has agreed that service of all writs, claims, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System (the Process Agent), and the Company irrevocably appointed the Process Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Company has agreed to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing in this Indenture shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.

(c) The Company irrevocably waives trial by jury in any legal action or proceeding relating to this Indenture or the Notes.

1.18 Waiver of Immunity

(a) To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified above, to any immunity from suit, from the jurisdiction of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States).

(b) The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process is effected upon the Company in the manner specified above or as otherwise permitted by law.

1.19 Foreign Exchange Restrictions

(a) In the event of any foreign exchange restriction or prohibition in Argentina, the Company shall make any and all payments of any Note in U.S. Dollars to be made outside Argentina by:

(i) purchasing, with pesos, “Bonos Externos Globales de la República Argentina” issued by Argentina and payable in U.S. Dollars or any other public or private securities issued in Argentina and denominated in U.S. Dollars, or any other securities (collectively, the Securities) and selling such instruments outside Argentina for Dollars; or

(ii) any other legal mechanism for the acquisition of Dollars in any exchange market.

(b) In addition, in the event of any foreign exchange restriction or prohibition in Argentina, any Holder of Notes may, to the extent legally permitted, elect to receive the payment in an amount equivalent to the peso amount necessary for purchasing Securities and the reasonable and customary cost of transferring and selling such Securities outside Argentina for U.S. Dollars in an amount equivalent to the sums due and payable under the Notes. Such payment will discharge and satisfy the Company’s payment obligations to such Holders on such payment date. In each case, all reasonable and customary costs, including any taxes, relative to such operations to obtain foreign currency will be borne by the Company.

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(c) In addition, in the event of any restriction or prohibition in Argentina to pay in foreign currency any obligations under the Notes to any Holder of Notes that is a resident in Argentina, the Company shall make its best efforts to obtain the corresponding authorization of the Central Bank to make such payments in U.S. Dollars. However, if such authorization cannot be obtained after reasonable attempts, the Company shall pay such Holder the Peso equivalent amount of the foreign currency amount due on the relevant payment date, or to the extent the Depositary or its nominee, as the Holder of Notes, does not accept Pesos, then the Company will make such payments of Peso equivalents directly to the Depositary participants holding a beneficial interest in the Notes.

(d) Such payments in Pesos will be calculated using the U.S. $/Peso exchange rate quoted by Reuters Screen “ARSVH=” ASK SIDE (Valor Hoy Mercado) at 12:00 p.m. New York City time on the payment date; provided that (i) if the U.S. $/ Peso exchange rate does not appear on such Reuters Screen, the U.S. $/ Peso exchange rate shall mean, with respect to the payment date, the U.S. $/ Peso exchange rate which appears on Bloomberg L.P. (Bloomberg Screen (ARS currency)-ASK SIDE-PCS Composite (NY)) at 12:00 p.m. New York City time on such payment date. Such payment in Pesos will fully discharge and satisfy the Company’s payment obligation to such holder on the payment date and shall not constitute an Event of Default.

1.20 Resignation and Appointment of Agents

The Company may terminate at any time the appointment of any or all of the Registrar, Co-Registrar and any Paying Agent, with or without cause, by giving to the Registrar, Co-Registrar or Paying Agent, as the case may be, at least 90 days’ prior written notice to that effect unless the relevant agent agrees to accept less notice; provided that (i) in the case of termination of the appointment of the Registrar or the Co-Registrar, no such termination shall take effect until a new Registrar or Co-Registrar, as the case may be, has been appointed and has accepted such appointment, and (ii) the effective date of such termination may not occur within 21 days before or after an Interest Payment Date nor during such time as an Event of Default shall have occurred and be continuing.

The Registrar, Co-Registrar and any Paying Agent may at any time resign from such capacities by giving written notice to the Company, specifying the date on which its desired resignation shall become effective; provided, however, that (i) such date shall never be less than 90 days from the date on which such notice is received by the Company, unless the Company agrees to accept less notice, (ii) the effective date of such resignation may not occur within 21 days before or after an Interest Payment Date and (iii) in any event, the resignation may not take effect prior to the appointment of a successor Registrar, Co-Registrar or Paying Agent, as the case may be, and the acceptance thereof of such appointment.

If the Registrar, Co-Registrar or any Paying Agent, as the case may be, resigns or is removed and the Company has not appointed a successor agent within 15 days of the expiration of the relevant notice, then the relevant Registrar, Co-Registrar or Paying Agent, as the case may be, may appoint, or may petition a court of competent jurisdiction for the appointment of, a reputable institution as the successor agent. Upon its removal or resignation, the Registrar, Co-Registrar or any Paying Agent, as the case may be, shall be entitled to the payment by the Company of its compensation and indemnification for the services rendered hereunder.

As long as any Notes are Outstanding, the Company will maintain a co-registrar and a paying agent in New York City, New York, United States. Initially, The Bank of New York shall act as such Co-Registrar and Paying Agent in New York City, New York, United States. As long as it is required by Argentine law or by the CNV, the Company will maintain a registrar, a transfer agent, a paying agent and a representative of the Trustee in Buenos Aires, Argentina. Initially, Banco Santander Río shall act as such Registrar, Transfer Agent, Paying Agent in Argentina, and representative of the Trustee in Buenos Aires, Argentina. As long as any Notes is listed on the Luxembourg Stock Exchange, the Company will maintain a Paying Agent in Luxembourg. Initially, The Bank of New York (Luxembourg) S.A. shall act as such Paying Agent in Luxembourg.

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2.

3.

ARTICLE FORM OF NOTES

2.1 Forms of the Notes

The Notes shall be in substantially the forms set forth in Exhibits A and B hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. The Notes will be issued as Restricted Notes or Regulation S Notes, in each case in accordance with Exhibits A and B hereto.

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provision of this Indenture, the provisions of this Indenture, shall govern and be controlling among the parties hereof.

The Notes will be initially represented by global certificates in fully registered form admitted to public offering in Argentina and listed on the Buenos Aires Stock Exchange, the MAE and the Luxembourg Stock Exchange.

2.2 Further Issues

The Company may from time to time, without the consent of the Holders of the Notes, subject to the provisions of hereof, create and issue additional notes having terms and conditions the same as those of the Notes (the Additional Notes), except for the payment of interest accruing prior to the issue date of such Additional Notes and, in some cases, except for the first payment of interest following the issue date of such Additional Notes, which Additional Notes may be consolidated and form a single series with the Outstanding Notes. The Company shall not issue any Additional Notes unless such Additional Notes have no more than a de minimis amount of original issue discount or such issuance would constitute a “qualified reopening” for U.S. federal income tax purposes.

ARTICLE THE NOTES

3.1 Title and Terms

The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is limited by the maximum authorized aggregate principal amount of Notes to be issued under the Program. On the Issuance Date, the Company shall issue U.S. $220,000,000 million aggregate principal amount of Notes.

The Stated Maturity of the Notes shall be October 9, 2017. The Notes shall bear interest at the rate of 10.5% per year (the Applicable Interest Rate), payable from the Issuance Date semi-annually in arrears on April 9 and October 9, commencing on the first such date to occur after the Issuance Date, until the principal thereof is paid in full or made available for payment. Default interest, to the extent that the payment of such interest shall be legally enforceable, shall accrue on any overdue principal and premium or interest payment at the rate of 2% per annum plus the Applicable Interest Rate, until such date on which such overdue principal and premium or interest payment is paid in full.

Payments with respect to the Notes will be made by wire transfer of immediately available funds to the accounts specified by the Holder of such Notes or if no account is specified, by mailing a check to each Holder’s address in the Registrar. All such payments are subject to the provisions in Section 1.15 (Legal Holidays) relating to legal holidays. The Notes shall have the further terms set forth in Exhibits A and B hereto.

The Notes shall be redeemable as provided in Article 10.

The Notes shall be subject to defeasance and covenant defeasance as provided in Article 11.

3.2 Denominations

The Notes shall be issuable only in global or in definitive registered form without coupons and only in denominations of U.S. $2,000 and integral multiples of U.S. $1,000 in excess thereof.

3.3 Execution, Authentication, Delivery and Dating

The Notes shall be executed on behalf of the Company by a member of the Board of Directors and a member of the Supervisory Committee (a Syndic) of the Company. The signature of such Director and Syndic on the Notes may be manual, or by facsimile.

Notes bearing the manual or facsimile signatures of individuals who were at any time the proper Directors or Syndics of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such positions prior to the authentication and delivery of such Notes or did not hold such positions at the date of authentication and delivery of such Notes.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company (as set forth above) to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee, in accordance with such Company Order, shall authenticate and deliver such Notes as provided in this Indenture and not otherwise. The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee (a) being advised by counsel determines that such action may not lawfully be taken or (b) acting in good faith through its board of directors or board of trustees, executive committee, or a trust committee of directors or trust officers shall determine that such action would expose the Trustee to personal liability to Holders.

Each Note shall be dated the date of its authentication.

No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for in Exhibit A hereto executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.

3.4 Registration, Registration of Transfer and Exchange Generally

(a) The Company shall cause to be kept at the Corporate Trust Office of the Trustee and any Paying Agent a register (the Note Register) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration and transfer of Notes. The Co-Registrar shall maintain the definitive record of all registration and transfer of the Notes. Banco Santander Río, as the trustee representative in Argentina is hereby appointed as local Registrar for the purpose of registering the Global Note.

(b) Upon surrender of any Note for registration of transfer at an office of the Registrar, and subject to the other provisions of this Section 3.4, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount, each such Note bearing such legends as are required by this Indenture.

At the option of the Holder, and subject to the other provisions of this Section 3.4, Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, and subject to the other provisions of this Section 3.4, the Company shall execute and the Trustee shall authenticate and deliver the Notes which the Holder making the exchange is entitled to receive.

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All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt and, subject to the other provisions of this Section 3.4, entitled to the same benefits under this Indenture and the Negotiable Obligations Law, as the Notes surrendered upon such registration of transfer or exchange.

Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Co-Registrar, duly executed, by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of Notes, but the Company, the Trustee or the Paying Agent may require (i) payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 3.3 (Execution, Authentication, Delivery and Dating), 3.4 (Registration, Registration of Transfer and Exchange Generally), 8.5 (Conformity with Trust Indenture Act and the Negotiable Obligations Law) or 10.11 (Redemptions and Purchases of the Notes) not involving any transfer and (ii) appropriate endorsements and transfer documents.

The Company shall not be required to (i) register the transfer of or exchange any Note during a period beginning at the opening of 15 Business Days before (A) the due date for any payment of principal of or interest on the Notes and ending at the close of business on such due date or (B) the day of the mailing of a notice of redemption of Notes selected for redemption under Section 10.7 (Notice of Redemption) and ending at the close of business on the day of such mailing, or (ii) register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(c) Notwithstanding any other provisions of this Indenture or the Notes, transfers and exchanges of Notes and beneficial interests therein of the kinds specified in this Section 3.4(b) shall be made only in accordance with this Section 3.4(b). Transfers and exchanges subject to this Section 3.4(b) shall also be subject to the other provisions of this Indenture that are not inconsistent with this Section 3.4(b).

(i) Restricted Global Note to Regulation S Global Note. If a participant of the Depositary holding a beneficial interest in the Restricted Global Note wishes at any time to transfer such interest in whole or in part to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Regulation S Global Note, such transfer may be effected only in accordance with the provisions of this clause (b)(i) and Section 3.4(c) and subject to the Applicable Procedures. Upon receipt by the Co-Registrar, of (A) an order given by such participant of the Depositary holding a beneficial interest in the Restricted Global Note directing that the principal amount represented by such Regulation S Global Note be increased by a specified amount and that the principal amount represented by such Restricted Global Note be reduced by an equal amount and (B) a Regulation S Certificate duly executed by such participant of the Depositary holding such beneficial interest or his attorney in fact duly authorized in writing, then the Co-Registrar shall reduce the principal amount of such Restricted Global Note and increase the principal amount of such Regulation S Global Note by such specified principal amount.

(ii) Regulation S Global Note to Restricted Global Note. If the participant in the Depositary holding a beneficial interest in the Regulation S Global Note wishes at any time to transfer such interest in such Note in whole or in part to a Person who wishes to take delivery thereof in the form of a beneficial interest in the Restricted Global Note, such transfer may be effected only in accordance with this clause (b)(ii) and Section 3.4(c) and subject to the Applicable Procedures. Upon receipt by the Co-Registrar, of (A) an order of the Depositary holding a beneficial interest in the Regulation S Global Note directing that the principal amount represented by such Regulation S Global Note be reduced by a specified amount and that the principal amount represented by such Restricted Global Note be increased by an equal amount and (B) a Restricted Notes Certificate duly executed by such participant of the Depositary holding such beneficial interest or his attorney

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in fact duly authorized in writing, then the Co-Registrar shall reduce the principal amount of such Regulation S Global Note and increase the principal amount of such Restricted Global Note by such specified principal amount.

(iii) Non-Global Note for Non-Global Note. If issued, a Non-Global Note may be transferred, in whole or in part, to a Person who takes delivery in the form of another Non-Global Note, provided that a Non-Global Note that bears a Securities Act Legend may be transferred, in whole or in part, only (A) if the Company shall have received a Restricted Notes Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Restricted Note or (B) if the Company shall have received a Regulation S Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Regulation S Note.

(iv) Global Note for Non-Global Note. A Global Note may be exchanged, in whole but not in part, for one or more Non-Global Notes only as provided in Section 3.4(d).

(v) Non-Global Note for Global Note. Non-Global Notes may be exchanged, in whole or in part, for beneficial interests in a Global Note, provided that a Non-Global Note that bears a Securities Act Legend may be transferred, in whole or in part, only (A) if the Company shall have received a Restricted Notes Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Restricted Note or (B) if the Company shall have received a Regulation S Certificate duly executed by the transferor Holder or his attorney duly authorized in writing, in which case the transferee Holder shall take delivery in the form of a Regulation S Note.

(d) Restricted Notes and their Successor Notes shall bear a Restricted Notes Legend and Regulation S Notes and their Successor Notes shall bear a Regulation S Legend, subject to the following:

(i) Subject to the following clauses of this Section 3.4(c), a Note that is issued in exchange for a Global Note or any interest therein shall bear the Securities Act Legend borne by such Global Note.

(ii) Subject to the following clauses of this Section 3.4(c), a new Non-Global Note that is issued in exchange for either a Non-Global Note or a Global Note or any portion thereof, upon transfer or otherwise, shall bear the Securities Act Legend borne by such other Note.

(iii) Securities that are sold or otherwise disposed of pursuant to an effective registration statement under the Securities Act shall not bear a Securities Act Legend.

(iv) After the applicable restricted period under Rule 144(k), as notified to the Trustee by the Company in writing a new Note that does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note (other than a Global Note) or any portion thereof that bears such a legend if the Trustee has received an Unrestricted Notes Certificate duly executed by the Holder of such legended Note or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall authenticate and deliver such a new Note in exchange for or in lieu of such other Note as provided in this Article 3.

(v) A new Note that does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note (other than a Global Note) or any portion thereof that bears such a legend if, in the Company’s judgment, placing such a legend upon such new Note is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Company, shall authenticate and deliver such a new Note as provided in this Article 3.

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(vi) Notwithstanding the foregoing provisions of this Section 3.4(c), a Successor Note of a Note that does not bear a particular form of Securities Act Legend shall not bear such form of legend unless the Company has reasonable cause to believe that such Successor Note is a “restricted security” within the meaning of Rule 144, in which case the Trustee, at the written direction of the Company, shall authenticate and deliver a new Note bearing a Restricted Notes Legend in exchange for such Successor Note as provided for in this Article 3.

(e) The following provisions shall apply only to Global Notes:

(i) Each Global Note authenticated under this Indenture shall be registered in the name of the Depositary or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Note shall constitute a single Note for all purposes of this Indenture.

(ii) Notwithstanding any other provision in this Indenture or the Notes, no Global Note may be exchanged in whole or in part for Notes registered, and no transfer of a Global Note in whole or in part may be registered, in the name of any Person other than the Depositary or a nominee thereof unless:

(A) the Depositary has notified the Company that it is unwilling or unable to continue as depositary for such Global Note or has ceased to be a clearing agency registered under the Exchange Act, and, in either case, the Company thereupon fails to appoint a successor depositary within 120 days after the date of such notice;

(B) the Depositary so requests following an Event of Default;

(C) the owner of an interest in a Global Note requests such exchange in writing delivered through the Depositary following an Event of Default; or

(D) the Company executes and delivers a Company Order stating that all Global Notes shall be exchanged in whole for Non-Global Notes.

(iii) A Global Note may not be exchanged for a Non-Global Note other than as provided in Section 3.4(d)(ii) above.

(iv) Non-Global Notes issued in exchange for a Global Note or any portion thereof pursuant to clause (ii) above shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear any Securities Act Legends required hereunder. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar, for cancellation. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Non-Global Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

(v) All Non-Global Notes issued in exchange for a Global Note or any portion thereof shall be registered in such names as the Depositary shall instruct (which instruction shall reflect the instruction of the Holder of the Notes) the Trustee or the Paying Agent (without any liability on the Trustee’s or the Paying Agent’s part). Every Note authenticated and delivered in exchange for or in lieu of a Global Note or any portion thereof, pursuant to Sections 3.3 (Execution, Authentication, Delivery and Dating), 3.4 Registration, Registration of Transfer and Exchange Generally), 8.5 (Conformity with Trust Indenture Act and the Negotiable Obligations Law) or 10.11 (Redemptions and Purchases of the Notes) hereof or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note.

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(vi) In the event of the occurrence of any of the events specified in clause (ii) above, the Company will promptly make available to the Trustee a reasonable supply of Non-Global Notes in definitive, fully registered form, without interest coupons. The Company will pay the cost of preparing, printing, packaging and delivering the Non-Global Notes.

3.5 Mutilated, Destroyed, Lost and Stolen Notes

If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding.

If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Note and (b) such Note or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a protected purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously Outstanding.

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. If exchanges of Notes pursuant to this Section 3.5 are done in Luxembourg, such exchanges will be exchanged by the Trustee via the Luxembourg Agent.

Upon the issuance of any new Note under this Section 3.5, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Note issued pursuant to this Section 3.5 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 3.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

3.6 Payment of Interest; Interest Rights Preserved

Interest on any Note which is payable and is punctually paid or duly provided for on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered in the Notes Register at the close of business on the Record Date for such interest.

Any interest on any Note which is payable but is not punctually paid or duly provided for on any Interest Payment Date (herein called Defaulted Interest) shall forthwith cease to be payable to the Holder on the relevant Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered in the Notes Register at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided for in this clause 3.6(a). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than 15

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days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to he mailed, first-class postage prepaid, to each Holder at his address as it appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b); or

(b) the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause 3.6(b), such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section 3.6, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

3.7 Persons Deemed Owners

Prior to due presentment of a Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Note is registered in the Notes Register as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and, subject to Section 3.4 (Registration, Registration of Transfer and Exchange Generally), interest on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

3.8 Cancellation

All Notes surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee or any Paying Agent and shall be promptly cancelled by it. The Company may, at any time, deliver to the Trustee or any Paying Agent for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section 3.8, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of in accordance with the Trustee’s customary procedures unless directed by a Company Order.

3.9 Computation of Interest

Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

3.10 Common Code/ISIN Numbers

In issuing the Notes, the Company may use “common code” and/or “ISIN” numbers (if then generally in use), and, if so, “common code” and/or “ISIN” numbers shall be included in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “common code” or “ISIN” numbers.

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3.11 Prescription

(a) Claims filed in Argentina courts against the Company for payment of principal in respect of the Notes (including Additional Amounts), including actions to enforce judgments obtained from a New York court, shall be prescribed unless made within ten years of the due date for payment of such principal. Claims for the payment of interest, including actions to enforce judgments obtained from a New York court, shall be prescribed unless made within four years of the due date for payment of such interest.

(b) Claims filed in the courts of the State of New York will be subject to the applicable statute of limitations for such claims.

3.12 Special Provision Regarding Title VI of the Argentine Income Tax Law

(a) Holders of Notes who elect to receive payment of principal and/or interest or the redemption price, if any, in Argentina, must file an application at the specified domicile of the Paying Agent in Argentina between the fifth and the third Business Day prior to the relevant Interest Payment Date or redemption date therefor or at maturity in order to receive such payment on the relevant Interest Payment Date or redemption date or at maturity. Such filing shall be made by completing an application for payment, which is available at the specified domicile of the Paying Agent in Argentina. The Paying Agent must notify the Trustee in writing no later than two Business Days prior to such relevant payment date that such election has been made together with all relevant information regarding the Notes. In the event that any such Holder shall fail to make such filing between the fifth and third Business Day prior to the relevant Interest Payment Date or redemption date or at maturity, as applicable, such Holder shall be entitled to receive the relevant payment on the third Business Day after such filing with the Paying Agent has taken place.

(b) Notwithstanding any other provision in Section 3.6 (Payment of Interest; Interest Rights Preserved), all payments to be made by the Paying Agent in Argentina with respect to Notes shall be in cash or by wire transfer to an account of the Holder in a bank located in Argentina (provided that the Holder has provided the Paying Agent in Argentina with sufficient information concerning such account and bank not less than five Business Days prior to the relevant Interest Payment Date or redemption date therefore or maturity).

(c) Any Holder of the Notes subject to Title VI of the Argentine Income Tax Law (text of 1997 as restated) must (i) present its Notes exclusively to the Paying Agent in Argentina and (ii) comply with the preceding paragraphs in order to receive payments of principal and/or interest thereof or the redemption price thereof.

