Exhibit 10.3


 


ADMINISTRATION
AGREEMENT


 


ADMINISTRATION AGREEMENT, dated as of March 6,
2008 (this “Administration Agreement”), is by and between CLECO KATRINA/RITA
HURRICANE RECOVERY FUNDING LLC, a Louisiana limited liability company, as
Issuer (the “Issuer”), and CLECO POWER LLC, a Louisiana limited liability
company (“Cleco Power”), as Administrator (in such capacity, the “Administrator”).  Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in Appendix A to
the Indenture more fully described below.


 


W I T
N E S S E T H:


 


WHEREAS, the Issuer is issuing its 2008 Senior Secured
Storm Recovery Bonds (the “Bonds”)  pursuant
to the Indenture, dated as of the date hereof and a First Supplemental
Indenture thereto, also dated as of the date hereof (the “First Supplement”)
(as amended, supplemented or otherwise modified and in effect from time to
time, the “Indenture”), between the Issuer and U.S. Bank National Association,
as the Trustee;


 


WHEREAS, the Issuer has entered into certain
agreements in connection with the issuance of the Bonds, including (i) the
Indenture and the First Supplement, (ii) the Storm Recovery Property
Servicing Agreement, dated as of the date hereof (the “Servicing Agreement”),
between the Issuer and Cleco Power, as Servicer, (iii) the Storm Recovery
Property Sale Agreement, dated as of the date hereof (the “Sale Agreement”),
between the Issuer and Cleco Power, as Seller, and (iv) the DTC Agreement
relating to the Bonds (the Indenture, the First Supplement, the Servicing
Agreement, the Sale Agreement and the DTC Agreement, as such agreements may be
amended and supplemented from time to time, being referred to hereinafter
collectively as the “Initial Related Agreements”);


 


WHEREAS, pursuant to the Initial Related Agreements,
the Issuer is required to perform certain duties in connection with the Initial
Related Agreements, the Bonds and the Trust Estate pledged to the Trustee
pursuant to the Indenture;


 


WHEREAS, the Issuer may from time to time enter into
and be required to perform certain duties under additional agreements similar
to the Initial Related Agreements (together with the Initial Related
Agreements, the “Related Agreements”);


 


WHEREAS, the Issuer has no employees, other than its
officers, and does not intend to hire any employees, and consequently desires
to have the Administrator perform certain of the duties of the Issuer referred
to in the preceding clauses and to provide such additional services consistent
with the terms of this Administration Agreement and the Related Agreements as
the Issuer may from time to time request; and


 


WHEREAS, the Administrator has the capacity to provide
the services and the facilities required thereby and is willing to perform such
services and provide such facilities for the Issuer on the terms set forth
herein;


 

















 


NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:


 


1.             Duties of the Administrator: Management
Services.  The Administrator hereby agrees to provide
the following corporate management services to the Issuer and to cause third
parties to provide professional services required for or contemplated by such
services in accordance with the provisions of this Administration Agreement:


 


(i)            furnish the Issuer with ordinary clerical,
bookkeeping and other corporate administrative services necessary and
appropriate for the Issuer, including, without limitation, the following
services:


 


(A)          maintain at the Premises (as defined
below) general accounting records of the Issuer (the “Account Records”),
subject to year-end audit, in accordance with generally accepted accounting
principles, separate and apart from its own accounting records, prepare or
cause to be prepared such quarterly and annual financial statements as may be
necessary or appropriate and arrange for year-end audits of the Issuer’s
financial statements by the Issuer’s independent accountants;


 


(B)           prepare and, after execution by the
Issuer, file with the Securities and Exchange Commission (the “Commission”) and
any applicable state agencies documents required to be filed with the
Commission and any applicable state agencies, including, without limitation,
periodic reports required to be filed under the Securities Exchange Act of
1934, as amended;


 


(C)           prepare for execution by the Issuer and
cause to be filed such income, franchise or other tax returns of the Issuer as
shall be required to be filed by applicable law (the “Tax Returns”) and cause
to be paid on behalf of the Issuer from the Issuer’s funds any taxes required
to be paid by the Issuer under applicable law;


