Document:

EXHIBIT 10.53

                Stock Subscription and Stockholders' Agreement
                ----------------------------------------------

                  Agreement  made as of the 29th day of  November,  1999 between
Educational Video Conferencing,  Inc., a Delaware corporation with offices at 35
East  Grassy  Sprain  Road,  Suite 200,  Yonkers,  NY 10710  ("EVCI"),  Visiocom
Worldwide,  S.A., a Belgian  corporation  with  offices at 13/15 Avenue  Charles
Madoux,  Brussels,  Belgium  1160  ("Visio"),  the  individuals  whose names and
residence  addresses are set forth in Exhibit A hereto (each,  an "Investor" and
collectively,  the  "Investors")  and  Visiocom  USA  Incorporated,  a  Delaware
corporation that was  incorporated on October 1, 1999 (the "Company").  EVCI and
Visio  are  collectively  referred  to as the  "Founders".  EVCI,  Visio and the
Investors are sometimes each referred to as a "Subscriber" or "Stockholder"  and
collectively referred to as the "Subscribers" or the "Stockholders".

                              W I T N E S S E T H:
                              - - - - - - - - - -

          EVCI delivers  accredited  college  courses and degree  programs,  and
professional   development,   corporate   training   and  other   programs,   to
corporations,  government organizations and others by means of interactive video
conferencing systems.

          Visio provides business employees with "one-on-one"  training, via the
Internet and video  conferencing,  on how to use business software programs and,
using the same teaching  methods,  Visio also provides  business  employees with
language courses (the "Training Business").

          EVCI and Visio desire to finance,  from their own  resources  and from
the resources of the Investors, and operate the Company.

          The Investors desire to participate in the  financing of  the Company.

          The parties  desire to formalize  their  agreement with respect to the
initial  financing,  management and other matters affecting the Company and also
with  respect  to the  transfer  or other  disposition  of their  shares  of the
Company.

          NOW,  THEREFORE,  in  consideration  of the  premises,  and the mutual
covenants and obligations  hereinafter set forth,  EVCI, Visio and the Investors
agree as follows:

          1. Business and Offices of the Company. (a) The Company will engage in
the Training  Business in North America,  including the co-marketing  activities
referred to in Section 8.

          (b) The principal  office of the Company shall be located in Fairfield
County,  Connecticut,  or Westchester  County,  New York. The Company shall have
such  other  office  or  offices  as its  Board  of  Directors  ("Board")  shall
determine.

          2. Stock  Subscription  and  Issuance.  (a) EVCI and Visio each hereby
subscribes for the number of shares of the Company's  Series A Preferred  Stock,
("Series A Preferred"),  the terms of which are set forth in the  Certificate of
Designations  attached  hereto as Exhibit B, and common stock,  $.0001 par value
per share ("Common Stock"), for the aggregate price set forth below:

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                                                  EVCI                  VISIO
                                                 --------              ---------
          No. and aggregate price of shares        10,000                 10,000
          of Series A Preferred                  $250,000               $250,000
          No. and aggregate price of shares       150,000                150,000
          of Common Stock                           $15                      $15

          (b) Each Investor hereby subscribes for the number of shares of Series
A  Preferred  (for a  total  of  40,000  shares  by all the  Investors)  for the
aggregate  price ($25 per  share) set forth  opposite  such  Investor's  name in
Exhibit A to this Agreement.

          (c) The  certificates  for the Series A  Preferred  and  Common  Stock
subscribed for above shall be issued and delivered promptly after receipt by the
Company of full payment of the  applicable  subscription  price,  which could be
occurring simultaneously with the execution and delivery of this Agreement.

          (d) The form of promissory note referred to in Section 8(e) of Exhibit
B hereto is attached hereto as Exhibit B-1.