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4. ARTICLE SATISFACTION AND DISCHARGE

4.1 Satisfaction and Discharge of Indenture

This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:

(a) either:

(i) all Notes previously issued, authenticated and delivered (other than (A) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 (Payment of Interest; Interest Rights Preserved), (B) Notes for whose payment money has previously been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.2 (Redemption at the Company’s Option) or (C) Notes that have been subject to defeasance under Article 11 (Defeasance and Covenant Defeasance) have been delivered to the Trustee for cancellation; or

(ii) all such Notes not previously delivered to the Trustee for cancellation:

(A) have become due and payable; or

(B) will become due and payable at their Stated Maturity within one year; or

(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company;

and the Company, in the case of (A), (B) or (C) in subclause (ii) above, has irrevocably deposited or caused to be deposited with the Trustee as funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes not previously delivered to the Trustee or any Paying Agent for cancellation, for principal (and premium, if any) and interest, and Additional Amounts, if any, to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.7 (Compensation and Reimbursement) and, if money shall have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of this Section, the obligations of the Trustee under Section 4.2 (Application of Trust Money) and the last paragraph of Section 10.2 (Redemption at the Company’s Option) shall survive such satisfaction and discharge.

4.2 Application of Trust Money

Subject to the provisions of the last paragraph of Section 10.2 (Redemption at the Company’s Option), all money deposited with the Trustee pursuant to Section 4.1 (Satisfaction and Discharge of Indenture) shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee.

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5. ARTICLE REMEDIES

5.1 Events of Default

Each of the following events with respect to the Notes shall be an Event of Default in connection with the Notes:

(a) default in the payment of any principal of any of the Notes when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for five calendar days;

(b) default in the payment of any interest or Additional Amounts, if applicable, when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for thirty (30) calendar days;

(c) any failure to comply with the provisions of Section 9.16 (Limitations on Mergers, Consolidations, Sales and Conveyances);

(d) any failure on the part of the Company to duly observe or perform any of the covenants or agreements of the Company under this Indenture (other than those referred to in (a) and (b) above) for a period of more than 30 calendar days after the date on which written notice thereof requiring the Company to remedy the same shall have been given to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount Outstanding of the Notes;

(e) there occurs with respect to any Indebtedness of the Company or its Restricted Subsidiaries having a principal amount of U.S. $30 million (or its equivalent in other currencies) or more in the aggregate for all such Indebtedness of all such Persons (i) an event of default that results in the acceleration of the maturity of such Indebtedness or (ii) failure to make a principal payment when due and such defaulted payment is not made, waived or extended within the applicable grace period;

(f) there shall have been a revocation, cancellation, termination or suspension for more than twenty (20) consecutive days of the Concession Agreement;

(g) there shall have been entered against the Company or any of its Restricted Subsidiaries a final judgment, decree or order by a court of competent jurisdiction from which no appeal may be taken or, within the applicable period to appeal, is taken for the payment of money, or the forfeiture of property with an aggregate value in excess of U.S. $30 million (or its equivalent in other currencies) and 60 calendar days shall have passed since the entry of the order without it being satisfied, discharged or stayed (a Judgment);

(h) a distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is levied, enforced or sued out on or against any part of the property, assets or revenues of the Company or any of its Restricted Subsidiaries, which, if executed or consummated, would have a material adverse effect on the Company’s ability to make scheduled principal and interest payments on the Notes, unless (i) such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is discharged or stayed within 90 days of notice to the Company or such Restricted Subsidiary, as the case may be, or (ii) if such distress, attachment, execution, seizure before judgment or legal or extrajudicial process shall not have been discharged or stayed within such 90-day period, the Company or such Restricted Subsidiary, as the case may be, shall have contested in good faith by appropriate proceedings such distress, attachment, execution, seizure before judgment or legal process; provided that if such distress, attachment, execution, seizure before judgment or legal process shall not have been discharged or stayed within 365 days of notice to the Company or such Restricted Subsidiary, as the case may be, the Company or such Restricted Subsidiary shall have posted a bond or other appropriate collateral which shall have substituted such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process within such time period;

(i) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary shall, after the Issuance Date:



(iii) (A) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors pursuant to a “concurso preventivo de acreedores,” (B) seek approval of its creditors for an “acuerdo preventivo extrajudicial” through any means, including the distribution of an offering circular or similar disclosure materials to creditors in connection with such “acuerdo preventivo extrajudicial,” (C) file for court endorsement of an “acuerdo preventivo extrajudicial,” (D) apply for or consent to the appointment (in a similar court proceeding) of a receiver, trustee, liquidator or the like for itself or its property or (E) make a similar court filing seeking to take advantage of any applicable Insolvency Law;

(j) after the Issuance Date and without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of the Company or any of its Restricted Subsidiaries

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that is a Significant Subsidiary adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, the appointment of a trustee, a receiver, liquidator or the like of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or of all of the assets thereof or other like relief in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary under any applicable bankruptcy or Insolvency Law, and either



(k) any condemnation, seizure, compulsory purchase or expropriation, or taking into custody or control, by any governmental authority or agency of assets or share capital of the Company or its Restricted Subsidiaries which, in the aggregate, would be likely to have a material adverse effect upon the business and results of operations of the Company and its Restricted Subsidiaries taken as a whole; or

(l) a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary.

5.2 Acceleration of Maturity; Rescission and Annulment

If an Event of Default occurs and is continuing with respect to the Notes, the Trustee may and, at the written direction or request of the Holders of not less than 25% of the then Outstanding aggregate principal amount of the Notes shall, by notice in writing to the Company, declare the principal amount of, and interest accrued on, the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable upon the date that such written notice is received by or on behalf of the Company.

After a declaration of acceleration of the Notes, but before a judgment or decree of the money due in respect of the Notes has been obtained, the Holders of not less than a majority of the then Outstanding aggregate principal amount of the Notes, may rescind, by written notice to the Trustee, an acceleration and its consequences if all existing Events of Default (other than the nonpayment of principal and interest and any Additional Amounts on the Notes, which have become due solely by virtue of such acceleration) have been cured or waived and if the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

5.3 Collection of Indebtedness and Suits for Enforcement by Trustee

The Company covenants that if:



the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Notes, the aggregate amount then due and payable on such Notes for principal (and premium, if any) and interest, to the extent that payment of default interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and interest, at the default interest rate applicable to such Notes, and (iii) such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

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If the Company fails to pay such amounts immediately upon demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the amounts so due and unpaid, may

prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other successor obligor of such Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor of the Notes, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

The Trustee shall not be bound to institute any proceedings or take any other actions described in the two preceding paragraphs of this Section 5.3 unless (a) it shall have been so directed by the Holders of a majority in aggregate principal amount of Notes then Outstanding pursuant (and subject) to Section 5.12 (Control by Holders) and (b) it shall have received an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such direction.

5.4 Trustee May File Proofs of Claim

In case of any judicial proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act, the Negotiable Obligations Law and Law 24,522, as amended, in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7 (Compensation and Reimbursement).

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

5.5 Trustee May Enforce Claims Without Possession of Notes

Notwithstanding the actions set forth in Article 29 of the Negotiable Obligations Law, all rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as Trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

5.6 Application of Money Collected

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

(a) FIRST: To the payment of all amounts due to the Trustee under Section 6.7 (Compensation and Reimbursement).

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(b) SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Notes and Additional Amounts, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal (and premium, if any) and interest, respectively.

(c) THIRD: The balance, if any, to the Company (without prejudice to, or liability in respect of, any question as to how such payment to the Company shall be dealt with as between the Company and any other Person) or to such party as a court of competent jurisdiction shall direct in writing.

5.7 Enforcement by Holders of Notes

No Holder of any Note will have any right by virtue of or by availing itself of any provision of this Indenture or the Notes to institute any suit, action or proceeding in equity or at law, or otherwise, upon or under or with respect to this Indenture, or the Notes, or for any remedy thereunder, unless:


(b) the Holders of not less than 25% of the aggregate principal amount of the Notes then Outstanding of the affected Notes shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee under this Indenture and shall have offered to the Trustee an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and

(c) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to this Indenture.

5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest

Notwithstanding any other provision in this Indenture and any provision of any Note, the right of any Holder of any Note to receive payment of the principal of and interest on such Note (including Additional Amounts) on or after the respective due dates expressed in such Note, or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such Holder. To that effect, any beneficial owner of Global Notes will have the right to obtain evidence of its beneficial ownership interest in a Global Note in accordance with Argentine Decree 677/01, as amended (including for initiating summary proceedings (acción ejecutiva) in the manner provided by the Negotiable Obligations Law), and for such purposes, such beneficial owner will be treated as the owner of that portion of the Global Note which represents its beneficial ownership interest therein.

5.9 Restoration of Rights and Remedies

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

5.10 Rights and Remedies Cumulative

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Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.6 (Payment of Interest; Interest Rights Preserved), no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right

and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

5.11 Delay or Omission Not Waiver

No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

5.12 Control by Holders

The Holders of a majority in principal amount of the Notes then Outstanding shall, upon offering to the Trustee indemnity reasonably satisfactory to it, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture or shall not be adverse in any material respect to the Trustee;



5.13 Waiver of Past Defaults

Subject to Section 5.2 (Acceleration of Maturity; Rescission and Annulment), the Holders of not less than a majority in principal amount of the Notes then Outstanding may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default:


(b) in respect of a covenant or provision hereof which under Section 8.2 (Supplemental Indentures With Consent of Holders) cannot be modified or amended without the consent of the Holder of each Note affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

5.14 Undertaking for Costs

In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section 5.14 nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee.

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5.15 Waiver of Stay or Extension Laws

To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified herein, to any immunity from suit, from the jurisdiction of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without limitation, the Foreign Sovereign Immunities Act of 1976 of the United States). The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process if effected upon the Company in the manner specified above or as otherwise permitted by law.

5.16 Knowledge of Default or Event of Default

The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes, unless either (i) a Responsible Officer shall have actual knowledge of such Default or Event of Default or (ii) written notice of such Default or Event of Default shall have been given to the Trustee by the Company or by any Holder.

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6. ARTICLE THE TRUSTEE

6.1 Certain Duties and Responsibilities

The Trustee shall be eligible to act as trustee for the Notes under Article 13 of the Negotiable Obligations Law. The duties and responsibilities of the Trustee shall be as provided by this Indenture and, where applicable, the Trust Indenture Act and the Negotiable Obligations Law. No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.1. Under no circumstances will the Trustee be liable to the Company for any consequential loss (being loss of business, goodwill, opportunity or profit), even if advised of the possibility of such loss or damage.

Except upon the occurrence and continuation of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee.

The duties of the Trustee’s Representative shall be determined solely by the express provisions of this Indenture or as it may agree in writing from time to time with the Trustee, and the Trustee’s Representative needs to perform only those duties that are specifically set forth in this Indenture and those agreed in writing with the Trustee. No implied covenants or obligations shall be read into this Indenture against the Representative of the Trustee in Argentina. The Trustee’s Representative shall have only the faculties and powers stated herein below. It is further acknowledged that the Trustee’s Representative is not and shall not be considered as if it were a Trustee’s general attorney.

The duties and faculties of the Trustee’s Representative up to the date hereof are only to: (i) receive from Holders, the Company, agents, and any governmental or regulatory authority or entity any and all letters, claims, requests, memorandums or any other document directed to the Trustee, (ii) transmit, deliver or notify the Trustee of the reception of any and all of the mentioned documents by facsimile, promptly but in no event later than 3 business days from receipt, and (iii) respond or answer such letters, claims, requests, memorandums or documents, following the express written instructions of the Trustee and only if such instructions are given by the Trustee.

The Trustee’s Representative shall not be liable for any action it takes or omits to take with diligence and in good faith, which it believes to be authorized or within its discretion, rights or powers.

The Company agrees to indemnify the Trustee’s Representative for, and to hold it harmless against, any loss, liability or expense, including, without limitation, the fees and expenses of legal counsel, incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance of its commitments hereunder, the performance of its duties hereunder and/or the exercise of it's rights hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

6.2 Notice of Defaults

The Trustee shall give the Holders written notice of any Default hereunder as and to the extent provided by the Trust Indenture Act (each such notice, a Notice of Default); provided, however, that in the case of any default of the character specified in Section 5.1(d) (Events of Default), no such notice to Holders shall be given until at least 30 calendar days after the occurrence thereof.

6.3 Certain Rights of Trustee

Subject to the provisions of Section 6.1 (Certain Duties and Responsibilities):

(a) the Trustee may rely and will be protected in acting or refraining from acting upon any resolution of the Board of Directors, Company Order, Officers’ Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Company mentioned in this Indenture will be sufficiently evidenced by a Company Order (unless other evidence in respect thereof is specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by an Officer or an assistant secretary of the Company;

(c) the Trustee may consult with counsel and experts and any advice or opinion of Counsel or expert will be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it under this Indenture in good faith and in accordance with such advice or Opinion of Counsel or expert, as the case may be;

(d) in the administration of this Indenture, whenever the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may request and, in the absence of bad faith, rely upon a certificate signed by an Officer;

(e) the Trustee will be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders of Notes pursuant to the provisions of this Indenture, unless such Holder of Notes have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred therein or thereby;

(f) the Trustee will not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(g) prior to the occurrence of an Event of Default under this Indenture and after the curing or waiving of all Events of Default, the Trustee will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority of the aggregate principal amount of the Notes affected then outstanding; provided that, if the payment within a reasonable time to the Trustee of the costs,

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expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expenses or liabilities as a condition to proceeding, the reasonable expenses of every such investigation will be paid by the Company or, if paid by the Trustee or any predecessor trustee, will be repaid by the Company upon demand;

(h) the Trustee may perform the services required to be rendered by it hereunder either directly or through attorneys-in-fact or agents not regularly in its employ and the Trustee shall not be liable for any misconduct or negligence on the part of any such attorney or agent appointed by it with due care hereunder;

(i) the Trustee shall have no liability for interest on, or have any responsibility to invest, any monies received by it pursuant to any of the provisions of this Indenture or the Notes; and

(j) except as otherwise specifically provided herein, (i) all references in this Indenture to the Trustee shall be deemed to refer to the Trustee in its capacity as Trustee and in its capacities as Registrar and Paying Agent and (ii) every provision of this Indenture relating to the conduct or affecting the liability or offering protection, immunity or indemnity to the Trustee shall be deemed to apply with the same force and effect to the Trustee acting in its capacities as Registrar and Paying Agent.

6.4 Not Responsible for Issuance of Notes

The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. Subject to the obligations imposed on the Trustee by paragraph (c) of Section 13 of the Negotiable Obligations Law, the Trustee has reviewed an English translation of the resolution of the Company’s shareholders meetings dated February 23, 2006 and of the resolutions of the Board of Directors dated June 28, 2007, and confirms that the terms and conditions of the Notes issued hereunder reflect accurately the terms of the resolution or resolutions adopted by the shareholders and the Board of Directors of the Company, respectively. The Trustee makes no representation as to the validity or sufficiency of any offering materials, this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any of the Notes or of the proceeds thereof.

6.5 May Hold Notes

The Trustee, any Paying Agent, any Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 6.8 (Disqualification; Conflicting Interests) and 6.13 (Preferential Collection of Claims against Company), may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent.

6.6 Money Held in Trust

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company in writing.

6.7 Compensation and Reimbursement

The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to compensation equal to U.S. $12,800 per annum or such other amount as shall be agreed to in writing between the Trustee and the Company (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee and each predecessor Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation, expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith. The Company also covenants to indemnify the Trustee, the Representative, the Registrar, the Co-Registrar, any and all Paying Agent, and each of

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their respective predecessors for, and to hold it harmless against, any and all loss, liability, damage, claim or expense (including the reasonable compensation and expense of its counsel), including taxes (other than taxes based on their income) incurred without negligence or bad faith on their part, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and their duties hereunder, including any liability any of them may incur as a result of failure to withhold, pay or report any tax, assessment or other governmental charge and the costs and expenses of defending themselves against or investigating any claim of liability in the premises. The obligations of the Company under this Section 6.7 to compensate the Trustee and to indemnify the Trustee, the Representative, the Registrar, the Co-Registrar, any and all Paying Agents, the Authenticating Agent, and each of their respective predecessors and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such additional indebtedness shall be a senior claim to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby subordinated to such senior claim.

The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each Agent, Representative, custodian and other Person employed by the Trustee or any such Agent, Representative or custodian in accordance with this Indenture to act hereunder.

The Company shall pay to the Trustee’s Representative from time to time, and the Trustee’s Representative shall be entitled to, such compensation for its acceptance of this Indenture and its services hereunder as the Trustee’s Representative and the Trustee shall from time to time agree in writing. The Company shall reimburse the Trustee’s Representative promptly upon request for all reasonable disbursements, advances and expenses incurred or made by or on behalf of it in addition to the compensation for its services. Such expenses may include the reasonable compensation, disbursements and expenses of Trustee’s Representative’s agents, counsel and other persons not regularly in its employ.

6.8 Disqualification; Conflicting Interests

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either

(a) eliminate such interest within 90 days;

(b) if this Indenture has been qualified under the Trust Indenture Act, apply to the SEC for permission to continue as trustee with respect to the Notes; or

(c) resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

Notwithstanding the above, in no case will the Trustee be deemed to have duly performed its obligations under this Indenture if, upon acquiring a conflicting interest, the Trustee gives preference to its own interest.

6.9 Corporate Trustee Required; Eligibility

There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and that has a combined capital and surplus of at least U.S. $50,000,000 and its Corporate Trust Office in New York. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then, for the purposes of this Section 6.9, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

This Indenture shall always have a Trustee that satisfies the requirements of Sections 310(a)(1), (2) and (5) of the Trust Indenture Act as if this Indenture were required to be qualified under the Trust Indenture Act. For the

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purposes of this Indenture, the Trustee will be deemed to be subject to Section 310(b) of the Trust Indenture Act; provided, however that any indenture or indentures under which other securities of, or certificates of interest or participation in other securities of, the Company are outstanding shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act if the requirements for such exclusion, as set forth in Section 310(b)(1) of Trust Indenture Act are met.

6.10 Resignation and Removal; Appointment of Successor

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until (i) the CNV has approved such appointment and (ii) the acceptance of appointment by the successor Trustee under Section 6.11 (Acceptance of Appointment by Successor).

(b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Notes then Outstanding, delivered to the Trustee and to the Company.

(d) If at any time:

(i) the Trustee shall fail to comply with Section 6.8 (Disqualification; Conflicting Interests) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(ii) the Trustee shall cease to be eligible under Section 6.9 (Corporate Trustee Required; Eligibility) and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at least six months; or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee, or (B) subject to Section 5.14 (Undertaking for Costs), any Holder who has been a bona fide Holder of a Note for at least six months may, on his behalf and on behalf of all other similarly situated Holders, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then Outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If, within one year after such resignation, removal or incapacity, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Notes then Outstanding delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee.

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(f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.7 (Notice to Holders) and to the CNV including by publication in the leading daily newspaper in Luxembourg or, alternatively, on the website of the Luxembourg Stock Exchange at http://www.bourse.lu. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office (including the address of its representative in Argentina).

6.11 Acceptance of Appointment by Successor

Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee, but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts.

The successor trustee shall be eligible to act as trustee under Section 13 of the Negotiable Obligations Law.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

Upon acceptance of the appointment of any successor trustee, the Company, at its expense, shall give notice thereof to the Holders as provided in Section 1.7 (Notice to Holders) (which notice shall include the successor trustee’s corporate trust office and its representative in Argentina) and to the CNV including by publication in the leading daily newspaper in Luxembourg.

As long as it is required by Argentine law and CNV regulations, the successor trustee must have a representative office in Argentina.

6.12 Merger, Conversion, Consolidation or Succession to Business

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee (including this transaction), shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article and under Article 13 of the Negotiable Obligations Law, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. In case any of the Notes shall not have been authenticated by such predecessor Trustee, any successor Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor Trustee. In all such cases such certificates shall have the full force and effect which this Indenture provides for the certificate of authentication of the Trustee; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Notes in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

6.13 Preferential Collection of Claims against Company

If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

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6.14 Trustee’s Application for Instructions from the Company

Any application by the Trustee for written instructions from the Company may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any officer of the Company actually receives such application, unless any such officer shall have consented in writing to any earlier date) unless before taking any such action (or the effective date in the case of an omission), the Trustee shall have received written instructions in response to such application specifying the action to be taken or omitted.

6.15 Appointment of Co-Trustee

It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture or the Notes, and in particular in case of the enforcement thereof on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted or take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or institution as a separate or co-trustee. The following provisions of this Section are adopted to these ends.

In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and Lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee to exercise such powers, rights and remedies, and only to the extent that the Trustee by the laws of any jurisdiction is incapable of exercising such powers, rights and remedies and every covenant and obligation necessary to the exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them.

Should any instrument in writing from the Company be required by the separate or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Company; provided, that if an Event of Default shall have occurred and be continuing, if the Company does not execute any such instrument within 15 days after request therefor, the Trustee shall be empowered as an attorney-in-fact for the Company to execute any such instrument in the Company’s name and stead. In case any separate or co-trustee or a successor to either shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate or co-trustee.

Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:

(a) all rights and powers, conferred or imposed upon the Trustee shall be conferred or imposed upon and may be exercised or performed by such separate trustee or co-trustee; and

(b) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder.

Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article.

Any co-trustee must be entitled to act as trustee under Article 13 of the Negotiable Obligations Law. 47

Any separate trustee or co-trustee may at any time appoint the Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.

To the extent required by Argentine law or by the CNV, the Trustee shall appoint a representative for the Trustee in Argentina. The Registrar in Argentina must keep a duplicate of the Notes Register in the Spanish language.

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7.

8.

ARTICLE HOLDERS’ LISTS AND REPORTS BY TRUSTEE

7.1 Company to Furnish Trustee Names and Addresses of Holders

The Company will furnish or cause to be furnished to the Trustee:

(a) semi-annually, not more than 15 days after each Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such Record Date; and

(b) at such other times as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished,

excluding from any such list names and addresses received by the Trustee in its capacity as Registrar.