 


(D)          prepare or cause to be prepared for
execution by the Issuer’s Managers minutes of the meetings of the Issuer’s
Managers and such other documents deemed appropriate by the Issuer to maintain
the separate limited liability company existence and good standing of the
Issuer (the “Company Minutes”) or otherwise required under the Related
Agreements (together with the Account Records, the Tax Returns, the Company
Minutes, the Issuer LLC Agreement, and the Issuer Articles of Organization, the
“Issuer Documents”); and any other documents deliverable by the Issuer
thereunder or in connection therewith; and


 


(E)           hold, maintain and preserve at the
Premises (or such other place as shall be required by any of the Related
Agreements) executed copies (to the extent applicable) of the Issuer Documents
and other documents executed by the Issuer thereunder or in connection
therewith;


 


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(ii)           take such actions on behalf of the Issuer, as are
necessary or desirable for the Issuer to keep in full effect its existence,
rights and franchises as a limited liability company under the laws of the
state of Louisiana and obtain and preserve its qualification to do business in
each jurisdiction in which it becomes necessary to be so qualified;


 


(iii)          provide
for the issuance and delivery of the Bonds;


 


(iv)          provide for the performance by the Issuer
of its obligations under each of the Related Agreements, and prepare, or cause
to be prepared, all documents, reports, filings, instruments, notices,
certificates and opinions that it shall be the duty of the Issuer to prepare,
file or deliver pursuant to the Related Agreements;


 


(v)           enforce each of the rights of the Issuer
under the Related Agreements, at the direction of the Trustee;


 


(vi)          provide for the defense, at the direction
of the Issuer’s Managers, of any action, suit or proceeding brought against the
Issuer or affecting the Issuer or any of its assets;


 


(vii)         provide
office space (the “Premises”) for the Issuer and such reasonable ancillary
services as are necessary to carry out the obligations of the Administrator
hereunder, including telecopying, duplicating and word processing services;


 


(viii)        undertake
such other administrative services as may be appropriate, necessary or
requested by the Issuer; and


 


(ix)           provide such other services as are
incidental to the foregoing or as the Issuer and the Administrator may agree.


 


In providing the services under this Section 1
and as otherwise provided under this Administration Agreement, the
Administrator will not knowingly take any actions on behalf of the Issuer which
(i) the Issuer is prohibited from taking under the Related Agreements, or (ii) would
cause the Issuer to be in violation of any federal, state or local law or the
Issuer LLC Agreement.


 


2.             Compensation.  As
compensation for the performance of the Administrator’s obligations under this
Administration Agreement (including the compensation of Persons serving as
Managers, other than the independent managers, and officers of the Issuer, but,
for the avoidance of doubt, excluding the performance by Cleco Power of its
obligations in its capacity as Servicer), the Administrator shall be entitled
to $100,000 annually (the “Administration Fee”), payable by the Issuer in
arrears proportionately on each Payment Date.


 


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3.             Third Party Services. 
Any services or fees required for or contemplated by the performance of
the above-referenced services by the Administrator to be provided by
unaffiliated third parties (including independent auditors’ fees and counsel
fees) may, if provided for or otherwise contemplated by any related financing
order issued by the LPSC and if the Issuer deems it necessary or desirable, be
arranged by the Issuer or by the Administrator at the direction (which may be
general or specific) of the Issuer. 
Costs and expenses associated with the contracting for such third-party
services may be paid directly by the Issuer or paid by the Administrator and
reimbursed by the Issuer in accordance with Section 2, or otherwise as the
Administrator and the Issuer may mutually arrange.


 


4.             Additional Information to be Furnished to the Issuer. 
The Administrator shall furnish to the Issuer from time to time such
additional information regarding the Trust Estate as the Issuer shall
reasonably request.


