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Case 1:06-cv-00305-MBH Document 59 Filed 10/03/2007 Page 1 of 35

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

CONSOLIDATED EDISON COMPANY

OF NEW YORK, INC. &
SUBSIDIARIES,

Plaintiff,

v.

THE UNITED STATES,

Defendant.

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No. 06-305 T

Judge Marian Blank Horn

JOINT STATEMENT OF ISSUES OF FACT

The Plaintiff, Consolidated Edison Company of New York and Subsidiaries, and the

Defendant, the United States of America, pursuant to the Court’s Scheduling Order revised

August 31, 2007, and the Court’s Order dated September 26, 2007, submit this Joint Statement

of Issues of Fact. The Plaintiff and the Defendant agree that the following statement consists of

all such issues of fact stated by either party. The parties reserve the right to argue, the

appropriate weight, if any, to be given to these factual issues under applicable legal authorities.

1.

What benefits or opportunities did Plaintiff receive, or could it reasonably expect

to receive, for its participation in the Transaction? When did Plaintiff receive, or could it

reasonably expect to receive, the benefits or opportunities? What is the extent of these benefits

or opportunities?

2.

What burdens or risks, if any, did Plaintiff incur, or could it reasonably expect to

incur, on account of its participation in the Transaction? When did Plaintiff incur, or could it

reasonably expect to incur, any burdens or risks? What is the extent of these burdens or risks?

What steps, if any, were taken to mitigate these burdens or risks?

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3.

What benefits or opportunities did EZH receive, or could it reasonably expect to

receive, for its participation in the Transaction? When did EZH receive, or could it reasonably

expect to receive, the benefits or opportunities? What is the extent of these benefits or

opportunities?

4.

What burdens or risks, if any, did EZH incur, or could it reasonably expect to

incur, on account of its participation in this Transaction? When did EZH incur, or could it

reasonably expect to incur, any burdens or risks? What is the extent of these burdens or risks?

What steps, if any, were taken to mitigate or eliminate these burdens or risks?

5.

As of December 15, 1997, what factors, economic or otherwise, could reasonably

be expected to bear on whether or not EZH will exercise its Sublease Purchase Option on

January 2, 2018?

6.

As of December 15, 1997, what was the likelihood, if knowable, that EZH would

exercise its Sublease Purchase Option on January 2, 2018?

7.

As of December 15, 1997, what was the likelihood, if knowable, that Plaintiff

would exercise its Sublease Renewal Option on January 2, 2018?

8.

As of December 15, 1997, what was the likelihood, if knowable, that Plaintiff

would exercise its Sublease Retention Option on January 2, 2018?

9.

As of December 15, 1997, what were the expectations of value regarding

Plaintiff’s leasehold interest in the RoCa3 Facility during the period after the expiration of the

Sublease Basic Term? As of December 15, 1997, what were the expectations of value regarding

Plaintiff’s leasehold interest in the RoCa3 Facility during the period after the expiration of the

Sublease Renewal Term?

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10. Whether the Transaction, objectively, had a reasonable possibility of, or was

likely to produce, a profit to Plaintiff absent claimed tax benefits?

11. Whether, and to what extent, if any, the Transaction has practical economic

effects aside from the creation of any tax benefits?

12. What were Plaintiff’s motivations in entering into the Transaction?

13. What steps did Plaintiff take to evaluate the RoCa3 Facility and the Transaction

prior to entry?

14. What were the circumstances surrounding Plaintiff’s business plans and strategy

during the relevant time period, including, with regard to deregulation in the power industry?

How were such plans carried out?

15. What were the circumstances surrounding Plaintiff’s entry into the Transaction?

16. Whether the Transaction qualified for leveraged lease accounting for financial

reporting purposes? Whether or not Plaintiff reasonably believed that the Transaction qualified

for leveraged lease accounting?”

17. What are the effects of leveraged lease accounting in the Transaction for financial

reporting purposes?

18. Whether, and to what extent, if any, the Transaction contains features or

components similar to other leveraged lease transactions?

19. What are the circumstances surrounding the loan from HBU to Plaintiff?

20. Whether Plaintiff possesses genuine attributes of traditional lessor status?

21. What are the circumstances surrounding the destruction, if any, of records

relevant to the Court’s determination of disputed facts and issues?

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In accordance with the Court’s Order the parties offer the following glossary list of terms

and acronyms.

ABB

"ABB" refers to Asea Brown Boveri AG & Co. Leasing KG, which is the

lessor under the German Leases.

ABC

"ABC" refers to a software program for optimizing intricately structured

financial transactions and comparing financial alternatives. It supports many

types of models, including leveraged leasing, lease-versus-buy, project

finance, debt and revenue optimization, securitization, and portfolio analysis.

ABN

"ABN" refers to ABN AMRO Bank N.V.

Acceptable
Substitute
Collateral

"Acceptable Substitute Collateral" refers to other forms of security that CEL

is permitted under the lease to use, in lieu of Lease Collateral Deposit or

Trustee Treasury Collateral, to secure a portion of the Final Basic Rent

Payment owed EZH on February 24, 2041 in the event that the Sublease

Renewal Option or Retention Option is exercised.

Acceptable
Substitute
Credit
Protection

"Acceptable Substitute Credit Protection" refers to alternative security that

EZH could elect to provide to CEL Trust and HBU if the rating of ABN’s

long-term unsecured senior debt obligations falls below A2 by Moody’s or A

by S&P.

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Access
Agreement

"Access Agreement" refers to the Access Agreement (RoCa Facility Trust

No. 2) dated as of December 12, 1997, between EZH and WTC, as Trustee,

which Agreement provides that EZH grants an easement to CEL Trust as

necessary for the leasing and operation of the Facility.

