Exhibit 4.2


 


CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC


 


Issuer


 


and


 


U.S. BANK NATIONAL ASSOCIATION


 


Trustee


 


FIRST SUPPLEMENTAL INDENTURE


 


Dated as of March 6, 2008


 






 


2008 Senior Secured Storm Recovery Bonds


 

















 


This FIRST SUPPLEMENTAL INDENTURE dated as of March 6,
2008 (this “Supplement”), by and among Cleco Katrina/Rita Hurricane
Recovery Funding LLC, a Louisiana limited liability company (the “Issuer”),
and U.S. Bank National Association, in its capacity as trustee (the “Trustee”),
is entered into pursuant to the Indenture dated as of even date herewith
between the Issuer and the Trustee (the “Indenture”).


 


PRELIMINARY STATEMENT; GRANTING CLAUSE


 


Section 9.01 of the Indenture provides, among
other things, that the Issuer and the Trustee may at any time and from time to
time enter into one or more Supplemental Indentures for the purpose of
authorizing the issuance by the Issuer of a Series of Storm Recovery Bonds
and specifying the terms thereof. The Issuer has duly authorized the execution
and delivery of this Supplement and the creation of Storm Recovery Bonds with
an initial aggregate principal amount of $180,600,000 to be known as the Issuer’s
2008 Senior Secured Storm Recovery Bonds (the “2008 Senior Secured Storm
Recovery Bonds”). All acts and all things necessary to make the 2008 Senior
Secured Storm Recovery Bonds, when duly executed by the Issuer and
authenticated by or on behalf of the Trustee as provided in the Indenture and
this Supplement and issued by the Issuer, the valid, binding and legal
obligations of the Issuer and to make this Supplement a valid and enforceable
supplement to the Indenture have been done, performed and fulfilled and the
execution and delivery hereof have been in all respects duly and lawfully
authorized. The Issuer and the Trustee are executing and delivering this
Supplement in order to provide for the 2008 Senior Secured Storm Recovery
Bonds.  In connection with the execution
and delivery of this Supplement, the Issuer undertakes and confirms that it
will not issue any Storm Recovery Bonds other than the 2008 Senior Secured
Storm Recovery Bonds provided for hereby.


 


The “Series Trust Estate” shall consist
of, and the Issuer hereby absolutely and irrevocably Grants to the Trustee, as
trustee for the benefit of the Holders of the 2008 Senior Secured Storm
Recovery Bonds issued and outstanding, all of the Issuer’s right, title and
interest whether now owned or hereafter acquired (and whether now existing or
hereafter arising), in, to and under (a) the Storm Recovery Property
relating to the 2008 Senior Secured Storm Recovery Bonds purchased by the
Issuer pursuant to the Sale Agreement relating to the 2008 Senior Secured Storm
Recovery Bonds and all proceeds thereof, including all of the rights and
interest of the Issuer under Financing Order No. U-29157-B dated September 17,
2007 (Docket No. U-29157), (b) the Sale Agreement relating to the
2008 Senior Secured Storm Recovery Bonds, (c) the Bill of Sale delivered
by the Seller pursuant to the Sale Agreement relating to the 2008 Senior
Secured Storm Recovery Bonds, (d) the Servicing Agreement relating to the
2008 Senior Secured Storm Recovery Bonds, (e) the Administration
Agreement, (f) the Collection Account 2008 Senior Secured Storm Recovery
Bonds and all subaccounts thereof (including, without limitation, the General
Subaccount, the Capital Subaccount and the Excess Funds Subaccount relating to
the 2008 Senior Secured Storm Recovery Bonds) and all cash, securities,
instruments, investment property or other assets credited to or deposited in
that Collection Account or any subaccount thereof from time to time or
purchased with funds therefrom, and all financial assets and securities
entitlements carried therein or credited thereto, (g) all other property
of whatever kind owned from time to time by the Issuer other than any cash
released to the Issuer by the Trustee pursuant to Section 8.02 of the
Indenture, (h) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and (i) all payments
on or 


 

















 


under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property of
any or all of the foregoing, all cash proceeds, accounts, accounts receivable,
general intangibles, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, payment intangibles,
letter-of-credit rights, investment property, commercial tort claims,
documents, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing.  This Supplement covers the
foregoing described portion of the Storm Recovery Property described in the
Financing Order.


