exhibit103.htm


    
      
        

        

      

      EXHIBIT 10.3

       

      
SECOND AMENDED AND
RESTATED
LIMITED LIABILITY COMPANY AGREEMENT 

       

      
of

       

      
ACADIA POWER PARTNERS,
LLC

       

      
Dated as of May 9,
2003

       

       

       

       

       

       

       

       

       

      
        
          
            

          

        

      

       

       

      
        	 	
                TABLE OF CONTENTS

                 

                 

              	
                

Page

              
	
                ARTICLE 1 

              	
                DEFINITIONS 

              	
                2

              
	
                     Section 1.1. 

              	
                Definitions and Usage 

              	
                2

              
	
                     Section 1.2. 

              	
                Appendices and Exhibits 

              	
                2

              
	
                     Section 1.3. 

              	
                Headings 

              	
                2

              
	
                ARTICLE 2 

              	
                FORMATION OF COMPANY AND RELATED MATTERS 

              	
                3

              
	
                     Section 2.1. 

              	
                Formation 

              	
                3

              
	
                     Section 2.2. 

              	
                Name 

              	
                3

              
	
                     Section 2.3. 

              	
                General Purposes 

              	
                3

              
	
                     Section 2.4. 

              	
                Specific Powers of Company 

              	
                3

              
	
                     Section 2.5. 

              	
                Principal Place of Business 

              	
                4

              
	
                     Section 2.6. 

              	
                Registered Agent and Office 

              	
                4

              
	
                     Section 2.7. 

              	
                No State Law Partnership 

              	
                5

              
	
                     Section 2.8. 

              	
                Title to Company Assets 

              	
                5

              
	
                     Section 2.9. 

              	
                Term and End of Term 

              	
                5

              
	
                ARTICLE 3 

              	
                OWNERSHIP INTERESTS AND CAPITAL CONTRIBUTIONS 

              	
                6

              
	
                     Section 3.1. 

              	
                Members and Ownership Interests 

              	
                6

              
	
                     Section 3.2. 

              	
                Initial Capital Contributions 

              	
                6

              
	
                     Section 3.3. 

              	
                Further Contributions 

              	
                8

              
	
                     Section 3.4. 

              	
                Election to Not Make Further Capital Contributions 

              	
                9

              
	
                     Section 3.5. 

              	
                No Interest on Capital Contributions 

              	
                11

              
	
                     Section 3.6. 

              	
                Contribution Loans 

              	
                11

              
	
                     Section 3.7. 

              	
                Capital Accounts 

              	
                11

              
	
                     Section 3.8. 

              	
                Non-Liability of Members 

              	
                12

              
	
                     Section 3.9. 

              	
                Partition 

              	
                12

              


      

       

       

      
        
          
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                TABLE OF CONTENTS
(continued)

                 

              	
                

Page

              
	
                     Section 3.10. 

              	
                Resignation 

              	
                12

              
	
                ARTICLE 4 

              	
                MEMBERS AND MANAGEMENT 

              	
                12

              
	
                     Section 4.1. 

              	
                General Management Authority 

              	
                12

              
	
                     Section 4.2. 

              	
                Day to Day Management Responsibility; Operations and Maintenance
      

              	
                13

              
	
                     Section 4.3. 

              	
                Management Committee 

              	
                16

              
	
                     Section 4.4. 

              	
                Business with Affiliates 

              	
                20

              
	
                ARTICLE 5 

              	
                JOINT DEVELOPMENT OF PROJECT 

              	
                21

              
	
                     Section 5.1. 

              	
                Owner Construct 

              	
                21

              
	
                     Section 5.2. 

              	
                Phases of Development 

              	
                22

              
	
                     Section 5.3. 

              	
                Project Director 

              	
                22

              
	
                     Section 5.4. 

              	
                Members' Phase I Development Responsibilities 

              	
                24

              
	
                     Section 5.5. 

              	
                Project Agreements 

              	
                26

              
	
                     Section 5.6. 

              	
                Significant Offtake Agreements 

              	
                26

              
	
                     Section 5.7. 

              	
                Project Financing 

              	
                28

              
	
                     Section 5.8. 

              	
                PPA Managers 

              	
                29

              
	
                ARTICLE 6 

              	
                BUDGETS, CONTRIBUTIONS AND ACCOUNTING 

              	
                30

              
	
                     Section 6.1. 

              	
                Development Funding 

              	
                30

              
	
                     Section 6.2. 

              	
                Operations Funding 

              	
                31

              
	
                     Section 6.3. 

              	
                Funding of Capital Repairs and Additions 

              	
                32

              
	
                     Section 6.4. 

              	
                Approval of Budgets; No Management Committee Deadlock 

              	
                33

              
	
                     Section 6.5. 

              	
                Other Matters Relating to Contributions 

              	
                34

              
	
                     Section 6.6. 

              	
                Inspection and Audit Rights 

              	
                34

              
	
                     Section 6.7. 

              	
                Reporting 

              	
                34

              
	     Section 6.8.	Financial Statements	 34


      

       

      
        
          
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                TABLE OF CONTENTS

                (continued) 

                 

              	
                

Page

              
	
                ARTICLE 7 

              	
                POWER MARKETING AND FUEL PROCUREMENT 

              	
                34 

              
	
                     Section 7.1. 

              	
                Power Marketing Agreement 

              	
                34 

              
	
                     Section 7.2. 

              	
                Marketing Annual Plan; Revenue and Forecasting Benchmarks 

              	
                38 

              
	
                     Section 7.3. 

              	
                Member Marketing 

              	
                39 

              
	
                     Section 7.4.

              	
                Replacement of Power Marketer 

              	
                39 

              
	
                     Section 7.5. 

              	
                Fuel Supply by Members 

              	
                41 

              
	
                ARTICLE 8 

              	
                ASSET OPTIMIZATION

              	
                41 

              
	
                     Section 8.1. 

              	
                Asset Optimization Committee 

              	
                41 

              
	
                     Section 8.2. 

              	
                AOC Participation 

              	
                41

              
	
                     Section 8.3. 

              	
                AOC Meetings 

              	
                42

              
	
                     Section 8.4. 

              	
                Chairman 

              	
                42

              
	
                     Section 8.5. 

              	
                Vote Required for Action 

              	
                42

              
	
                     Section 8.6. 

              	
                Compensation 

              	
                42

              
	
                     Section 8.7. 

              	
                Right to Present Matters to Management Committee 

              	
                42

              
	
                ARTICLE 9 

              	
                INSURANCE 

              	
                43

              
	
                     Section 9.1. 

              	
                Insurance 

              	
                43

              
	
                ARTICLE 10 

              	
                CASUALTY DAMAGE 

              	
                43

              
	
                   Section 10.1. 

              	
                Damage or Destruction 

              	
                43

              
	
                   Section 10.2. 

              	
                Option to Terminate 

              	
                43

              
	
                ARTICLE 11 

              	
                CONDEMNATION

              	
                44

              
	
                   Section 11.1. 

              	
                Condemnation of Substantially All of the Facility 

              	
                44

              
	
                   Section 11.2. 

              	
                Condemnation of Part 

              	
                44

              
	   Section 11.3.	
                Temporary Taking 

              	 44
	   Section 11.4. 	
                Survival 

              	 44


      

       

       

      
        
          
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                (continued) 

              	
                 

                Page 

              
	
                ARTICLE 12 

              	
                DISTRIBUTIONS 

              	
                44

              
	
                   Section 12.1. 

              	
                Priority Distributions 

              	
                44

              
	
                   Section 12.2. 

              	
                Special Distribution to Calpine on Restatement Date 

              	
                45

              
	
                   Section 12.3. 

              	
                Ordinary Distributions

              	
                45

              
	
                   Section 12.4. 

              	
                Restricted Distributions 

              	
                45

              
	
                ARTICLE 13 

              	
                ALLOCATIONS OF PROFITS AND LOSSES

              	
                45

              
	
                   Section 13.1. 

              	
                Allocations of Profits 

              	
                45

              
	
                   Section 13.2. 

              	
                Allocation of Losses 

              	
                46

              
	
                   Section 13.3. 

              	
                Allocations Upon Liquidation of the Company 

              	
                46

              
	
                   Section 13.4. 

              	
                Substantial Economic Effect of Allocations 

              	
                46

              
	
                   Section 13.5. 

              	
                Minimum Gain Chargeback 

              	
                46

              
	
                   Section 13.6. 

              	
                Member Minimum Gain Chargeback 

              	
                46

              
	
                   Section 13.7. 

              	
                Qualified Income Offset 

              	
                47

              
	
                   Section 13.8. 

              	
                Excess Losses 

              	
                47

              
	
                   Section 13.9. 

              	
                Member Nonrecourse Deductions 

              	
                47

              
	
                 Section 13.10. 

              	
                Nonrecourse Deductions 

              	
                47

              
	
                 Section 13.11. 

              	
                Curative Allocations 

              	
                47

              
	
                 Section 13.12. 

              	
                Code § 754 Adjustments 

              	
                48

              
	
                 Section 13.13. 

              	
                Other Allocation Rules 

              	
                48

              
	
                 Section 13.14. 

              	
                Code § 704(c) Allocations 

              	
                49

              
	
                 Section 13.15. 

              	
                Special Calpine Allocations 

              	
                49

              
	ARTICLE 14 	
                 DISPOSAL OF INTERESTS 

              	 49 
	   Section 14.1. 	
                 Disposition by Members 

              	 49
	   Section 14.2.	
                 Right of First Refusal 

              	 49



      

       

       

      
        
          
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                (continued) 

              	
                 

                Page

              
	
                   Section 14.3.

              	
                Further Requirements 

              	
                50

              
	
                   Section 14.4. 

              	
                Equitable Relief 

              	
                51

              
	
                   Section 14.5. 

              	
                Disposee to Become Member 

              	
                51

              
	
                   Section 14.6. 

              	
                Sales of Interest in a Member 

              	
                51

              
	
                ARTICLE 15 

              	
                DISSOLUTION AND WINDING UP

              	
                52

              
	
                   Section 15.1. 

              	
                Events of Dissolution 

              	
                52

              
	
                   Section 15.2. 

              	
                Winding Up 

              	
                52

              
	
                   Section 15.3. 

              	
                Objective of Winding Up 

              	
                54

              
	
                   Section 15.4. 

              	
                Effect of a Member's Bankruptcy 

              	
                55

              
	
                   Section 15.5. 

              	
                Application and Distribution of Company Assets 

              	
                55

              
	
                   Section 15.6. 

              	
                Capital Account Adjustment 

              	
                55

              
	
                   Section 15.7. 

              	
                Termination of the Company 

              	
                55

              
	
                   Section 15.8. 

              	
                Deficit Capital Accounts 

              	
                55

              
	
                ARTICLE 16 

              	
                TAXES 

              	
                56

              
	
                   Section 16.1. 

              	
                Tax Matters Partner 

              	
                56

              
	
                   Section 16.2. 

              	
                Tax Returns 

              	
                56

              
	
                     Section 16.3. 

              	
                Tax Elections 

              	
                56

              
	
                     Section 16.4. 

              	
                Survival of Tax Provisions 

              	
                57

              
	
                ARTICLE 17 

              	
                LIABILITY, EXCULPATION AND INDEMNIFICATION

              	
                57

              
	
                   Section 17.1. 

              	
                Liability 

              	
                57

              
	
                   Section 17.2. 

              	
                Exculpation 

              	
                57

              
	   Section 17.3. 	
                Duties and Liabilities of Covered Persons 

              	 58
	   Section 17.4.	
                Indemnification 

              	 58
	   Section 17.5. 	
                Expenses 

              	 59


      

       

      
        
          
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                TABLE OF
      CONTENTS

                (continued) 

              	
                 

                Page

              
	
                ARTICLE 18

              	
                DEFAULTS AND REMEDIES 

              	
                59

              
	
                   Section 18.1. 

              	
                Defaults and Cure Periods 

              	
                59

              
	
                   Section 18.2. 

              	
                Remedies of Non-Defaulting Member 

              	
                60

              
	
                   Section 18.3. 

              	
                Notice; Termination 

              	
                61

              
	
                   Section 18.4. 

              	
                No Pursuit of Project 

              	
                61

              
	
                   Section 18.5. 

              	
                Defaulting Party's Loss of Representation and Voting Rights 

              	
                61

              
	
                   Section 18.6. 

              	
                Interest on Overdue Obligations and Post-Judgment Interest 

              	
                61

              
	
                   Section 18.7. 

              	
                No Waivers 

              	
                62

              
	
                ARTICLE 19 

              	
                REPRESENTATIONS, WARRANTIES AND COVENANTS 

              	
                62

              
	
                   Section 19.1. 

              	
                Due Organization 

              	
                62

              
	
                   Section 19.2. 

              	
                Power and Authority 

              	
                62

              
	
                   Section 19.3. 

              	
                Due Authorization 

              	
                62

              
	
                   Section 19.4. 

              	
                Consents 

              	
                62

              
	
                   Section 19.5. 

              	
                Binding Obligation 

              	
                62

              
	
                   Section 19.6. 

              	
                No Violation 

              	
                62

              
	
                   Section 19.7. 

              	
                No Litigation 

              	
                63

              
	
                   Section 19.8. 

              	
                Taxes 

              	
                63

              
	
                   Section 19.9. 

              	
                Authorized Signatory 

              	
                63

              
	
                ARTICLE 20 

              	
                DISPUTE RESOLUTION 

              	
                63

              
	
                   Section 20.1. 

              	
                Settlement By Mutual Agreement 

              	
                63

              
	   Section 20.2.	
                 Arbitration

              	 64
	   Section 20.3.	
                 Emergency Relief 

              	 64
	   Section 20.4.	
                 Survival 

              	 64
	 ARTICLE 21 	
                 TIME, APPROVALS AND CONSENTS 

              	 64


      

       

       

      
        
          
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                Page 

              
	
                   Section 21.1. 

              	
                Time 

              	
                64

              
	
                   Section 21.2. 

              	
                Approvals and Consents; Standards for Review 

              	
                64

              
	
                ARTICLE 22 

              	
                GENERAL PROVISIONS 

              	
                65

              
	
                   Section 22.1. 

              	
                Actual Damages 

              	
                65

              
	
                   Section 22.2. 

              	
                Amendment 

              	
                65

              
	
                   Section 22.3. 

              	
                Binding Effect 

              	
                65

              
	
                   Section 22.4. 

              	
                Complete Agreement 

              	
                65

              
	
                   Section 22.5. 

              	
                Confidentiality 

              	
                65

              
	
                   Section 22.6. 

              	
                Counterparts 

              	
                66

              
	
                   Section 22.7. 

              	
                Further Assurances 

              	
                66

              
	
                   Section 22.8. 

              	
                Governing Law 

              	
                66

              
	
                   Section 22.9. 

              	
                Headings; Table of Contents 

              	
                66

              
	
                 Section 22.10. 

              	
                Interpretation and Reliance 

              	
                66

              
	
                 Section 22.11. 

              	
                Notices 

              	
                66

              
	
                 Section 22.12. 

              	
                Method and Timing of Payment 

              	
                66

              
	
                 Section 22.13. 

              	
                Intellectual Property License 

              	
                67

              
	
                 Section 22.14. 

              	
                Public Announcements 

              	
                67

              
	
                 Section 22.15. 

              	
                Severability 

              	
                67

              
	
                 Section 22.16. 

              	
                Third Party Beneficiaries 

              	
                67

              
	 Section 22.17.	
                 Purchase Procedures 

                 

              	 68
	 	
                 APPENDICES AND EXHIBITS 

                 

              	 
	 APPENDICES: 	 	 
	 APPENDIX A 	
                 Glossary of Defined Terms and Rules as to Usage 

              	 
	 APPENDIX B 	
                 Members' Contributed Assets 

              	 
	
                 APPENDIX C 

              	
                 Addresses for Notices; Description of Accounts 

              	 


      

       

      
        
          
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                (continued) 

              	
                 

                 

                Page

              
	
                APPENDIX D 

              	
                Arbitration Procedures 

              	 
	
                APPENDIX E 

              	
                Members' Phase I Development Responsibilities 

              	 
	
                APPENDIX F 

              	
                Reimbursable Member Expenses as of 1/31/00 

              	 
	
                APPENDIX G 

              	
                Required Provisions of Asset Management Policy Manual 

              	 
	
                APPENDIX H 

              	
                Development Plan and Construction Schedule 

              	 
	 	 	 
	
                EXHIBITS: 

              	 	 
	
                EXHIBIT A 

              	
                Project Budget 

              	 
	
                EXHIBIT B 

              	
                Initial Operating Budget 

              	 
	
                EXHIBIT C 

              	
                Insurance Plan 

              	 
	
                EXHIBIT D 

              	
                Legal Description of Facility Site 

              	 


      

       

       

      
        
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      SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY
AGREEMENT

OF

ACADIA POWER PARTNERS, LLC

PREAMBLE


       

          This Second Amended
and Restated Limited Liability Company Agreement (this "Agreement") of Acadia
Power Partners, LLC, a Delaware limited liability company (the "Company"), is made as
of May 9, 2003 ("Restatement Date"),
by and between Calpine Acadia Holdings, LLC, a Delaware limited liability
company ("Calpine"), and Acadia
Power Holdings, LLC, a Louisiana limited liability company ("Acadia Holdings"), as
the sole members of the Company.

       

          WHEREAS, Cleco
Midstream Resources, LLC, a Louisiana limited liability company ("CMR"), and IEP USA
Holdings, L.L.C., a Delaware limited liability company ("IEP"), formed the
Company as a Delaware limited liability company pursuant to the Delaware Limited
Liability Company Act, 6 Del. Code § 18-101, etseq., as amended from
time to time (the "Delaware Act"), by
filing a Certificate of Formation of the Company with the office of the
Secretary of State of the State of Delaware on October 13, 1999; and

       

          WHEREAS, CMR and IEP
adopted the initial Limited Liability Company Agreement of the Company on
October 13, 1999 (the "Original Agreement");
and

       

          WHEREAS, in the
following order:  (i) IEP conveyed its entire thirty percent
(30%) Ownership Interest to Acadia Holdings by Assignment of LLC Interest dated
effective as of February 28, 2000, (ii) CMR conveyed a twenty percent (20%)
Ownership Interest to Acadia Holdings by Assignment of LLC Interest dated
effective as of February 29, 2000, and (iii) CMR conveyed a fifty percent
(50%) Ownership Interest to Calpine by Assignment of LLC Interest dated
effective as of February 29, 2000 (together, the "Initial
Conveyances"), with the resulting Ownership Interests in the Company
being held fifty percent (50%) by Acadia Holdings and fifty percent (50%) by
Calpine; and

       

          WHEREAS, as part of
the consideration for the Initial Conveyances, and as a condition thereto,
Calpine and Acadia Holdings entered into the Amended and Restated Limited
Liability Company Agreement of Acadia Power Partners LLC, dated as of February
29, 2000, which became effective upon the consummation of the last of the
Initial Conveyances (the "Effective Time") as a
comprehensive amendment and restatement of the Original Agreement, which Amended
and Restated Limited Liability Company Agreement of Acadia Power Partners, LLC
was subsequently amended by the First Amendment to Amended and Restated Limited
Liability Company Agreement of Acadia Power Partners, LLC dated August 15, 2000,
the Second Amendment to Amended and Restated Limited Liability Company Agreement
of Acadia Power Partners, LLC dated November 3, 2000, the Third Amendment to
Amended and Restated Limited Liability Company Agreement of Acadia Power
Partners, LLC dated July 26, 2001 and the Fourth Amendment to Amended and
Restated Limited Liability Company Agreement of 

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Acadia Power Partners, LLC dated July 27, 2001 (as amended through the
Restatement Date, the "First Amended and Restated Agreement"); and

       

          WHEREAS, the parties desire to amend and
restate the First Amended and Restated Agreement hereby; and

       

          WHEREAS, the parties hereto desire that,
from and after the Effective Time, the Company shall continue to be governed by
the Delaware Act and this Agreement;

       

          NOW, THEREFORE, in consideration of the
agreements and obligations set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties agree as follows:

       

      ARTICLE 1
DEFINITIONS 

       

       

        Section
1.1. Definitions
and Usage.  Unless the
context shall otherwise require, capitalized terms used in this Agreement shall
have the meanings assigned to them in the Glossary of Defined Terms attached to
this Agreement as Appendix A, which also contains rules as to usage that
shall be applicable to this Agreement.

         

        Section
1.2. Appendices
and Exhibits.  This Agreement consists of this document itself and
the following Appendices and Exhibits which are specifically made a part of this
Agreement by reference:
    
                Appendices:

      Appendix
A          Glossary of Defined
Terms and Rules as to Usage
Appendix
B          Members'
Contributed Assets
Appendix
C          Addresses for
Notices; Description of Accounts
Appendix
D          Arbitration
Procedures
Appendix
E          Members' Phase I
Development Responsibilities
Appendix
F          Reimbursable Member
Expenses as of 1/31/00
Appendix
G          Required Provisions
of Asset Management Policy Manual 
Appendix
H          Development Plan
and Construction Schedule

       

         Exhibits:

       

      Exhibit
A          Project
Budget
Exhibit
B          Initial Operating
Budget
Exhibit
C          Insurance
Plan
Exhibit
D          Legal Description
of Facility Site

       

                

        Section
1.3. Headings.  The headings and subheadings in this Agreement are
included for convenience and identification only and in no way are intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.

         

         

      

      
        
          
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      ARTICLE
2
FORMATION OF COMPANY AND RELATED MATTERS


       

               
        Section
2.1. Formation.  The Company was formed as a limited liability
company under the laws of the State of Delaware on October 13, 1999, by the
filing with the Secretary of State of Delaware of the Certificate of Formation
under and pursuant to the Delaware Act and the issuance of a certificate of
organization for the Company by the Secretary of State of
Delaware.  In connection therewith, CMR and IEP entered into the
Original Agreement as the governing agreement for the Company.  In
connection with the acquisition by Calpine and Acadia Holdings of their
respective fifty percent (50%) Ownership Interests in the Company, Calpine and
Acadia Holdings, as the sole Members of the Company have entered into this
Agreement, which is a comprehensive amendment and restatement of the Original
Agreement in its entirety and shall supersede the Original Agreement effective
as of the Effective Time.

      

       


                 
Section 2.2.  Name.  The name of the Company is Acadia
Power Partners, LLC.  The business of the Company may be conducted
upon compliance with Applicable Law under any other name designated by the
Management Committee.


       


                
 Section 2.3.  General
Purposes.  The Company was formed for the
object and purpose of, and the nature of the business to be conducted and
promoted by the Company is, the design, development, procurement, construction,
ownership, start-up, operation, management, Maintenance, repair and replacement
as needed of the Facility and any portions thereof (the "Project") and the
engagement in any and all activities necessary, incidental or related to the
foregoing.  As used in this Agreement, the term "Facility" refers to
the following:  a nominally rated one thousand megawatt (1,000 MW)
natural gas-fired electric generation plant and all related equipment on the
Facility Site and all other equipment, facilities and real property rights at or
adjacent to the Facility Site reasonably necessary for operation of the
Facility, including (a) the combustion and steam turbine generators, HRSGs,
auxiliary equipment and control room, (b) the Interconnection Facilities
and the associated easements and rights of way adjacent to the Facility Site,
(c) all wastewater easements, systems and associated improvements, and
(d) valves, switches, meters, wires, towers and control equipment. 

       


                  Section 2.4.  Specific
Powers of Company.  The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purposes
set forth in Section
2.3, including the power to: 

              

             (a)  Qualify
to and conduct its business, carry on its operations and have and exercise the
powers granted to a limited liability company by the Delaware Act in any state,
territory, district or possession of the United States, or in any foreign
country, that may be necessary, convenient or incidental to the accomplishment
of the purposes of the Company;

       

                      (b)  Enter
into, perform and carry out contracts of any kind, including contracts with any
Member, any Affiliate thereof, or any agent of the Company necessary, convenient
or incidental to, or in connection with, the accomplishment of the purposes of


       

      
        
          
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      the Company, including the Definitive
Agreements, the Project Agreements and any Financing Documents;

       

             
        (c)  Invest and
reinvest its funds;

       

                      (d)  Sue
and be sued, complain and defend, and participate in administrative or other
proceedings in its name;

       

             
        (e)  Appoint agents of
the Company, including officers, and define their duties and fix their
compensation;

       

                      (f)  Employ
or retain such agents, officers, employees, managers, accountants, attorneys,
consultants and other Persons necessary or appropriate to carry out the business
and affairs of the Company, and to pay such fees, expenses, salaries and wages
and other compensation as the Management Committee shall determine;

       

             
        (g)  Indemnify any
Person in accordance with the Delaware Act and obtain any and all types of
insurance;

       

                      (h)  Cease
its activities and cancel its Certificate of Formation;

         

             
        (i)  Negotiate, enter
into, renegotiate, extend, renew, terminate, modify, amend, waive, execute,
acknowledge or take any other action with respect to any lease, contract,
security agreement or any other agreement with respect to any Company Assets or
activities of the Company;

       

                      (j)  Borrow
money and issue evidences of indebtedness, and secure the same by a mortgage,
pledge, security interest or other lien on or in some or all of the Company
Assets;

       

             
        (k)  Pay, collect,
compromise, litigate, arbitrate or otherwise adjust or settle any and all other
claims or demands of or against the Company or to hold such proceeds against the
payment of contingent liabilities; and

       

                      (l)  Make,
execute, acknowledge and file any and all documents or instruments necessary,
convenient or incidental to the accomplishment of the purposes of the
Company.

       

      
        Section
2.5. Principal
Place of Business.  The
principal place of business of the Company shall initially be located in care of
Cleco Midstream Resources, LLC, 2005 Vandevelde Avenue, Alexandria, Louisiana
71303 until such time as there is a business office and mailing address at the
Facility Site in Acadia Parish, Louisiana.  The Management Committee
may, at any time, change the principal place of business of the Company and
shall give notice to the Members of such
change.
          


                  Section 2.6.  Registered
Agent and Office.  The registered agent for service
of process on the Company in the State of Delaware is Corporation Service
Company, 1013 Centre Road, Wilmington, New Castle County, Delaware 19805, and
the registered office of the Company in 

       

      
        
          -4-

          
            

          

        

      

       

      the State of Delaware is Corporation Service Company at the
same address.  The Management Committee may, at any time, change the
registered agent of the Company or the location of such registered office and
shall give notice to the Members of such change.

        

      
        Section
2.7. No State
Law Partnership.  Other than
for federal tax and state income tax purposes, the Company shall not be
considered a partnership (including a limited partnership) or joint venture, no
Member shall be a partner or joint venturer of the other Member for any purposes
other than federal tax and state income tax purposes, and this Agreement shall
not be construed to suggest otherwise.

      

       


              
   Section 2.8.  Title to
Company Assets.  All property and assets, whether
real, personal or mixed, or tangible or intangible, owned by the Company ("Company Assets")
shall be deemed to be owned by the Company as an entity, and no Member,
individually, shall have any ownership of such assets.  All the
Company Assets, including all the assets and properties contributed by the
Members to the Company pursuant to this Agreement, shall be recorded as the
property of the Company on its books and records, and all the Company Assets
shall be held by the Company in its own name. 

       


             
   Section 2.9.  Term and
End of Term .  The term of the Company's
existence as a separate legal entity commenced upon the filing of the
Certificate of Formation and shall, unless earlier terminated pursuant to the
provisions hereof, continue in perpetuity (the "Term").  Notwithstanding
the foregoing, no later than one (1) year prior to the fiftieth (50th) anniversary of the
Commercial Operation Date (such period being the "Initial Term"), the
Management Committee shall meet to determine whether to continue the operation
of the Facility or to dissolve the Company and trigger the Windup Events. 

              

                 
    (a)  In the event the Management Committee
decides to dissolve the Company and trigger the Windup Events, on and after the
date of this decision, the Company shall continue its existence only for such
purpose until the completion of the Windup Events, at which time the Termination
Date will be deemed to have occurred.

       

            
         (b)  In the
event the Management Committee does not agree upon a course of action before the
date that is six (6) months prior to the end of the Initial Term, either Member
shall have the right to acquire all (but not less than all) of the Ownership
Interest of the other Member at a Purchase Price equal to Fair Market Value of
such Ownership Interest, as determined in accordance with the procedures set
forth in Section
22.17.  The Member desiring to acquire all of the Ownership
Interest of the other Member must submit its Offer to the other Member prior to
the end of the Initial Term.  If no Offer is submitted prior to the
end of the Initial Term, then, unless either Member timely initiates the Windup
Events under Section 2.9(d),
the Members will be deemed to have decided to continue the operation of the
Facility, and the Term of the Company will continue for an Extension
Term.

       

               
      (c)  In the event that each Member
wishes to purchase the other Member's Ownership Interest at the end of the
Initial Term or the Extension Term then in effect, then the Members will be
deemed to have decided to continue the operation of the Facility, and the Term
of the Company will continue for an additional period
of five (5) years ("Extension Term")
commencing on the next day after the last day of the Initial Term or the
previous Extension Term

       

      
        
          
            -5-

          

          
            

          

        

      

       

      and ending on the fifth (5th) anniversary
thereof.  No later than one (1) year before the end of any Extension
Term then in effect, the Management Committee shall again meet to determine
whether to continue the operation of the Facility or whether to dissolve the
Company and trigger the Windup Events.  In the event the Management
Committee does not agree upon a course of action before the date that is six (6)
months prior to the end of the Extension Term then in effect, the procedures
described in Section 2.9(b)
shall again be applicable with respect to each subsequent Extension
Term.

       

              
       (d)  In the event that by
the end of the Initial Term or the Extension Term then in effect (if
applicable), the Management Committee has not agreed on a course of action and
neither Member has exercised its right to purchase the Ownership Interest of the
other Member, then, within six (6) months after the end of the Initial Term or
the previous Extension Term (as applicable), either Member may initiate the
Windup Events and this Agreement shall thereafter remain in effect only for the
purpose of dissolving the Company and undertaking the Windup Events and, upon
completion thereof, the Termination Date will be deemed to have
occurred.  Any failure by the Management Committee to agree on a
course of action under this Section 2.9
shall not constitute a Dispute or Controversy.

       

               
      (e)  The existence of the Company
as a separate legal entity shall continue until the cancellation of the
Company's Certificate of Formation in the manner required by the Delaware
Act.

       

      ARTICLE 3
OWNERSHIP
INTERESTS AND CAPITAL CONTRIBUTIONS 

       

      
        Section
3.1. Members
and Ownership Interests.  Upon the making of the initial Capital Contributions
set forth in Section
3.2, the Members shall have the following initial Ownership Interests in
the Company:

         

      

      
        
          
            	
                    Members 

                     

                  	
                    Ownership Interests 

                     

                  
	
                    Calpine 

                     

                  	
                    50% 

                     

                  
	
                    Acadia Holdings 

                     

                  	
                    50% 

                     

                  


          

        
      

       

                Section 3.2.  Initial
Capital Contributions .

       

      
        3.2.1. Initial
Capitalization.  Contemporaneously with the execution and delivery of
the Original Agreement, each Member made, or caused its Affiliate to make on its
behalf, a Capital Contribution in cash in the following respective
amounts:

      

                          


      
        
          
            	
                    Calpine 

                     

                  	
                    $1,000 

                     

                  
	
                    Acadia Holdings 

                     

                  	
                    $1,000 

                     

                  


          

        
      

       

      These amounts have been added to the Capital Account of each
respective Member.

       

       

                   3.2.2.  In-Kind
Contributions.  On the Contribution Date (as defined below), each
Member contributed, or caused its Affiliate to contribute on its behalf, to the
Company the

         

      

       

      
        
          
            
              -6-

            

            
              

            

          

        

         

      

      respective assets and properties identified on Appendix
B.  All such assets and properties were contributed with
warranties of title by, through or under the contributing Member, but not
otherwise, free and clear of any and all liens or security interests or other
claims by third parties, and any and all additional Encumbrances which could
adversely affect the Company's ability, in keeping with the Operating Standards,
to incorporate into, or use such asset or property in connection with, the
Project.  Upon such contribution, there was added to the Capital
Account of each respective Member an amount equal to the sum of all Third Party
Expenses incurred by the contributing Member in acquiring each such asset, as
approved by the Management Committee, and the Members agreed that such an amount
was the Fair Market Value as of the date of contribution of each such
asset.  Each Member shall keep accurate and complete records of all
Third Party Expenses incurred by it or its Affiliates in acquiring assets that
are contributed to the Company and, to assist the Management Committee in
determining the amount to be added to the contributing Member's Capital Account
with respect to each contributed asset, each Member shall provide such
documentation of its expenses as the Management Committee may
request.  The Members agree that the aggregate Third Party Expenses
incurred as of January 31, 2000 by each Member in acquiring the assets
identified on Exhibit
B to be contributed by such Member to the Company are the amounts set
forth on Exhibit
B.  Upon conveyance, such assets and property shall become
Company Assets.  On the Contribution Date (after the appropriate
additions to the Capital Accounts have been made), the Member whose Capital
Account balance was lower contributed, or caused its Affiliate to contribute on
its behalf, cash in an amount equal to the difference between its Capital
Account balance and the other Member's Capital Account balance so that, as a
result, the Members' Capital Accounts was equal on the Contribution Date. 

       


                          3.2.3.  Actions
Prior to Contribution Date .   From and after the Effective
Time, as part of its Phase I development responsibilities under Appendix E,
Calpine covenants to (i) pursue negotiations with each respective vendor as to
the final form of the Combustion Turbine Purchase Contract, the Steam Turbine
Purchase Contract and the HRSG Purchase Contract and (ii) make all payments that
(1) may be required by such vendors in order to reserve such equipment prior to
the date such contracts are executed by the Company or (2) may be required under
such contracts once signed by Calpine on the Management Committee's direction,
prior to the date such contracts are contributed and assigned by Calpine to the
Company, in each case as necessary to timely secure such equipment for the
Project in accordance with the Development Plan and Construction Schedule
attached as Appendix J (the "Development Plan").  Payments made
by Calpine pursuant to clause (ii) of the preceding sentence shall
constitute Third Party Expenses, the amount of which shall be added to Calpine's
Capital Account in accordance with Section 3.2.2.  The Combustion
Turbine Purchase Contract, the Steam Turbine Purchase Contract and the HRSG
Purchase Contract shall each require the approval of the Management Committee in
advance of their execution.  These contracts are anticipated to be
entered into by and between the Company and the respective vendors on or after
the Contribution Date; however, if so directed by the Management Committee,
Calpine will enter into one or more of such contracts on or before the
Contribution Date, and if so, in accordance with the provisions of Section 3.2.4,
Calpine will assign and contribute such contracts to the Company (and obtain all
necessary consents from such vendors as may be required for such
assignment).  Calpine guarantees that the purchase price for each of
the four (4) F class combustion turbine generators to be purchased under the
Combustion Turbine Purchase Contract will not exceed $34,500,000 (except to the
extent changes in the scope of the Project result in a higher cost), and Calpine
will

      
         

        
          
            
              -7-

            

            
              

            

          

        

         

      

      pay any amount per turbine in excess of such price without
being entitled to reimbursement by the Company or to any addition to its Capital
Account for such excess cost.