Adjusted
Undivided
Interest

"Adjusted Undivided Interest" means for any Facility User or Leaseholder,

initially their Undivided Interest Percentage and thereafter the initial Adjusted

Undivided Interest Percentage as adjusted upwards or downwards pursuant to

the provisions of the Facility Operating Agreement. CEL Trust's initial

Adjusted Undivided Interest Percentage is the same as its Undivided Interest,

i.e, the 47.468354430380% undivided interest in the RoCa3 Facility granted

to the CEL Trust pursuant to the Lease Agreement.

"Anchor & Cluster" refers to an investment strategy used by Con Edison NY.

"AVERA" refer to a successor entity to a portion of Duke Engineering.

"Arthur Andersen" was an accounting firm that provided advice regarding the

treatment of the Transaction for financial accounting purposes.

Anchor &
Cluster
AREVA

Arthur
Andersen

Banc One

"Banc One" refers to Banc One Leasing Corp.

Banc One Trust

"Banc One Trust" refers to the RoCa Facility Trust No. 1, which was formed

for the benefit of Banc One to enter into a lease agreement and sublease

agreement as well as other agreements that related to the portion of the

RoCa3 Facility that was not part of the Transaction with the CEL Trust.

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Base Load
Power Plant

Bayerische
Landesbank

Board of
Trustees

"Base Load Power Plant" refers to a plant that supplies a continuous level of

electricity, as contrasted to peaking plants, which supply energy at a variable

level.

"Bayerische Landesbank" refers to Bayerische Landesbank Girozentrale,

Luxembourg Branch, which was the issuer of the original Letter of Credit.

"Board of Trustees" refers to the Board of Trustees of Con Edison NY (the

equivalent of a board of directors).

bundled

"Bundled" refers to the practice of the same legal entity both generating

electricity and distributing that electricity to its customers.

Burdensome
Buyout Event

"Burdensome Buyout Event" refers to events, and not intentionally caused by

EZH, defined in the Participation Agreement and that make it illegal or more

expensive for EZH to continue with the Transaction and allow EZH to choose

to terminate the Sublease by assuming CEL Trust’s obligations under the

Lease, and paying to CEL Trust the Burdensome Buyout Value.

Burdensome
Buyout Value

"Burdensome Buyout Value" refers to the payment that EZH is required to

make in the event that it chooses to terminate the Sublease as the result of a

Burdensome Buyout Event.

Capstar

"Capstar" refers to Capstar Partners, an advisor to EZH on the transaction.

CECONY

“CECONY” refers to Consolidated Edison Company of New York, Inc. and

its subsidiaries.

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CED

"CED" refers to Consolidated Edison Development, Inc., a subsidiary of Con

Edison NY that was originally named Gramercy Development, Inc. ("GDI").

The activities of CED are not subject to PSC regulation.

CEE

"CEE" refers to Consolidated Edison Energy, Inc., an unregulated subsidiary

of Con Edison NY that was formed to market specialized energy capacity and

risk management services to wholesale customers in the Northeast and mid-

Atlantic states.

CEI

"CEI" refers to Consolidated Edison, Inc. (“CEI”), a widely held and publicly

traded company on the New York Stock Exchange that is the ultimate parent

company of Con Edison NY, CED and CEL.

CEL

"CEL" refers to Consolidated Edison Leasing, Inc., a special purpose

company formed for the purpose of serving as the grantor in the RoCa

Facility Trust No. 2.

CEL Trust

"CEL Trust" refers to the RoCa Facility Trust No. 2, which was formed for

the benefit of CEL to enter into the Lease Agreement and Sublease

Agreement as well as other agreements that were involved in the Transaction.

CEPALCO

"CEPALCO" refers to Cagayan Electric Power and Light Company, an

energy distribution company in the Philipines.

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CES

"CES" refers to Consolidated Edison Solutions, Inc., formerly ProMark

Energy, Inc., an unregulated subsidiary of Con Edison NY that was formed to

provide electricity and natural gas to commercial and residential customers in

the Northeast.

CHP

"CHP" refers to a combined heat and power plant.

Clifford Chance Clifford Chance was Dutch Counsel for EZH, Stichting Rotte, Stichting

Ijssel, Stichting Roca with respect to the RoCa3 transaction.

Closing Date

"Closing Date" refers to December 15, 1997.

Closing
Funding
Memorandum

"Closing Funding Memorandum" refers to the Closing Memorandum (RoCa

Facility Trust No. 2) dated the Closing Date among EZH, [fill in] providing

for various payments related to the Transaction due on the Closing Date.

COGEN

"COGEN" is sometimes used to refer to cogeneration, which is a process that

involves the simultaneous production of both electricity and some other

product, often heat or steam.

Cogeneration

"Cogeneration" refers to a process that involves the simultaneous production

of both electricity and some other product, often heat or steam.

Common
Facilities

"Common Facilities" refers to the improvements known as the pumproom, the

office building containing, among other things, the control room, the gas

receiving station and parking spaces, and generally described in the certificate

EZH delivered pursuant to Section 3(t) of the Participation Agreement.

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Common
Facilities Use
Agreement

"Common Facilities Use Agreeement" refers to the Common Facilities Use

Agreement dated as of December 15, 1997, among N. V. Electriciteitsbedrijf

Zuid-Holland and Wilmington Trust Company, a Trustee (ROCA Facility

Trust No. 1 [Banc One Trust]), and Wilmington Trust Company, as Trustee

(ROCA Facility Trust No. 2 [CEL Trust]) to establish their respective rights

and obligations relating to the use of the Common Facilities.