7.2 Preservation of Information; Communications to Holders

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders) and the names and addresses of Holders received by the Trustee and the representative of the Trustee in Argentine in its capacity as Co-Registrar and Registrar, respectively. The Trustee may destroy any list furnished to it as provided in Section 7.1 (Company to Furnish Trustee Names and Addresses of Holders) upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Notes, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.

(c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

ARTICLE SUPPLEMENTAL INDENTURES

8.1 Supplemental Indentures Without Consent of Holders

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes.

(a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Notes; or

(b) to add to the covenants of the Company for the benefit of the Holders or otherwise provide additional rights to the Holders, or to surrender any right or power herein conferred upon the Company; or

(c) to secure or guarantee the Notes; or

(d) to comply with any requirements of the SEC in order to effect and maintain the qualification of this Indenture under the Trust Indenture Act; or

(e) to provide for uncertificated Notes in addition to or in place of certificated Notes, or

(f) to evidence the appointment of a co-trustee pursuant to Section 6.15 (Appointment of Co-Trustee) hereof; or

(g) to modify the restrictions on and procedures for resales and other transfers of this Note to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted Notes generally; provided that such action pursuant to this clause (g) shall not adversely affect the interests of Holders in any material respect;

(h) to cure any ambiguity, omission, defect or inconsistency; or

(i) to make any change that does not, in the opinion of the Trustee, adversely affect the rights of any Holder in any material respect.

8.2 Supplemental Indentures With Consent of Holders

With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then Outstanding as expressed at a Meeting of the Holders, and communicated to the Company by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Note then Outstanding affected thereby:

(a) extend the final maturity of the Notes or the date on which any installment of principal is due,

(b) reduce the principal amount of the Notes,

(c) reduce the rate or extend the time of payment of interest on the Notes,

(d) change the obligation to pay Additional Amounts,

(e) change the currency of payment of principal of or interest on the Notes (including Additional Amounts),

(f) change the governing law,

(g) impair or affect the right of any Holder of Notes to institute suit for the payment thereof,

(h) change any prepayment provision that would alter the pro rata sharing of payments required thereby,

(i) modify the number of Holders necessary to waive an Event of Default,

(j) reduce the percentage in principal amount of Notes then Outstanding that is required for the adoption of a resolution at a meeting of Holders of the Notes,

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(k) reduce the percentage in principal amount of Notes then Outstanding that is required form a quorum at a meeting of Holders of the Notes,

(l) reduce the percentage in principal amount of Notes then Outstanding that is required to request the calling of a meeting of Holders of the Notes, or

(m) modify the provisions of this Indenture with respect to modification and waiver, except to increase any percentage or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby.

Promptly after the execution by the Company and the Trustee of any supplemental indenture, the Company shall give notice thereof to the Holders of the Notes affected thereby as specified in this Indenture (as described under Section 1.7 (Notice to Holders) setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act of Holders shall approve the substance thereof.

8.3 Execution of Supplemental Indentures

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1 (Certain Duties and Responsibilities)) shall be fully protected in relying upon, in addition to the documents required by Section 1.3 (Compliance Certificates and Opinions), an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

8.4 Effect of Supplemental Indentures

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

8.5 Conformity with Trust Indenture Act and the Negotiable Obligations Law

Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act and the Negotiable Obligations Law.

8.6 Reference in Notes to Supplemental Indentures

Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may bear a notation as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Notes then Outstanding.

8.7 Notice of Supplemental Indentures

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Promptly after execution by the Company of any supplemental indenture pursuant to Sections 8.1 (Supplemental Indentures Without Consent of Holders) and 8.2 (Supplemental Indentures With Consent of Holders), the Company shall transmit to the Holders and to the CNV a notice setting forth the substance of the supplemental indenture. Notices will also be published in a daily leading newspaper having general circulation in Luxembourg, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require. To the extent

permitted by law, any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

8.8 Meetings of Holders

(a) A meeting of Holders of Notes may be called at any time and from time to time pursuant to Section 14 of the Negotiable Obligations Law and this Section 8.8 to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other actions provided by this Indenture to be made, given or taken by Holders of the Notes. In addition, the Company may at any time call a meeting of Holders of the Notes to enter into a supplemental indenture as provided in Article 8, or to obtain a waiver of any provision of this Indenture or the Notes. The meetings will be held in the City of Buenos Aires; provided, however, that each of the Company and the Trustee may determine to hold any such meeting simultaneously in the City of Buenos Aires and in New York City and/or any other city by any means of telecommunications which permits the participants to hear and speak to each other, and any such simultaneous meeting shall be deemed to constitute a single meeting for purposes of the quorum and voting percentages applicable to such meeting. In addition, the Company shall upon the written request of the Trustee or of Holders of at least 5% in aggregate principal amount of Notes at the time Outstanding call such a meeting and such meeting shall be convened within 40 days from the date such request is received by the Company. If a meeting is held pursuant to the request of the Holders, the agenda for such meeting shall be that set forth in the request made by such Holders, provided, however, that matter not included in the agenda may be included if approved by Holders of each of the Notes. In the event the Board of Directors of the Company fails to call such meeting at the request of Holders, the meeting may be called by the CNV or by a competent court. The Trustee by and through its designated representative may attend any meeting called pursuant to this Section 8.8(a).

(b) For so long as applicable Argentine laws and regulations so require, notice of any meeting, setting forth the date, time and place of such meeting and the agenda therefore (which shall describe in general terms the action proposed to be taken at such meeting), shall be called by publications in the Official Gazette of the Republic of Argentina (Boletín Oficial de la República Argentina), the Buenos Aires Stock Exchange Daily Bulletin and in a newspaper of wide circulation in Argentina (expected to be La Nación) during five (5) days within a period of no more than 30 days nor less than 10 days before the day scheduled for the meeting. Notices will also be published in a daily leading newspaper having general circulation in Luxembourg, so long as the Notes are admitted to trading on the Euro MTF market of the Luxembourg Stock Exchange, and the rules of such exchange so require. In addition, notice of any meeting under this Section 8.8 shall be provided to the Trustee in the manner provided for in Section 1.6 (Notices, etc., to Trustee and Company) of this Indenture.

(c) To be entitled to vote at any meeting of Holders of Notes a Person shall be (i) a Holder of one or more Notes as of the record date in accordance with the Negotiable Obligation Law, or (ii) a Person appointed by an instrument in writing as proxy by such Holder of one or more Notes; provided that a person appointed as chairman of a meeting may not be appointed as proxy.

(d) The Holders, whether present or represented by proxy, entitled to vote 60% in aggregate principal amount of the Notes at the time Outstanding (or such greater percentage as may be required under applicable Argentine law) will initially be required for a quorum at any such meeting. In the absence of a quorum at any such meeting, the meeting may be adjourned for a period of not less than 10 days nor more than 30 days, as determined by the chairman of the meeting, except in the case of ordinary meetings where the first and second call meeting may be held on the same day. At any meeting adjourned for lack of quorum, the persons entitled to vote 30% of the aggregate principal amount of the Notes at the time Outstanding (or such greater percentage as may be required under applicable Argentine law) shall constitute a quorum at any such reconvened adjourned meeting. Notice of reconvening of any adjourned meeting shall be given as provided above, except that such notice need only be published for only 3 days and not less than 8 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of any adjourned meeting shall state expressly the aggregate principal amount of Notes that shall constitute a quorum at such meeting,

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(e) Any Holder of Notes who has executed an instrument in writing appointing a Person as proxy shall be deemed to be present for the purposes of determining a quorum and be deemed to have voted; provided that such Holder shall be considered as present and voting only with respect to the matters covered by such instrument in writing. Any resolution passed or decision taken at any meeting of Holders of Notes duly held in accordance with this Section 8.8 shall, if otherwise in compliance with this Indenture, be binding on all the Holders, whether or not present or represented at the meeting.

(f) The appointment of any proxy shall be proved by having the signature of the Person executing the proxy certified by any notary public, bank, trust company satisfactory to the Company or judicially certified in the manner provided under Argentine law. The holding of Notes shall be proved by the Notes Register maintained in accordance with Section 3.7 (Persons Deemed Owners) or by a certificate or certificates of the Trustee; provided that the holding of a beneficial interest in a Global Note shall be proved by a certificate or certificates of the Depositary.

(g) At any such meeting at which the proper quorum is present, any resolution to modify or amend, or to waive compliance with, any of the provisions of Notes or this Indenture shall be effectively passed and decided if approved by the persons entitled to vote not less than a majority of the aggregate principal amount then Outstanding of Notes present at the meeting, except for those provisions requiring consent of all Holders of Notes as described under Section 8.2 (Supplemental Indentures With Consent of Holders).

(h) A representative of the Trustee shall act as the temporary chairman of the meeting. If the Trustee fails to designate a representative to act as temporary chairman of the meeting, the Company shall designate a member of the Supervisory Committee to act as temporary chairman of the meeting. If the Company fails to designate such a Person, the CNV or competent court shall designate a Person to act as chairman. The permanent chairman of the meeting shall be elected by vote of the Holders of a majority in the then Outstanding aggregate principal amount of the Notes represented at the meeting. At any meeting of Holders of Notes, each Holder of Notes or proxy shall be entitled to one vote for each U.S. $1.00 principal amount of the Notes held or represented by such Holder of Notes; provided that no vote shall be cast or counted at any meeting in respect of any Note challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote except as a Holder of Notes or proxy. Any meeting of Holders of Notes duly called at which a quorum is present may be adjourned from time to time, and the meeting may be held as so adjourned with the presence of the same Holders of Notes that were present in the initial meeting without further notice.

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9. ARTICLE COVENANTS

9.1 Limitation on Liens

The Company will not, and will not permit any of its Restricted Subsidiaries to incur, assume or suffer to exist, any Lien upon its property, assets or revenues, whether now owned or hereafter acquired, securing any Indebtedness of any Person, unless the Notes are equally and ratably secured by such Liens, other than the following (Permitted Liens):






(f) Liens on property that secure Indebtedness Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of such property and which attach no later than 90 days after the date of such purchase or the completion of construction or improvement; provided that no such Lien shall extend to or cover any physical assets or equipment other than the physical assets or equipment being acquired, constructed or improved;


(h) escrow deposits, trusts or similar accounts created or established pursuant to the Restructuring Indenture, this Indenture or for the payment of debt service obligations under the Notes, including without limitation, any deposits or accounts created and any encumbrances or interests granted in such deposits or accounts, in each case, in connection with or in furtherance of the application of the proceeds of this offering as described under “Use of Proceeds” in the Offering Memorandum;



(k) Liens in existence on the Issuance Date and any renewals or extensions thereof, so long as (A) such renewal or extension Lien does not extend to any property other than that originally subject to the Liens being renewed or extended and (B) the principal amount of the Indebtedness secured by such Lien, if applicable, is not increased;

(l) Liens to secure any Permitted Refinancing Indebtedness which is Incurred to refinance any Indebtedness which has been secured by a Lien permitted under this Section 9.1; provided that such new Liens are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced, and do not extend to any property or assets other than property or assets securing the Indebtedness refinanced by such Permitted Refinancing Indebtedness;

(m) Liens on Receivables and Related Assets securing Permitted Indebtedness described in Section 9.2(h);

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(n) Liens arising or deemed to arise from a Sale and Leaseback Transaction;

(o) Liens created or established in order to comply with any applicable rule, regulation, order, resolution, decree, directive or instruction of any federal, provincial or municipal government of Argentina, or any agency or instrumentality thereof, in connection with the conduct of a Permitted Business; and

(p) Liens on any debt securities of the Company or a Restricted Subsidiary repurchased by the Company and securing Indebtedness the proceeds of which are used exclusively for the repurchase of other debt securities of the Company or a Restricted Subsidiary;


9.2 Limitations on Indebtedness

The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness; provided that the Company or any Restricted Subsidiary may Incur Indebtedness if, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application of the proceeds therefrom, no Default has occurred and is continuing and the Leverage Ratio is not greater than 3.75 or less than zero and the Interest Expense Coverage Ratio is not less than 2.0.

Notwithstanding the foregoing, the Company and its Restricted Subsidiaries may Incur the following Indebtedness if, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application of the proceeds therefrom, no Default has occurred and is continuing (Permitted Indebtedness):

(a) Indebtedness outstanding on the Issuance Date, including any Notes issued on the Issuance Date;

(b) Permitted Refinancing Indebtedness;

(c) Subordinated Indebtedness;

(d) Indebtedness Incurred for purposes of, and substantially all of the proceeds of which are applied to, financing of Regulatory Capital Expenditures;

(e) Indebtedness in respect of Hedging Contracts;

(f) Indebtedness with respect to letters of credit, bankers’ acceptances and similar obligations issued in the ordinary course of business and not supporting Indebtedness, including performance bonds and letters of credit supporting performance bonds;

(g) Indebtedness of the Company or any of its Restricted Subsidiaries owed to the Company or any of its Restricted Subsidiaries so long as such Indebtedness continues to be owed to the Company or a Restricted Subsidiary and which, if the obligor is the Company and such Indebtedness is owed to such Restricted Subsidiary, is subordinated in right of payment and priority to the Notes, pursuant to a Subordination Agreement

(h) Indebtedness under any one or more Permitted Receivables Financings, the combined aggregate principal amount of which does not exceed U.S.$35 million (or its equivalent in other currencies) at any time Outstanding; and

(i) Indebtedness Incurred for general corporate purposes in an aggregate principal amount not to exceed U.S. $55 million (or its equivalent in other currencies) at any time Outstanding.

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9.3 Limitations on Asset Sales

The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale unless:


(b) at least 75% of the value of the consideration therefrom is in the form of Cash and Cash Equivalents; provided that (i) any non-cash consideration received is for fair market value and (ii) the receipt of such non-cash consideration is otherwise permitted under this Indenture; and


Within 270 days after the receipt of any Net Cash Proceeds from an Asset Sale (other than a Sale and Leaseback Transaction), the Company or any Restricted Subsidiary shall, at its election, apply the Net Cash Proceeds of such Asset Sale to (i) purchase, prepay or redeem Indebtedness of the Company or any Restricted Subsidiary or (ii) (A) acquire or commit to acquire all or substantially all of the assets of a Permitted Business or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Permitted Business; or (B) acquire or commit to acquire assets that are to be used by the Company or a Restricted Subsidiary in a Permitted Business; provided that if the Company receives Net Cash Proceeds from Asset Sales in an aggregate amount in excess of U.S. $20 million in any fiscal year, the Company shall apply such excess, to the extent not otherwise applied as permitted in this paragraph within the following fiscal year for the purposes set forth in clauses (i) or (ii) above.

The Company or any Restricted Subsidiary shall apply the Net Cash Proceeds of any Sale and Leaseback Transaction as set forth in clauses (i) or (ii)(B) in the immediately preceding paragraph.

9.4 Limitation on Transactions with Shareholders and Affiliates

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, renew or extend any transaction or arrangement including the purchase, sale, lease or exchange of property or assets, or the rendering of any service, with any Affiliate of the Company (other than Sociedad Anónima Centro de Movimiento de Energía (SACME)) except upon terms not less favorable to the Company or such Restricted Subsidiary than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company. If any such transaction or series of related transactions has an aggregate value in excess of U.S. $10 million, prior to such transaction, the Company will obtain a favorable written opinion from (i) the audit committee of the Company, which committee shall include at least two independent members of the Board of Directors and (ii) at least one independent consultant that the terms of the transaction are consistent with those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

The foregoing paragraphs do not apply to:



(c) any payments made pursuant to the Technical Assistance Agreement, dated September 15, 2005, between EDF and the Company, or pursuant to a technical service or operating agreement with the then current strategic operator on or prior to the fifth anniversary of the Issuance Date (or later, if the Company is required under any applicable rules or regulations or by any relevant authorities to engage a strategic operator after such fifth anniversary); in an aggregate amount not to exceed U.S. $2.0 million (or its equivalent in other currencies), net of withholding taxes, in any fiscal year;

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(d) any payments to Electricidad Argentina S.A. (EASA) in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $2.5 million (or its equivalent in other currencies) in any fiscal year; or

(e) the performance by any of the Company or its Restricted Subsidiaries of its obligations under the terms of any agreement or instrument in effect on the Issuance Date and disclosed in the Offering Memorandum under the heading “Related Party Transactions.”

9.5 Limitation on Restricted Payments

The Company will not and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, take any of the following actions (each, a Restricted Payment):

(a) declare or pay any dividend or return of capital or make any distribution on or in respect of Equity Interests of the Company or any Restricted Subsidiary to Holders of such Equity Interests other than (i) any dividends or distributions in the form of Qualified Equity Interests of the Company, (ii) dividends, distributions or returns of capital payable to the Company or a Restricted Subsidiary, (iii) dividends, distributions or returns of capital made on a pro rata basis to the Company and its Restricted Subsidiaries on the one hand, and minority Holders of Equity Interests of a Restricted Subsidiary on the other hand or (iv) any payments permitted to be made pursuant to Section 9.4 (Limitation on Transactions with Shareholders and Affiliates);


(c) repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Indebtedness, other than (i) scheduled payments of interest or principal (provided no Default or Event of Default shall have occurred and be continuing), (ii) any intercompany Indebtedness between or among the Company and/or any Restricted Subsidiaries or (iii) any payments permitted to be made pursuant to Section 9.4 (Limitation on Transactions with Shareholders and Affiliates); or

(d) make any Investments (other than Permitted Investments);

unless, at the time of, and after giving effect to, the proposed Restricted Payment:

(x) no Default has occurred and is continuing; and

(y) the Company could incur at least U.S.$1.00 of Indebtedness under the Leverage Ratio test set forth in Section 9.2 (Limitations on Indebtedness) hereof.

9.6 Delivery of Financial Statements

The Company will furnish to the Trustee:


(b) as soon as available, but in any event within 75 days after the end of each of the first three fiscal quarters of the Company, a copy of the unaudited consolidated balance sheet of the Company as of the end of each such quarter and the related unaudited consolidated statements of income and cash flows of the Company for such quarter and the portion of the fiscal year through such date;

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(c) concurrently with the delivery of the financial statements for each fiscal year and the second fiscal quarter of the Company referred to in clauses (a) and (b), respectively above, a certificate of the Company’s general manager or Chief Financial Officer certifying the calculation of the Leverage Ratio and the Interest Expense Coverage Ratio; and

(d) concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate of the general manager or chief financial officer of the Company stating whether, to the best of such officer’s knowledge, anything came to his or her attention to cause him or her to believe that there existed on the date of such statements a Default or an Event of Default, and if so, specifying the nature and period of existence thereof.


Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

9.7 Notices of Default

The Company will use reasonable efforts to notify the Trustee by facsimile or electronic mail (receipt confirmed telephonically or by electronic mail or electronic mail receipt) promptly after it becomes aware of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of an Officer of the Company setting forth the details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto.

9.8 Maintenance of Notes Listing

The Company will use its reasonable best efforts to obtain and maintain a listing on the Buenos Aires Stock Exchange, the admission to trading on the Mercado Abierto Electrónico S.A., a listing on the Luxembourg Stock Exchange and the admission to trading on the Euro MTF market of the Luxembourg Stock Exchange. In the event that the Notes are admitted to trading on Euro MTF, the Company will use commercially reasonable efforts to maintain such listing; provided that the Company may terminate such listing and delist the Notes from Euro MTF if it determines that the provisions of the European Transparency Obligations Directive (2003/2004/COD) or other applicable legislation becomes unduly onerous or burdensome, in which case the Company will use commercially reasonable efforts to obtain an alternative admission to listing, trading and/or quotation for the Notes by another listing authority, exchange and/or system within or outside the European Union, as it may decide and to the extent feasible.

9.9 Corporate Existence

Except as otherwise permitted under this Indenture and referred to below under Section 9.16 (Limitations on Mergers, Consolidations, Sales and Conveyances), the Company, at all times, will do all things necessary to preserve and keep in full force and effect its corporate existence and preserve and keep in full force and effect in all respects all material licenses and permits necessary to the proper conduct of its business and its rights (charter and statutory) and franchises and such rights and franchises of its Restricted Subsidiaries necessary to the proper conduct of the business of the Company and such Subsidiaries, as a whole.

9.10 Conduct of Business.

The Company and its Restricted Subsidiaries will not engage in any business other than a Permitted Business. 57

9.11 Maintenance of Properties

The Company will cause all material tangible properties used in the conduct of its business or the business of any of its Significant Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements and improvements thereof, all as in the Company’s judgment may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that this covenant will not prevent the Company or any of its Subsidiaries from discontinuing the operation or maintenance of any of such properties if such discontinuance is desirable in the conduct of its business and the business of its Subsidiaries taken as a whole and not adverse in any material respect to the Holders of the Notes.

9.12 Maintenance of Insurance

The Company will, and will cause each of its Subsidiaries to, maintain insurance in such amounts and covering such risks as is usually carried by electricity distribution companies, subject to any applicable laws and regulations of Argentina.

9.13 Payment of Taxes and Other Claims

The Company will, and will cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or its Subsidiaries; provided, however, that neither the Company nor any Subsidiary will be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim which is being contested in good faith and, if appropriate, by appropriate legal proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, to the extent required by Argentine GAAP.

9.14 Designation of Restricted and Unrestricted Subsidiaries.

(a) The Company may designate any Subsidiary, including a newly acquired or created Subsidiary, to be an Unrestricted Subsidiary under this Indenture if:

(i) the Restricted Subsidiary is not a Significant Subsidiary;

(ii) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such designation;

(iii) such Subsidiary does not own any Capital Stock of the Company or any Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the Company or any Restricted Subsidiary; and

(iv) the Subsidiary is not party to any transaction or arrangement with the Company or any Restricted Subsidiary that would not be permitted under Section 9.4 (Limitation on Transactions with Shareholders and Affiliates).