          3. Subscriber Representations and Warranties.

          Each of the Subscribers severally represents and warrants to the other
and the Company:

          (a) The  Subscriber  understands  that none of the  shares of Series A
Preferred (or underlying  Common Stock) or the Common Stock  (collectively,  the
"Securities")  has been registered  under the Securities Act of 1933, as amended
("Securities  Act"), or any state  securities laws in reliance on exemptions for
private offerings;  although federal securities laws will not prevent the resale
of the  Securities,  the  Securities  cannot be resold or otherwise  disposed of
unless they are subsequently  registered under the Securities Act and applicable
state  securities laws or an exemption from  registration is available,  and the
certificates  representing the Securities will bear a restrictive legend to such
effect;  there  may be no  public  market  for the  Securities  and  there is no
assurance one will develop in the future;  the  Subscriber  may have to hold the
Securities  indefinitely  and it may  not be  possible  for  the  Subscriber  to
liquidate the Subscriber's  investment in the Company; and the Subscriber should
not purchase the Securities  unless the Subscriber can afford a complete loss of
the Subscriber's investment and can bear the burden of owning the Securities for
an indefinite period of time.

          (b) The  Subscriber is subscribing  for the Securities  solely for the
Subscriber's  own  account  for  investment  and  not  with a view to or for the
resale, assignment,  distribution,  subdivision or fractionalization thereof. No
other person has a direct or indirect beneficial interest in the Securities.

          (c) The Subscriber  understands that the purchase of the Securities is
a speculative investment which involves a high degree of risk of loss.

          (d) The Subscriber is an "accredited investor" as that term is defined
under Rule 501(a) of Regulation D promulgated  under the  Securities Act because
the Subscriber:

               (i) is a natural person whose  individual net worth, or joint net
worth with the Subscriber's spouse, exceeds $1,000,000; or

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               (ii) is a natural  person  who had  individual  income  exceeding
$200,000 in each of the two most recent  calendar years or joint income with the
Subscriber's spouse exceeding $300,000 in each of those years and the Subscriber
has a reasonable expectation of reaching the same level of income in the current
year; or

               (iii) is a corporation,  Massachusetts  or similar business trust
or a partnership, limited liability company or similar entity not formed for the
specific  purpose of  acquiring  the  Securities,  with total  assets  exceeding
$5,000,000; or

               (iv)  is an  entity  in  which  all  of  the  equity  owners  are
accredited investors; or

               (v) is an  accredited  investor for another  reason that has been
disclosed to the Company in writing.

          (e) The Subscriber, alone, or together with the Subscriber's purchaser
representative,  if any, has such knowledge and experience in financial matters,
including   investments   in  securities   that  are   restricted  as  to  their
transferability,  that,  the  Subscriber is capable of evaluating  the risks and
merits of an investment in the Securities  and of making an informed  investment
decision.

          (f) The  address  set  forth  above  or in  Exhibit  A  hereto  is the
Subscriber's  correct  home  address  or,  if the  Subscriber  is other  than an
individual,  the correct address of the Subscriber's  principal office,  and the
Subscriber has no present intention of changing such address.

          (g) If a corporation,  partnership or other entity,  the Subscriber is
duly authorized to purchase and hold the Securities.

          (h) All  documents,  records  and  other  materials  pertaining  to an
investment in the Company which were requested by the Subscriber  have been made
available or delivered to the Subscriber.

          (i) The Subscriber has read and understands Exhibit C hereto regarding
the disqualifications  under the Connecticut "blue sky" law and has no knowledge
of any disqualification, after giving effect to the transactions contemplated by
this Agreement,  with respect to the Company or any of the Company's  directors,
officers,  beneficial owners of 10 percent or more of any class of the Company's
equity securities,  or any promoters (including the Founders) connected with the
Company in any capacity.

          4. The Company's  Representations  and Warranties.  The Company hereby
represents and warrants to the Subscribers as follows:

          (a) The Company is a corporation duly organized,  validly existing and
in good  standing  under the laws of the State of Delaware and has the corporate
power to conduct the business which it proposes to conduct.  A conformed copy of
the Company's  certificate of incorporation,  prior to filing the Certificate of
Designations,  is  attached  as Exhibit  D-1 hereto and a copy of the  Company's
bylaws is attached as Exhibit D-2 hereto.

          (b) All corporate action required to authorize the execution, delivery
and performance of this Agreement has been duly taken.