 


Such Grant is made to the Trustee to have and to hold
in trust to secure the payment of principal of and premium, if any, and
interest on, and any other amounts (including all fees, expenses, counsel fees
and other amounts due and owing to the Trustee) owing in respect of, the 2008
Senior Secured Storm Recovery Bonds equally and ratably without prejudice,
preference, priority or distinction, except as expressly provided in the
Indenture and this Supplement and to secure performance by the Issuer of all of
the Issuer’s obligations under the Indenture and this Supplement with respect
to the 2008 Senior Secured Storm Recovery Bonds, all as provided in the
Indenture and this Supplement; provided, however, that in no
event shall the proceeds of the issuance of the 2008 Senior Secured Storm
Recovery Bonds constitute a portion of the Series Trust Estate.  The Indenture and this Supplement constitute
a security agreement within the meaning of the Securitization Act and under the
UCC to the extent that the provisions of the UCC are applicable hereto.  The Issuer authorizes the Trustee to file a
financing statement covering the Series Trust Estate, either as described
above or by using more general terms as permitted by Section 9-504 of the
UCC.


 


The Trustee, as trustee on behalf of the Holders of
the Storm Recovery Bonds, acknowledges such Grant, accepts the trusts hereunder
in accordance with the provisions hereof and agrees to perform its duties as
set forth in the Indenture and this Supplement.


 


ARTICLE I


 


DEFINITIONS


 


All terms used in this Supplement that are defined in
the Indenture, either directly or by reference therein, have the meanings assigned
to such terms in the Indenture, except to the extent such terms are defined or
modified in this Supplement or the context clearly requires otherwise.


 


ARTICLE II


 


OTHER DEFINITIONAL
PROVISIONS


 


SECTION 2.01.      “Authorized Denominations” means
$1,000 and integral multiples thereof, except for one Storm Recovery Bond of
each Tranche which may be of a smaller denomination.


 


2

















 


SECTION 2.02.      “Expected Amortization Schedule”
means Schedule A to this Supplement.


 


SECTION 2.03.      “Expected Final Payment Date”
means, with respect to any Tranche of the 2008 Senior Secured Storm Recovery
Bonds, the expected final payment date therefor, as specified in Article IV
of this Supplement.


 


SECTION 2.04.      “Final Maturity Date” means, with
respect to any Tranche of the 2008 Senior Secured Storm Recovery Bonds, the
final maturity date thereof, as specified in Article IV of this
Supplement.


 


SECTION 2.05.      “Interest Rate” has the meaning set
forth in Article IV of this Supplement.


 


SECTION 2.06.      “Payment Date” has the meaning set
forth in Section 5.01 of this Supplement.


 


SECTION 2.07.      “Record Date” shall mean, with respect to any Payment
Date, the close of business on the Business Day immediately prior to such
Payment Date.


 


SECTION 2.08.      “Required Capital Amount” has the
meaning set forth in Section 5.04 of this Supplement.


 


SECTION 2.09.      “Series Issuance Date” has the
meaning set forth in Section 3.02 of this Supplement.


 


ARTICLE III



DESIGNATION; SERIES ISSUANCE DATE; SOLE SERIES


 


SECTION 3.01.      DESIGNATION.  The 2008 Senior Secured Storm Recovery Bonds
shall be designated generally as the Issuer’s 2008 Senior Secured Storm
Recovery Bonds and further denominated as Tranche A-1 or Tranche A-2, as
applicable.


 


SECTION 3.02.      SERIES ISSUANCE DATE.  The 2008 Senior Secured Storm Recovery Bonds
that are authenticated and delivered by the Trustee to or upon the written
order of the Issuer on March 6, 2008 (the “Series Issuance Date”)
shall have as their date of authentication March 6, 2008.


 


SECTION 3.03.      BOOK-ENTRY.  Upon original issuance, the 2008 Senior Secured Storm
Recovery Bonds will
be issued in the form of a typewritten Storm Recovery Bond or Storm Recovery
Bonds representing the Book-Entry Storm Recovery Bonds, to be delivered to DTC
(or its custodian), as the initial Clearing Agency, by, or on behalf of, the
Issuer, pursuant to Section 2.11 of the Indenture.  The 2008 Senior Secured Storm
Recovery Bonds will not be listed on any securities exchange.


 


3

















 


SECTION 3.04.      NO ADDITIONAL SERIES.  The Issuer hereby covenants and agrees that
the 2008 Senior Secured Storm Recovery Bonds are the only Storm Recovery Bonds
that the Issuer will issue and that no additional series of Storm Recovery
Bonds will be issued by the Issuer.