       

      
        3.2.4. Contribution
Date; Contribution Deadline.  The “Contribution
Deadline” shall be the date that is forty-five (45) days after the
Effective Time or, if such day is not a Business Day, the next Business
Day.  The “Contribution
Date” shall be the date that is three (3) Business Days after the date on
which both the Company and Siemens Westinghouse Power Corporation have executed
the Combustion Turbine Purchase Contract (or, as the case may be, the date on
which the Combustion Turbine Purchase Contract previously executed by Calpine,
on the Management Committee’s direction, and Siemens Westinghouse Power
Corporation is assigned by Calpine to the Company).  If the Combustion
Turbine Purchase Contract is not executed by the Company (or executed by Calpine
and assigned to the Company) on or before the Contribution Deadline, Acadia
Holdings, in its sole discretion, may elect, by written notice to Calpine,
either to (a) extend the Contribution Deadline for a reasonable time in
order for the Combustion Turbine Purchase Contract to be executed by the Company
(or executed by Calpine and assigned to the Company, if the Management Committee
so directs), not to exceed sixty (60) days after the original Contribution
Deadline, or (b) trigger the Windup Events in accordance with Article 15.  Failure
by Acadia Holdings to provide notice in the foregoing circumstance within five
(5) Business Days following the original Contribution Deadline shall be deemed
an election to extend the Contribution Deadline until the sixtieth (60th) day
after the original Contribution Deadline.  If Acadia Holdings elects
to extend the Contribution Deadline, but the Combustion Turbine Purchase
Contract is not executed by the Company (or executed by Calpine and assigned to
the Company) on or before the extended Contribution Deadline, the Windup Events
shall be commenced in accordance with Article 15.  If the
Windup Events are commenced under this Section
3.2.4, then, notwithstanding anything to the contrary in Section
15.2.3, following reasonable advance notice by Acadia Holdings to
Calpine, within three (3) Business Days after Acadia Holdings tenders
reimbursement to Calpine for all payments made by Calpine to the steam turbine
generator vendor to reserve the steam turbine generators for the Project and
under the Steam Turbine Purchase Contract, Calpine shall assign to Acadia
Holdings the Steam Turbine Purchase Contract (provided the Steam Turbine
Purchase Contract was previously entered into by
Calpine).
  

                  Section 3.3.  Further Contributions. 

       

                          3.3.1.  Maximum
Aggregate Capital Contributions.  Subject to the provisions of Section 3.4, each
Member agrees to make such further Pro Rata Capital Contributions necessary to
fund the Project Costs as they are incurred in accordance with the drawdown
schedule attached to the Project Budget and Section 6.1;
provided, however, that each
Member's aggregate Capital Contribution obligations, including all contributions
pursuant to Section 3.2.2,
shall not exceed the amount set forth below opposite such Member's name unless
otherwise agreed to by such Member: 

       

      
        
          
            	
                    Calpine 

                     

                  	
                    $250,000,000 

                     

                  
	
                    Acadia Holdings 

                     

                  	
                    $250,000,000 

                     

                  


          

        
        
           

          
            
              
                
                  -8-

                

              

              
                

              

            

          

           

        

               3.3.2. Maximum
Aggregate Capital Contribution Reduced by Guarantees.  Notwithstanding Section
3.3.1, the maximum aggregate Capital Contribution obligations set forth
above for a Member shall be reduced (but not below zero) on a dollar-for-dollar
basis by the maximum aggregate payment obligation then currently guaranteed from
time to time by such Member or such Member’s Affiliate or Affiliates under Third
Party Guarantee(s) for so long as such Third Party Guarantee(s) continue to be
in effect. 

      

                          3.3.3.  Payments
by Affiliate Guarantors Prior to Commercial Operation
Date.  Any
amount actually paid before the Commercial Operation Date by an Affiliated
Guarantor under a Third Party Guarantee will be (i) deemed to be a Capital
Contribution of the Member that is, or is an Affiliate of, such Affiliated
Guarantor, (ii) applied against and reduce such Member's obligations to make
Capital Contributions that next come due following the date of payment, and
(iii) added to the Capital Account of such Member in accordance with Section 3.7(a)
as of the date of payment.  The foregoing shall be in lieu of any
rights of subrogation or similar rights that the Affiliated Guarantor may
otherwise have under Applicable Law. 

       


                          3.3.4.  Payments
by Affiliate Guarantors On or After Commercial Operation
Date.  Any
amount actually paid on or after the Commercial Operation Date by an Affiliated
Guarantor under a Third Party Guarantee will, as of the date of payment,
automatically become a Subordinated Obligation (as defined in Section 3.3.5) in
favor of such Affiliated Guarantor. 

       


                          3.3.5.  Subordinated
Obligations.  For purposes of this Section 3.3,
"Subordinated
Obligation" means an obligation of the Company that is subordinated in
right of payment to all operating expenses of the Company and to all debt
service owing to any Person that is not a Member or an Affiliate of any Member,
but that is senior in right of payment to any and all other debt service or debt
obligations of the Company to any Member or any Affiliate of any Member
(including any Contribution Loan) and senior in right of payment to all
distributions in respect of Ownership Interests.  If the Company's
available cash at any time is insufficient to pay all outstanding Subordinated
Obligations at that time, the available cash shall be applied to the outstanding
Subordinated Obligations pro-rata according to the respective outstanding
amounts of the Subordinated Obligations.  Any amount owing as a
Subordinated Obligation hereunder shall accrue interest at the Default Rate from
the date such obligation arose by virtue of an Affiliate Guarantor's payment
under a Third Party Guarantee until the date the Company repays the applicable
Affiliated Guarantor.


       


                  Section 3.4.  Election
to Not Make Further Capital Contributions. 

       

                          3.4.1.  Opt-Out
Notice and Non-Electing Member's Election.  Notwithstanding the provisions of
Section 3.3, at
any time prior to the Commercial Operation Date, either Member (the "Electing Member") may
make a one-time election to terminate its obligation to fund any future Capital
Contributions by delivering notice thereof (the "Opt-Out Notice") to
the other Member (the "Non-Electing
Member"), and upon completion of the procedures in this Section 3.4, to
terminate all its obligations to make any future Capital Contributions to the
Company.  In such event, any future failure to fund Capital
Contributions by the Electing Member (except as required in this Section 3.4) shall
not constitute an Event of Default hereunder.  The Opt-Out Notice
shall state that the Electing Member has elected to terminate its 

       

      
         

        
          
            -9-

            
              

            

          

        

         

      

      obligation to fund any future Capital Contributions required
under this Agreement and shall either (i) offer to sell to the Non-Electing
Member or its designee all of the Electing Member's Ownership Interest for a sum
equal to ninety-seven and one half percent (97.5%) of the Electing Member's
Capital Account balance as of the date of the Opt-Out Notice plus one hundred
percent (100%) of such Member's Capital Contributions funded following delivery
of the Opt-Out Notice or (ii) request that the Non-Electing Member assume
the Electing Member's obligation to fund its Pro Rata share of all future
Capital Contributions required under this Agreement following the thirtieth
(30th) day after
delivery of the Opt-Out Notice.  An Opt-Out Notice shall be
irrevocable.  Regardless of which option the Electing Member offers
the Non-Electing Member, the Electing Member shall continue to be obligated to
fund its Pro Rata share of all Capital Contributions required under this
Agreement during the thirty (30) day period following delivery of the Opt-Out
Notice.  On or before the thirtieth (30th) day following
delivery of the Opt-Out Notice, the Non-Electing Member shall, by notice to the
Electing Member, either (a) accept the offer given the Non-Electing Member
to buy, or cause its designee to buy, the Electing Member's Ownership Interest
or fund the Electing Member's Pro Rata share of future Capital Contributions or
(b) elect to trigger the Windup Events in accordance with Article
15.  Failure by the Non-Electing Member to deliver such notice
shall be deemed an election to trigger the Windup Events.  In the
event the Non-Electing Member elects to trigger the Windup Events, the Electing
Member's election to terminate its obligations hereunder shall be deemed null
and void, and all Members shall continue to be bound by their respective
obligations hereunder until the Windup Events have been concluded and the
Company is terminated.

       

      
        3.4.2. Buy-Out
of Ownership Interest.  In
the event the Electing Member offers to sell its Ownership Interest to the
Non-Electing Member and the Non-Electing Member accepts such offer, the purchase
and sale of the Electing Member’s Ownership Interest shall close on the date
that is ninety (90) days following receipt by the Non-Electing Member of the
Electing Member’s Opt-Out Notice.  The purchase price for the Electing
Member’s Ownership Interest, calculated in accordance with clause (i) of the
third sentence of Section 3.4.1,
shall be paid at closing.  The Electing Member shall convey its
Ownership Interest to the Non-Electing Member or its designee at closing free
and clear of any and all Encumbrances or claims by third parties (other than a
security interest securing any Project Financing previously or concurrently
approved by the Management Committee), and the Electing Member shall give such
warranties and representations of title, corporate authority and due
authorization to the Non-Electing Member as are customary in a sale of a
membership interest in a closely held limited liability
company.

         

                 3.4.3. Funding of Electing Member’s Pro Rata
Share.  In the event the Electing Member offers the
Non-Electing Member the right to assume the Electing Member’s obligation to fund
its Pro Rata share of Capital Contributions required under this Agreement, and
the Non-Electing Member accepts such offer, the Non-Electing Member shall be
obligated to fund the Electing Member’s Pro Rata share of all future Capital
Contributions required by this Agreement, as an additional Capital Contribution,
following the thirtieth (30th)
day following receipt by the Non-Electing Member of the Electing Member’s
Opt-Out Notice.  Upon each such contribution, the Ownership Interests
of the Members shall be automatically adjusted to correspond to the percentage
each Member’s Capital Contributions bears to the aggregate of
all

         

      

      
         

        
          
            
              -10-

            

            
              

            

          

        

         

      

      Members' Capital Contributions.  The Management
Committee shall give all Members notice of such adjustment to the Ownership
Interests and the Capital Accounts. 

       

           
Section 3.5. No
Interest on Capital Contributions.  No Member is entitled to interest on its Capital
Contributions. 

       

                 
Section
3.6.  Contribution
Loans .

       

                    (a)  Should
there occur a Contribution Default as to any Member (a "Noncontributing
Member"), then the Member which has made its required Capital
Contributions (such Member being the "Contributing Member")
shall have the right, but not the obligation, to advance such amount directly to
the Company as a loan to the Noncontributing Member (a "Contribution Loan"),
without prejudice to the Contributing Member's other rights hereunder, including
the right to declare an Event of Default under Article 18.

       

                    (b)  Each
Contribution Loan shall bear interest at a rate equal to the Default
Rate.  A Noncontributing Member shall repay its Contribution Loan on a
first priority basis out of any and all subsequent distributions to which the
Noncontributing Member would otherwise be entitled under this Agreement (and the
Company and the Management Committee are hereby irrevocably directed to pay all
such distributions directly to the Contributing Member), with all principal and
interest in any event being due in full on the first anniversary of the date
such Contribution Loan is made.  All payments on account of a
Contribution Loan shall be applied first to interest and then to principal until
the Contribution Loan is repaid in full.

       

                    (c)  A
Contributing Member participating in a Contribution Loan may designate an
Affiliate to make a Contribution Loan hereunder on such Member's
behalf.

       

                    (d)  The
Contributing Member's Contribution Loan shall be secured by a security interest
in the noncontributing Member's Ownership Interest and all proceeds thereof,
including all distributions attributable thereto, and each Member shall grant to
the other a security interest therein to secure its obligation to repay any
Contribution Loan together with interest thereon.  Such security
interest shall at all times be subordinate to any security interest granted by
the Members in connection with any Project Financing.

       

      
        Section 3.7.  Capital
Accounts.  Separate Capital Accounts shall be maintained
for each Member and shall consist of the sum of (a) the cumulative amount of any
cash contributed or deemed to have been contributed to the capital of the
Company by such Member; plus (b) the Gross Asset Value, as of the date of
contribution, of any property other than cash contributed to the capital of the
Company by such Member (net of liabilities secured by such contributed property
that the Company is considered to assume or take subject to under Section 752 of
the Code); plus (c) the cumulative amount of the Company’s Profits that has been
allocated to such Member hereunder; plus (d) any items in the nature of income
or gain which are specially or curatively allocated pursuant to Sections 13.3 through
13.10; plus (e)
the amount of any Company liabilities assumed by such Member or which are
secured by any asset of the Company distributed to such Member; minus (f) the
cumulative amount of cash and the Gross Asset Value, as of the date of
distribution, of all other property that has been distributed to such Member or
deemed to have been distributed to such Member hereunder by the Company (net of
liabilities

         

      
 

      
        
          
            
              
                -11-

              

            

            
              

            

          

        

         

      

      secured by such distributed property that the Member is
considered to assume or take subject to under Section 752 of the Code); minus
(g) the cumulative amount of the Company's Losses that have been allocated to
such Member hereunder; minus (h) any items in the nature of deductions or losses
which are specially or curatively allocated pursuant to Sections 13.3 through
13.10 hereof;
minus (i) the amount of any liabilities of such Member assumed by the Company or
which are secured by any property contributed by such Member to the
Company.  All of the provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury Regulations
Section 1.704-1(b) or any successor Treasury Regulations governing the treatment
of capital accounts and shall be interpreted and applied in a manner consistent
with such Treasury Regulations.

       

      
        Section
3.8. Non-Liability
of Members.  No Member shall
be liable for the debts, liabilities, contracts or other obligations of the
Company except to the extent of any unpaid Capital Contributions such Member is
required to make to the Company pursuant to the terms of this Agreement and such
Member’s share of the assets (including undistributed revenues) of the
Company.
  

                  Section 3.9.  Partition.  Each Member waives any and all
rights that it may have to maintain an action for partition of the Company
Assets. 

       


                  Section 3.10.  Resignation.  Except as provided herein, a
Member may not resign from the Company prior to the dissolution of the Company
and conclusion of the Windup Events. 

        

      ARTICLE 4
MEMBERS AND MANAGEMENT 

       

                
 Section 4.1.  General
Management Authority.  The business of the Company shall
be managed by the Management Committee which shall have exclusive authority and
full discretion with respect to management of the business of the Company, the
right to exercise the powers of the Company described in Section 2.4 and
the right and authority to delegate any of its powers to one or more
delegees.  Any reference in this Agreement to voting by the Members
shall mean voting by the Management Committee.  No Member shall have
authority to act for, or to assume any obligation or responsibility on behalf
of, the Company except with the prior approval of the Management
Committee.  Without limiting its general powers under this Section 4.1 and
subject to the other provisions hereof, the Management Committee is hereby
specifically empowered to: 

              

               (a)  Approve
all budgets of the Company for any expense or expenditure, including each
Operating Budget and Capital Expense Budget as provided in Section
6.4;

       

                      (b)  Approve
any expenditure undertaken for the Project not budgeted and/or adjustments in
the approved and then-applicable Project Budget, Operating Budget or Capital
Expense Budget;

       

                            (c)  Approve
changes in the schedule for the Project; 

       

       

               (d)  Approve any expenditures out of contingency funds and requests
for additional Capital Contributions;

       

      
         

        
          
            
              
                -12-

              

            

            
              

            

          

        

         

      

       

                     
(e)  Appoint and/or remove the Project Management Company, subject to
the terms of the Project Management Agreement; appoint and/or remove the
Operator, subject to the terms of the O&M Arrangements; appoint and/or
remove the Project Director, or such Person's replacement, in accordance with
Section 5.3;
reassign either Member's development responsibilities established pursuant to
Section 5.4,
and appoint and/or remove the individuals responsible for undertaking those
responsibilities; and appoint and/or remove the Power Marketer in accordance
with the Power Marketing Agreement;

       

                    
 (f)  Approve any application for and accept any conditions to
any Necessary Regulatory Approvals and any other necessary or appropriate
governmental permits or authorizations related to the Facility or its
construction or operation;

       

                     
(g)  Approve the form and content of any Financing
Commitments;

       

                     
(h)  Approve all tax policy matters regarding the Company, including
elections relating to income and single business taxes (other than those
elections reserved for the individual Members to make), preparation and filing
of Company tax returns and the handling of and participation in Company tax
audits conducted by any Governmental Authority;

       

                    
 (i)  Appoint and/or remove outside legal counsel, Certified
Public Accountants and other consultants for the Company;

       

                    
 (j)  Approve any insurance and indemnity program covering the
interests of the Company or other Persons;

       

                     
(k)  Make or approve any public announcements regarding the Project;
and

       

                     
(l)  Approve the Project Agreements, Definitive Agreement or any
Financing Document and any amendment thereto, waiver of any provision thereof or
the exercise of remedies with respect thereto.

       

      
        Section
4.2. Day to
Day Management Responsibility; Operations and
Maintenance.  Except to the extent delegated by the Management
Committee pursuant to this Agreement, the Project Management Agreement or
otherwise, responsibility for the day to day management of the business affairs
of the Company shall remain with the Management Committee.

      

       

                          4.2.1.  O&M
Arrangements.  Not later than three hundred
sixty-five (365) days before the anticipated Commercial Operation Date, the
Management Committee shall negotiate and cause the Company to enter into one or
more Affiliate Contracts or commercially reasonable contractual arrangements
with one or more third parties for the provision of O&M Services at the
Facility (the "O&M
Arrangements") by the Operator.  Consideration of the proposed
O&M Arrangements, even if they include one or more Affiliate Contracts, will
not be a Disqualified Matter.  The O&M Arrangements shall provide
for O&M Services to be performed under the direction of the Plant Manager,
who shall be an employee of the Project Management Company.  The
O&M Arrangements will impose upon the Plant Manager reasonable duties to
report to the Management Committee and keep it regularly informed as to Facility
operations.  "O&M 

      
         

        
          
            
              
                -13-

              

            

            
              

            

          

        

         

      

      Services" will
consist of all routine Maintenance for the Facility and other operational
functions designated by the Management Committee, which may include the
following:

       

                 
    (a)  Assisting the Company and the Project
Management Company in preparing for commercial operation of the Facility;


       

                
     (b)  Conducting orientation and training
programs for employees;

       

             
        (c)  Developing and
enforcing a plant safety program, hazardous materials program and emergency
response plan;

       

                 
    (d)  Developing a reasonable inventory list
for materials, supplies, spare and replacement parts, equipment, vehicles and
other items necessary for operation and Maintenance of the Facility;

       

              
       (e)  Performing procurement
services for the Company;

       

               
      (f)  Managing scheduled and
unscheduled outages and emergencies at the Facility;

       

                
     (g)  Testing fuel quality;

       

                
     (h)  Operating the Facility in
accordance with (i) the Annual Plan and the schedules provided by the Power
Marketer for the delivery of Energy, (ii) the then current Operating
Budget, and (iii) the Operating Standard;

       

                 
    (i)  Carrying out periodic performance tests
of the Facility;

       

              
       (j)  Preparing the Operating
Budgets as required by Section 6.2.1
and Capital Expense Budgets as required by Section 6.3.1
for submission to the Management Committee for approval;

       

               
      (k)  Testing and recalibrating the
Facility meter(s);

       

                
     (l)  Performing, or causing to be
performed, all Maintenance necessary to keep the Facility in a condition to
operate in accordance with the Operating Standard and keeping, or causing to be
kept, the Facility and the Facility Site in a clean, neat and orderly condition
given its nature and use;

       

                
     (m)  Performing, or causing to be
performed, all Capital Repairs and Additions authorized by the Management
Committee in connection with the then current Capital Expense Budget;

       

               (n)  Preparing and
maintaining for the Company complete written operating instructions and
Maintenance procedures required for the Facility (including a preventive
Maintenance program); and

      
         

        
          
            
              -14-

            

            
              

            

          

        

         

      

           

               
      (o)  Preparing and maintaining
daily operating logs regarding generation of Energy and operation and
Maintenance of the Facility.

       

      If the Management Committee does not agree on the final form
of the O&M Arrangements, the matter shall constitute a Dispute or
Controversy that shall be resolved in accordance with Article 20.

       

      
        4.2.2. Major
Maintenance Arrangements.  Not later than one-hundred eighty
(180) days before the Commercial Operation Date, the Management Committee shall
negotiate and cause the Company to enter into one or more Affiliate Contracts or
commercially reasonable contractual arrangements with one or more third parties
for the provision of Major Maintenance Services at the Facility (“Major Maintenance
Arrangements”).  Consideration of the proposed Major
Maintenance Arrangements, even if they include one or more Affiliate Contracts,
will not be a Disqualified Matter.  “Major Maintenance
Services” will consist of all non-routine Maintenance for the Facility,
including overhauls and major Maintenance work required for the combustion
turbine generators, steam turbine generators and heat recovery steam generators,
and other similar or related functions designated by the Management Committee.
Because each Member is qualified and willing to provide certain of the Major
Maintenance Services to the Project below the market rate for such services, the
Management Committee shall give special preference to (a) an Affiliate Contract
with Calpine or its Affiliate for the performance of major Maintenance work on
the Facility’s combustion turbine generators and (b) an Affiliate Contract with
Acadia Holdings or its Affiliate for the performance of the other Major
Maintenance Services.  If the Management Committee does not agree on
the final form of the Maintenance Arrangements, the matter shall constitute a
Dispute or Controversy that shall be resolved in accordance with Article 20.

      

       

                          4.2.3.  Owner's
Representative.  Under Section 4.5 of the
O&M Agreement, the Company has the right to determine that Cleco may
substitute one of its (or its Affiliates') employees for an employee of the
operator under the O&M Agreement in a supervisory level position under the
Plant Manager.  In the event that the Management Committee reaches a
deadlock on the issue of whether to allow Cleco to make such a substitution
under the O&M Agreement, Acadia Holdings shall have the right (without the
consent or approval of any other Member) to place an employee of Cleco (or one
of its Affiliates) at the Facility Site as an Owner's representative. 

       


                          4.2.4.  Replacement
Upon Event of Default and Termination of PPA.  If (i) there occurs an Event
of Default (as defined in the 2001 PPA or the 2003 PPA) by Calpine Energy, or
any successor or assignee to Calpine Energy under the 2001 PPA or the 2003 PPA
that is an Affiliate of Calpine Parent, and (ii) the Company terminates one or
both PPAs due to such Event of Default, then upon request by Acadia Holdings,
within thirty (30) days following the date of such request: 

       

                (a)  The
Company shall require Calpine Central to enter into a written instrument of
assignment and assumption transferring the O&M Agreement and the Project
Management Agreement to Acadia Holdings or an Affiliate thereof designated by
Acadia Holdings (together with its address), such instrument to be in form and
substance satisfactory to the Company and Acadia Holdings; and

       

      
         

        
          
            
              -15-

            

            
              

            

          

        

         

      

       

                  
   (b)  Acadia Holdings shall, or shall cause its
designated Affiliate to, enter into such instrument of assignment and assumption
as assignee.

       

      This Section 4.2.4
constitutes the prior written consent of the Company to the foregoing assignment
and assumption in accordance with Section 12.1 of the
O&M Agreement and Section 12.1 of
the Project Management Agreement.

       

                  Section 4.3.  Management
Committee . 

       

      
        4.3.1. Member’s
Representatives.  The
Management Committee shall consist of two (2) representatives for each of
Calpine and Acadia Holdings (each a “Representative”).  There
shall also be one alternate designated for each Representative (each an “Alternate”),
who shall have authority to act in the absence of either or both of its
Representatives.  Any Member may at any time, by prior notice to the
other Member, remove its Representative(s) or Alternate(s) on the Management
Committee and designate a new Representative(s) or Alternate(s).  Each
Representative shall serve on the Management Committee until his or her
successor shall be duly designated or until his or her death, resignation or
removal by the Member that appointed him or her. Any right or privilege of a
Representative hereunder may, in the absence of the Representative, be exercised
by its Alternate, and references herein to any rights or privileges of a
Representative shall mean the “Representative
or its Alternate acting on behalf of the Representative.”  The
participation and acts (including the execution of any documents) by an
Alternate shall be deemed to be the act of the Representative(s) for whom such
Alternate is acting without any evidence of the absence or unavailability of
such Representative(s).  Any decision by the Management Committee, and
any action taken by the Company in compliance with the direction of the
Management Committee pursuant to its authority hereunder, shall be binding on
the Company and each Member, whether such direction was approved in accordance
with the provisions hereof by the Representatives or one or more of the
Alternates acting on behalf of their respective
Representative(s).  Each Member shall promptly give notice to the
other of any change in the business address or business telephone of any of its
Representatives or Alternates.  As of the Restatement Date, the
Members designate the following individuals as their Representatives and
Alternates:

      

       

      
        
          	
                  Position 

                   

                	
                  Calpine 

                   

                	
                  Acadia Holdings 

                   

                
	
                  Representative 

                   

                	
                  Woody Saylor 

                   

                	
                  Samuel Charlton, III 

                   

                
	
                  Representative 

                   

                	
                  Robert Regan 

                   

                	
                  Bill Fontenot 

                   

                
	
                  Alternate 

                   

                	
                  Andre K. Walker 

                   

                	
                  Keith Johnson 

                   

                
	
                  Alternate 

                   

                	
                  Steve Dowdy 

                   

                	
                  Chuck Murray 

                   

                


        

         

      
      The Management Committee may adopt such rules of order,
by-laws and policy statements and directives as it considers necessary or
appropriate for the conduct of its business and that of the
Company.  Each Member shall use reasonable efforts to cause its
Representatives or Alternates to attend each meeting of the Management
Committee, and no Member shall withhold the presence or participation of its
Representatives or Alternates to forestall decisions in matters relating to the
Project.  An Alternate may take the place of one or both of its
Member's Representatives at a meeting.  Other employees or agents of
the Members may also attend meetings.

       

      
        
          
            
              -16-

            

            
              

            

          

        

         

      

             4.3.2. No Fiduciary Duties of Representatives and
Alternates.  To the fullest extent permitted by
Applicable Law, including Section 18-1101(c) of the Delaware Act, each
Representative and each Alternate shall be deemed an agent of the Member that
designated such Representative or Alternate and shall have no duty (fiduciary or
otherwise) to the Company or to the other Member.  Each Member, by
execution of this Agreement, agrees to, consents to, and acknowledges the
delegation of powers and authority to the Management Committee, and to actions
and decisions of the Management Committee within the scope of the Management
Committee’s authority as provided herein.

       

         
   4.3.3.  Regular Meetings.  Unless
otherwise agreed by the Management Committee, the Management Committee shall
meet at least once each Month on the third Tuesday of the Month. 

       

                          4.3.4.  Special Meetings.  In
addition to its regular monthly meetings, special meetings of the Management
Committee may be called by the Chairman of the Management Committee upon the
request of a Member, any Representative, the Project Director, the Construction
Manager or the Plant Manager, as applicable. 

       

                          4.3.5.  Telephonic Meetings
Permitted.  Representatives
and Alternates, or any committee designated by the Management Committee, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting. 

       

                          4.3.6.  Chairman; Secretary. 

       

                     
(a)  A Calpine Representative shall act as Chairman of the Management
Committee from the Effective Time until the Commercial Operation
Date.  As of the Restatement Date, Samuel Charlton, III has been
designated as the Chairman of the Management Committee.  Chairmanship
of the Management Committee shall rotate between the Members every two (2)
Fiscal Years during the Term, such rotation to be effective on January 1 of
every other Fiscal Year.  The Chairman shall at all times be one of
the Representatives.  The Chairman of the Management Committee shall
provide notice to each Representative stating the place, date and hour of each
meeting of the Management Committee, together with an agenda for the meeting,
not less than ten (10) days before the date of the meeting (unless such notice
is waived by each Member's Representatives either at the meeting or by written
consent).  The Chairman of the Management Committee shall include on
the agenda any items that a Member or a Representative requests in advance to be
included.  At least five (5) days before each meeting (or if the
meeting is called on shorter notice, as far in advance as is practicable under
the circumstances), detailed information on the matters
to be considered by the Management Committee will be provided to each
Representative. The Chairman shall have the authority to sign for and bind the
Company to all agreements, subject to the prior approval of the Management
Committee.  The Chairman will have the same voting power as the other
Representatives and will not have any right to cast any tie-breaking or special
vote of any kind.

       

                      (b)  The
Chairman or any Representative may invite additional attendees to meetings of
the Management Committee.  Such attendees, who shall be identified at
the 

       

      
         

        
          
            
              -17-

            

            
              

            

          

        

         

      

      commencement of such meeting, shall have no power to vote on
any matters but may participate in discussions in accordance with the Management
Committee's rules of order.

       

                    
 (c)  The Management Committee shall also designate a Secretary
of the Management Committee, who may or may not be a Representative or
Alternate.  The Secretary shall be responsible for maintaining all
minutes and other necessary records of the meetings of the Management Committee
and shall be authorized to execute and deliver any and all certificates
acknowledging actions approved by the Management Committee.  Within
ten (10) days after each Management Committee meeting, the Secretary shall send
to each Member for review and approval a copy of the minutes of such meeting. In
addition, the Secretary shall have such other responsibilities as are
customarily undertaken by the Secretary of a corporation or are otherwise
authorized by action of the Management Committee.

       

             4.3.7. Voting of
Ownership Interest.  Each Representative’s vote shall represent
one half (1⁄2) of the Ownership Interest in the Company then owned by the Member
that appointed such Representative.  If only one Representative of a
Member is present, in person or by telephonic means, at a Management Committee
meeting, such Representative shall be entitled to cast two (2) votes that
together represent the full Ownership Interest then owned by the Member that
appointed such Representative.

       


                          4.3.8.  Quorum;
Simple Majority Vote Required for Action.  The Management Committee may act
only if a quorum is present, whether in person or by telephonic
means.  A quorum shall consist of Representatives representing a
Simple Majority.  Except as set forth in Sections 4.3.9
and 4.3.10, the
Management Committee shall act by a Simple Majority vote cast by the
Representative(s) at a meeting at which a quorum of the Representative(s) are
present.  In the event that a Simple Majority vote is not reached on a
matter before the Management Committee requiring a Simple Majority vote, such
event shall constitute a Dispute or Controversy, and either Member may seek
resolution of such matter under the terms of Article
20.  In the event that a Simple Majority decision is reached,
the matter shall be acted upon by the Company. 

       


                          4.3.9.  Super
Majority Vote on Certain Matters.  The following matters shall
require a Super Majority vote by the Representative(s) at a meeting at which a
quorum of the Representative(s) are present in order to be acted upon by the
Company: 

       

                 
    (a)  The sale of all or a substantial portion
of the Company Assets;

       

                     
(b)  Merger or consolidation of the Company with another Person;
and

       

                      (c)  Voluntary
winding up of the affairs of the Company and dissolution or liquidation of the
Company.

       

      By contrast to matters requiring approval by a Simple
Majority vote under Section 4.3.8,
failure to secure a Super Majority vote on any matter that requires approval by
Super Majority vote under this Section 4.3.9
shall not constitute a Dispute or Controversy and shall not be subject to
resolution under the terms of Article 20.

       

      
         

        
          
            
              -18-

            

            
              

            

          

        

         

      

       

                          4.3.10.  Unanimous Approval
Required.  The following matters shall require a
vote of one hundred percent (100%) of the Ownership Interests in order to be
acted upon by the Company: 

       

              
       (a)  Any proposal by a
Member to substitute credit support pursuant to Section 4.4.5;

       

                      (b)  The
appointment of a Liquidator under Section
15.2(b);

       

             
        (c)  Any action
contemplated by Code § 6222 through
6231; and

       

                      (d)  A
change in the nature of the Company's business.

       

      By contrast to matters requiring approval by a Simple
Majority vote under Section 4.3.8,
failure to secure a unanimous vote on any matter that requires approval by
unanimous vote under this Section 4.3.10 shall
not constitute a Dispute or Controversy and shall not be subject to resolution
under the terms of Article 20.

       

             4.3.11. Action
Without a Meeting.  Any
action required by the Delaware Act to be taken at a meeting of the Members, or
any action which may be taken at a meeting of the Management Committee or of any
committee established by the Management Committee, may be taken without a
meeting if all Representatives, or all members of such committee established by
the Management Committee, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Management
Committee or such committee, as the case may be.  A telegram, telex,
cablegram or similar transmission by a Representative, or a photographic,
photostatic, facsimile or similar reproduction of a writing signed by a
Representative, shall be regarded as signed by the Representative for purposes
of this Section 4.3.11.


       


                          4.3.12.  Management
Committee Compensation.  Representatives and Alternates
shall not be entitled to any compensation for their services as members of the
Management Committee.


       


                          4.3.13.  Duties of
Members.  Each Member and its Affiliates, in
connection with the business and affairs of the Company, and in exercising such
Member's discretion under this Agreement, shall to the fullest extent permitted
by Section 18-1101(c) of the Delaware Act, be entitled to consider such
interests and factors as such Member desires, including its own interest and the
interest of its Affiliates, and shall have no duty or obligation to give any
consideration to any interest of, or factors affecting, the Company or any other
Member. 

       


                  Section 4.4.  Business
with Affiliates .


       

                          4.4.1.  Arms'
Length Basis for Affiliate Contracts.  The Members or their Affiliates
shall not be precluded from providing goods and/or services to the
Project.  All contracts for the provision of goods and/or services to
the Project by a Member or an Affiliate thereof ("Affiliate Contracts")
shall be negotiated and administered in good faith on an arms' length basis and,
at the time of execution, have terms at least as favorable to the Project as
those available in the market from unaffiliated third parties.  Except
as provided below, upon execution 

       

      
         

        
          
            
              -19-

            

            
              

            

          

        

         

      

      of any Affiliate Contract approved by the Management
Committee, each Member shall be deemed to have waived any right to object to the
terms of such Affiliate Contract on the grounds of the absence of good faith,
lack of arms' length negotiations or the presence of terms not at least as
favorable to the Project as those available in the market from unaffiliated
third parties; provided, however, that
(a) if a Member whose Representative(s) voted against approval of an
Affiliate Contract owned less than a forty-five percent (45%) Ownership Interest
in the Company at the time of such vote, such Member shall not be deemed to have
waived any right to object to the terms of the Affiliate Contract on the grounds
of the absence of good faith, lack of arms' length negotiations or the presence
of terms not at least as favorable to the Project as those available in the
market from unaffiliated third parties and (b) such Member's objection to
the terms of such Affiliate Contract shall constitute a Dispute or Controversy
for resolution in accordance with Article 20. 

       

                          4.4.2.  Disqualified
Matters.  So long as each Member owns at least a
forty-five percent (45%) Ownership Interest, in the event that a Member or any
of its Affiliates is a party to an Affiliate Contract, then (a) such
Member's Representatives on the Management Committee shall be disqualified from
voting on decisions or actions involving a Disqualified Matter as to the
Affiliate Contract and (b) the Representatives who are not disqualified
shall vote on such Disqualified Matter in accordance with the best interests of
the Company.  "Disqualified Matters"
means actions by the Company or by the Management Committee on behalf of the
Company in response to a breach of or default (or alleged breach or default)
under the subject Affiliate Contract (such as a waiver of the breach or default,
notice of breach or event of default or notice of termination for breach in
accordance with the terms of the Affiliate Contract) or enforcement or exercise
of any of the Company's rights or remedies in respect to such breach or default
(or alleged breach or default).  Disqualified Matters shall not
include the initial approval of an Affiliate Contract or matters other than
those relating to a breach or default that may arise during the term of an
Affiliate Contract, such as an amendment of the terms thereof requested by any
party thereto, renewal or extension of the Affiliate Contract or the terms
applicable to the renewal period, or a decision to select or approve the Project
Director, Construction Manager, Asset Manager or Plant Manager.  In
the event a proposal includes Disqualified Matters and matters other than
Disqualified Matters, then such matters shall be presented as separate proposals
to the Management Committee.  The Representatives who are disqualified
from voting on a Disqualified Matter shall not be excluded from discussions of
the Disqualified Matter, and shall receive notice of the intent to vote on the
Disqualified Matter and an opportunity to be heard on the matter prior to such
vote.  Nothing herein shall prohibit the counterparty to any Affiliate
Contract from enforcing its rights under the Affiliate Contract or contesting
any determination of a breach or default under the Affiliate Contract. 