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          (c) The  Securities  have been duly and validly  authorized  and, when
issued,  paid for and delivered in accordance  with the terms of this Agreement,
will be duly and validly  issued,  fully paid and  nonassessable.  After  giving
effect to the issuance of the Securities,  (i) the Company's outstanding capital
stock will consist of 60,000 shares of Series A Preferred and 300,000  shares of
Common  Stock,  (ii) the Company  will not have any  obligation  (contingent  or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
except as provided in the Certificate of  Designation,  (iii) except for 300,000
shares of Common Stock  reserved for issuance  upon  conversion  of the Series A
Preferred  and 66,668  shares of Common Stock  reserved  for  issuance  upon the
exercise of options  granted to Timothy  Gilbert  and  Patrick  Dessein (to each
purchase  33,334  shares),  the Company  will not have any shares of its capital
stock reserved for issuance,  and (iv) except for the Series A Preferred and the
joint  venture  contemplated  by this  Agreement,  there will be no  outstanding
subscriptions, options, warrants, rights, calls or convertible securities, stock
appreciation rights (phantom or otherwise),  joint venture, partnership or other
commitments  of any  nature  relating  to  shares  of the  capital  stock of the
Company. As of the date hereof, the Company has no liability or indebtedness for
dividends or other distributions declared or accumulated but unpaid with respect
to any shares of stock.

          (d) This  Agreement  is a legal,  valid and binding  agreement  of the
Company enforceable in accordance with its terms except as enforceability may be
limited  by  bankruptcy,  insolvency  or other  laws  affecting  the  rights  of
creditors generally or by equitable principles.

          5. Board;  Committees;  Officers.  (a) The Board shall consist of nine
members.  Of the nine directors,  three shall be designated by EVCI, three shall
be designated by Visio and three shall be designated by the  Investors.  Each of
the Stockholders agrees to vote its shares of the Company to elect the designees
of the other;  provided,  however,  that each Stockholder  shall have a right to
approve the designees of the other  Stockholders,  which  approval  shall not be
unreasonably  withheld or delayed. In the event a vacancy occurs on the Board by
reason  of   resignation,   death,   disability,   or  any  other  reason,   the
Stockholder(s)  who  designated the director who has vacated his or her position
shall  likewise  be  entitled  to  designate  his or her  replacement,  and  the
Stockholders  shall vote as stockholders,  or cause their designees on the Board
to vote as directors, to so fill any such vacancy as promptly as possible.

            (b) The Board shall hold at least one meeting per calendar  quarter.
The presence of five directors  shall be necessary to constitute a quorum of the
Board for the transaction of business.  Except as provided below in this Section
5(b), the affirmative vote of five directors shall likewise be necessary for the
passage of any  resolution or the taking of any action at meetings of the Board.
The bylaws of the Company shall provide that the following matters shall require
the affirmative vote of at least seven members of the Board:

               (i) The  merger,  reorganization,  consolidation,  sale or  other
disposition of  substantially  all the assets or dissolution  and liquidation of
the Company.

               (ii) The amendment of the certificate of  incorporation or bylaws
of the Company.

               (iii)  Subject to Section  5(c),  the election of officers of the
Company  and the  assignment  of  authority  and  duties to any  officer  who is
required to act solely in  accordance  with the  authority  and duties,  if any,
assigned to such officer from time to time by the Board.

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               (iv) The approval,  or modification by more than $25,000,  of any
Budget (defined in Section 6(b)).

               (v) The  incurrence or assumption by the Company of any liability
for money  borrowed,  or the  guarantee by the Company of any  obligation of any
person, firm or corporation, in each case in excess of the greater of $25,000 or
an amount designated for such purpose in the current Budget.

               (vi) The  establishment  and maintenance of bank accounts and the
designation  of  authorized  signatories  on  such  accounts  otherwise  than in
accordance with Section 9(b) or in the event the Finance  Committee of the Board
is unwilling or unable to act with respect thereto.

               (vii) Any loan made by the Company.