(b) (i) A Subsidiary previously designated an Unrestricted Subsidiary which fails to meet the qualifications set forth in paragraph (a) above will be deemed to become at that time a Restricted Subsidiary, subject to the consequences set forth in paragraph (d).

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(ii) The Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary if the designation would not cause a Default

(c) Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary:

(i) all existing Investments of the Company and the Restricted Subsidiaries therein valued at the Company’s proportional share of the fair market value of its assets less liabilities will be deemed made at that time;

(ii) all existing Indebtedness of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time, and all Liens on property of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time;

(iii) all existing transactions between it and the Company or any Restricted Subsidiary will be deemed entered into at that time; and

(iv) it will cease to be subject to the provisions of this Indenture and the Notes as a Restricted Subsidiary.

(d) Upon an Unrestricted Subsidiary becoming, or being deemed to become, a Restricted Subsidiary:

(i) all of its Indebtedness and Disqualified Stock will be deemed incurred at that time for purposes of Section 9.2 (Limitations on Indebtedness);

(ii) Investments therein previously charged under Section 9.5 (Limitation on Restricted Payments), as adjusted to reflect any change in the Company’s proportional share of the fair market value of its assets less liabilities, will be credited thereunder; and

(iii) it will thenceforward be subject to the provisions of this Indenture and the Notes as a Restricted Subsidiary.

Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary shall, unless so noted by the Company, be deemed to include the designation of all of the Subsidiaries of such Subsidiary. Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Trustee by delivering to the Trustee a copy of the resolutions of the Board of Directors giving effect to the designation and an Officers’ Certificate certifying that the designation complied with the foregoing provisions, not later than the next succeeding delivery of financial statements as required under Section 9.6 (Delivery of Financial Statements).

9.15 Limitation of Applicability of Certain Covenants

Notwithstanding the foregoing, the obligations of the Company and its Restricted Subsidiaries to comply with the covenants described above under the captions Sections 9.2 (Limitations on Indebtedness), 9.3 (Limitations on Asset Sales), and 9.5 (Limitation on Restricted Payments) (collectively, the Suspended Covenants) will be suspended and cease to have any further effect during the period (the Suspended Period) from and after the first date that either (a) the Company attains from at least one of the Rating Agencies, a rating on its long-term debt denominated in currencies other than pesos that is Investment Grade or (b) the Leverage Ratio (as certified by the Company’s auditors) is equal to or lower than 2.5 and until, as applicable, the date (the Reversion Date) on which either (i) none of the Rating Agencies provide the Company’s non-Peso denominated long-term debt an Investment Grade rating or (ii) the Leverage Ratio is greater than 2.5. On the Reversion Date, the Company and its Restricted Subsidiaries’ obligation to comply with the Suspended Covenants shall be reinstated; provided, however, that the Suspended Covenants will not be of any effect with regard to actions of the Company or its Restricted Subsidiaries taken during the Suspension Period, and no Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period.

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On the Reversion Date, all Indebtedness incurred while the Suspended Covenants were suspended will be classified to have been incurred pursuant to one of the paragraphs set forth in Section 9.2 (Limitations on Indebtedness) (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reversion Date and after giving

effect to Indebtedness outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be incurred pursuant to Section 9.2 (Limitations on Indebtedness) such Indebtedness will be deemed to have been outstanding on the Issuance Date, so that it is classified as permitted under paragraph (a) of Section 9.2 (Limitation on Indebtedness).

9.16 Limitations on Mergers, Consolidations, Sales and Conveyances

The Company will not enter into any merger, consolidation, spin-off or reorganization with any Person (whether or not the Company is the surviving or continuing Person) or sell, assign, transfer or otherwise convey or dispose of all or substantially all of its and its Restricted Subsidiaries’ assets, taken as a whole, whether by one transaction or a series of transactions, to any Person unless:


(b) the surviving or transferee Person (if not the Company) shall have expressly assumed, by a document executed and delivered to the Trustee in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes and this Indenture;



(e) the surviving or transferee Person shall have delivered to the Trustee an Officers’ Certificate stating that such merger, consolidation, sale, assignment, transfer or other conveyance or disposition complies with this covenant and this Indenture.

Upon the occurrence of any of the transactions permitted by the preceding paragraph, the surviving or transferee Person (if not the Company) will succeed to and become substituted for the Company, and may exercise every right and power of the Company, with the same effect as if it had been named in the Notes and this Indenture. Following such transaction, the Company will be released from its liability as obligor on the Notes and under this Indenture.

In the event of any such sale, assignment, transfer, conveyance or disposition, the Company, as the predecessor entity, may be dissolved, wound-up or liquidated at any time thereafter.

9.17 Payment of Additional Amounts

All payments of principal, premium or interest by the Company in respect of the Notes will be made without deduction or withholding for or on account of any present or future taxes, penalties, fines, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf any Argentine Tax Jurisdiction (Argentine Taxes), unless the Company is compelled by law to deduct or withhold such Argentine Taxes. In any such event, the Company will pay such additional amounts (Additional Amounts) in respect of Argentine Taxes as may be necessary to ensure that the amounts received by Holders and beneficial owners of such Notes after such withholding or deduction will equal the respective amounts that would have been received in respect of such Notes in the absence of such withholding or deduction, except that no such Additional Amounts will be payable:

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(a) to or on behalf of a Holder or beneficial owner of a Note that is liable for Argentine Taxes in respect of such Note by reason of having a present or former connection with an Argentine Tax Jurisdiction other than merely the holding or owning of such Note or the enforcement of rights with respect to such Note or the receipt of income or any payments in respect thereof;

(b) to or on behalf of a Holder or beneficial owner of a Note in respect of Argentine Taxes that would not have been imposed but for the failure of the Holder or beneficial owner of a Note to comply with any certification, identification, information, documentation or other reporting requirement (within 45 calendar days following a written request from the Company to the Holder or beneficial owner, as applicable, for compliance) if such compliance is required by applicable law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of deduction or withholding of, Argentine Taxes;

(c) to or on behalf of a Holder or beneficial owner of a Note in respect of any estate, inheritance, gift, sales, transfer, personal assets or similar tax, assessment or other governmental charge;

(d) to or on behalf of a Holder or beneficial owner of a Note in respect of Argentine Taxes payable otherwise than by withholding from payment of principal of, premium, if any, or interest on the Notes;

(e) to or on behalf of a Holder or beneficial owner of a Note in respect of any Taxes that are imposed on a payment to an individual and are required to be made pursuant to European Council Directive 2003/48/E on the taxation of savings income or any other directive implementing the conclusions of the ECOFIN Council meetings of November 26 and 27, 2000, December 13, 2001, and January 21, 2003, or any law implementing or complying with, or introduced in order to conform to, such a directive;

(f) to or on behalf of a Holder or beneficial owner of a Note in respect of any Taxes that would not have been imposed if presentation for payment of the relevant notes had been made to a paying agent other than the paying agent to which the presentation was made;

(g) to or on behalf of a Holder or beneficial owner of a Note in respect of Argentine Taxes that would not have been imposed but for the fact that the Holder presented such Note for payment (where presentation is required) more than 30 days after the later of :

(i) the date on which such payment became due and

(ii) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which, the full amount is received and notice of such receipt has been given to the Holders by the Trustee; or

(h) any combination of items (a) to (g) above;

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any Notes to any Holder or beneficial owner of a Note who is a fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of an Argentine Tax Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership, limited liability company or beneficial owner who would not have been entitled to such Additional Amounts had it been the Holder of such Notes.

To the extent required by applicable law, the Company will withhold or deduct any Argentine Taxes required by such law and remit the full amount deducted or withheld to the relevant authority.

The Company will furnish to the Trustee, within 60 days after the date of receipt of written request from the Holders or beneficial owners of the Notes through the Trustee, copies of such receipts evidencing the payment of any Argentine Taxes so deducted or withheld in such form as provided in the normal course by the taxing authority

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imposing such Argentine Taxes and as is reasonably available to us or to the Trustee. The Trustee will make such evidence available to the Holders or beneficial owners of Notes upon request.

The Company will pay any present or future stamp, issue, registration, court, documentation, excise or other similar taxes, charges and duties, including interest and penalties with respect thereto, imposed by any Argentine Tax Jurisdiction in respect of the execution, issue, registration or delivery of the Notes or any other document or instrument referred to hereunder and any such taxes, charges or duties imposed by any jurisdiction as a result of, or in connection with, the enforcement of the Notes and/or any other such document or instrument.

The Company covenants that if the Company or the Trustee or any Paying Agent is required by law to make any deduction or withholding on payments of principal of or interest on the Notes for or on account of any Argentine tax, duty, assessment or other governmental charge, the Company shall, at least 10 Business Days prior to the first payment on which such deduction or withholding is applicable, (and at least 10 Business Days prior to each succeeding payment date or any redemption date or maturity date if there has been any change with respect to the matters set forth in the below-mentioned Officer’s Certificate) deliver to the Trustee (with a copy to any other Paying Agent) an Officer’s Certificate specifying the amount so required to be deducted or withheld and certifying that the Company shall pay such deduction or withholding.

The Company hereby covenants to indemnify the Trustee (and each other Paying Agent) for, and to hold the Trustee harmless against any loss, liability or expense incurred without negligence or bad faith on the Trustee’s part arising out of actions taken or omitted by any of them in reliance on any Officer’s Certificate furnished pursuant to this Section 9.17 or the failure of the Trustee to receive on a timely basis such Officer’s Certificate or any information or documentation requested by it or otherwise required by applicable laws or regulations to be obtained, furnished or filed in respect of any tax, duty, assessment or other governmental charge pursuant to the foregoing provisions of this Section 9.17.

The indemnification obligations of the Company under this Section 9.17 shall survive the payment of the Notes, the resignation or removal of the Trustee and any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any successor Person to the Company and to any jurisdiction in which such successor is organized or is otherwise resident for tax purposes or any jurisdiction from or through which payment is made by such successor or its respective agents.

9.18 Money for Note Payments to be Held in Trust

If the Company shall at any time act as its own Paying Agent, it will, on or before each payment date of the principal of (and premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled to such payment a sum sufficient to pay the principal (and premium, if any) or interest due until such sums shall he paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act

Whenever the Company shall have one or more Paying Agents, it will, prior to each payment date of the principal of (and premium, if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. Principal and interest shall be considered paid on the date due if on such date the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds in accordance with this Indenture U.S. Dollars designated for and sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

The Company will cause each Paying Agent, other than the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 9.18, that such Paying Agent will:

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The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same term as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Note which remains unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the city of Buenos Aires, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

9.19 Ranking of Notes

The Company will ensure that its obligations under the Notes will at all times constitute direct, unconditional, unsecured and unsubordinated obligations of the Company ranking at least pari passu in priority of payment, in right of security upon liquidation and in all other respects among themselves and with all other unsecured indebtedness of the Company now or hereafter outstanding, except to the extent that such other indebtedness may be preferred by mandatory provisions of applicable law or subordinated by its terms.

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10. ARTICLE REDEMPTION OF NOTES

10.1 Applicability of Article

Redemption of Notes, at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article 10.

10.2 Redemption at the Company’s Option

(a) At any time and from time to time prior to October 9, 2012, upon not less than 30 nor more than 60 days notice, the Company may redeem the Notes with the net cash proceeds received by it from any Public Equity Offering at a redemption price equal to 110.5% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the original aggregate principal amount of the Notes, including any additional notes of such series; provided that (i) in each case the redemption takes place not later than 180 days after the closing of the related Public Equity Offering, and (ii) not less than 65% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes of such series) remains outstanding immediately thereafter.

(b) At any time on or after October 9, 2012 and prior to maturity, upon not less than 30 nor more than 60 days’ notice to the Trustee, the Company may redeem all or part of the Notes. These redemptions will be in amounts of U.S. $2,000 or integral multiples of U.S. $1,000 in excess thereof at the following redemption prices (expressed as percentages of their principal amount at maturity) plus, in each case, accrued and unpaid interest and Additional Amounts, if any, to the redemption date, if redeemed during the 12-month period commencing on October 9 of the years set forth below. This redemption is subject to the right of holders of record on the relevant regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date.

Year Redemption Price 2012 105.250% 2013 102.625% 2014 101.313% 2015 and thereafter 100%

Notice of redemption will be given as described herein.

(c) Subject to the foregoing, in the case of any Optional Redemption of less than all of the Notes, such Notes will be redeemed, to the extent permitted under applicable law and securities exchange rules, on a pro rata basis. If any Notes are to be redeemed only in part, the notice of redemption relating to such Notes shall state the portion of the principal amount thereof to be redeemed. Notes in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Notes. Interest, if any, will cease to accrue on the Notes or portions thereof called for redemption on the later of the redemption date or the date on which the relevant redemption price is effectively paid to holders of Notes or portions thereof called for redemption.

10.3 Repurchase at the Option of Holders Upon a Change of Control

If a Change of Control occurs, each Holder of the Notes will have the right to require the Company to repurchase all or any part (in any integral multiple of U.S. $1,000.00) of that Holder’s Notes pursuant to an offer (the Change of Control Offer) made by the Company on the terms set forth in this Indenture. In the Change of Control Offer, the Company will offer to purchase such Holder’s Notes at a purchase price in cash equal to 100% of the aggregate principal amount of such Notes to be repurchased plus accrued and unpaid interest and Additional Amounts, if any, on such Notes to be repurchased to the date of purchase, subject to the rights of Holders of such Notes on the relevant record date to receive interest due on the relevant interest payment date (the Change of Control Payment). Within 30 days following a Change of Control, the Company will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase the applicable Notes on a date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the Change of Control Payment Date), pursuant to the procedures required by this Indenture and described in such notice. To the extent that the provisions of any securities laws or regulations to be issued in the future conflict with the Change of Control provisions of this Indenture, the Company will make the Change of Control Offer in accordance with the applicable provisions of the securities laws and regulations (and the terms set forth herein that do not conflict with such provisions) and will not be deemed to have breached its obligations under the Change of Control provisions of this Indenture by virtue of such compliance.




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The Trustee will promptly deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to this Indenture as described under Section 10.2 (Redemption at the Company’s Option), unless and until there is a default in payment of the applicable redemption price.

10.4 Redemption for Taxation Reasons

The Company may redeem the Notes at its option in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ written notice (which will be irrevocable) to the Trustee and, if applicable, to the CNV, in writing and to the Luxembourg Stock Exchange, if the rules of such exchange so require, such notice to be given by publication in the English language in a leading newspaper having general circulation in Luxembourg (which is expected to be the d’Wort or the Tageblatt), or, alternatively, on the website of the Luxembourg Stock Exchange at http://www.bourse.lu. The notes may be redeemed at a redemption price equal to 100% of the outstanding principal amount thereof, together with any accrued but unpaid interest and any Additional Amounts to the date fixed for redemption, if, as a result of any change in, or amendment to, the laws (or any regulations or rulings issued thereunder) of the Republic of Argentina or any political subdivision of or any taxing authority in the Republic of Argentina (each an Argentine Tax Jurisdiction) or any change in the application, administration or official interpretation of such laws, regulations or rulings, including, without limitation, the holding of a court of competent jurisdiction, the Company has or will become obligated to pay Additional Amounts with respect to a payment on or in respect of the Notes, which change or amendment becomes effective on or after the date of issuance of the Notes (or, in the case of a successor Person to the Company, as of the date such Person assumes the obligations of the Company), and the Company determines in good faith that such obligation cannot be avoided by its taking reasonable measures available to it. No such notice of redemption may be given earlier than 60 days prior to the earliest date on which we would be obligated to pay such Additional Amounts were a payment in respect of the Notes then due. Prior to the distribution of any notice of redemption pursuant to this paragraph, the Company will deliver to the Trustee a certificate signed by a duly authorized Officer stating that it has or will become obligated to pay Additional Amounts as a result of such change or amendment, and that such obligation cannot be avoided by its taking reasonable measures available to it. The Company will also deliver to the Trustee, prior to the distribution of such notice, an Opinion of Counsel to the effect that as a result of such change or amendment the Company will be obligated to pay Additional Amounts. The Trustee will be entitled to accept such certificate and such opinion as sufficient evidence of the satisfaction of the conditions precedent contained in the second preceding sentence, in which event it will be conclusive and binding on the Holders.

10.5 Market Purchases

The Company may at any time and from time to time purchase Notes to the extent permitted by applicable law.

10.6 Selection by Trustee of Notes to be Redeemed

If less than all of the Notes are to be redeemed at any time, the Trustee will select the particular Notes or portions (equal to U.S. $1,000 or any integral multiple thereof) as follows:

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http://www.bourse.lu/

(a) if the Notes are listed on one or more securities exchanges, in compliance with the requirements, if any, of the principal securities exchange on which the Notes are listed (as set forth in an Officers’ Certificate delivered by the Company to the Trustee); or

(b) if the Notes are not so listed or if such requirements are not so certified, on a pro rata basis, by lot or by such method as the Trustee deems fair and appropriate.

The Trustee shall promptly notify the Company and each Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Notes redeemed or to be redeemed only in part, to the portion of the principal amount of such Notes which has been or is to be redeemed.

10.7 Notice of Redemption

Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, at his address appearing in the Note Register. In addition, the Company shall, at least 30 and not more than 60 days before the Redemption Date, cause notice of such redemption to be published in the Daily Bulletin of the Buenos Aires Stock Exchange and a leading newspaper having a general circulation in Argentina (expected to be La Nación) and, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such stock exchange so require, a newspaper having a general circulation in Luxembourg (expected to be the d’Wort), with a copy to the Trustee. Notices of redemption may not be conditional.

All notices of redemption shall identify the Note and state:

(a) the Redemption Date;

(b) the Redemption Price;

(c) a brief statement setting forth the Company’s right to effect such redemption and, if any conditions to such redemption apply, the Company’s basis therefor;

(d) if less than all the Notes then Outstanding are to be redeemed, the identification (and, in the case of partial redemption of any Notes, the principal amounts) of the particular Notes to be redeemed;

(e) that on the Redemption Date the Redemption Price will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and after said date; and

(f) unless all of the Notes are Global Notes, the place or places where such Notes are to be surrendered for payment of the Redemption Price.

Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.

10.8 Deposit of Redemption Price

On or before 12:00 noon, New York time, at least one Business Day prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 9.17 (Payment of Additional Amounts)) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on and any Additional Amounts, all the Notes which are to be redeemed on that date.

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10.9 Notes Payable on Redemption Date

Notice of redemption having been given as aforesaid, the New Debt so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price together with accrued interests and Additional Amounts, if any therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price, accrued interest and any Additional Amounts) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date and any Additional Amounts; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Notes or one or more Predecessor Notes, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.6 (Payment of Interest; Interest Rights Preserved) and to Lenders, if applicable.

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Note.

10.10 Notes Redeemed in Part

Any Note that is not a Global Note and that is to be redeemed only in part shall be surrendered at an office or agency of the Company (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. If any Global Note is to be redeemed in part, the Paying Agent shall forward such Global Note to the Trustee who shall make a notation on Schedule A thereof to reduce the principal amount at maturity of such Global Note by an amount equal to the redeemed portion of the Global Note, provided that the Global Note shall be in an authorized denomination.

10.11 Redemptions and Purchases of the Notes

In this Indenture and the Notes, the Company’s obligations to prepay or repurchase the Notes shall be construed to give effect to the Company’s concurrent obligation to purchase or prepay all of the Notes, on a pro rata basis.

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11. ARTICLE DEFEASANCE AND COVENANT DEFEASANCE

11.1 Company’s Option to Effect Defeasance or Covenant Defeasance

The Company may at its option by Board Resolution, at any time, elect to have either Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) applied to the Notes then Outstanding upon compliance with the conditions set forth below in this Article 11.

11.2 Defeasance and Discharge

Upon the Company’s exercise of the option provided in Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) applicable to this Section 11.2, the Company shall be deemed to have been discharged from its obligations with respect to the Notes then Outstanding on the date the conditions set forth below are satisfied with respect to such Notes (hereinafter, defeasance). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Notes then Outstanding and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders of such Notes to receive, solely from the trust fund described in Section 11.4 (Conditions to Defeasance or Covenant Defeasance) and as more fully set forth in such Section 11.4

(Conditions to Defeasance or Covenant Defeasance), payments in respect of the principal of (and premium, if any) and interest and Additional Amounts, if any, on such Notes when such payments are due;

(b) the Company’s obligations with respect to such Notes under Sections 3.4 (Registration, Registration of Transfer and Exchange Generally), 3.5 (Mutilated, Destroyed, Lost and Stolen Notes), 3.6 (Payment of Interest; Interest Rights Preserved);

(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder, and

(d) this Article 11.

Subject to compliance with this Article 11, the Company may pursuant to Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) elect to have this Section 11.2 applied to the Notes then Outstanding notwithstanding its prior election pursuant to Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) to have Section 11.3 (Covenant Defeasance) applied to the Notes then Outstanding.

11.3 Covenant Defeasance

Upon the Company’s exercise of the option provided in Section 11.1 (Company’s Option to Effect Defeasance or Covenant Defeasance) applicable to this Section.

(a) the Company shall be released from its obligations under Article 9 (Covenants); and

(b) the occurrence of an event specified in Section 5.1(d) (Events of Default) (with respect to Article 9) shall not be deemed to be an Event of Default on and after the date the conditions set forth below are satisfied (hereinafter, covenant defeasance).

For this purpose, such covenant defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such section or clause, whether directly or indirectly by reason of any reference elsewhere herein to any such section or clause or by reason of any reference in any such section or clause to any other provision herein or in any other document, but the remainder of this Indenture and such Notes shall be unaffected thereby.