 


ARTICLE IV



INITIAL PRINCIPAL BALANCE; INTEREST RATE; EXPECTED

FINAL PAYMENT DATE; FINAL MATURITY DATE


 


(a)           The
Storm Recovery Bonds of each Tranche of the 2008 Senior Secured Storm Recovery
Bonds shall have the initial principal balance, Expected Final Payment Date and
Final Maturity Date and bear interest at the interest rate (the “Interest
Rate”) as set forth below:


 


	
  Tranche

  	
   

  	
  Initial Principal

  Balance

  	
   

  	
  Expected Final

  Payment Date

  	
   

  	
  Final

  Maturity Date

  	
   

  	
  Interest Rate

  	
   

  
	
  A-1

  	
   

  	
   

  	
  $

  	
  113,000,000

  	
   

  	
  3/1/2017

  	
   

  	
  3/1/2020

  	
   

  	
  4.41

  	
  %

  
	
  A-2

  	
   

  	
   

  	
  $

  	
  67,600,000

  	
   

  	
  3/1/2020

  	
   

  	
  3/1/2023

  	
   

  	
  5.61

  	
  %

  



 


(b)           The
Expected Final Payment Date for each Tranche of the 2008 Senior Secured Storm
Recovery Bonds will be the date when the outstanding principal balance of that
Tranche will be reduced to zero if payments are made according to the Expected
Amortization Schedule for that Tranche. 
The Final Maturity Date for each Tranche of the 2008 Senior Secured
Storm Recovery Bonds will be the date when the Issuer is required to pay the
entire remaining unpaid principal balance, if any, of all outstanding 2008
Senior Secured Storm Recovery Bonds of that Tranche.


 


(c)           Interest
on the 2008 Senior Secured Storm Recovery Bonds will be paid before Principal
of the 2008 Senior Secured Storm Recovery Bonds.  If there is a shortfall in the amounts
available in the Collection Account to make interest payments, the Trustee will
distribute Interest Pro Rata to each Outstanding Tranche of 2008 Senior Secured
Storm Recovery Bonds based on the amount of Interest payable on each
Outstanding Tranche.  Interest on the
2008 Senior Secured Storm Recovery Bonds will be calculated on the basis of a
360-day year of twelve 30-day months.


 


ARTICLE V

PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE

FOR PRINCIPAL; INTEREST; REQUIRED CAPITAL AMOUNT; WATERFALL CAPS


 


SECTION 5.01.      PAYMENT DATES.  The “Payment Dates” for the 2008
Senior Secured Storm Recovery Bonds are March 1 and September 1 of
each year or, if any such date is not a Business Day, the next succeeding
Business Day, commencing on March 1, 2009, and continuing until the
earlier of repayment of such Tranche in full and the applicable Final Maturity
Date.


 


4

















 


SECTION 5.02.      EXPECTED AMORTIZATION SCHEDULE FOR
PRINCIPAL.  Unless an Event of Default
has occurred and is continuing and the unpaid principal amount of all Tranches
of 2008 Senior Secured Storm Recovery Bonds has been declared to be due and
payable together with accrued and unpaid interest thereon, on each Payment Date
the Trustee shall distribute to the Holders of record of the 2008 Senior
Secured Storm Recovery Bonds as of the related Record Date amounts payable in
respect of the 2008 Senior Secured Storm Recovery Bonds pursuant to Section 8.02(d) of
the Indenture as Principal, so that the outstanding Principal balance as of
such Payment Date (after giving effect to all payments of Principal, if any,
made on such Payment Date) has been reduced to the extent possible to the
Principal balance specified in the Expected Amortization Schedule but not less
than such Principal balance.  Unless an
Event of Default has occurred and is continuing and the unpaid principal amount
of all Tranches of 2008 Senior Secured Storm Recovery Bonds has been declared
to be due and payable together with accrued and unpaid interest thereon,
payments of Principal on any Tranche A-2 2008 Senior Secured Storm Recovery
Bonds shall not be made on any Payment Date until the Principal balance of the
Tranche A-1 2008 Senior Secured Storm Recovery Bonds has been reduced to zero; provided,
however, that payments of Principal on the Tranche A-2 2008 Senior
Secured Storm Recovery Bonds may be made on the Payment Date that the Principal
balance of the Tranche A-1 2008 Senior Secured Storm Recovery Bonds has been
reduced to zero.


 


SECTION 5.03.      INTEREST. 
Interest will be payable on each Tranche of the 2008 Senior Secured
Storm Recovery Bonds on each Payment Date as follows:


 


(a)           if
there has been a payment default, any Interest payable but unpaid on any prior
Payment Date, together with Interest on such unpaid Interest, if any, and


 


(b)           accrued
Interest on the principal balance of each Tranche of the 2008 Senior Secured
Storm Recovery Bonds as of the close of business on the preceding Payment Date,
or the date of the original issuance of the Tranche of the 2008 Senior Secured
Storm Recovery Bonds, as applicable, after giving effect to all payments of
Principal made on the preceding Payment Date;


 


provided, however,  that, with respect to the initial Payment Date
or if no payment has yet been made, Interest on the outstanding principal
balance shall accrue from and including the Series Issuance Date to, but
excluding, the following Payment Date, and thereafter from and including the
previous Payment Date to, but excluding, the applicable Payment Date until the
Storm Recovery Bonds have been paid in full, at the interest rate indicated in Article IV.