Competitive
Opportunities
Proceeding

"Competitive Opportunities Proceeding" refers the proceedings of the PSC to

evaluate ways the electric service industry could be restructured due to the

increasing competitive options available to consumers.

Con Edison NY "Con Edison NY" refers to Consolidated Edison Company of New York, Inc.

and its subsidiaries.

Consolidated
Edison Energy,
Inc.

"Consolidated Edison Energy, Inc." refers to an unregulated subsidiary of

Con Edison NY that was formed to market specialized energy capacity and

risk management services to wholesale customers in the Northeast and mid-

Atlantic states.

Consolidated
Edison
Solutions, Inc.

"Consolidated Edison Solutions, Inc.", formerly ProMark Energy, Inc., refers

to an unregulated subsidiary of Con Edison NY that was formed to provide

electricity and natural gas to commercial and residential customers in the

Northeast.

Cornerstone

"Cornerstone" refers to Cornerstone Financial Advisors L.P., an advisor on

the Transaction.

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Corporate
Planning

"Corporate Planning" refers to a department within Con Edison NY that

engaged in corporate planning.

CPC

"CPC" refers to the Corporate Policy Committee of senior executives of Con

CSFB

Custody
Account

Edison NY.

"CSFB" refers to Credit Suisse First Boston.

"Custody Account" means CSFB's account at Citibank, New York ABA

021000089 Acct. No. 2F4A2 maintained pursuant to the Custody Agreement

as a custodial account in the name of EZH subject to a lien for the benefit of

CEL Trust.

Custody
Agreement

"Custody Agreement" refers to the Custody Agreement (RoCa Facility Trust

No. 2), dated as of December 15, 1997, among Stichting IJssel, WTC, CEL,

EZH, and CSFB, to secure EZH's obligations under the Sublease and other

Operative Documents.

Davis Polk
Wardwell

Debt
Defeasance
Deposit
Deloitte

Duke
Engineering

E.On/E.On
Benelux/E.On
Benelux
Generation

Davis Polk Wardwell was US counsel for Bayersiche Landesbank and HBU

with respect to the RoCa3 transaction.

"Debt Defeasance Deposit" refers to the Custody Account.

"Deloitte" refers to Deloitte & Touche LLP.

"Duke Engineering" refers to Duke Engineering & Services.

"E.On" or "E.On Benelux" or "E. On Benelux Generation" refers to a

successor in interest to Preussen Elektra, who acquired EZH.

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EBO

“EBO” is an acronym for Early Buyout Option. In this case, EBO refers to

the Sublease Purchase Option.

EEGSA

"EEGSA" refers to Enpresa Electrica de Guatemala, S.A. is Guatemala's

largest distribution utility.

EIF

"EIF" refers to Energy Investors Fund, who sponsored Project Finance Fund

III, LP, a fund in which CED invested.

ENECO

"ENECO" refers to N.V. Eneco. a gas distribution company in the

Netherlands in the mid to late 1990s, CED made bid, which was accepted on

a transaction involving ENECO, but withdrew before the transaction was

completed.

Entitlement
Shares

"Entitlement Shares" equal any Leaseholder’s Adjusted Undivided Interest

Percentage and a Facility User's Adjusted Undivided Interest.

EPO

“EPO” is an acronym for Early Buyout Option. In the case, EBO refer to the

Sublease Purchase Option.

EPON

"EPON" refers to Elektriciteits-Produktiemaatschappij O+B41ost- en Noord-

Nederland. CED considered a lease-leaseback transaction involving EPON

but decided not to pursue it.

Equity Investor

"Equity Investor," in this context, refers to the person making the equity

investment to enter into the transaction, i.e., CEL.

EZH

"EZH" refers to Electriciteitsbedrijf Zuid-Holland. EZH owned the RoCa3

Facility.

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Facility

"Facility" refers to the Unit, the Common Facilities, the Cooling Water

Facility
Operating
Agreement

Station, the Cooling Water Tower, and the Network, including the Facility

Personal Property (such as desks, computers, and the like), and any and all

Modifications thereto and Parts thereof.

"Facility Operating Agreement" refers to the Facility Operating Agreement

dated as of December 15, 1997, among EZH, WTC, as Trustee (ROCA

Facility Trust No. 1 [Banc One Trust]), and WTC, as Trustee (ROCA

Facility Trust No. 2 [CEL Trust]) to establish their respective rights and

obligations in respect of matters relating to the operation of the RoCa3

Facility during the Lease Term.

Facility
Operating
Agreement
Default

Facility Support
Agreement

"Facility Operating Agreement Default" refers to any default by the Operator

under the Facility Operating Agreement that remains uncured after

appropriate notice.

"Facility Support Agreement" refers to the Facility Support Agreement dated

as of December 15, 1997, among EZH and WTC, as Trustee (ROCA Facility

Trust No. 1 [Banc One Trust]), and WT, as Trustee (ROCA Facility Trust

No. 2 [CEL Trust]) in order to make the Common Facilities available for the

operation of the other units that shared the site.

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Facility User

"Facility User" refers to (i) any Lessee (except if such Lessee has subleased

its Undivided Interest to another Person) or any Person during the time, and to

the extent its subleasing an Undivided Interest; (ii) EZH after the termination

of either Trustee’s Lease; or (iii) EZH or any other Person during the time

such person has been given the rights to market and sell Energy from the

RoCa3 facility.

FAS

FASB

"FAS" is an acronym for "Financial Accounting Standards."

"FASB" is an acronym for "Financial Accounting Standards Board."

FASB 13

"FAS 13" refers to the Financial Accounting Standard that addresses the

financial accounting for leveraged lease transactions.