 


5.             Independence of the Administrator. 
For all purposes of this Administration Agreement, the Administrator
shall be an independent contractor and shall not be subject to the supervision
of the Issuer with respect to the manner in which it accomplishes the performance
of its obligations hereunder.  Unless
expressly authorized by the Issuer, the Administrator shall have no authority,
and shall not hold itself out as having the authority, to act for or represent
the Issuer in any way and shall not otherwise be deemed an agent of the Issuer.


 


The work to be performed
under this Administration Agreement is part of the Issuer’s business and is an
integral part of and is essential to the business and operations of the
Issuer.  For purposes of the Louisiana
Worker’s Compensation Act, the Issuer is deemed to be the statutory employer of
the Administrator’s employees who perform the services under this
Administration Agreement.  Although the
Issuer is to be granted the protections that are afforded a statutory employer
under Louisiana law, this provision is included for the sole purpose of
establishing a statutory employer relationship between the Issuer and the
Administrator’s personnel within the meaning of La. R.S. 23:1061(A) and is
not intended to create an employer / employee relationship as between the
Issuer and the Administrator’s personnel for any other purpose.  The Administrator shall be and remain
primarily responsible for the payment of workers’ compensation benefits to the
Administrator’s personnel and shall not be entitled to seek contribution for
any such payments from the Issuer, and the Administrator further shall
indemnify and hold harmless the Issuer and at the Issuer’s option defend the
Issuer for any payment to the Administrator’s personnel of workers’ compensation
benefits or from any claim for such benefits or any other employee claim.


 


6.             No Joint Venture.  Nothing
contained in this Administration Agreement (a) shall constitute the
Administrator and the Issuer as partners or co-members of any partnership,
joint venture, association, syndicate, unincorporated business or other
separate entity, (b) shall be construed to impose any liability as such on
either of them or (c) shall be deemed to confer on either of them any
express, implied or apparent authority to incur any obligation or liability on
behalf of the other.


 


7.             Other Activities of Administrator. 
Nothing herein shall prevent the Administrator or any of its members,
managers, officers, employees, subsidiaries or affiliates from engaging in
other businesses or, in its sole discretion, from acting in a similar capacity
as an Administrator 


 


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for any other person or entity even though such person
or entity may engage in business activities similar to those of the Issuer.


 


8.             Term of Agreement; Resignation and Removal of
Administrator.  (a) This Administration Agreement shall
continue in force until the payment in full of the Bonds and any other amount
which may become due and payable under the Indenture, upon which event this Administration
Agreement shall automatically terminate.


 


(b)           Subject to Sections 8(e) and 8(f),
the Administrator may resign its duties hereunder by providing the Issuer with
at least sixty (60) days’ prior written notice.


 


(c)           Subject to Sections 8(e) and 8(f),
the Issuer may remove the Administrator without cause by providing the
Administrator with at least sixty (60) days’ prior written notice.


 


(d)           Subject to Sections 8(e) and 8(f),
at the sole option of the Issuer, the Administrator may be removed immediately
upon written notice of termination from the Issuer to the Administrator if any
of the following events shall occur:


 


(i)            The Administrator shall default in the performance of
any of its duties under this Administration Agreement and, after notice of such
default, shall fail to cure such default within ten (10) days (or, if such
default cannot be cured in such time, shall (A) fail to give within ten (10) days
such assurance of cure as shall be reasonably satisfactory to the Issuer and (B) fail
to cure such default within 30 days thereafter);


 


(ii)           a court of competent jurisdiction shall
enter a decree or order for relief, and such decree or order shall not have
been vacated within sixty (60) days, in respect of the Administrator in any
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or such court shall appoint a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
the Administrator or any substantial part of its property or order the
winding-up or liquidation of its affairs; or


 


(iii)          the
Administrator shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent to
the entry of an order for relief in an involuntary case under any such law,
shall consent to the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of possession by
any such official of any substantial part of its property, shall make any
general assignment for the benefit of creditors or shall fail generally to pay
its debts as they become due.


 


The Administrator agrees that if any of the events
specified in clauses (ii) or (iii) of this Section 8(d) shall
occur, it shall give written notice thereof to the Issuer and the Trustee as
soon as practicable but in any event within seven (7) days after the
happening of such event.