       

      
        4.4.3. Liability
for Actions.  In the event that an Affiliate that was
determined by the Management Committee to be in breach or default of an
Affiliate Contract pursuant to a vote on a Disqualified Matter is subsequently
found, in a final, nonappealable judgment or binding arbitral decision, not to
have been in such breach or default to the extent claimed by the Management
Committee, the Member who was not disqualified from voting with respect to such
matter shall indemnify and hold the Company harmless against any liability or
damages due to the Affiliate as a result thereof.

      

      
         

        
          
            
              -20-

            

            
              

            

          

        

         

      

       


                          4.4.4.  Conflicts
of Interest; Competition with Project.  Subject to the other express
provisions of this Agreement, each Member and its Affiliates, at any time and
from time to time may possess business interests and engage in business
activities in addition to those relating to the Project, including business
interests and activities in direct competition with the
Project.  Neither Member nor its Affiliates shall have any rights by
virtue of this Agreement in any outside business ventures of the other Member or
its Affiliates.  No Member or its Affiliates shall have any obligation
to offer the other Member or any Affiliate thereof the right to participate in
any outside business venture and in no event shall such Member or Affiliate have
any liability to the other Member or any Affiliate thereof under the "corporate
opportunity" or similar doctrine. 

       


                          4.4.5.  Substitution
for Credit Support.  As of the Effective Time, Calpine
Parent entered into the Calpine Limited Guaranty and Cleco entered into the
Cleco Limited Guaranty.  Each of Calpine and Cleco shall have the
right at any time during the Term to substitute and replace such guaranty or
credit support with such assurances and other credit support as are acceptable
to both Members. 

       


                          4.4.6.  Certain
Actions Under Calpine 2001 PPA Guaranty.  Under Section 6(d) of
the Calpine 2001 PPA Guaranty, the Company has the right in specified
circumstances to take certain actions and make certain elections with respect to
credit support to be provided by or on behalf of Calpine
Parent.  Notwithstanding anything to the contrary, Acadia Holdings
shall have the sole right on behalf of the Company (without the consent or
approval of any other Member) to take all actions and make all elections
provided for on the Company's part in Section 6(d) of
the Calpine 2001 PPA Guaranty and all such actions taken and elections made by
Acadia Holdings shall be binding on the Company.

       


      ARTICLE 5
JOINT
DEVELOPMENT OF PROJECT 

       

                  Section 5.1.  Owner
Construct.  By entering into this Agreement
the Members have committed to the construction and operation of the Facility
subject to the terms and conditions of this Agreement.  It is
understood and agreed that the Company intends to construct the Facility on an
"owner construct" basis by entering into the Construction Agreements, and there
will not be a turnkey contract for the design, procurement, construction or
commissioning of the Facility, subject to the Company entering into the
Construction Agreements (including provisions adequately addressing matters such
as schedule and performance guarantees and associated liquidated damages and
remedies, warranties, allocation of risk for Force Majeure and other matters,
step-in rights in the case of non-performance or inadequate performance, and
credit support) in form and substance acceptable to the Management Committee and
sufficient to support a Project Financing on commercially reasonable terms.


       

      
        Section
5.2. Phases of
Development.  The Project shall be developed by the Company in
the following phases, each of which is outlined in detail
below:

      

       

                      (a)  "Phase I" commenced
prior to the Effective Time and shall end on the Project Director Discharge
Date, it being understood that Phase I and Phase II will overlap. Phase I shall
consist of all activities necessary or appropriate for the development and
financing 

       

      
         

        
          
            
              -21-

            

            
              

            

          

        

         

      

       

      (if any) of the Project (the "Phase I Activities"),
including (i) due diligence, (ii) updating of the Development Plan, (iii)
updating of the Project Budget and Initial Operating Budget,
(iv) preparation, negotiation and execution of the Project Agreements, (v)
applying for and obtaining Necessary Regulatory Approvals (other than those
which cannot be applied for or obtained until after the Commercial Operation
Date), (vi) negotiation of and entering into such other arrangements and
contracts as are necessary or advisable to construct or operate the Facility,
and (vii) design and engineering activities.  The Phase I Activities
shall exclude the Phase II Activities.

       

                      (b)  "Phase II" shall
commence at the Effective Time and shall end on the Commercial Operation
Date.  Phase II shall consist of all activities necessary or
appropriate for the construction, testing and start-up of the Facility (the
"Phase II
Activities"), and shall include (i) procurement activities and (ii)
hiring and training of necessary operating staff.

       

              
       (c)  "Phase III" shall
commence on the Commercial Operation Date and shall end on the Termination
Date.  Phase III shall consist of all activities necessary or
appropriate for the operation, maintenance and management of the Project in
accordance with the Operating Standard, this Agreement, the Definitive
Agreements, the Project Agreements and the Financing Documents (the "Phase III
Activities").

       

                Section 5.3.  Project
Director . 

       

      
        5.3.1. Role of
Project Director.  Responsibility for coordinating Phase I Activities
shall rest primarily with the Project Director, who shall be the Company’s
individual representative authorized and empowered to act for and on behalf of
the Company on matters relating to the development of the Project (the “Project
Director”), in compliance with the Development Plan.  The
Project Director shall be subject to and shall follow the overall direction of
the Management Committee.  In the event of an inconsistency between
the directives of the Management Committee and the Project Management Company or
any other Person (other than a Governmental Authority), the Project Director
shall follow the Management Committee’s directives.  The prior
authorization of the Management Committee shall be required before the Project
Director may make any commitments or take on any liabilities or obligations that
are binding on the Company.  Without limiting the general nature of
his or her accountability to the Company, and subject to the other provisions of
this Section
5.3, the Project Director shall (a) lead in planning and conducting
negotiations with the counterparties to any Project Agreement as to which
neither Member has responsibility under Section
5.4, (b) co-ordinate all activities for which each Member has
responsibilities under Section
5.4, (c) establish formal lines of communications with the
Management Committee to coordinate his or her activities and keep the Management
Committee and the Members informed on a timely basis of matters relating to the
Project, and (d) carry out any other function in relation to the Project
delegated to or required of him or her by the Management
Committee.

         

         

                   5.3.2.  Powers and
Authority.  The
Project Director shall have all necessary powers and authority to enable him or
her to execute and carry out the day to day administration of the Project until
the Project Director Discharge Date.  For the period of his or her
service as Project Director, the Company shall be bound by the written
communications, directions,

         

      

       

      
         

        
          
            
              -22-

            

            
              

            

          

        

         

      

      requests and decisions given or made by the Project Director
(to the extent approved by the Management Committee), and all third parties
engaged in connection with the development of the Project, including the Project
Management Company, shall be entitled to rely thereon. 

       


                          5.3.3.  Reporting
Responsibilities.  The Project Director shall furnish
monthly progress reports to the Management Committee and otherwise consult with
the Management Committee on a regular basis as to its directives and the
progress of the Project.  In addition, the Project Director will hold
weekly status meetings in order to keep all participants fully informed as to
Project activities.  All the individuals identified on Appendix E as having
responsibility for a Phase I Activity, and any other individuals requested by a
Member, may participate in such meetings in person or by telephone via a 1-800
conference call to be arranged by the Project Director.  The Project
Director shall use good faith efforts to keep Acadia Holdings informed on a
regular basis with regard to all aspects of the Phase I Activities, and
shall notify Acadia Holdings of meetings with any third parties relating to the
Phase I Activities.  (The Project Director shall not be required
to notify Acadia Holdings of meetings involving only Calpine and its
Affiliates.) Acadia Holdings will identify for the Project Director an
individual as its representative for such purpose, which individual may be
replaced from time to time upon notice by Acadia Holdings to the Project
Director.  Neither compliance, nor failure to comply, with the
preceding two sentences shall limit the authority of the Project Director,
constitute a condition to performance of any of his or her obligations hereunder
or under the Project Management Agreement, or create any liability for the
Project Director or Calpine.


       


                          5.3.4.  Standard
of Conduct.  The Project Director shall (a)
devote sufficient time to the Project in order to perform fully and effectively
his or her duties as described in this Agreement and (b) perform his or her
duties in an effective and professional manner and in the best interests of the
Company, according to accepted industry standards for project
management.  If Calpine or an Affiliate of Calpine is the Project
Management Company, Calpine shall cause the Project Management Company to
provide the Project Director with the necessary resources to accomplish his or
her responsibilities hereunder.  If Acadia Holdings or an Affiliate of
Acadia Holdings is the Project Management Company, Acadia Holdings shall cause
the Project Management Company to provide the Project Director with the
necessary resources to accomplish his or her responsibilities
hereunder.  The Project Director shall have no liability for his or
her failure to perform his or her obligations hereunder and the sole recourse of
the Members and the Company shall be to cause the Management Committee on behalf
of the Company and each Member, in accordance with Section 5.3.5, to
remove the acting Project Director and replace him or her with an individual
approved by the Management Committee. 

       

      
        5.3.5. Appointment
and Removal of Project Director.

      
 

                      (a)  The
Project Director has been identified and proposed by the Project Management
Company, subject to approval by the Management Committee, and is employed by the
Project Management Company or an Affiliate of the Project Management
Company.  The power and authority of the Project Director shall
continue in full force and effect until the date on which the Management
Committee determines that the Phase I Activities hereunder have been
completed or that their coordination will be completed by the Construction
Manager or the Plant Manager (the "Project Director Discharge
Date").

       

      
         

        
          
            
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      (b)  The appointed Project
Director may be earlier terminated by the Management Committee (i) if he or she
has failed to follow the directions of the Management Committee in any material
instance or to observe any provision of this Agreement, after notice to the
Project Management Company and the Project Director specifying the infraction
and the actions to be taken to remedy the same, and a reasonable opportunity to
cure such infraction has elapsed without remedying the infraction, by a vote of
the Management Committee (with such matter considered a Disqualified Matter on
which the Member that is the Project Management Company or the Member whose
Affiliate is the Project Management Company, as the case may be, shall have no
vote) or (ii) if said individual dies, becomes incapacitated or ceases
working for the Project Management Company or an Affiliate of the Project
Management Company.  In the event the appointment of a Project
Director is terminated, the Member that is the Project Management Company or the
Member whose Affiliate is the Project Management Company, as the case may be,
shall promptly provide the Company with a plan for succession and orderly
transition of the Project Director's functions so that at no point will there be
no Project Director in place, including, in the event the appointment of the
Project Director is terminated under clause (ii) above, the temporary
appointment of an interim Project Director (which shall not require Management
Committee approval) who shall serve in such capacity until the Management
Committee shall have approved a replacement Project Director.

       

                 (c)  Upon the
Management Committee's direction, the Member that is the Project Management
Company or the Member whose Affiliate is the Project Management Company, as the
case may be, shall implement such succession plan.  As part of such
plan, the Project Management Company shall give the Company notice of the
proposed substitution or replacement of another qualified individual as the
Project Director to serve until the Project Director Discharge Date (together
with information as to the individual's qualifications and credentials), and the
Management Committee shall have the right to approve or disapprove of the
individual proposed to serve as the Project Director.  If the
Management Committee does not approve the individual proposed within fifteen
(15) days after the proposal is made, the Member that is the Project Management
Company or the Member whose Affiliate is the Project Management Company, as the
case may be, shall promptly propose another qualified individual in accordance
with the preceding sentence.  Until the Management Committee approves
a replacement Project Director, the then acting Project Director (including any
interim Project Director) shall continue in the performance of his or her duties
as Project Director.

       

                Section 5.4.  Members'
Phase I Development Responsibilities .

       

                          5.4.1.  Assignment of Phase I
Responsibilities to Members.  Specific Phase I development
responsibility shall be allocated among the Members, and may be reallocated from
time to time, by the Management Committee in order to optimize the handling of
specific responsibilities.  The initial responsibilities allocated to
each Member as of the Effective Time are set forth on Appendix
E.  Each Member agrees to the following with respect to the
tasks assigned to it: 

       

                   
  (a)  To appoint an individual, who may or may not be the
Member's Representative, to have lead responsibility for each of the tasks
assigned.  Such individual will coordinate his or her activities
directly with the Project Director, who shall supervise and coordinate all
Phase I Activities;

       

      
        
          
            
              -24-

            

            
              

            

          

        

         

      

       

                
     (b)  To provide to the Project Director
an initial budget of anticipated Third Party Expenses and Reimbursable Member
Expenses and schedule for accomplishing its tasks and other data and information
in regard to the budget and schedule upon the Project Director's request or as
circumstances warrant;

       

                      (c)  To
act as the interface with, and supervise, all third parties performing work
related to its tasks;

       

             
        (d)  To report to the
Project Director as requested, or cause the individuals to whom such tasks are
assigned to report to the Project Director as requested, regarding the status of
the Member's tasks, and to report all major developments relating to its tasks
as circumstances warrant;

       

                     
(e)  To provide such information and materials, or to cause the
individuals to whom such tasks are assigned to provide such information and
materials, as the Project Director or the other Member may reasonably request
and to allow review by the Management Committee or the other Member of all
material work product; and

       

             
        (f)  To cooperate with
the other Member in performing its respective tasks.

       

      The foregoing Member responsibilities may be expanded,
limited or terminated at any time by the Management Committee.

       

      
        5.4.2. Reimbursement
of Reimbursable Member Expenses.  Each Member shall be entitled
to reimbursement by the Company for all Reimbursable Member Expenses incurred in
connection with its Phase I responsibilities, to the extent included in the
Project Budget, in accordance with Section
6.1.3(b).  Notwithstanding the foregoing, each Member shall
bear its own internal costs and expenses that are incurred in connection with
the preparation and execution of this Agreement and the Definitive Agreements,
or in excess of the amounts included in the Project Budget, and the Capital
Account of each such Member shall not be increased for such costs and
expenses.  Expenses incurred by a Member or any of its Affiliates in
performing any contract with the Company shall not be included as Reimbursable
Member Expenses to be reimbursed pursuant to this Section 5.4.2, but
shall be governed by the contract under which they are incurred.

        5.4.3. Standard
of Conduct of Individuals Assigned by Responsible Member.  The
individuals responsible for performing the tasks assigned to them by either
Member shall (a) devote sufficient time to the Project in order to perform fully
and effectively the assigned responsibilities and (b) perform his or her duties
in an effective and professional manner and in the best interests of the
Company, according to accepted industry standards.  The Member
responsible for each task shall provide each such individuals the necessary
resources to accomplish his or her responsibilities hereunder.  No
individual assigned to perform a task identified on Appendix E shall have
any liability for his or her failure to perform his or her respective
obligations, and the sole recourse of the Members and the Company shall be to
cause the Management Committee, on behalf of the Company, to remove the
individual assigned to such task and replace him or her with an individual
approved by the Management Committee.

      

       


      
        
          
            
              -25-

            

            
              

            

          

        

         

      

                          5.4.4.  Appointment
and Removal of Individuals.  The appointment of any of the
individuals responsible for performing the tasks assigned to them by either
Member may be earlier terminated by the Management Committee (a) if he or she
has failed to follow the directions of the Management Committee in any material
instance or to observe any provision of this Agreement, after notice to the
Member and the Project Director that appointed such individual specifying the
infraction and the actions to be taken to remedy the same, and a reasonable
opportunity to cure such infraction has elapsed without remedying the
infraction, by a vote of the Management Committee (with such matter considered a
Disqualified Matter on which the Member appointing such individual shall have no
vote) or (b) if said individual dies, becomes incapacitated or ceases
working for a Member or its Affiliate.  In the event the appointment
of any individual is being terminated, the Member to whom his or her
responsibility was assigned under Section 5.4.1 shall
provide the Company with a plan for succession and orderly transition of the
individual's responsibility so that at no point will such responsibility be
unassigned, including, in the event an individual's appointment is terminated
under clause (b) above, the temporary appointment of a qualified individual
(which shall not require Management Committee approval) who shall undertake the
responsibility in the interim until the Management Committee shall have approved
a replacement. 

       


                  Section 5.5.  Project
Agreements.  During Phase I, Project Agreements
will be negotiated by the Member that has been delegated responsibility for the
applicable Project Agreement pursuant to Section 5.4.1, or as
otherwise designated by the Management Committee, and the Member to whom the
lead responsibility is assigned for the applicable Project Agreement shall cause
the appropriate individuals to negotiate the applicable Project Agreements,
unless and until the Management Committee reassigns such
responsibility.  Following the completion of the Phase I Activities,
except as provided in Section 5.6
(regarding, without limitation, Significant Offtake Agreements presented by the
Members) and Article 7
(regarding, without limitation, the responsibilities of the Power Marketer), the
Project Management Company shall be primarily responsible for negotiating all
remaining Project Agreements subject to the direction of the Management
Committee.  All Project Agreements shall be subject to the approval of
the Management Committee.


       


              
   Section 5.6.  Significant
Offtake Agreements.  No Member may enter into any
Offtake Agreement, or any binding term sheet for an Offtake Agreement, on behalf
of the Company.  In addition to the provisions of Section 5.5
(regarding, without limitation, negotiation of Project Agreements) and Article 7
(regarding, without limitation, the responsibilities of the Power Marketer),
either Member may, from time to time during the Term, present proposed
Significant Offtake Agreements to the Management Committee for
consideration.  A Significant Offtake Agreement proposed for execution
by the Company shall be submitted to the Management Committee for approval
either at a regular meeting of the Management Committee or a special meeting of
the Management Committee called for that purpose.  In either event, in
order for a Significant Offtake Agreement to be considered by the Management
Committee, the proposing Member shall provide a copy of the agreement to the
Chairman no less than seven (7) days before the date of the meeting. The
Chairman shall distribute the Significant Offtake Agreement along with the
detailed information on matters to be considered by the Management Committee at
such meeting to be distributed to the Representatives at least five (5) days
before the meeting in accordance with Section
4.3.6(a).  The foregoing requirement that a copy of the
proposed Significant Offtake Agreement be delivered to the Representatives in
advance of a meeting of the 

       

      
         

        
          
            
              -26-

            

            
              

            

          

        

         

      

       

      Management Committee may be waived if done so in writing by
all the Representatives attending such meeting.  Provided the proposed
Significant Offtake Agreement has been delivered to the Members in advance of
the meeting (or such requirement is waived), the proposed agreement shall be
considered by the Management Committee at the meeting.  The Management
Committee shall in its discretion:

       

                
     (a)  Vote to approve the proposed
Significant Offtake Agreement, in which event the proposed agreement shall be
executed by the Chairman on behalf of the Company or the proposing Member shall
be authorized to conclude any final negotiations of the agreement (which shall
not include any material changes from the agreement presented to the Management
Committee for approval), and prepare and submit to the Chairman for signature
the final, executable Significant Offtake Agreement;

       

                      (b)  Subject
to the provisions of Section 5.6.1, vote
against approving the proposed Significant Offtake Agreement, in which event the
proposing Member shall take no further action on behalf of the Company with
regard to the proposed agreement; or

       

                   
  (c)  Specify revisions to the terms of the proposed
Significant Offtake Agreement that the Management Committee requires for
approval of the agreement, in which event the proposing Member (i) shall
continue to negotiate with the counterparty to the proposed agreement in order
to address such terms to the satisfaction of the Management Committee and
(ii) shall, if it is successful in negotiating the terms required by the
Management Committee (or in negotiating such alternate terms that the proposing
Member reasonably believes the Management Committee may desire to accept),
present the revised Significant Offtake Agreement at a subsequent meeting of the
Management Committee in accordance with the foregoing procedures.

       

      
               5.6.1.  Procedure Prior to Project
Financing.  The provisions of this
Section 5.6.1
are applicable during the period from the Effective Time until the earlier to
occur of (a) the first drawdown of funds under the Company’s initial Project
Financing, and (b) the date either Member acquires control of a Simple
Majority.  During this period, if, after consideration of a
Prequalified Significant Offtake Agreement proposed by either Member, the
Management Committee does not agree on a course of action pursuant to clauses
(a), (b) or (c) of Section 5.6, within
fifteen (15) Business Days after the proposed Prequalified Significant Offtake
Agreement was first considered at a meeting of the Management Committee, the
Management Committee shall be deemed to have voted to approve the proposed
Prequalified Significant Offtake Agreement, and, except as provided below, the
Chairman shall execute the Prequalified Significant Offtake Agreement on behalf
of the Company.  The term “Prequalified Significant
Offtake Agreement” means a Significant Offtake Agreement, (a) with
any Person (including an Affiliate of either Member) as the offtaker having a
Standard & Poor’s credit rating of BBB- or better, or the Moody’s equivalent
thereof, and (b) that, when analyzed using the Base Model,
is  projected (on a stand alone basis) to result in a nine percent
(9%) unlevered internal rate of return to the Company, after income taxes
(assuming an overall income tax rate of 38.25%), based on the Project Costs,
Operating Expenses (including fuel costs), Capital Expenses, Tax depreciation
and other items allocable to the Capacity and Energy sold under the proposed
Prequalified Significant Offtake Agreement.  “Base Model” means the
Project’s spreadsheet financial model

         

      

      
         

        
          
            
              -27-

            

            
              

            

          

        

         

      

      that will be reasonably agreed upon by the Management
Committee within sixty (60) days after the Effective Time. Notwithstanding
anything to the contrary herein, the Representatives that do not agree that the
Prequalified Significant Offtake Agreement should be entered into by the Company
may specify particular revisions to the terms of the proposed Prequalified
Significant Offtake Agreement that they require for approval of the agreement,
in which event the proposing Member shall endeavor, in good faith within a
reasonable time not to exceed thirty (30) days, to negotiate those terms
requested by the dissenting Representatives, and the Company shall not enter
into the proposed Prequalified Significant Offtake Agreement until the proposing
Member has so endeavored to negotiate the requested terms.  Regardless
whether the requested terms are or are not included in the proposed Prequalified
Significant Offtake Agreement following such good faith endeavors, at the end of
such thirty (30) day period, the Chairman shall execute such Prequalified
Significant Offtake Agreement as provided above in the form then negotiated for
the Company by the proposing Member.

       
  

      Section
5.7.  Project
Financing.

       

      5.7.1. Project
Finance Criteria.  The Company will, as its primary financing
strategy, pursue financing for the Project on the basis of loans or bonds which
are non-recourse and off-balance sheet to the Members and their Affiliates,
under which (a) the lenders will have a first priority perfected security
interest in all Company Assets (without any cross-collateralization or
cross-default to any other assets or indebtedness of the Members or their
Affiliates), and (b) the Members and their Affiliates will not have any
obligation or liability in respect of such financing except for (i) obligations
to contribute equity, including equity for cost overruns (with each Member being
responsible for its Pro Rata share of any such equity up to a maximum to be
agreed by the Members), (ii) the Members’ pledge of their respective Ownership
Interests as security for the project debt, with no representations, warranties
or covenants other than usual and customary corporate representations and
warranties for a pledge agreement in a non-recourse, off-balance sheet financing
of the type described above, and (iii) any obligations that the Members or their
Affiliates may elect to undertake pursuant to the Financing Documents (“Project
Financing”).  Accordingly, the Members agree that this
Agreement, the Definitive Agreements and the Project Agreements are intended to
comply with standards and requirements for a Project Financing so as to be
acceptable to the project lenders.  To the extent that either Member
or its respective Affiliates may be subject to restrictions under senior debt
agreements or bond indentures that inhibit either Member or its respective
Affiliates from pledging its Ownership Interest in the Company to secure the
project debt, the Members will work with one another to resolve resulting issues
so that Project Financing may be achieved generally in accordance with the
structure contemplated for Project Financing in this Agreement.

       

      5.7.2. Management
Committee Approval.  The Management Committee may approve a
Financing Commitment at any time.  Beginning no later than the date
upon which the Company has entered into Significant Offtake Agreements pursuant
to which an aggregate of sixty-five percent (65%) of the total output of
Capacity or Energy from the Facility will be sold for terms of no less than
fifteen (15) years, the Members agree (a) to work together to develop a
plan for Project Financing and (b) diligently to jointly pursue and obtain
Financing Commitments to implement such plan.

       

       


                  Section 5.8.  PPA
Managers. 

       

      
         

        
          
            
              -28-

            

            
              

            

          

        

         

      

                          5.8.1.  Appointment
.  Each of
Acadia Holdings and Calpine shall have the right in its sole discretion to
appoint an individual to act as manager for the Company with respect to the PPAs
(each a "PPA
Manager") and to remove and replace its PPA Manager at any time and from
time to time for any reason or for no reason.  Each PPA Manager shall
have the right at any time and from time to time to designate an alternate PPA
Manager to act on behalf of the designating PPA Manager to the extent such
designating PPA Manager is unavailable.  Each of Acadia Holdings and
Calpine shall notify the other of the name and contact information of its PPA
Manager and of any replacement PPA Manager appointed by it and any alternate PPA
Manager designated by its PPA Manager. 

       


                          5.8.2.  Scope of
Authority.  The PPA Managers shall have the
right to make all decisions on behalf of the Company with respect to the matters
that require a decision of or direction from the Company at such time pursuant
to Section 2.11.5
of the O&M Agreement, including the issuance of Product Notices (as defined
in the O&M Agreement) and, to the extent the Company so elects in accordance
with Section 2.11.5.2
of the O&M Agreement, directing the issuance of Operational Notices (as
defined in the O&M Agreement) by the Operator.  To the extent any
such decision or direction involves the first twenty-four (24) hours of any
outage or other event or circumstance, such decision or direction shall be given
or made by the Acadia Holdings PPA Manager in his or her sole discretion on
behalf of the Company.  To the extent any such decision or direction
involves the period beyond the first twenty-four (24) hours of any outage or
other event or circumstance, such decision or direction shall be given or made
only by mutual agreement of the Acadia Holdings PPA Manager and the Calpine PPA
Manager.  Either PPA Manager may, without the need for any consent
from the other PPA Manager, exercise the elections afforded the Company under
Section 2.11.5.2
of the O&M Agreement.  All directions given and decisions made by
either PPA Manager or both PPA Managers in accordance with this Section 5.8.2
shall be final and binding on the Company and shall not be subject to review or
approval by the Management Committee or by any
Member.  Notwithstanding the foregoing, if the PPA Managers do not
agree on any matter requiring the mutual agreement of both PPA Managers under
this Section 5.8.2
within three (3) hours after the initial communication between the PPA
Managers regarding such matter, either PPA Manager may refer the matter to the
Management Committee, which shall then give the
relevant directions or make the relevant decisions on behalf of the
Company.

       

      ARTICLE 6
BUDGETS, CONTRIBUTIONS AND ACCOUNTING


       

                Section 6.1.  Development
Funding . 

       

      
        6.1.1. Project
Budget.  Attached hereto as
Exhibit
A is the budget approved by the Members setting forth the Project Costs
anticipated to be incurred through the Commercial Operation Date (“Project
Budget”), which Project Budget may be amended from time to time by the
Management Committee in accordance with the provisions of this
Agreement.

      

       


                         6.1.2.  Project
Account; Project Costs.

        

           
          (a)  In
accordance with the Project Management Agreement, the Project Management Company
shall establish the Project Account on behalf of the
Project.  Each

       

      
         

        
          
            
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      Member agrees, in accordance with the provisions set forth in
this Section
6.1.2, the drawdown schedule attached to the Project Budget and otherwise
in accordance with this Agreement, to disburse monies, or pursuant to any
Financing Documents to cause monies to be disbursed, to the Project Account to
pay its Pro Rata share of Project Costs, but in no event shall any Member be
required to pay any amount in respect of any Project Cost in excess of the line
item amount included in the Project Budget for such Project Cost, except that,
upon the request of the Project Director, each Member shall pay its Pro Rata
share of a line item overrun (i) to the extent it does not exceed ten percent
(10%) of the corresponding line item amount in the Project Budget, and (ii) if
such overrun, when added to all other line item overruns theretofore funded by
the Members, does not exceed $2,500,000. 

       

               
      (b)  In accordance with the
Project Management Agreement, on or before the fifteenth (15th) day of each Month,
the Project Management Company shall submit to the Management Committee a
detailed summary of all invoices for Project Costs due and payable during the
next Month, including (i) Reimbursable Member Expenses, (ii) Third
Party Expenses and (iii) Reimbursable Project Management Expenses, in each
case to the extent included in the Project Budget.  On or before the
last to occur of (a) the 25th day of the applicable
Month and (b) ten (10) Business Days following receipt of the Project
Management Company's summary, each Member shall advance to the Project Account,
or cause to be advanced to the Project Account in accordance with any Financing
Documents, its Pro Rata share of the stipulated amount (subject to the
limitation set forth in Section 6.1.2(a)), by
wire transfer of immediately available funds or, in the event the Management
Committee objects to any amounts requested by the Project Management Company,
its Pro Rata share of the amount requested less the amount to which the
Management Committee has objected.  In accordance with the Project
Management Agreement, promptly following the last day of the Term, the Project
Management Company shall submit an invoice marked "Final Invoice" to the
Management Committee for payment reflecting all remaining outstanding and unpaid
Reimbursable Project Management Expenses due for the Term.  Each
Member shall advance to the Project Account its Pro Rata share of the amount
stipulated in the Final Invoice by wire transfer of immediately available funds
in accordance with the foregoing provisions relating to monthly invoices. 

       

                 
    (c)  All disbursements to the Project Account
by a Member shall constitute Capital Contributions of such Member.

       

                          6.1.3.  Submission
of Third Party Expenses by Members. 

       

              
       (a)  Each Member shall promptly forward invoices for payment of
Third Party Expenses to the Project Director by the tenth (10th) day of each Month
with respect to the preceding Month.  Third Party Expenses shall be
paid solely by the Project Management Company and only to the extent included in
the Project Budget, and no Member shall make direct payment of any Third Party
Expenses.  Such Third Party Expenses will be submitted to the
Management Committee by the Project Management Company as Project Costs to the
extent they are included in the Project Budget, in accordance with Section 6.1.2(b), and
paid by the Company

       

           
          (b)  Each Member shall be entitled to reimbursement by the Company
for all its Reimbursable Member Expenses incurred in connection with its
Phase I development 

       

      
         

        
          
            
              -30-

            

            
              

            

          

        

         

      

       

      responsibilities to the extent included in the Project
Budget.  Attached hereto as Appendix F is a
complete and accurate statement by each Member of all Reimbursable Member
Expenses incurred by each Member as of January 31, 2000, which amounts are
hereby approved by the Members, and included in the Project
Budget.  In addition, each Member shall keep accurate and complete
records of all Reimbursable Member Expenses and, commencing in March, 2000,
shall provide a reasonably detailed report of such costs to the Project Director
by the twenty-fifth (25th) day of each Month
with respect to the preceding Month.  Reimbursable Member Expenses
incurred prior to the earlier of the Month in which Financial Closing occurs or
the Commercial Operation Date occurs (including the amounts set forth on Appendix F) shall be
submitted the following Month to the Management Committee by the Project
Management Company as Project Costs to the extent they are included in the
Project Budget, in accordance with Section 6.1.2(b),
and paid by the Company.  Reimbursable Member Expenses incurred in or
following the Month in which Financial Closing or the Commercial Operation Date
occurs, whichever is first, will be submitted monthly to the Management
Committee by the Project Management Company as Project Costs to the extent they
are included in the Project Budget, in accordance with Section 6.1.2(b), and
paid by the Company.

       

              
   Section 6.2.  Operations
Funding . 

       

      
        6.2.1. Operating
Budgets.  Attached hereto as
Exhibit
B is a comprehensive budget approved by the Members for total Operating
Expenses based on a full twelve (12) Month period, which budget shall apply on a
pro-rata basis during the period commencing on the Commercial Operation Date and
ending on the last day of the Fiscal Year in which the Commercial Operation Date
occurs (“Initial
Operating Budget”).  The O&M Arrangements will require
that, on or before November 1st
of each Fiscal Year during the Term, the Operator, acting through the Plant
Manager, shall prepare and submit to the Management Committee for approval a
comprehensive budget estimating the expected total Operating Expenses for the
next succeeding Fiscal Year (each such budget, including the Initial Operating
Budget, being hereinafter referred to as an “Operating
Budget”).  Each Operating Budget may be amended from time to
time by the Management Committee in accordance with the provisions of this
Agreement.  Each Operating Budget shall also recommend levels of
working capital and reserves for the items described in Section
6.2.3.

         

        6.2.2. Funding
of Operating Expenses.  To
the extent the Management Committee expressly approves an additional capital
call for Operating Expenses, each Member (other than an Electing Member) shall
disburse monies to the Project Account to pay its Pro Rata share of such
Operating Expenses, in accordance with the instructions for such funding
determined by the Management Committee.  All disbursements by the
Members for Operating Expenses shall constitute Capital
Contributions.

      

       


                          6.2.3.  Reserves.  The Management Committee shall
establish reserves for scheduled Maintenance and may from time to time establish
reserves for unscheduled Maintenance and/or for Capital Repairs and
Additions.  The Management Committee shall determine the manner in
which any such reserves shall be funded and may approve other credit
arrangements in lieu of cash reserves.  Each Member shall contribute
its Pro Rata share of the reserve funds established by the Management
Committee.  It is the intention of the Members that the Company will
fully fund the costs of scheduled Maintenance prior to the commencement of a


       

      
        
          
            
              -31-

            

            
              

            

          

        

         

      

      planned outage for the performance of such
Maintenance.  Any monies used to fund reserves for scheduled or
unscheduled Maintenance will be held in an interest-bearing reserve sub-account
(the "Operating
Reserve Sub-Account") of the Project Account.  Any monies used
to fund reserves for Capital Repairs and Additions will be held in the Capital
Expense Account.  The Management Committee also may decide on the
establishment of a reserve account, credit arrangement or other mechanism for
providing for the payment of decommissioning costs at the end of the Term. All
contributions to reserves by the Members shall constitute Capital
Contributions. 

       

              
   Section 6.3.  Funding
of Capital Repairs and Additions . 

       

                          6.3.1.  Capital
Expense Budget.  The O&M Arrangements will
require that the Operator, acting through the Plant Manager, (a) at least
ninety (90) days before the scheduled Commercial Operation Date, shall prepare
and submit to the Management Committee for approval a comprehensive budget
estimating all anticipated and proposed Capital Expenses for Capital Repairs and
Additions and recommended reserves therefor ("Capital Expense
Budget") through the end of the Fiscal Year after the Fiscal Year in
which the Commercial Operation Date is scheduled to occur and for the next six
(6) years thereafter and (b) on or before November 1st of each Fiscal Year,
shall prepare and submit to the Management Committee for approval a
comprehensive proposed Capital Expense Budget for the next succeeding six (6)
year period, together with a description of the proposed Capital Repairs and
Additions so as to allow the Management Committee to make a reasonable
evaluation of the anticipated repairs or additions. Neither Member shall have
the right to require any Capital Repairs and Additions to or expansions of the
Facility. 