11.4 Conditions to Defeasance or Covenant Defeasance

The following shall be the conditions to application of either Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) to the Notes:

(a) The Company shall irrevocably have deposited or caused to be deposited with the Trustee funds in trust, for the benefit of Holders of the Notes, cash in U.S. Dollars or U.S. Government Obligations, or a combination thereof, sufficient, in the opinion of a recognized firm of independent certified public accountants, to pay and discharge the principal of and each installment of interest (and Additional Amounts) on such Notes on the Stated Maturity of such principal or installment of Interest in accordance with the terms of this Indenture and of the Notes;

(b) in the case of defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling (that in each case applies to defeasance) or (ii) since the date of this Indenture there has been a change in the applicable United States federal income tax law, in either case to the effect that the Holders of the outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred;

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(c) in the case of covenant defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the respective outstanding Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and or covenant defeasance had not occurred;

(d) no Event of Default or event which with the giving of notice, lapse of time or satisfaction or any other condition or any combination of the foregoing would become an Event of Default shall have occurred and be continuing on the date of such deposit or will occur as a result of such deposit or, insofar as Events of Default resulting from bankruptcy or insolvency events are concerned, at any time during the period ending on the 121st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period);

(e) such defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in this Indenture and for purposes of the Trust Indenture Act with respect to any securities of the Company;

(f) such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound;

(g) the Company shall have delivered to the Trustee an Officers’ Certificate stating that all conditions precedent provided for relating to either defeasance or covenant defeasance, as the case may be, have been complied with and no violations under instruments or agreements governing any other outstanding Indebtedness of the Company would result as a consequence of such defeasance or covenant defeasance, as the case may be;

(h) the Company has delivered to the Trustee, subject to certain exceptions set forth in this Indenture, an opinion of its Argentine counsel to the effect that after two years following the deposit, the trust funds deposited in accordance with Argentine law No. 24,441 will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally under the laws of Argentina; and

(i) the Company shall have paid or duly provided for payment of all amounts then due to the Trustee pursuant to the terms of this Indenture.

11.5 Deposited Money and Government Obligations to be Held in Trust; Other Miscellaneous Provisions

Subject to the provisions of the last paragraph of Section 10.2 (Redemption at the Company’s Option), all Dollars and Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (collectively, for purposes of this Section 11.5, the Trustee) pursuant to Section 11.4 (Conditions to Defeasance or Covenant Defeasance) in respect of the Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the Holders of such Notes, of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the Dollars or the Government Obligations deposited with the Trustee pursuant to Section 11.4 (Conditions to Defeasance or Covenant Defeasance) or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Notes.

Anything in this Article 11 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any Dollars or Government Obligations held by it as provided in Section 11.4 (Conditions to Defeasance or Covenant Defeasance) which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of

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the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance.

11.6 Reinstatement

If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance) by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 11 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 11.2 (Defeasance and Discharge) or Section 11.3 (Covenant Defeasance); provided, however, that if the Company makes any payment of principal of (and premium, if any) or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or the Paying Agent.

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12. ARTICLE MISCELLANEOUS PROVISIONS

12.1 No Liability of Directors, Officers, Employees, Incorporators, Members, and Stockholders

Except as specifically provided under Argentine law, no director, officer, employee, member of the Statutory Audit Committee, incorporator, member or stockholder of the Company will have any liability for any obligations of the Company under the Notes or this Indenture, or for any claim based on, in respect of, or by reason of, such obligations. Each holder of the Notes by accepting such Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws of the United States and it is the view of the SEC that such a waiver is against public policy. In addition, the waiver may not be effective to waive liabilities for any damage caused to Holders in violation of the Negotiable Obligations Law.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A. By: /s/ Rogelio Pagano

Rogelio Pagano Title: Director de Finanzas y Control THE BANK OF NEW YORK, as Trustee By: /s/ Edgar Ramos

Edgar Ramos Title: Assistant Vice President BANCO SANTANDER RÍO S.A., as representative of the Trustee in Argentina By: /s/ Oscar Amechino

Oscar Amechino Title: Gerente Departamental By: /s/ Claudio A. Cesario

Claudio A. Cesario Title: Gerente Principal

Edenor Indenture (NY) 13350/213/INDENTURE/edenor.notes.indenture.DOC

EXHIBIT A

[Form of Face of Note]

[RESTRICTED / REGULATION S] 10.5% NOTE DUE 2017


(incorporated in the City of Buenos Aires, Argentina, with Limited Liability (sociedad anónima) under the laws of the Republic of Argentina on July 21, 1992, for a term of duration of 95 years, and registered with the Public Registry of Commerce on August 3, 1992 under No. 7,041, Book 111, Volume A of Sociedades Anónimas and with principal offices at Azopardo 1025, City of Buenos Aires, Argentina)

Cusip No. [ ] ISIN No. [ ] No. [ ] U.S. $[ ]

Series: 10.5% Senior Note due 2017 for an aggregate principal amount of U.S. $220,000,000 (the Notes)

[Legend if the Note is a Restricted Note:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. EACH PURCHASER OF THIS NOTE OR ANY INTEREST HEREIN IS HEREBY NOTIFIED THAT THE TRANSFEROR OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

[Legend if the Note is a Global Note:


UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (DTC), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]

Exhibit A-1

[Legend if the Note is a Certificated Note:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIED WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.]

Empresa Distribuidora y Comercializadora Norte S.A., a sociedad anónima duly organized and existing under the laws of Argentina (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or to its registered assigns, the principal sum of U.S. $220,000,000 or such lesser amount as shall remain Outstanding after giving effect to any scheduled payment of principal or any cancellation, redemption or prepayment of this Note in accordance with the Indenture, and to pay interest thereon from October 9, 2007 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on April 9 and October 9 in each year, at the rate of 10.5% per year (the Interest Rate), until the principal hereof is paid or made available for payment and (to the extent that the payment of such interest shall be legally enforceable) at the rate of 2% per annum plus the Interest Rate on any overdue principal and premium and on any overdue installment of interest until paid.

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Record Date for such interest, which shall be the March 25 or September 24 (whether or not a Business Day, as defined below), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest (as defined below) to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

Interest on the Notes shall be computed based on a 360-day year of twelve 30-day months.

Payments in respect of this Note will be made by wire transfer of immediately available funds to the accounts specified by the Holder of this Note, or, if no account is specified, by mailing a check to each Holder’s address in the Registrar. All such payments are subject to the provisions in Section 1.15 (Legal Holidays) of the Indenture relating to legal holidays.

The Company may from time to time, without the consent of the holders of this Note, subject to the provisions of hereof, create and issue additional notes having terms and conditions the same as those of this Note (Additional Notes), except for the payment of interest accruing prior to the issue date of such Additional Notes and, in some cases, except for the first payment of interest following the issue date of such Additional Notes, which Additional Notes may be consolidated and form a single series with the outstanding Notes. The Company shall not issue any Additional Notes unless such Additional Notes have no more than a de minimis amount of original issue discount or such issuance would constitute a “qualified reopening” for U.S. federal income tax purposes.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

2

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated: October , 2007

By: Name: Title: Member of the Board of Directors

By: Name: Title: Member of the Statutory Audit Committee

Exhibit A-1

CERTIFICATE OF AUTHENTICATION

This note is one of the Notes designated herein and referred to in the within-mentioned Indenture.

The Bank of New York, AS TRUSTEE

By: (Authorized Signatory Name)

Name: Title:

2

[If Note is a Global Note, insert the following:

SCHEDULE A

SCHEDULE OF PRINCIPAL AMOUNT

The initial principal amount at maturity of this Note shall be U.S. $220,000,000. The following decreases/increases in the principal amount at maturity of this Note have been made:

Date of Decrease/Increase

Decrease in Principal Amount at Maturity

Increase in Principal Amount at Maturity

Total Principal Amount at Maturity

Following such Decrease/Increase

Notation Made by or on Behalf of Trustee

]

3

EXHIBIT B

[Form of Reverse of Note]

Reverse of Note

1. This Note is a negotiable obligation under Argentine Law No. 23,576, as amended (the Negotiable Obligations Law). This Note is one of a duly authorized issue of Notes of the Company designated as its 10.5% Notes due 2017 (herein called the Notes) issued and to be issued under an Indenture, dated as of October 9, 2007, 2006 (herein called the Indenture), between the Company, The Bank of New York, as Trustee (herein called the Trustee, which term includes any successor trustee under the Indenture) and Banco Santander Río S.A. (as representative of the Trustee in Argentina, Registrar, Transfer and Paying Agent and herein called the Paying Agent, which term includes any successor paying agent under the Indenture) to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. References to Sections herein are references to Sections of the Indenture.

2. In accordance with Section 10.2 (Redemption at the Company’s Option) of the Indenture, (A) At any time and from time to time prior to October 9, 2012, upon not less than 30 nor more than 60 days notice to the Trustee, the Company may redeem the Notes with the net cash proceeds received by it from any Public Equity Offering at a redemption price equal to 110.5% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the original aggregate principal amount of the Notes, including any additional notes of such series; provided that (i) in each case the redemption takes place not later than 180 days after the closing of the related Public Equity Offering, and (ii) not less than 65% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes of such series) remains outstanding immediately thereafter and (B) At any time on or after October 9, 2012 and prior to maturity, upon not less than 30 nor more than 60 days’ notice, the Company may redeem all or part of the Notes. These redemptions will be in amounts of U.S. $2,000 or integral multiples of U.S. $1,000 in excess thereof at the following redemption prices (expressed as percentages of their principal amount at maturity) plus, in each case, accrued and unpaid interest and Additional Amounts, if any, to the redemption date, if redeemed during the 12-month period commencing on October 9 of the years set forth below. This redemption is subject to the right of holders of record on the relevant regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date.

Year Redemption Price 2012 105.250% 2013 102.625% 2014 101.313% 2015 and thereafter 100%

3. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.

4. In accordance with Section 10.3 (Repurchase at the Option of Holders Upon a Change of Control) of the Indenture, if a Change of Control occurs, each Holder of the Notes will have the right to require the Company to repurchase all or any part (in any integral multiple of U.S. $1,000.00) of that Holder’s Notes pursuant to an offer (the Change of Control Offer) made by the Company on the terms set forth in the Indenture. In the Change of Control Offer, the Company will offer to purchase such Holder’s Notes at a purchase price in cash equal to 100% of the aggregate principal amount of such Notes to be repurchased plus accrued and unpaid interest and Additional Amounts, if any, on such Notes to be repurchased to the date of purchase, subject to the rights of Holders of such Notes on the relevant record date to receive interest due on the relevant interest payment date (the Change of Control Payment). Within 30 days

Exhibit B-1

following a Change of Control, the Company will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase the applicable Notes on a date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the Change of Control Payment Date), pursuant to the procedures required by the Indenture and described in such Change of Control Offer Notice. To the extent that the provisions of any securities laws or regulations to be issued in the future conflict with the Change of Control provisions of the Indenture, the Company will make the Change of Control Offer in accordance with the applicable provisions of the securities laws and regulations (and the terms set forth herein that do not conflict with such provisions) and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.

5. On the Change of Control Payment Date, the Company will, to the extent lawful:

a. accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

b. deposit with the Trustee an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

c. deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

6. The Trustee will promptly deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

7. The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the Indenture as described under Section 10.2 (Redemption at the Company’s Option) of the Indenture, unless and until there is a default in payment of the applicable redemption price.

8. The Company may redeem the Notes at its option in whole, but not in part, at any time, on giving not less than 30 nor more than 60 days’ written notice (which will be irrevocable) to the Trustee and, if applicable, to the CNV, in writing and to the Luxembourg Stock Exchange, if the rules of such exchange so require, such notice to be given by publication in the English language in a leading newspaper having general circulation in Luxembourg (which is expected to be the d’Wort or the Tageblatt), or, alternatively, on the website of the Luxembourg Stock Exchange at http://www.bourse.lu. The notes may be redeemed at a redemption price equal to 100% of the outstanding principal amount thereof, together with any accrued but unpaid interest and any Additional Amounts to the date fixed for redemption, if, as a result of any change in, or amendment to, the laws (or any regulations or rulings issued thereunder) of the Republic of Argentina or any political subdivision of or any taxing authority in the Republic of Argentina (each an Argentine Tax Jurisdiction) or any change in the application, administration or official interpretation of such laws, regulations or rulings, including, without limitation, the holding of a court of competent jurisdiction, the Company has or will become obligated to pay Additional Amounts with respect to a payment on or in respect of the Notes, which change or amendment becomes effective on or after the date of issuance of the Notes (or, in the case of a successor Person to the Company, as of the date such Person assumes the obligations of the Company), and the Company determines in good faith that such obligation cannot be avoided by its taking reasonable measures available to it. No such notice of redemption may be given earlier than 60 days prior to the earliest date on which we would be obligated to pay such Additional Amounts were a payment in respect of the Notes then due. Prior to the distribution of any notice of

Exhibit B-2

http://www.bourse.lu/

redemption pursuant to this paragraph, the Company will deliver to the Trustee a certificate signed by a duly authorized officer stating that it has or will become obligated to pay Additional Amounts as a result of such change or amendment, and that such obligation cannot be avoided by its taking reasonable measures available to it. The Company will also deliver to the Trustee, prior to the distribution of such notice, an opinion of counsel to the effect that as a result of such change or amendment the Company will be obligated to pay Additional Amounts. The Trustee will be entitled to accept such certificate and such opinion as sufficient evidence of the satisfaction of the conditions precedent contained in the second preceding sentence, in which event it will be conclusive and binding on the holders.

9. The Indenture contains provisions for defeasance at any time of (i) the entire indebtedness of this Note or (ii) certain covenants and Events of Default with respect to this Note, in each case upon compliance with certain conditions set forth therein.

10. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of all Notes then Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

11. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

12. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office of the Registrar, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes executed by the Company and authenticated and delivered by the Trustee, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

13. The Notes are issuable only in registered form without coupons in denominations of U.S. $2,000 and integral multiples of U.S. $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same.

14. No service charge shall be made for any registration of transfer or exchange of Notes, but the Company, the Trustee or the Paying Agent may require (i) payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 3.3 (Execution, Authentication, Delivery and Dating), 3.4 (Registration, Registration of Transfer and Exchange Generally), 8.5 (Conformity with Trust Indenture Act and the Negotiable Obligations Law) or 10.11 (Redemptions and Purchases of the Notes) of the Indenture not involving any transfer and (ii) appropriate endorsements and transfer documents.

15. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered in the Notes Register as the owner of this Note for the purpose of receiving payment of principal of (and premium, if any) and, subject to Section 3.4 (Registration, Registration of Transfer and Exchange Generally) of the Indenture, interest on such Note and for all other purposes whatsoever, whether or not this Note be

Exhibit B-3

overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

16. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

17. THE NEGOTIABLE OBLIGATIONS LAW GOVERNS THE LEGAL REQUIREMENTS FOR THIS NOTE TO QUALIFY AS AN “OBLIGACIÓN NEGOCIABLE” THEREUNDER WHILE SUCH LAW, TOGETHER WITH ARGENTINE LAW NO. 19,550, AS AMENDED AND OTHER ARGENTINE LAWS AND REGULATIONS, GOVERN THE CAPACITY AND CORPORATE AUTHORIZATION OF THE COMPANY TO EXECUTE AND DELIVER THIS NOTE AND THE INDENTURE AND THE AUTHORIZATION OF THE CNV FOR THE PUBLIC OFFERING OF THIS NOTE IN ARGENTINA. AS TO ALL OTHER MATTERS, THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.

18. Each of the following events with respect to the Notes shall be an event of default (Events of Default) in connection with the Notes:

a. default in the payment of any principal of any of the Notes when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for five calendar days;

b. default in the payment of any interest or Additional Amounts, if applicable, when the same shall become due and payable, whether at maturity, upon redemption, by declaration, by prepayment or otherwise and such default continues for thirty (30) calendar days;

c. any failure to comply with the provisions of Sections 9.16 (Limitations on Mergers, Consolidations, Sales and Conveyances);

d. any failure on the part of the Company to duly observe or perform any of the covenants or agreements of the Company under the Indenture (other than those referred to in (a) and (b) above) for a period of more than 30 calendar days after the date on which written notice thereof requiring the Company to remedy the same shall have been given to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount Outstanding of the Notes;

e. there occurs with respect to any Indebtedness of the Company or its Restricted Subsidiaries having a principal amount of U.S. $30 million (or its equivalent in other currencies) or more in the aggregate for all such Indebtedness of all such Persons (i) an event of default that results in the acceleration of the maturity of such Indebtedness or (ii) failure to make a principal payment when due and such defaulted payment is not made, waived or extended within the applicable grace period;

f. there shall have been a revocation, cancellation, termination or suspension for more than twenty (20) consecutive days of the Concession Agreement;

g. there shall have been entered against the Company or any of its Restricted Subsidiaries a final judgment, decree or order by a court of competent jurisdiction from which no appeal may be taken or, within the applicable period to appeal, is taken for the payment of money, or the forfeiture of property with an aggregate value in excess of U.S. $30 million (or its equivalent in other currencies) and 60 calendar days shall have passed since the entry of the order without it being satisfied, discharged or stayed (a Judgment);

h. a distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is levied, enforced or sued out on or against any part of the property, assets or revenues of the

Exhibit B-4

Company or any of its Restricted Subsidiaries, which, if executed or consummated, would have a material adverse effect on the Company’s ability to make scheduled principal and interest payments on the Notes, unless (i) such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process is discharged or stayed within 90 days of notice to the Company or such Restricted Subsidiary, as the case may be, or (ii) if such distress, attachment, execution, seizure before judgment or legal or extrajudicial process shall not have been discharged or stayed within such 90-day period, the Company or such Restricted Subsidiary, as the case may be, shall have contested in good faith by appropriate proceedings such distress, attachment, execution, seizure before judgment or legal process; provided that if such distress, attachment, execution, seizure before judgment or legal process shall not have been discharged or stayed within 365 days of notice to the Company or such Restricted Subsidiary, as the case may be, the Company or such Restricted Subsidiary shall have posted a bond or other appropriate collateral which shall have substituted such distress, attachment, execution, seizure before judgment or other legal or extrajudicial process within such time period;

i. the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary shall, after the Issuance Date:

i. make a general assignment for the benefit of its creditors,

ii. be adjudicated bankrupt or insolvent, or

iii. (A) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors pursuant to a “concurso preventivo de acreedores,” (B) seek approval of its creditors for an “acuerdo preventivo extrajudicial” through any means, including the distribution of an offering circular or similar disclosure materials to creditors in connection with such “acuerdo preventivo extrajudicial,” (C) file for court endorsement of an “acuerdo preventivo extrajudicial,” (D) apply for or consent to the appointment (in a similar court proceeding) of a receiver, trustee, liquidator or the like for itself or its property or (E) make a similar court filing seeking to take advantage of any applicable Insolvency Law;

j. after the Issuance Date and without its application, approval or consent, a proceeding shall be instituted in any court of competent jurisdiction, seeking in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary adjudication in bankruptcy, reorganization, dissolution, winding up, liquidation, a composition or arrangement with creditors, the appointment of a trustee, a receiver, liquidator or the like of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or of all of the assets thereof or other like relief in respect of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary under any applicable bankruptcy or Insolvency Law, and either

i. such proceeding shall not be actively contested by the Company or such Restricted Subsidiary in good faith, or

ii. any order, judgment or decree shall be entered by any court of competent jurisdiction to effect any of the foregoing;

k. any condemnation, seizure, compulsory purchase or expropriation, or taking into custody or control, by any governmental authority or agency of assets or share capital of the Company or its Restricted Subsidiaries which, in the aggregate, would be likely to have a material adverse effect upon the business and results of operations of the Company and its Restricted Subsidiaries taken as a whole; or

l. a general moratorium shall be agreed or declared in respect of the payment or performance of the obligations of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary.

Exhibit B-5

19. If an Event of Default occurs and is continuing with respect to the Notes, the Trustee may and, at the direction or request of the holders of not less than 25% of the then outstanding aggregate principal amount of the Notes shall, by notice in writing to the Company, declare the principal amount of, and interest accrued on, the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable upon the date that such written notice is received by or on behalf of the Company.

20. After a declaration of acceleration of the Notes, but before a judgment or decree of the money due in respect of the Notes has been obtained, the holders of not less than a majority of the then outstanding aggregate principal amount of the Notes, may rescind, by written notice to the Trustee, an acceleration and its consequences if all existing Events of Default (other than the nonpayment of principal and interest and any Additional Amounts on the Notes, which have become due solely by virtue of such acceleration) have been cured or waived and if the rescission would not conflict with any judgment or decree. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

21. The Company covenants that if:



the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of this Note, (i) the aggregate amount then due and payable on this Note for principal (and premium, if any) and interest, (ii) to the extent that payment of default interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and interest, at the default interest rate applicable to this Note, and (iii) such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

22. If the Company fails to pay such amounts immediately upon demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the amounts so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other successor obligor of this Note and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor of the Notes, wherever situated.

23. If an Event of Default occurs and is continuing, the Trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in the Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

24. The Trustee shall not be bound to institute any proceedings or take any other actions described in the two preceding paragraphs unless (a) it shall have been so directed by the Holders of a majority in aggregate principal amount of Notes then Outstanding pursuant (and subject) to Section 5.12 (Control by Holders) of the Indenture and (b) it shall have received an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such direction.

25. In case of any judicial proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act, the Negotiable Obligations Law and Law 24,522, as amended, in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver,

Exhibit B-6

assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7 (Compensation and Reimbursement) of the Indenture.