               (viii) The issuance or  repurchase  of any shares of any class of
the Company.

               (ix)  The  establishment,  modification  or  termination  or  any
employee stock grant or option agreement or plan or any other benefit,  pension,
profit sharing, fringe benefit or similar plan.

               (x) The declaration of any dividend in any form.

               (xi) The approval of any employment arrangement with any employee
providing for compensation,  including fringe benefits, in excess of $50,000 per
annum;   provided,   however,  such  approval  shall  not  be  required  if  the
compensation level and the position the employee is being hired to fill has been
included in a Budget approved pursuant to Section 5(b)(iv).

               (xii) The institution,  or consenting to the institution,  of any
bankruptcy,  insolvency,   reorganization,   readjustment  of  debt  or  similar
proceeding  relating  to the  Company  under  the  law of any  jurisdiction;  an
assignment for the benefit of creditors;  or an application for or consenting to
the  appointment of any receiver,  trustee or similar  officer for any or all of
the property of the Company.

               (xiii)  Any  material  change in the  principal  business  of the
Company or the  establishment  of a new line of  business or class of product or
service.

               (xiv) The entering into of any transaction  with a Stockholder or
any of a Stockholder's affiliates.

               (xv) The designation or change of any committee of the Board.

               (xvi) The engagement or discharge of legal counsel or independent
auditors.

               (xvii) The dissolution and liquidation of the Company.

               (xviii) As required by Section 12(a).

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<PAGE>

               (xix)  Any  Board  determination  or  selection   (including  the
selection of an  independent  appraiser)  required  pursuant to the terms of the
Series A Preferred set forth in the Company's certificate of incorporation.

               (xx) The discharge of any officer of the Company whose employment
was approved pursuant to Section 5(b)(xi).

          (c) The officers of the Company shall be as set forth in the Company's
bylaws. The Chairman of the Board and the Chief Executive Officer of the Company
shall be  designated  by EVCI and the  Vice  Chairman  of the  Board  and  Chief
Operating  Officer of the Company shall be designated by Visio.  Initially,  the
Chairman of the Board shall be Dr. Arol I.  Buntzman,  the Vice  Chairman of the
Board  shall be  Patrick  Lang,  the Chief  Executive  Officer  shall be Timothy
Gilbert and the Chief  Operating  Officer  shall be Patrick  Dessein.  The Board
shall elect such officers to serve in accordance with the Company's  bylaws.  In
addition to presiding at meetings of stockholders or the Board in the absence of
the  Chairman of Board,  the  authority  and duties of the Vice  Chairman of the
Board shall be limited to the specific authority and duties, if any, assigned to
him or her by the Board in accordance with Section  5(b)(iii).  The Stockholders
shall  each  cause  their  respective  designees  on the  Board  to vote for the
election of persons so  designated  as officers  pursuant to this Section  5(c);
provided,  however, that any person designated by a Stockholder who is not named
above shall be approved by the other  Stockholders,  which approval shall not be
unreasonably withheld or delayed.

          6. Financial Statements;  Budgets;  Finance Committee. (a) In order to
keep the Board  currently  apprised of the  financial  condition  and results of
operations  of the  Company,  there shall be  delivered to each Board member (i)
until the Company has audited financial  statements showing at least one year of
net income,  monthly financial statements containing a balance sheet,  statement
of operations  and statement of cash flows which shall be unaudited but shall be
prepared in accordance with generally accepted accounting principles followed in
the United States  ("GAAP") and  delivered to Board  members  within 10 business
days after the end of the month to which they relate, (ii) thereafter, quarterly
financial  statements which containing a balance sheet,  statement of operations
and  statement of cash flows which shall be  unaudited  but shall be prepared in
accordance with GAAP and delivered to Board members within 45 days after the end
of the calendar quarter to which they relate. Each quarterly financial statement
shall also include a statement of  operations  for the year to date. In addition
to the monthly and quarterly financial  statements provided for above, the Board
shall retain  independent  auditors  (initially  authorized at the Board's first
meeting  following the date of this  Agreement),  to audit the annual  financial
statements  of the Company  and to prepare  and deliver to the Board,  within 90
days after the end of each fiscal year of the Company,  their formal  report and
opinion with respect thereto.