       

                          6.3.2.  Funding of Capital Expense
Budgets.  In
accordance with the Project Management Agreement, the Project Management Company
shall establish an interest-bearing bank account on behalf of the Company solely
for funding of Capital Expenses (the "Capital Expense
Account").  To the extent the Management Committee expressly
approves an additional capital call for any Capital Expenses, each Member shall
disburse monies to the Capital Expense Account to pay its Pro Rata share of such
Capital Expenses, in accordance with the instructions for such funding
determined by the Management Committee, but in no event shall any Member be
required to pay any amount in respect of any Capital Expense in excess of the
line item amount included in the Capital Expense Budget for such Capital
Expense.  All disbursements by the Members to the Capital Expense
Account shall constitute Capital Contributions.  On the Termination
Date, any funds in the Capital Expense Account, after payment of all amounts
owing from such account in accordance herewith, shall be an asset relating to
the Facility for disposition in accordance with the terms and conditions of this
Agreement. 

       


                  Section 6.4.  Approval
of Budgets; No Management Committee Deadlock . 

       

                          6.4.1.  Approval
of Budgets.  The Management Committee may
(a) approve a proposed Operating Budget or Capital Expense Budget, (b)
approve a portion of the proposed Operating Budget or Capital Expense Budget and
reject the other portions of the proposed Operating Budget or Capital Expense
Budget, or (c) reject the proposed Operating Budget or Capital Expense
Budget.  The O&M Arrangements will require that the Operator, in
the event the Management Committee rejects all or a portion of a proposed
Operating Budget or Capital 

       

      
         

        
          
            
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      Expense Budget, within not more than ten (10) days after
rejection, shall prepare and submit a revised Operating Budget or Capital
Expense Budget, as applicable, to the Management Committee for approval at a
meeting called for such purpose as soon as practicable upon due notice in
accordance with Section 4.3.4. 

       


                          6.4.2.  Budget
Deadlock.  If
the Management Committee does not approve an Operating Budget or a Capital
Expense Budget, or a quorum is not obtained at a Management Committee meeting at
which an Operating Budget or Capital Expense Budget was to be considered and no
quorum is obtained for thirty (30) days after adjournment or postponement of any
such meeting (in either case, a "Budget Deadlock"),
then for the forthcoming Fiscal Year, until the Management Committee approves
the applicable budget for such Fiscal Year, (a) the Operating Budget for the
next succeeding Fiscal Year shall be equal to the Operating Budget applicable to
the then ending Fiscal Year, plus such amounts in excess of the prior Fiscal
Year's budgeted amounts necessary for the payment of taxes and other items not
within the reasonable control of the Company as well as increases in contract
services and personnel costs to the extent required to operate and maintain the
Project in accordance with the Operating Standard, but in no event in excess of
five percent (5%) of the prior Fiscal Year's Operating Budget and/or (b) the
Capital Expense Budget proposed for the next six (6) year period shall not be
implemented and the Capital Expense Budget previously approved by the Management
Committee shall remain in full force and effect for the period covered thereby
until resolution of the Budget Deadlock.  No Representative on the
Management Committee may object to a Capital Expense to be incurred in the then
current Fiscal Year in a proposed Capital Expense Budget if that expense was
previously approved by the Management Committee in the Capital Expense Budget
for such Fiscal Year. 

       

                  Section 6.5.  Other
Matters Relating to Contributions . 

       

      
        6.5.1. No Right
to Property.  Except as
provided in Section 15.2(b),
no Member shall have the right to demand or receive property in return for any
of its Capital Contributions.

      

       


                  Section 6.6.  Inspection
and Audit Rights.  The Company's correspondence,
records, general ledgers, canceled checks, time sheets, vouchers and books of
account will be made available to the Members at all times during the
Term.  All such items shall be maintained for a period of at least
seven (7) years following the creation thereof.  The Members further
acknowledge and agree that the approval of any Project Budget, Operating Budget
or Capital Expense Budget and the funding of expenditures for Project Costs,
Operating Expenses and Capital Expenses shall be without prejudice to the rights
of either Member to review and audit expenditures actually incurred to verify
that such expenditures are properly charged to the Project and are properly
stated in the correct amount (any such audit to be commenced within one year
following the dates such expenditures are reported in writing to the Management
Committee). 

       


                  Section 6.7.  Reporting.  In accordance with the Project
Management Agreement, the Project Management Company shall prepare and deliver
to the Management Committee on or before the twentieth (20th) day of each Month,
a statement of (a) all expenditures for Project Costs made during the prior
Month and a reconciliation of such Project Costs against the Project Budget,
(b) all expenditures for Operating Expenses made during the prior Month and
a 

       

      
         

        
          
            
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      reconciliation of such Operating Expenses against the
applicable Operating Budget, and (c) all Capital Expenses paid during the
prior Month and a reconciliation of such Capital Expenses against the applicable
Capital Expense Budget.


       


                  Section 6.8.  Financial
Statements.  The Management Committee shall
cause all of the Company's books and records to be kept in accordance with
generally accepted accounting principles consistently applied. The Management
Committee shall cause to be prepared and delivered to each Member (a) unaudited
monthly and year-to-date financial statements of the Company no later than
twenty (20) days after the end of each Month, and (b) audited annual financial
statements of the Company no later than seventy-five (75) days after the end of
each Fiscal Year. 

       

      ARTICLE
7 
POWER MARKETING
AND FUEL PROCUREMENT 

       

          
       Section 7.1.  Power
Marketing Agreement.  As soon as reasonably practicable
after the Trigger Date, in a period that is anticipated to end ninety (90) days
after the Trigger Date, the Management Committee shall negotiate and cause the
Company to enter into an Affiliate Contract with the Power Marketer (the "Power Marketing
Agreement") for the provision of the following services to the
Company:  the nomination, purchase and sale of natural gas necessary
to operate the Facility, the sale of Energy, Capacity and ancillary services
provided by the Facility, intra-day trading of Reserve Margin and Energy
generated therefrom (or other trading as directed by the Management Committee),
risk management, scheduling for, and the dispatch of, Energy, and other project
related commercial and operational activities assigned to it by the
Management Committee ("Power Marketing
Services").  The Members contemplate that natural gas will be
purchased from, and Energy, Capacity and ancillary services will be sold to,
third parties, and the Power Marketer shall handle scheduling, invoicing and
other administrative functions with respect thereto, but the Power Marketer
shall have no obligation to sell natural gas to the Company or purchase Energy,
Capacity or ancillary services from the Company or enter into any commitments
with respect thereto for which the Power Marketer could be
liable.  The Power Marketing Agreement shall incorporate Sections 7.1
through 7.5.  Upon
the effective date of the Power Marketing Agreement between the Company and the
initial Power Marketer, (a) the Power Marketing Agreement shall constitute
the entire agreement between the parties thereto relating to the subject matter
thereof and shall supersede the provisions of Sections 7.1
through 7.5 and
(b) all references in this Agreement to any of Sections 7.1
through 7.5
shall thereafter refer to the comparable provision of the Power Marketing
Agreement.  The Members acknowledge and understand that the Company
has entered into the Procurement and Marketing Agreement, dated as of July 27,
2001, between Cleco Marketing & Trading and the Company, which is intended
to function in conjunction with the PPAs.  Such Procurement and
Marketing Agreement is not the Power Marketing Agreement contemplated by this
Article 7 and, accordingly, this Article 7 shall remain in effect following the
execution and delivery of such Procurement and Marketing Agreement and until the
Power Marketing Agreement is executed and delivered following the Trigger Date.


       

                          7.1.1.Initial Power Marketer;
Power Marketing for Next Project.  The
Management Committee hereby designates Cleco Marketing & Trading as the
initial Power Marketer for the Company.  The Members agree that in the
event they or their Controlled 

       

      
         

        
          
            
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      Affiliates jointly develop and operate a second power plant
project together, Calpine shall have the option, but no obligation, to perform
(or have its Affiliate perform) the role of power marketer in connection with
such project on substantially the same terms as are set forth herein with such
changes as may then be deemed necessary or reasonable by the parties to
accommodate dissimilarities between the technical or commercial aspects of the
Project and the second project.


       


                          7.1.2.  Reimbursement.  The Power Marketer shall not be
entitled to any fee or reimbursement of expenses incurred in trading Energy,
Capacity or ancillary services for the Company.  The benefits to the
Member that is, or whose Affiliate is, the Power Marketer constitute the sole
and adequate consideration for the Power Marketer's performance of the trading
services.  However, the Power Marketer shall be entitled to receive
from the Company reimbursement of its labor, overhead and other reasonable
expenses and costs incurred in connection with its administration and management
of contracts in the Asset Book.  Such reimbursement shall constitute
Operating Expenses that will be budgeted in each Operating Budget and will be
subject thereto, and the Company shall cause such expenses to be paid out of the
Project Account. 

       


                          7.1.3.  Third
Party Assistance.  Without limitation to the last
sentence of Section 7.1.7,
the Power Marketer may from time to time submit proposals to the Management
Committee for the Company to engage consultants, advisors or other Persons to
assist with the Power Marketing Services, and if approved, such arrangements
will constitute Project Agreements, but the Power Marketer (a) shall have
no authority to enter into such arrangements on behalf of the Company and
(b) shall have no right to be reimbursed by the Company if it separately
enters into such arrangements, notwithstanding that the Company may have
benefited from such arrangements.

       

                          7.1.4.  Asset Management Policy Manual
;
Transfer Price.  On or before fifteen (15) months prior to the
anticipated Commercial Operation Date, the Power Marketer shall develop an asset
management policy manual, which shall be subject to the Management Committee's
approval ("Asset
Management Policy Manual"). 

       

                      (a)  The
Asset Management Policy Manual shall set the applicable price at which either
Member can purchase (or arrange for the purchase) of Capacity and Energy
pursuant to Section 7.3 (the
"Transfer
Price"), state the policies and procedures for all Power Marketing
Services, contain certain risk parameters for trading by the Power Marketer of
Capacity, Energy and ancillary services from the Facility (which the Management
Committee may change from time to time) and incorporate the provisions set forth
in Appendix I.  The
Transfer Price is anticipated to reflect the "all in" costs to the Company
allocable to the Capacity and Energy that either Member may purchase (or arrange
for the purchase of) from the Company hereunder.

       

              
       (b)  All Power Marketing
Services undertaken by the Power Marketer in connection with the Project shall
be undertaken in accordance with the Asset Management Policy Manual, and any and
all risk parameters set forth therein or that the Management Committee may from
time to time establish in connection therewith.  The Management
Committee may modify, amend or restate the Asset Management Policy Manual at any
time and from time to time in its discretion.

       

      
         

        
          
            
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                          7.1.5.  Asset Manager.  An
employee of the Power Marketer (or its Affiliate) will be appointed by the Power
Marketer, subject to the approval of the Management Committee, to direct,
oversee and coordinate the Power Marketing Services (the "Asset
Manager").  The Power Marketer shall provide the Asset Manager with
the necessary resources to accomplish his or her responsibilities
hereunder.  The Asset Manager shall report directly to the Management
Committee and shall be in routine daily contact with the Representatives of the
Member that is not acting as the Power Marketer. The appointed Asset Manager may
be terminated by the Management Committee (a) if he or she has failed to follow
the directions of the Management Committee in any material instance or to
observe any provision of this Agreement or the Asset Management Policy Manual,
after notice to the Asset Manager and the Power Marketer specifying the
infraction and the actions to be taken to remedy the same, and a reasonable
opportunity to cure such infraction has elapsed without remedying the
infraction, by a vote of the Management Committee (with such matter considered a
Disqualified Matter on which the Member that is, or whose Affiliate is, the
Power Marketer shall have no vote) or (b) if said individual dies, becomes
incapacitated or ceases working for a Member or its Affiliate.  In the
event the Asset Manager's appointment is being terminated, the Power Marketer
shall provide the Company with a plan for succession and orderly transition of
the Asset Manager's responsibility so that at no point will the Power Marketing
Services be interrupted, including, in the event an individual's appointment is
terminated under clause (b) above, the temporary appointment of a qualified
individual (which shall not require Management Committee approval) who shall
undertake the Asset Manager's responsibility in the interim until the Management
Committee shall have approved a replacement Asset Manager. 

       

                          7.1.6.  Standard of Conduct.  The
Power Marketer and its personnel (a) are and shall be fully experienced and
qualified to perform the Power Marketing Services; (b) shall perform the
Power Marketing Services in accordance with this Agreement and the Asset
Management Policy Manual, and in an effective and professional manner consistent
with the standards, skill, diligence and care that would be exercised by a
Person experienced in the power and gas marketing industry; (c) shall use
all commercially reasonable efforts to discharge its and their duties under this
Agreement in a manner that will maximize net revenues to the Company within the
defined risk parameters as set forth by the Management Committee from time to
time in the Asset Management Policy Manual; and (d) in performing the Power
Marketing Services, will comply with the instruction or directives of the
Management Committee.  The Power Marketer will not engage in
Self-Dealing Practices on behalf of itself or any of its
Affiliates.  The Power Marketer and its personnel will promptly
provide information to any Member and any Representative (and other Persons to
the extent requested by a Member or a Representative) upon request of such
Member or Representative.  In its performance of the Power Marketing
Services, the Power Marketer shall comply with (x) any requirements that
affect the Power Marketing Services arising under the Financing Documents and
(y) all Applicable Law to which the Power Marketer, its personnel, the
Company, its Members, or the Facility is or may be subject. 

        

                          7.1.7.  Asset
Book.  The
Power Marketer shall maintain a separate book for the Facility ("Asset Book")
identifying all open positions, hedging instruments and other commercial and
financial instruments resulting from the Power Marketing Services, all in
accordance with the Asset Management Policy Manual.  The Power
Marketer will settle all positions with the Company monthly, and, on or before
the tenth (10th)
day of each Month, 

       

      
         

        
          
            
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      (a) the Power Marketer shall render to the Company by
wire transfer to the Project Account, payment of all net revenues received by
the Power Marketer during the preceding Month, together with a statement setting
forth the calculation of the net revenues for the immediately preceding Month or
(b) the Power Marketer shall furnish to the Company a statement setting
forth the calculation of the net losses for the immediately preceding Month, and
the Company shall render to the Power Marketer by wire transfer payment of all
net losses incurred on behalf of the Company; provided, however, that if the
Management Committee has reasonable cause to believe that the Power Marketer has
engaged in Self-Dealing Practices or exceeded the limits on its authority
hereunder and such actions resulted in such net losses, the Management Committee
may suspend payment pending resolution of its concerns.  As will be
more specifically set forth in the Asset Management Policy Manual, and as an
exception to the prohibition in Section 7.1.2 on
fees and the reimbursement of expenses incurred in trading activities, the Power
Marketer may incur Operating Expenses on behalf of the Company that are directly
related to the sale of Energy, Capacity and ancillary services from the
Facility, such as broker's fees or commissions incurred in trading Energy,
Capacity or ancillary services from the Facility. 

       


                          7.1.8.  Dispatch.  The Power Marketer shall be
responsible for all dispatch of Energy and will communicate directly with the
Plant Manager in connection therewith.  In addition, the Power
Marketer will be responsible for coordinating all of the Facility's Maintenance
schedules with the Plant Manager. 

       

                          7.1.9.  Orderly Transition of Power
Marketer.  At
any time there is a change in the identity of the Power Marketer, the prior
Power Marketer shall cooperate with the Company and the succeeding Power
Marketer to ensure the prompt succession and orderly transition of the Power
Marketing Services.


       


                  Section 7.2.  Marketing
Annual Plan; Revenue and Forecasting Benchmarks. 

       

                          7.2.1.  Annual
Plan; Updates; Benchmarks.  On or before October 1, 2001, and
on each October 1st thereafter during the
Term, the Power Marketer shall prepare, and submit to the Management Committee
for its review and approval, an annual plan for Power Marketing Services for the
Facility for the upcoming period of January 1 through December 31 (the "Annual
Plan").  The Annual Plan shall contain the following: 

         

                    
 (a)  Revenue benchmarks setting forth the Power Marketer's
proposed net revenue goals for the Company over specified periods of time and
the frequency upon which the Power Marketer's performance shall be determined
(the "Revenue
Benchmarks"); and

       

                      (b)  An
annual forecast (the "Annual Forecast")
that sets forth the following:  (i) the variable maximum amounts of
Energy that the Power Marketer anticipates the Company will be required to
deliver each Month under all Offtake Agreements for the forecasted year,
together with reasonable margins above the delivery requirements under all
Offtake Agreements (such margins being referred to herein as the "Reserve Margin")
(collectively, the "Contracted Energy
Requirements"); (ii) the fixed amount of Capacity that the Power Marketer
believes in no event will be needed to meet the Contracted Energy Requirements
at any time during the forecasted year ("Uncommitted
Capacity"); 

       

      
         

        
          
            
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      and (iii) the variable amount of Capacity or "swing" (and the
associated Energy) that the Power Marketer anticipates will be available each
month after subtracting from the Facility's total Capacity both the Capacity
required to meet the Contracted Energy Requirements and the Uncommitted Capacity
(the "Available Swing
Energy").  The Power Marketer shall update the Contracted
Energy Requirements and the Available Swing Energy, and report such updates to
the Management Committee, on a monthly basis.

       

                          7.2.2.  Approval of Annual
Plan.  Within
fifteen (15) days after the submission of a proposed Annual Plan, the Power
Marketer shall meet with the Management Committee to discuss the proposed Annual
Plan and any suggested changes, comments or questions the Management Committee
may have regarding the Annual Plan. The Management Committee shall approve, or
suggest modifications to, the proposed Revenue Benchmarks and the Annual
Forecast as part of the approval process for the Annual Plan.  If the
Annual Plan is not approved by the Management Committee at such meeting, then
within ten (10) days after such meeting, the Power Marketer shall submit a
revised Annual Plan to the Management Committee, which addresses all of the
concerns raised by the Management Committee.  Within five (5) days
after the Management Committee receives the revised Annual Plan, the Management
Committee shall approve or reject the revised Annual Plan.  If the
revised Annual Plan is not approved, (a) the Management Committee shall
prepare a further revised Annual Plan and present it to the Power Marketer
within ten (10) days after the Management Committee rejects the Power Marketer's
revised Annual Plan and (b) the Power Marketer shall be deemed to have
approved the Management Committee's Annual Plan, and shall be bound to act in
accordance with such plan.  Pending approval of any Annual Plan, the
Power Marketer shall act in accordance with the most recently approved preceding
plan. 

       

                          7.2.3.  Implementation of Annual Plan;
Meetings.  After the Management Committee
approves an Annual Plan, the Power Marketer shall perform the Power Marketing
Services in accordance with the Annual Plan then approved by the Management
Committee (and the Asset Management Policy Manual) for the upcoming January 1
through December 31 time period.  During the January 1 through
December 31 time period to which the approved Annual Plan applies, the Power
Marketer and the Management Committee shall meet on a mutually agreeable day
during the first week of each of the following Months:  February, May,
and August, to consider any adjustments or modifications to the Annual Plan
necessary or desirable to achieve the objectives of maximizing net revenue
payable to the Company during the remaining portion of the applicable January 1
through December 31 time period. 

       


                          7.2.4.  Changes
to Annual Plan.  While the Management Committee and
the Power Marketer shall meet periodically in accordance with Section 7.2.3, any
Representative of the Management Committee or the Power Marketer shall be
permitted, at any time and from time to time, to suggest modifications to the
Annual Plan to the Management Committee.  The Management Committee and
the Power Marketer shall consider all such suggested modifications; provided, however, that the
Power Marketer shall not implement any such modification to the Annual Plan
unless and until such modification has been approved by the Management
Committee. 

       

      
         

        
          
            
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 Section 7.3.  Member
Marketing.  Each Member shall be entitled, but
shall not be required, to nominate and purchase for itself or for resale (or
arrange for third parties to nominate and purchase) from the Company, under
contract(s) having a term of not more than one year: 

             

             (a)  Up to
fifty percent (50%) of the Uncommitted Capacity, if any, and the Energy that can
be generated from this percentage of Uncommitted Capacity; and

       

              
       (b)  Up to fifty percent
(50%) of the Available Swing Energy.

       

      To do so, each Member must (i) pay the Transfer Price to the
Company, or cause it to be paid, and (ii) provide, or cause to be provided, all
of the dispatch requirements to the Asset Manager, who shall coordinate these
requirements as part of its services under Section 7.1.8.  The
contracting Member may not commit to provide any offtaker with any other type or
greater amount of output from the Facility than are permitted hereunder, and
neither the Company nor the other Member shall have any duty or liability to the
offtaker or any Person with respect to any such impermissible commitment.

       

                Section 7.4.  Replacement
of Power Marketer. 

       

                          7.4.1. Upon Failure
to Meet Performance Benchmarks.  In the event the Power
Marketer fails (a) to achieve or surpass the net revenue goals in accordance
with the approved Revenue Benchmarks or (b) to accurately forecast the
Contracted Energy Requirements, Uncommitted Capacity or Available Swing Energy
in the Annual Forecast, within the margins for accuracy established by the
Management Committee in the Asset Management Policy Manual, the Member who is
not then the Power Marketer (or whose Affiliate is not the Power Marketer) shall
have the right to designate itself or one of its Affiliates as Power
Marketer.  Such replacement Power Marketer shall assume all of the
obligations of the Power Marketer, including the obligations to (i) meet
the net revenue goals established by the most recently approved Revenue
Benchmarks and (ii) accurately forecast, within the margins for accuracy
established by the Management Committee in the Asset Management Policy Manual,
the Contracted Energy Requirements, Uncommitted Capacity and Available Swing
Energy.  The replacing Member shall provide the Power Marketer with
two (2) Business Days' advance notice of its removal for failure to meet the
foregoing performance benchmarks, and on the next Business Day, the replacing
Member or its Affiliate shall assume the former Power Marketer's trading
responsibilities, and the replacing Member or its Affiliate shall assume the
Power Marketer's contract administration and management functions as soon
thereafter as practicable, but in no event later than fourteen (14) days after
the date of the notice (or, if the 14th day is not a Business
Day, the next Business Day).


        

                          7.4.2.  Upon
Change in Control of Member.  In the event that Acadia Holdings
is, or its Affiliate is, the then acting Power Marketer and Acadia Holdings
ceases to (a) own at least a fifty percent (50%) Ownership Interest or (b) be a
Controlled Affiliate of Cleco, Calpine shall have the right, upon two (2) days'
prior notice to Acadia Holdings, to replace any then existing Power Marketer
designated by Acadia Holdings with a Person selected by Calpine, and such action
shall constitute a Disqualified Matter as to Acadia Holdings for all purposes
under this Agreement.  In the event that Calpine is, or its Affiliate
is, the then acting Power Marketer and Calpine ceases to (a) own at least a
fifty percent (50%) Ownership Interest or (b) be a 

       

      
         

        
          
            
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      Controlled Affiliate of Calpine Parent, Acadia Holdings shall
have the right, upon two (2) days' prior notice to Calpine, to replace the then
acting Power Marketer designated by Calpine with a Person selected by Acadia
Holdings, and such action shall constitute a Disqualified Matter as to Calpine
for all purposes under this Agreement.  In the event neither Calpine
nor Acadia Holdings can satisfy the foregoing requirements, then the Power
Marketer shall be selected by a vote of the Management Committee. 

       


                          7.4.3.  Upon
Default.  The
Management Committee shall at all times have the right to replace the Power
Marketer in the event (a) the VAR analysis of the Asset Book reveals a VAR
measure for the aggregate open position of the Asset Book that exceeds the
limits set forth in the Asset Management Policy Manual, (b) the Power Marketer
(or its Asset Manager) enters into any contract outside any other risk parameter
established in the Asset Management Policy Manual from time to time or (c) the
Power Marketer (or its Asset Manager) fails to comply with any material
obligation under this Agreement or the Asset Management Policy Manual regarding
the Power Marketing Services, after notice to the Asset Manager and the Power
Marketer specifying the infraction and the actions to be taken to remedy the
same, and a reasonable opportunity to cure such infraction has elapsed without
remedying the infraction.   Any such matters shall constitute a
Disqualified Matter as to the Member that is or whose Affiliate is the then
current Power Marketer. 

       

                  Section 7.5.  Fuel Supply by Members.  If
either Member or its Affiliates has fuel reserves of a suitable quality that are
capable of being transported to the Facility in an economical manner, the Power
Marketer and the Management Committee shall give special preference to Affiliate
Contract(s) proposed by such Member or its Affiliate for the sale of such fuel
reserves to the Company, provided that the proposed Affiliate Contracts have
terms at least as favorable to the Project as those available in the market from
unaffiliated third parties.


        

      ARTICLE 8
ASSET
OPTIMIZATION 

       

         
        Section
8.1. Asset
Optimization Committee.  The
Members recognize and agree that from time to time opportunities may arise which
allow for a more efficient use or more profitable use of the Company Assets to
the benefit of the Company.  Such opportunities are often first
identified by field personnel and others engaged in the actual day to day
operations of the Project, including fuel procurement and the marketing of
Energy, Capacity or ancillary services, and the Company will benefit from an
orderly process by which ideas for asset optimization may be presented and
developed for consideration by the Management Committee.  In order to
facilitate the presentation and development of ideas for asset optimization the
Company shall establish an Asset Optimization Committee (the “AOC”).

      

        

                  Section 8.2.  AOC
Participation.  The AOC shall consist of one (1)
representative of each Member, and a third representative of the Member not then
acting as the Power Marketer (each an "AOC Rep"), each
designated from time to time by such Member by notice to the other
Member.  By like notice, each Member shall also designate an alternate
for its AOC Rep(s) (each an "AOC Alternate") who
shall have authority to act in the absence of its AOC Rep(s).  An AOC
Alternate may take the place of any of its Member's AOC Rep(s) at a meeting of
the AOC.  Other employees or agents of the Members may also attend
meetings.  Any Member may at any 

       

      
         

        
          
            
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      time, by prior notice to the other Member, remove its AOC
Rep(s) or AOC Alternate(s) and designate a new AOC Rep(s) or AOC
Alternate(s).  Each AOC Rep shall serve on the AOC until his or her
successor shall be duly designated or until his or her death, resignation or
removal by the Member that appointed him or her.  At least six (6)
months before the scheduled Commercial Operation Date each Member shall give
notice to the other of the name, business address and business telephone number
of its AOC Rep(s) and AOC Alternate(s) and promptly after any change, give
notice to the other of any change in the identity, business address or business
telephone of its AOC Rep(s) or AOC Alternate(s).  The AOC may adopt
such rules of order, by-laws and policy statements and directives as it
considers necessary or appropriate for the conduct of its
business.  The AOC shall have no authority to act on behalf of the
Company or the Management Committee.  Its purpose is to provide a
forum for the presentation of proposals for asset optimization, to consider
which if any proposals should be considered by the Management Committee, and to
assist in the development of such proposals for presentation to and
consideration by the Management Committee.  No proposal for asset
optimization shall be acted upon without prior approval by the Management
Committee. 

        

                Section 8.3.  AOC
Meetings .

       

             8.3.1. Regular
Meetings.  The AOC shall meet
at least once each calendar quarter upon no less than ten (10) days’ prior
notice from the AOC Chair to the AOC Reps and AOC
Alternates.

       


                          8.3.2.  Special
Meetings.  In
addition to its regular quarterly meetings, special meetings of the AOC may be
called by the AOC Chair upon the request of a Member or the Plant Manager, as
applicable. 

       


                          8.3.3.  Telephonic
Meetings Permitted.  AOC Reps and AOC Alternates may
participate in a meeting of the AOC by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting. 

       


                  Section 8.4.  Chairman.  The Member that is not the Power
Marketer shall designate one (1) of its two (2) AOC Reps as the chairman of the
AOC (the "AOC
Chair") for each meeting of the AOC.  The AOC Chair shall
provide notice to each AOC Rep stating the place, date and hour of each meeting
of the AOC, together with an agenda for the meeting, not less than ten (10) days
before the date of the meeting (unless such notice is waived by each Member's
AOC Rep and/or AOC Alternate either at the meeting or by written
consent).  At least five (5) days before each meeting (or if the
meeting is called on shorter notice, as far in advance as is practicable under
the circumstances), detailed information on the matters to be considered by the
AOC will be provided to each AOC Rep and AOC Alternate.  The AOC Chair
or any AOC Rep or AOC Alternate may invite additional attendees to meetings of
the AOC.  Such attendees, who shall be identified at the commencement
of such meeting, shall have no power to vote on any matters but may participate
in discussions in accordance with the AOC's rules of order. 

       


                
 Section 8.5.  Vote
Required for Action.  The AOC shall consider each
proposal for asset optimization and assist in further developing the proposal
for submission to the 

       

      
         

        
          
            
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      Management Committee.  The AOC shall determine, by
majority vote, when a proposal is fully developed and ready to be submitted to
the Management Committee.  It is the purpose and goal of the AOC to
expedite the consideration and development of proposals for asset
optimization.  The AOC shall, therefore, act at all times with the
intent of expediting and facilitating the process of consideration and
development. 

       


                  Section 8.6.  Compensation.  AOC Reps and AOC Alternates shall
not be entitled to any compensation for their services as members of the
AOC. 

       


                
 Section 8.7.  Right to
Present Matters to Management Committee.  The provisions of this Article 8 shall not
be construed to preclude either Member from presenting any matter to the
Management Committee for consideration and action, notwithstanding that the AOC
may have determined not to submit such matter to the Management
Committee.  However, if a Member presents to the Management Committee
a matter that the AOC has determined not to submit to the Management Committee,
such Member shall disclose that fact to the Management Committee when the matter
is presented. 

       

      ARTICLE
9 
INSURANCE


       

      
        Section
9.1. Insurance.  Upon the direction of the Management Committee, the
Project Management Company shall, for the benefit of the Company, the Members,
the Project Management Company, the Representatives and the Alternates, and such
additional Persons as may be required by the Definitive Agreements, the
Financing Documents, or the Management Committee, procure and maintain (or cause
to be procured and maintained) insurance of the types, in the amounts and with
the deductibles specified in Exhibit
C (the “Insurance
Plan”).  Prior to the Commercial Operation Date, premiums
payable under the Insurance Plan shall constitute a Project Cost, and on and
after such date, an Operating Expense of the Facility.

      

       


      ARTICLE 10 
CASUALTY
DAMAGE 

       

                  Section 10.1.  Damage or
Destruction.  Should a Casualty to the Facility
or any part thereof occur, the Management Committee shall promptly decide on a
course of action with respect to the damaged or destroyed
Facility.  Insurance proceeds paid pursuant to the Insurance Plan for
loss of or damage to the Facility (herein sometimes referred to as the "Insurance Proceeds")
shall be deposited in the Project Account for use as directed by the Management
Committee, subject to the provisions of the Financing Documents. 

       


                   Section 10.2.  Option to
Terminate . 

       

                          10.2.1.  Damage or
Destruction of Substantially All of the Facility.  In the event that substantially
all of the Facility shall be damaged or destroyed by Casualty during the Term,
then within sixty (60) days after such damage or destruction, the Management
Committee shall confer as to whether to rebuild the Facility or whether to
dissolve the Company and windup the Project by taking the actions set forth in
Section 15.2.  If
the Management Committee does not agree on a course of action within such sixty
(60) day period, then within a thirty (30) day period following the end of the
sixty (60) day period, the Member desiring to rebuild the Facility 

       

      
         

        
          
            
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      shall have the right to purchase the Ownership Interest of
the other Member at a Purchase Price determined pursuant to the procedures set
forth in Section
22.17.  If neither Member has exercised such right within the
thirty (30) day period, then either Member may initiate the Windup Events by
notice to the other Member. 

       

                          10.2.2.  Proceeds and Deductibles
upon Termination.  If the Company is dissolved
pursuant to the provisions of Section 10.2.1,
Insurance Proceeds, if any, payable in respect of such damage or destruction
shall nonetheless be deposited into the Project Account prior to the Termination
Date.  If one Member is to acquire the other Member's Ownership
Interest pursuant to Section 10.2.1, then
the Insurance Proceeds, if any, payable in respect of such damage or destruction
shall be deposited in the Project Account (such account being an asset acquired
as part of such Member's acquisition of the Ownership Interests upon payment of
the Purchase Price), subject to the provisions of the Financing Documents.


       

      ARTICLE
11 
CONDEMNATION


       

                 
Section 11.1.  Condemnation
of Substantially All of the Facility. 

       

      
        11.1.1. Termination
Rights.  If, at any time
during the Term, title to the whole or substantially all of the Facility or the
Facility Site shall be taken in any Condemnation Action (or conveyed in lieu of
any such Condemnation Action), other than for a temporary use or occupancy that
is for one (1) year or less in the aggregate, then either Member may, at its
option (to be exercised with reasonable promptness in the circumstances, but in
all events within sixty (60) days after such taking), notify the other
Member of its election to dissolve the Company because of such Condemnation
Action and trigger the Windup Events.

      

       


                          11.1.2.  Condemnation
Awards.  All
Condemnation Awards payable as a result of or in connection with any taking of
the whole or substantially all of the Facility shall be deposited into the
Project Account, subject to the provisions of the Financing Documents. 

       


                  Section 11.2.  Condemnation
of Part.  In
the event of a Condemnation Action affecting less than the whole or
substantially all of the Facility and the Facility Site, the Term shall not be
reduced or affected in any way.  The Condemnation Award shall be paid
into the Project Account, and the Management Committee shall promptly thereafter
decide on a course of action with respect to disposition of such monies and any
actions required with respect to the remainder of the Facility and/or Facility
Site, subject to the provisions of the Financing Documents. 

       


               
  Section 11.3.  Temporary
Taking.  If
the whole or any part of the Facility or the Facility Site shall be taken in
Condemnation Actions for a temporary use or occupancy, the Term shall not be
reduced, extended or affected in any way. 

       


                  Section 11.4.  Survival.  The provisions contained in this
Article 11
shall survive the expiration or earlier termination of this Agreement, but only
insofar as such provisions relate to any Condemnation Action that arose prior to
the Termination Date.


       

      
         

        
          
            
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      ARTICLE 12 
DISTRIBUTIONS


       

                  Section 12.1.  Priority
Distributions.  During each Fiscal Year within the
Priority Period, if the Management Committee determines that the Company has
cash available after payment of the Special Distribution, required operating
expenses and liabilities of the Company, Reimbursable Member Expenses and
Project Management Expenses, the Company shall distribute to Acadia Holdings
cash in the amount of the Accumulated Priority Amount and the Priority Amount
("Priority
Distributions").  To support the performance of Calpine Energy
under the PPAs, Calpine Parent is providing three letters of credit for the
benefit of Acadia Holdings (the "Calpine
LCs").  If Acadia Holdings draws any Demand Amount (as defined
in the applicable Calpine LC) under any Calpine LC, such Demand Amount shall be
deemed to have been distributed by the Company to Acadia Holdings.  If
the stated amount of such Calpine LC is reinstated within five (5) Business Days
after the date of payment of such Demand Amount, then (a) the amount paid shall
be deemed a distribution to Acadia Holdings and shall be treated as a Priority
Distribution hereunder and (b) the Accumulated Priority Amount and the Priority
Amount otherwise owed to Acadia Holdings shall be reduced accordingly by the
amount of the Demand Amount.

