Exhibit 10.1

 

STORM RECOVERY PROPERTY SALE AGREEMENT

 

between

 

CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

 

Issuer

 

and

 

CLECO POWER LLC

 

Seller

 

Dated as of March 6, 2008

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

1

Section 1.01

 

Definitions

1

Section 1.02

 

Other Definitional Provisions

1

 

 

 

 

ARTICLE II CONVEYANCE OF THE STORM RECOVERY PROPERTY

2

Section 2.01

 

Conveyance of the Storm Recovery Property

2

Section 2.02

 

Conditions to Conveyance of the Storm Recovery Property

2

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

3

Section 3.01

 

Organization and Good Standing

4

Section 3.02

 

Due Qualification

4

Section 3.03

 

Power and Authority

4

Section 3.04

 

Binding Obligation

4

Section 3.05

 

No Violation

4

Section 3.06

 

No Proceedings

4

Section 3.07

 

Approvals

5

Section 3.08

 

The Storm Recovery Property

5

Section 3.09

 

Solvency

6

Section 3.10

 

The Financing Order

6

Section 3.11

 

State Action

7

Section 3.12

 

No Court Order

8

Section 3.13

 

Approvals Concerning the Storm Recovery Property

8

Section 3.14

 

Assumptions

8

Section 3.15

 

Creation of the Storm Recovery Property

8

Section 3.16

 

Prospectus

9

Section 3.17

 

Nature of Representations and Warranties

9

Section 3.18

 

Waivers of Legal Warranties

9

 

 

 

 

ARTICLE IV COVENANTS OF THE SELLER

10

Section 4.01

 

Seller’s Existence

10

Section 4.02

 

No Liens or Conveyances

10

Section 4.03

 

Delivery of Collections

10

Section 4.04

 

Notice of Liens

11

Section 4.05

 

Compliance With Law

11

Section 4.06

 

Covenants Related to the Storm Recovery Property

11

Section 4.07

 

Protection of Title

12

Section 4.08

 

Taxes

13

Section 4.09

 

Filings Pursuant to Financing Order

13

Section 4.10

 

Issuance Advice Letter

13

Section 4.11

 

Tariff

13

Section 4.12

 

Notice of Breach to Rating Agencies, Etc.

13

Section 4.13

 

Use of Proceeds

14

Section 4.14

 

Further Assurances

14

 

 

 

 

ARTICLE V ADDITIONAL UNDERTAKINGS OF SELLER

14

SECTION 5.01 LIABILITY OF THE SELLER; INDEMNITIES

14

Section 5.02

 

Merger or Consolidation of, or Assumption of the Obligations of, the Seller

16

Section 5.03

 

Limitation on Liability of the Seller and Others

18

 

 

 

 

ARTICLE VI MISCELLANEOUS PROVISIONS

18

Section 6.01

 

Amendment

18

 

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Section 6.02

 

Notices

19

Section 6.03

 

Assignment by the Seller

20

Section 6.04

 

Assignment to the Indenture Trustee

20

Section 6.05

 

Limitations on Rights of Others

20

Section 6.06

 

Severability

20

Section 6.07

 

Separate Counterparts

21

Section 6.08

 

Headings

21

Section 6.09

 

Governing Law

21

Section 6.10

 

Nonpetition Covenants

21

 

APPENDIX A

 

DEFINITIONS

 

 

 

SCHEDULE 1

 

 

 

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STORM RECOVERY PROPERTY SALE AGREEMENT (this “Agreement”) dated as of March 6,
2008, between CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC, a Louisiana
limited liability company (the “Issuer”), and CLECO POWER LLC, a Louisiana
limited liability company, as seller (the “Seller”).

 

WHEREAS, the Issuer desires to purchase the Storm Recovery Property created
pursuant to the Securitization Act and the Financing Order;

 

WHEREAS, the Seller is willing to sell its rights and interests in and to the
Storm Recovery Property to the Issuer;

 

WHEREAS, the Issuer, in order to finance the purchase of the Storm Recovery
Property, will issue the Storm Recovery Bonds under the Indenture; and

 

WHEREAS, the Issuer, to secure its obligations under the Storm Recovery Bonds
and the Indenture, will pledge its right, title and interest in the Storm
Recovery Property and this Agreement to the Indenture Trustee for the benefit of
the Storm Recovery Bondholders.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01           Definitions.    Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in Appendix A to
this Agreement.

 

Section 1.02           Other Definitional Provisions.

 

(A)           “AGREEMENT” MEANS THIS STORM RECOVERY PROPERTY SALE AGREEMENT, AS
THE SAME MAY BE AMENDED AND SUPPLEMENTED FROM TIME TO TIME.

 

(B)           NON-CAPITALIZED TERMS USED HEREIN WHICH ARE DEFINED IN THE
SECURITIZATION ACT, AS THE CONTEXT REQUIRES, HAVE THE MEANINGS ASSIGNED TO SUCH
TERMS IN THE SECURITIZATION ACT, BUT WITHOUT GIVING EFFECT TO AMENDMENTS TO THE
SECURITIZATION ACT AFTER THE DATE HEREOF WHICH HAVE A MATERIAL ADVERSE EFFECT ON
THE ISSUER OR THE STORM RECOVERY BONDHOLDERS.

 

(C)           ALL TERMS DEFINED IN THIS AGREEMENT SHALL HAVE SUCH DEFINED
MEANINGS WHEN USED IN ANY CERTIFICATE OR OTHER DOCUMENT MADE OR DELIVERED
PURSUANT HERETO UNLESS OTHERWISE DEFINED THEREIN.

 

(D)           THE WORDS “HEREOF,” “HEREIN,” “HEREUNDER” AND WORDS OF SIMILAR
IMPORT WHEN USED IN THIS AGREEMENT SHALL REFER TO THIS AGREEMENT AS A WHOLE AND
NOT TO ANY PARTICULAR PROVISION OF THIS AGREEMENT; SECTION, SCHEDULE AND
EXHIBIT REFERENCES CONTAINED IN THIS AGREEMENT ARE REFERENCES TO SECTIONS,
SCHEDULES AND EXHIBITS IN OR TO

 

1

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THIS AGREEMENT UNLESS OTHERWISE SPECIFIED; AND THE TERM “INCLUDING” SHALL MEAN
“INCLUDING WITHOUT LIMITATION.”

 

(E)           THE DEFINITIONS CONTAINED IN THIS AGREEMENT ARE APPLICABLE TO THE
SINGULAR AS WELL AS THE PLURAL FORMS OF SUCH TERMS.

 

ARTICLE II

 

CONVEYANCE OF THE STORM RECOVERY PROPERTY

 

Section 2.01           Conveyance of the Storm Recovery Property.

 

(A)           IN CONSIDERATION OF THE ISSUER’S PAYMENT TO OR UPON THE ORDER OF
THE SELLER OF $176,000,000 (THE “PURCHASE PRICE”), SUBJECT TO THE SATISFACTION
OR WAIVER OF THE CONDITIONS SPECIFIED IN SECTION 2.02, THE SELLER DOES HEREBY
IRREVOCABLY SELL, TRANSFER, ASSIGN, SET OVER AND OTHERWISE CONVEY TO THE ISSUER,
WITHOUT RECOURSE (SUBJECT, FOR THE AVOIDANCE OF DOUBT,  TO THE EXPRESS
OBLIGATIONS OF THE SELLER HEREIN) OR WARRANTY, EXCEPT AS SET FORTH HEREIN, ALL
RIGHT, TITLE AND INTEREST OF THE SELLER IN AND TO THE STORM RECOVERY PROPERTY AS
IDENTIFIED IN THE BILL OF SALE DELIVERED PURSUANT TO SECTION 2.02(I) ON OR PRIOR
TO THE TRANSFER DATE (SUCH SALE, TRANSFER, ASSIGNMENT, SETTING OVER AND
CONVEYANCE OF THE STORM RECOVERY PROPERTY TO INCLUDE, TO THE FULLEST EXTENT
PERMITTED BY THE SECURITIZATION ACT, THE RIGHT TO IMPOSE, COLLECT AND RECEIVE
THE STORM RECOVERY CHARGES, AS THE SAME MAY BE ADJUSTED FROM TIME TO TIME). 
SUCH SALE, TRANSFER, ASSIGNMENT, SETTING OVER AND CONVEYANCE OF THE STORM
RECOVERY PROPERTY IS HEREBY EXPRESSLY STATED TO BE A SALE OR OTHER ABSOLUTE
TRANSFER AND, PURSUANT TO SECTION 1230(1) OF THE SECURITIZATION ACT AND OTHER
APPLICABLE LAW, IS A TRUE SALE AND IS NOT A SECURED TRANSACTION AND TITLE AND
OWNERSHIP HAS PASSED TO THE ISSUER.  THE PRECEDING SENTENCE IS THE STATEMENT
REFERRED TO IN SECTION 1230 OF THE SECURITIZATION ACT.  THE SELLER AGREES AND
CONFIRMS THAT UPON PAYMENT OF THE PURCHASE PRICE AND THE EXECUTION AND DELIVERY
OF THIS AGREEMENT AND THE BILL OF SALE, THE SALE, TRANSFER AND ASSIGNMENT
HEREUNDER SHALL BE EFFECTIVE AND THE SELLER SHALL HAVE NO RIGHT, TITLE OR
INTEREST IN, TO OR UNDER THE STORM RECOVERY PROPERTY.

 

(B)           SUBJECT TO THE SATISFACTION OR WAIVER OF CONDITIONS SPECIFIED IN
SECTION 2.02, THE ISSUER DOES HEREBY PURCHASE THE STORM RECOVERY PROPERTY FROM
THE SELLER FOR THE CONSIDERATION SET FORTH IN SECTION 2.01(A).

 

(C)           THE SELLER AND THE ISSUER EACH ACKNOWLEDGE AND AGREE THAT THE
PURCHASE PRICE FOR THE STORM RECOVERY PROPERTY SOLD PURSUANT TO THIS AGREEMENT
IS EQUAL TO ITS FAIR MARKET VALUE AT THE TIME OF SALE.

 

Section 2.02           Conditions to Conveyance of the Storm Recovery
Property.   The obligation of the Seller to sell, and the obligation of the
Issuer to purchase the Storm Recovery Property on the Transfer Date shall be
subject to and conditioned upon the satisfaction or waiver of each of the
following conditions:

 

(I)            ON OR PRIOR TO THE TRANSFER DATE, THE SELLER SHALL DELIVER TO THE
ISSUER A DULY EXECUTED BILL OF SALE IDENTIFYING THE STORM RECOVERY PROPERTY,
SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO;

 

2

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(II)           AS OF THE TRANSFER DATE, THE REPRESENTATIONS AND WARRANTIES OF
THE SELLER IN THIS AGREEMENT SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS
AND NO MATERIAL BREACH BY THE SELLER OF ITS COVENANTS IN THIS AGREEMENT SHALL
EXIST AND THE SELLER SHALL HAVE DELIVERED TO THE ISSUER AND THE INDENTURE
TRUSTEE AN OFFICER’S CERTIFICATE TO SUCH EFFECT AND NO SERVICER DEFAULT SHALL
HAVE OCCURRED AND BE CONTINUING;

 

(III)          AS OF THE TRANSFER DATE:

 

(A)          THE ISSUER SHALL HAVE SUFFICIENT FUNDS AVAILABLE TO PAY THE
PURCHASE PRICE, AND

 

(B)          ALL CONDITIONS SET FORTH IN THE INDENTURE TO THE ISSUANCE OF THE
STORM RECOVERY BONDS INTENDED TO PROVIDE SUCH FUNDS SHALL HAVE BEEN SATISFIED OR
WAIVED.