          (b) There shall be delivered to the Board for its review and approval,
at least 45 days prior to the end of each fiscal year of the  Company,  a budget
and business plan for the next succeeding year (collectively, the "Budget"). The
Budget  shall  also set forth in  reasonable  detail,  on a monthly  basis,  the
expected results of operations of the Company for the succeeding year.

          (c) The  Board  of  Directors  shall  designate  a  Finance  Committee
consisting of three members of the Board.  Each of EVCI, Visio and the Investors
shall have the right to designate one member of the Finance Committee from among
the  members  of  the  Board.   The  Stockholders  shall cause  their  designees
on  the  Board  to  vote  as  directors  to  appoint  EVCI's,  Visio's  and  the

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Investors'  designees and their successors as members of the Finance  Committee.
The Finance  Committee's duties and authority shall include the requirement that
it authorize, in advance, any single or related expenditures (including under an
agreement  requiring periodic payments) of from $5,000 to $25,000,  which has or
have not been  included  in a Budget  that  has  been  authorized  by the  Board
pursuant to Section 5(b)(iv).

          7. Visio  Royalty.  Visio shall be entitled to receive  royalties from
the Company in accordance with the provisions, that are consistent with the Term
Sheet  dated  October  19,  1999,  of an  agreement  to  be  authorized  by  the
affirmative vote of at least seven members of the Board at its first meeting.

          8. Co-Marketing  Agreement.  EVCI and VUSA shall provide  co-marketing
services and receive  compensation  therefor in accordance  with the provisions,
that are consistent  with the Term Sheet dated October 19, 1999, of an agreement
to be authorized by the affirmative  vote of at least seven members of the Board
at its first meeting.

          9. Books and Records;  Bank  Accounts.(a) All books and records of the
Company  shall be  reasonably  available  for  inspection  at the offices of the
Company   during   normal   business   hours  by  the   Stockholders   or  their
representatives. The Company shall maintain its books in accordance with GAAP.

          (b) The Company shall  maintain three bank accounts at a bank selected
by the Finance Committee that is proximate to the Company's  principal  offices.
One account shall be  designated  "Operating  Account" and shall contain  enough
funds to permit the  Company  to  operate  for one  calendar  quarter  under the
current  Budget.  The second account shall be designated  "Payroll  Account" and
shall be funded from the Operating Account as required to pay payroll. The third
account shall be designated  "Treasury Account" and shall contain the balance of
the  Company's  cash  resources  except to the extent such funds are invested in
short-term,  interest-bearing,  investment grade obligations. The signatories on
the Operating and Payroll  Accounts shall be the Company's  Chief  Executive and
Chief Operating  Officers and the  signatories on the Treasury  Account shall be
the Company's Chief Financial Officer and two members of the Finance Committee.

          10.  Restrictions on  Transferability of Stock. (a) None of the shares
of the  Company  owned by the  Stockholders  shall be sold,  assigned,  donated,
mortgaged,  pledged,  hypothecated or in any other way disposed of or encumbered
by a Stockholder  (each a "Transfer")  without the prior written  consent of the
other  Stockholders,  except as provided  in this  Agreement  and the  Company's
Certificate of Incorporation, as amended.

          (b)  Subject  to the  remaining  provisions  of this  Section  10, the
restrictions  on Transfer of Section  10(a) shall not apply to (A) any  Transfer
among Stockholders or by a Stockholder to a Related  Transferee  (defined below)
of  another  Stockholder,  or  (B)  any  Transfer  by a  Stockholder  who  is an
individual  (an  "Individual  Stockholder"):  (i) to or  among  such  Individual
Stockholder's spouse, children, grandchildren or other living descendants, or to
a trust or family  partnership  of which there are no principal  (i.e.,  corpus)
beneficiaries  or  partners  other  than  the  grantor  or one or  more  of such
Individual  Stockholder,   spouse,  children,   grandchildren  or  other  living
descendants  and,  provided,   in  the  case  of  a  trust,  that  the  existing
beneficiaries  and/or  trustee(s) and/or grantor(s) of such trust have the power
to act with respect to the trust's  assets  without  court  approval and, in the
case of a family  partnership,  that the partners  thereof have the power to act
with  respect  to the  partnership's  assets  without  court  approval  and  the
partnership is not permitted to (x)