 


(e)           No resignation or removal of the
Administrator pursuant to this Section 8(e) shall be effective until
a successor Administrator has been appointed by the Issuer, and such successor 


 


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Administrator has agreed
in writing to be bound by the terms of this Administration Agreement in the
same manner as the Administrator is bound hereunder.


 


(f)            The appointment of any successor
Administrator shall be effective only after satisfaction of the Rating Agency
Condition with respect to the proposed appointment.


 


9.             Action upon Termination, Resignation or Removal. 
Promptly upon the effective date of termination of this Administration Agreement
pursuant to Section 8(a), the resignation of the Administrator pursuant to
Section 8(b) or the removal of the Administrator pursuant to Section 8(c) or
8(d), the Administrator shall be entitled to be paid a pro-rated portion of the
annual fee described in Section 2 hereof through the date of
termination.  The Administrator shall
forthwith upon such termination pursuant to Section 8(a) deliver to
the Issuer all property and documents of or relating to the Trust Estate then
in the custody of the Administrator.  In
the event of the resignation of the Administrator pursuant to Section 8(b) or
the removal of the Administrator pursuant to Section 8(c) or 8(d),
the Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.


 


10.           Administrator’s Liability. 
Except as otherwise provided herein, the Administrator assumes no
liability other than to render or stand ready to render the services called for
herein, and neither the Administrator nor any of its members, managers,
officers, employees, subsidiaries or affiliates shall be responsible for any
action of the Issuer or any of the members, managers, officers, employees,
subsidiaries or affiliates of the Issuer (other than the Administrator itself).  The Administrator shall not be liable for nor
shall it have any obligation with regard to any of the liabilities, whether
direct or indirect, absolute or contingent of the Issuer or any of the members,
managers, officers, employees, subsidiaries or affiliates of the Issuer (other
than the Administrator itself).


 


11.           INDEMNITY.


 


(A)          SUBJECT TO THE PRIORITY OF
PAYMENTS SET FORTH IN THE INDENTURE, THE ISSUER SHALL INDEMNIFY THE
ADMINISTRATOR, ITS MEMBERS, MANAGERS, OFFICERS, EMPLOYEES AND AFFILIATES
AGAINST ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, LIABILITIES AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR
PREPARATION THEREFOR WHETHER OR NOT THE ADMINISTRATOR IS A PARTY THERETO) WHICH
ANY OF THEM MAY PAY OR INCUR ARISING OUT OF OR RELATING TO THIS
ADMINISTRATION AGREEMENT AND THE SERVICES CALLED FOR HEREIN; PROVIDED, HOWEVER,
THAT SUCH INDEMNITY SHALL NOT APPLY TO ANY SUCH LOSS, CLAIM, DAMAGE, PENALTY,
JUDGMENT, LIABILITY OR EXPENSE RESULTING FROM THE ADMINISTRATOR’S NEGLIGENCE OR
WILLFUL MISCONDUCT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER.


 


(B)          THE ADMINISTRATOR SHALL INDEMNIFY
THE ISSUER, ITS MEMBERS, MANAGERS, OFFICERS AND EMPLOYEES AGAINST ALL LOSSES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, ALL EXPENSES OF LITIGATION OR PREPARATION THEREFOR WHETHER OR NOT
THE ISSUER IS A PARTY THERETO) 


 


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WHICH ANY OF THEM MAY INCUR
AS A RESULT OF THE ADMINISTRATOR’S NEGLIGENCE OR WILLFUL MISCONDUCT IN THE
PERFORMANCE OF ITS OBLIGATIONS HEREUNDER.


 


12.           Notices.  Any notice,
report or other communication given hereunder shall be in writing and addressed
as follows:


 


(a)           if to the Issuer, to:


 


Cleco Katrina/Rita
Hurricane Recovery Funding LLC

2605 Hwy. 28 East

Office Number 12,

Pineville, Louisiana 71360-5226

Attention:  Manager


 


(b)           if to the Administrator, to:


 


Cleco Power LLC

2030 Donahue Ferry Road,

Pineville, Louisiana 71360-5226

Attention:  Treasurer


 


or to such other address as either party shall have
provided to the other party in writing. 
Any notice required to be in writing hereunder shall be deemed given if
such notice is mailed by certified mail, postage prepaid, or hand-delivered to
the address of such party as provided above.