 


SECTION 5.04.      REQUIRED CAPITAL AMOUNT.  The “Required Capital Amount” for the
2008 Senior Secured Storm Recovery Bonds shall be $903,000, which is equal to
0.5% of the initial outstanding principal balance of the 2008 Senior Secured
Storm Recovery Bonds.


 


SECTION 5.05.      PREMIUM. 
There will be no early redemption of the 2008 Senior Secured Storm
Recovery Bonds, and therefore no Premium will be payable in connection with the
early redemption of the 2008 Senior Secured Storm Recovery Bonds.


 


5

















 


SECTION 5.06.      WATERFALL
CAPS.  The amount payable to the Trustee with
respect to expenses and Indemnity Amounts related to the 2008
Senior Secured Storm Recovery Bonds pursuant to Section 8.02(d)(i) of the Indenture shall not
exceed $50,000 during any calendar year.


 


SECTION 5.07.      INVESTMENT
EARNINGS ON THE CAPITAL SUBACCOUNT.  In
accordance with the Financing Order, the rate of return on capital invested by
Cleco Power in the Issuer shall equal 5.61% per annum, the interest rate on the
Tranche A-2 2008 Senior Secured Storm Recovery Bonds, which rate of return is
the rate referred to in Section 8.02(d)(x) of the Indenture.


 


SECTION 5.08.      INITIAL
SUBACCOUNTS.  The initial subaccounts in the Collection
Account for the 2008 Senior Secured Storm Recovery Bonds shall be the General
Subaccount, the Capital Subaccount and the Excess Funds Subaccount.


 


ARTICLE VI



AUTHORIZED DENOMINATIONS


 


The 2008 Senior Secured Storm Recovery Bonds shall be
issuable in the Authorized Denominations.


 


ARTICLE VII



REDEMPTION


 


The 2008 Senior Secured
Storm Recovery Bonds shall not be subject to mandatory or optional redemption.


 


ARTICLE VIII



CREDIT ENHANCEMENT


 


No credit enhancement (other than the Excess Funds
Account, the Required Capital Amount and any adjustments to the Storm Recovery
Charges approved by the LPSC as provided in the Financing Order) is provided
for the 2008 Senior Secured Storm Recovery Bonds.


 


ARTICLE IX



DELIVERY AND PAYMENT FOR THE 2008 SENIOR SECURED STORM RECOVERY

BONDS; FORM OF THE 2008 SENIOR SECURED STORM RECOVERY BONDS


 


The Trustee shall deliver or cause to be delivered the
2008 Senior Secured Storm Recovery Bonds in accordance with Section 3.03
when authenticated in accordance with Section 2.02 of the Indenture.  Each 2008 Senior Secured Storm Recovery Bond
shall be in the form of Exhibit A hereto, which is incorporated herein by
reference.


 


6

















 


ARTICLE X



MISCELLANEOUS


 


SECTION 10.01.    CONFIRMATION OF INDENTURE.  As supplemented by this Supplement, the
Indenture is in all respects ratified and confirmed and the Indenture, as so
supplemented by this Supplement, shall be read, taken, and construed as one and
the same instrument.


 


SECTION 10.02.    EFFECTS OF HEADINGS.  The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.


 


SECTION 10.03.    COUNTERPARTS.  This Supplement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.


 


SECTION 10.04.    GOVERNING LAW.  THIS SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE OBLIGATIONS OF THE TRUSTEE
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.


 


SECTION 10.05.    RIGHTS OF TRUSTEE AND OTHERS.  The Trustee, the authenticating agent, the
Storm Recovery Bond Registrar and the Paying Agent shall be entitled to the
same rights, protections, immunities, and indemnities set forth in the
Indenture as if specifically set forth herein.


 


7

















 


IN WITNESS
WHEREOF, the Issuer and the Trustee have caused this Supplement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.


 


	
   

  	
  CLECO KATRINA/RITA HURRICANE

  
	
   

  	
   

  	
  RECOVERY FUNDING LLC,

  
	
   

  	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith D. Crump

  	
   

  
	
   

  	
   

  	
  Name: Keith D. Crump

  
	
   

  	
   

  	
  Title: Vice President and Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  not in its individual capacity but solely as

  
	
   

  	
   

  	
  Trustee on behalf of the Storm Recovery

  
	
   

  	
   

  	
  Bondholders

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Melissa A. Rosal

  	
   

  
	
   

  	
   

  	
  Name: Melissa A. Rosal

  
	
   

  	
   

  	
  Title: Vice President

  
					



 


8

















 


SCHEDULE A


 