       

                  Section 12.2.  Special Distribution to Calpine on
Restatement Date.The Company and Aquila Long Term, Inc.
("Aquila") are
entering into a Termination Agreement dated as of the Restatement Date ("Aquila Termination
Agreement"), which agreement terminates the Power Purchase Agreement by
and between the Company and Aquila, dated October 9, 2000, as amended on January
31, 2001.  Pursuant to the Aquila Termination Agreement, on the
Restatement Date Aquila shall pay the Aquila Termination Fee to the
Company.  Upon the Company's receipt of the Aquila Termination Fee,
the Company shall specially distribute to Calpine cash in the amount of the
Aquila Termination Fee (the "Special
Distribution").


       


                
 Section 12.3.  Ordinary
Distributions.  If at any time and from time to
time (other than in connection with the dissolution and termination of the
Company pursuant to Article 15), the
Management Committee determines that the Company has cash (or may draw on
unfunded loan commitments to the extent permitted by the Financing Documents)
that is not required for the operations of the Company, the payment of
liabilities or expenses of the Company, the payment of the Special Distribution,
Priority Distributions, Reimbursable Member Expenses and Reimbursable Project
Management Expenses or the setting aside of reserves to meet the anticipated
cash needs of the Company, unless the Management Committee shall decide
otherwise, it shall cause the Company to distribute such available cash, or draw
on any unfunded loan commitments to the extent permitted by the Financing
Documents, and distribute all or any portion of that excess cash and drawdown
funds to the Members Pro Rata, subject to the provisions of the Financing
Documents. In addition, within thirty (30) days following the Commercial
Operation Date, unless the Management Committee shall decide otherwise, it shall
cause the Company to distribute to the Members Pro Rata, the Development Fees,
subject to the provisions of the Financing Documents. 

       


                  Section 12.4.  Restricted
Distributions.  The Company, and the Management
Committee on behalf of the Company, shall not be required to make a distribution
to any 

       

      
         

        
          
            
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      Member on account of its Ownership Interest if and to the
extent that such distribution would violate Section 18-607 of the Delaware Act
or other Applicable Law.


        

      ARTICLE 13
ALLOCATIONS
OF PROFITS AND LOSSES

       

                  Section 13.1.  Allocations
of Profits.  After giving effect to the special
and curative allocations set forth in Sections 13.5 through
13.12 and Section 13.15,
any Profits of the Company for each Fiscal Year shall be allocated in the
following priority: 

       

           
          (a)  first,
to Acadia Holdings to the extent of the amount by which (i) the cumulative
Priority Amounts for the current Fiscal Year and all previous Fiscal Years
exceeds (ii) the cumulative Profits allocated to Acadia Holdings pursuant to
this Section 13.1(a)
for all previous Fiscal Years; and

       

               (b)  second,
to the Members Pro Rata.

       

                  Section 13.2.  Allocation of Losses.After
giving effect to the special and curative allocations set forth in Sections 13.5 through
13.12 and Section 13.15,
any Losses of the Company for each Fiscal Year shall be allocated to the Members
Pro Rata. 

       


                
 Section 13.3.Allocations
Upon Liquidation of the Company. 

       

           
          (a)  Notwithstanding
any other provision of this Agreement, if upon liquidation of the Company, the
cumulative Priority Amounts for the current Fiscal Year and all previous Fiscal
Years exceeds the cumulative Profits allocated pursuant to Section 13.1(a) for
all previous Fiscal Years, Profits (and, if necessary, items of gross income,
gain, loss and deduction) for such Fiscal Year shall be allocated in the
following priority:

       

                    
 (i)  first, to Acadia Holdings to the extent of the amount by
which the cumulative Priority Amounts for the current Fiscal Year and all
previous Fiscal Years exceeds the cumulative Profits allocated to Acadia
Holdings pursuant to Section 13.1(a) for
all previous Fiscal Years; and

       

                  
   (ii)  second, to the Members Pro Rata.

       

                
 Section 13.4.  Substantial Economic Effect of
Allocations.  Notwithstanding any other
provision of this Agreement to the contrary, for purposes of determining Profits
and Losses of the Company, no allocation of income, gain, loss, deduction, or
credit shall be made to a Member if such allocation would not have "substantial
economic effect" pursuant to Treasury Regulations § 1.704-1(b)
et seq., as such
regulations may be amended and in effect from time to time. 

       


            
     Section
13.5.  Minimum
Gain Chargeback.  Except as otherwise provided in
Treasury Regulation § 1.704-2(f),
notwithstanding any other provision of this Article 13, if
there is a net decrease in Company Minimum Gain during any Fiscal Year, each
Member shall be specially allocated items of Company gross income and gain for
such Fiscal Year (and, if necessary, for subsequent Fiscal Years) before any
other allocation under this Article 13 in an
amount equal to 

       

      
         

        
          
            
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      such Member's share of the net decrease in Company Minimum
Gain during such Fiscal Year, determined in accordance with Treasury Regulation
§  1.704-2(g).  Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto.  The items to be so
allocated shall be determined in accordance with Treasury Regulation
§ 1.704-2(f)(6) and Treasury Regulation
§  1.704-2(j)(2).  This Section 13.5 is
intended to comply with the minimum gain chargeback requirement in Treasury
Regulation § 1.704-2(f) and shall be applied and interpreted consistently
therewith. 

       


                  Section 13.6.  Member
Minimum Gain Chargeback.  Except as otherwise provided in
Treasury Regulation §  1.704-2(i)(4), notwithstanding any other
provision of this Article 13
(other than Section
13.5, if there is a net decrease in Member Nonrecourse Debt Minimum Gain
during any Fiscal Year, each Member who has a share of the Member Nonrecourse
Debt Minimum Gain, determined in accordance with Treasury Regulation
§  1.704-2(i)(5), shall be specially allocated items of Company gross
income and gain for such Fiscal Year (and, if necessary, for subsequent Fiscal
Years) in an amount equal to such Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain, determined in accordance with Treasury Regulation
§ 1.704-2(i)(4).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto.  The items to be so allocated shall
be determined in accordance with Treasury Regulation § 1.704-2(i)(4) and
Treasury Regulation §  1.704-2(j)(2).  This Section 13.6 is
intended to comply with the chargeback of partner nonrecourse debt minimum gain
requirement in Treasury Regulation §  1.704-2(i)(4) and shall be
applied and interpreted consistently therewith. 

       

                
 Section 13.7.  Qualified Income
Offset.  In the
event any Member unexpectedly receives any adjustment, allocation, or
distribution described in Treasury Regulation § 1.704-1(b)(2)(ii)(d)(4),
Treasury Regulation § 1.704-1(b)(2)(ii)(d)(5), or Treasury Regulation
§  1.704-1(b)(2)(ii)(d)(6), items of Company gross income and gain for
such Fiscal Year (and, if necessary, for subsequent Fiscal Years) shall be
specially allocated to each such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the deficit
balance in the Adjusted Capital Account of such Member as quickly as possible,
provided that an allocation pursuant to this Section 13.7
shall be made only if and to the extent that such Member would have an Adjusted
Capital Account deficit after all other allocations provided for in this Article 13 have been
tentatively made as if this Section 13.7
were not in this Agreement.  This Section 13.7 is
intended to constitute a "qualified income offset" provision within the meaning
of Treasury Regulation §  1.704-1(b)(2)(ii)(d). 

       


                  Section 13.8.  Excess
Losses.  In
no event shall Losses of the Company be allocated to a Member if such allocation
would cause or increase an Adjusted Capital Account deficit of such
Member.  All Losses of the Company in excess of the limitation set
forth in this Section
13.8 shall be allocated to the Members that have positive balances in
their Adjusted Capital Accounts in proportion to such positive balances, but
only to the extent that the Losses do not cause any Member to have a deficit
balance in its Adjusted Capital Account while any other Member has a positive
balance in its Adjusted Capital Account. 

       


                  Section 13.9.  Member
Nonrecourse Deductions.  Any Member Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Member or Members who
bear the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member 

       

      
         

        
          
            
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      Nonrecourse Deductions are attributable in accordance with
Treasury Regulation § 1.704-2(b) and Treasury Regulation
§  1.704-2(i)(1).


       

       


             
    Section
13.10.  Nonrecourse
Deductions.  Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Members in proportion to their
respective Ownership Interests.


       


              
   Section
13.11.  Curative
Allocations.  The allocations set forth in Sections 13.5
through 13.10
(the "Regulatory
Allocations") are intended to comply with certain requirements of
Treasury Regulations § § 1.704-1 and 1.704-2.  It is the
intent of the Members that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Company income, gain, loss or deduction pursuant
to this Article 13.  Therefore,
notwithstanding any other provisions of this Article 13
(other than the Regulatory Allocations), the Members shall make such offsetting
special allocations of Company income, gain, loss or deduction in whatever
manner they determine appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement. Any such allocation shall be made
by taking into account future Regulatory Allocations that, although not yet
made, are likely to offset other Regulatory Allocations previously made. 

       

                  Section 13.12.  Code § 754
Adjustments.  To the
extent an adjustment to the adjusted tax basis of any Company Asset pursuant to
Code § 734(b) or Code §  743(b) is required pursuant to Treasury
Regulation §  1.704-1(b)(2)(iv)(m)(2) or Treasury Regulation
§ 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
its Interest, the amount of such adjustment to Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in accordance with their Ownership Interests
in the event Treasury Regulation § 1.704-1(b)(2)(iv)(m)(2) applies, or to
the Member to whom such distribution was made in the event Treasury Regulation
§  1.704-1(b)(2)(iv)(m)(4) applies. 

       


                  Section 13.13.  Other
Allocation Rules.

       

               
      (a)  Profits, Losses and any other
items of income, gain, loss or deduction shall be allocated to the Members
pursuant to this Article 13 as of the last day of each Fiscal Year; provided
that Profits, Losses and such other items shall also be allocated at such times
as the Gross Asset Values of Company Property are adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value herein.

       

               
      (b)  For purposes of determining
the Profits, Losses, or any other items allocable to any period, Profits,
Losses, and any such other items shall be determined on a daily, monthly or
other basis, as determined by all of the Members using any permissible method
under Code §  706 and the Treasury Regulations thereunder.

       

             
        (c)  All allocations
to the Members as a group pursuant to this Article 13 shall, except as
otherwise provided, be divided among them according to their respective
Ownership Interests at the time of such allocations.

       

      
         

        
          
            
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        (d)  Except as
otherwise provided in this Agreement, all items of Company income, gain, loss,
deduction and any other allocations not otherwise provided for shall be divided
among the Members in the same proportions as they share Profits or Losses, as
the case may be, for such Fiscal Year.

       

           
          (e)  To
the extent permitted by the Code and applicable Treasury Regulations, tax
credits, if any, shall be allocated among the Members according to their
respective Ownership Interests at the time of such allocation.

       

               
      (f)  The Members are aware of the
income tax consequences of the allocations made by this Article 13 and
agree to be bound by the provisions of this Article 13 in reporting their
shares of Company income and loss for income tax purposes.

       

                  Section 13.14.  Code § 704(c)
Allocations.  In
accordance with Code §  704(c) and the Treasury Regulations thereunder,
income, gain, loss and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
Gross Asset Value using an allocation method pursuant to Code §  704(c) as
selected by the Management Committee; and if the Members are unable to agree on
a method, then the traditional method, subject to the ceiling rule provided in
Treasury Regulation §  1.704-3(b), shall be utilized.  In the
event the Gross Asset Value of any Company Asset is adjusted as required by the
definition of "Gross
Asset Value" contained in Appendix A,
subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code §  704(c) and the Treasury Regulations thereunder.
Allocations pursuant to this Section 13.14
are solely for purposes of Taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Profits,
Losses, other items, or distributions pursuant to any provision of this
Agreement.  Any elections or other decisions relating to such
allocations shall be made by the Management Committee. 

       


              
   Section
13.15.  Special
Calpine Allocations.  All Profits, Losses and items of
income, gain, loss and deduction of the Company (after giving effect to the
special and curative allocations set forth in Sections 13.5
through 13.12)
that are attributable to the termination effected by the Aquila Termination
Agreement and receipt by the Company of the Aquila Termination Fee shall be
specially allocated to Calpine.


        

      ARTICLE 14
DISPOSAL
OF INTERESTS 

       

                  Section 14.1.  Disposition
by Members.  Any Disposition by any Member of
all or part of its Ownership Interest to any Person other than a Controlled
Affiliate of the Disposer shall be made only upon the prior written consent of
the other Member, which consent shall not be unreasonably withheld, conditioned
or delayed.  Notwithstanding anything to the contrary contained
herein, in no event may any Member dispose of all or any part of its Ownership
Interest to a Controlled Affiliate or any other Person if as a consequence
thereof the Company shall (a) lose its status as an Exempt Wholesale Generator
(as defined by FERC) or any 

       

      
         

        
          
            
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      comparable status under then Applicable Law, or (b) otherwise
become subject to any Applicable Law to which it was not previously subject and
which would result in any material increase in its costs of operation or
decrease in its operating flexibility. 

       


                
 Section 14.2.  Right of
First Refusal.  If any Member desires to Dispose
of all or part of its Ownership Interest to any Person, it may do so only after
the following conditions have been met. The proposed Disposer must have received
a bona fide third party written offer to Dispose of its Ownership Interest that
the Disposer is able and willing to accept (the "Third Party
Offer").  The proposed Disposer must notify the other Member in
writing of the Third Party Offer and, if such Third Party Offer includes
non-cash consideration, the proposed Disposer shall also furnish its reasonable
good faith estimate of the Fair Market Value of such non-cash
consideration.  A copy of the Third Party Offer must accompany this
notice to the other Member.  Upon receipt of the proposed Disposer's
notice of a Third Party Offer, the other Member shall have the right to purchase
the same portion of the Disposer's Ownership Interest as was proposed to be
acquired in the Third Party Offer for the price and upon the terms of such Third
Party Offer (including cash in an amount equivalent to the Fair Market Value of
any non-cash consideration included in the Third Party Offer).  Within
thirty (30) days after its receipt of the proposed Disposer's notice of the
Third Party Offer, the other Member may exercise this right by delivering a
written notice to the Disposer of such Member's intent to purchase said portion
of the Disposer's Ownership Interest.  If the other Member does not
notify the proposed Disposer of its intent to purchase the applicable portion of
the Disposer's Membership Interest, in writing, within thirty (30) days of
receiving the Disposer's notice of the Third Party Offer, the proposed Disposer
shall be free to Dispose of the applicable portion of its Ownership Interest to
such third party, but only if all of the following conditions are met: 

       

              
       (a)  The price and terms of
the Disposition must be the same as, or more favorable to, the proposed Disposer
than the Third Party Offer;

       

            
         (b)  The
Disposition must be consummated within four (4) months of the date the other
Member received the notice of the Third Party Offer; and

       

            
         (c)  The other
Member must consent to the identity of the Disposee, which consent shall not be
unreasonably withheld, conditioned or delayed.  If a Member
contemplates Disposing of all or any part of its Ownership Interest in the
future, then such proposed Disposer may request the other Member to give advance
consent to the identity of the proposed transferee(s).  If the other
Member gives its advance consent to one or more proposed transferee(s), such
consent shall be effective for a period of one (1) year from the date given, and
the other Member may not revoke its consent to the identity of such proposed
transferee(s) during this period.

       

                  
Section 14.3.  Further
Requirements. 

       

           
          (a)  Any
Disposition or Encumbrance of an Ownership Interest or a part thereof by a
Member must comply with any applicable provisions of the Financing Documents,
the Project Agreements and any other agreement to which the Company is a
party.

       

      
         

        
          
            
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 (b)  In the case of a Disposition, the Disposee must execute and
deliver to the Company, and to the other Member, a written instrument in form
and substance acceptable to the Company's counsel containing, among any other
reasonable and usual terms required by the Company's counsel, an acknowledgement
by the Disposee that it has accepted and assumed all of the terms of this
Agreement (including the terms of this Article 14) and has, subject to Section 14.5,
become a Member of the Company.

       

           
          (c)  If,
as a result of the proposed Disposition, there will be more than two (2) Members
of the Company, all the existing and intended Members following such Disposition
must have mutually agreed to an amendment to this Agreement to account for
ownership by more than two Members.

       

           
          (d)  The
Disposer or proposed Disposer shall reimburse the Company and the other Member
(or cause them to be reimbursed) for any and all reasonable expenses incurred by
the Company or the other Member in connection with complying with the provisions
of this Section 14.3 and
otherwise in connection with the Disposition or proposed Disposition.

       

                  Section 14.4.  Equitable Relief.  A Member may not Dispose of or
Encumber all or any portion of its Ownership Interest except in strict
accordance with this Article
14.  Any attempted Disposition or Encumbrance of all or any
portion of an Ownership Interest, other than in strict accordance with this
Article 14,
shall be and is hereby declared null and void ab
initio.  The Members agree that breach of the provisions of
this Article 14
may cause irreparable injury to the Company and the Members for which monetary
damages (or other remedy at law) are inadequate in view of (a) the complexities
and uncertainties in measuring actual damages that would be sustained by reason
of the failure of a Member to comply with such provisions, and (b) the
uniqueness of the Company's business and the relationship among the
Members.  Accordingly, the Members agree that the provisions of this
Article 14 may
be enforced by specific performance.  The Members acknowledge that the
Disposition or Encumbrance of Ownership Interests may be subject to further
restrictions imposed by the terms of the Project Agreements or the Financing
Documents.  

       


                  Section 14.5.  Disposee
to Become Member.  Upon all conditions to the
Disposition being satisfied, and, upon obtaining the required consent therefor
from the Members as set forth in Section 14.1,
the Disposee of a Disposition shall become a Member. 

       


                  Section 14.6.  Sales of
Interest in a Member.

       


                          14.6.1.  Notice;
Option to Buy Ownership Interest.  Calpine warrants and
represents to Acadia Holdings that it is an indirect wholly owned subsidiary of
Calpine Parent, and Acadia Holdings warrants and represents to Calpine that it
is an indirect wholly owned subsidiary of Cleco.  Calpine and Acadia
Holdings each acknowledge and agree that they have entered into this Agreement
in consideration of the fact that Calpine is a Controlled Affiliate of Calpine
Parent and Acadia Holdings is a Controlled Affiliate of Cleco and in light of
the benefits that those relationships may bring to the
Company.  Consequently, it is agreed by the Members that
(a) should there ever be a Disposition of an interest in Acadia Holdings,
or in any entity (other than Cleco) that directly or indirectly owns a
beneficial interest in Acadia Holdings, and following such Disposition, Acadia
Holdings is not a Controlled Affiliate of Cleco or (b) should 

       

      
         

        
          
            
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      there ever be a Disposition of an interest in Calpine, or in
any entity (other than Calpine Parent) that directly or indirectly owns an
interest in Calpine, and following such Disposition, Calpine is not a Controlled
Affiliate of Calpine Parent, the affected Member shall provide prior notice of
such Disposition to the other Member.  Such notice shall specify the
identity of the proposed Disposee and describe the nature of the transaction in
which such Disposition is to occur (or be accompanied by a draft copy of the
instrument(s) by which the Disposition is to occur).  Except as
provided in Section 14.6.2,
within thirty (30) days following receipt of such notice, the Member receiving
such notice shall have the right to purchase the Ownership Interest of the other
Member at a Purchase Price determined in accordance with the procedures set
forth in Section 22.17.


       

                          14.6.2.  No Option for Minority
Member.  If the Member entitled to notice of a proposed
Disposition under Section 14.6.1
is no longer a Controlled Affiliate, such Member shall not have the right to
purchase the Ownership Interest of the Member that will be affected by the
proposed Disposition.


        

      ARTICLE 15
DISSOLUTION AND WINDING UP


       

      
        Section
15.1. Events of
Dissolution.  The Company
shall be dissolved and its affairs shall be wound up:

         

      

           
          (a)  Upon
the expiration of the Term of the Company as set forth in Section 2.9;

       

           
          (b)  Upon
the decision of the Management Committee;

       

           
          (c)  Upon
the election of either Member following the failure of each Member to exercise
its right to acquire the Ownership Interest of the other Member in accordance
with Section 10.2.1;

       

              
       (d)  Upon the election of
either Member following a Condemnation Action affecting the whole or
substantially all of the Facility or the Facility Site in accordance with Section 11.1;

       

           
          (e)  Upon
Acadia Holdings' election under Section 3.2.4 or
otherwise as provided for in Section 3.2.4;

       

            
         (f)  Upon the
election of a Non-Electing Member following receipt of an Opt-Out Notice in
accordance with Section 3.4;

       

              
       (g)  Upon the occurrence of
an Event of Default under Section 18.1 and the
election of the Non-Defaulting Party to trigger the Windup Events pursuant to
Section 18.2;
or

       

              
       (h)  Upon the entry of a
decree of judicial dissolution pursuant to Section 18-802 of the Delaware
Act.

       

      
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      Section
15.2. Winding
Up.

       

      15.2.1. Windup
Events.  Upon dissolution of the Company, the Company shall
continue its existence solely for the purpose of winding up its
affairs.  The “Windup Events” shall
consist of the following actions:

       

            
         (a)  The
Management Committee shall terminate all Project Agreements in accordance with
the terms thereof;

       

               
      (b)  The Management Committee or,
if the Members unanimously agree to appoint a liquidating trustee, the
liquidating trustee (the Management Committee or such liquidating trustee, as
the case may be, being referred to herein as the "Liquidator"), shall
(i) timely dispose of the salvageable Company Assets by sale, auction, partition
or in-kind distribution, in the Liquidator's discretion (except as to the
matters provided for in Section 15.2.3
as to which the Liquidator has no discretion), (ii) deposit any proceeds of the
disposition in the Project Account, (iii) undertake other necessary steps for
the winding up of the Project, including disbursement of any balance remaining
in the Project Account and the Capital Expense Account after the payment of all
indebtedness of the Company; and (iv) notify the Management Committee when such
actions have been completed; and

       

            
         (c)  Upon
receipt of notice that the winding up activities have been completed, and
verification of same by the Management Committee, the Management Committee shall
terminate this Agreement and the Definitive Agreements, and the parties hereto
and thereto shall be released from and shall have no obligation hereunder or
under the Definitive Agreements to which they were parties arising on and after
the Termination Date, except for such obligations that expressly survive the
termination hereof or thereof.

       

                          15.2.2.  Liquidator's
Duties.  The winding up process shall be carried out at
the direction of the Liquidator.  In winding up the Company's affairs,
every effort shall then be made to dispose of the Company Assets in an orderly
manner, having regard to the liquidity, divisibility and marketability of the
Company Assets and consistent with the considerations set forth in Section 15.3.  If
the Liquidator determines in its discretion (except as to the matters provided
for in Section 15.2.3
as to which the Liquidator has no discretion) that it would be imprudent to
dispose of any non-cash Company Assets by sale or auction, the Liquidator may
distribute such assets in kind to the Members, in lieu of cash, proportionately
to their rights to receive cash distributions hereunder.  The
Liquidator shall not be entitled to be paid by the Company any fee for services
rendered in connection with the liquidation of the Company, but shall be
reimbursed by the Company for all third party costs and expenses incurred by it
in connection therewith and shall be indemnified by the Company with respect to
any action brought against it in connection therewith by applying, mutatis mutandis, the
provisions of Article
17. 

       


                          15.2.3.  In-Kind
Distribution of Contributed Assets.  Should the event
resulting in the commencement of the Windup Events occur prior to the earlier of
Financial Closing and the date that the last of the four (4) combustion turbine
generators is delivered to the Facility Site: 

       

      
         

        
          
            
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          (a)  Provided
that Calpine is not a Defaulting Party whose Event of Default resulted in the
commencement of the Windup Events, at Calpine's election in its sole discretion
(and the Liquidator shall have no discretion with respect thereto), upon
commencement of the Windup Events, the Liquidator shall either convey the
combustion turbine generators to Calpine or cause the Company to assign the
Combustion Turbine Purchase Contract to Calpine if the combustion turbine
generators have not yet been acquired by the Company; and

       

           
          (b)  Except
as otherwise provided under Section 15.2.3(a),
provided that the Member is not a Defaulting Party whose Event of Default
resulted in the commencement of the Windup Events, at each Member's election in
its sole discretion (and the Liquidator shall have no discretion with respect
thereto), upon commencement of the Windup Events, the Liquidator shall convey to
each electing Member the following assets in kind:

       

                             (i)  Those
assets selected by such Member from among the assets it contributed to the
Company; and

       

                          (ii)  After
each electing Member makes its selection under clause (i) of this Section 15.2.3(b),
the remaining Company Assets selected by such Member (which may include any
remaining assets contributed to the Company by the other Member).

       

      In the case of the Liquidator's distribution of assets
in-kind under Section 15.2.2
or a Member's election to receive an in-kind distribution of assets under this
Section 15.2.3,
such assets shall be valued at their Gross Asset Value.  In the event
a Member elects to receive assets in-kind pursuant to this Section 15.2.3
and, as a result, there are insufficient assets remaining in the Company to
allow a Pro Rata cash distribution to the other Member, the Member who has
elected to receive assets in kind (or if both, the Member receiving the assets
with the greater Gross Asset Value) shall contribute such cash to the Project
Account as is necessary so that the Liquidator may make a Pro Rata cash
distribution to the other Member in accordance with Section 15.5.

       

                          15.2.4.  Reimbursement for Third Party
Expenses.  In the event the Windup Events are commenced
prior to the date on which the assets listed on Appendix B have been contributed
to the Company pursuant to Section 3.2.2, with respect to the assets each
Member would have contributed, each such Member shall be considered a creditor
of the Company for the total amount of the Third Party Expenses incurred by it
or its Affiliates in connection with acquiring such assets on or before the date
the Windup Events commence, and each such Member shall be entitled to be
reimbursed therefor by the Company pursuant to clause (a) of Section 15.5.  In
the event the Company is required to reimburse a Member under this Section 15.2.4
but there are insufficient assets remaining in the Company in order to make such
payment, the other Member shall contribute such cash to the Project Account as
is necessary so that the Liquidator may reimburse the Member entitled to
reimbursement for Third Party Expenses hereunder. 

       

      
         

        
          
            
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                  Section 15.3.  Objective
of Winding Up.  In winding up the business of the
Company, the Liquidator shall wind up the Company in an orderly and prudent
manner consistent with the Company's then-existing obligations, with the goals
of fulfilling the Company's contractual obligations, protecting customer
goodwill and assuring customer service, limiting any residual liability to the
Members and effecting a division of Company Assets in accordance with the
provisions of this Agreement. 

       

             
    Section
15.4.  Effect of a Member's
Bankruptcy.  The
occurrence of the Bankruptcy of a Member shall not cause a Member to cease to be
a Member of the Company, and, except as expressly provided in
Section 18.2(b), upon the occurrence of such an event, the business of the
Company shall be continued without dissolution. 

       


                  Section 15.5.  Application
and Distribution of Company Assets.  The Company Assets in winding up
shall be applied or distributed as follows: 

           

             (a)  first,
to creditors of the Company (including Members that are creditors), whether by
payment or the making of reasonable provision for the payment thereof, and
including any contingent, conditional and unmatured liabilities of the Company,
taking into account the relative priorities thereof;

       

           
          (b)  second,
to the members in accordance with their positive Capital Accounts until all such
Capital Accounts equal zero; and

       

           
          (c)  any
remaining amounts Pro Rata to the Members.

       

      A reasonable reserve for contingent, conditional and
unmatured liabilities in connection with the winding up of the business of the
Company shall be retained by the Company until such winding up is completed or
such reserve is otherwise deemed no longer necessary by the Liquidator.

       

                
 Section 15.6.  Capital Account
Adjustment. For purposes of
determining a Member's Capital Account, if, on liquidation and dissolution of
the Company, some or all of the Company Assets are distributed to the Members in
kind, Company Profits (or Losses) shall be increased by the Profits (or Losses)
that would have been realized had such assets been sold for their respective
Fair Market Values on the date of dissolution of the Company, as determined by
the Liquidator.  Any such increase pursuant to the preceding
sentence:  (a) shall be allocated to the Members in accordance
with Article
13; and (b) shall increase (or decrease) the Members' Capital
Account balance accordingly.


       


                 
Section 15.7.  Termination
of the Company.  The Company's existence shall
terminate when all Company Assets, after payment of or due provision for all
debts, liabilities and obligations of the Company, shall have been distributed
to the Members in the manner provided for in this Article 15, and the
Certificate of Formation shall have been canceled in the manner required by the
Delaware Act. 

       


                  Section 15.8.  Deficit
Capital Accounts.  Except as provided in Section 15.2.3
and Section 15.2.4
and in the last sentence of this Section 15.8, if any
Member has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all Fiscal Years, including the
Fiscal Year during which the liquidation of the Company occurs), 

       

      
         

        
          
            
              -54-

            

            
              

            

          

        

         

      

      such Member shall have no obligation to make any contribution
to the capital of the Company with respect to such deficit, and such deficit
shall not be considered a debt owed to the Company or to any other Person for
any purpose whatsoever.  Notwithstanding any other provision in this
Agreement, if Acadia Holdings receives an amount of Priority Distributions
during the Fiscal Year in which liquidation of the Company occurs that exceeds
the amount of Priority Distributions to which Acadia Holdings is entitled for
such Fiscal Year, taking into account the proportionate reduction in the
Priority Amount for the Fiscal Year in which liquidation occurs (as provided for
in the definition of "Priority Amount" set
forth in Appendix
A), Acadia Holdings shall return such excess Priority Distributions to
the Company prior to distribution of the Company Assets in accordance with Section 15.5.

       

      ARTICLE 16
TAXES


      
         

        Section
16.1. Tax
Matters Partner.  The
Management Committee hereby designates Calpine as the “tax matters partner” of
the Company pursuant to Code § 6231(a)(7) (the “Tax
Matters Partner”), provided,
however,
that if (i) there occurs an Event of Default (as defined in the 2001 PPA or the
2003 PPA) by Calpine Energy, or any successor or assignee to Calpine Energy
under the 2001 PPA or the 2003 PPA that is an Affiliate of Calpine Parent, and
(ii) the Company terminates one or both PPAs due to such Event of Default, then
upon request by Acadia Holdings, within thirty (30) days following the date of
such request, the Management Committee shall remove Calpine as the Tax Matters
Partner and Acadia shall be designated as the replacement Tax Matters
Partner.  The Tax Matters Partner shall take such action as may be
necessary to cause the other Member to become a “notice partner” within the
meaning of Code § 6223.  The Tax Matters Partner shall inform the
other Member of all significant matters that may come to its attention in its
capacity as Tax Matters Partner by giving notice thereof to the other Member on
or before the fifth (5th)
Business Day after becoming aware thereof and, within that time, shall forward
to the other Member copies of all significant written communications it may
receive in that capacity.  The Tax Matters Partner may not take any
action contemplated by Code § 6222 through 6231 without the consent of the
other Member.

      
  

                 
Section 16.2.  Tax
Returns.  The
Tax Matters Partner shall cause to be prepared and timely filed all necessary
Tax returns and reports for the Company, including making the elections
described in Section 16.3,
and shall provide to the other Member copies of all such Tax returns within
thirty (30) days after they have been filed. The Tax Matters Partner shall
furnish to the other Member within ninety (90) days after the end of each Fiscal
Year all Tax reporting information and such additional information as the other
Member shall reasonably request for purposes of preparing any income tax return
of such Member or any of its Affiliates.  The other Member shall
furnish to the Tax Matters Partner all pertinent information in its possession
or that can reasonably be obtained relating to Company operations that is
necessary to enable the Company's Tax returns and reports to be prepared and
timely filed. 

       


                
 Section 16.3.  Tax
Elections.  The Tax Matters Partner shall make
the following elections for the Company on the appropriate tax returns: 

       

                      (a)  To
adopt the calendar year as the Company's Fiscal Year;

       

      
         

        
          
            
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        (b)  To adopt the
accrual method of accounting applied in a consistent manner for purposes of
maintaining the Company's books and records and for federal income tax
purposes;

       

                      (c)  If
a distribution of Company Assets as described in Code § 734 occurs or if a
transfer of an Ownership Interest as described in Code § 743 occurs, on
written request of the other Member or the Tax Matters
Partner's own election, to elect, pursuant to Code § 754, to adjust the
basis of the Company Assets;

       

                   
 (d)  To elect to amortize the organizational expenses of the
Company and the startup expenditures of the Company under Code § 195
ratably over a period of sixty (60) months as permitted by Code
§ 709(b);

       

                           (e)  To
elect to adopt the Code § 704(c) allocation methods with respect to
property contributions by the Members; and

       

                
          (f)  Any
other election the Management Committee may deem appropriate and in the best
interests of the Members.

       

      The Members acknowledge that this Agreement creates a
partnership for federal income tax purposes.  Neither the Company nor
any Member may make an election for the Company to be excluded from the
application of the provisions of subchapter K of chapter 1 of subtitle A of the
Code or any similar provisions of applicable state law, and no provision of this
Agreement shall be construed to sanction or approve such an election.

       

                 
Section 16.4.  Survival of Tax
Provisions.  The
terms of this Article 16 shall survive the termination of this Agreement and the
termination of any Member's ownership of an Ownership Interest in the Company,
and shall remain binding on the Members for the period of time necessary to
resolve any Tax matters regarding the Company until the resolution of all Tax
matters. 

        

      ARTICLE 17
LIABILITY,
EXCULPATION AND INDEMNIFICATION 

       

      
        Section
17.1. Liability.  Except as otherwise provided by the Delaware Act,
the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be obligated personally
for any such debt, obligation or liability of the Company solely by reason of
being a Covered Person.

      

        

                  Section 17.2.  Exculpation. 

       

                      (a)  No
Covered Person shall be liable to the Company or any other Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Covered Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such loss, damage or claim incurred by reason of such Covered Person's
gross negligence or willful misconduct.

       

      
        
          
            -56-

          

          
            

          

        

      

       

             
        (b)  A Covered Person
shall be fully protected in relying in good faith upon the records of the
Company and upon such information, opinions, reports or statements presented to
the Company by any Person selected by the Management Committee as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which distributions to Members might properly be paid.

       

                Section 17.3.  Duties
and Liabilities of Covered Persons .

       

               
      (a)  To the extent that, at law or
in equity, a Covered Person has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to any other Covered Person, a
Covered Person acting under this Agreement shall not be liable to the Company or
to any other Covered Person for its good faith reliance on the provisions of
this Agreement.  The provisions of this Agreement, to the extent that
they restrict the duties and liabilities of a Covered Person otherwise existing
at law or in equity, are agreed by the Members to replace such other duties and
liabilities of such Covered Person.

       

             
        (b)  Unless otherwise
expressly provided herein, whenever a conflict of interest exists or arises
between Covered Persons, or whenever this Agreement or any other agreement
contemplated herein provides that a Covered Person shall act in a manner that
is, or provides terms that are, fair and reasonable to the Company or any
Member, the Covered Person shall resolve such conflict of interest, taking such
action or providing such terms, considering in each case the relative interest
of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, including the Operating
Standard, and any applicable generally accepted accounting practices or
principles.  In the absence of bad faith by the Covered Person, the
resolution, action or term so made, taken or provided by the Covered Person
shall not constitute a breach of this Agreement or any other agreement
contemplated herein or of any duty or obligation of the Covered Person at law or
in equity or otherwise.

       

               
      (c)  Whenever in this Agreement a
Covered Person is permitted or required to make a decision (i) in its
"discretion" or under a grant of similar authority or latitude, the Covered
Person shall be entitled to consider such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Company or any other
Person, or (ii) in its "good faith" or under another express standard, the
Covered Person shall act under such express standard and shall not be subject to
any other or difference standard imposed by this Agreement or other Applicable
Law.