 

(IV)          ON OR PRIOR TO THE TRANSFER DATE, THE SELLER SHALL HAVE TAKEN ALL
ACTIONS REQUIRED UNDER THE SECURITIZATION ACT, THE FINANCING ORDER AND OTHER
APPLICABLE LAW FOR THE ISSUER TO HAVE OWNERSHIP OF THE STORM RECOVERY PROPERTY,
FREE AND CLEAR OF ALL LIENS OTHER THAN LIENS CREATED BY THE ISSUER PURSUANT TO
THE INDENTURE; AND THE ISSUER, OR THE SERVICER ON BEHALF OF THE ISSUER, SHALL
HAVE TAKEN ANY ACTION REQUIRED FOR THE ISSUER TO GRANT THE INDENTURE TRUSTEE A
FIRST PRIORITY PERFECTED SECURITY INTEREST IN THE TRUST ESTATE AND MAINTAIN SUCH
SECURITY INTEREST AS OF SUCH DATE (INCLUDING ALL ACTIONS REQUIRED UNDER THE
SECURITIZATION ACT, THE FINANCING ORDER AND THE UNIFORM COMMERCIAL CODE AS
ENACTED IN THE STATE OF LOUISIANA AND EACH OTHER APPLICABLE JURISDICTION (THE
“UCC”));

 

(V)           THE SELLER SHALL HAVE DELIVERED TO EACH RATING AGENCY AND TO THE
ISSUER ANY OPINIONS OF COUNSEL REQUESTED BY THE RATING AGENCIES;

 

(VI)          THE SELLER SHALL HAVE DELIVERED TO THE INDENTURE TRUSTEE AND THE
ISSUER AN OFFICER’S CERTIFICATE CONFIRMING THE SATISFACTION OF EACH RELEVANT
CONDITION PRECEDENT SPECIFIED IN THIS SECTION 2.02; AND

 

(VII)         THE SELLER SHALL HAVE RECEIVED THE PURCHASE PRICE IN FUNDS
IMMEDIATELY AVAILABLE ON THE TRANSFER DATE.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

As of the Transfer Date, the Seller makes the following representations and
warranties on which the Issuer has relied and will rely in acquiring the Storm
Recovery Property. The following representations and warranties are made under
existing law as in effect as of the Transfer Date.  The Seller shall not be in
breach of any representation or warranty herein as a result of a change in law
occurring after the Transfer Date, including by means of legislative enactment,
constitutional amendment or voter initiative.  The representations and
warranties shall survive the sale of the Storm Recovery Property to the Issuer
and the pledge thereof on the Transfer Date to the Indenture Trustee pursuant to
the Indenture.

 

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Section 3.01           Organization and Good Standing.   The Seller is a limited
liability company duly organized and in good standing under the laws of the
State of Louisiana, with limited liability company power and authority to own
its properties and to conduct its business as currently owned or conducted.

 

Section 3.02           Due Qualification.   The Seller is duly qualified to do
business as a foreign limited liability company in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires such
qualifications, licenses or approvals (except where the failure to so qualify or
obtain such licenses and approvals would not be reasonably likely to have a
material adverse effect on the Seller’s business, operations, assets, revenues
or properties).

 

Section 3.03           Power and Authority.   The Seller has the limited
liability company power and authority to obtain the Financing Order and to
execute and deliver this Agreement and to carry out its terms; the Seller has
the limited liability company power and authority to own the rights and
interests under the Financing Order, and to sell and assign the rights and
interests under the Financing Order and in the Storm Recovery Property to the
Issuer; and the execution, delivery and performance of this Agreement have been
duly authorized by the Seller by all necessary limited liability company action.

 

Section 3.04           Binding Obligation.   This Agreement constitutes a legal,
valid and binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, subject to bankruptcy, receivership, insolvency,
reorganization, moratorium, fraudulent transfer and other laws relating to or
affecting creditors’ or secured parties’ rights generally from time to time in
effect and to general principles of equity (including concepts of materiality,
reasonableness, good faith and fair dealing), regardless of whether considered
in a proceeding in equity or at law.

 

Section 3.05           No Violation.   The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not:
(i) conflict with or result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under, the
articles of organization or limited liability company operating agreement of the
Seller, or any indenture, mortgage, credit agreement or other agreement or
instrument to which the Seller is a party or by which it or its properties is
bound; (ii) result in the creation or imposition of any Lien upon any of the
Seller’s properties pursuant to the terms of any such indenture, agreement or
other instrument (except for any Lien created by the Issuer under the Basic
Documents in favor of the Storm Recovery Bondholders and in accordance with
Section 1231 of the Securitization Act); or (iii) violate any existing law or
any existing order, rule or regulation applicable to the Seller of any
Governmental Authority having jurisdiction over the Seller or its properties.

 

Section 3.06           No Proceedings.   Except as disclosed in the Issuer’s
prospectus dated February 26, 2008 and the related prospectus supplement dated
February 28, 2008 relating to the Storm Recovery Bonds (together, the
“Prospectus”), there are no proceedings pending and, to the Seller’s knowledge,
(x) there are no proceedings threatened and (y) there are no investigations
pending or threatened before any Governmental Authority having jurisdiction over
the Seller or its properties involving or relating to the Seller or the Issuer
or, to the Seller’s knowledge, any other Person:

 

4

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(I)            ASSERTING THE INVALIDITY OF THIS AGREEMENT, ANY OF THE OTHER
BASIC DOCUMENTS, THE STORM RECOVERY BONDS, THE SECURITIZATION ACT OR THE
FINANCING ORDER;

 

(II)           SEEKING TO PREVENT THE ISSUANCE OF THE STORM RECOVERY BONDS OR
THE CONSUMMATION OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OF THE OTHER BASIC DOCUMENTS;

 

(III)          SEEKING ANY DETERMINATION OR RULING THAT COULD REASONABLY BE
EXPECTED TO MATERIALLY AND ADVERSELY AFFECT THE PERFORMANCE BY THE SELLER OF ITS
OBLIGATIONS UNDER, OR THE VALIDITY OR ENFORCEABILITY OF, THIS AGREEMENT, ANY OF
THE OTHER BASIC DOCUMENTS OR THE STORM RECOVERY BONDS; OR

 

(IV)          CHALLENGING THE SELLER’S TREATMENT OF THE STORM RECOVERY BONDS AS
DEBT OF  THE SELLER FOR FEDERAL OR STATE INCOME, GROSS RECEIPTS OR FRANCHISE TAX
PURPOSES.

 

Section 3.07           Approvals.   Except for continuation filings under the
UCC and the Securitization Act, no approval, authorization, consent, order or
other action of, or filing with, any Governmental Authority is required under an
applicable law, rule or regulation in connection with the execution and delivery
by the Seller of this Agreement, the performance by the Seller of the
transactions contemplated hereby or the fulfillment by the Seller of the terms
hereof, except those that have been obtained or made and those that the Seller,
in its capacity as Servicer under the Servicing Agreement, is required to make
in the future pursuant to the Servicing Agreement.

 

Section 3.08           The Storm Recovery Property.

 

(A)           INFORMATION.  SUBJECT TO SECTION 3.14, ALL WRITTEN INFORMATION, AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME PRIOR TO THE DATE THIS REPRESENTATION
IS MADE, PROVIDED BY THE SELLER TO THE ISSUER WITH RESPECT TO THE STORM RECOVERY
PROPERTY (INCLUDING THE FINANCING ORDER AND THE ISSUANCE ADVICE LETTER) IS
CORRECT IN ALL MATERIAL RESPECTS.

 

(B)           EFFECT OF TRANSFER.  IT IS THE INTENTION OF THE PARTIES HERETO
THAT (OTHER THAN FOR UNITED STATES FEDERAL INCOME TAX PURPOSES AND, TO THE
EXTENT CONSISTENT WITH APPLICABLE STATE TAX LAWS, STATE INCOME AND FRANCHISE TAX
PURPOSES) THE SALE, TRANSFER, ASSIGNMENT, SETTING OVER AND CONVEYANCE HEREIN
CONTEMPLATED CONSTITUTES A SALE OR OTHER ABSOLUTE TRANSFER OF ALL RIGHT, TITLE
AND INTEREST OF THE SELLER IN AND TO THE STORM RECOVERY PROPERTY FROM THE SELLER
TO THE ISSUER.  UPON EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE BILL OF
SALE AND PAYMENT OF THE PURCHASE PRICE, THE SELLER WILL HAVE NO RIGHT, TITLE OR
INTEREST IN, TO OR UNDER THE STORM RECOVERY PROPERTY; AND THAT SUCH STORM
RECOVERY PROPERTY WOULD NOT BE A PART OF THE ESTATE OF THE SELLER AS DEBTOR IN
THE EVENT OF THE FILING OF A BANKRUPTCY PETITION BY OR AGAINST THE SELLER UNDER
ANY BANKRUPTCY LAW.

 

(C)           TRANSFER FILINGS.

 

(I)            THE SELLER IS THE SOLE OWNER OF ALL THE RIGHTS AND INTERESTS
UNDER THE FINANCING ORDER TO BE SOLD TO THE ISSUER ON THE TRANSFER DATE.

 

(II)           ON THE TRANSFER DATE, IMMEDIATELY UPON THE SALE HEREUNDER, THE 
STORM RECOVERY PROPERTY WILL HAVE BEEN VALIDLY SOLD, ASSIGNED, TRANSFERRED, SET

 

5

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over and conveyed to the Issuer free and clear of all Liens (except for any Lien
created by the Issuer under the Basic Documents in favor of the Storm Recovery
Bondholders and in accordance with Section 1231 of the Securitization Act).

 

(III)          ALL ACTIONS OR FILINGS (INCLUDING FILINGS WITH THE LOUISIANA UCC
FILING OFFICER IN ACCORDANCE WITH THE RULES PRESCRIBED UNDER THE SECURITIZATION
ACT AND THE UCC) NECESSARY IN ANY JURISDICTION TO GIVE THE ISSUER A PERFECTED
OWNERSHIP INTEREST (SUBJECT TO ANY LIEN CREATED BY THE ISSUER UNDER THE BASIC
DOCUMENTS IN FAVOR OF THE STORM RECOVERY BONDHOLDERS AND IN ACCORDANCE WITH
SECTION 1231 OF THE SECURITIZATION ACT) IN THE STORM RECOVERY PROPERTY AND TO
GRANT TO THE INDENTURE TRUSTEE A FIRST PRIORITY PERFECTED SECURITY INTEREST IN
THE STORM RECOVERY PROPERTY, FREE AND CLEAR OF ALL LIENS OF THE SELLER OR ANYONE
ELSE (EXCEPT FOR ANY LIEN CREATED BY THE ISSUER UNDER THE BASIC DOCUMENTS IN
FAVOR OF THE STORM RECOVERY BONDHOLDERS AND IN ACCORDANCE WITH SECTION 1231 OF
THE SECURITIZATION ACT), HAVE BEEN TAKEN OR MADE.