EXPECTED
AMORTIZATION SCHEDULE


 


OUTSTANDING
PRINCIPAL BALANCE PER TRANCHE


 


	
  Payment Date

  	
   

  	
  Tranche A-1

  Balance

  	
   

  	
  Tranche A-2

  Balance

  	
   

  
	
  InitialPrincipal

  Balance

  	
   

  	
  $

  	
  113,000,000

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2009

  	
   

  	
  $

  	
  104,649,570

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2009

  	
   

  	
  $

  	
  99,454,071

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2010

  	
   

  	
  $

  	
  93,562,218

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2010

  	
   

  	
  $

  	
  87,975,644

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2011

  	
   

  	
  $

  	
  81,693,110

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2011

  	
   

  	
  $

  	
  75,706,837

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2012

  	
   

  	
  $

  	
  69,009,620

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2012

  	
   

  	
  $

  	
  62,598,482

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2013

  	
   

  	
  $

  	
  55,469,160

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2013

  	
   

  	
  $

  	
  48,629,834

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2014

  	
   

  	
  $

  	
  41,048,576

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2014

  	
   

  	
  $

  	
  33,753,650

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2015

  	
   

  	
  $

  	
  25,700,493

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2015

  	
   

  	
  $

  	
  17,929,465

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2016

  	
   

  	
  $

  	
  9,383,556

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  9/1/2016

  	
   

  	
  $

  	
  1,115,062

  	
   

  	
  $

  	
  67,600,000

  	
   

  
	
  3/1/2017

  	
   

  	
  —

  	
   

  	
  $

  	
  59,654,571

  	
   

  
	
  9/1/2017

  	
   

  	
  —

  	
   

  	
  $

  	
  50,818,616

  	
   

  
	
  3/1/2018

  	
   

  	
  —

  	
   

  	
  $

  	
  41,119,002

  	
   

  
	
  9/1/2018

  	
   

  	
  —

  	
   

  	
  $

  	
  31,625,433

  	
   

  
	
  3/1/2019

  	
   

  	
  —

  	
   

  	
  $

  	
  21,243,639

  	
   

  
	
  9/1/2019

  	
   

  	
  —

  	
   

  	
  $

  	
  11,054,868

  	
   

  
	
  3/1/2020

  	
   

  	
  —

  	
   

  	
  —

  	
   

  



 
















 


	
  Exhibit A to First
  Supplemental Indenture

  
	
   

  	
   

  	
   

  
	
  REGISTERED

  	
  $

  	
   

  
	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SEE REVERSE FOR CERTAIN
  DEFINITIONS

  
	
   

  
	
   

  	
  CUSIP NO.

  	
   

  	
   

  
								



 


THE PRINCIPAL OF THIS TRANCHE [ 
] 2008 SENIOR SECURED STORM RECOVERY BOND WILL BE
PAID IN INSTALLMENTS AS SET FORTH HEREIN. 
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS TRANCHE [  ] 2008 SENIOR SECURED STORM
RECOVERY BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.  THE HOLDER OF THIS TRANCHE [  ] 2008 SENIOR SECURED STORM
RECOVERY BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE THAT IS ONE
YEAR AND ONE DAY AFTER THE PAYMENT IN FULL OF THE  TRANCHE [  ] 2008 SENIOR SECURED STORM
RECOVERY BONDS, IT WILL NOT INSTITUTE AGAINST OR JOIN ANY OTHER PERSON IN
INSTITUTING AGAINST THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT,
INSOLVENCY OR LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDINGS UNDER THE
LAWS OF THE UNITED STATES OR ANY STATE OF THE UNITED STATES.


 


NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING
POWER OF THE STATE OF LOUISIANA IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF,
OR INTEREST ON, THIS TRANCHE [  ] 2008
SENIOR SECURED STORM RECOVERY BOND.


 


CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC


 


2008
SENIOR SECURED STORM RECOVERY BONDS, Tranche [  
].


 


	
  Bond Rate

  	
   

  	
  Initial

  Principal Amount

  	
   

  	
  Expected Final

  Payment Date

  	
   

  	
  Final

  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  %

  	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
										



 


 


Cleco Katrina/Rita Hurricane Recovery Funding LLC, a
limited liability company organized and existing under the laws of the State of
Louisiana (herein referred to as the “Issuer”), for value received, hereby
promises to pay to the registered holder under Section 2.05 of the
Indenture (“Registered Holder”), or registered assigns, the Initial Principal
Amount shown above in semiannual installments on the Payment Dates (as defined
below) and in the amounts specified on the reverse hereof or, if less, the
amounts determined pursuant to Section 8.02(d) of the Indenture
referred to on the reverse hereof, in each year, commencing on the date
determined as provided on the reverse hereof and ending on or before the Final
Maturity Date of this