Final Basic
Rent Payment

"Final Basic Rent Payment" refers to the payment in the amount of

approximately $831.5 million that was the second installment that the CEL

Trust was required to pay EZH under the Lease Agreement on the Lease

Termination Date, i.e, February 24, 2041.

Final Sublease
Basic Rent

"Final Sublease Basic Rent" refers to the payment in the amount of

$7,362,950.53 payable by EZH to CEL Trust under the Sublease Agreement

due on January 2, 2018.

A committee of the Board of Trustees of Con Ed New York.

"GAAP" is an acronym for "Generally Accepted Accounting Standards."

Finance
Committee

GAAP

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Gasunie

The Dutch owner and manager of the high pressure natural gas grid in the

Netherlands. Gasunie provides the natural gas used to run the RoCa 3

facility.

GDI

"GDI" refers to Gramercy Development, Inc., a subsidiary of Con Edison NY

that later changed its name to Consolidated Edison Development, Inc.

(“CED”).

GENOR

"GENOR" refers to Generadora Electrica del Norte, Limitada, a relatively

small power facility (40 MW) in Eastern Guatemala. CED indirectly

acquired an approximate 44% ownership interest in GENOR.

German
Equipment

"German Equipment" refers to a steam turbine generator and a gas turbine

generator in the RoCa3 Facility that are subject to the German Leases.

German Leases

"German Leases" refer to two leases under German law with ABB for the

German Equipment.

Gramercy
Development,
Inc.

Greenfield
Projects

Gramercy Development, Inc. ("GDI") refers to a subsidiary of Con Edison

NY that later changed its name to Consolidated Edison Development, Inc.

(“CED”).

"Greenfield Projects" refer to projects where the project needs to be built in

contrast to projects where one purchases an existing asset.

HBU

“HBU” refers to Hollandsche Bank-Unie N.V. HBU makes the HBU Loan to

CEL Trust.

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HBU Loan

"HBU Loan" refers to the non-recourse loan from Hollandsche Bank-Unie

N.V. (“HBU”) in the amount of $80,792,270.36 at 7.10% interest to the CEL

Trust.

Hurdle Rate

Hurdle Rates” or “Hurdle Rates” are a minimum rate or rates of return

sometimes used by companies to determine whether to undertake particular

project.

IEP

"IEP" refers to International Energy Partners, L.P. CED entered into an

agreement with IEP to participate in certain international energy infrastructure

investment opportunities identified by IEP.

Ijssel
Agreement

"IJssel Agreement" refers to the IJsell Agreement (RoCa Facility Trust No.

2), dated as of December 15, 1997, among Stichting Ijssel, WTC, CEL, and

Stichting Roca, to provide security for EZH's obligations under the Operative

Documents.

Ijssel Collateral

"IJssel Collateral" refers to a first priority security interest granted by

Stichting IJssel in the Account, the U.S. Government Obligations, and any

earnings thereon.

Ijssel Deposit

"IJssel Deposit" refers to all U.S. Government Obligations and any funds in

the Custody Account, together with the proceeds thereon.

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Ijssel
Foundation

"IJssel Foundation" refers to Stichting IJssel, [a Dutch legal entity], EZH

established to purchase debt instruments, to make deposits, and to grant

security interests in its assets to third parties to secure certain of EZH’s

payment obligations under the Sublease and other Operative Documents.

Incremental
Collateral
Pledge

"Incremental Collateral Pledge" refers to U.S. Government Securities or

certain corporate bonds in a custodial account that shall be established by

CEL, for the benefit of CEL, with a security interest in EZH’s favor to secure

a portion of the Final Basic Rent Payment owed EZH on February 24, 2041,

in the event that the Retention Option is exercised, unless CEL provides

Acceptable Alternative Collateral.

Initial Basic
Rent Payment

"Initial Basic Rent Payment" or "Prepayment Amount" refers to the payment

in the amount of approximately $120.1 million that was the first installment

of rent that the CEL Trust was required to pay EZH under the Lease

Agreement on the Closing Date.

"Investor Defeasance Deposit" refers to the Ijssel Deposit.

"Investor Secured Obligations" refers all of EZH’s, as Sublessee’s, and the

IJssel Foundation’s, obligations to CEL under the Operative Documents.

Investor
Defeasance
Deposit
Investor
Secured
Obligations

IRR

IRR is an acronym for Internal Rate of Return.

KEMA

A company founded and owned by the four Licensed Producers, SEP and a

large number of distribution companies to be their technology consultant.

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Lease
Agreement or
Lease

"Lease Agreement" or "Lease" refers to the Lease Agreement (RoCa Facility

Trust No. 2) dated as of December 15, 1997, between EZH and WTC, as

Trustee, which provides that the CEL Trust is the Lessee of a

47.468354430380% undivided interest (the Undivided Interest) in the RoCa3

facility for 43.2 years (the Lease Interest), commencing with the Closing Date

(i.e., December 15, 1997) and ending on the Lease Termination Date (i.e.,

February 24, 2041) (the Lease Term).

Lease
Certificate of
Acceptance

"Lease Certificate of Acceptance" refers to the Lease Certificate of

Acceptance (RoCa Facility Trust No. 2) dated December 12, 1997, which

provides that EZH delivered and leased to CEL Trust under the Lease and

CEL Trust accepted and leased the Undivided Interest from EZH under the

Lease, for all purposes of the Lease.

Lease Collateral
Deposit

"Lease Collateral Deposit" refers to a desposit CEL shall make, unless it

provides Acceptable Alternative Collateral, and pledge to EZH to secure a

portion of the Final Basic Rent Payment owed it on February 24, 2041 in the

event that the Sublease Renewal Option is exercised.

Lease Rent

"Lease Rent" refers to the amounts payable by CEL Trust to EZH under the

Lease Agreement.