       

                 
Section 17.4.  Indemnification.  To the
fullest extent permitted by applicable law, a Covered Person shall be entitled
to indemnification from the Company for any loss, damage or claim incurred by
such Covered Person by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person's gross negligence or
willful misconduct with respect to such acts or omissions, provided that any


       

      
        
          
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      indemnity under this Section 17.4
shall be provided out of and to the extent of Company assets only, and no
Covered Person shall have any personal liability on account thereof. 

       

                 
Section 17.5.  Expenses.  To the
fullest extent permitted by applicable law, expenses (including legal fees)
incurred by a Covered Person in defending any claim, demand, action, suit or
proceeding shall, from time to time, be advanced by the Company prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the Company of an undertaking by or on behalf of the Covered Person, in form
and substance acceptable to the Management Committee, to repay such amount if it
shall be determined that the Covered Person is not entitled to be indemnified as
authorized in Section 17.4. 

       


      ARTICLES 18
DEFAULTS
AND REMEDIES 

       

                  Section 18.1.  Defaults
and Cure Periods.  The occurrence of any of the
following events: 

       

                      (a)  The
material breach of any provision of this Agreement by a Member;

       

             
        (b)  The institution
by a Member of proceedings of any nature under any Law, whether now existing or
subsequently enacted or amended, for the relief of debtors wherein such Member
is seeking relief as a debtor;

       

                      (c)  A
general assignment by a Member for the benefit of creditors;

       

             
        (d)  The institution
by a Member of a case or other proceeding as a debtor under any section or
chapter of the federal Bankruptcy Code or other bankruptcy or insolvency Law as
now existing or hereafter amended or becoming effective;

       

                    
 (e)  The institution against a Member of a case or proceeding
under any section or chapter of the federal Bankruptcy Code or other bankruptcy
or insolvency Law as now existing or hereafter amended or becoming effective,
which proceeding is not dismissed, stayed or discharged within a period of sixty
(60) days after the filing thereof or, if stayed, which stay is thereafter
lifted without a contemporaneous discharge or dismissal of such
proceeding;

       

                      (f)  The
appointment of a receiver, custodian, liquidator, trustee or like officer, to
take possession of assets of a Member having a value in excess of $1,000,000 if
the pendency of said receivership would reasonably tend to have a materially
adverse effect upon the performance by said Member of its obligations under this
Agreement, which receivership remains undischarged for a period of ninety (90)
days from the date of its imposition;

       

            
         (g)  The
admission by a Member in writing of its inability to pay its debts as they
mature;

       

                
     (h)  The attachment, execution or other
judicial seizure of all or any substantial part of a Member's assets or of a
Member's Ownership Interest, or any part thereof, such 

       

      
        
          
            -58-

          

          
            

          

        

      

       

       

      attachment, execution or seizure being with respect to an
amount of not less than $1,000,000 and remaining undismissed or undischarged for
a period of fifteen (15) days after the levy thereof, if
the occurrence of such attachment, execution or other judicial seizure would
reasonably tend to have a materially adverse effect upon the performance by such
Member of its obligations under this Agreement; provided, however, that such an
attachment, execution or seizure shall not constitute an Event of Default
hereunder if such Member posts a bond sufficient to fully satisfy the amount of
such claim or judgment within fifteen (15) days after the levy thereof and the
Member's assets are thereby released from the lien of such attachment;

       

                
     (i)  Fraud by a Member which relates to
the Company or the Members; or

       

             
        (j)  The occurrence of
a Contribution Default and/or breach of any guarantee provided by such Member or
its Affiliate in connection with any Capital Contribution;

       

      shall constitute an event of default ("Event of Default")
hereunder on the part of the Member with respect to whom such event occurs
("Defaulting
Party") if, within thirty (30) days following notice of any non-monetary
default, and if, within ten (10) days following notice of default due to the
non-payment of monies due hereunder the Defaulting Party fails to pay such
monies, or in the case of non-monetary defaults which can be cured, fails to
commence substantial efforts to cure such default or, having commenced to cure,
thereafter fails within a reasonable time to prosecute to completion with
diligence and continuity the curing of such default; provided, however, that the
occurrence of any of the events described in Sections 18.1(b),
(c), (d), (e), (f), (g), or (h) above shall
constitute an Event of Default immediately upon such occurrence without any
requirement of notice or passage of time except as specifically set forth in any
such subsection.

       

                  Section 18.2.  Remedies of Non-Defaulting
Member.  Upon
the occurrence of an Event of Default, the non-defaulting Member (the "Non-Defaulting
Party") may, at its option, pursue any one or more of the following
remedies without any notice or demand whatsoever other than any notice expressly
provided for in this Agreement, as its sole and exclusive remedy(ies) for any
such Event of Default: 

       

                      (a)  The
Non-Defaulting Party may recover for deposit into the Project Account all
amounts due and payable by the Defaulting Party into the Project Account under
this Agreement, regardless whether the Non-Defaulting Party has exercised any of
its termination rights hereunder with respect to such Event of
Default;

       

             
        (b)  The
Non-Defaulting Party shall have the right, subject to the notice and cure and
other provisions of Section 18.3, to
dissolve the Company and trigger the Windup Events; and

       

                      (c)  The
Non-Defaulting Party shall have the right to acquire all (but not less than all)
of the Ownership Interest of the Defaulting Party in accordance with the
procedures set forth in Section 22.17,
except that the Purchase Price shall be the Fair Market Value of the Defaulting
Party's Ownership Interest minus an amount equal to twenty percent (20%) of such
Fair Market Value as liquidated damages, it being agreed by the Members


       

      
        
          
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      that such liquidated damages (i) have been negotiated and
agreed upon because actual damages resulting from an Event of Default will be
difficult or impossible to calculate with reasonable
certainty, (ii) are not a penalty, and (iii) will be applicable regardless of
the actual damages sustained by the Non-Defaulting Party.

       

                 
Section 18.3.  Notice; Termination.  Upon
the occurrence of an Event of Default, before the exercise of either remedy
provided for in Sections 18.2(b) or 18.2(c), the Non-Defaulting Party shall
give to the Defaulting Party and the Management Committee notice (a "Final
Notice") of the Non-Defaulting Party's intention to exercise one of such
remedies after the expiration of a period of thirty (30) days from the date such
Final Notice is delivered (the "Default Cure Period") unless the Event of
Default is cured.  Upon expiration of the Default Cure Period, if the
Event of Default is not cured, (a) the Non-Defaulting Party shall be
entitled to the remedy specified in the Final Notice, i.e., either the
Defaulting Party shall sell its Ownership Interest to the Non-Defaulting Member
in accordance with Section 18.2(c) or the Company shall be dissolved and
the Windup Events shall be undertaken by the Non-Defaulting Party in accordance
with Section 18.2(b) and as provided in Section 18.4, and (b) the
Non-Defaulting Party shall take such steps as needed to effectuate such remedy
(or demand that the Defaulting Party or the Company, as the case may be, take
such actions as it or they are required to take to effectuate such
remedy).  If, however, within the Default Cure Period, the Defaulting
Party cures such Event of Default, then the Non-Defaulting Member shall not be
entitled to the remedy specified in such Final Notice.  If any Dispute
or Controversy relating to the Event of Default is submitted to binding
arbitration in accordance with the provisions of Section 20.2 and
Appendix D, the Default Cure Period shall be extended until the arbitrator
has rendered its final decision regarding the Dispute or
Controversy.  Should the arbitrator determine that an Event of Default
has occurred and such Event of Default has not been cured as of the date of the
arbitrator's decision, the Defaulting Party shall have no further opportunity to
cure the Event of Default and the Non-Defaulting Party shall be immediately
entitled to the remedy it elected under Sections 18.2(b) or 18.2(c). 

                


             Section 18.4.  No Pursuit of Project.  If the
Non-Defaulting Party elects to dissolve the Company and windup the Project
rather than purchase the Ownership Interest of the Defaulting Party, the Windup
Events shall commence, provided that, all actions that would be conducted by the
Management Committee with respect thereto will be conducted by the
Non-Defaulting Party in accordance with Article 15. 

       

                  Section 18.5.  Defaulting
Party's Loss of Representation and Voting Rights.  Should a Defaulting Party fail to
cure any Event of Default prior to the end of the Default Cure Period, the
Non-Defaulting Party shall, from and after the end of the Default Cure Period,
have the right to appoint all of the Representatives and Alternates to the
Management Committee and the Chairman, and the Defaulting Party shall not be
entitled to vote on any matters brought before the Management Committee for
consideration. 

       


                
 Section 18.6.  Interest
on Overdue Obligations and Post-Judgment Interest.  If any sum due hereunder is not
paid by the due date thereof, the Member owing such obligation shall pay to the
other Member interest thereon at the Default Rate concurrently with the payment
of the amount, such interest to begin to accrue as of the date such payment was
originally due and payable.  Any payment of such interest at the
Default Rate pursuant to this Agreement shall not 

       

      
        
          
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      excuse or cure any Event of Default hereunder.  All
payments shall first be applied to the payment of accrued but unpaid
interest.  The amount of any judgment or arbitration award obtained by
one Member against the other Member in any Action or Proceeding arising out of
an Event of Default by such other Member under this Agreement shall bear
interest thereafter until paid at the Default Rate.

       

                  Section 18.7.  No Waivers.  No
failure or delay of any Member, in any one or more instances, (a) in exercising
any power, right or remedy under this Agreement or (b) in insisting upon the
strict performance by the other Member of such other Member's covenants,
obligations or agreements under this Agreement, shall operate as a waiver,
discharge or invalidation thereof, nor shall any single or partial exercise of
any such right, power or remedy or insistence on strict performance, or any
abandonment or discontinuance of steps to enforce such a right, power or remedy
or to enforce strict performance, preclude any other or future exercise thereof
or insistence thereupon or the exercise of any other right, power or
remedy.  The covenants, obligations, and agreements of a defaulting
Member and the rights and remedies of the other Member upon a default or Event
of Default shall continue and remain in full force and effect with respect to
any subsequent breach, act or omission. 

       


      ARTICLES 19
REPRESENTATIONS, WARRANTIES AND COVENANTS


       

      Each Member represents and warrants to the other Member
that:

       

                  Section 19.1.  Due Organization.  It is
a duly organized, validly existing entity of the type described in the
introduction to this Agreement and is in good standing under the laws of the
jurisdiction of its formation.


       


                
 Section 19.2.  Power and
Authority .  It has full legal right, power and
authority to enter into this Agreement and perform its obligations under this
Agreement. 

       


                  Section 19.3.  Due
Authorization .  It has taken all appropriate and
necessary action to authorize its execution, delivery and performance of this
Agreement and the transactions contemplated hereunder. 

       


                 Section 19.4.  Consents.  It has obtained all consents,
approvals, permits and other authorizations necessary for its valid execution,
delivery and performance of this Agreement. 

       


                 Section 19.5.  Binding
Obligation.  This Agreement constitutes a
legal, valid and binding obligation of such Member, enforceable against such
Member in accordance with its terms, except to the extent enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
rights of creditors generally or by general principles of equity. 

       


                  Section 19.6.  No
Violation .  The execution, delivery and
performance by such Member of this Agreement, the compliance with the terms and
provisions hereof, and the carrying out of the transactions contemplated hereby,
(i) do not conflict with and will not result in a breach or violation of any of
the terms or provisions of the organizational documents of such Member and
(ii) do not conflict with and will not result in a breach or violation of
any of the terms or provisions of any existing Applicable Law affecting such
Member or by which it or any of its 

       

      
        
          
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      Properties is bound, or any agreement or instrument to which
such Member is a party or by which it or any of its Properties is bound, or
constitute or will constitute a default thereunder or will result in the
imposition of any Lien upon any of its Properties.

       

                
 Section 19.7.  No Litigation.  There
is no litigation pending, or, to the best of its knowledge, threatened to which
such Member or any of its Affiliates is a party that, if adversely determined,
would have a material adverse effect on the Project or such Member's ability to
perform its responsibilities hereunder. 

       

      
        Section
19.8. Taxes.  All federal income tax returns and all other tax
returns or reports (federal, state, local or foreign) which are required to be
filed with respect to or by such Member have been filed as required, or the time
for filing appropriately extended, and all taxes due, to such Member’s
knowledge, for the periods covered by such returns, except such accrued and
unpaid taxes for which appropriate accruals have been made in accordance with
generally accepted accounting principles, have been
paid.

      

       


                  Section 19.9.  Authorized
Signatory.  The representative executing this
Agreement on behalf of such Member is duly authorized by action of the governing
body of such Member to execute this Agreement on such Member's behalf and to
bind such Member hereunder.


       


      ARTICLES 20
DISPUTE
RESOLUTION 

       

                  Section 20.1.  Settlement
By Mutual Agreement.  In the event (i) a dispute or
controversy arises between the Members relating to the effectiveness, validity,
interpretation, implementation, termination, cancellation or enforcement of this
Agreement or (ii) the Management Committee does not, within a reasonable time,
achieve a Simple Majority decision regarding any matter requiring a Simple
Majority decision presented to it for consideration (either (i) or (ii) being a
"Dispute or
Controversy"), the Dispute or Controversy shall first be presented to the
Management Committee for resolution at a special meeting of the Management
Committee called for such purpose.  Should a mutual resolution and
settlement not be obtained at the special meeting of the Management Committee
for such purpose or should no such meeting take place within fifteen (15) days
following notice from either Member to the Chairman requesting a special meeting
of the Management Committee for the purpose of resolving such Dispute or
Controversy, then either Member may by notice to the other Member refer the
Dispute or Controversy to senior management of the Members for
resolution.  Within fifteen (15) days after delivery of any such
notice by one Member to the other referring such Dispute or Controversy to
senior management of the Members for resolution, representatives of senior
management of each of the Members shall meet at a mutually agreed upon time and
place to attempt, with diligence and good faith, to resolve and settle such
Dispute or Controversy.  Should mutual resolution and settlement not
be obtained at the meeting of representatives of senior management of each of
the Members for such purposes or should no such meeting take place within such
fifteen (15) day period (unless extended by mutual agreement), then either
Member may by notice to the other Member submit the Dispute or Controversy to
binding arbitration in accordance with the provisions of Section 20.2 and
Appendix D.  Upon
the receipt of notice of referral to arbitration hereunder, the Members shall be
compelled to arbitrate the Dispute or 

       

      
        
          
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      Controversy in accordance with the terms of this Article 20 and Appendix D
without regard to the justiciable character or executory nature of such Dispute
or Controversy.

       

                  Section 20.2.  Arbitration.  Each
Member hereby agrees that any Dispute or Controversy which is not resolved
pursuant to the provisions of Section 20.1 may
be submitted to binding arbitration hereunder and if submitted shall be resolved
exclusively and finally through such binding arbitration. 

       


                  Section 20.3.  Emergency
Relief.  Without affecting the Members'
agreement to arbitrate any Dispute or Controversy, either Member may seek
injunctive relief or other form of emergency relief at any time from the federal
district court for the Southern District of New York. 

       


              
   Section 20.4.  Survival.  The provisions of this Article 20 shall
survive expiration or earlier termination of this Agreement. 

       


      ARTICLES 21
TIME, APPROVALS
AND CONSENTS  

       

              
   Section 21.1.  Time.  Times set forth in this Agreement
for the performance of obligations shall be strictly construed, time being of
the essence of such instrument.  All provisions in this Agreement
which specify or provide a method to compute a number of days for the
performance, delivery, completion or observance by a Member of any action,
covenant, agreement, obligation or notice hereunder shall mean and refer to
calendar days, unless otherwise expressly provided.  However, in the
event the date specified or computed under this Agreement for the performance,
delivery, completion or observance of a covenant, agreement, obligation or
notice by either Member, or for the occurrence of any event provided for herein,
shall be a Saturday, Sunday or Legal Holiday, then the date for such
performance, delivery, completion, observance or occurrence shall automatically
be extended to the next Business Day. 

        

                  Section 21.2.  Approvals
and Consents; Standards for Review.  The provisions of this Section 21.2
shall be applicable with respect to all instances in which it is provided under
this Agreement that the Members (and their respective Representative(s) and
Alternate(s)) exercise approval or consent rights; provided, however, that if the
provisions of this Section 21.2
specifying time periods for exercise of approval or consent rights shall
conflict with other express provisions of this Agreement providing for time
periods for exercise of designated approval or consent rights, then the
provisions of such other provisions of this Agreement shall
control.  Unless this Agreement specifically provides that a Member's
(including its Representative(s)' and Alternate(s)') approval or consent rights
may be exercised in its sole and absolute discretion (or a similar standard),
such approval or consent rights shall be exercised in good faith, with due
diligence, and in a commercially reasonable manner and will not be unreasonably
withheld, conditioned or delayed.  No consent or approval by a Member
(including its Representative(s) and Alternate(s)) shall be deemed hereunder,
unless specifically provided herein.  Each Member agrees to attempt in
good faith to resolve expeditiously any disputes concerning the approval of or
consent hereunder, but if any such dispute is not resolved between the Members,
then such dispute shall be resolved in accordance with the provisions contained
in Article
20.

       

       

      
        
          
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      ARTICLES 22
GENERAL PROVISIONS 

       

                  Section 22.1.  Actual
Damages .  NEITHER
MEMBER SHALL BE LIABLE OR HAVE ANY RESPONSIBILITY TO THE OTHER FOR ANY INDIRECT,
SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES INCLUDING LOST EARNINGS OR
PROFITS.  SUCH LIMITATION ON LIABILITY SHALL APPLY TO ANY CLAIM OR
ACTION, WHETHER IT IS BASED IN WHOLE OR IN PART ON CONTRACT, NEGLIGENCE, STRICT
LIABILITY, TORT, STATUTE OR ANY OTHER THEORY OF LIABILITY. 

       

      
        Section
22.2. Amendment.  This Agreement may not be modified or amended except
by an instrument in writing signed by individuals authorized to bind each
respective Member.

      

       


               
  Section 22.3.  Binding
Effect.  The
terms of this Agreement shall be binding upon, and inure to the benefit of, the
Members and their permitted successors and assigns. 

       


                  Section 22.4.  Complete
Agreement.  This Agreement and the Definitive
Agreements, taken together, in conjunction with all Appendices and Exhibits
attached hereto and thereto, constitute the entire agreement of the Members
relating to the subject matter of this Agreement and supersede all prior
contracts, agreements or understandings with respect to the subject matter
hereof and thereof, both oral or written.  Each Member agrees that (a)
the other Member, Calpine Parent and Cleco (and their agents and
representatives) have not made any representation, warranty, covenant or
agreement to or with such Member relating to the subject matter hereof and
thereof other than as reduced to writing in this Agreement or in any Definitive
Agreement and (b) such Member has not relied upon any representation, warranty,
covenant or agreement to or with the other Member, Calpine Parent or Cleco
relating to the subject matter hereof and thereof, other than those reduced to
writing in this Agreement or in any Definitive Agreement. 

       


                  Section 22.5.  Confidentiality.  No Member shall disclose or
otherwise make available to any other Person (other than such Member's
Affiliates, employees, officers, directors, legal advisors, financial advisors
and accountants, and, in the case of the Members, prospective lenders, provided
each such Person agrees to maintain the confidentiality of such information) any
information of a technical, commercial or business nature regarding the Project
or this Agreement ("Confidential
Information") without the prior written consent of the other
Member.  Confidential Information shall not include information which
(a) the Member can demonstrate was known to it prior to its disclosure by the
other Member; (b) is, or later becomes, public knowledge without breach of this
Agreement by such Member; (c) was received by such Member from a third party
without obligation of confidentiality; or (d) is developed by such Member
independently from Confidential Information received from the other Member, as
evidenced by appropriate documentation.  In the event that disclosure
is required by court order or a Governmental Authority, the Member subject to
such requirement shall promptly notify the other Member and will use reasonable
efforts to obtain protective orders or similar restraints with respect to such
disclosure. 

       

                 
Section 22.6.  Counterparts.  This
Agreement may be executed by the Members in any number of separate counterparts,
each of which when so executed and delivered shall be deemed 

       

      
        
          
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      an original, but all such counterparts shall together
constitute one and the same agreement.  All signatures need not be on
the same counterpart.


       


               
  Section 22.7.  Further
Assurances.  Each Member agrees to do all acts
and things and to execute and deliver such further written instruments, as may
be from time to time reasonably required to carry out the terms and provisions
of this Agreement.


       


                  Section 22.8.  Governing
Law .  This
Agreement and the rights and duties of the Members arising out of this Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, without reference to the conflict of laws rules thereof that would
direct the application of the laws of another jurisdiction. 

       


              
   Section 22.9.  Headings;
Table of Contents . The headings of the Articles and
Sections of this Agreement and the Table of Contents are included for
convenience only and shall not be deemed to constitute a part of this
Agreement. 

       


              
   Section
22.10.  Interpretation
and Reliance.  No presumption will apply in favor
of any Member in the interpretation of this Agreement or any of the Definitive
Agreements or in the resolution of any ambiguity of any provisions thereof. 

       


                  Section 22.11.  Notices.  All notices, consents, approvals,
requests, invoices or statements ("Notices") provided
for or permitted to be given under this Agreement must be in
writing.  Notices to a Member must be delivered to such Member at the
address for such Member set forth in Appendix C to this
Agreement or at such other address as such Member shall designate by notice to
the other Member.  Notices may be (i) sent by registered or certified
U.S. Mail with return receipt requested, (ii) delivered personally (including
delivery by private courier services) or (iii) sent by telecopy (with
confirmation of such Notice) to the Member entitled thereto.  Such
Notices shall be deemed to be duly given and received (i) on the third (3rd)
Business Day after posting if mailed as provided, (ii) when delivered personally
(including delivery by private courier services) unless such day is not a
Business Day, in which case such delivery shall be deemed to be made as of the
next succeeding Business Day or (iii) in the case of telecopy (with confirmation
of such Notice), when sent, so long as it was received before 5:00 p.m. local
time for the intended recipient on a Business Day and otherwise such delivery
shall be deemed to be made as of the next succeeding Business
Day.  Electronic mail (E-mail) shall not be considered delivery of
written notice under this Agreement.  Each Member shall have the right
at any time and from time to time to specify additional Persons ("Additional
Addressees") to whom notice hereunder must be given, by delivering to the
other Member five (5) days' notice thereof setting forth a single address for
each such Additional Addressee; provided, however, that no
Member shall have the right to designate more than two (2) such Additional
Addressees. 

       


                  Section 22.12.  Method
and Timing of Payment.  All amounts required to be
paid by any Member under this Agreement shall be paid in such freely
transferable coin or currency of the United States as at the time of payment
shall be legal tender for the payment of public and private debts or by wire
transfer of immediately available federal funds.  If any payment under
this Agreement is required to be made on a day other than a Business Day, the
date of payment shall be extended to the next Business Day. 

       

      
        
          
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                  Section 22.13.  Intellectual
Property License .  All rights in Intellectual
Property created or developed by either Member or any of the Affiliates thereof
(any of which, an "IP
Developer"), with or without the assistance of other Persons, prior to or
during the Term in connection with performance of an IP Developer's obligations
hereunder or under any Definitive Agreement, shall be vested in the IP
Developer, and any other Person utilizing the Intellectual Property in
connection with the Project or the Facility, including the Company
(collectively, the "IP
Licensees") shall have a non-exclusive royalty-free license to use the IP
Developer's Intellectual Property solely in connection with the Project and the
Facility but not otherwise.  Each IP Developer shall provide notice to
the Management Committee when it becomes aware of the creation or development of
any such Intellectual Property, and each IP Developer shall provide all
necessary consents and execute all requisite documentation to effect the formal
vesting in the IP Licensees of a license to use the Intellectual
Property.  All components of the Intellectual Property are instruments
of service in respect to the Project and the Facility.  No IP
Developer shall be deemed to represent that the Intellectual Property is
suitable for reuse by any IP Licensee in any other context or for any other use,
and any such reuse shall be at the IP Licensee's sole risk and without liability
or legal exposure to the IP Developer.  No IP Licensee may use the
Intellectual Property except for such use as is licensed hereunder, and the IP
Developer may pursue any and all remedies available at law or in equity to
enforce the scope of the Intellectual Property license herein
granted.  The Project Agreements shall contain similar provisions
vesting in the Members or their designees a license to use, in connection with
the Project and the Facility, Intellectual Property developed by third parties
pursuant to the Project Agreements. 

       


                  Section 22.14.  Public
Announcements.  Neither Member shall, except as
required by Applicable Law or the rules of any recognized national stock
exchange, cause any public announcement to be made regarding this Agreement, the
Project or the Definitive Agreements without the consent of the Management
Committee.  In the event that either Member shall be required to cause
such a public announcement to be made pursuant to any Applicable Law or the
rules of any recognized national stock exchange, such Member shall endeavor to
provide the other Member at least forty-eight (48) hours' prior notice of such
announcement. 

       


                  Section 22.15.  Severability.  In the event that any provision of
this Agreement is held to be unenforceable or invalid by any court of competent
jurisdiction, the Members shall negotiate an equitable adjustment to the
provisions of this Agreement with the view to effecting, to the extent possible,
the original purpose and intent of this Agreement, and the validity and
enforceability of the remaining provisions shall not be affected thereby. 

       


                  Section 22.16.  Third
Party Beneficiaries.  There are no third party
beneficiaries to this Agreement, and the provisions of this Agreement shall not
impart any legal or equitable right, remedy or claim enforceable by any Person
other than the Members (and their permitted successors and permitted assigns).


       

                Section
22.17.  Purchase
Procedures.  In the event one Member has the right
to acquire the Ownership Interest of the other Member pursuant to Section 2.9,
Section 10.2.1,
Section 14.6.1
or Section 18.2(c),
the Member exercising such right (the "Acquiring Member")
shall provide notice (the "Offer") of the
exercise of such right or option to the other Member (the "Conveying Member")
within the time period required pursuant to the relevant Section. 

        

      
        
          
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               (a)  In
the Offer, the Acquiring Member shall state the price that it is willing to pay
as the Purchase Price for the other Member's Ownership Interest.  The
Conveying Member, within thirty (30) days following receipt of such notice,
shall state in writing (the "Response") whether or
not it accepts such amount as the Purchase Price.  If the Members do
not agree on the Purchase Price within fifteen (15) days of receipt of the
Response by the Acquiring Member, then each Member shall designate a qualified
appraiser within fifteen (15) days from the expiration of the aforementioned
fifteen (15) day period.  A qualified appraiser shall be an appraiser
with at least five (5) years experience in the appraisal of properties similar
to the Facility.  Each appraiser shall be directed to determine the
Fair Market Value of the Conveying Member's Ownership Interest within thirty
(30) days of his appointment and to notify each Member of his
determination.  If the lower of the two determinations is not less
than ninety-five percent (95%) of the higher of the two determinations, then the
Fair Market Value shall be the average of the two determinations.  If
the lower of the two determinations is less than ninety-five percent (95%) of
the higher of the two determinations, then the two appraisers shall, within
fifteen (15) days thereafter, appoint a third appraiser with similar
qualifications (who shall not have performed any work for either Member within
the five (5) year period prior to his or her appointment) and shall each furnish
to such appraiser a written report of his or her respective
determination.  Within thirty (30) days of his appointment, the third
appraiser shall select the Fair Market Value of one or the other of the
appraisers appointed by the Members and shall notify each Member of his
determination, which shall be binding upon the Members.  The third
appraiser must select one of the two appraisals and shall not have the right to
establish a different Fair Market Value determination.  Each Member
shall bear the cost of the appraiser appointed by it, and they shall share
equally the cost of the third appraiser.

       

               
      (b)  Within ten (10) Business Days
of receiving the final determination of Fair Market Value as provided in
paragraph (a) above, the Acquiring Member shall either (i) pay to the Conveying
Member the Purchase Price by wire transfer of immediately available funds or
(ii) notify the Conveying Member that it no longer desires to purchase the
Ownership Interest of the Conveying Member, in which case (1) in the event these
procedures were initiated pursuant to Section 2.9, the
provisions of Section 2.9(d)
will control as if the Members had not decided in a course of action and neither
had exercised its right to purchase the Ownership Interest of the other; (2) in
the event these procedures were initiated pursuant to Section 14.6,
the provisions of Section 14.6
will control as if the Member had not exercised its right to purchase the
Ownership Interest of the other; (3) in the event these procedures were
initiated pursuant to Section 10.2.1,
the last sentence of Section 10.2.1
shall control as if neither Member had exercised its right to purchase the
Ownership Interest of the other; and (4) in the event these procedures were
initiated pursuant to Section 18.2(c),
the Non-Defaulting Party may either rescind its Final Notice and elect to
continue the Company or exercise its remedy under Section 18.2(b)
without delivering an additional Final Notice (and in the latter event, the
provisions of Section 18.4
shall be put into effect).  Concurrent with the payment of the
Purchase Price, the Conveying Member shall deliver such
instruments of transfer of title and assignment as are reasonably requested by
the Acquiring Member; provided, however, that no
representations shall be required to be provided by the Conveying Member other
than representations that the Conveying Member has good title to its Ownership
Interest, that the Conveying Member has the right, power and authority to convey
the Ownership Interest and that the Ownership Interest is transferred free and
clear of all liens.

       

      

        
          
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                IN
WITNESS WHEREOF, this Agreement has been executed by the Members as of the
Effective Time.

       

      
        	 	
                ACADIA POWER HOLDINGS, LLC

                 

              
	 	 
	 	
                By:      /s/
      David M.
      Eppler                               

              
	 	
                David M. Eppler
Manager 

                 

              
	 	 
	 	
                CALPINE ACADIA HOLDINGS,
      LLC,

                acting by and through its sole member,
CPN Acadia, Inc.

                 

                 

                 

              
	 	
                By:      /s/
      Diana
      Knox                                       

              
	 	
                Diana Knox
Senior Vice President 

                 

              
	 	 


      

       

       

      
        
          
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      APPENDIX A

       

      Glossary of Defined
Terms

       

          "2001 PPA" means the Power Purchase
Agreement, dated July 27, 2001, between the Company and Calpine Energy.

       

          "2003 PPA" means the 2003 Power
Purchase Agreement, dated as of May 9, 2003, between the Company and Calpine
Energy.

       

          "Acadia Holdings" shall have
the meaning given to it in the Preamble and shall include, unless otherwise
specified, the successors and permitted assigns thereof.

       

          "Acadia Holdings PPA Manager"
means the PPA Manager appointed by Acadia Holdings pursuant to Section 5.8.1.

       

          "Accumulated Priority Amount"
means, for each Fiscal Year, the amount by which the cumulative amount of the
Priority Amounts for all previous Fiscal Years exceeds the cumulative amount of
distributions made to Acadia Holdings pursuant to Section 12.1
during all previous Fiscal Years.

       

          "Acquiring Member" is defined in Section 22.17.

       

          "Action or Proceeding" means
any lawsuit, arbitration or other alternative resolution process, Governmental
Authority investigation, hearing, audit, appeal, administrative proceeding or
judicial proceeding.

       

          "Additional Addressees" is
defined in Section 22.11.

       

          "Adjusted Capital Account" means, with respect to any
Member, the balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after (i) increasing such Member's Capital
Account by any amounts that such Member is obligated to restore under Treasury
Regulation §  1.704-1(b)(2)(ii)(c), or is deemed obligated to restore under
Treasury Regulation §  1.704-2(g) and Treasury Regulation §
 1.704-2(i)(5), and (ii) decreasing such Member's Capital Account with the
items described in Treasury Regulation §  1.704-1(b)(2)(ii)(d)(4), Treasury
Regulation §  1.704-1(b)(2)(ii)(d)(5) and Treasury Regulation §
 1.704-1(b)(2)(ii)(d)(6).  The foregoing definition of Adjusted
Capital Account is intended to comply with, and shall be interpreted
consistently with, the provisions of Treasury Regulation §
 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

       

          "Affiliate" means with respect to any
Person, any other Person directly or indirectly controlling, directly or
indirectly controlled by or under direct or indirect common control with such
Person.  As used in this definition, the term "control," "controlling"
or "controlled by" shall mean the possession, directly or indirectly, of the
power either to (i) vote fifty percent (50%) or more of the securities or
interests having ordinary voting power for the election of directors (or other
comparable controlling body) of such Person or (ii) direct or cause the
direction of the actions, management or policies of such Person, whether through
the ownership of voting securities or interests, by contract or otherwise,
excluding in each case, any lender of such Person

       

      
        
          
            Appendix A, Page 1

          

          
            

          

        

      

       

       or any Affiliate of such
lender.  Notwithstanding the foregoing, as to each Member, Affiliate
shall not mean the Company.

       

          "Affiliate Contracts" is
defined in Section 4.4.1.

       

          "Affiliated Guarantor" means
any Member or Affiliate of a Member providing a Third Party
Guarantee.  For the avoidance of doubt, neither Calpine Parent nor
Cleco is an "Affiliated Guarantor" with regard to the Calpine Limited Guaranty
and the Cleco Limited Guaranty, respectively.

       

          "Agreement" is defined in the
Preamble.

       

          "Alternate" is defined in Section 4.3.1.

       

          "Annual Forecast" is defined in
Section
7.2.1(b).

       

          "Annual Plan" is defined in
Section
7.2.1.

       

          "AOC" is defined in Section 8.1.

       

          "AOC Alternate" is defined in
Section
8.2.

       

          "AOC Chair" is defined in Section 8.4.

       

          "AOC Rep" is defined in Section 8.2.

       

          "Applicable Law" means any constitution, law,
statute, ordinance, order, injunction, rule, regulation or Authorization of any
Governmental Authority (excluding any such legislative, judicial or
administrative body or instrumentality acting in any capacity as a lender,
guarantor, or mortgagee).

       

          "Aquila" is defined in Section 12.2.

       

          "Aquila Termination Agreement"
is defined in Section
12.2.

       

          "Aquila Termination Fee" means
the Termination Fee (as defined in the Aquila Termination Agreement).

       

          "Asset Book" is defined in
Section
7.1.7.

       

          "Asset Management Policy
Manual" is defined in Section 7.1.4.

       

          "Asset Manager" is defined in
Section
7.1.5.

       

          "Authorizations" means
licenses, certificates, permits, orders, approvals, determinations, variances,
franchises and authorizations from Governmental Authorities.

       

          "Available Swing Energy" is
defined in Section
7.2.1(b).

       

      
        
          
            Appendix A, Page 2

          

          
            

          

        

      

       

          "Bankruptcy" means, with respect to any
Person, any of the events described in Sections 18.1(b),
(c), (d), (e), (f), (g) or (h).

       

          "Base Model" is defined in
Section 5.6.1.

       

          "Budget Deadlock" is defined in
Section
6.4.2.

       

          "Business Day" means a day of
the year that is not a Saturday, Sunday or Legal Holiday.

       

          "Calpine" shall have the
meaning given to it in the Preamble and shall include, unless otherwise
specified, the successors and permitted assigns thereof.

       

          "Calpine Central" means Calpine
Central, L.P., a Delaware limited partnership and wholly-owned subsidiary of
Calpine Parent.

       

          "Calpine Energy" means Calpine
Energy Services, L.P., a Delaware limited partnership and wholly-owned
subsidiary of Calpine Parent.

       

          "Calpine LCs" is defined in
Section
12.1.

       

          "Calpine Limited Guaranty"
means (a) the Calpine Limited Guaranty, dated as of February 29, 2000, made by
Calpine Parent to the Company and (b) any substitution or replacement therefor
approved by the Management Committee pursuant to Section 4.4.5 of the
Agreement.