 

Section 3.09           Solvency.   After giving effect to the sale of the Storm
Recovery Property hereunder, the Seller:

 

(I)            IS SOLVENT AND EXPECTS TO REMAIN SOLVENT,

 

(II)           IS ADEQUATELY CAPITALIZED TO CONDUCT ITS BUSINESS AND AFFAIRS
CONSIDERING ITS SIZE AND THE NATURE OF ITS BUSINESS AND INTENDED PURPOSES,

 

(III)          IS NOT ENGAGED AND DOES NOT EXPECT TO ENGAGE IN A BUSINESS FOR
WHICH ITS REMAINING PROPERTY REPRESENTS AN UNREASONABLY SMALL PORTION OF ITS
CAPITAL,

 

(IV)          REASONABLY BELIEVES THAT IT WILL BE ABLE TO PAY ITS DEBTS AS THEY
COME DUE, AND

 

(V)           IS ABLE TO PAY ITS DEBTS AS THEY COME DUE AND DOES NOT INTEND TO
INCUR, OR BELIEVES THAT IT WILL INCUR, INDEBTEDNESS THAT IT WILL NOT BE ABLE TO
REPAY AT ITS MATURITY.

 

Section 3.10           The Financing Order.

 

(A)           THE FINANCING ORDER WAS ISSUED BY THE LOUISIANA COMMISSION ON
SEPTEMBER 17, 2007 IN ACCORDANCE WITH THE SECURITIZATION ACT; THE FINANCING
ORDER AND THE PROCESS BY WHICH IT WAS ISSUED COMPLY WITH ALL APPLICABLE LAWS,
RULES AND REGULATIONS OF THE STATE OF LOUISIANA AND THE FEDERAL LAWS OF THE
UNITED STATES, AND THE FINANCING ORDER IS FINAL, NON-APPEALABLE AND IN FULL
FORCE AND EFFECT.

 

(B)           AS OF THE DATE OF ISSUANCE OF THE STORM RECOVERY BONDS, THE STORM
RECOVERY BONDS WILL BE ENTITLED TO THE PROTECTIONS PROVIDED BY THE
SECURITIZATION ACT AND THE FINANCING ORDER, THE ISSUANCE ADVICE LETTER AND THE
STORM RECOVERY CHARGES AUTHORIZED THEREIN WILL HAVE BECOME IRREVOCABLE AND NOT
SUBJECT TO REDUCTION, IMPAIRMENT OR ADJUSTMENT BY FURTHER ACTION OF THE
LOUISIANA COMMISSION, EXCEPT AS PERMITTED BY SECTION 1228(C)(4) OF THE
SECURITIZATION ACT, AND THE ISSUANCE ADVICE LETTER HAS BEEN FILED IN ACCORDANCE
WITH THE FINANCING ORDER.  THE ISSUANCE ADVICE LETTER AND THE TARIFF

 

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                HAVE BEEN FILED IN ACCORDANCE WITH THE FINANCING ORDER AND AN
OFFICER OF THE SELLER HAS PROVIDED THE CERTIFICATION TO THE LOUISIANA COMMISSION
REQUIRED BY THE ISSUANCE ADVICE LETTER.  THE INITIAL STORM RECOVERY CHARGES AND
THE FINAL TERMS OF THE STORM RECOVERY BONDS SET FORTH IN THE ISSUANCE ADVICE
LETTER HAVE BECOME EFFECTIVE.  NO OTHER APPROVAL, AUTHORIZATION, CONSENT, ORDER
OR OTHER ACTION OF, OR FILING WITH ANY GOVERNMENTAL AUTHORITY IS REQUIRED IN
CONNECTION WITH THE CREATION OF THE STORM RECOVERY PROPERTY TRANSFERRED ON SUCH
DATE, EXCEPT THOSE THAT HAVE BEEN OBTAINED OR MADE.

 

Section 3.11         State Action.

 

(A)           UNDER THE SECURITIZATION ACT, THE STATE OF LOUISIANA HAS PLEDGED
THAT IT WILL NOT TAKE OR PERMIT ANY ACTION THAT WOULD IMPAIR THE VALUE OF THE
STORM RECOVERY PROPERTY OR, EXCEPT AS PERMITTED IN SECTION 1228(C)(4) OF THE
SECURITIZATION ACT, REDUCE, ALTER OR IMPAIR THE STORM RECOVERY CHARGES UNTIL THE
PRINCIPAL, INTEREST AND PREMIUM, IF ANY, AND ANY OTHER CHARGES INCURRED AND
CONTRACTS TO BE PERFORMED IN CONNECTION WITH THE STORM RECOVERY BONDS, HAVE BEEN
PAID AND PERFORMED IN FULL.

 

(B)           UNDER THE LAWS OF THE STATE OF LOUISIANA AND THE FEDERAL LAWS OF
THE UNITED STATES, A REVIEWING COURT OF COMPETENT JURISDICTION WOULD HOLD THAT
(X) THE STATE OF LOUISIANA COULD NOT CONSTITUTIONALLY TAKE ANY ACTION OF A
LEGISLATIVE CHARACTER, INCLUDING THE REPEAL OR AMENDMENT OF THE SECURITIZATION
ACT, WHICH WOULD SUBSTANTIALLY LIMIT, ALTER OR IMPAIR THE STORM RECOVERY
PROPERTY OR OTHER RIGHTS VESTED IN THE STORM RECOVERY BONDHOLDERS PURSUANT TO
THE FINANCING ORDER, OR SUBSTANTIALLY LIMIT, ALTER, IMPAIR OR REDUCE THE VALUE
OR AMOUNT OF THE STORM RECOVERY PROPERTY, UNLESS SUCH ACTION IS A REASONABLE AND
NECESSARY EXERCISE OF THE STATE OF LOUISIANA’S SOVEREIGN POWERS BASED ON
REASONABLE CONDITIONS AND OF A CHARACTER REASONABLE AND APPROPRIATE TO THE
EMERGENCY OR OTHER SIGNIFICANT AND LEGITIMATE PUBLIC PURPOSE JUSTIFYING SUCH
ACTION, AND, (Y) UNDER THE TAKINGS CLAUSES OF THE STATE OF LOUISIANA AND UNITED
STATES CONSTITUTIONS, IF THE COURT CONCLUDES THAT THE STORM RECOVERY PROPERTY IS
PROTECTED BY THE TAKINGS CLAUSES, THE STATE OF LOUISIANA COULD NOT REPEAL OR
AMEND THE SECURITIZATION ACT OR TAKE ANY OTHER ACTION IN CONTRAVENTION OF ITS
PLEDGE REFERRED TO IN SUBSECTION (A) ABOVE WITHOUT PAYING JUST COMPENSATION TO
THE STORM RECOVERY BONDHOLDERS, AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION, IF DOING SO WOULD CONSTITUTE A PERMANENT APPROPRIATION OF A
SUBSTANTIAL PROPERTY INTEREST OF THE STORM RECOVERY BONDHOLDERS IN THE STORM
RECOVERY PROPERTY AND DEPRIVE THE STORM RECOVERY BONDHOLDERS OF THEIR REASONABLE
EXPECTATIONS ARISING FROM THEIR INVESTMENTS IN THE STORM RECOVERY BONDS;
HOWEVER, THERE IS NO ASSURANCE THAT, EVEN IF A COURT WERE TO AWARD JUST
COMPENSATION, IT WOULD BE SUFFICIENT TO PAY THE FULL AMOUNT OF PRINCIPAL OF AND
INTEREST ON THE STORM RECOVERY BONDS.

 

(C)           UNDER THE LAWS OF THE STATE OF LOUISIANA AND THE UNITED STATES
CONSTITUTION, A LOUISIANA STATE COURT REVIEWING AN APPEAL OF LOUISIANA
COMMISSION ACTION OF A LEGISLATIVE CHARACTER WOULD CONCLUDE THAT THE LOUISIANA
COMMISSION PLEDGE (I) CREATES A BINDING CONTRACTUAL OBLIGATION OF THE STATE OF
LOUISIANA FOR PURPOSES OF THE CONTRACT CLAUSES OF THE UNITED STATES AND
LOUISIANA CONSTITUTIONS, AND (II) PROVIDES A BASIS UPON WHICH THE STORM RECOVERY
BONDHOLDERS COULD CHALLENGE SUCCESSFULLY ANY ACTION OF THE LOUISIANA COMMISSION
OF A LEGISLATIVE CHARACTER, INCLUDING THE RESCISSION OR AMENDMENT OF THE
FINANCING ORDER, THAT SUCH COURT DETERMINES VIOLATES THE LOUISIANA

 

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COMMISSION PLEDGE IN A MANNER THAT SUBSTANTIALLY REDUCES, LIMITS OR IMPAIRS THE
VALUE OF THE STORM RECOVERY PROPERTY OR THE STORM RECOVERY CHARGES, PRIOR TO THE
TIME THAT THE STORM RECOVERY BONDS ARE PAID IN FULL AND DISCHARGED, UNLESS THERE
IS A JUDICIAL FINDING THAT THE LOUISIANA COMMISSION ACTION CLEARLY IS EXERCISED
FOR A PUBLIC END AND IS REASONABLY NECESSARY TO THE ACCOMPLISHMENT OF THAT
PUBLIC END SO AS NOT TO BE ARBITRARY, CAPRICIOUS OR AN ABUSE OF AUTHORITY. 
THERE IS NO ASSURANCE, HOWEVER, THAT, EVEN IF A COURT WERE TO AWARD JUST
COMPENSATION IT WOULD BE SUFFICIENT TO PAY THE FULL AMOUNT OF PRINCIPAL AND
INTEREST ON THE STORM RECOVERY BONDS.

 

Section 3.12           No Court Order.   There is no order by any court
providing for the revocation, alteration, limitation or other impairment of the
Securitization Act, the Financing Order, the Issuance Advice Letter, the Storm
Recovery Property or the Storm Recovery Charges or any rights arising under any
of them or that seeks to enjoin the performance of any obligations under the
Financing Order.

 

Section 3.13           Approvals Concerning the Storm Recovery Property.   Under
the laws of the State of Louisiana and the federal laws of the United States, no
other approval, authorization, consent, order or other action of, or filing with
any Governmental Authority is required in connection with the creation or
transfer of the Seller’s rights and interests under the Financing Order and the
Issuer’s purchase of the Storm Recovery Property from the Seller, except those
that have been obtained or made.

 

Section 3.14           Assumptions.   Based on information available to the
Seller on the date hereof, the assumptions used in calculating the Storm
Recovery Charges in the Issuance Advice Letter are reasonable and made in good
faith; however, notwithstanding the foregoing, THE SELLER MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT BILLED STORM RECOVERY
CHARGES WILL BE ACTUALLY COLLECTED FROM CUSTOMERS, OR THAT AMOUNTS ACTUALLY
COLLECTED ARISING FROM THE STORM RECOVERY CHARGES WILL IN FACT BE SUFFICIENT TO
MEET THE PAYMENT OBLIGATIONS ON THE STORM RECOVERY BONDS OR THAT THE ASSUMPTIONS
USED IN CALCULATING SUCH STORM RECOVERY CHARGES WILL IN FACT BE REALIZED.