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distribute assets to persons who are not among the relatives listed above or (y)
have partners who are not among the  relatives  listed above and (ii) to a legal
representative  of such  Individual  Stockholder  in the event  such  Individual
Stockholder  becomes  mentally  incompetent  or to such  Individual  Stockholder
becomes  mentally  incompetent  or to  such  Individual  Stockholder's  personal
representative  following the death of such Individual  Stockholder,  or (C) any
Transfer  by  any  Stockholder  that  is an  entity  to its  members,  managers,
officers,  directors,  stockholders  or  employers  or to an  affiliate  of such
Stockholder. An "affiliate" of a Stockholder is a person or entity that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, the Stockholder.  Transferees to whom Transfers
are permitted  pursuant to this Section 10(b) are referred to herein as "Related
Transferees".  References in this Agreement to a Founder or the Investors  shall
be deemed to include their Related Transferees.

          (c) No Transfer to a Related  Transferee  or pursuant to Section 11(d)
shall be  effective  unless the  transferee  shall  execute  and  deliver to the
Company  an  appropriate  document  in form and  substance  satisfactory  to the
Company in its reasonable  judgment,  confirming that the transferee  takes such
shares subject to all the provisions of this Agreement to the same extent as its
transferor was bound by and entitled to the benefits of such provisions.

          (d) In  connection  with an initial  public  offering of the Company's
equity securities ("IPO"), each Stockholder agrees to be subject to a lockup for
such period of time recommended by the underwriters, as the Board shall approve.
During such period,  each  Stockholder  agrees not to Transfer any shares of the
Company without the prior written consent of the underwriter(s).  This provision
is  self-operating  but each Stockholder  agrees to execute and deliver a lockup
agreement in such form requested by the underwriter(s).

          (e) In addition to the restrictive legend referred to in Section 3(a),
all  certificates  representing  shares of the Company owned by the Stockholders
shall be inscribed with the following legend:

            "Sale,   assignment,    pledge,   encumbrance   or   other
            disposition  of any  of the  shares  represented  by  this
            Certificate  is also limited and  restricted in accordance
            with  the  terms  of  a  Subscription  and   Stockholders'
            Agreement dated as of November 29, 1999, among Educational
            Video  Conferencing,  Inc.,  Visiocom  Worldwide  S.A. and
            other  stockholders of the Company,  a copy of which is on
            file at the principal office of the Company."

          11. Rights of First Refusal and Tag-Along Option.  (a) If, at any time
after  the  second  anniversary  of the date of this  Agreement,  a  Stockholder
receives an  irrevocable  and  unconditional  bona fide written offer (the "Bona
Fide Offer") from a financially responsible  unaffiliated person (the "Bona Fide
Offeror")  to  purchase  all or a portion  of such  Stockholder's  shares of the
Company  (the   "Offered   Shares"),   then  such   Stockholder   (the  "Selling
Stockholder")  shall give written notice thereof (the "Offering  Notice") to the
other Stockholders (the "Remaining Stockholders").  The Offering Notice shall be
accompanied  by a copy of the Bona  Fide  Offer,  shall  set  forth the name and
address of the Bona Fide Offeror and shall offer to sell all such Offered Shares
to the Remaining  Stockholders at the same price and on the same terms per share
set forth in the Bona Fide  Offer.  Any such Bona Fide  Offer must also apply to
the purchase of not less than all of the Remaining  Stockholder's  shares of the
Company, if any, which become included in the "Offered

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Shares" under Section  11(c),  at the same price and on the same terms per share
set forth in the Offering Notice.