       

          "Calpine Parent" means Calpine
Corporation, a corporation organized under the laws of the State of Delaware,
and any successor thereof.

       

          "Calpine PPA Manager" means the
PPA Manager appointed by Calpine pursuant to Section 5.8.1.

       

          "Calpine 2001 PPA Guaranty"
means the Guaranty, dated as of July 27, 2001, made by Calpine Parent in
favor of the Company under which Calpine Parent guarantees the obligations of
Calpine Energy under the 2001 PPA.

       

          "Capacity" means the electrical
generating capability of the Facility.

       

          "Capital Account" of any Member
means the account established and maintained on behalf of the Member pursuant to
Section
3.7.

       

          "Capital Contribution" means the amount of cash and
the Fair Market Value of all other property contributed to the Company by a
Member in its capacity as such at any point in time.  All such amounts
contributed shall be reflected on the books and records of the Company.

       

          "Capital Expense Account" is
defined in Section
6.3.2.

       

          "Capital Expense Budget" is
defined in Section
6.3.1.

       

      
        
          
            Appendix A, Page 3

          

          
            

          

        

      

       

          "Capital Expenses" means all
expenses incurred with respect to Capital Repairs and Additions.

       

          "Capital Repairs and Additions"
means (a) all work (including all labor, supplies, materials and
equipment), other than Maintenance work, reasonably necessary to repair,
restore, refurbish or replace any equipment, structure or any other component of
the Facility necessitated by (i) any material defects in design, construction or
installation of the Facility, (ii) physical or functional obsolescence or (iii)
modifications required by Applicable Law and (b) other capital additions or
modifications to the Facility authorized by the Company.

       

          "Casualty" means damage,
destruction or other property casualty resulting from a Force Majeure event or
other sudden, unexpected or unusual cause.

       

          "Certificate of Formation" means the Certificate of
Formation of the Company and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware.

       

          "Certified Public Accountants"
means a firm of nationally recognized independent public accountants selected
from time to time by the Management Committee.

       

          "Chairman" means the natural person
appointed by the Management Committee as Chairman of the Company, who shall
perform the duties described in Section
4.3.6(a).  The Chairman shall be deemed a "manager" of the
Company within the meaning of the Delaware Act.

       

          "Cleco" means Cleco
Corporation, a Louisiana corporation, and any successor thereof.

       

         ''Cleco Limited Guaranty" means (a) the Cleco
Limited Guaranty, dated as of February 29, 2000, made by Cleco Parent to the
Company and (b) any substitution or replacement therefor approved by the
Management Committee pursuant to Section 4.4.5. 

       

          "Cleco Marketing &
Trading" means
Cleco Marketing & Trading, LLC, a Louisiana limited liability company.

       

          "CMR" is defined in the
Preamble.

       

          "Code" means the Internal Revenue
Code of 1986, as amended from time to time, or any corresponding federal tax
statute enacted after the date of the Agreement.  A reference herein
to a specific Section of the Code refers not only to such specific Section but
also to any corresponding provision of any federal tax statute enacted after the
date of the Agreement, as such specific Section or such corresponding provision
is in effect on the date of application of the provisions of the Agreement
containing such reference.

       

          "Combustion Turbine Purchase
Contract" means
an agreement between the Company (directly or as assignee of Calpine Parent or
an Affiliate thereof) and Siemens Westinghouse Power Corporation for the sale to
the Company of four (4) F class combustion turbine generators (currently
identified by Calpine as Nos. 9902, 9903, 9904 and 9905) for the Project.

       

      
        
          
            Appendix A, Page 4

          

          
            

          

        

      

       

          "Commercial Operation Date"
means the date of Completion or such other date designated by the Management
Committee.

       

          "Company" is defined in the
Preamble.

       

          "Company Assets" is defined in
Section 2.8.

       

          "Company Minimum Gain" has the meaning given the
term "partnership minimum gain" in Treasury Regulation §  1.704-2(b)(2) and
Treasury Regulation §  1.704-2(d).

       

          "Completion" means that (a) all
Performance Tests have been performed and all Performance Guarantees have been
met in accordance with the requirements of the Construction Agreements (or
waived by the Management Committee) and all other work has been performed in
accordance with the requirements of the Construction Agreements other than punch
list items, and (b) all requirements for completion of the Project as set forth
in the Financing Documents have been satisfied.

       

          "Condemnation Action" means a
taking by any Governmental Authority (or other Person with power of eminent
domain) by exercise of any right of eminent domain or by appropriation and an
acquisition by any Governmental Authority (or other Person with power of eminent
domain) through a negotiated purchase in lieu thereof.

       

          "Confidential Information" is
defined in Section
22.5.

       

          "Construction Agreements" means
the Construction Contracts, Engineering Contract and Equipment Supply
Contracts.

       

          "Construction Contracts" means
(i) the construction contract between the Company and a qualified third party
construction contractor for the performance of construction related work for the
power block and (ii) any other third party construction related agreements
deemed necessary and entered into by the Company, such as a natural gas pipeline
construction agreement and a natural gas pipeline design and engineering
agreement.

       

          "Construction Manager" means
the Construction Manager under the Project Management Agreement.

       

          "Construction Parties" means
the Persons other than the Company that are parties to the Construction
Agreements.

       

          "Construction Project" means
the design, engineering, development, procurement, construction, start-up and
testing of the Facility.

       

          "Contracted Energy
Requirements" is defined in Section
7.2.1(b).

       

          "Contributing Member " is
defined in Section
3.6(a).

       

          "Contribution Date" is defined in Section 3.2.4.

       

      
        
          
            Appendix A, Page 5

          

          
            

          

        

      

       

          "Contribution Deadline" is
defined in Section 3.2.4.

       

          "Contribution Default" means
the failure by a Member to make a Capital Contribution as required by the
Agreement.

       

          "Contribution Loan" is defined
in Section
3.6(a).

       

          "Controlled Affiliate" means
(i) in the case of Calpine, a Person who is owned and controlled, directly or
indirectly, by Calpine Parent and (ii) in the case of Acadia Holdings, a Person
who is owned and controlled, directly or indirectly, by Cleco.  As
used in this definition the term "controlled" means the possession, directly or
indirectly, of the power to vote fifty-five percent (55%) or more of the
securities or interests having ordinary voting power for the election of
directors (or other comparable controlling body) of such Person.

       

          "Conveying Member" is defined in Section 22.17.

       

          "Covered Person" means any Member, any
Affiliate of a Member, any Representative or Alternate, or any Chairman, or any
officer, director, shareholder, partner, employee, representative or agent of a
Member or their respective Affiliates, or any employee or agent of the Company
or its Affiliates.

       

          "Default Cure Period" is
defined in Section
18.3.

       

          "Default Rate" means a per
annum rate of interest equal to the lesser of (a) the Prime Rate plus four (4)
percentage points or (b) the maximum rate of interest permitted to be
charged by Applicable Law.

       

          "Defaulting Party" is defined
in Section
18.1.

       

          "Definitive Agreements" means the following
agreements: 

       

              
       (a)  The Project Management
Agreement;

       

            
         (b)  The O&M
Arrangements, to the extent either Member (or a Member's Affiliate) is a party
thereto;

       

               
      (c)  The Major Maintenance
Arrangements, to the extent either Member (or a Member's Affiliate) is a party
thereto; and

       

                 
    (d)  The Power Marketing Agreement.

       

          "Delaware Act" is defined in the
Preamble.

       

          "Depreciation" means, for each Fiscal Year
or other period, an amount equal to the depreciation, amortization, or other
cost recovery deduction allowable with respect to an asset for such year or
other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value 

       

      
        
          
            Appendix A, Page 6

          

          
            

          

        

      

       

      as the federal income tax depreciation, amortization, or
other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method or methods of
depreciation, depletion or amortization selected by all of the Members.

       

          "Development Fee" means the
development fee set forth in the Project Budget, one half (1/2) of which shall
be payable to each Member in accordance with Section 12.1.

       

          "Development Plan" is defined in Section 3.2.3.

       

          "Dispose" (and with correlative
meaning the terms "Disposing," "Disposer," "Disposee," and "Disposition") means with
respect to any asset (including any Ownership Interest or any portion thereof),
a sale, assignment, transfer, conveyance, gift, exchange or other disposition of
such asset, whether such disposition be voluntary, involuntary or by operation
of Applicable Law, including the following: (a) in the case of an asset owned by
a natural Person, a transfer of such asset upon the death of its owner, whether
by will, intestate succession or otherwise; (b) in the case of an asset owned by
a Person other than a natural Person, (i) merger or consolidation of such
Person, (ii) a conversion of such entity into another type of Person, or (iii)
distribution of such asset in connection with the dissolution, liquidation,
winding-up or termination of such Person (unless in the case of a dissolution,
such entity's business is continued without the commencement of liquidation or
winding-up).

       

          "Dispute or Controversy" is
defined in Section
20.1.

       

          "Disqualified Matters " is
defined in Section
4.4.2.

       

          "Effective Time" is defined in the
Preamble.

       

          "Electing Member" is defined in
Section
3.4.1.

       

          "Electric Interconnection
Agreements" means (a) the Interconnection Agreement to be entered
into between Cleco Utility Group Inc., as co-owner of the Richard Substation
located adjacent to the Facility Site, and the Company for the interconnection
of the Facility to Cleco's existing 138 kV transmission system, and (b) the
Interconnection Agreement to be entered into between Entergy Gulf States
Utilities, Inc., its Affiliate, successor or assign, as co-owner of the Richard
Substation located adjacent to the Facility Site, and the Company for the
interconnection of the Facility to Entergy Gulf States Utilities, Inc.'s
existing 138 kV section of the Richard Substation.

       

          "Electric Interconnection
Facilities" means the facilities, equipment and systems for electric
interconnection necessary for the coordinated and integrated delivery of Energy
from the Facility to the Richard Substation, including all wires, switches,
transformers, protective equipment, substations and control systems, but not
including facilities, equipment or systems required by any Governmental
Authority to be owned by Cleco Utility Group.

       

      
        
          
            Appendix A, Page 7

          

          
            

          

        

      

         

        

          "Encumber" (and with
correlative meaning the term "Encumbrance") means the
creation of a security interest, lien, pledge, mortgage or other encumbrance,
whether such encumbrance be voluntary, involuntary or by operation of Applicable
Law.

       

          "Energy" means net electric
energy in kWh generated by the Facility.

       

          "Engineering Contract" means
the contract for professional services between the Company and a qualified third
party engineering firm for the performance of design and engineering services
for the Project.

       

          "Equipment Supply Contracts"
means the Combustion Turbine Purchase Contract, the Steam Turbine Purchase
Contract, the HRSG Purchase Contract and the other purchase contracts pursuant
to which the Company will procure the combustion turbine generators, heat
recovery steam generators, steam turbine generators, and other equipment and
systems from vendors approved by the Management Committee.

       

          "Event of Default" is defined
in Section
18.1.

       

          "Extension Term" is defined in
Section
2.9(c).

       

          "Facility" is defined in Section 2.3.

       

          "Facility Site" means the
approximately sixty (60) acre site located in Acadia Parish, Louisiana, conveyed
by CMR to the Company, such site being located adjacent to the Richard
Substation and being more particularly described on Exhibit D attached to
the Agreement.

       

          "Fair Market Value" means the
value that would be obtained for the applicable item in an arms-length
transaction between an informed and willing buyer and an informed and willing
seller.

       

          "FERC" means the Federal Energy
Regulatory Commission, or any successor Governmental Authority.

       

          "Final Completion" means final
Completion of the Facility and completion of all punchlist items.

       

          "Final Notice" is defined in
Section
18.3.

       

          "Financial Closing" means the
closing of the Financing Documents and the making of the initial advance
thereunder following the waiver or satisfaction of any and all conditions
precedent to the availability to the Company of such advance.

       

          "Financing Commitments" means
agreements or commitments (including non-binding term sheets or commitment
letters) between one or more financial institutions or other Persons and the
Company pursuant to which such financial institutions or other Persons agree,
subject to the conditions set forth herein, to provide Project Financing to the
Company.

       

      
        
          
            Appendix A, Page 8

          

          
            

          

        

      

       

          "Financing Documents" means the
definitive agreements and related documents (including loan agreements, credit
agreements, security agreements, mortgages, pledge agreements, trust agreements,
account agreements and agency agreements) under which the Company borrows the
funds necessary to effect the Project and grants security in respect
thereof.

       

          "First Amended and Restated
Agreement" is defined in the Preamble.

       

          "Fiscal Year" means the calendar
year.

       

          "Force Majeure" means any occurrence, whether of
the kind herein enumerated or otherwise, that is not within the reasonable
control of the Person claiming the right to delay performance on account of such
occurrence and which, in any event, is not a result of the intentional act,
negligence or willful misconduct of the Person claiming the right to delay
performance on account of such occurrence, including acts of God, lock-outs,
acts of the public enemy, the confiscation or seizure by any Governmental
Authority, insurrections, wars or war-like action (whether actual and pending or
expected), arrests or other restraints of government (civil or military),
blockades, embargoes, strikes, labor unrest or disputes, unavailability of labor
or materials, epidemics, landslides, lightning, earthquakes, fires, hurricanes,
storms, floods, wash-outs, explosions, civil disturbance or disobedience, riot,
sabotage, terrorism, threats of sabotage or terrorism. 

       

          "Fuel Supply Agreements" means
agreements for the supply, transportation and/or storage of natural gas for the
Facility.

       

          "Gas Interconnection Agreements" means gas
pipeline interconnection agreement(s) by and among the Company and each gas
pipeline transportation company, approved by the Management Committee, for the
interconnection of the Facility to gas pipelines operated by such gas
transportation company. 

       

          "Gas Interconnection
Facilities" means
all connections, pipes, systems, valves, meters, control equipment and
facilities required to supply and transport natural gas to the Facility.

       

          "Governmental Authority" means
any federal, state or local governmental entity, authority or agency, court,
tribunal, regulatory commission or other body, whether legislative, judicial or
executive (or combination or permutation thereof) having jurisdiction as to the
matter in question.

       

          "Gross Asset Value" means, with respect to any
Company asset, the asset's adjusted basis for federal income tax purposes,
except as follows:

       

               
      (a)  The initial Gross Asset Value
of any asset contributed by a Member to the Company shall be the Fair Market
Value of such asset, as agreed to by the Management Committee;

       

              
       (b)  The Gross Asset Value
of each Company Asset shall be adjusted to equal its respective Fair Market
Value, as determined by the Management Committee (or the Liquidator, if
applicable), as of the following times:  (i) the acquisition of
an additional Ownership Interest in the Company by any new or existing Member in
exchange for 

       

       

      
        
          
            Appendix A, Page 9

          

          
            

          

        

      

       

       

      more than a de minimis Capital Contribution; (ii) the
distribution by the Company to a Member of more than a de minimis amount of
Company Assets as consideration for an Ownership Interest in the Company; (iii)
the liquidation of the Company within the meaning of Treasury Regulation §
1.704-1(b)(2)(ii)(g); and (iv) the occurrence of any event agreed upon by the
Management Committee which is permitted under Treasury Regulation §
 1.704-1(b)(2)(ii)(g);

       

              
       (c)  The Gross Asset Value
of any Company Asset distributed to any Member shall be the Fair Market Value of
such asset on the date of distribution, as determined by the Management
Committee (or the Liquidator, if applicable); and

       

               
      (d)  The Gross Asset Value of each
Company Asset shall be increased (or decreased) to reflect any adjustments to
the adjusted basis of such asset pursuant to Code § 734(b) or Code § 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulation § 1.704-1(b)(2)(iv)(m),
subparagraph (f) of the definition of Profits and Losses herein, and Section 13.12.

       

      If the Gross Asset Value of a Company Asset has been
determined or adjusted pursuant to subparagraphs (a), (b), or (d) above, such
Gross Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and
Losses.

       

          "HRSGs" means four (4) heat recovery
steam generators.

       

          "HRSG Purchase Contract" means
an agreement for the purchase of HRSGs for the Project.

       

          "IEP" is defined in the
Preamble.

       

          "Initial Conveyances" is
defined in the Preamble.

       

          "Initial Operating Budget" is
defined in Section
6.2.1.

       

          "Initial Term" is defined in
Section
2.9.

       

          "Insurance Plan" is defined in
Section
9.1.

       

          "Insurance Proceeds" is defined
in Section
10.1.

       

         "Intellectual Property" means patents,
trademarks, service marks, copyrights, processes, trade secrets, know how or
other proprietary information developed or owned by a Person. 

         

          "Interconnection Facilities"
means the Electric Interconnection Facilities and the Gas Interconnection
Facilities.

       

         "IP Developer" is defined in Section 22.13. 

       

      
        
          
            Appendix A, Page 10

          

          
            

          

        

      

       

          "IP Licensees" is defined in
Section
22.13.

       

          "kWh" means
kilowatt-hours.

       

          "Legal Holiday" means any day,
other than a Saturday or Sunday, on which the banks are permitted or required to
be closed in Houston, Texas or New York, New York.

       

          "Lien" means, with respect to
any Property, any mortgage, lien, pledge, charge or security interest, any liens
for taxes or assessments, builder, mechanic, warehouseman, materialman,
contractor, workman, repairman or carrier lien or other similar liens.

       

          "Liquidator" is defined in
Section
15.2.1(b).

       

          "Maintain" and "Maintenance" means all work
(including all labor, supplies, parts, materials and equipment) which is
reasonably necessary for the inspection, cleaning, upkeep or periodic overhaul
of any structure, component, surface, machinery, equipment, fixture or any other
component of the Facility in order to keep it in good working order consistent
with the Operating Standard, including preventative or routine maintenance that
is stipulated in the operating manuals for the Facility's equipment.

       

          "Major Maintenance
Arrangements" is defined in Section 4.2.2.

       

          "Major Maintenance Services" is
defined in Section 4.2.2.

       

          "Management Committee" means
the Management Committee of the Company established by the Members pursuant to
Section
4.3.

       

          "Member" means each of Calpine and
Acadia Holdings and includes any Person admitted as an additional Member or a
substitute Member pursuant to the provisions of the Agreement, in such Person's
capacity as a member of the Company, and "Members" means two or more such
Persons when acting in their capacities as Members of the
Company.  For purposes of the Delaware Act, the Members shall
constitute one class or group of Members.

       

          "Member Nonrecourse Debt" has the meaning given the
term "partner nonrecourse debt" in Treasury Regulation §
 1.704-2(b)(4).

       

          "Member Nonrecourse Debt Minimum
Gain" has the
meaning given the term "partner nonrecourse debt minimum gain" in Treasury
Regulation §  1.704-2(i)(3).

       

          "Member Nonrecourse
Deductions" has
the meaning given the term "partner nonrecourse deductions" in Treasury
Regulation §  1.704-2(i)(2) and Treasury Regulation §
 1.704-2(i)(1).

       

          "Month" means a calendar
month.

       

          "Necessary Regulatory
Approvals" means all Authorizations as may be required in connection with
(a) the construction and operation of the Facility or (b) the generation, sale
and delivery of Energy, Capacity or ancillary services from the Facility.

       

      
        
          
            Appendix A, Page 11

          

          
            

          

        

      

       

       

          "Noncontributing Member" is
defined in Section
3.6(a).

       

          "Non-Defaulting Party" is
defined in Section
18.2.

       

          "Non-Electing Member" is
defined in Section
3.4.1.

       

          "Nonrecourse Deductions" has the meaning set forth in
Treasury Regulation §  1.704-2(b)(1) and Treasury Regulation §
 1.704-2(c).

       

          "Notices" is defined in Section 22.11.

       

          "O&M Agreement" means the
Operation and Maintenance Agreement by and between Calpine Central and the
Company, dated July 27, 2001, as amended by the First Amendment to O&M
Agreement dated May 9, 2002.

       

          "O&M Arrangements" is defined in Section 4.2.1.

       

         "O&M
Services" is defined in Section 4.2.1. 

       

          "OEM
Contracts" means long-term maintenance
contracts with the turbine and other major equipment suppliers for the Facility.


       

          "Offer" is defined in Section 22.17.

       

          "Offtake Agreements" means one
or more agreements for the sale of Energy, Capacity or ancillary services
generated by the Facility, or for tolling services, or other contractual
arrangements for the disposition of the output of the Facility, and shall
include all Significant Offtake Agreements.

       

          "Operating Budget" is defined
in Section
6.2.1.

       

          "Operating Expenses" means for any period, all
operating and Maintenance expenses of the Facility that are not classified as
Project Costs, including Reimbursable Project Management Expenses, fuel supply,
transportation and storage costs, insurance, Taxes, general and administrative
expenses, the Operator's fee or reimbursable expenses, and the Power Marketer's
contract administration expenses.  Operating Expenses shall not
include any of the Power Marketer's trading expenses, except those permitted in
accordance with the Asset Management Policy Manual. 

       

          "Operating Reserve
Sub-Account" is
defined is Section
6.2.3.

       

          "Operating Standard" means the
operation and management of the Project:

       

            
         (a)  In a
prudent and efficient manner; and

       

            
         (b)  In all
respects in accordance with (i) all applicable rules, regulations, laws and
permits, (ii) Prudent Electric Industry Standards and (iii) all safety, fire,
protection and other requirements of applicable Project insurance policies;
and

       

      
        
          
            Appendix A, Page 12

          

          
            

          

        

      

       

           
          (c)  In
all respects (i) in accordance with the warranties, operating manuals and
procedures for the Facility and (ii) in accordance with the Agreement, the
Definitive Agreements, the Project Agreements, the Financing Documents and any
other agreements relating to construction, operation, maintenance or financing
of the Project.

       

          "Operator" means the Person or
Persons providing the O&M Services, and its or their respective successors
and permitted assigns.

       

          "Opt-Out Notice" is defined in
Section
3.4.1.

       

          "Original Agreement" is defined in the
Preamble.

       

          "Ownership Interest" means the percentage interest
that each Member has in the ownership of the Company, as initially specified in
Section 3.1, as
it may be adjusted pursuant to Section 3.4.3, and
reference to a specified Ownership Interest means such percentage of the
aggregate Ownership Interests of all Members.

       

          "Performance Guarantees" means
collectively all performance guarantees or commitments by the Construction
Parties with respect to the Construction Project or any part thereof as set
forth in the Construction Agreements.

       

          "Performance Tests" means
collectively all performance and acceptance tests performed with respect to the
Construction Project or any part thereof as set forth in the Construction
Agreements.

       

          "Person" means any individual,
partnership, corporation, association, trust, limited liability company, joint
venture, unincorporated organization, Governmental Authority or any other form
of entity.

       

          "Phase I" is defined in Section 5.2(a).

       

          "Phase I Activities" is defined
in Section
5.2(a).

       

          "Phase II" is defined in Section 5.2(b).

       

          "Phase II Activities" is
defined in Section
5.2(b).

       

          "Phase III" is defined in Section 5.2(c).

       

          "Phase III Activities" is
defined in Section
5.2(c).

       

          "Plant Manager" means the
position of plant manager for the Facility during Phase III and the
individual performing, or causing to be performed, the Phase III Activities
assigned to such position.  Notwithstanding the foregoing, the Plant
Manager may be designated prior to the Commercial Operation Date and may be
asked to perform, or cause to be performed, certain Phase I Activities in
the Management Committee's discretion.

       

      
        
          
            Appendix A, Page 13

          

          
            

          

        

      

       

          "Power Marketer" means the
Person (and any successor or permitted assignee thereof) engaged by the
Management Committee to perform, or cause to be performed, the Power Marketing
Services for the Company pursuant to the Power Marketing Agreement.

       

          "Power Marketing Agreement" is
defined in Section 7.1.

       

          "Power Marketing Services"
defined in Section 7.1.

       

          "PPA Manager" is defined in Section 5.8.1.

       

          "PPAs" means the 2001 PPA and
the 2003 PPA.

       

          "Prequalified Significant Offtake
Agreement" is defined in Section 5.6.1.

       

          "Prime Rate" means a per annum
rate of interest equal to the "Prime Rate" (as published from time to time in
The Wall Street
Journal under "Money Rates").

       

          "Priority Amount" means, for each Fiscal Year
during the Priority Period, $14,000,000; provided that (a) for
the first such Fiscal Year, the Priority Amount shall be $14,000,000 multiplied
by the quotient obtained by dividing (i) the number of days in such Fiscal
Year during the Priority Period by (ii) 365 and (b) for the last such
Fiscal Year, the Priority Amount shall be $14,000,000 multiplied by the quotient
obtained by dividing (i) the number of days in such Fiscal Year occurring
during the Priority Period by (ii) 365.

       

          "Priority Distributions" is
defined in Section
12.1.

       

          "Priority Period" means the
period from and including May 9, 2003 to and including June 30, 2022.

       

          "Profits" and "Losses" mean, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code § 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code § 703(a)(1)
shall be included in taxable income or loss), with the following
adjustments:

       

                
     (a)  Any income of the Company that is
exempt from federal income tax and not otherwise taken into account in computing
Profits or Losses shall be included as an item of gross income;

       

               
      (b)  Any expenditures of the
Company described in Code § 705(a)(2)(B),
or treated as Code § 705(a)(2)(B),
expenditures pursuant to Treasury Regulation § 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Profits and Losses shall be
treated as a deductible expense;

       

             
        (c)  In the event the
Gross Asset Value of any Company asset is adjusted pursuant to the definition of
"Gross Asset Value," the amount of such adjustment shall be taken into account
as gain or loss from the disposition of such asset for purposes of computing
Profits and Losses;

       

      
        
          
            Appendix A, Page 14

          

          
            

          

        

      

       

            
         (d)  Gain or
loss resulting from any disposition of Company assets with respect to which gain
or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of the property differs from its Gross Asset
Value;

       

               
      (e)  In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in computing
such taxable income or loss, there shall be taken into account Depreciation for
such Fiscal Year or other period, computed in accordance with the definition of
Depreciation;

       

             
        (f)  The amount of any
adjustments to the adjusted tax basis or book value of any Company Asset
pursuant to Code § 743(b) or
734(b) shall not be taken into account, except as may be required pursuant to
Treasury Regulation § 1.704-1(b)(2)(iv)(m)(4);
and

       

               
      (g)  Notwithstanding any other
provisions of this definition, any items which are specially or curatively
allocated pursuant to Section 13.5
through Section
13.11 shall not be taken in to account in computing Profits or
Losses.

       

          "Project" is defined in Section 2.3.

       

          "Project Account" means the
account established by the Project Management Company to which each Member shall
disburse its Pro Rata share of all Project Cost in accordance with the
provisions of Section
6.1.2.

       

          "Project Agreements" means the following
agreements plus other agreements between the Company and third parties necessary
in connection with the development, construction, operation or Maintenance of
the Facility:

       

           
          (a)  Construction
Agreements;

       

             
        (b)  OEM
Contracts;

       

               
      (c)  Electric Interconnection
Agreements and Gas Interconnection Agreements;

       

                 
    (d)  Offtake Agreements;

       

             
        (e)  Transmission
Services Agreements;

       

               
      (f)  Fuel Supply Agreements;

       

               
      (g)  The O&M Agreement and
other agreements between the Company and third parties, if any, for the
performance of some or all of the O&M Services; and

       

              
       (h)  Agreements between the
Company and third parties, if any, for the performance of some or all of the
Major Maintenance Services.

       

          "Project Budget" is defined in
Section
6.1.1.

       

      
        
          Appendix A, Page 15

        

        
          

        

      

       

       

          "Project Costs" means costs and expenses,
initial working capital, and the funding of any initial reserves required by the
Project Budget to develop, design, engineer, procure equipment for, construct,
start-up, test and attain commercial operation of the Facility (including
initial operation until the Commercial Operation Date) in accordance with the
Agreement, the Definitive Agreements and the Project Agreements, and shall
include all development costs (including the Development Fee), payments under
the Construction Agreements, costs for acquiring and preparing the Facility Site
and obtaining easements, rights of way and other necessary real property rights
as Company Assets, interest during construction, fees and reimbursable expenses
of lenders, spare parts, owner-furnished equipment, consumables, gas, power and
other utilities for construction, start-up and testing, utility and pipeline
interconnection costs, insurance and taxes required to be paid before the
Commercial Operation Date, permitting costs, fees and expenses for services
rendered before the Commercial Operation Date (including legal and consulting
fees and disbursements other than those incurred in connection with the
preparation and negotiation of the Agreement and the Definitive Agreements),
Project development and construction management expenses, operating costs
incurred prior to the Commercial Operation Date and costs of emissions offsets
and allowances.

       

          "Project Director" is defined
in Section
5.3.1.

       

          "Project Director Discharge
Date" is defined in Section
5.3.5(a).

       

          "Project Financing" is defined
in Section
5.7.1.

       

          "Project Management Agreement"
means the Project Management Agreement by and between the Project Management
Company and the Company, dated February 29, 2000, as amended by the First
Amendment to Project Management Agreement dated July 27, 2001 and the Second
Amendment to Project Management Agreement dated May 9, 2002.

       

          "Project Management Company"
means Calpine Central.

       

          "Property" means any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.


       

          "Pro Rata" means pro rata
according to each Member's respective Ownership Interest.

       

          "Prudent Electric Industry
Standards" means those practices, methods, equipment, specifications and
standards of safety and performance, as the same may change from time to time,
as are commonly used by operators of electric generation stations in the United
States of a type and size similar to those constituting the Facility as good,
safe, and prudent engineering practices in connection with the operation,
maintenance, repair, and use of gas turbines, steam turbines, electric
generators, and other equipment and facilities with commensurate standards of
safety, performance, dependability, efficiency, and economy.  Prudent
Electric Industry Standards are not intended to be limited to the optimum
practice or method to the exclusion of others, but rather to be a spectrum of
possible but reasonable practices and methods.

       

          "Purchase Price" means (a) in
the case of a purchase pursuant to Sections 2.9, 10.2.1 or 14.6, Fair Market
Value or (b) in the case of a purchase pursuant to Section 18.2(c), the
amount calculated as provided therein.

       

      
        
          
            Appendix A, Page 16

          

          
            

          

        

      

       

       

          "Regulatory Allocations" is
defined in Section
13.11.

       

          "Reimbursable Member Expenses"
means, to the extent reasonably allocable to work related to the Project, (a)
the cost of salaries of the personnel of a Member or its Affiliates multiplied
by 1.4, (b) the cost of overtime of the personnel of a Member or its Affiliates
and (c) travel expenses, including meals and
hotels.  Reimbursable Member Expenses shall not include any of the
foregoing costs and expenses to the extent incurred in connection with the
preparation or execution of the Agreement or the Definitive Agreements.

       

          "Reimbursable Project Management
Expenses" is defined in the Project Management Agreement.

       

          "Representative" is defined in
Section
4.3.1.

       

          "Reserve Margin" is defined in Section
7.2.1(b).

       

          "Response" is defined in Section
22.17(a).

       

          "Restatement Date" is defined in the
Preamble.

       

          "Revenue Benchmarks" is defined
in Section
7.2.1(a).

       

          "Secretary" means the natural person
appointed by the Chairman as the Secretary of the Company.

       

          "Self-Dealing Practices" is defined in Section 5 of Appendix G.


       

          "Significant Offtake Agreement"
means an Offtake Agreement (a) for a term in excess of one (1) year and (b) for
the sale of either (i) fifty megawatts (50 MW) or more of Capacity or (ii)
Energy having a current market valuation, at the time the Significant Offtake
Agreement is proposed, exceeding $2,000,000.

       

          "Simple Majority" means
fifty-five percent (55%) or more of the Ownership Interests in the
Company.

       

          "Special Distribution" is
defined in Section
12.2.

       

          "Steam Turbine Purchase
Contract" means an agreement for the purchase of two (2) steam turbine
generators for the Project.

       

          "Subordinated Obligation" is
defined in Section
3.3.5.

       

          "Super Majority" means
seventy-five percent (75%) or more of the Ownership Interests in the
Company.

       

          "Tax" or "Taxes" means all federal, state,
local or foreign net or gross income, gross receipts, net proceeds, sales, use,
ad valorem, value added, franchise, bank shares, withholding, payroll,
employment, excise, property, deed, stamp, alternative or add on minimum,
environmental or other taxes, assessments, duties, fees, levies, fees in lieu of
taxes, or other 

       

      
        
          
            Appendix A, Page 17

          

          
            

          

        

      

       

       

      governmental charges of any nature whatever, whether disputed
or not, together with any interest, fines, penalties, additions to tax or
additional amounts with respect thereto.

       

          "Tax Matters Partner" is
defined in Section 16.1.

       

          "Term" means the period of time
in which the Company continues its existence as a separate legal entity as
defined in Section
2.9.

       

          "Termination Date" means the
date the Company ceases to do business and all Windup Events have been
completed.

       

          "Third Party Expenses" means
all expenses payable by a Member or its Affiliates to third parties in
connection with the Project, including payments due to equipment vendors under
contracts with such vendors and third party legal, consulting, contractor and
financing costs and fees (but excluding any legal fees or expenses incurred in
connection with the negotiation of the Agreement or the Definitive
Agreements).

       

          "Third Party Guarantee" means
any guarantee given by a Member or an Affiliate of a Member to any Person that
guarantees a contractual payment or performance obligation of the Company to
such Person (including an guarantee given to the other Member or to an Affiliate
thereof guaranteeing the Company's obligations under an Affiliate Contract),
provided that such guarantee has been authorized by the Management
Committee.

       

          "Third Party Offer" is defined
in Section
14.2.

       

          "Transfer Price" is defined in
Section
7.1.4(a).

       

          "Transmission Services
Agreements" means the Transmission Services Agreements to be entered into
between the Company and the applicable transmission services providers, as
required by any law, rule or regulation or the rules or operating guides of any
applicable reliability counsel, pursuant to which adequate transmission services
are provided for the Energy, all in accordance with applicable open access
transmission service tariffs.

       

          "Treasury Regulations" means the income tax
regulations, including temporary regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

       

          "Trigger Date" means the date
on which either or both of the PPAs expire(s) or terminate(s) for any
reason.

       

          "Uncommitted Capacity" is defined in Section
7.2.1(b).

       

          "Uncommitted Capacity Share" is
defined in Section
5.6.2.

       

          "VAR" means a statistical
calculation of the dollar amount of maximum potential loss over a specified
holding period and defined confidence interval which is measured for a portfolio
of transactions, which provides a measure for estimating the amount of potential
loss and the probability of that loss occurring.

       

      
        
          
            Appendix A, Page 18

          

          
            

          

        

      

        

          "Windup Events" is defined in
Section
15.2.1.

       

      Rules as to Usage


       

            1.  The
terms defined above have the meanings set forth above for all purposes, and such
meanings are equally applicable to both the singular and plural forms of the
terms defined.

       

            2.  "Include," "includes" and "including" shall be
deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import.

       

            3.  "Writing," "written" and
comparable terms refer to printing, typing, and other means of reproducing in a
visible form.

       

            4.  Any
agreement, instrument or Applicable Law defined or referred to above means such
agreement or instrument or Applicable Law as from time to time amended, modified
or supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of Applicable Law) by succession of comparable
successor Applicable Law and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated
therein.

       

            5.  References
to a Person are also to its permitted successors and assigns.

       

            6.  Any
term defined above by reference to any agreement, instrument or Applicable Law
has such meaning whether or not such agreement, instrument or Applicable Law is
in effect.