Lease Term

"Lease Term" refers to the period commencing with the Closing Date (i.e.,

December 15, 1997) and ending on the Lease Termination Date (i.e.,

February 24, 2041) under the Lease Agreement

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Lease
Termination
Date
Leaseholder

Lessee

Lessor

"Lease Termination Date" is February 24, 2041.

"Leaseholder" refers to any Trustee (CEL Trust or Banc One Trust) or EZH,

to the extent its rights to the RoCa3 Facility are not subject to a lease by either

Trustee.

The Participation Agreement provides that "Lessee" refers to CEL Trust.

The Participation Agreement provides that "Lessor" refers to EZH.

Letter of Credit

"Letter of Credit" refers to one or more letters of credit in favor of CEL Trust

Licensed
Producer

Licensed
Producer

and CEL, which the Participation Agreement provides that EZH is required to

maintain for the benefit of CEL Trust and CEL, to secure obligations of EZH

to CEL Trust and CEL under the Operative Documents.

"Licensed Producer" is a company that qualifies as such under the laws

governing electric utilities in the Netherlands. EZH is a Licensed Producer

"Licensed Producer" refers to one of four regulated electricity production

companies licensed by the Dutch government to generate the public supply of

electricity in the Netherlands during 1997. EZH was one of the four Licensed

Producers in the Netherlands in 1997.

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Lien of the
Loan
Agreement

"Letter of Credit" refers to one or more letters of credit in favor of CEL Trust

and CEL, which the Participation Agreement provides that EZH is required to

maintain for the benefit of CEL Trust and CEL, to secure obligations of EZH

to CEL Trust and CEL under the Operative Documents. Lien of the Loan

Agreement” refers to a lien CEL Trust assigns to HBU on, among other

things, the Lease Agreement, the Sublease Agreement, all rents, profits,

revenues and other income from the property subjected to the Lien of the

Loan, CEL Trust’s right to receive rent from EZH, to secure amounts due

with respect to all Loan Certificates issued under the Loan and Security

Agreement.

LILO

"LILO" is an acronym for "Lease-In, Lease-Out."

Loan and
Security
Agreement

"Loan and Security Agreement" (RoCa Facility Trust No. 2) dated as of

December 12, 1997, among WTC, as Trustee and HBU, which provides for

the non-recourse loan from HBU in the amount of $80,792,270.36 at 7.10%

interest to the CEL Trust.

Loan Certificate

"Loan Certificate" refers to the Loan Certificate due January 2, 2027 (RoCa

Loeff Claeys
Verbeke

Loyens &
Volkmaars

Facility Trust No. 2) dated December 15, 1997, for the HBU Loan.

Loeff Claeys Verbeke was Dutch counsel to Con Ed. with respect to the

Transaction.

Loyens & Volkmaars was Dutch counsel to EZH with respect to the

Transaction.

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Maasvlakte

Maasvlakte was a coal fired plant owned by EZH in the Netherlands in the

late 1990s.

MEGA

"MEGA" refers to Maatsschapppij voor Elektriciteit en Gas Limburg. CED

considered a lease-leaseback transaction involving MEGA but its proposal

was not accepted.

megawatt

"Megawatt" or "MW" is a measure of electricity. The output of electrical

generating facilities, such as the RoCa3 Facility, is often measured in

megawatts.

Megawatt hour

"Megawatt hour" or "MWh" is a basic unit of electrical energy equal to one

megawatt of power used for one hour.

MW

"MW" is an abbreviation for megawatt, which is a measure of electricity

equal to one million watts. The output of electrical generating facilities, such

as the RoCa3 Facility, is often measured in megawatts.

MWh

"MWh" is an abbreviation for megawatt hour, which is a basic unit of

electrical energy equal to one megawatt of power used for one hour.

Nauta Dutilh

Nauta Dutilh was Dutch counsel to HBU and ABN AMRO with respect to the

Transaction.

Net Present
Value

Net Present Value" as the present value of a stream of cash flows using

assumed discount rate and calculated as of a particular date.

Network

Network refers to the pipelines from and to the Unit for the delivery of CO2.

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NUON

"NUON" refers to NUON Energie-Onderneming voor Gelderland, Friesland

en Flevoland, a utility serving the Provinces of Gelderland, Friesland and

Flevoland located in the central portion of the Netherlands. CED entered into

a lease-leaseback transaction with NUON.

NPV Benefit

"NPV Benefit" means the amount expressed as a percentage of the Value of

the Undivided Interest obtained by subtracting from the Prepayment Amount

the sum of (i) the net present value as of the Closing Date of the Equity

Portion of the scheduled Sublease Basic Rent and of the Equity Portion of the

Sublease Purchase Option Price, in each case discounted at the Discount Rate,

and (ii) the net present value as of the Closing Date of the Debt Portion of the

scheduled Sublease Basic Rent and the Debt portion of the Sublease Purchase

Option Price, in each case discounted at the Discount Rate.

O&R

"O&R" refers to Orange & Rockland, Inc, a regulated power subsidiary of

CEI located in New York.

Offering
Memorandum

"Offering Memorandum" refers to a document providing information about

an investment that is sometimes provided to potential investors. No offering

memorandum was prepared for the Transaction.

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Operative
Documents

"Operative Documents" are the agreements listed in the Participation

Agreement by which EZH and CEL, directly or through the CEL Trust,

along with other third parties, entered into the Transaction, including, among

others: (1) the Participation Agreement; (2) the Lease Agreement; (3) the

Lease Certificate of Acceptance; (4) the Sublease Agreement; (5) the

Sublease Certificate of Acceptance; (6) the Loan and Security Agreement; (7)

the Sublessee Loan Agreement, (8) the Tax Indemnity Agreement; (9) the

IJssel Agreement; (10) the Rotte Agreement; (11) the Sublease Deposit,

Pledge and Repledge Agreement; (12) the Sublessee Pledge and Security

Agreement; (13) the Custody Agreement; (14); the Facility Operating

Agreement; (15) the Common Facilities Use Agreement; (16) the Facility

Support Agreement; and (17) the Access Agreement.