 

Section 3.15           Creation of the Storm Recovery Property.

 

(A)           UPON THE EFFECTIVENESS OF THE FINANCING ORDER, THE TRANSFER OF THE
SELLER’S RIGHTS AND INTERESTS UNDER THE FINANCING ORDER RELATED TO THE STORM
RECOVERY BONDS AND THE ISSUER’S PURCHASE OF THE STORM RECOVERY PROPERTY FROM THE
SELLER PURSUANT TO THIS AGREEMENT, THE STORM RECOVERY PROPERTY WILL CONSTITUTE A
PRESENT CONTRACT RIGHT VESTED IN THE ISSUER.

 

(B)           UPON THE EFFECTIVENESS OF THE FINANCING ORDER, THE ISSUANCE ADVICE
LETTER AND THE TARIFF, THE TRANSFER OF THE SELLER’S RIGHTS AND INTERESTS UNDER
THE FINANCING ORDER AND THE ISSUER’S PURCHASE OF THE STORM RECOVERY PROPERTY
FROM THE SELLER PURSUANT TO THIS AGREEMENT, THE STORM RECOVERY PROPERTY
INCLUDES:

 

(1)           the right to impose, bill, charge, collect and receive the Storm
Recovery Charges, including the right to receive Storm Recovery

 

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Charges in amounts and at times sufficient to pay principal and interest on the
Storm Recovery Bonds,

 

(2)           all rights and interest of the Seller under the Financing Order,
except the rights of Seller to earn and receive a rate of return on its invested
capital in the Issuer, to receive administration and servicer fees, to withdraw
funds from its restricted storm recovery reserve funded by the proceeds from the
sale of the Storm Recovery Property, or to use the Seller’s remaining portion of
those proceeds,

 

(3)           the rights to file for periodic adjustments of the Storm Recovery
Charges as provided in the Financing Order, and

 

(4)           all revenues, collections, claims, rights to payments, payments,
money, or proceeds arising from the rights and interests resulting from the
Storm Recovery Charges.

 

(C)           UPON THE EFFECTIVENESS OF THE ISSUANCE ADVICE LETTER AND THE
TARIFF, THE TRANSFER OF THE SELLER’S RIGHTS AND INTERESTS UNDER THE FINANCING
ORDER AND THE ISSUER’S PURCHASE OF THE STORM RECOVERY PROPERTY FROM THE SELLER
ON THE TRANSFER DATE PURSUANT TO THIS AGREEMENT, THE STORM RECOVERY PROPERTY
WILL NOT BE SUBJECT TO ANY LIEN CREATED BY A PREVIOUS INDENTURE.

 

Section 3.16           Prospectus.   As of the date hereof, the information
describing the Seller under the caption “The Seller, Initial Servicer and
Sponsor” in the Prospectus is true and correct in all material respects.

 

Section 3.17           Nature of Representations and Warranties.   The
representations and warranties set forth in Section 3.08 and Section 3.10
through Section 3.16, insofar as they involve conclusions of law, are made not
on the basis that the Seller purports to be a legal expert or to be rendering
legal advice, but rather to reflect the parties’ good faith understanding of the
legal basis on which the parties are entering into this Agreement and the other
Basic Documents and the basis on which the Storm Recovery Bondholders are
purchasing the Storm Recovery Bonds, and to reflect the parties’ agreement that,
if such understanding turns out to be incorrect or inaccurate, the Seller will
be obligated to indemnify the Issuer and its permitted assigns (to the extent
required by and in accordance with Section 5.01), and that the Issuer and its
permitted assigns will be entitled to enforce any rights and remedies under the
Basic Documents on account of such inaccuracy to the same extent as if the
Seller had breached any other representations or warranties hereunder.

 

Section 3.18           Waivers of Legal Warranties.   The Seller makes no
representation or warranty, express or implied, as to the solvency of any
Customer on the Transfer Date or as to the future solvency of any Customer. 
Further, the Issuer waives any right to rescind this Agreement or any conveyance
pursuant to this Agreement in case of insolvency of any Customer, regardless of
any actual or implied knowledge by Seller at any time of the insolvency of any
Customer.  Additionally, the Issuer agrees that this Agreement is not subject to
a

 

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suspensive condition under Louisiana Civil Code Article 2450, notwithstanding
that the imposition and collection of Storm Recovery Charges depends upon future
acts such as the Servicer performing its servicing functions relating to the
collection of Storm Recovery Charges, the future provision of electric service
to Customers, and the future consumption by Customers of electricity.

 

ARTICLE IV

COVENANTS OF THE SELLER

 

Section 4.01           Seller’s Existence.   Subject to Section 5.02, so long as
any of the Storm Recovery Bonds are outstanding, the Seller (i) shall keep in
full force and effect its existence and remain in good standing under the laws
of the state of its organization, and shall obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or will be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement to which the Seller is a party
necessary to the proper administration of this Agreement and the transactions
contemplated hereby and (ii) hereby agrees to continue to operate its system to
provide transmission and distribution delivery service to its customers; and, to
the extent that any interest in Storm Recovery Property created by this
Financing Order is assigned, sold or transferred to another assignee, the Seller
shall enter into a contract with that assignee that requires the Seller to
continue to operate its transmission and distribution delivery system to provide
service to the Seller’s Louisiana Commission-jurisdictional customers; and
further (in each case) the Seller will undertake to collect, account and remit
amounts in respect of the Storm Recovery Charges for the benefit and account of
such assignee (or its financing party); provided, however, that this provision
shall not prohibit the Seller from selling, assigning, or otherwise divesting
its transmission system or distribution system (or any portions thereof)
providing service to the Seller’s Louisiana Commission-jurisdictional customers,
by any method whatsoever, including those specified in the Financing Order
pursuant to which an entity becomes a successor, so long as the entities
acquiring either such system or portion thereof agree to continue operating such
facilities to provide service to Louisiana Commission-jurisdictional customers.

 

Section 4.02           No Liens or Conveyances.   Except for the conveyances
hereunder or any Lien under the Basic Documents pursuant to Section 1231 of the
Securitization Act for the benefit of the Indenture Trustee and the Storm
Recovery Bondholders, the Seller shall not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien
on, any of the Storm Recovery Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to the Storm Recovery Property, and shall defend
the right, title and interest of the Issuer and the Indenture Trustee, as
assignee of the Issuer, in, to and under the Storm Recovery Property against all
claims of third parties claiming through or under the Seller.

 

SECTION 4.03           DELIVERY OF COLLECTIONS.   IN THE EVENT THAT THE SELLER
RECEIVES COLLECTIONS IN RESPECT OF THE STORM RECOVERY CHARGES OR THE PROCEEDS
THEREOF OTHER THAN IN ITS CAPACITY AS THE SERVICER, THE SELLER AGREES TO PAY TO
THE SERVICER, ON BEHALF OF THE ISSUER, ALL PAYMENTS RECEIVED BY IT IN RESPECT
THEREOF AS SOON AS

 

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PRACTICABLE AFTER RECEIPT THEREOF. PRIOR TO SUCH REMITTANCE TO THE SERVICER BY
THE SELLER, THE SELLER AGREES THAT SUCH AMOUNTS ARE HELD BY IT IN TRUST FOR THE
ISSUER AND THE INDENTURE TRUSTEE. IF THE SELLER BECOMES A PARTY TO ANY FUTURE
TRADE RECEIVABLES PURCHASE AND SALE ARRANGEMENT OR SIMILAR ARRANGEMENT UNDER
WHICH IT SELLS ALL OR ANY PORTION OF ITS ACCOUNTS RECEIVABLES, THE SELLER AND
THE OTHER PARTIES TO SUCH ARRANGEMENT SHALL ENTER INTO AN INTERCREDITOR
AGREEMENT IN CONNECTION THEREWITH AND THE TERMS OF THE DOCUMENTATION EVIDENCING
SUCH TRADE RECEIVABLES PURCHASE AND SALE ARRANGEMENT OR SIMILAR ARRANGEMENT
SHALL EXPRESSLY EXCLUDE STORM RECOVERY CHARGES FROM ANY RECEIVABLES OR OTHER
ASSETS PLEDGED OR SOLD UNDER SUCH ARRANGEMENT.

 

Section 4.04           Notice of Liens.   The Seller shall notify the Issuer and
the Indenture Trustee promptly after becoming aware of any Lien on the Storm
Recovery Property, other than the conveyance hereunder, any Lien created in
favor of the Storm Recovery Bondholders or any Lien created by the Issuer under
the Indenture.

 

Section 4.05           Compliance With Law.   The Seller shall comply with its
organizational or governing documents and all laws, treaties, rules, regulations
and determinations of any Governmental Authority applicable to the Seller,
except to the extent that failure to so comply would not materially adversely
affect the Issuer’s or the Indenture Trustee’s interests in the Storm Recovery
Property or under any of the Basic Documents or the Seller’s performance of its
obligations hereunder or under any of the other Basic Documents.

 

Section 4.06           Covenants Related to the Storm Recovery Property.

 

(A)           SO LONG AS ANY OF THE STORM RECOVERY BONDS ARE OUTSTANDING, THE
SELLER SHALL:

 

(I)            TREAT THE STORM RECOVERY BONDS AS DEBT OF THE ISSUER AND NOT OF
THE SELLER, EXCEPT FOR FINANCIAL REPORTING OR TAX PURPOSES;

 

(II)           DISCLOSE IN ITS FINANCIAL STATEMENTS THAT THE ISSUER IS, AND THE
SELLER IS NOT, THE OWNER OF THE STORM RECOVERY PROPERTY AND THAT THE ASSETS OF
THE ISSUER ARE NOT AVAILABLE TO PAY CREDITORS OF THE SELLER OR ANY OF ITS
AFFILIATES (OTHER THAN THE ISSUER),

 

(III)          UNLESS, AND TO THE EXTENT, REQUIRED BY APPLICABLE LAW OR DIRECTED
OR REQUIRED BY A GOVERNMENTAL AUTHORITY, DISCLOSE THE EFFECTS OF ALL
TRANSACTIONS BETWEEN THE SELLER AND THE ISSUER IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, AND

 

(IV)          NOT OWN OR PURCHASE ANY STORM RECOVERY BONDS.