26. No provision of the Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

27. All rights of action and claims under the Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

28. No Holder of any Note will have any right by virtue of or by availing itself of any provision of the Indenture or the Notes to institute any suit, action or proceeding in equity or at law, or otherwise, upon or under or with respect to the Indenture, or the Notes, or for any remedy thereunder, unless:


(b) the Holders of not less than 25% of the aggregate principal amount of the Notes then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as Trustee under the Indenture and shall have offered to the Trustee an indemnity satisfactory to it against the costs, expenses and liabilities to be incurred therein or thereby, and

(c) the Trustee for 30 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to the Indenture.

29. Notwithstanding any other provision in the Indenture and any provision of this Note, the right of any Holder of any Note to receive payment of the principal of and interest on this Note (including Additional Amounts) on or after the respective due dates expressed in this Note, or to institute suit (including any “acción ejecutiva individual” pursuant to Article 29 of the Negotiable Obligations Law) for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the prior consent of such Holder. To that effect, any beneficial owner of Global Notes will have the right to obtain evidence of its beneficial ownership interest in a Global Note in accordance with Argentine Decree 677/01, as amended (including for initiating summary proceedings (acción ejecutiva) in the manner provided by the Negotiable Obligations Law), and for such purposes, such beneficial owner will be treated as the owner of that portion of the Global Note which represents its beneficial ownership interest therein.

30. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under the Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such ease, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

Exhibit B-7

31. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 3.6 (Payment of Interest; Interest Rights Preserved) of the Indenture, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

32. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.

33. The Holders of a majority in principal amount of the Notes then Outstanding shall, upon offering to the Trustee indemnity satisfactory to it, have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that:

(a) such direction shall not be in conflict with any rule of law or with the Indenture or shall not be adverse in any material respect to the Trustee; and



34. Subject to Section 5.2 (Acceleration of Maturity; Rescission and Annulment) of the Indenture, the Holders of not less than a majority in principal amount of the Notes then Outstanding may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default:


(b) in respect of a covenant or provision which under Section 8.2 (Supplemental Indentures With Consent of Holders) of the Indenture cannot be modified or amended without the consent of the Holder of each Note affected.

35. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

36. In any suit for the enforcement of any right or remedy under the Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this paragraph nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or the Trustee.

37. To the extent that the Company or any of its revenues, assets or properties shall be entitled, with respect to any Related Proceeding any time brought against the Company or any of its revenues, assets or properties in the courts identified above, to any immunity from suit, from the jurisdiction of any such court, from attachment prior to judgment, from attachment in aid of execution of judgment, from execution of a judgment or from any other legal or judicial process or remedy, and to the extent that in any such jurisdiction there shall be attributed such an immunity, the Company has irrevocably agreed not to claim and has irrevocably waived such immunity to the fullest extent permitted by law (including, without

Exhibit B-8

limitation, the Foreign Sovereign Immunities Act of 1976 of the United States). The Company has agreed that final judgment in any such suit, action or proceeding brought in such a court will be conclusive and binding on it and may be enforced in any court to the jurisdiction of which the Company is subject by a suit upon such judgment; provided that service of process if effected upon the Company in the manner specified above or as otherwise permitted by law.

38. The Company will not, and will not permit any of its Restricted Subsidiaries to incur, assume or suffer to exist, any Lien upon its property, assets or revenues, whether now owned or hereafter acquired, securing any Indebtedness of any Person, unless the Notes are equally and ratably secured by such Liens, other than the following (Permitted Liens):






(f) Liens on property that secure Indebtedness Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of such property and which attach no later than 90 days after the date of such purchase or the completion of construction or improvement; provided that no such Lien shall extend to or cover any physical assets or equipment other than the physical assets or equipment being acquired, constructed or improved;

(g) Liens on property at the time the Company or any of its Restricted Subsidiaries acquires such property, including any acquisition by means of a merger or consolidation of such Person with or into the Company or a Restricted Subsidiary;

Exhibit B-9

provided that such Liens are not created in contemplation of such acquisition and do not extend to any other property of the Company or any Restricted Subsidiary existing immediately prior to such acquisition;

(h) escrow deposits, trusts or similar accounts created or established pursuant to the Restructuring Indenture, the Indenture or for the payment of debt service obligations under the Notes, including, without limitation, any deposits or accounts created and any encumbrances or interests granted in such deposits or accounts, in each case, in connection with or in furtherance of the application of the proceeds of this offering as described under “Use of Proceeds” in the Offering Memorandum;



(k) Liens in existence on the Issuance Date and any renewals or extensions thereof, so long as (A) such renewal or extension Lien does not extend to any property other than that originally subject to the Liens being renewed or extended and (B) the principal amount of the Indebtedness secured by such Lien, if applicable, is not increased;

(l) Liens to secure any Permitted Refinancing Indebtedness which is Incurred to refinance any Indebtedness which has been secured by a Lien permitted under this paragraph; provided that such new Liens are not materially more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being refinanced, and do not extend to any property or assets other than property or assets securing the Indebtedness refinanced by such Permitted Refinancing Indebtedness;

(m) Liens on Receivables and Related Assets securing Permitted Indebtedness described in Paragraph 40(h) hereof;

(n) Liens arising or deemed to arise from a Sale and Leaseback Transaction;

(o) Liens created or established in order to comply with any applicable rule, regulation, order, resolution, decree, directive or instruction of any federal, provincial or municipal government of Argentina, or any agency or instrumentality thereof, in connection with the conduct of a Permitted Business; and

(p) Liens on any debt securities of the Company or a Restricted Subsidiary repurchased by the Company and securing Indebtedness the proceeds of which are used exclusively for the repurchase of debt securities of the Company or a Restricted Subsidiary;


39. The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness; provided that the Company or any Restricted Subsidiary may Incur Indebtedness if, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application of the proceeds therefrom, no Default has occurred and is continuing and the Leverage Ratio is not greater than 3.75 or less than zero and the Interest Expense Coverage Ratio is not less than 2.0.

40. Notwithstanding the foregoing, the Company and its Restricted Subsidiaries may Incur the following Indebtedness if, on the date of the Incurrence, after giving effect to the Incurrence and the receipt and application of the proceeds therefrom, no Default has occurred and is continuing (Permitted Indebtedness):

Exhibit B-10

(a) Indebtedness outstanding on the Issuance Date, including any Notes issued on the Issuance Date;

(b) Permitted Refinancing Indebtedness;

(c) Subordinated Indebtedness;

(d) Indebtedness Incurred for purposes of, and substantially all of the proceeds of which are applied to, financing of Regulatory Capital Expenditures;

(e) Indebtedness in respect of Hedging Contracts;

(f) Indebtedness with respect to letters of credit, bankers’ acceptances and similar obligations issued in the ordinary course of business and not supporting Indebtedness, including performance bonds and letters of credit supporting performance bonds;

(g) Indebtedness of the Company or any of its Restricted Subsidiaries owed to the Company or any of its Restricted Subsidiaries so long as such Indebtedness continues to be owed to the Company or a Restricted Subsidiary and which, if the obligor is the Company and such Indebtedness is owed to such Restricted Subsidiary, is subordinated in right of payment and priority to the Notes, pursuant to a Subordination Agreement;

(h) Indebtedness under any one or more Permitted Receivables Financings, the combined aggregate principal amount of which does not exceed U.S.$35 million (or its equivalent in other currencies) at any time outstanding; and


41. The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale unless:


(b) at least 75% of the value of the consideration therefrom is in the form of Cash and Cash Equivalents; provided that (i) any non-cash consideration received is for fair market value and (ii) the receipt of such non-cash consideration is otherwise permitted under the Indenture; and


42. Within 270 days after the receipt of any Net Cash Proceeds from an Asset Sale (other than a Sale and Leaseback Transaction), the Company or any Restricted Subsidiary shall, at its election, apply the Net Cash Proceeds of such Asset Sale to (i) purchase, prepay or redeem Indebtedness of the Company or any Restricted Subsidiary or (ii) (A) acquire or commit to acquire all or substantially all of the assets of a Permitted Business or a majority of the Voting Stock of another Person that thereupon becomes a Restricted Subsidiary engaged in a Permitted Business; or (B) acquire or commit to acquire assets that are to be used by the Company or a Restricted Subsidiary in a Permitted Business; provided that if the Company receives Net Cash Proceeds from Asset Sales in an aggregate amount in excess of U.S. $20 million in any fiscal year, the Company shall apply such excess, to the extent not otherwise applied as

Exhibit B-11

permitted in this paragraph within the following fiscal year, for the purposes set forth in clauses (i) or (ii) above.

The Company or any Restricted Subsidiary shall apply the Net Cash Proceeds of any Sale and Leaseback Transaction as set forth in clauses (i) or (ii)(B) in the immediately preceding paragraph.

43. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into, renew or extend any transaction or arrangement including the purchase, sale, lease or exchange of property or assets, or the rendering of any service, with any Affiliate of the Company (other than Sociedad Anónima Centro de Movimiento de Energía (SACME)) except upon terms not less favorable to the Company or such Restricted Subsidiary than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

44. If any such transaction or series of related transactions has an aggregate value in excess of U.S. $10 million, prior to such transaction, the Company will obtain a favorable written opinion from (i) the audit committee of the Company, which committee shall include at least two independent members of the Board of Directors and (ii) at least one independent consultant that the terms of the transaction are consistent with those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company.

45. Paragraphs 51 and 52 do not apply to:



(c) any payments made pursuant to the Technical Assistance Agreement, dated September 15, 2005, between EDF and the Company, or pursuant to a technical service or operating agreement with the then current strategic operator on or prior to the fifth anniversary of the Issuance Date (or later, if the Company is required under any applicable rules or regulations or by any relevant authorities to engage a strategic operator after such fifth anniversary); in an aggregate amount not to exceed U.S. $2.0 million (or its equivalent in other currencies), net of withholding taxes, in any fiscal year;

(d) any payments to Electricidad Argentina S.A. (EASA) in an aggregate amount (including, but not limited to, withholding taxes, but net of value added taxes) not to exceed U.S. $2.5 million (or its equivalent in other currencies) in any fiscal year; or

(e) the performance by any of the Company or its Restricted Subsidiaries of its obligations under the terms of any modification or replacement of such agreement in effect on the Issuance Date and disclosed in the Offering Memorandum under the heading “Related Party Transactions.”

46. The Company will not and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, take any of the following actions (each, a Restricted Payment):

(a) declare or pay any dividend or return of capital or make any distribution on or in respect of Equity Interests of the Company or any Restricted Subsidiary to Holders of such Equity Interests other than (i) any dividends or distributions in the form of Qualified Equity Interests of the Company, (ii) dividends, distributions or returns of capital payable to the Company or a Restricted Subsidiary, (iii) dividends, distributions or returns of capital made on a pro rata basis to the Company and its

Exhibit B-12

Restricted Subsidiaries on the one hand, and minority Holders of Equity Interests of a Restricted Subsidiary on the other hand or (iv) any payments permitted to be made pursuant to Section 9.4 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture;


(c) repay, redeem, repurchase, defease or otherwise acquire or retire for value, or make any payment on or with respect to, any Subordinated Indebtedness, other than (i) scheduled payments of interest or principal (provided no Default or Event of Default shall have occurred and be continuing), (ii) any intercompany Indebtedness between or among the Company and/or any Restricted Subsidiaries or (iii) any payments permitted to be made pursuant to Section 9.4 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture; or

(d) make any Investments (other than Permitted Investments);

unless, at the time of, and after giving affect to, the proposed Restricted Payment.

47. The Company will furnish to the Trustee:


(b) as soon as available, but in any event within 75 days after the end of each of the first three fiscal quarters of the Company, a copy of the unaudited consolidated balance sheet of the Company as of the end of each such quarter and the related unaudited consolidated statements of income and cash flows of the Company for such quarter and the portion of the fiscal year through such date; and

(c) concurrently with the delivery of the financial statements for each fiscal year and the second fiscal quarter of the Company referred to in clauses (a) and (b), respectively above, a certificate of the Company’s general manager or Chief Financial Officer certifying the calculation of the Leverage Ratio and the Interest Expense Coverage Ratio; and

(d) concurrently with the delivery of the financial statements referred to in clause (a) above, a certificate of the general manager or chief financial officer of the Company stating (i) whether, to the best of such officer’s knowledge, anything came to his or her attention to cause him or her to believe that there existed on the date of such statements a Default or an Event of Default, and if so, specifying the nature and period of existence thereof.


48. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Exhibit B-13

49. The Company will use reasonable efforts to notify the Trustee by facsimile or electronic mail (receipt confirmed telephonically or by electronic mail or electronic mail receipt) promptly after it becomes aware of the occurrence of any Event of Default, or any condition or event which with the giving of notice, lapse of time or satisfaction of any other condition or any combination of the foregoing would, unless cured or waived, become an Event of Default. Each notice given pursuant to this paragraph shall be accompanied by a certificate of an Officer of the Company setting forth the details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto.

50. The Company will use its reasonable best efforts to obtain and maintain a listing on the Buenos Aires Stock Exchange, the admission to trading on the Mercado Abierto Electrónico S.A., a listing on the Luxembourg Stock Exchange and the admission to trading on the Euro MTF market of the Luxembourg Stock Exchange. In the event that the Notes are admitted to trading on Euro MTF, the Company will use commercially reasonable efforts to maintain such listing; provided that the Company may terminate such listing and delist the Notes from Euro MTF if it determines that the provisions of the European Transparency Obligations Directive (2003/2004/COD) or other applicable legislation becomes unduly onerous or burdensome, in which case the Company will use commercially reasonable efforts to obtain an alternative admission to listing, trading and/or quotation for the Notes by another listing authority, exchange and/or system within or outside the European Union, as it may decide and to the extent feasible.

51. Except as otherwise permitted under the Indenture and referred to below under Section 9.16 (Limitations on Mergers, Consolidations, Sales and Conveyances) of the Indenture, the Company, at all times, will do all things necessary to preserve and keep in full force and effect its corporate existence and preserve and keep in full force and effect in all respects all material licenses and permits necessary to the proper conduct of its business and its rights (charter and statutory) and franchises and such rights and franchises of its Restricted Subsidiaries necessary to the proper conduct of the business of the Company and such Subsidiaries, as a whole.

52. The Company and its Restricted Subsidiaries will not engage in any business other than a Permitted Business.

53. The Company will cause all material tangible properties used in the conduct of its business or the business of any of its Significant Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements and improvements thereof, all as in the Company’s judgment may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that this covenant will not prevent the Company or any of its Subsidiaries from discontinuing the operation or maintenance of any of such properties if such discontinuance is desirable in the conduct of its business and the business of its Subsidiaries taken as a whole and not adverse in any material respect to the holders of the Notes.

54. The Company will, and will cause each of its Subsidiaries to, maintain insurance in such amounts and covering such risks as is usually carried by electricity distribution companies, subject to any applicable laws and regulations of Argentina.

55. The Company will, and will cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all taxes, assessments and governmental charges levied or imposed upon the Company or its Subsidiaries; provided, however, that neither the Company nor any Subsidiary will be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim which is being contested in good faith and, if appropriate, by appropriate legal proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Company or such Subsidiary, as the case may be, to the extent required by Argentine GAAP.

56. The Company may designate any Subsidiary, including a newly acquired or created Subsidiary, to be an Unrestricted Subsidiary under the Indenture if:

(a) the Restricted Subsidiary is not a Significant Subsidiary;

Exhibit B-14

(b) no Default or Event of Default shall have occurred and be continuing at the time of and after giving effect to such designation;

(c) such Subsidiary does not own any Capital Stock of the Company or any Restricted Subsidiary or hold any Indebtedness of, or any Lien on any property of, the Company or any Restricted Subsidiary; and

(d) the Subsidiary is not party to any transaction or arrangement with the Company or any Restricted Subsidiary that would not be permitted under Section 9.4 (Limitation on Transactions with Shareholders and Affiliates) of the Indenture.


57. (a) A Subsidiary previously designated an Unrestricted Subsidiary which fails to meet the qualifications set forth in paragraph 66 above will be deemed to become at that time a Restricted Subsidiary, subject to the consequences set forth in paragraph 69.

(b) the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary if the designation would not cause a Default.

58. Upon a Restricted Subsidiary becoming an Unrestricted Subsidiary:

(a) all existing Investments of the Company and the Restricted Subsidiaries therein valued at the Company’s proportional share of the fair market value of its assets less liabilities will be deemed made at that time;

(b) all existing Indebtedness of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time, and all Liens on property of the Company or a Restricted Subsidiary held by it will be deemed incurred at that time;

(c) all existing transactions between it and the Company or any Restricted Subsidiary will be deemed entered into at that time; and

(d) it will cease to be subject to the provisions of the Indenture and the Notes as a Restricted Subsidiary.

59. Upon an Unrestricted Subsidiary becoming, or being deemed to become, a Restricted Subsidiary:

(a) all of its Indebtedness and Disqualified Stock will be deemed incurred at that time for purposes of Section 9.2 (Limitations on Indebtedness) of the Indenture;

(b) Investments therein previously charged under Section 9.5 (Limitation on Restricted Payments) of the Indenture, as adjusted to reflect any change in the Company’s proportional share of the fair market value of its assets less liabilities, will be credited thereunder; and

(c) it will thenceforward be subject to the provisions of the Indenture and the Notes as a Restricted Subsidiary.

Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary shall, unless so noted by the Company, be deemed to include the designation of all of the Subsidiaries of such Subsidiary. Any designation by the Company of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary will be evidenced to the Trustee by delivering to the Trustee a copy of the resolutions of the Board of Directors

Exhibit B-15

giving effect to the designation and an Officers’ Certificate certifying that the designation complied with the foregoing provisions, not later than the next succeeding delivery of financial statements as required under Section 9.6 (Delivery of Financial Statements) of the Indenture.

60. Notwithstanding the foregoing, the obligations of the Company and its Restricted Subsidiaries to comply with the covenants described above under the Sections 9.2 (Limitations on Indebtedness), 9.3 (Limitations on Asset Sales) and 9.5 (Limitation on Restricted Payments) (collectively, the Suspended Covenants) will be suspended and cease to have any further effect during the period (the Suspended Period) from and after the first date that either (a) the Company attains from at least one of the Rating Agencies, a rating on its long-term debt denominated in currencies other than pesos that is Investment Grade or (b) the Leverage Ratio (as certified by the Company’s auditors) is equal to or lower than 2.5 and until, as applicable, the date (the Reversion Date) on which either (i) none of the Rating Agencies provide the Company’s non-Peso denominated long-term debt an Investment Grade rating or (ii) the Leverage Ratio is greater than 2.5. On the Reversion Date, the Company and its Restricted Subsidiaries’ obligation to comply with the Suspended Covenants shall be reinstated; provided, however, that the Suspended Covenants will not be of any effect with regard to actions of the Company or its Restricted Subsidiaries taken during the Suspension Period, and no Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period.

61. On the Reversion Date, all Indebtedness incurred while the Suspended Covenants were suspended will be classified to have been incurred pursuant to one of the paragraphs set forth in Section 9.2 (Limitations on Indebtedness) of the Indenture (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reversion Date and after giving effect to Indebtedness outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be incurred pursuant to Section 9.2 (Limitations on Indebtedness) of the Indenture such Indebtedness will be deemed to have been outstanding on the Issuance Date, so that it is classified as permitted under paragraph (a) of Section 9.2 (Limitations on Indebtedness) of the Indenture.

62. The Company will not enter into any merger, consolidation, spin-off or reorganization with any Person (whether or not the Company is the surviving or continuing Person) or sell, assign, transfer or otherwise convey or dispose of all or substantially all of its and its Restricted Subsidiaries’ assets, taken as a whole, whether by one transaction or a series of transactions, to any Person unless:


(b) the surviving or transferee Person (if not the Company) shall have expressly assumed, by a document executed and delivered to the Trustee in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes and the Indenture;



(e) the surviving or transferee Person shall have delivered to the Trustee an Officers’ Certificate stating that such merger, consolidation, sale, assignment, transfer or other conveyance or disposition complies with this covenant and the Indenture.

Exhibit B-16

63. Upon the occurrence of any of the transactions permitted by the preceding paragraph, the surviving or transferee Person (if not the Company) will succeed to and become substituted for the Company, and may exercise every right and power of the Company, with the same effect as if it had been named in the Notes and the Indenture. Following such transaction, the Company will be released from its liability as obligor on the Notes and under the Indenture.

64. In the event of any such sale, assignment, transfer, conveyance or disposition, the Company, as the predecessor entity, may be dissolved, wound-up or liquidated at any time thereafter.