Operator

"Operator" refers to EZH, in its capacity as Operator of the Facility, and its

successors as such Operator in accordance with Section 2.1 of the Facility

Operating Agreement.

Oppenhoff &
Radler

Participation
Agreement

Oppenhoff & Radler was German counsel to Con Ed and HBU with respect

to the RoCa3 transaction.

"Participation Agreement" refers to the Participation Agreement (RoCa

Facility Trust No. 2), dated as of December 15, 1997 among EZH, CEL, HBU

and WTC which is an umbrella agreement containing general conditions,

representations and covenants of the parties in the Transaction and the events

that will occur at the closing of the Transaction.

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Payment
Obligations

"Payment Obligations" refers either to payments that Stichting IJssel agrees to

make under the IJssel Agreement or payments that Stichting Rotte agrees to

make under the Rotte Agreement.

Planning and
Environmental
Committee

"Planning and Environmental Committee" refers to the Planning and

Environmental Committee of the Board of Trustees of Con Edison NY, which

would review plans for Con Edison NY’s future actions, including Con

Edison NY’s response to the deregulation process, provide advice and

consent to the management of Con Edison NY regarding such plans, and

submit recommendations to the Board of Trustees of Con Edison NY

regarding such plans.

Premature
Terminations

Prepayment
Amount

Preussen
Elektra

Price
Waterhouse

"Premature Terminations" refers to events that could result in a termination of

the the Sublease to EZH prior to the expiration of the Sublease Term.

"Prepayment Amount" or “Initial Basic Rent Payment” refers to the payment

in the amount of approximately $120.1 million that was the first installment

of rent that the CEL Trust was required to pay EZH under the Lease

Agreement on the Closing Date.

Preussen Elektra was the company that acquired EZH, see E.On/E.On

Benelux/E.On Benelux Generation.

"Price Waterhouse" refers to Price Waterhouse, LLP, an accounting firm that

provided advice regarding the treatment of the Transactions for financial

accounting purposes.

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Pricing Runs

"Pricing Runs" refers to the output of financial software optimization

programs, such as the ABC software program, that are used throughout the

leasing industry to structure and price transactions.

PSC

"PSC" refers to the New York Public Service Commission, which is

responsible for regulating the power industry in the State of New York.

PSEG
Resources, Inc.

PSEG Resources, Inc. was a subsidiary of PSEG (Public Service Enterprise

Group), a co-investor with Con Ed in the NUON transaction.

PW

"PW" refers to Price Waterhouse, an accounting firm that provided advice

regarding the treatment of the Transactions for financial accounting purposes.

Reimbursement
Agreement

RoCa Facility
Trust No. 1

"Reimbursement Agreement" refers to the Reimbursement Agreement

between Bayerische and EZH.

"RoCa Facility Trust No. 1" is the same as the Banc One Trust and refers to

the trust, which was formed for the benefit of Banc One to enter into a lease

agreement and sublease agreement as well as other agreements that related to

the portion of the RoCa3 Facility that was not part of the Transaction with the

CEL Trust.

RoCa Facility
Trust No. 2

"RoCa Facility Trust No. 2" is the same as the CEL Trust and refers to the

trust, which was formed for the benefit of CEL to enter into the Lease

Agreement and Sublease Agreement as well as other agreements that were

involved in the Transaction

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RoCa3 Facility

"RoCa3 Facility" refers to a power generation facility and related property

located near Rotterdam, The Netherlands, that is the subject of this

transaction. All of the property included in the definition of Facility is

included as part of this definition.

ROE

"ROE" is an acronym for Return on Equity

Rotte
Agreement

"Rotte Agreement" refers to the Rotte Agreement (RoCa Facility Trust No.

2), dated December 15, 1997, among EZH, Stichting Rotte, Stichting Roca

and WTC to provide security for EZH's obligations under the Operative

Documents.

Rotte
Foundation

"Rotte Foundation" refers to Stichting Rotte [a Dutch legal entity], EZH

established to purchase debt instruments, to make deposits, and to grant

security interests in its assets to third parties to secure EZH’s payment

obligations under the Sublease and other Operative Documents.

Secured
Amounts

"Secured Amounts" refer to the amounts owed by CEL Trust to HBU

pursuant to the Loan Agreement and Loan Certificates, not in excess of the

amount of Sublease Rent required to be paid pursuant to the terms of the

Sublease Agreement.

SEP

"SEP" refers to N.V. Samenwerkende Elektriciteits Produktiebedrijven, an

entity responsible for coordinating the Licensed Producers in the Netherlands

in 1997. In that year, the shares of SEP were owned by the four Licensed

Producers, which includes EZH. They also owned and managed the high

voltage grid in 1997.

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Shearman &
Sterling

Shearman & Sterling was a US law firm that represented Con Edison NY

with respect to the transaction.

Sigma Energy

Sigma Energy is a successor entity to a portion of Duke Engineering.

SILO

"SILO" is an acronym for "Sale-In, Lease-Out."

Stichting IJssel

"Stichting IJssel" refers to Stichting IJssel, a stichting (foundation)

established by Deed of Establishment of Stichting Ijssel, having its registered

office in The Hague.

Stichting Roca

"Stichting Roca" refers to Stichting Roca, a stichting (foundation) established

by Deed of Establishment of Stichting Roca, having its registered office in

The Hague.