 

(B)           SO LONG AS ANY OF THE STORM RECOVERY BONDS ARE OUTSTANDING,

 

(I)            IN ALL PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THE STORM
RECOVERY PROPERTY, THE SELLER SHALL: (A) AFFIRMATIVELY CERTIFY AND CONFIRM THAT
IT HAS SOLD ALL OF ITS RIGHTS AND INTERESTS IN AND TO THE STORM RECOVERY
PROPERTY TO THE ISSUER (OTHER THAN FOR FINANCIAL REPORTING OR TAX PURPOSES), AND
(B) NOT MAKE ANY STATEMENT OR REFERENCE IN RESPECT OF THE STORM RECOVERY
PROPERTY THAT IS INCONSISTENT WITH THE OWNERSHIP THEREOF BY THE ISSUER (OTHER
THAN FOR FINANCIAL REPORTING OR TAX PURPOSES);

 

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(II)           THE SELLER SHALL NOT TAKE ANY ACTION IN RESPECT OF THE STORM
RECOVERY PROPERTY EXCEPT SOLELY IN ITS CAPACITY AS THE SERVICER THEREOF PURSUANT
TO THE SERVICING AGREEMENT OR AS CONTEMPLATED BY THE BASIC DOCUMENTS; AND

 

(III)          NEITHER THE SELLER NOR THE ISSUER SHALL TAKE ANY ACTION, FILE ANY
TAX RETURN, OR MAKE ANY ELECTION INCONSISTENT WITH THE TREATMENT OF THE ISSUER,
FOR PURPOSES OF FEDERAL TAXES AND, TO THE EXTENT CONSISTENT WITH APPLICABLE
STATE, LOCAL AND OTHER TAX LAW, FOR PURPOSES OF STATE, LOCAL AND OTHER TAXES, AS
A DISREGARDED ENTITY THAT IS NOT SEPARATE FROM THE SELLER (OR, IF RELEVANT, FROM
ANOTHER SOLE OWNER OF THE ISSUER).

 

(C)           THE SELLER AGREES THAT UPON THE SALE BY THE SELLER OF ALL OF ITS
RIGHTS AND INTERESTS IN AND TO THE STORM RECOVERY PROPERTY TO THE ISSUER
PURSUANT TO THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY LAW, INCLUDING
APPLICABLE LOUISIANA COMMISSION REGULATIONS AND THE SECURITIZATION ACT, THE
ISSUER SHALL HAVE ALL OF THE RIGHTS ORIGINALLY HELD BY THE SELLER WITH RESPECT
TO THE TRANSFERRED STORM RECOVERY PROPERTY, INCLUDING THE RIGHT (SUBJECT TO THE
TERMS OF THE SERVICING AGREEMENT) TO EXERCISE ANY AND ALL RIGHTS AND REMEDIES TO
COLLECT ANY AMOUNTS PAYABLE BY ANY CUSTOMER IN RESPECT OF THE TRANSFERRED STORM
RECOVERY PROPERTY, NOTWITHSTANDING ANY OBJECTION OR DIRECTION TO THE CONTRARY BY
THE SELLER (AND THE SELLER AGREES NOT TO MAKE ANY SUCH OBJECTION OR TO TAKE ANY
SUCH CONTRARY ACTION), AND ANY PAYMENT TO THE SERVICER BY ANY PERSON RESPONSIBLE
FOR REMITTING STORM RECOVERY CHARGES TO THE SERVICER UNDER THE TERMS OF THE
FINANCING ORDER OR THE SECURITIZATION ACT OR THE TARIFF SHALL DISCHARGE SUCH
PERSON’S OBLIGATIONS IN RESPECT OF THE STORM RECOVERY PROPERTY TO THE EXTENT OF
SUCH PAYMENT, NOTWITHSTANDING ANY OBJECTION OR DIRECTION TO THE CONTRARY BY THE
SELLER.

 

Section 4.07           Protection of Title.   The Seller shall execute and file
such filings, and cause to be executed and filed such filings, in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interests of the Issuer and the Indenture Trustee in the Storm
Recovery Property, including all filings required under the Securitization Act
and the UCC relating to the transfer of the ownership of the rights and
interests under the Financing Order by the Seller to the Issuer and the pledge
of the Storm Recovery Property by the Issuer to the Indenture Trustee. The
Seller shall deliver (or cause to be delivered) to the Issuer and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.  The Seller shall
institute any action or proceeding reasonably necessary to compel performance by
the Louisiana Commission or the State of Louisiana of any of their obligations
or duties under the Securitization Act, the Financing Order or the Issuance
Advice Letter relating to the transfer of the rights and interests under the
Financing Order by the Seller to the Issuer and shall notify the Indenture
Trustee of the institution of any such action.  The Seller agrees to take such
legal or administrative actions, including defending against or instituting and
pursuing legal actions and appearing or testifying at hearings or similar
proceedings, in each case as may be reasonably necessary:

 

(A)           TO PROTECT THE ISSUER AND THE STORM RECOVERY BONDHOLDERS FROM
CLAIMS, STATE ACTIONS OR OTHER ACTIONS OR PROCEEDINGS OF THIRD PARTIES WHICH, IF
SUCCESSFULLY PURSUED, WOULD RESULT IN A BREACH OF ANY REPRESENTATION SET FORTH
IN ARTICLE III; OR

 

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(B)           SO LONG AS THE SELLER IS ALSO THE SERVICER, TO BLOCK OR OVERTURN
ANY ATTEMPTS TO CAUSE A REPEAL OF, MODIFICATION OF OR SUPPLEMENT TO THE
SECURITIZATION ACT, THE FINANCING ORDER, THE ISSUANCE ADVICE LETTER OR THE
RIGHTS OF STORM RECOVERY BONDHOLDERS BY LEGISLATIVE ENACTMENT (INCLUDING ANY
ACTION OF THE LOUISIANA COMMISSION OF A LEGISLATIVE CHARACTER) OR CONSTITUTIONAL
AMENDMENT THAT WOULD BE MATERIALLY ADVERSE TO THE ISSUER, THE INDENTURE TRUSTEE
OR THE STORM RECOVERY BONDHOLDERS.

 

The costs of any such actions or proceedings shall be reimbursed by the Issuer
to the Seller from amounts on deposit in the Collection Account as an Operating
Expense (as such terms are defined in the Indenture) in accordance with the
terms of the Indenture.  The Seller’s obligations pursuant to this Section 4.07
shall survive and continue notwithstanding that the payment of Operating
Expenses pursuant to the Indenture may be delayed (it being understood that the
Seller may be required to advance its own funds to satisfy its obligation
hereunder).  The Seller designates the Issuer as its agent and attorney-in-fact
to execute any filings of financing statements, continuation statements or other
instruments required of the Seller pursuant to this Section 4.07, it being
understood that the Issuer shall have no obligation to execute any such
instruments.

 

Section 4.08           Taxes.   So long as any of the Storm Recovery Bonds are
outstanding, the Seller shall pay all material taxes, assessments and
governmental charges imposed upon it or any of its properties or assets or with
respect to any of its franchises, businesses, income or property before any
penalty accrues thereon if the failure to pay any such taxes, assessments and
governmental charges would, after any applicable grace periods, notices or other
similar requirements, result in a Lien on the Storm Recovery Property; provided
that no such tax need be paid if the Seller or any of its Affiliates is
contesting the same in good faith by appropriate proceedings promptly instituted
and diligently conducted and if the Seller or such Affiliate has established
appropriate reserves as shall be required in conformity with generally accepted
accounting principles.

 

Section 4.09           Filings Pursuant to Financing Order.   The Seller shall
comply with all filing requirements imposed upon the Seller in its capacity as
such by the Financing Order, including making any such post-closing filings.

 

Section 4.10           Issuance Advice Letter.   The Seller hereby agrees not to
withdraw the filing of the Issuance Advice Letter with the Louisiana Commission.

 

Section 4.11           Tariff.   The Seller hereby agrees to make all reasonable
efforts to keep the Tariff in full force and effect at all times.

 

Section 4.12           Notice of Breach to Rating Agencies, Etc..   Promptly
after obtaining knowledge thereof, in the event of a breach in any material
respect (without regard to any materiality qualifier contained in such
representation, warranty or covenant) of any of the Seller’s representations,
warranties or covenants contained herein, the Seller shall promptly notify the
Issuer, the Indenture Trustee and the Rating Agencies of such breach.  For the
avoidance of doubt, any breach which would adversely affect scheduled payments
on the Storm Recovery Bonds will be deemed to be a material breach for purposes
of this Section 4.12.

 

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Section 4.13           Use of Proceeds.   The Seller shall use the proceeds of
the sale of the Storm Recovery Property in accordance with the Financing Order
and the Securitization Act.

 

Section 4.14           Further Assurances.   Upon the reasonable request of the
Issuer, the Seller shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary to carry out more effectually
the provisions and purposes of this Agreement.

 

ARTICLE V

ADDITIONAL UNDERTAKINGS OF SELLER

 

The Seller hereby undertakes the obligations contained in this Article V and
acknowledges that the Issuer shall have the right to assign its rights with
respect to such obligations to the Indenture Trustee for the benefit of the
Storm Recovery Bondholders.

 

SECTION 5.01     LIABILITY OF THE SELLER; INDEMNITIES.

 

(A)           THE SELLER SHALL BE LIABLE IN ACCORDANCE HEREWITH ONLY TO THE
EXTENT OF THE OBLIGATIONS SPECIFICALLY UNDERTAKEN BY THE SELLER UNDER THIS
AGREEMENT.

 

(B)           THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE,
FOR ITSELF AND ON BEHALF OF THE STORM RECOVERY BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR, AND DEFEND
AND HOLD HARMLESS EACH SUCH PERSON FROM AND AGAINST, ANY AND ALL TAXES (OTHER
THAN ANY TAXES IMPOSED ON STORM RECOVERY BONDHOLDERS SOLELY AS A RESULT OF THEIR
OWNERSHIP OF STORM RECOVERY BONDS) THAT MAY AT ANY TIME BE IMPOSED ON OR
ASSERTED AGAINST ANY SUCH PERSON UNDER EXISTING LAW AS OF THE TRANSFER DATE AS A
RESULT OF THE SALE AND ASSIGNMENT OF THE SELLER’S RIGHTS AND INTERESTS UNDER THE
FINANCING ORDER BY THE SELLER TO THE ISSUER, THE ACQUISITION OR HOLDING OF THE
STORM RECOVERY PROPERTY BY THE ISSUER OR THE ISSUANCE AND SALE BY THE ISSUER OF
THE STORM RECOVERY BONDS, INCLUDING ANY SALES, GROSS RECEIPTS, TANGIBLE PERSONAL
PROPERTY, PRIVILEGE, FRANCHISE OR LICENSE TAXES, BUT EXCLUDING ANY TAXES IMPOSED
AS A RESULT OF A FAILURE OF SUCH PERSON TO PROPERLY WITHHOLD OR REMIT TAXES
IMPOSED WITH RESPECT TO PAYMENTS ON ANY STORM RECOVERY BOND, IN THE EVENT AND TO
THE EXTENT SUCH TAXES ARE NOT RECOVERABLE AS FINANCING COSTS, IT BEING
UNDERSTOOD THAT THE STORM RECOVERY BONDHOLDERS SHALL BE ENTITLED TO ENFORCE
THEIR RIGHTS AGAINST THE SELLER UNDER THIS SECTION 5.01(B) SOLELY THROUGH A
CAUSE OF ACTION BROUGHT FOR THEIR BENEFIT BY THE INDENTURE TRUSTEE IN ACCORDANCE
WITH THE TERMS OF THE INDENTURE.

 

(C)           THE SELLER SHALL INDEMNIFY THE ISSUER AND THE INDENTURE TRUSTEE,
FOR ITSELF AND ON BEHALF OF THE STORM RECOVERY BONDHOLDERS, AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES AND AGENTS FOR, AND DEFEND
AND HOLD HARMLESS EACH SUCH PERSON FROM AND

 

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AGAINST, ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, ACTIONS, SUITS OR
PAYMENTS OF ANY KIND WHATSOEVER THAT MAY BE IMPOSED ON OR ASSERTED AGAINST ANY
SUCH PERSON (WHICH MAY INCLUDE, WITHOUT LIMITATION, AN AMOUNT EQUAL TO PRINCIPAL
AND INTEREST ON THE STORM RECOVERY BONDS AS A MEASURE OF SELLER’S
INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 5.01) TOGETHER WITH ANY
REASONABLE COSTS AND EXPENSES INCURRED BY SUCH PERSON, IN EACH CASE AS A RESULT
OF THE SELLER’S BREACH OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS
CONTAINED IN THIS AGREEMENT.