       

            7.  "Hereof," "herein," "hereunder" and
comparable terms refer, unless otherwise expressly indicated, to the entire
agreement or instrument in which such terms are used and not to any particular
article, section or other subdivision thereof or attachment
thereto.  References in an instrument to "Article," "Section," or
another subdivision or to an attachment are, unless the context otherwise
requires, to an article, section, subsection or subdivision of or an attachment
to such agreement or instrument.  All references to exhibits or
appendices in any agreement or instrument that is governed by this Appendix are
to exhibits or appendices attached to such instrument or agreement.

       

            8.  Pronouns,
whenever used in any agreement or instrument that is governed by this Appendix
and of whatever gender, shall include natural Persons, corporations, limited
liability companies, partnerships and associations of every kind and
character.

       

            9.  References
to any gender include, unless the context otherwise requires, references to all
genders.

       

            10.  The
word "or" will
have the inclusive meaning represented by the phrase "and/or."

       

            11.  "Shall" and "will" have equal
force and effect.

       

            12.  References
to "$" or to
"dollars" shall
mean the lawful currency of the United States of America.

       

      
        
          
            Appendix A, Page 19

          

          
            

          

        

      

       

      APPENDIX B


       

      MEMBERS'
CONTRIBUTED ASSETS

      
        


         

        
          	
                  Acadia Holding’s
      Contributed Assets:

                	
                  Third
      Party Expenses

                  incurred
      through 1/31/00

                  in acquiring such assets:  
      

                
	
                  Fee
      simple title to Facility Site

                	
                  $1,064,011

                	 
      
	
                  Survey
      dated May 5, 1999 of Facility Site

                	
                  4,724

                	 
      
	
                  Application
      for Air Permit (and all supporting studies)

                	
                  117,363

                	 
      
	
                  Water
      testing studies and reports

                	
                  205,577

                	 
      
	
                  Transmission
      studies and reports

                	
                  14,534

                	 
      
	
                  Easements
      and/or route assessments for fuel lines and water
discharge

                	
                  12,787

                	 
      
	
                  Preliminary
      engineering (conceptual design, site layout, budgets,
etc.)

                	
                  83,805

                	 
      
	 
      	
                  1,502,801

                	 
      


        

        


         

        
          	
                  Calpine’s Contributed
    Assets:

                	
                  Third
      Party Expenses

                  incurred
      through 1/31/00

                  in acquiring such assets:
  

                
	
                  Scope
      Book

                	
                  $          1

                	 
      
	
                  Combustion
      Turbine Purchase Contract

                	 
      	 
      
	
                  Payment 1/2/00

                	
                  3,250,000

                	 
      
	
                  (Payment on 3/2/00
      $3,250,000)

                	 
      	 
      
	
                  HRSG
      Purchase Contract (9/99 through 12/99)

                	
                  1,050,000

                	 
      
	
                  Steam
      Turbine Purchase Contract (Payment in 3/00 ($2.2 MM)

                	
                               0

                	 
      
	 
      	
                  4,300,000

                	 
      


        

      

       

       

       

       

      
        
          
            Appendix B, Page 1

          

          
            

          

        

      


      
        APPENDIX C


      

       

      ADDRESSES FOR
NOTICES; DESCRIPTION OF ACCOUNTS

       

      1.     Project Account
:

       

          All payments to or
for deposit in the Project Account shall be made by wire transfer of immediately
available federal funds to the following account:

       

      
        	 	
                Union Bank of California 

              
	 	
                Account of:  Acadia Power Partners, LLC 

              
	 	
                Account Number:  187 00333 93 

              
	 	
                ABA Number:  122 000 496 

              
	 	
                Attention:     Michael Thomas 

              
	 	
                                     (408)
      995-0505 

              


      

       

      2.     Acadia
Holdings:  Acadia Power Holdings, LLC

       

          a)     Acadia Holdings'
Account:  All payments to Acadia Holdings shall be made by wire
transfer of immediately available federal funds to the following account:

       

      
        	 	
                Bank One, NA 

              
	 	
                Account of:  Cleco Corporation 

              
	 	
                Account Number:  1013200 

              
	 	
                ABA Number:  071000013 

              
	 	
                Attention:  Acadia Power Holdings, LLC 

              
	 	
                     Treasury Services (318) 484-7786
    

              


      

       

         

          b)     Notices:  All
Notices to Acadia Holdings shall be sent to:

       

      
        	 	
                Acadia Power Holdings, LLC 

              
	 	
                c/o Cleco Midstream Resources, LLC 

              
	 	
                2030 Donahue Ferry Road 

              
	 	
                Pineville, LA 71360 

              
	 	
                Attention: Samuel Charlton, III 

              


      

       

      3.      Calpine:  Calpine
Acadia Holdings, LLC

       

          a)     Calpine's
Account:  All payments to Calpine shall be made by wire
transfer of immediately available federal funds to the following account:

       

      
        	 	
                Account Name:      Calpine
      Corporation 

              
	 	
                Account Number:     3160010990
      

              
	 	
                Bank Name:
                Union Bank of
      California 

              
	 	
                               Oakland, California

              
	 	
                ABA
      Number:       122000496

              
	 	
                Notation:          Calpine
      Acadia Holdings, LLC 

              


      

       

      
         

        
          
            
              Appendix C, Page 1

            

            
              

            

          

        

      

                       Notices:  All
Notices to Calpine shall be sent to:

       

      
        	 	
                Calpine Acadia Holdings, LLC 

              
	 	
                c/o Calpine Corporation 

              
	 	
                700 Louisiana, Suite 2700 

              
	 	
                Houston, Texas  77002 

              
	 	
                Attention:     Diana Knox, Senior Vice
      President 

              
	 	 


      

       

      
         

        
          
            
              Appendix C, Page 2

            

            
              

            

          

        

      

      APPENDIX D


       

      ARBITRATION
PROCEDURES

       

                 Section 1.  Binding
Arbitration.  Binding arbitration shall be conducted in
accordance with the following procedures:

       

                    (a)  The
Member seeking arbitration shall request such arbitration in writing, which
writing shall be delivered to the other Member and include a clear statement of
the matter(s) in dispute. Except to the extent provided in this Appendix D, the
arbitration shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association by a single arbitrator to be
appointed as follows: (i) upon the issuance and receipt of a request for
arbitration, the requesting and receiving Member shall each designate a
representative for the sole purpose of selecting, by mutual agreement with the
other Member's designated representative, the individual who shall arbitrate the
Dispute or Controversy referred to arbitration hereunder; (ii) within twenty
(20) days of their appointment, the two representatives shall designate a third
individual who shall be the arbitrator to conduct the arbitration of the Dispute
or Controversy; and (iii) said individual shall be qualified to arbitrate the
Dispute or Controversy referred to arbitration hereunder and have a schedule
that permits him or her to serve as arbitrator within the time periods set forth
herein.  In order to facilitate any such appointment, the Member
seeking arbitration shall submit a brief description (no longer than two (2)
pages) of the Dispute or Controversy to the other Member.  In the
event the Members' two representatives do not agree on a single arbitrator of
the Dispute or Controversy within the twenty (20) day period, then the
arbitrator shall be appointed by the then-serving senior judge of the federal
district court for the Southern District of New York or any successor thereto
within the next ten (10) day period.  The Member seeking arbitration
shall request the appointment of an arbitrator and furnish a copy of the
aforesaid description of the Dispute or Controversy to said
judge.  Each Member may, but shall not be required to, submit to said
judge a list of up to three (3) qualified individuals as candidates for
appointment as the arbitrator whose schedules permit their service as arbitrator
within the time periods set forth herein.  The arbitrator appointed by
the judge need not be from such lists.

       

                    (b)  Within
thirty (30) days of the date the arbitrator is appointed, the arbitrator shall
notify the Members of the date of the arbitration hearing, which hearing date
shall be not more than sixty (60) days from the date of the arbitrator's
appointment.  The arbitration hearing shall be held in New York City,
New York.

       

                    (c)  Any
dispute regarding discovery, or the relevance or scope thereof, shall be
determined by the arbitrator consistent with the expedited nature of
arbitration.  (The arbitrator may hold a preliminary hearing to
establish the extent of and schedule for the production of such documents and
other information and the identification of any witnesses to be called.) All
discovery shall be completed within forty-five (45) days following the
appointment of the arbitrator.

       

      
         

        
          
            
              Appendix D, Page 1

            

            
              

            

          

        

      

       

       

                    (d)  The
arbitrator shall issue a final ruling within thirty (30) days after the
arbitration hearing.  Any decision of the arbitrator shall state the
basis of the award and shall include both findings of fact and conclusions of
law.  Any award rendered pursuant to the foregoing, which may include
an award or decree of specific performance hereunder, shall be final and binding
on, and nonappealable by, the Members and judgment thereon may be entered or
enforcement thereof sought by either Member in a court of competent
jurisdiction.  The foregoing deadlines shall be tolled during the
period that no arbitrator is serving until a replacement is appointed in
accordance with this Appendix D.

       

                    (e)  Notwithstanding
the foregoing, nothing contained herein shall be deemed to give the arbitrator
appointed hereunder any authority, power or right to alter, change, amend,
modify, waive, add to or delete from any of the provisions of the
Agreement.

       

                Section 2.  Further Qualifications of
Arbitrators; Conduct.  All arbitrators shall be and remain at
all times wholly impartial and, upon written request by either Member, shall
provide the Members with a statement that they can and shall decide any Dispute
or Controversy referred to them impartially.  No arbitrator shall be,
or shall have been within the preceding ten (10) years, employed by either
Member or any Affiliate of either Member, or have served as an advisor or
consultant to either Member or any Affiliate of either Member, or have any
material financial dependence upon either Member or any Affiliate of either
Member, nor shall any arbitrator have any material financial interest in the
Dispute or Controversy.

       

                Section 3.  Applicable Law and
Arbitration Rules.  The agreement to arbitrate set forth in
this Appendix D
shall be enforceable in either federal or state court. The enforcement of such
agreement, and, except as otherwise expressly provided herein, all procedural
aspects governing the conduct of the arbitration, shall be governed by and
construed pursuant to the Commercial Rules of the American Arbitration
Association.  In deciding the substance of any such Dispute or
Controversy, the arbitrator shall apply the substantive laws of the State of
Delaware.  The arbitrator shall have authority, power and right to
award damages and provide for other remedies as are available at law or in
equity in accordance with the laws of the State of Delaware, except that the
arbitrator shall have no authority to award any damages excluded by Section 22.1 of the
Agreement, regardless of whether such damages may be available under the laws of
the State of Delaware.  The Members hereby waive their right, if any,
to recover any damages excluded by Section 22.1 of the
Agreement in connection with any arbitrated Dispute or Controversy.

       

                Section 4.  Consolidation.  If
the Members initiate multiple arbitration proceedings, the subject matters of
which are related by common questions of law or fact and which could result in
conflicting awards or obligations, then the Members hereby agree that all such
proceedings may be consolidated into a single arbitration proceeding.

       

                Section 5.  Pendency of Dispute; Interim
Measures.  The existence of any Dispute or Controversy eligible
for referral or referred to arbitration hereunder, or the pendency of the
dispute settlement or resolution procedures set forth herein, shall not in and
of themselves relieve or excuse either Member from its ongoing duties and
obligations under the Agreement or any other Definitive Agreement or any right,
duty or obligation arising therefrom; provided, however, that during
the pendency of arbitration proceedings and prior to a final award, upon 

       

      
         

        
          
            
              Appendix D, Page 2

            

            
              

            

          

        

      

       

       

      written request by a Member, the arbitrator may issue interim
measures for preservation or protection of the status quo.

       

                Section
6.  No
Appeal.  Each Member agrees that arbitration pursuant to this
Appendix D
shall be the exclusive method for resolving all Disputes and Controversies that
are not resolved by mutual agreement and that it will not commence an Action or
Proceeding, except to enforce the arbitrator's decision or to compel the other
Member to participate in arbitration under this Appendix D.

       

                Section 7.  Complete
Defense.  The Members agree that compliance by a Member with
the provisions of this Appendix shall be a complete defense to any Action or
Proceeding instituted in any federal or state court, or before any
administrative tribunal by any other Member with respect to any Dispute or
Controversy which is subject to arbitration as set forth herein, other than a
suit or action alleging non-compliance with a final and binding arbitration
award rendered hereunder.

       

                Section
8.  Costs.  Each
Member shall bear the costs of its designated representative to select the
arbitrator of the Dispute or Controversy and its own attorneys'
fees.  The costs of the arbitrator, as well as the additional
incidental costs of arbitration, shall be paid for by the non-prevailing Member
in the arbitration; provided, however, that where
the final decision of the arbitrator is not clearly in favor of either Member,
such costs shall be shared equally by the Members.

       

      
         

        
          
            
              Appendix D, Page 3

            

            
              

            

          

        

      

       

      APPENDIX E

       

      MEMBERS' PHASE I DEVELOPMENT
RESPONSIBILITIES

       

      
        	
                ACTION/PROJECT
AGREEMENT
      

                 

              	
                RESPONSIBILITY 

                 

              	
                REPRESENTATIVES 

                 

              	 
	
                Land and Easements procurement 

                 

              	
                Acadia Holdings (lead)/Calpine (review) 

                 

              	
                Acadia
      Holdings

                 

                Irene Norris 

              	
                Calpine

                 

                Jackie Thomas 

              
	 	 	 	 
	
                Permitting 

                 

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Charlie Van Hoof 

                 

              	
                Patrick Blanchard 

                 

              
	 	 	 	 
	
                Design and Scope 

                 

              	
                Calpine (lead)/Acadia Holdings (review) 

              	
                Don Jeansonne 

                 

              	
                Chris Shugart 

                 

              
	 	 	 	 
	
                Combustion Turbine Purchase Contract, Steam Turbine Purchase Contract
      and HRSG Purchase Contract 

              	
                Calpine (lead)/Acadia Holdings (review) 

                 

              	
                Don Jeansonne 

                 

              	
                Steve Ellington 

                 

              
	 	 	 	 
	
                Offtake/Power Marketing Agreement and Offtake Agreements 

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Keith Johnson 

                 

              	
                Peter Blood 

                 

              
	 	 	 	 
	
                Fuel Supply and Transportation/Fuel Supply Agreements 

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Sam Charleton 

                 

              	
                Jeff Rawls 

                 

              
	 	 	 	 
	
                Transmission/ Interconnection and Transmission Services Agreement
      

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Mark MacDonald 

                 

              	
                Terry Dodson 

                 

              


      

       

      
         

        
          
            
              Appendix E, Page 1

            

            
              

            

          

        

      

       

      
        	
                Public/Government Relations 

                 

              	
                Acadia Holdings (lead)/Calpine (review) 

                 

              	
                Public: Mike Burns

Government: Kim Fontenot 

              	
                Jimmy Glotfelty 

                 

              
	 	 	 	 
	
                Pro Forma Economics 

                 

              	
                Calpine (lead)/Acadia Holdings (review) 

              	
                Keith Crump 

                 

              	
                Andre Walker 

                 

              
	 	 	 	 
	
                Finance 

                 

              	
                Calpine and Acadia Holdings (co-lead) 

              	
                Tom Howlin 

                 

              	
                Adam Dexter 

                 

              
	 	 	 	 
	
                Property Tax Abatement 

                 

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Nick Lemoine 

                 

              	
                Jackie Thomas 

                 

              
	 	 	 	 
	
                Louisiana PSC 

                 

              	
                Acadia Holdings (lead)/Calpine (review) 

              	
                Kim Fontenot 

                 

              	
                Jimmy Glotfelty 

                 

              
	 	 	 	 
	
                FERC 

                 

              	
                Calpine (lead)/Acadia (review) 

              	
                Bill Fontenot 

                 

              	
                Joe Rohen 

                 

              


      

       

      
         

        
          
            
              Appendix E, Page 2

            

            
              

            

          

        

      

       

       

      
        	
                Legal Coordination 

                 

              	
                Calpine and Acadia Holdings (co-lead) 

              	
                Tom Howlin 

                 

              	
                Liz Miller

                 

                (In House Counsel) 

              
	 	 	 	 
	
                Accounting 

                 

              	
                Calpine(lead)/Acadia Holdings (review) 

              	
                Chuck Murray 

                 

              	
                Henry Nader 

                 

              
	 	 	 	 
	
                Insurance 

                 

              	
                Calpine(lead)/Acadia Holdings (review) 

              	
                John Melancon 

                 

              	
                Denise Straka 

                 

              
	 	 	 	 
	
                Construction Agreements (other than as covered above) and OEM
      Contracts 

              	
                Calpine(lead)/Acadia Holdings (review) 

              	
                Don Jeansonne 

                 

              	
                Angelo Urbani 

                 

              


      

       

      
         

        
          
            
              Appendix E, Page 3

            

            
              

            

          

        

      


       

       

      APPENDIX F

       

      REIMBURSABLE MEMBER EXPENSES
AS OF 1/31/00 

       

      
        
          	
                  Acadia:

                   

                	 
      
	
                  Transmission
      Engineering

                	
                  $27,869

                   

                
	
                  Production
      Engineering

                	
                  28,280

                   

                
	
                  Tax
      Department

                	
                  1,976

                   

                
	
                  Right
      Of Way Department

                	
                  24,713

                   

                
	
                  Environmental
      Services

                	
                  23,188

                   

                
	
                  Technical
      Services

                	
                  5,266

                   

                
	
                  Project
      Management

                	
                  59,541

                   

                
	
                  Energy
      Marketing

                	
                  12,317

                   

                
	
                  Fuel
      Procurement RFP & Pipeline Engineering

                	
                  19,583

                   

                
	
                  Governmental
      Affairs

                	
                  2,154

                   

                
	
                   

                  Accounting

                	
                  5,277

                
	
                  TOTAL

                	
                  $210,164

                   

                
	
                  Calpine:

                	
                  $
      0

                   

                
	 
      	 
      


        

      

       

      
         

        
          
            
              Appendix F, Page 1

            

            
              

            

          

        

      

       

      APPENDIX G

       

      REQUIRED PROVISIONS
OF
ASSET MANAGEMENT POLICY MANUAL

       

      1.     The Power Marketing Services
shall include the following:

       

                (a)  Selling
Energy and buying energy, scheduling Energy delivery on available transmission
paths, confirming the Energy delivery schedules, rescheduling Energy deliveries
as required, securing and selling fuel, nominating fuel to the pipelines for
delivery to the Facility or away from the Facility, confirming the fuel
nominations, re-nominating fuel schedules as-required, and accounting for all
transactions associated with Offtake Agreements, Fuel Supply Agreements and
other agreements to optimize the Company's net revenue;

       

                (b)  Negotiating
Transmission Services Agreements, ancillary services agreements, and Fuel Supply
Agreements on behalf of the Company;

       

                (c)  Monitoring,
on a routine basis (to be determined by the Management Committee), the
relationship between gas prices and power prices and, when and to the extent
that gas and power arbitrage opportunities arise that enable the Power Marketer
to maximize the Company's net revenues, reselling or buying some portion of the
Company's gas supplies and/or gas transportation or gas storage services;

       

                (d)  Communicating
directly with the Plant Manager to ensure that the Energy dispatch, scheduling,
and fuel delivery obligations are met and optimized during each scheduling
period or delivery day in accordance with the fuel delivery and power generation
schedule and requirements of all Offtake Agreements, Fuel Supply Agreements and
Transmission Services Agreements;

       

                (e)  Providing
a summary of all trades that were executed for the Company in accordance with
the schedule to be determined by the Management Committee, and providing such
other reports and information to the Management Committee, the Members and to
the Members and any other Persons as the Management Committee shall direct from
time to time, including:

       

                     (1)  An
asset optimization log showing the daily utilization of the executed Fuel Supply
Agreements; 

       

                     (2)  A
credit log (described in paragraph 10 below);

       

                     (3)  A
daily VAR report;

       

                     (4)  A
daily position report;

       

                     (5)  A
daily transaction report;

       

                     (6)  An
Annual Plan report;

       

      
         

        
          
            
              Appendix G, Page 1

            

            
              

            

          

        

      

       

                     (7)  A
quarterly stress test report;

       

                     (8)  A
gas supply, transportation, and storage report addressing costs, imbalances, and
revenues from coordination of and remarketing of fuel-related transactions;
and

       

                     (9)  A
report of performance compared to the Revenue Benchmarks.

       

      2.     With respect to the Offtake
Agreements, the Transmission Services Agreements and the Fuel Supply Agreements,
the Power Marketer shall make all schedules and nominations, receive and pay all
invoices, deliver and receive all notices and correspondence thereunder, and
otherwise perform and administer such agreements in a manner so that the Company
and third parties fully satisfy their respective obligations thereunder.

       

      3.     Unless otherwise specified by
the Management Committee in its discretion from time to time, the Power Marketer
shall obtain the advance approval of the Management Committee for all Offtake
Agreements having a term of one (1) year or longer and over $1,000,000 in
VAR.  Unless otherwise specified by the Management Committee in its
discretion from time to time, Offtake Agreements having a term of less than one
(1) year and/or less than $1,000,000 in VAR (and otherwise satisfying any
prerequisites imposed from time to time by the Management Committee) will not
require advance approval by the Management Committee.  Similar limits
for advance approval of Fuel Supply Agreements may be specified by the
Management Committee, and below such limits (provided that such agreements
otherwise satisfy any prerequisites imposed from time to time by the Management
Committee), advance approval by the Management Committee will not be
required.

       

      4.     With respect to Offtake
Agreements, Fuel Supply Agreements and any other related agreements that, under
the Asset Management Policy Manual then in effect, do not require Management
Committee pre-approval, the Power Marketer shall notify the Member that is not
(or whose Affiliate is not) then the Power Marketer of such agreements in a
timely manner.  In addition, either Member may, at any time, submit
bids to buy Energy or offer to sell fuel to the Project on terms competitive in
the market.

       

      5.     The Power Marketer shall not
engage in Self-Dealing Practices on its own behalf or on behalf of any of its
Affiliates. "Self-Dealing
Practices" are generally defined as the Power Marketer executing
purchases of fuel for the Facility or sales of Energy at prices and costs that
are economically discriminatory and disadvantageous to the Company or the other
Member, or sharing information about the availability of Energy or fuel for the
Facility to the disadvantage of the Company or the other Member, for the benefit
of the Power Marketer or an Affiliate.  By way of example and not
limitation, the following practices by the Power Marketer would constitute
Self-Dealing Practices:

       

      ·      Making sales
of Energy or fuel for the Facility to an Affiliate of the Power Marketer at
prices below the current market, or purchasing fuel for the Facility from an
Affiliate of the Power Marketer at prices above the current market so as 

       

      
         

        
          
            
              Appendix G, Page 2

            

            
              

            

          

        

      

       

      to allow the Power Marketer's
Affiliate to make a better margin than it otherwise would have in the absence of
the below-market price from the Power Marketer; or

       

      ·      Sharing
information about the availability of Energy or fuel for the Facility with the
Power Marketer's Affiliate that is not shared with the Management Committee or
the other Member, thereby disadvantaging the Company or such other Member.

       

      6.     The Power Marketer shall
allow each Member, and the agents and representatives thereof, to exercise the
right to inspect the Power Marketer's records of all Project related activity,
including documentation of executed trades, electronic tags, third party confirmations, and all deal tickets. 

       

      7.     Management Committee, and
report to the Management Committee on a regular basis (to be determined by the
Management Committee), the marked-to-market position of all counterparties in
transactions between such counterparty and the Company and/or the Power Marketer
on behalf of the Company.  If the level of credit extended by the
Power Marketer to any approved counterparty equals or exceeds its designated
level of credit, then the Power Marketer will not conduct any Project-related
transactions with such counterparty until such counterparty's marked-to-market
position has improved to an acceptable level below the designated level of
credit.

       

      8.     The Power Marketer shall
observe the requirements of the position trading and risk management system to
be adopted by the Management Committee, and revised from time to
time.  The system will initially require the Power Marketer to manage
the Asset Book such that the volumetric and dollar level of exposure in VAR on
an annual basis do not exceed two hundred fifty megawatts (250 MW) or $2,000,000
of open transactions, and impose limits on the number of open electricity
futures contracts and open gas futures contracts.  The position
trading and risk management system will also impose specific risk limits to
guide the Power Marketer's transactional activities regarding terms, volumes,
seasonality, transaction types, spark spread, unit contingency, transmission,
transportation, etc. The position trading and risk management system will
require the Power Marketer to provide an audit trail for all executed
transactions.

       

      
         

        
          
            
              Appendix G, Page 3

            

            
              

            

          

        

      

       

      APPENDIX H

       

      DEVELOPMENT PLAN AND CONSTRUCTION SCHEDULE 

       

      

       

       

       

      
         

        
          
            
              Appendix H, Page 1

            

            
              

            

          

        

      

       

      

      
        
          Appendix H, Page 2

        

        
          

        

      

       

       

       

      

       

      
        
          Appendix H, Page 3

        

        
          

        

      

       

       

       

      

       

      
        
          Appendix H, Page 4

        

        
          

        

      

       

      

       

      
        
          Appendix H, Page 5

        

        
          

        

      

       

       

      

       

       

      
         

        
          
            
              Appendix H, Page 6

            

            
              

            

          

        

      

       

       

       

      EXHIBIT A

       

      PROJECT BUDGET

       

       

       

      

       

      
        
          Exhibit A, Page 1

        

        
          

        

      

       

       

      

       

      
        
          Exhibit A, Page
2

        

        
          

        

      

       

      

       

       

      
         

        
          
            
              Exhibit A, Page 3

            

            
              

            

          

        

      

       

       

      EXHIBIT B

       

      INITIAL OPERATING
BUDGET

       

       

      

       

       

       

       

       

      
        
          
            
              Exhibit B, Page 1

            

            
              

            

          

        

      

       

       

      EXHIBIT C

       

      INSURANCE PLAN

       

      1.     The Company shall obtain and
maintain or cause to be obtained and maintained for its benefit and for the
benefit of the Project Management Company (and such other Persons that the
Management Committee deems appropriate from time to time) the types of insurance
required by the following provisions together with any other types of insurance
as are (a) reasonably necessary and consistent with the Prudent Electric
Industry Standards to protect each Member's interest in the Facility against
loss or liability, (b) consistent with the insurance policies customarily
obtained for projects similar in type and location to the Facility and (c)
available on commercially reasonably terms with insurance companies rated "A-"
or better, with a minimum size rating of "VIII," by Best's Insurance Guide and
Key Ratings, (or an equivalent rating by another nationally recognized insurance
rating agency of similar standing if Best's Insurance Guide and Key Ratings
shall no longer be published) or other insurance companies of recognized
responsibility:

       

                (a)  Commercial
general liability insurance for the Facility, on an "occurrence" policy form for
the Members, the Project Management Company and other Persons deemed by the
Management Committee appropriate to be insured hereunder (such as the Operator)
with primary coverage limits of no less than $1,000,000 for injuries or death to
one or more persons or damage to Property resulting from any one occurrence and
a $1,000,000 aggregate limit.  The foregoing limits shall be specific
to the Facility and independent of any other facilities or sites of either
Member.  The commercial general liability policy shall also include a
severability of interest clause, a cross liability clause in the event more than
one entity is a "named insured" under the liability policy.

       

                (b)  Automobile
liability insurance, including coverage for owned, non-owned and hired
automobiles for both bodily injury and property damage and containing
appropriate no-fault insurance provisions or other endorsements in accordance
with state legal requirements, with limits of no less than $1,000,000 per
accident with respect to bodily injury and property damage.

       

                (c)  From
the point of groundbreaking for the Project and up to the Commercial Operation
Date, builder's risk insurance on an "all risk basis" on a completed value form
with "extended coverage" (including collapse, sinkhole and subsidence) and "soft
cost coverage" on an "agreed amount" basis providing (i) coverage for the
Facility, including removal of debris, insuring the buildings, structures,
machinery, equipment, facilities, fixtures and other items constituting a part
of the Facility in a minimum aggregate amount not less than the full replacement
value of the Facility, (ii) off-site coverage with a per occurrence limit of
$5,000,000 or such higher amount as is sufficient to cover off-site equipment
associated with the Project, (iii) transit coverage with a per occurrence limit
of not less than the greater of $5,000,000 or an amount sufficient to cover the
full insurable value of any item in transit, (iv) coverage for operational
testing and startup with the same dollar coverage and modifications as set out
in clause (i) above, (v) delay in opening coverage in an amount not less than
that equal to a 12 month period on an "all risk" basis, as set forth in clauses
(i) through (iv) above. All such policies may have 

       

       

      
         

        
          
            
              Exhibit C, Page 1

            

            
              

            

          

        

      

       

       

      deductibles of not greater than $500,000 per loss; delay in
opening coverage shall have a deductible not greater than a forty-five (45) day
period; operational testing shall have a deductible of not greater than
$500,000; and transit coverage shall have a deductible of not greater than
$250,000. The builder's risk policy shall include first party cleanup, and
hazardous materials coverage subject to appropriate sublimits.

       

                (d)  From
and after the Commercial Operation Date, "all risk" property insurance coverage
in the amount not less than the full replacement value of the Facility,
including a full replacement cost endorsement (no co-insurance) with no
deduction for depreciation, providing (i) coverages against loss or damage by
fire, lightning, windstorm, hail, explosion, riot, civil commotion, aircraft,
vehicles, smoke and other risks from time to time included under "all risk" or
"extended coverage" policies, collapse, sinkhole, and subsidence with
appropriate sublimits and (ii) boiler and machinery coverage on a
"comprehensive" basis including breakdown and repair with limits not less than
the full replacement cost of the insured objects.  The policy/policies
shall include increased cost of construction coverage, debris removal, and
building ordinance coverage to pay for loss of "undamaged" property which may be
required to be replaced due to enforcement of local, state or federal ordinances
subject to appropriate sublimits.

       

                (e)  From
and after the Commercial Operation Date, business interruption insurance on an
"all risk" basis as set forth in clauses (d)(i) and (ii) above.

       

                (f)  Umbrella
excess liability insurance of not less than $25,000,000 per occurrence and in
the aggregate during construction and $25,000,000 per occurrence and in the
aggregate during operation. Such coverages shall be on an occurrence or claims
made policy form and over and above coverage provided by the policies described
in paragraphs (a) and (b) above and (g) and (h) below whose limits shall apply
toward the $25,000,000 limits set forth in this clause (f).  The
umbrella and/or excess policies shall not contain endorsements which restrict
coverages as set forth in paragraphs (a) and (b) above and paragraph (h) below,
and which are provided in the underlying policies.

       

                (g)  Aircraft
liability, to the extent exposure exists, in an amount not less than $10,000,000
for all owned, non-owned and hired aircraft, fixed wing or rotary, used in
connection with the operation of the Facility.

       

                (h)  For
the Company's employees, the Project Management Company's employees performing
work in connection with the Project, and any other Person's employees deemed by
the Management Committee appropriate to be insured hereunder (such as employees
of the Operator), workers compensation insurance and employer's liability
insurance, with a limit of not less than $1,000,000, disability benefits
insurance and such other forms of insurance as it is required by law to provide
for its employees, providing statutory benefits and other states' endorsement
and USL&H Act coverage and Jones Act (if any exposure exists), covering loss
resulting from injury, sickness, disability or death, waiving rights of
subrogation against the Members, the Project Management Company, Calpine Parent,
Cleco and the Operator.

       

      
        
          
            Exhibit C, Page 2

          

          
            

          

        

      

       

       

      2.     Except as otherwise provided
above, all other Persons performing work in connection with the Project during
the Term shall supply proper evidence that they have obtained for themselves as
insureds the insurance of the type and in the amounts specified in Sections 1(a), 1(b) and 1(h) of this Exhibit C above with
maximum deductibles or self retentions of $25,000; provided, however, that the
Management Committee (or its designee) shall have the discretion to specify
other types or amounts of insurance or to waive aspects of the foregoing
requirements in its discretion. Work performed by Persons in connection with the
Project shall not commence until a certificate of insurance has been delivered
verifying coverages outlined above and below to be in place.  In
addition, excess liability or umbrella liability limits of not less than
$4,000,000 shall be certified.  Such insurance, with the exception of
workers compensation, supplied by these Persons shall:

       

                (a)  Add
the Members, the Project Management Company, and the Operator as additional
insureds where appropriate;

       

                (b)  Be
primary with respect to any other insurance for benefit of the Members, the
Project Management Company and the Operator;

       

                (c)  Waive
rights of subrogation against the Members, the Project Management Company and
the Operator; and

       

                (d)  Continue
in force until the contractual obligations of such Person are fulfilled or
completed.

       

                Subcontractors
shall be responsible for tools and equipment brought onto the Facility
Site.

       

      3.     Insurance premiums paid by
the Project Management Company for the insurance policies required hereunder,
and deductibles paid or incurred by the Project Management Company on claims
relating to the Project, shall constitute Reimbursable Project Management
Expenses.

       

      4.     Each insurance policy
required hereunder shall provide (and any certificate evidencing the existence
of such insurance policy shall certify) that such insurance policy shall not be
canceled, non-renewed or coverage thereunder materially reduced unless the
Members and the Project Management Company shall have received written notice of
cancellation, non-renewal or material reduction in coverage, and the Members and
the Project Management Company shall receive not less than thirty (30) days'
notice of such cancellation, non-renewal or material reduction in coverage. In
the event any insurance policy is to be canceled due to non-payment of premiums,
the requirements of the preceding sentence shall apply except that the written
notice shall be sent to the Members and the Project Management Company on the
earliest possible date but in no event less than ten (10) days prior to the
effective date of such cancellation.

       

      
        
          
            Exhibit C, Page 3

          

          
            

          

        

      

      EXHIBIT
D

      


      LEGAL
DESCRIPTION OF FACILITY SITE

      


      


      That
unimproved tract of land, with all rights, ways, privileges and servitudes
thereunto appertaining, located in Acadia Parish, Louisiana, in Section 58,
Township 7 South, Range 1 East, containing and consisting of a total of 61.5
acres, and being the property shown by hatchmarks as "PROPERTY TO BE ACQUIRED BY
CLECO MIDSTREAM RESOURCES LLC - 61.50 ACRES" on a Map of Survey prepared by
Aucoin & Associates, Inc., dated May 10, 1999, a copy of which is attached
hereto and made a part hereof by reference for all purposes as
Exhibit "A";

      


      Being
a portion of the property acquired by Laura Marlene Frey Devillier, Marie Louise
Frey Logan and Barbara Ann Frey Atkins in part from Joseph Gustave Frey, as
recognized by judgment of possession in the Succession of Joseph Gustave Frey
dated October 26, 1989, recorded in COB N48, Folio 719, Probate Docket No.
12842, and in part from Clarise Cormier Frey, as recognized by judgment of
possession in the Succession of Clarise Cormier Frey, dated February 26, 1997,
recorded in COB R54, Folio 875, Entry No. 632863, Probate Docket No. 15009, all
of the records of Acadia Parish, Louisiana; and

      


      Being
the same as the property conveyed by Laura Marlene Frey Devillier, Marie Louise
Frey Logan and Barbara Ann Frey Atkins collectively as Sellers to Cleco
Midstream Resources, LLC, a Louisiana limited liability company, pursuant to
that certain Cash Sale instrument dated May 19, 1999, recorded in COB Q56,
Folio 728, Entry No. 661412 of the records of Acadia Parish,
Louisiana.

       

      
        
          Exhibit D, Page 1

        

        
          

        

      

       

      

       

       

      
        Exhibit D, Page
2