Stichting Rotte

"Stichting Rotte" refers to Stichting Rotte, a stichting (foundation) established

by Deed of Establishment of Stichting Rotte, having its registered office in

The Hague.

Strandable
Costs

"Strandable Costs" refer to those costs incurred by utilities that may become

unrecoverable ("stranded") during the transition from regulation to a

competitive market for electricity.

Stranded Costs

"Stranded Costs" refer to those costs incurred by utilities that become

unrecoverable during the transition from regulation to a competitive market

for electricity.

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STRIPS

STRIPS is an acronym for Separate Trading of Registered Interest and

Principal of Securities. "Treasury Strips" refer to zero-coupon treasury bonds

with a face value payable at maturity. Treasury Strips are purchased at a

discount from the face value at maturity and promise a fixed rate of return for

the life of the security called the yield to maturity.

"Sublease Agreement" or "Sublease" refers to the Sublease Agreement (RoCa

Facility Trust No. 2) dated as of December 12, 1997, between WTC, as

Trustee, and EZH, which, in conjunction with Appendix A of the

Participation Agreement, provides that CEL Trust leases the Undivided

Interest in the RoCa3 Facility to EZH for a period of 20.1 years (the

“Sublease Basic Term”), commencing on the Closing Date (i.e., December

15, 1997) and expiring on the Sublease Basic Termination Date (i.e., January

2, 2018).

"Sublease Basic Rent" refers to the amounts payable by EZH to CEL Trust

under the Sublease Agreement during the Sublease Basic Term (i.e., until

January 2, 2018).

"Sublease Basic Term" refers to the period commencing on the Closing Date

(i.e., December 15, 1997) and expiring on the Sublease Basic Termination

Date (i.e., January 2, 2018).

"Sublease Basic Termination Date" is January 2, 2018.

Sublease
Agreement or
Sublease

Sublease Basic
Rent

Sublease Basic
Term

Sublease Basic
Termination
Date

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Sublease
Certificate of
Acceptance

"Sublease Certificate of Acceptance" refers to the Sublease Certificate of

Acceptance (RoCa Facility Trust No. 2) dated December 12, 1997, which

provides that CEL Trust delivered and leased to EZH under the Sublease and

EZH accepted and leased the Undivided Interest from CEL Trust under the

Sublease, for all purposes of the Sublease.

Sublease
Deposit

Sublease
Deposit Amount

"Sublease Deposit" refers to a deposit of the Sublease Deposit Amount by the

Rotte Foundation with ABN, together with all interest accrued thereon.

"Sublease Deposit Amount" or "Sublease Payment Amount" refers to a

payment of $80,792,270.36 that the Rotte Agreement provides EZH shall pay

to the Rotte Foundation on the Closing Date.

Sublease
Deposit, Pledge
and Repledge
Agreement

"Sublease Deposit, Pledge and Repledge Agreement" refers to the Sublease

Deposit, Pledge and Repledge Agreement (Roca Facility Trust No. 2) dated

December 15, 1997, among Stichting Rotte, ABN, WTC, EZH, and HBU,

which provides Security for EZH's obligations under the Operative

Documents.

Sublease Early
Purchase Option
Event

"Sublease Early Purchase Option Event" refers to CEL’s (or an affiliate of

CEL’s) acquisition of, merger or consolidation with, or purchase of a

competitor of EZH that triggers EZH's right to purchase CEL Trust’s Lease

Interest pursuant to section 9(c) of the Sublease.

Sublease
Facility Event
of Loss

"Sublease Facility Event of Loss" refers to damage to the Facility or a change

in law that prevents the continued operation of the Facility.

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Sublease
Facility Partial
Event of Loss

Sublease
Payment
Amount

"Sublease Facility Partial Event of Loss" refers to an event which results in a

significant reduction in the output capacity and/or efficiency of the Facility.

"Sublease Payment Amount" or "Sublease Deposit Amount" refers to a

payment of $80,792,270.36 that the Rotte Agreement provides EZH shall pay

to the Rotte Foundation on the Closing Date.

Sublease
Purchase Option

"Sublease Purchase Option” refers to the option provided to EZH whereby at

the end of the Sublease Basic Term (i.e., January 2, 2018), EZH can elect to

purchase CEL Trust’s remaining Lease Interest for the Sublease Purchase

Option Price (together with any unpaid Sublease Basic Rent due and payable

before the Sublease Basic Termination Date), plus the assumption by EZH of

all of CEL Trust’s obligations under the Lease, including the obligation to

make the Final Basic Rent Payment.

"Sublease Purchase Option Price" is 143.63396613% of the appraised value

of the Undivided Interest, which equates to $215,450,949.20.

"Sublease Renewal Option" refers to a conditional option granted the CEL

Trust under Section 20(a)(i) of the Sublease Agreement to require EZH to

renew the Sublease for an additional 16.5 years from the Sublease Basic

Termination Date, January 2, 2018, and ending on June 15, 2034 (the

“Sublease Renewal Term”).

Sublease
Purchase Option
Price

Sublease
Renewal Option

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Sublease
Renewal Rent

"Sublease Renewal Rent" refers to the amounts payable by EZH to CEL Trust

under the Sublease Agreement during the Sublease Renewal Term, i.e., the

period from the Sublease Basic Termination Date, January 2, 2018, and

ending on June 15, 2034.

Sublease
Renewal Term

"Sublease Renewal Term" refers to an additional 16.5 year period from the

Sublease Basic Termination Date, January 2, 2018, and ending on June 15,

2034, that arises if the Sublease Renewal Option is exercised.

Sublease Rent

"Sublease Rent" refers to amounts payable by EZH to CEL Trust under the

Sublease Agreement.