 


A-1

















 


Tranche [  ]
2008 Senior Secured Storm Recovery Bond, to pay the entire unpaid principal
hereof on such Final Maturity Date and to pay Interest, at the Bond Rate shown
above, on each March 1 and September 1, or if any such day is not a
Business Day, the next succeeding Business Day, commencing on March 1,
2009 and continuing until the earlier of the payment of the Principal hereof
and the Final Maturity Date of this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond (each a “Payment Date”), on
the Principal amount of this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond outstanding from time to
time.  Interest on this Tranche [  ] 2008 Senior Secured Storm Recovery Bond
will accrue for each Payment Date from the most recent Payment Date on which
Interest has been paid to but excluding such Payment Date or, if no Interest
has yet been paid, from March 6, 2008. 
Interest will be computed on the basis of a 360-day year of twelve
30-day months.  Such Principal of and
Interest on this Tranche [  ] 2008
Senior Secured Storm Recovery Bond shall be paid in the manner specified on the
reverse hereof.


 


The Principal of and Interest on this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond are payable in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts.  All payments made by the
Issuer with respect to this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond shall be applied first to
Interest due and payable on this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond as provided above and then to
the unpaid Principal of and premium, if any, on this Tranche [  ] 2008 Senior Secured Storm Recovery Bond,
all in the manner set forth in Section 8.02(d) of the Indenture.


 


This Tranche [ 
] 2008 Senior Secured Storm Recovery Bond is a “storm recovery bond” as
such term is defined in the Securitization Act. 
Principal and Interest on this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond are payable from and secured
primarily by the Storm Recovery Property authorized by the Financing Order.


 


The Securitization Act provides that the State of
Louisiana pledges “to and agrees with bondholders, the owners of storm recovery
property, and other financing parties that the state will not:


 


(1) Alter the provisions of this Part [the
Securitization Act] which authorize the commission to create a contract right
by the issuance of a financing order, to create storm recovery  property, and to make the storm recovery
charges imposed by a financing order  irrevocable, binding, and nonbypassable charges;


 


(2) Take or permit any action that impairs or
would impair the value of the storm recovery property; or


 


(3) Except as allowed under this
Section and except for adjustments under  any true-up mechanism
established by the commission, reduce, alter, or impair storm  recovery
charges that are to be imposed, collected, and remitted for the benefit of the  bondholders and
other financing parties until any and all principal, interest,  premium,
financing costs and other fees, expenses, or charges incurred, and any  contracts to be
performed, in connection with the related storm recovery bonds have  been paid and
performed in full. Nothing in this Paragraph shall preclude limitation  or alteration
if and when full compensation is made by law for the full


 


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protection of  the storm
recovery charges collected pursuant to a financing order and full protection  of the holders
of storm recovery bonds and any assignee or financing party.”


 


In addition, the Financing Order provides that the
LPSC “covenants, pledges and agrees it thereafter shall not amend,
modify, or rescind the Financing Order by any subsequent action, or reduce,
impair, postpone, terminate, or otherwise adjust the storm recovery charges
approved in the Financing Order, or in any way reduce or impair the value of
the storm recovery property created by the Financing Order, except as may be
contemplated by a refinancing authorized in strict accordance with the
Securitization Act by a subsequent order of the Commission or by the periodic
true up adjustments authorized by the Financing Order, until the indefeasible
payment in full of the storm recovery bonds and the related financing costs.”


 


The Issuer acknowledges that
the purchase of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond by
the Registered Holder or the purchase of an beneficial interest in this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond by a Person is made in reliance on such pledges by the
State of Louisiana and the LPSC.


 


Reference is made to the further provisions of this
Tranche [  ] 2008 Senior Secured Storm
Recovery Bond set forth on the reverse hereof, which shall have the same effect
as though fully set forth on the face of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond.


 


Unless the certificate of authentication hereon has
been executed by the Trustee whose name appears below by manual signature, this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond shall not be entitled to any benefit under the Indenture,
or be valid or obligatory for any purpose.


 


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Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation (“DTC”),
to Issuer or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.


 


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IN WITNESS WHEREOF, the Issuer has caused this instrument
to be signed, manually or in facsimile, by an Authorized Officer of the Issuer.


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  
	
   

  	
  CLECO KATRINA/RITA HURRICANE

  
	
   

  	
   

  	
  RECOVERY FUNDING LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


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TRUSTEE’S CERTIFICATE OF AUTHENTICATION


 


	
  Dated:

  	
   

  	
  , 200

  	
   

  	
   

  	
   

  
	
   

  
	
  This is one of the
  Tranche [  ] 2008 Senior Secured Storm
  Recovery Bonds designated above and referred to in the within-mentioned
  Indenture.