 

(D)           THE INDEMNIFICATION OBLIGATIONS OF THE SELLER UNDER THIS
SECTION 5.01 SHALL RANK PARI PASSU WITH ALL OTHER GENERAL UNSECURED OBLIGATIONS
OF THE SELLER.

 

(E)           INDEMNIFICATION UNDER THIS SECTION 5.01 SHALL SURVIVE THE
RESIGNATION OR REMOVAL OF THE INDENTURE TRUSTEE AND THE TERMINATION OF THIS
AGREEMENT AND SHALL INCLUDE REASONABLE FEES AND EXPENSES OF INVESTIGATION AND
LITIGATION (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES).  THE SELLER
SHALL NOT INDEMNIFY ANY PARTY UNDER THIS SECTION 5.01 FOR ANY CHANGES IN LAW
AFTER THE TRANSFER DATE, INCLUDING BY MEANS OF LEGISLATIVE ENACTMENT,
CONSTITUTIONAL AMENDMENT OR VOTER INITIATIVE, OR FOR ANY LIABILITY RESULTING
SOLELY FROM A DOWNGRADE IN ANY RATING OF THE STORM RECOVERY BONDS BY ANY RATING
AGENCY.  THE SELLER SHALL NOT INDEMNIFY THE INDENTURE TRUSTEE OR ITS OFFICERS,
DIRECTORS, MANAGERS, EMPLOYEES OR AGENTS UNDER THIS SECTION 5.01 AGAINST ANY
LIABILITY, OBLIGATION, CLAIM, ACTION, SUIT OR PAYMENT OF ANY KIND ARISING OUT OF
THE WILLFUL MISCONDUCT, NEGLIGENCE OR BAD FAITH OF ANY SUCH PERSON.

 

(F)            THE SELLER SHALL NOT BE REQUIRED TO INDEMNIFY A PARTY UNDER THIS
SECTION 5.01 FOR ANY AMOUNT PAID OR PAYABLE BY SUCH PARTY IN THE SETTLEMENT OF
ANY ACTION, PROCEEDING OR INVESTIGATION WITHOUT THE PRIOR WRITTEN CONSENT OF THE
SELLER WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

(G)           PROMPTLY AFTER RECEIPT BY A PARTY OF NOTICE OF THE COMMENCEMENT OF
ANY ACTION, PROCEEDING OR INVESTIGATION, SUCH PARTY SHALL, IF A CLAIM IN RESPECT
THEREOF IS TO BE MADE AGAINST THE SELLER UNDER THIS SECTION 5.01, NOTIFY THE
SELLER IN WRITING OF THE COMMENCEMENT THEREOF. FAILURE BY A PARTY TO SO NOTIFY
THE SELLER SHALL RELIEVE THE SELLER FROM THE OBLIGATION TO INDEMNIFY AND HOLD
HARMLESS SUCH INDEMNIFIED PARTY UNDER THIS SECTION 5.01 ONLY TO THE EXTENT THAT
THE SELLER SUFFERS ACTUAL PREJUDICE AS A RESULT OF SUCH FAILURE.

 

(H)           WITH RESPECT TO ANY ACTION, PROCEEDING OR INVESTIGATION BROUGHT BY
A THIRD PARTY FOR WHICH INDEMNIFICATION MAY BE SOUGHT UNDER SECTION 5.01(C), THE
SELLER SHALL BE ENTITLED TO CONDUCT AND CONTROL, AT ITS EXPENSE AND WITH COUNSEL
OF ITS CHOOSING THAT IS REASONABLY SATISFACTORY TO SUCH INDEMNIFIED PARTY, THE
DEFENSE OF ANY SUCH ACTION, PROCEEDING OR

 

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INVESTIGATION (IN WHICH CASE THE SELLER SHALL NOT THEREAFTER BE RESPONSIBLE FOR
THE FEES AND EXPENSES OF ANY SEPARATE COUNSEL RETAINED BY THE INDEMNIFIED PARTY
EXCEPT AS SET FORTH BELOW); PROVIDED THAT THE INDEMNIFIED PARTY SHALL HAVE THE
RIGHT TO PARTICIPATE IN SUCH ACTION, PROCEEDING OR INVESTIGATION THROUGH COUNSEL
CHOSEN BY IT AND AT ITS OWN EXPENSE. NOTWITHSTANDING THE SELLER’S ELECTION TO
ASSUME THE DEFENSE OF ANY ACTION, PROCEEDING OR INVESTIGATION, THE INDEMNIFIED
PARTY SHALL HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL (INCLUDING LOCAL COUNSEL),
AND THE SELLER SHALL BEAR THE REASONABLE FEES, COSTS AND EXPENSES OF SUCH
SEPARATE COUNSEL IF (I) THE DEFENDANTS IN ANY SUCH ACTION INCLUDE BOTH THE
INDEMNIFIED PARTY AND THE SELLER AND THE INDEMNIFIED PARTY SHALL HAVE REASONABLY
CONCLUDED THAT THERE MAY BE LEGAL DEFENSES AVAILABLE TO IT THAT ARE DIFFERENT
FROM OR ADDITIONAL TO THOSE AVAILABLE TO THE SELLER, (II) THE SELLER SHALL NOT
HAVE EMPLOYED COUNSEL REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY TO
REPRESENT THE INDEMNIFIED PARTY WITHIN A REASONABLE TIME AFTER NOTICE OF THE
INSTITUTION OF SUCH ACTION, (III) THE SELLER SHALL AUTHORIZE THE INDEMNIFIED
PARTY TO EMPLOY SEPARATE COUNSEL AT THE EXPENSE OF THE SELLER OR (IV) IN THE
CASE OF THE INDENTURE TRUSTEE, SUCH ACTION EXPOSES THE INDENTURE TRUSTEE TO A
MATERIAL RISK OF CRIMINAL LIABILITY OR FORFEITURE OR A SERVICER DEFAULT HAS
OCCURRED AND IS CONTINUING.  NOTWITHSTANDING THE FOREGOING, THE SELLER SHALL NOT
BE OBLIGATED TO PAY FOR THE FEES, COSTS AND EXPENSES OF MORE THAN ONE SEPARATE
COUNSEL FOR THE INDEMNIFIED PARTIES OTHER THAN ONE LOCAL COUNSEL, IF
APPROPRIATE.

 

NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL ANY SUCH FOREGOING INDEMNITY
EXTEND TO THE COLLECTIBILITY OF THE STORM RECOVERY CHARGES FROM ANY PERSON
RESPONSIBLE FOR REMITTING STORM RECOVERY CHARGES TO THE SERVICER UNDER THE TERMS
OF THE FINANCING ORDER, THE SECURITIZATION ACT OR AN APPLICABLE TARIFF, OR THE
CREDITWORTHINESS OF ANY SUCH PERSON OR THE INABILITY OR FAILURE OF SUCH PERSON
TO TIMELY PAY ALL OR A PORTION OF THE STORM RECOVERY CHARGES.  THE REMEDIES
PROVIDED IN THIS AGREEMENT ARE THE SOLE AND EXCLUSIVE REMEDIES AGAINST THE
SELLER FOR BREACH OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS IN THIS
AGREEMENT.

 

Section 5.02           Merger or Consolidation of, or Assumption of the
Obligations of, the Seller.

 

Any Person:

 

(A)           INTO WHICH THE SELLER MAY BE MERGED, CONVERTED OR CONSOLIDATED AND
WHICH SUCCEEDS TO ALL OR SUBSTANTIALLY ALL OF THE ELECTRIC TRANSMISSION AND
DISTRIBUTION BUSINESS OF THE SELLER (OR, IF THE TRANSMISSION AND DISTRIBUTION
BUSINESS IS SPLIT, ANY PERSON WHICH THE LOUISIANA COMMISSION DESIGNATES IN
CONNECTION WITH AN ORDER RELATING TO SUCH SPLIT),

 

(B)           WHICH RESULTS FROM THE DIVISION OF THE SELLER INTO TWO OR MORE
PERSONS AND WHICH SUCCEEDS TO ALL OR SUBSTANTIALLY ALL OF THE ELECTRIC
TRANSMISSION AND DISTRIBUTION

 

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BUSINESS OF THE SELLER (OR, IF THE TRANSMISSION AND DISTRIBUTION BUSINESS IS
SPLIT, ANY PERSON WHICH THE LOUISIANA COMMISSION DESIGNATES IN CONNECTION WITH
AN ORDER RELATING TO SUCH SPLIT),

 

(C)           WHICH MAY RESULT FROM ANY MERGER, CONVERSION OR CONSOLIDATION TO
WHICH THE SELLER SHALL BE A PARTY AND WHICH SUCCEEDS TO ALL OR SUBSTANTIALLY ALL
OF THE ELECTRIC TRANSMISSION AND DISTRIBUTION BUSINESS OF THE SELLER (OR, IF THE
TRANSMISSION AND DISTRIBUTION BUSINESS IS SPLIT, ANY PERSON WHICH THE LOUISIANA
COMMISSION DESIGNATES IN CONNECTION WITH AN ORDER RELATING TO SUCH SPLIT),

 

(D)           WHICH MAY PURCHASE OR OTHERWISE SUCCEED TO THE PROPERTIES AND
ASSETS OF THE SELLER SUBSTANTIALLY AS A WHOLE AND WHICH PURCHASES OR OTHERWISE
SUCCEEDS TO ALL OR SUBSTANTIALLY ALL OF THE ELECTRIC TRANSMISSION AND
DISTRIBUTION BUSINESS OF THE SELLER (OR, IF THE TRANSMISSION AND DISTRIBUTION
BUSINESS IS SPLIT, ANY PERSON WHICH THE LOUISIANA COMMISSION DESIGNATES IN
CONNECTION WITH AN ORDER RELATING TO SUCH SPLIT), OR

 

(E)           WHICH MAY OTHERWISE PURCHASE OR SUCCEED TO ALL OR SUBSTANTIALLY
ALL OF THE ELECTRIC TRANSMISSION AND DISTRIBUTION BUSINESS OF THE SELLER (OR, IF
THE TRANSMISSION AND DISTRIBUTION BUSINESS IS SPLIT, ANY PERSON WHICH THE
LOUISIANA COMMISSION DESIGNATES IN CONNECTION WITH AN ORDER RELATING TO SUCH
SPLIT),

 

which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that

 

(I)            IMMEDIATELY AFTER GIVING EFFECT TO SUCH TRANSACTION, NO
REPRESENTATION, WARRANTY OR COVENANT MADE PURSUANT TO ARTICLE III OR ARTICLE IV
SHALL HAVE BEEN BREACHED IN ANY MATERIAL RESPECT AND NO SERVICER DEFAULT, AND NO
EVENT THAT, AFTER NOTICE OR LAPSE OF TIME, OR BOTH, WOULD BECOME A SERVICER
DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING,