Sublease
Retention
Option

"Sublease Retention Option" refers to a conditional option granted the CEL

Trust under Section 20 of the Sublease Agreement to require EZH to return

the Sublessor’s Lease Interest to CEL Trust as of January 2, 2018. The

Sublease Retention Option is described more fully in paragraphs 179 through

184 of the Stipulation.

Sublease
Special Special
Termination
Value

Sublease
Special
Termination
Value

"Sublease Special Special Termination Value" is computation based on the

information contained in Exhibits F and D to the Sublease and the date on

which the calculation needs to be made.

"Sublease Special Termination Value" is a computation based on the

information contained in Exhibits D and E to the Sublease and the date on

which the calculation needs to be made.

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Sublease
Termination
Date

Sublease
Termination
Value

"Sublease Termination Date" is January 2, 2018, unless the Sublease Renewal

Term has commenced, in which case the term means June 15, 2034.

"Sublease Termination Value" a computation based on the information

contained in Exhibits C and E to the Sublease and the date on which the

calculation needs to be made.

Sublessee

The Participation Agreement provides that "Sublessee" refers to EZH.

Sublessee Loan

"Sublessee Loan" refers to a loan from CEL Trust to EZH in the amounts set

forth on Schedule A to the Sublessee Loan Agreement bearing interest at

7.43% per annum.

Sublessee Loan
Agreement

"Sublessee Loan Agreement" refers to the Sublease Loan Agreement (RoCa

Facility Trust No. 2) dated as of December 12, 1997, between WTC, as

Trustee, and EZH, which provides for a loan from CEL Trust to EZH.

Sublessee
Pledge and
Security
Agreement

"Sublessee Pledge and Security Agreement" refers to the Sublessee Pledge

and Security Agreement (RoCa Facility Trust No. 2) dated as of December

15, 1997 among Stichting IJssel, as Pledgor, WTC, as Collateral Agent and

Pledgee, WTC, as Trustee, CEL and EZH, which provides Security for

EZH's obligations under the Operative Documents.

Sublessee
Secured
Obligations

"Sublessee Secured Obligations" refers all of the IJssel Foundation’s

obligations to return all monies and securities in the IJssel Deposit, following

satisfaction of all Payment Obligations, upon termination of the IJssel

Agreement.

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Sublessor

The Participation Agreement provides that "Sublessor" refers to CEL Trust.

T&D

"T&D" refers to transmission and distribution, e.g., the process of taking the

Tauw Milieu or
Tauw

Tax Indemnity
Agreement

electricity that has been generated and delivering it to consumers.

"Tauw Milieu" or “Tauw" refers to Tauw Milieu, which performed an

environmental study of the RoCa3 Facility as part of this Transaction.

"Tax Indemnity Agreement" refers to the Tax Indemnity Agreement (RoCa

Facility Trust No. 2) dated as of December 12, 1997, between EZH and

WTC, as Trustee, which Agreement provides representations and agreements

related to various tax aspects of the Transaction.

Transaction

"Transaction" refers to a lease of the Undivided Interest in the RoCa3 Facility

to CEL Trust pursuant to a Lease Agreement and a shorter-term sublease of

this Undivided Interest in the RoCa3 Facility from CEL Trust to EZH

pursuant to a Sublease Agreement, and all other Operative Documents.

Transaction
Expenses

"Transaction Expenses" refers to certain expenses incurred in connection with

the negotiation, preparation delivery and recording documents used in the

Transaction that were paid by CEL Trust. Transaction Expenses as defined do

not include all expenses incurred with respect to the Transaction.

Transmission
and Distribution

"Transmission and Distribution" refers to the process of taking the electricity

that has been generated and delivering it to consumers.

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Treasury Strips

"Treasury Strips" refer to zero-coupon treasury bonds with a face value

payable at maturity. Treasury Strips are purchased at a discount from the face

value at maturity and promise a fixed rate of return for the life of the security

called the yield to maturity. STRIPS is an acronym for Separate Trading of

Registered Interest and Principal of Securities.

Trust
Agreement

"Trust Agreement" refers to a Trust Agreement with WTC, under which the

Trustee agreed to act as trustee of a trust, RoCa Facility Trust No. 2, for the

benefit of CEL (the “CEL Trust”) in connection with the Transaction.

Trustee

"Trustee" refers to Wilmington Trust Company, which served as the trustee

for the CEL Trust.

Trustee Secured
Obligations

Trustee
Treasury
Collateral

"Trustee Secured Obligations” refers to all of EZH’s, as Sublessee’s, and the

IJssel Foundation’s obligations.

“Trustee Treasury Collateral” refers to U.S. Government Securities in a

custodial account that shall be established by CEL, for the benefit of CEL,

with a security interest in EZH’s favor to secure a portion of the Final Basic

Rent Payment owed EZH on February 24, 2041 in the event that the Sublease

Renewal Option or Retention Option is exercised, unless CEL provides

Acceptable Alternative Collateral.

U.S.
Government
Obligations

"U.S. Government Obligations" refers to United States Treasury securities

(including STRIPS) maintained in the commercial book-entry system entitled

Treasury/Reserve Automated Debt Entry System.

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unbundled

"Unbundled" refers to the practice of having ownership of the legal entity that

generates electricity separate from ownership of the legal entity that

distributes such electricity to the customers.

Undivided
Interest

"Undivided Interest" refers to the 47.468354430380% undivided interest in

the RoCa3 Facility granted to the CEL Trust pursuant to the Lease

Agreement.

Unit

"Unit" refers to the gas-fired electric generating unit known as RoCa3 having

a rated capacity of 220 net MW.

VAT

"VAT" is an a