65. All payments of principal, premium or interest by the Company in respect of the Notes will be made without deduction or withholding for or on account of any present or future taxes, penalties, fines, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf any Argentine Tax Jurisdiction (Argentine Taxes), unless the Company is compelled by law to deduct or withhold such Argentine Taxes. In any such event, the Company will pay such additional amounts (Additional Amounts) in respect of Argentine Taxes as may be necessary to ensure that the amounts received by holders and beneficial owners of such Notes after such withholding or deduction will equal the respective amounts that would have been received in respect of such Notes in the absence of such withholding or deduction, except that no such Additional Amounts will be payable:

a. to or on behalf of a holder or beneficial owner of a Note that is liable for Argentine Taxes in respect of such Note by reason of having a present or former connection with an Argentine Tax Jurisdiction other than merely the holding or owning of such Note or the enforcement of rights with respect to such Note or the receipt of income or any payments in respect thereof;

b. to or on behalf of a holder or beneficial owner of a Note in respect of Argentine Taxes that would not have been imposed but for the failure of the holder or beneficial owner of a Note to comply with any certification, identification, information, documentation or other reporting requirement (within 45 calendar days following a written request from the Company to the holder or beneficial owner, as applicable, for compliance) if such compliance is required by applicable law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of deduction or withholding of, Argentine Taxes; to or on behalf of a holder or beneficial owner of a Note in respect of any estate, inheritance, gift, sales, transfer, personal assets or similar tax, assessment or other governmental charge;

c. to or on behalf of a holder or beneficial owner of a Note in respect of any estate, inheritance, gift, sales, transfer, personal assets or similar tax, assessment or other governmental charge;

d. to or on behalf of a holder or beneficial owner of a Note in respect of Argentine Taxes payable otherwise than by withholding from payment of principal of, premium, if any, or interest on the Notes;

e. to or on behalf of a holder or beneficial owner of a Note in respect of any Taxes that are imposed on a payment to an individual and are required to be made pursuant to European Council Directive 2003/48/E on the taxation of savings income or any other directive implementing the conclusions of the ECOFIN Council meetings of November 26 and 27, 2000, December 13, 2001, and January 21, 2003, or any law implementing or complying with, or introduced in order to conform to, such a directive;

f. to or on behalf of a holder or beneficial owner of a Note in respect of any Taxes that would not have been imposed if presentation for payment of the relevant notes had been made to a paying agent other than the paying agent to which the presentation was made;

g. to or on behalf of a holder or beneficial owner of a Note in respect of Argentine Taxes that would not have been imposed but for the fact that the holder presented such Note for payment (where presentation is required) more than 30 days after the later of

Exhibit B-17

i. the date on which such payment became due and

ii. if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which, the full amount having been so received,

notice to that effect will have been given to the holders by the Trustee; or

h. any combination of items (a) to (g) above;

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any Notes to any Holder or beneficial owner of a Note who is a fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of an Argentine Tax Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership, limited liability company or beneficial owner who would not have been entitled to such Additional Amounts had it been the holder of such Notes.

66. The Company will pay any present or future stamp, issue, registration, court, documentation, excise or other similar taxes, charges and duties, including interest and penalties with respect thereto, imposed by any Argentine Tax Jurisdiction in respect of the execution, issue, registration or delivery of the Notes or any other document or instrument referred to hereunder and any such taxes, charges or duties imposed by any jurisdiction as a result of, or in connection with, the enforcement of the Notes and/or any other such document or instrument.

67. The Company covenants that if the Company or the Trustee or any Paying Agent is required by law to make any deduction or withholding on payments of principal of or interest on the Notes for or on account of any Argentine tax, duty, assessment or other governmental charge, the Company shall, at least 10 Business Days prior to the first payment on which such deduction or withholding is applicable, (and at least 10 Business Days prior to each succeeding payment date or any redemption date or maturity date if there has been any change with respect to the matters set forth in the below-mentioned Officer’s Certificate) deliver to the Trustee (with a copy to any other Paying Agent) an Officer’s Certificate specifying the amount so required to be deducted or withheld and certifying that the Company shall pay such deduction or withholding.

68. The Company hereby covenants to indemnify the Trustee (and each other Paying Agent) for, and to hold the Trustee harmless against any loss, liability or expense incurred without negligence or bad faith on the Trustee’s part arising out of actions taken or omitted by any of them in reliance on any Officer’s Certificate furnished pursuant to this Section or the failure of the Trustee to receive on a timely basis such Officer’s Certificate or any information or documentation requested by it or otherwise required by applicable laws or regulations to be obtained, furnished or filed in respect of any tax, duty, assessment or other governmental charge pursuant to the foregoing provisions of Section 9.17 (Payment of Additional Amounts) of the Indenture.

69. The indemnification obligations of the Company under Section 9.17 (Payment of Additional Amounts) of the Indenture shall survive the payment of the Notes, the termination of the Indenture and the resignation or removal of the Trustee.

70. If the Company shall at any time act as its own Paying Agent, it will, on or before each payment date of the principal of (and premium, if any) or interest on any of the Notes, segregate and hold in trust for the benefit of the Persons entitled to such payment a sum sufficient to pay the principal (and premium, if any) or interest due until such sums shall he paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

71. Whenever the Company shall have one or more Paying Agents, it will, prior to each payment date of the principal of (and premium, if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to

Exhibit B-18

pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. Principal and interest shall be considered paid on the date due if on such date the Trustee or Paying Agent (other than the Company or an Affiliate of the Company) holds in accordance with the Indenture U.S. Dollars designated for and sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of the Indenture.

72. The Company will cause each Paying Agent, other than the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of Section 9.18 (Money for Note Payments to be Held in Trust) of the Indenture, that such Paying Agent will:




73. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of the Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same term as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

74. Any money deposited with the Trustee or any Paying Agent, or held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Note which remains unclaimed for three years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of this Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper customarily published on each Business Day and of general circulation in the city of Buenos Aires, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

75. Claims filed in Argentina courts against the Company for payment of principal in respect of the Notes (including Additional Amounts), including actions to enforce judgments obtained from a New York court, shall be prescribed unless made within ten years of the due date for payment of such principal. Claims for the payment of interest, including actions to enforce judgments obtained from a New York court, shall be prescribed unless made within four years of the due date for payment of such interest..

76. Claims filed in the courts of the State of New York will be subject to the applicable statute of limitations for such claims.

Exhibit B-19

77. In the event of any foreign exchange restriction or prohibition in Argentina, the Company shall make any and all payments of any Note in U.S. Dollars to be made outside Argentina by:

(a) purchasing, with pesos, “Bonos Externos Globales de la República Argentina” issued by Argentina and payable in Dollars or any other public or private securities issued in Argentina and denominated in U.S. Dollars, or any other securities (collectively, the Securities) and selling such instruments outside Argentina for U.S. Dollars; or

(b) any other legal mechanism for the acquisition of U.S. Dollars in any exchange market.

(c) In addition, in the event of any foreign exchange restriction or prohibition in Argentina, any Holder of Notes may, to the extent legally permitted, elect to receive the payment in an amount equivalent to the Peso amount necessary for purchasing Securities and the reasonable and customary cost of transferring and selling such Securities outside Argentina for U.S. Dollars in an amount equivalent to the sums due and payable under the Notes. Such payment will discharge and satisfy the Company’s payment obligations to such Holders on such payment date. In each case, all reasonable and customary costs, including any taxes, relative to such operations to obtain foreign currency will be borne by the Company.

(d) In addition, in the event of any restriction or prohibition in Argentina to pay in foreign currency any obligations under the Notes to any Holder of Notes that is a resident in Argentina, the Company shall make its best efforts to obtain the corresponding authorization of the Central Bank to make such payments in U.S. Dollars. However, if such authorization cannot be obtained after reasonable attempts, the Company shall pay such Holder the Peso equivalent amount of the foreign currency amount due on the relevant payment date, or to the extent the Depositary or its nominee, as the Holder of Notes, does not accept Pesos, then we will make such payments of Peso equivalents directly to the Depositary participants holding a beneficial interest in the Notes.

(e) Such payments in Pesos will be calculated using the U.S. $/ Peso exchange rate quoted by Reuters Screen “ARSVH=” ASK SIDE (Valor Hoy Mercado) at 12:00 p.m. New York City time on the payment date; provided that (i) if the U.S. $/ Peso exchange rate does not appear on such Reuters Screen, the U.S. $/ Peso exchange rate shall mean, with respect to the payment date, the U.S. $/ Peso exchange rate which appears on Bloomberg L.P. (Bloomberg Screen (ARS currency)-ASK SIDE-PCS Composite (NY)) at 12:00 p.m. New York City time on such payment date. Such payment in Pesos will fully discharge and satisfy the Company’s payment obligation to such holder on the payment date and shall not constitute an Event of Default.

78. Any suit, action or proceeding against the Company or its properties, assets or revenues with respect to the Notes or the Indenture (a Related Proceeding) may be brought in the Supreme Court of the State of New York, County of New York, or in the United States District Court for the Southern District of New York, or in the courts of Argentina that sit in the City of Buenos Aires, or in accordance with the provisions of Section 38 of Decree No. 677/2001, as the person bringing such Related Proceeding may elect in its sole discretion. The Company has consented to the non-exclusive jurisdiction of each such court for the purpose of any Related Proceeding and has irrevocably waived any objection to the laying of venue of any Related Proceeding brought in any such court and to the fullest extent it may effectively do so and the defense of an inconvenient forum to the maintenance of any Related Proceeding or any such suit, action or proceeding in any such court.

79. The Company has agreed that service of all writs, claims, process and summonses in any Related Proceeding brought against it in the State of New York may be made upon CT Corporation System (the Process Agent), and the Company irrevocably appointed the Process Agent as its agent and true and lawful attorney in fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and has agreed that the failure of the Process Agent to give any notice to it of any such

Exhibit B-20

service of process shall not impair or affect the validity of such service or of any judgment based thereon. The Company has agreed to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing in the Indenture shall in any way be deemed to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law.

80. The Company irrevocably waives trial by jury in any legal action or proceeding relating to the Indenture or the Notes.

81. The Company will ensure that its obligations under the Notes will at all times constitute direct, unconditional and unsubordinated obligations of the Company ranking at least pari passu in priority of payment, in right of security upon liquidation and in all other respects among themselves and with all other unsecured indebtedness of the Company now or hereafter outstanding, except to the extent that such other indebtedness may be preferred by mandatory provisions of applicable law or subordinated by its terms.

82. As used herein,




Defaulted Interest means any interest on any Note which is payable but is not punctually paid or duly provided for on any Interest Payment Date.

Interest Payment Date means April 9 and October 9 of each year, commencing on the first such date to occur after the Issuance Date; provided that if any Interest Payment Date would fall on a day other than a Business Day, such Interest Payment Date shall be the next succeeding Business Day with the same force and effect as if made on such April 9 or October 9, as applicable, with no accrual of interest for the period between such date and such immediately succeeding Business Day.


Issuance Date means the date of original issuance of the Notes under the Indenture.

Offering Memorandum means the final offering memorandum relating to the Notes dated October 1, 2007.


Restructuring Indenture means the indenture, dated as of April 24, 2006, among the Company and The Bank of New York, as Trustee, Co-Registrar and Paying Agent, and Banco Río de la Plata S.A. as Registrar, Transfer and Paying Agent in Argentina and Representative of the Trustee in Argentina.

Special Record Date for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.6 (Payment of Interest; Interest Rights Preserved) of the Indenture.

Exhibit B-21

Exhibit B-22

ANNEX A

FORM OF REGULATION S CERTIFICATE

(For transfers pursuant to Section 3.4(b)(i), (iii) and (v) of the Indenture)

The Bank of New York 101 Barclay Street, Floor 4 East New York, New York 10286 Attn: Corporate Trust Administration—Global Finance Unit

Re: U.S. $220,000,000 10.5% Notes due October 9, 2017 (the Notes)

Reference is made to the Indenture, dated October 9, 2007 (the Indenture), between the Company and The Bank of New York, as Trustee. Terms used herein and defined in the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933, as amended (the Securities Act) are used herein as so defined.


COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).


The Owner has requested that the Specified Notes be transferred to a person (the Transferee) who will take delivery in the form of a Regulation S Note. In connection with such transfer, the Owner hereby certifies or has certified that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 904 of Regulation S or Rule 144 under the Securities Act and with all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies or has certified as follows:

Annex A-1


If the transfer is being effected in accordance with Rule 904 of Regulation S:

(A) the Owner is not a distributor of the Notes, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

(B) the offer of the Specified Notes was not made to a person in the United States;

(C) either:

(i) at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or

(ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the International Notes Market Association or another designated offshore Notes market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

(D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof; and

(E) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.



(A) the transfer is occurring after October 9, 2008 and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after October 9, 2009, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.



By: Name: Title:


Annex A-2

ANNEX B

FORM OF RESTRICTED NOTES CERTIFICATE

(For transfers pursuant to Section 3.4(b)(ii), (iii) and (v) of the Indenture)


Re: U.S. $220,000,000 10.5% Notes due October 9, 2017 (the Notes)



COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).

The person in whose name this certificate is executed below (the Undersigned) hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes, (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so or (iii) it is the Holder of a Global Note and has received a certification to the effect set forth below. Such beneficial owner or owners are referred to herein collectively as the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be transferred to a person (the Transferee) who will take delivery in the form of a Restricted Note. In connection with such transfer, the Owner hereby certifies or has certified that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 144A or Rule 144 under the Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies or has certified that:

(l) Rule 144A Transfers

If the transfer is being effected in accordance with Rule 144A:

(A) the Specified Notes are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a “qualified institutional buyer” within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and

(B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer.

Annex B-1



(A) the transfer is occurring after October 9, 2008 and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after October 9, 2009, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.



By: Name: Title:


Annex B-2

ANNEX C

FORM OF UNRESTRICTED NOTES CERTIFICATE

(For removal of Securities Act legends pursuant to Section 3.4(c)(iv) of the Indenture)


Re. U.S. $220,000,000 10.5% Notes due October 9, 2017 (the Notes)



COMMON CODE No(s).

ISIN No(s).

CERTIFICATE No(s).


The Owner has requested that the Specified Notes be exchanged for Notes bearing no Securities Act legend pursuant to Section 3.4(c)(iv)of the Indenture. In connection with such exchange, the Owner hereby certifies or has certified that the exchange is occurring after October 9, 2009, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges or has acknowledged that any future transfers of the Specified Notes must comply with all applicable securities laws of the states of the United States and other jurisdictions.



By: Name: Title:


Annex C-1

Exhibit 2.4

EMPRESA DISTRIBUIDORA Y COMERCIALIZADORA NORTE S.A.

10.50% Senior Notes due 2017

REGISTRATION RIGHTS AGREEMENT

October 9, 2007

Citigroup Global Markets Inc. 388 Greenwich Street New York, New York 10013

Deutsche Bank Securities Inc. 60 Wall Street New York, NY 10005

As Representatives of the Initial Purchasers

Ladies and Gentlemen:

Empresa Distribuidora y Comercializadora Norte S.A. (the “Company”), a corporation organized under the laws of the Republic of Argentina ( “Argentina”), proposes to issue and sell to certain purchasers (the “Initial Purchasers”), for whom you (the “Representatives”) are acting as representatives, its 10.50% Senior Notes in the principal amount of U.S. $220,000,000 due 2017 (the “Securities”), upon the terms set forth in the Purchase Agreement between the Company and the Representatives dated October 1, 2007 (the “Purchase Agreement”) relating to the initial placement (the “Initial Placement”) of the Securities. To induce the Initial Purchasers to enter into the Purchase Agreement and to satisfy a condition to your obligations thereunder, the Company agrees with you for your benefit and the benefit of the holders from time to time of the Securities (including the Initial Purchasers) (each a “Holder” and, collectively, the “Holders”), as follows:

1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings:

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

“Affiliate” shall have the meaning specified in Rule 405 under the Act and the terms “controlling” and “controlled” shall have meanings correlative thereto.

“Broker-Dealer” shall mean any broker or dealer registered as such under the Exchange Act.

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

“Closing Date” shall mean the date of the first issuance of the Securities.

“Commission” shall mean the United States Securities and Exchange Commission.

“Deferral Period” shall have the meaning indicated in Section 4(k)(ii) hereof.

“Depositary” means any of The Depository Trust Company (“DTC”), Euroclear Bank S.A./N.V., as operator of the Euroclear system and its successors (“Euroclear”) and Clearstream Banking, société anonyme, Luxembourg and its successors (“Clearstream”), as the case may be.

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

“Exchange Offer Registration Period” shall mean the one-year period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement.

“Exchange Offer Registration Statement” shall mean a registration statement of the Company on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments thereto, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

“Exchanging Dealer” shall mean any Holder (which may include any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New Securities any Securities that it acquired for its own account as a result of market-making activities or other trading activities (but not directly from the Company or any Affiliate of the Company) for New Securities.

“Final Offering Memorandum” shall mean the offering memorandum, dated October 1, 2007, relating to the Securities, including any and all exhibits thereto and any information incorporated by reference therein as of such date.

“Holder” shall have the meaning set forth in the preamble hereto.

“Indenture” shall mean the Indenture relating to the Securities, dated as of October 9, 2007, between the Company and The Bank of New York, as trustee, as the same may be amended from time to time in accordance with the terms thereof.

“Initial Placement” shall have the meaning set forth in the preamble hereto.

“Initial Purchaser” shall have the meaning set forth in the preamble hereto.

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“Losses” shall have the meaning set forth in Section 6(d) hereof.

“Majority Holders” shall mean, on any date, Holders of a majority of the aggregate principal amount of Securities registered under a Registration Statement.

“Managing Underwriters” shall mean the investment banker or investment bankers and manager or managers that administer an underwritten offering, if any, under a Registration Statement.

“NASD Rules” shall mean the Conduct Rules and the By-Laws of the National Association of Securities Dealers, Inc.

“New Securities” shall mean debt securities of the Company identical in all material respects to the Securities (except that the transfer restrictions shall be modified or eliminated, as appropriate) to be issued under the New Securities Indenture.

“New Securities Indenture” shall mean an indenture between the Company and the New Securities Trustee, identical in all material respects to the Indenture (except that the transfer restrictions shall be modified or eliminated, as appropriate), which may be the Indenture if in the terms thereof appropriate provision is made for the New Securities.

“New Securities Trustee” shall mean a bank or trust company reasonably satisfactory to the Initial Purchasers, as trustee with respect to the New Securities under the New Securities Indenture.

“Prospectus” shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Securities or the New Securities covered by such Registration Statement, and all amendments and supplements thereto, including any and all exhibits thereto and any information incorporated by reference therein.

“Purchase Agreement” shall have the meaning set forth in the preamble hereto.

“Registered Exchange Offer” shall mean the proposed offer of the Company to issue and deliver to the Holders of the Securities that are not prohibited by any law or policy of the Commission from participating in such offer, in exchange for the Securities, a like aggregate principal amount of the New Securities.

“Registrable Securities” shall mean (i) Securities other than those that have been (A) registered under a Registration Statement and disposed of in accordance therewith or (B) distributed to the public pursuant to Rule 144 under the Act or any successor rule or regulation thereto that may be adopted by the Commission and (ii) any New Securities resale of which by the Holder thereof requires compliance with the prospectus delivery requirements of the Act.

“Registration Default Damages” shall have the meaning set forth in Section 8 hereof.

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“Registration Statement” shall mean any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Securities or the New Securities pursuant to the provisions of this Agreement, any amendments and supplements to such registration statement, including post-effective amendments (in each case including the Prospectus contained therein), all exhibits thereto and all material incorporated by reference therein.

“Securities” shall have the meaning set forth in the preamble hereto.

“Shelf Registration” shall mean a registration effected pursuant to Section 3 hereof.

“Shelf Registration Period” has the meaning set forth in Section 3(b) hereof.

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Company pursuant to the provisions of Section 3 hereof which covers some or all of the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement), on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

“Trustee” shall mean the trustee with respect to the Securities under the Indenture.

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

“Underwriter” shall mean any underwriter of Securities in connection with an offering thereof under a Shelf Registration Statement.

2. Registered Exchange Offer. (a) To the extent not prohibited by any applicable law or applicable interpretations of the staff of the Commission, the Company shall use its reasonable best efforts to prepare and, not later than 300 days following the Closing Date, file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Company shall use its best efforts to cause the Exchange Offer Registration Statement to become effective under the Act within 330 days of the Closing Date.

(b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for New Securities (assuming that such Holder is not an Affiliate of the Company, acquires the New Securities in the ordinary course of such Holder’s business, has no arrangements with any person to participate in the distribution of the New Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) and to trade such New Securities from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States.

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(c) In connection with the Registered Exchange Offer, the Company shall:

(i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with, if applicable, an appropriate letter of transmittal and related documents;

(ii) keep the Registered Exchange Offer open for not less than 20 Business Days and not more than 30 Business Days after the date notice thereof is mailed to the Holders (or, in each case, longer if required by applicable law);

(iii) use its reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective under the Act, supplemented and amended as required, until the earlier of (A) 180 days after the closing of the Registered Exchange Offer and (B) such times as all Exchanging Dealers no longer own any Registrable Securities;

(iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan in New York City, which may be the Trustee, the New Securities Trustee or an Affiliate of either of them;

(v) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last Business Day on which the Registered Exchange Offer is open;

(vi) prior to effectiveness of the Exchange Offer Registration Statement, provide a supplemental letter to the Commission (A) stating that the Company is conducting the Registered Exchange Offer in reliance on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991); and (B) including a representation that the Company has not entered into any arrangement or understanding with any person to distribute the New Securities to be received in the Registered Exchange Offer and that, to the best of the Company’s information and belief, each Holder participating in the Registered Exchange Offer is acquiring the New Securities in the ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the New Securities; and

(vii) comply in all respects with all applicable laws.

(d) As soon as practicable after the close of the Registered Exchange Offer, the Company shall:

(i) accept for exchange all Securities (or portions thereof) validly tendered and not properly withdrawn pursuant to the Registered Exchange Offer;

(ii) deliver, or cause to be delivered, to the Trustee for cancellation in accordance with Section 4(s) all Securities (or portions thereof) so accepted for exchange; and

5

(iii) cause the New Securities Trustee promptly to authenticate and deliver to each Holder of Securities a principal amount of New Securities equal to the principal amount of the Securities of such Holder so accepted for exchange.

(e) Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Registered Exchange Offer to participate in a distribution of the New Securities (x) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission in Exxon Capital Holdings Corporation (pub. avail. May 13, 1988) and Morgan Stanley and Co., Inc. (pub. avail. June 5, 1991), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993 and similar no-action letters; and (y) must comply with the registration and prospectus delivery requirements of the Act in connection with any secondary resale transaction, which must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Act if the resales are of New Securities obtained by such Holder in exchange for Securities acquired by such Holder directly from the Company or one of its Affiliates. Accordingly, each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that, at the time of the consummation of the Registered Exchange Offer:

(i) any New Securities received by such Holder will be acquired in the ordinary course of business;

(ii) such Holder will have no arrangement or understanding with any person to participate in the distribution of the Securities or the New Securities within the meaning of the Act; and

(iii) such Holder is not an Affiliate of the Company.