 

(II)           THE RATING AGENCIES SHALL HAVE RECEIVED PRIOR WRITTEN NOTICE OF
SUCH TRANSACTION,

 

(III)          THE SELLER SHALL HAVE DELIVERED TO THE ISSUER AND THE INDENTURE
TRUSTEE AN OFFICER’S CERTIFICATE AND AN OPINION OF COUNSEL EACH STATING THAT
SUCH CONSOLIDATION, CONVERSION, MERGER, DIVISION OR SUCCESSION AND SUCH
AGREEMENT OF ASSUMPTION COMPLY WITH THIS SECTION 5.02 AND THAT ALL CONDITIONS
PRECEDENT, IF ANY, PROVIDED FOR IN THIS AGREEMENT RELATING TO SUCH TRANSACTION
HAVE BEEN COMPLIED WITH,

 

(IV)          THE SELLER SHALL HAVE DELIVERED TO THE ISSUER AND THE INDENTURE
TRUSTEE AN OPINION OF COUNSEL EITHER

 

(A)          STATING THAT, IN THE OPINION OF SUCH COUNSEL, ALL FILINGS TO BE
MADE BY THE SELLER, INCLUDING FILINGS WITH THE LOUISIANA COMMISSION PURSUANT TO
THE SECURITIZATION ACT AND THE UCC, THAT ARE NECESSARY FULLY TO PRESERVE AND
PROTECT THE RESPECTIVE INTERESTS OF THE ISSUER AND THE INDENTURE TRUSTEE IN THE
STORM

 

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RECOVERY PROPERTY HAVE BEEN EXECUTED AND FILED, AND RECITING THE DETAILS OF SUCH
FILINGS, OR

 

(B)           STATING THAT, IN THE OPINION OF SUCH COUNSEL, NO SUCH ACTION IS
NECESSARY TO PRESERVE AND PROTECT SUCH INTERESTS, AND

 

(V)           THE SELLER SHALL HAVE DELIVERED TO THE ISSUER, THE INDENTURE
TRUSTEE AND THE RATING AGENCIES AN OPINION OF INDEPENDENT TAX COUNSEL (AS
SELECTED BY, AND IN FORM AND SUBSTANCE SATISFACTORY TO THE SELLER, AND WHICH MAY
BE BASED ON A RULING FROM THE INTERNAL REVENUE SERVICE) TO THE EFFECT THAT, FOR
FEDERAL INCOME TAX PURPOSES, SUCH TRANSACTION WILL NOT RESULT IN A MATERIAL
ADVERSE FEDERAL INCOME TAX CONSEQUENCE TO THE ISSUER, THE INDENTURE TRUSTEE OR
THE STORM RECOVERY BONDHOLDERS.

 

The Seller shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above described agreement of
assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above.
When any Person acquires the properties and assets of the Seller substantially
as a whole and succeeds to all or substantially all of the electric transmission
and distribution business of the Seller (or, if the transmission and
distribution business is split, any person which the Louisiana Commission
designates in connection with an order relating to such split), or otherwise
becomes the successor to the Seller in accordance with the terms of this
Section 5.02, then upon the satisfaction of all of the other conditions of this
Section 5.02, the Seller shall automatically and without further notice be
released from its obligations hereunder.

 

Section 5.03           Limitation on Liability of the Seller and Others.   The
Seller and any manager, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person, respecting any matters arising
hereunder.  Subject to Section 4.07, the Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.

 

ARTICLE VI

 

MISCELLANEOUS PROVISIONS

 

Section 6.01           Amendment.

 

(A)           THIS AGREEMENT MAY BE AMENDED IN WRITING BY THE SELLER AND THE
ISSUER, PROVIDED THAT (I) THE RATING AGENCY CONDITION HAS BEEN SATISFIED IN
CONNECTION THEREWITH, (II) THE INDENTURE TRUSTEE HAS CONSENTED THERETO AND
(III) IN THE CASE OF ANY AMENDMENT THAT INCREASES ONGOING FINANCING COSTS AS
DEFINED IN THE FINANCING ORDER, THE LOUISIANA COMMISSION HAS CONSENTED THERETO
OR SHALL BE CONCLUSIVELY DEEMED TO HAVE CONSENTED THERETO.  PROMPTLY AFTER THE
EXECUTION OF ANY SUCH AMENDMENT OR CONSENT, THE ISSUER SHALL FURNISH WRITTEN
NOTIFICATION OF THE SUBSTANCE OF SUCH AMENDMENT OR CONSENT TO EACH OF THE RATING
AGENCIES.  WITH RESPECT TO THE LOUISIANA COMMISSION’S CONSENT TO ANY AMENDMENT
TO THIS AGREEMENT,

 

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(I)            THE SELLER MAY SUBMIT THE AMENDMENT TO THE LOUISIANA COMMISSION
BY DELIVERING TO THE LOUISIANA COMMISSION’S EXECUTIVE COUNSEL A WRITTEN REQUEST
FOR SUCH CONSENT, WHICH REQUEST SHALL CONTAIN:

 

(A)          A REFERENCE TO DOCKET NO. U-29157 AND A STATEMENT AS TO THE
POSSIBLE EFFECT OF THE AMENDMENT ON ONGOING FINANCING COSTS;

 

(B)           AN OFFICER’S CERTIFICATE STATING THAT THE PROPOSED AMENDMENT HAS
BEEN APPROVED BY ALL RELEVANT PARTIES TO THIS AGREEMENT; AND

 

(C)           A STATEMENT IDENTIFYING THE PERSON TO WHOM THE LOUISIANA
COMMISSION OR ITS STAFF IS TO ADDRESS ITS CONSENT TO THE PROPOSED AMENDMENT OR
REQUEST ADDITIONAL TIME;

 

(II)           ANY AMENDMENT REQUIRING THE CONSENT OF THE LPSC AS PROVIDED IN
THIS SECTION 6.01(A) SHALL BECOME EFFECTIVE ON THE LATER OF:

 

(A)          THE DATE PROPOSED BY THE PARTIES TO THE AMENDMENT, OR

 

(B)           31 DAYS AFTER SUCH SUBMISSION OF THE AMENDMENT TO THE LPSC UNLESS
THE LPSC ISSUES AN ORDER DISAPPROVING THE AMENDMENT WITHIN A 30-DAY PERIOD.

 

(B)           PRIOR TO THE EXECUTION OF ANY AMENDMENT TO THIS AGREEMENT, THE
ISSUER AND THE INDENTURE TRUSTEE SHALL BE ENTITLED TO RECEIVE AND RELY UPON AN
OPINION OF COUNSEL STATING THAT THE EXECUTION OF SUCH AMENDMENT IS AUTHORIZED OR
PERMITTED BY THIS AGREEMENT.  THE ISSUER AND THE INDENTURE TRUSTEE MAY, BUT
SHALL NOT BE OBLIGATED TO, ENTER INTO ANY SUCH AMENDMENT THAT AFFECTS THEIR OWN
RIGHTS, DUTIES OR IMMUNITIES UNDER THIS AGREEMENT OR OTHERWISE.  FOLLOWING
DELIVERY OF A NOTICE TO THE LOUISIANA COMMISSION BY THE SELLER UNDER
SECTION 6.01(A) ABOVE, THE SELLER AND ISSUER MAY AT ANY TIME WITHDRAW FROM THE
LOUISIANA COMMISSION FURTHER CONSIDERATION OF ANY NOTIFICATION OF A PROPOSED
AMENDMENT.

 

Section 6.02           Notices.   Unless otherwise specifically provided herein,
all demands, notices and communications upon or to the Seller, the Issuer, the
Indenture Trustee, the Louisiana Commission or the Rating Agencies under this
Agreement shall be in writing, delivered personally, via facsimile, reputable
overnight courier or by certified mail, return-receipt requested, and shall be
deemed to have been duly given upon receipt

 

(A)           IN THE CASE OF THE SELLER, TO CLECO POWER LLC, 2030 DONAHUE FERRY
ROAD, PINEVILLE, LOUISIANA 71360-5226, ATTENTION:  TREASURER,

 

(B)           IN THE CASE OF THE ISSUER, TO CLECO KATRINA/RITA HURRICANE
RECOVERY FUNDING LLC, 2605 HWY. 28 EAST OFFICE NUMBER 12, PINEVILLE, LOUISIANA
71360-5226, ATTENTION:  MANAGER,

 

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(C)           IN THE CASE OF MOODY’S, TO MOODY’S INVESTORS SERVICE, INC., ABS
MONITORING DEPARTMENT, 99 CHURCH STREET, NEW YORK, NEW YORK 10007,

 

(D)           IN THE CASE OF STANDARD & POOR’S, TO STANDARD & POOR’S, A DIVISION
OF THE MCGRAW-HILL COMPANIES, 55 WATER STREET, NEW YORK, NEW YORK 10041,
ATTENTION: ASSET BACKED SURVEILLANCE DEPARTMENT,

 

(E)           IN THE CASE OF FITCH, TO FITCH, INC., 1 STATE STREET PLAZA, NEW
YORK, NEW YORK 10004, ATTENTION: ABS SURVEILLANCE,

 

(F)            IN THE CASE THE INDENTURE TRUSTEE, AT THE ADDRESS PROVIDED FOR
NOTICES OR COMMUNICATIONS TO THE INDENTURE TRUSTEE IN THE INDENTURE, AND

 

(G)           IN THE CASE OF THE LOUISIANA COMMISSION, TO GALVEZ BUILDING, 12TH
FLOOR, 602 NORTH FIFTH STREET, BATON ROUGE, LOUISIANA 70821-9154, ATTENTION:
EXECUTIVE COUNSEL;

 

or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

 

Section 6.03           Assignment by the Seller.   Notwithstanding anything to
the contrary contained herein, except as provided in Section 5.02, this
Agreement may not be assigned by the Seller.

 

Section 6.04           Assignment to the Indenture Trustee.   The Seller hereby
acknowledges and consents to any pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Storm Recovery Bondholders of all right, title and interest
of the Issuer in, to and under the Storm Recovery Property and the proceeds
thereof and the assignment of any or all of the Issuer’s rights hereunder to the
Indenture Trustee.  Notwithstanding such assignment, in no event shall the
Indenture Trustee have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.

 

Section 6.05           Limitations on Rights of Others.   The provisions of this
Agreement are solely for the benefit of the Seller, the Issuer and the Indenture
Trustee, on behalf of itself and the Storm Recovery Bondholders, and nothing in
this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.

 

Section 6.06           Severability.   Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

20

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Section 6.07   Separate Counterparts.   This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

 

Section 6.08   Headings.  The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

 

Section 6.09   Governing Law.   THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF LOUISIANA, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 6.10   Nonpetition Covenants.  (a) Notwithstanding any prior termination
of this Agreement or the Indenture, the Seller shall not, prior to the date
which is one year and one day after the termination of the Indenture, petition
or otherwise invoke or cause the Issuer to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
the property of the Issuer, or ordering the winding-up or liquidation of the
affairs of the Issuer.