  
	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
   

  	
  not in its individual capacity but solely as

  Trustee on behalf of the Storm Recovery

  Bondholders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [By:  [    ],

  
	
   

  	
   

  	
  as Authenticating Agent]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
								



 


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REVERSE OF STORM RECOVERY BOND


 


This Tranche [ 
] 2008 Senior Secured Storm Recovery Bond is one of a duly authorized
issue of Storm Recovery Bonds of the Issuer (herein called the “2008 Senior
Secured Storm Recovery Bonds”), which are issuable in one or more Tranches, in
which this Tranche [  ] 2008 Senior
Secured Storm Recovery Bond represents an interest, including the
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond (herein called the “Tranche [  ] 2008 Senior Secured Storm Recovery Bond”),
all issued and to be issued under an indenture dated as of March 6, 2008,
and a supplemental indenture thereto dated as of even date therewith (such
supplemental indenture, as supplemented or amended, the “Supplement” and,
collectively with such indenture, as supplemented or amended, the “Indenture”),
each between the Issuer and U.S. Bank National Association, as Trustee (the “Trustee,”
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the Series Trust Estate pledged, the nature and extent of
the security and the respective rights, obligations and immunities thereunder
of the Issuer, the Trustee and the Storm Recovery Bondholders.  All terms used in this Tranche [  ] 2008 Senior Secured Storm Recovery Bond
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in the Indenture.


 


The Tranche [ 
] 2008 Senior Secured Storm Recovery Bond and the other Tranche of 2008
Senior Secured Storm Recovery Bonds issued by the Issuer are and will be
equally and ratably secured by the Series Trust Estate pledged as security
therefor as provided in the Indenture or the Supplement.


 


The Principal of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond
shall be payable on each Payment Date only to the extent that amounts in the
Collection Account are available therefor, and only until the outstanding
Principal balance thereof on such Payment Date (after giving effect to all
payments of Principal, if any, made on such Payment Date) has been reduced to
the Principal balance specified in the Expected Amortization Schedule which is
attached to the Supplement as Schedule A, unless payable earlier because
an Event of Default shall have occurred and be continuing and the Trustee or
the Storm Recovery Bondholders representing not less than a majority of the
Outstanding Amount of the 2008 Senior Secured Storm Recovery Bonds have
declared the 2008 Senior Secured Storm Recovery Bonds to be immediately due and
payable in accordance with Section 5.02 of the Indenture.  However, actual Principal payments may be
made in less than expected amounts and at later than expected times as
determined pursuant to Section 8.02(d) of the Indenture and Section 5.02
of the Supplement. The entire unpaid Principal amount of this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond shall be due and payable on the Final Maturity Date of this
Tranche [  ] 2008 Senior Secured Storm
Recovery Bond.  Notwithstanding the
foregoing, the entire unpaid Principal amount of the 2008 Senior Secured Storm
Recovery Bonds shall be due and payable, if not then previously paid, on the
date on which an Event of Default shall have occurred and be continuing and the
Trustee or the Storm Recovery Bondholders representing a majority of the
Outstanding Amount of the 2008 Senior Secured Storm Recovery Bonds have
declared the 2008 Senior Secured Storm Recovery Bonds to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture.  All Principal payments on the
Tranche [  ] 2008 Senior Secured
Storm Recovery Bonds shall be made pro rata to the Tranche [  ] 2008 Storm Recovery 


 


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Bondholders entitled thereto based on the respective
Principal amounts of the 2008 Senior Secured Storm Recovery Bonds held by them.


 


Payments of Interest on this Tranche [  ] 2008 Senior Secured Storm Recovery Bond due
and payable on each Payment Date, together with the installment of Principal or
premium, if any, due on this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond on such Payment Date shall be
made by check mailed first-class, postage prepaid, to the Person whose name
appears as the Holder of this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond in the 2008 Senior Secured
Storm Recovery Bond Register as of the close of business on the Record Date or
in such other manner as may be provided in the Supplement, except that with
respect to Tranche [  ] 2008 Senior
Secured Storm Recovery Bonds registered on the Record Date in the name of a
Clearing Agency, payments will be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency and except
for the final installment of Principal and premium, if any, payable with
respect to this Tranche [  ] 2008
Senior Secured Storm Recovery Bond on a Payment Date which shall be payable as
provided below.  Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears in the 2008 Senior Secured Storm Recovery Bond Register as of the
applicable Record Date without requiring that this Tranche [  ] 2008 Senior Secured Storm Recovery Bond be
submitted for notation of payment.  Any
reduction in the Principal amount of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond (or
any one or more predecessors to such 2008 Senior Secured Storm Recovery Bond)
effected by any payments made on any Payment Date shall be binding upon all
future Storm Recovery Bondholders of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond and
of any Tranche [  ] 2008 Senior
Secured Storm Recovery Bond issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon.  If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
Principal amount of this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond on a Payment Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the second preceding Record Date to such Payment
Date by notice mailed no later than five days prior to such final Payment Date
and shall specify that such final installment will be payable to the Holder
hereof as of the Record Date immediately preceding such final Payment Date and
only upon presentation and surrender of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond and
shall specify the place where this Tranche [  ] 2008 Senior Secured Storm Recovery Bond may
be presented and surrendered for payment of such installment.