(f) If any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Securities constituting any portion of an unsold allotment, at the request of such Initial Purchaser, the Company shall issue and deliver to such Initial Purchaser or the person purchasing New Securities registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange for such Securities, a like principal amount of New Securities. The Company shall use its best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such New Securities as for New Securities issued pursuant to the Registered Exchange Offer.

3. Shelf Registration. (a) If (i) due to any change in law or applicable interpretations thereof by the Commission’s staff, the Company determines upon advice of its outside counsel that it is not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof; (ii) for any other reason the Exchange Offer Registration Statement is not declared effective within 330 days of the Closing Date or the Registered Exchange Offer is not consummated within 365 days of the date hereof; (iii) any Initial Purchaser so requests with respect to Securities that are not eligible to be exchanged for New Securities in the Registered Exchange Offer and that are held by it following consummation of the Registered Exchange Offer; (iv) any Holder (other than an Initial Purchaser) is not eligible to participate in the Registered Exchange Offer; or (v) in the case of any Initial Purchaser that participates in the

6

Registered Exchange Offer or acquires New Securities pursuant to Section 2(f) hereof, such Initial Purchaser does not receive freely tradeable New Securities in exchange for Securities constituting any portion of an unsold allotment (it being understood that (x) the requirement that an Initial Purchaser deliver a Prospectus containing the information required by Item 507 or 508 of Regulation S-K under the Act in connection with sales of New Securities acquired in exchange for such Securities shall result in such New Securities being not “freely tradeable”; and (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of New Securities acquired in the Registered Exchange Offer in exchange for Securities acquired as a result of market-making activities or other trading activities shall not result in such New Securities being not “freely tradeable”) and the Company receives reasonable advance notice that it will be required to file a Shelf Registration Statement pursuant to this clause (a)(v), the Company shall use its reasonable best efforts to effect a Shelf Registration Statement in accordance with subsection (b) below.

(b) (i) The Company shall as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 3), file with the Commission and shall use its best efforts to cause to be declared effective under the Act within 90 days after so required or requested, a Shelf Registration Statement relating to the offer and sale of the Securities or the New Securities, as applicable, by the Holders thereof from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder; and provided further, that with respect to New Securities received by an Initial Purchaser in exchange for Securities constituting any portion of an unsold allotment, the Company may, if permitted by current interpretations by the Commission’s staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Item 507 or 508 of Regulation S-K, as applicable, in satisfaction of its obligations under this subsection with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement.

(ii) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective, supplemented and amended as required by the Act, in order to permit the Prospectus forming part thereof to be usable by Holders for a period the “Shelf Registration Period”) from the date the Shelf Registration Statement is declared effective by the Commission until (A) the expiration of the holding period under Rule 144(k) under the Act or (B) the date upon which all the Securities or New Securities, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities at any time during the Shelf Registration Period, unless such action is (x) required by applicable law or otherwise undertaken by the Company in good faith and for valid business reasons (not including avoidance of the Company’s obligations

7

hereunder), including the acquisition or divestiture of assets, and (y) permitted pursuant to Section 4(k)(ii) hereof.

(iii) The Company shall cause the Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement or such amendment or supplement, (A) to comply in all material respects with the applicable requirements of the Act; and (B) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading.

4. Additional Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply.

(a) The Company shall:

(i) furnish to each of the Representatives and to counsel for the Holders, not less than five Business Days prior to the filing thereof with the Commission, a copy of any Exchange Offer Registration Statement and any Shelf Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein (including all documents incorporated by reference therein after the initial filing) and shall use its reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as the Representatives reasonably propose;

(ii) include the information set forth in Annex A hereto on the facing page of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, in Annex C hereto in the underwriting or plan of distribution section of the Prospectus contained in the Exchange Offer Registration Statement, and, if applicable, in Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer;

(iii) if requested by an Initial Purchaser, include the information required by Item 507 or 508 of Regulation S-K, as applicable, in the Prospectus contained in the Exchange Offer Registration Statement; and

(iv) in the case of a Shelf Registration Statement, include the names of the Holders that propose to sell Securities pursuant to the Shelf Registration Statement as selling security holders.

(b) The Company shall ensure that:

(i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act; and

8

(ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(c) The Company shall advise the Representatives, the Holders of Securities covered by any Shelf Registration Statement and any Exchanging Dealer under any Exchange Offer Registration Statement that has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by any Representative or any such Holder or Exchanging Dealer, shall confirm such advice in writing:

(i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii) of any request by the Commission for any amendment or supplement to the Registration Statement, the Prospectus or for additional information;

(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose;

(iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose; and

(v) of the happening of any event that requires any change in the Registration Statement, the Prospectus so that, as of such date, they (A) do not contain any untrue statement of a material fact and (B) do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading.

(d) The Company shall use its best efforts to prevent the issuance of any order suspending the effectiveness of any Registration Statement or the qualification of the securities therein for sale in any jurisdiction and, if issued, to obtain as soon as possible the withdrawal thereof.

(e) The Company shall furnish to each Holder of Registrable Securities covered by any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including all material incorporated therein by reference, and, if the Holder so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein).

(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities covered by any Shelf Registration Statement, without charge, as many

9

copies of the Prospectus (including the Preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g) The Company shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including all material incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits thereto (including exhibits incorporated by reference therein).

(h) The Company shall promptly deliver to each Initial Purchaser, each Exchanging Dealer and each other person required to deliver a Prospectus during the Exchange Offer Registration Period, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as any such person may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer and any such other person that may be required to deliver a Prospectus following the Registered Exchange Offer in connection with the offering and sale of the New Securities covered by the Prospectus, or any amendment or supplement thereto, included in the Exchange Offer Registration Statement.

(i) Prior to the Registered Exchange Offer or any other offering of Securities pursuant to any Registration Statement, the Company shall arrange, if necessary, for the qualification of the Securities or the New Securities for sale under the laws of such jurisdictions as any Holder shall reasonably request and shall maintain such qualification in effect so long as required; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the Initial Placement, the Registered Exchange Offer or any offering pursuant to a Shelf Registration Statement, in any such jurisdiction where it is not then so subject.

(j) The Company shall cooperate with the Holders of Securities to facilitate the timely preparation and delivery of certificates representing New Securities or Securities to be issued or sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request.

(k) (i) Upon the occurrence of any event contemplated by subsections (c)(ii) through (v) above, the Company shall promptly (or within the time period provided for by clause (ii) hereof, if applicable) prepare a post-effective amendment to the applicable Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to Initial Purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not

10

misleading. In such circumstances, the period of effectiveness of the Exchange Offer Registration Statement provided for in Section 2 shall be extended by the number of days from and including the date of the giving of a notice of suspension pursuant to Section 4(c) to and including the date when the Initial Purchasers, the Holders of the Securities and any known Exchanging Dealer shall have received such amended or supplemented Prospectus pursuant to this Section.

(ii) Upon the occurrence or existence of any pending corporate development or any other material event that, in the reasonable judgment of the Company, makes it appropriate to suspend the availability of a Shelf Registration Statement and the related Prospectus, the Company shall give notice (without notice of the nature or details of such events) to the Holders that the availability of the Shelf Registration is suspended and, upon actual receipt of any such notice, each Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration until such Holder’s receipt of copies of the supplemented or amended Prospectus provided for in Section 4(k)(i) hereof, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The period during which the availability of the Shelf Registration and any Prospectus is suspended (the “Deferral Period”) shall not exceed 45 days in any three-month period or 90 days in any twelve-month period.

(l) Not later than the effective date of any Registration Statement, the Company shall provide a CUSIP number for the Securities or the New Securities, as the case may be, registered under such Registration Statement and provide the Trustee with printed or word-processed certificates for such Securities or New Securities, in a form eligible for deposit with the Depositary .

(m) The Company shall comply with all applicable rules and regulations of the Commission and shall make generally available to the Holders an earnings statement satisfying the provisions of Section 11(a) of the Act as soon as practicable after the effective date of the applicable Registration Statement and in any event no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the applicable Registration Statement.

(n) The Company shall cause the New Securities Indenture to be qualified under the Trust Indenture Act in a timely manner.

(o) The Company may require each Holder of Registrable Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably require for inclusion in such Registration Statement. The Company may exclude from such Shelf Registration Statement the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request.

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(p) In the case of any Shelf Registration Statement, the Company shall:

(i) enter into customary agreements (including, if requested by the Majority Holders, an underwriting agreement in customary form) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 6 hereof;

(ii) make such representations and warranties to the Holders of Securities registered thereunder and the Underwriters of Registrable Securities, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement;

(iii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the Underwriters of Registrable Securities, if any, covering such matters as are customarily covered in opinions requested by underwriters in underwritten offerings and such other matters as may be reasonably requested by such Holders and Underwriters;

(iv) obtain “comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in “comfort” letters in connection with primary underwritten offerings; and

(v) deliver such documents and certificates as are customarily delivered in underwritten offerings and may be reasonably requested by the Majority Holders or the Managing Underwriters, if any, including those to evidence compliance with Section 4(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

The actions set forth in clauses (ii), through (v) and (v) of this paragraph (p) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto; and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder.

(q) In the case of any Shelf Registration Statement, the Company shall:

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(i) make available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such Underwriter, at reasonable times and in reasonable manners, all relevant financial and other records and pertinent corporate documents of the Company and its subsidiaries as may be reasonably requested by such person; provided that if any such information is identified in writing by the Company as being confidential or proprietary, each person receiving such information shall use such person’s reasonable best efforts to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the substantial and necessary rights and interests of any Holder, Underwriter or other person so inspecting such information; and

(ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations.

(r) In the case of any Exchange Offer Registration Statement, the Company shall, if requested by an Initial Purchaser, or by a broker dealer that holds Securities that were acquired as a result of market making or other trading activities:

(i) make available for inspection by the requesting party, and any attorney, accountant or other agent retained by the requesting party, at reasonable times and in reasonable manners, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries as may be reasonably requested by such person; provided that if any such information is identified in writing by the Company as being confidential or proprietary, each person receiving such information shall use such person’s reasonable best efforts to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the substantial and necessary rights and interests of any Holder, Underwriter or other person so inspecting such information;

(ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the requesting party or any such attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations;

(iii) make such representations and warranties to the requesting party, in form, substance and scope as are customarily made by issuers to Underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement;

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(iv) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the requesting party and its counsel, addressed to the requesting party, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by the requesting party or its counsel;

(v) obtain “comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to the requesting party, in customary form and covering matters of the type customarily covered in “comfort” letters in connection with primary underwritten offerings, or if requested by the requesting party or its counsel in lieu of a “comfort” letter, an agreed-upon procedures letter under Statement on Auditing Standards No. 35, covering matters requested by the requesting party or its counsel; and

(vi) deliver such documents and certificates as may be reasonably requested by the requesting party or its counsel, including those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements.

The foregoing actions set forth in clauses (iii) through (vi) of this Section shall be performed at the close of the Registered Exchange Offer and the effective date of any post-effective amendment to the Exchange Offer Registration Statement.

(s) If a Registered Exchange Offer is to be consummated, upon delivery of the Securities by Holders to the Company (or to such other person as directed by the Company) in exchange for the New Securities, the Company shall mark, or caused to be marked, on the Securities so exchanged that such Securities are being cancelled in exchange for the New Securities. In no event shall the Securities be marked as paid or otherwise satisfied.

(t) The Company shall use its reasonable best efforts if the Securities have been rated prior to the initial sale of such Securities, to confirm such ratings will apply to the Securities or the New Securities, as the case may be, covered by a Registration Statement.

(u) In the event that any Broker-Dealer shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the NASD Rules) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company shall assist such Broker-Dealer in complying with the NASD Rules.

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(v) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Securities or the New Securities, as the case may be, covered by a Registration Statement.

5. Registration Expenses. The Company shall bear all expenses incurred in connection with the performance of its obligations under Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel (which shall initially be Davis Polk & Wardwell, but which may be another nationally recognized law firm experienced in securities matters designated by the Majority Holders) to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchasers for the reasonable fees and disbursements of counsel, if any, acting in connection therewith.

6. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless each Holder of Securities or New Securities, as the case may be, covered by any Registration Statement, each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer, the directors, officers, employees, Affiliates and agents of each such Holder, Initial Purchaser or Exchanging Dealer and each person who controls any such Holder, Initial Purchaser or Exchanging Dealer within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of any preliminary Prospectus or the Prospectus, in the light of the circumstances under which they were made) not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of the party claiming indemnification specifically for inclusion therein. This indemnity agreement shall be in addition to any liability that the Company may otherwise have.

The Company also agrees to indemnify as provided in this Section 6(a) or contribute as provided in Section 6(d) hereof to Losses of each underwriter, if any, of Securities or New Securities, as the case may be, registered under a Shelf Registration Statement, their directors, officers, employees, Affiliates or agents and each person who controls such underwriter on substantially the same basis as that of the indemnification of the Initial Purchasers and the selling Holders provided in this Section 6(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 4(p) hereof.

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(b) Each Holder of Securities or New Securities, as the case may be, covered by a Registration Statement (including each Initial Purchaser that is a Holder, in such capacity) severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs such Registration Statement and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to each such Holder, but only with reference to written information relating to such Holder furnished to the Company by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability that any such Holder may otherwise have.

(c) Promptly after receipt by an indemnified party under this Section 6 or notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses; and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including one local counsel per jurisdiction) of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel (including one local counsel per jurisdiction) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

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(d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 6 is unavailable to or insufficient to hold harmless an indemnified party for any reason, then each applicable indemnifying party shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending any loss, claim, liability, damage or action) (collectively “Losses”) to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall any Initial Purchaser be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Security, or in the case of a New Security, applicable to the Security that was exchangeable into such New Security, as set forth in the Final Offering Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from the Initial Placement (before deducting expenses) as set forth in the Final Offering Memorandum. Benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Offering Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Securities or New Securities, as applicable, registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such Holder, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d).

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(e) The provisions of this Section 6 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Company or any of the indemnified persons referred to in this Section 6, and will survive the acceptance of any New Securities and sale by a Holder of securities covered by a Registration Statement.

7. Underwritten Registrations. (a) If any of the Securities or New Securities, as the case may be, covered by any Shelf Registration Statement are to be sold in an underwritten offering, the Managing Underwriters shall be selected by the Majority Holders.

(b) No person may participate in any underwritten offering pursuant to any Shelf Registration Statement, unless such person (i) agrees to sell such person’s Securities or New Securities, as the case may be, on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

8. Registration Defaults. If any of the following events shall occur, then the Company shall pay liquidated damages (the “Registration Default Damages”) to the Holders of Securities in respect of the Securities as follows:

(a) if any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, then Registration Default Damages shall accrue on the Registrable Securities at a rate of 0.25% per annum for the first 60 days from and including such specified date and 0.50% per annum thereafter; or

(b) if any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the date by which best efforts are to be used to cause such effectiveness under this Agreement, then commencing on the day after such specified date, Registration Default Damages shall accrue on the Registrable Securities at a rate of 0.25% per annum for the first 60 days from and including such specified date and 0.50% per annum thereafter; or

(c) if any Registration Statement required by this Agreement has been declared effective but ceases to be effective at any time at which it is required to be effective under this Agreement, then commencing on the day the Registration Statement ceases to be effective, Registration Default Damages shall accrue on the Registrable Securities at a rate of 0.25% per annum for the first 60 days from and including such date on which the Registration Statement ceases to be effective and 0.50% per annum thereafter;

provided, however, that (1) upon the filing of the Registration Statement (in the case of paragraph (a) above), (2) upon the effectiveness of the Registration Statement (in the case of paragraph (b) above), or (3) upon the effectiveness of the Registration Statement which had ceased to remain effective (in the case of paragraph (c) above), Registration Default Damages shall cease to accrue.

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9. No Inconsistent Agreements. The Company has not entered into, and agrees not to enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holders herein or that otherwise conflicts with the provisions hereof.

10. Amendments and Waivers. The provisions of this Agreement may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders; provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective; provided, further, that no amendment, qualification, supplement, waiver or consent with respect to Section 6 hereof shall be effective as against any Holder of Registered Securities unless consented to in writing by such Holder; and provided, further, that the provisions of this Article 10 may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Initial Purchasers and each Holder. Notwithstanding the foregoing (except the foregoing provisos), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or New Securities, as the case may be, are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of Securities or New Securities, as the case may be, being sold rather than registered under such Registration Statement.

11. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery:

(a) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section 11, which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture;

(b) if to the Representatives, initially at the address or addresses set forth in the Purchase Agreement; and

(c) if to the Company, initially at its address set forth in the Purchase Agreement.

All such notices and communications shall be deemed to have been duly given when received at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the person giving the same to the Trustee, at the address specified in the Indenture.

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The Initial Purchasers or the Company by notice to the other parties may designate additional or different addresses for subsequent notices or communications.

12. Remedies. Each Holder, in addition to being entitled to exercise all rights provided to it herein, in the Indenture or in the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement in accordance with the terms and conditions of this Agreement, in any U.S. federal or New York court located in New York City. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate.

13. Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective successors and assigns, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Securities and the New Securities, and the indemnified persons referred to in Section 6 hereof. The Company hereby agrees to extend the benefits of this Agreement to any Holder of Securities and the New Securities, and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto.

14. Jurisdiction. The Company agrees that any suit, action or proceeding against the Company brought by any Holder or Initial Purchaser, the directors, officers, employees, Affiliates and agents of any Holder or Initial Purchaser, or by any person who controls any Holder or Initial Purchaser, arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any State or U.S. federal court in The City of New York and County of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. The Company hereby appoints CT Corporation System as its authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein which may be instituted in any State or U.S. federal court in The City of New York and County of New York, by any Holder or Initial Purchaser, the directors, officers, employees, Affiliates and agents of any Holder or Initial Purchaser, or by any person who controls any Holder or Initial Purchaser, and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit, action or proceeding. The Company hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Company. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment in full force and effect so long as any of the Securities shall be outstanding. To the extent that the Company may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, it hereby irrevocably waives such immunity in respect of this Agreement, to the fullest extent permitted by law. Notwithstanding

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the foregoing, any action arising out of or based upon this Agreement may be instituted by any Holder or Initial Purchaser, the directors, officers, employees, Affiliates and agents of any Holder or Initial Purchaser, or by any person who controls any Holder or Initial Purchaser, in any court of competent jurisdiction in Argentina.

15. Currency. Each reference in this Agreement to U.S. dollars (the “relevant currency”) is of the essence. To the fullest extent permitted by law, the obligation of the Company in respect of any amount due under this Agreement will, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the relevant currency that the party entitled to receive such payment may, in accordance with its normal procedures, purchase with the sum paid in such other currency (after any premium and costs of exchange) on the Business Day immediately following the day on which such party receives such payment. If the amount in the relevant currency that may be so purchased for any reason falls short of the amount originally due, the Company will pay such additional amounts, in the relevant currency, as may be necessary to compensate for the shortfall. Any obligation of the Company not discharged by such payment will, to the fullest extent permitted by applicable law, be due as a separate and independent obligation and, until discharged as provided herein, will continue in full force and effect.

16. Waiver of Immunity. To the extent that the Company has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, the Company hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement.

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

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

19. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

20. Severability. In the event that any one of more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

21. Securities Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities or New Securities is

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required hereunder, Securities or New Securities, as applicable, held by the Company or its Affiliates (other than subsequent Holders of Securities or New Securities if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Securities or New Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

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

Very truly yours,


By: _/s/ Rogelio Pagano_______________ Name: Rogelio Pagano Title: Director de Finanzas y Control

The foregoing Agreement is hereby confirmed and accepted as of the date first above written.

Citigroup Global Markets Inc.

By: /s/ Blake Haider______ Name: Blake Haider Title: Director

Deutsche Bank Securities Inc.

By: /s/ Santiago Bausili ___ Name: Santiago Bausili Title: Director

By: /s/ Roy Ellis _________ Name: Roy Ellis Title: Managing Director

For themselves and the other several Initial Purchasers named in Schedule I to the Purchase Agreement.

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ANNEX A

Each broker-dealer that receives new securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new securities. The [Prospectus/Letter of Transmittal] states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where such securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The company has agreed that, starting on the expiration date and ending on the close of business one year after the expiration date, it will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution”.

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ANNEX B

Each broker-dealer that receives new securities for its own account in exchange for securities, where such securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new securities. See “Plan of Distribution”.

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ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives new securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such new securities. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new securities received in exchange for securities where such securities were acquired as a result of market-making activities or other trading activities. The company has agreed that, starting on the expiration date and ending on the close of business one year after the expiration date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until __________, ______, all dealers effecting transactions in the new securities may be required to deliver a prospectus.

The company will not receive any proceeds from any sale of new securities by brokers-dealers. New securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the new securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such new securities. Any broker-dealer that resales new securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such new securities may be deemed to be an “underwriter” within the meaning of the Act and any profit of any such resale of new securities and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Act. By acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Act.

For a period of one year after the expiration date of the Exchange Offer, the company will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents. The company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the holder of the securities) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the securities (including any broker-dealers) against certain liabilities, including liabilities under the Act.

[If applicable, add information required by Regulation S-K Items 507 and/or 508.]

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ANNEX D

Rider A

PLEASE FILL IN YOUR NAME AND ADDRESS BELOW IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name: Address:

Rider B

If the undersigned is not a Broker-Dealer, the undersigned represents that it acquired the New Securities in the ordinary course of its business, it is not engaged in, and does not intend to engage in, a distribution of New Securities and it has no arrangements or understandings with any person to participate in a distribution of the New Securities. If the undersigned is a Broker-Dealer that will receive New Securities for its own account in exchange for Securities, it represents that the Securities to be exchanged for New Securities were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such New Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Act.

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