 

(b)    Notwithstanding any prior termination of this Agreement or the Indenture,
the Issuer shall not, prior to the date which is one year and one day after the
termination of the Indenture, petition or otherwise invoke or cause the Seller
to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or any substantial part of the property of the Seller, or ordering the
winding-up or liquidation of the affairs of the Seller.

 

[Rest of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the day and year first above written.

 

 

CLECO KATRINA/RITA HURRICANE
RECOVERY FUNDING LLC,

 

     as Issuer,

 

 

 

 

 

By:

/s/ Keith D. Crump

 

 

  Name: Keith D. Crump

 

 

  Title: Vice President and Manager

 

 

 

 

 

CLECO POWER LLC,

 

     as Seller,

 

 

 

 

 

By:

/s/ Kathleen F. Nolen

 

 

  Name: Kathleen F. Nolen

 

 

  Title: Senior Vice President and Chief Financial Officer

 

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APPENDIX A - DEFINITIONS

 

The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.

 

“Administration Agreement” means the Administration Agreement, dated as of
March 6, 2008, between the Issuer and the Seller, as the same may be amended and
supplemented from time to time.

 

“Affiliate” means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person.  For the purposes of this definition, control, when used with respect to
any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms controlling and controlled
have meanings correlative to the foregoing.

 

“Agreement” or the “Sale Agreement” means this Storm Recovery Property Sale
Agreement, as the same may be amended and supplemented from time to time.

 

“Basic Documents” means the Articles of Organization of the Issuer which was
filed with the Secretary of State of the State of Louisiana on October 30, 2007,
the limited liability company operating agreement of the Issuer, the Sale
Agreement, the Bill of Sale, the Servicing Agreement, the Administration
Agreement, the Indenture and the Series Supplement.

 

“Bill of Sale” means the Bill of Sale, dated as of March 6, 2008, issued by the
Seller to the Issuer pursuant to the Sale Agreement evidencing the sale of the
Storm Recovery Property by the Seller to the Issuer.

 

“Cleco Power” means Cleco Power LLC, a Louisiana limited liability company, or
its successor.

 

“Financing Order” means Financing Order No. U-29157-B issued by the Louisiana
Commission on September 17, 2007 in Docket No. U-29157 pursuant to the
Securitization Act.

 

“Fitch” means Fitch, Inc., or its successor.

 

“Governmental Authority” means any court or any federal or state regulatory
body, administrative agency or governmental instrumentality.

 

“Indenture” means the Indenture, dated as of March 6, 2008, among the Issuer and
the Indenture Trustee, and the Series Supplement (including the forms and terms
of the Storm Recovery Bonds), as the same may be amended and supplemented with
respect to the Storm Recovery Bonds from time to time.

 

“Indenture Trustee” means U.S. Bank National Association, or its successor or
any successor Indenture Trustee under the Indenture.

 

A-1

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 “Issuance Advice Letter” means the issuance advice letter submitted to the
Louisiana Commission on February 29, 2008 by the Seller pursuant to the
Financing Order in connection with the issuance of the Storm Recovery Bonds.

 

“Issuer” means Cleco Katrina/Rita Hurricane Recovery Funding LLC, a Louisiana
limited liability company, or its successor under the Indenture.

 

“Lien” means a security interest, lien, charge, pledge, equity or encumbrance of
any kind.

 

“Louisiana Commission” means the Louisiana Public Service Commission or any
successor.

 

“Louisiana Commission Pledge” means  the pledge of the Louisiana Commission
found in Part VI(G) of the Financing Order.

 

“Louisiana UCC Filing Officer” has the meaning ascribed to such term in the
Servicing Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

 

“Officer’s Certificate” means a certificate signed, in the case of the Seller,
by any manager, the chairman of the board, the chief executive officer, the
president, any vice chairman, any executive vice president, senior vice
president or vice president, the treasurer, assistant treasurer, the secretary
or any assistant secretary of the Seller.

 

“Opinion of Counsel” means one or more written opinions of counsel who may be an
employee of or counsel to the Issuer or the Seller, which counsel shall be
reasonably acceptable to the Indenture Trustee, the LPSC, the Issuer or the
Rating Agencies, as applicable, and which shall be in form reasonably
satisfactory to the Indenture Trustee or the LPSC, if applicable.

 

“Person” means any individual, corporation, estate, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
business trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.

 

“proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

 

“Prospectus” has the meaning specified in Section 3.06 hereof.

 

“Purchase Price” has the meaning specified in Section 2.01(a) hereof.

 

“Rating Agency” means any rating agency rating the Storm Recovery Bonds at the
time of issuance thereof at the request of the Issuer, which initially shall be
Moody’s, Fitch and S&P.  If no such organization or successor is any longer in
existence, “Rating Agency” shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Issuer, written notice
of which designation shall be given to the Indenture Trustee, the Louisiana
Commission and the Servicer.

 

A-2

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“Rating Agency Condition” means, with respect to any action, the notification in
writing to each Rating Agency of such action, and confirmation from S&P to the
Indenture Trustee and the Issuer that such action will not result in a reduction
or withdrawal of the then current rating by such Rating Agency of any
outstanding class or tranche of Storm Recovery Bonds.

 

“Securitization Act” means Act No. 64 of the Louisiana Regular Session of 2006,
the “Louisiana Electric Utility Storm Recovery Securitization Act,” codified at
La. R.S. 45:1226-1236.

 

“Seller” means Cleco Power, or its successor, in its capacity as seller of the
Storm Recovery Property to the Issuer pursuant to the Sale Agreement.

 

“Series Supplement” means the First Supplemental Indenture dated as of March 6,
2008, among the Issuer and the Indenture Trustee, which specifies the terms of
the Storm Recovery Bonds.

 

“Servicer” means Cleco Power, in its capacity as the servicer under the
Servicing Agreement, and each successor to or assignee of Cleco Power (in the
same capacity) pursuant to the relevant sections of the Servicing Agreement.

 

“Servicer Default” means the occurrence and continuation of one of the events
specified in Section 7.01 of the Servicing Agreement.

 

“Servicing Agreement” means the Storm Recovery Property Servicing Agreement,
dated as of March 6, 2008, between the Issuer and the Servicer and acknowledged
by the Indenture Trustee, as the same may be amended and supplemented from time
to time.

 

“Standard & Poor’s” or “S&P,” means Standard & Poor’s, a division of The
McGraw-Hill Companies, or its successor.

 

“Storm Recovery Bond” means any of the 2008 Senior Secured Storm Recovery Bonds
issued by the Issuer pursuant to the Indenture and the Series Supplement.

 

“Storm Recovery Bondholder” means a Person in whose name a Storm Recovery Bond
is registered on the Storm Recovery Bond Register.

 

“Storm Recovery Bond Register” has the meaning specified in Section 2.05 of the
Indenture.

 

“Storm Recovery Charges” means the nonbypassable amounts to be charged for the
use or availability of electric services, approved by the Louisiana Commission
in the Financing Order that may be collected by the Seller, its successors,
assignees or other collection agents as provided for in the Financing Order.

 

“Storm Recovery Property” means all of Seller’s rights and interest under the
Financing Order (including, without limitation, rights to impose, collect and
receive the “storm recovery charges” (as defined in the Securitization Act)
approved in such Financing Order) issued by the Louisiana Commission on
September 17, 2007 (Docket No. U-29157) pursuant to the

 

A-3

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Securitization Act, except the rights of Seller to earn and receive a rate of
return on its invested capital in the Issuer, to receive administration and
servicer fees, to withdraw funds from its restricted storm recovery reserve
funded by the proceeds from the sale of the Storm Recovery Property, or to use
the Seller’s remaining portion of those proceeds.

 

“Tariff” means Rider SRCA and Rider SCSA filed by the Seller pursuant to
ordering paragraph 10 of the Financing Order.

 

“Transfer Date” means the date on which the Storm Recovery Bonds are to be
originally issued in accordance with Section 2.10 of the Indenture.

 

“Trust Estate” means the “Series Trust Estate” as such term is defined in the
Series Supplement.

 

“UCC” has the meaning specified in Section 2.02(iv) hereof.

 

A-4

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EXHIBIT A

 

BILL OF SALE

 

1.             This Bill of Sale is being delivered pursuant to the Storm
Recovery Property Sale Agreement, dated as of March 6, 2008 (the “Sale
Agreement”), between Cleco Power LLC (the “Seller”) and Cleco Katrina/Rita
Hurricane Recovery Funding LLC (the “Issuer”).  All capitalized terms used but
not defined herein have the respective meanings ascribed thereto in the Sale
Agreement.

 

2.             In consideration of the Issuer’s payment to the Seller of
$176,000,000, receipt of which is hereby acknowledged, the Seller does hereby
irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer,
without recourse or warranty, except as set forth in the Sale Agreement, all
right, title and interest of the Seller in, to and under the Storm Recovery
Property identified on Schedule 1 hereto (such sale, transfer, assignment,
setting over and conveyance of the Storm Recovery Property includes, to the
fullest extent permitted by the Securitization Act, the right to impose, collect
and receive the Storm Recovery Charges related to the Storm Recovery Property,
as the same may be adjusted from time to time).  Such sale, transfer,
assignment, setting over and conveyance is hereby expressly stated to be a sale
or other absolute transfer and, pursuant to Section 1230(1) of the
Securitization Act and other applicable law, is a true sale and is not a secured
transaction and title and ownership has passed to the Issuer.  The preceding
sentence is the statement referred to in Section 1230 of the Securitization
Act.  The Seller agrees and confirms that, after giving effect to the sale
evidenced by this Bill of Sale, the Seller has no right, title or interest in,
to or under the Storm Recovery Property.

 

3.             The Issuer does hereby purchase the Storm Recovery Property
identified on Schedule 1 hereto from the Seller for the consideration set forth
in paragraph 2 above.

 

4.             The Seller and the Issuer each acknowledge and agree that the
purchase price for the Storm Recovery Property sold pursuant to this Bill of
Sale and the Sale Agreement is equal to its fair market value on the date
hereof.

 

5.             The Seller confirms that each of the representations and
warranties on the part of the Seller contained in the Sale Agreement are true
and correct in all respects on the date hereof as if made on the date hereof.

 

6.             This Bill of Sale may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

 

7.             THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF LOUISIANA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

A-1

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IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this Bill of
Sale as of the 6th day of March 2008.

 

 

CLECO KATRINA/RITA HURRICANE
RECOVERY FUNDING LLC,

 

           as Issuer,

 

 

 

 

 

By:

 

 

 

  Name:

 

 

  Title:

 

 

 

 

 

CLECO POWER LLC,

 

           as Seller,

 

 

 

 

 

By:

 

 

 

  Name:

 

 

  Title:

 

A-2

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SCHEDULE 1
to
BILL OF SALE

 

Storm Recovery Property

 

All of Seller’s rights and interest under the Financing Order (including,
without limitation, rights to impose, collect and receive the “storm recovery
charges” (as defined in the Securitization Act) approved in such Financing
Order) issued by the Louisiana Commission on September 17, 2007 (Docket
No. U-29157) pursuant to the Securitization Act, except the rights of Seller to
earn and receive a rate of return on its invested capital in the Issuer, to
receive administration and servicer fees, to withdraw funds from its restricted
storm recovery reserve funded by the proceeds from the sale of the Storm
Recovery Property, or to use the Seller’s remaining portion of those proceeds.

 

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