 


The Issuer shall pay Interest on overdue installments
of Interest on this Tranche [  ]
2008 Senior Secured Storm Recovery Bond at the Bond Rate for
Tranche [  ] to the extent lawful.


 


As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond may
be registered in the 2008 Senior Secured Storm Recovery Bond Register upon surrender
of this Tranche [  ] 2008 Senior
Secured Storm Recovery Bond for registration of transfer at the office or
agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an Eligible Guarantor Institution,
and thereupon one or more new Tranche [ 
] 2008 Senior Secured Storm 


 


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Recovery Bond of any Authorized Denominations and in
the same aggregate unpaid Principal amount will be issued to the designated
transferee or transferees.  No service
charge will be charged for any registration of transfer or exchange of this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond, but the transferor may be required to pay a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange.


 


Prior to the due presentment for registration of
transfer of this Tranche [  ] 2008
Senior Secured Storm Recovery Bond, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name this
Tranche [  ] 2008 Senior Secured
Storm Recovery Bond is registered (as of the day of determination) as the owner
hereof for the purpose of receiving payments of Principal of and premium, if
any, and Interest on this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond and for all other purposes
whatsoever, whether or not this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.


 


The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Storm Recovery Bondholders
under the Indenture at any time by the Issuer with the consent of the Storm
Recovery Bondholders representing a majority of the Outstanding Amount of all
2008 Senior Secured Storm Recovery Bonds at the time Outstanding of each
Tranche to be affected.  The Indenture
also contains provisions permitting the Storm Recovery Bondholders representing
specified percentages of the Outstanding Amount of the 2008 Senior Secured
Storm Recovery Bonds, on behalf of all Storm Recovery Bondholders, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences.  Any such consent or waiver by the Storm
Recovery Bondholders of this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond (or any one or more
predecessors of such 2008 Senior Secured Storm Recovery Bonds) shall be
conclusive and binding upon such Storm Recovery Bondholder and upon all future
Storm Recovery Bondholders of this Tranche [  ] 2008 Senior Secured Storm Recovery Bond and
of any Tranche [  ] 2008 Senior
Secured Storm Recovery Bond issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Tranche [ 
] 2008 Senior Secured Storm Recovery Bond.  The Indenture also permits the Trustee to
amend or waive certain terms and conditions set forth in the Indenture without
the consent of the Storm Recovery Bondholders.


 


The term “Issuer” as used in this Tranche [  ] 2008 Senior Secured Storm Recovery Bond
includes any successor to the Issuer under the Indenture.


 


The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate.


 


The Tranche [ 
] 2008 Senior Secured Storm Recovery Bond are issuable only in
registered form in Authorized Denominations as provided in the Indenture and
the Supplement, subject to certain limitations therein set forth.


 


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THIS TRANCHE [  ] 2008 SENIOR SECURED STORM RECOVERY BOND,
THE INDENTURE AND THE SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF LOUISIANA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.


 


No reference herein to the Indenture and no provision
of this Tranche [  ] 2008 Senior Secured
Storm Recovery Bond or of the Indenture shall alter or impair the obligation of
the Issuer, which is absolute and unconditional, to pay the Principal of and
Interest on this Tranche [  ] 2008
Senior Secured Storm Recovery Bond at the times, place, and rate, and in the coin
or currency herein prescribed.


 


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ASSIGNMENT


 


Social Security or taxpayer I.D. or other identifying
number of assignee  
                     .


 


FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto                    


 


(name
and address of assignee)


 


the Tranche [  ]
2008 Senior Secured Storm Recovery Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints


 


(name
and address of appointee)


 


attorney, to transfer said Tranche [  ] 2008 Senior Secured Storm Recovery Bond on
the books kept for registration thereof, with full power of substitution in the
premises.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  *

  
	
   

  	
   

  	
  Signature Guaranteed:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 






*              NOTE:  The signature to this assignment must
correspond with the name of the registered owner as it appears on the face of
the Tranche [  ] 2008 Senior Secured
Storm Recovery Bond in every particular, without alteration, enlargement or any
change whatsoever.


 


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