 


13.           Amendments.  This Administration
Agreement may be amended from time to time by a written amendment duly executed
and delivered by each of the Issuer and the Administrator, provided that (i) the
Rating Agency Condition has been satisfied in connection therewith, (ii) the
Trustee shall have consented and (iii) in the case of any amendment that
increases ongoing financing costs as defined in the Financing Order, the LPSC shall
have consented thereto or shall be conclusively deemed to have consented
thereto.  With respect to the LPSC’s
consent to any amendment to this Administration Agreement,


 


(a)           the Administrator may submit the amendment to the LPSC
by delivering to the LPSC’s executive counsel a written request for such
consent, which request shall contain:


 


(i)            a reference to Docket No. U-29157 and
a statement as to the possible effect of the amendment on ongoing financing
costs;


 


(ii)           an Officer’s Certificate stating that the
proposed amendment has been approved by all parties to this Administration Agreement;
and


 


(iii)          a
statement identifying the person to whom the LPSC or its staff is to address
its consent to the proposed amendment.


 


(b)           Any amendment requiring the consent of the LPSC as
provided in this Section 13 shall become effective on the later of:


 


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(i)            the date proposed by the parties to the
amendment, or


 


(ii)           31 days after such submission of the
amendment to the LPSC unless the LPSC issues an order disapproving the
amendment within a 30-day period.


 


Following delivery of a notice to the LPSC by the
Administrator under Section 13(a) above, the Administrator and Issuer
may at any time withdraw from the LPSC further consideration of any
notification of a proposed amendment.


 


14.           Successors and Assigns. 
This Administration Agreement may not be assigned by the Administrator
unless such assignment is previously consented to in writing by the Issuer and
the Trustee and subject to the satisfaction of the Rating Agency Condition in
connection therewith.  Any assignment
with such consent and satisfaction, if accepted by the assignee, shall bind the
assignee hereunder in the same manner as the Administrator is bound
hereunder.  Notwithstanding the
foregoing, this Administration Agreement may be assigned by the Administrator
without the consent of the Issuer or the Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization
executes and delivers to the Issuer an Agreement in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder.  Subject to the foregoing, this Administration
Agreement shall bind any successors or assigns of the parties hereto.  Upon satisfaction of all of the conditions of
this Section 14, the preceding Administrator shall automatically and
without further notice be released from all of its obligations hereunder.


 


15.           Governing Law.  This Administration
Agreement shall be construed in accordance with the laws of the State of Louisiana,
without reference to its conflict of law provisions, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.


 


16.           Headings.  The Section headings
hereof have been inserted for convenience of reference only and shall not be
construed to affect the meaning, construction or effect of this Administration Agreement.


 


17.           Counterparts.  This Administration
Agreement may be executed in counterparts, each of which when so executed shall
be an original, but all of which together shall constitute but one and the same
Administration Agreement.


 


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


 


19.           Nonpetition Covenant. 
Notwithstanding any prior termination of this Administration Agreement,
the Administrator covenants that it shall not, prior to the date which is one
year and one day after payment in full of the Bonds, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the 


 


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purpose of commencing or sustaining a case against the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Issuer or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Issuer.


 


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


 


 


	
   

  	
  CLECO KATRINA/RITA HURRICANE

  RECOVERY FUNDING LLC,

  
	
   

  	
   

  	
  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith D. Crump

  
	
   

  	
   

  	
  Name: Keith D. Crump

  
	
   

  	
   

  	
  Title: Vice President and Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CLECO POWER LLC,

  
	
   

  	
   

  	
  as Administrator,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathleen F. Nolen

  
	
   

  	
   

  	
  Name: Kathleen F. Nolen

  
	
   

  	
   

  	
  Title: Senior Vice President and Chief Financial
  Officer

  
				



 


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