          (b) Each Remaining Stockholder shall have the right to purchase all or
any portion of its pro rata portion of the Offered Shares (determined  according
to  ownership  of the  Company's  shares  assuming  conversion  of the  Series A
Preferred into Common Stock) by giving written notice of exercise to the Selling
Stockholder  by the 30th day  following  the date the Offering  Notice is given.
However, nothing contained herein shall prohibit the Remaining Stockholders from
agreeing  among  themselves  or with the Bona Fide  Offeror  as to the number of
Offered Shares to be purchased by each of them.

          (c) A Remaining  Stockholder shall have the right to have a proportion
of its shares of the Company (determined according to ownership of the Company's
shares assuming conversion of the Series A Preferred into Common Stock) included
in the Offered Shares for sale to the Bona Fide Offeror at the same price and on
the same  terms per share set  forth in the  Offering  Notice by giving  written
notice of exercise of such right by the 30th day following the date the Offering
Notice is given.

            (d) In the event the Remaining  Stockholders have not duly exercised
their  rights  to  purchase  a  portion  of  the  Offered  Shares,  the  Selling
Stockholder  shall be free to sell such  portion  of the  Offered  Shares  for a
period of 40 days after the  expiration of the period for such exercise but only
to the Bona Fide Offeror in accordance  with the terms described in the Offering
Notice; provided that, in the event any Remaining Stockholder has not elected to
have all of its shares  included in the Offered  Shares and,  subject to Section
16, as a  condition  of such sale,  the Bona Fide  Offeror  shall agree that the
Offered  Shares  shall  continue  to be subject  to the terms of this  Agreement
following  their  transfer to the Bona Fide Offeror by executing and  delivering
such  instruments  and documents as counsel for the Company shall deem necessary
and  appropriate  in  order  to make  the  Bona  Fide  Offeror  a party  to this
Agreement,  for all purposes,  in lieu of the Selling Stockholder.  In addition,
the  certificate  representing  such shares shall be  inscribed  with the legend
referred to in Section 10.

            (e) The Offered  Shares  (including  any Shares which become part of
the  Offered  Shares  under  Section  11(c)),  if any,  to be  purchased  by the
Remaining  Stockholders or the Bona Fide Offeror shall be sold at a closing that
takes place at the offices of the attorneys  for the Company  within 10 business
days after the 30th day referred to above in Section 11(b).  The purchaser shall
not receive valid title to any of such shares until all of them are purchased in
accordance  with the terms of the Offering  Notice.  The purchase  price for the
Offered Shares shall be paid against receipt of the certificate(s)  representing
the Offered  Shares being  purchased  endorsed in blank or  accompanied by stock
powers  endorsed in blank,  in either case with signature  guaranteed,  together
with such other  documents  as counsel for the Company  shall deem  necessary to
permit the transfer of such shares.

          12.  Drag-Along  Right.  (a) If either of the  Founders  or any of the
Investors (the "Proposing  Stockholder(s)")  propose(s) to make a bona fide sale
of all of their shares of the Company held by the Proposing  Stockholder(s) to a
non-affiliated party (the "Proposed Transferee"),  pursuant to any sale or other
disposition of such shares, including, without limitation, a stock sale, merger,
recapitalization,   consolidation,   reorganization,  restructuring  or  similar
transaction or series of  transactions  that has been approved by at least seven
of nine  members of the Board at a meeting duly called and held for such purpose
(an "Exit Transaction"),  then the Proposing Stockholder(s) shall have the right
(a "Drag-Along Right"),  exercisable  upon 30 days'  prior written notice to the

                                       9
<PAGE>

other  Stockholders,  to  require  the other  Stockholders  to sell all of their
shares of the Company  and, at the  election  of the  Proposing  Stockholder(s),
options to purchase or any other award or right to receive or acquire  shares of
Common  Stock  (whether  vested  or  unvested)  issued  pursuant  to  employment
agreements,  management  agreements  of otherwise  ("Options"),  to the Proposed
Transferee  on the  same  terms  and  conditions  and at the  same  price as the
Stockholders  exercising the Drag-Along Right. In the case of Series A Preferred
or the  Options,  the  purchase  price of each share of Series A  Preferred  and
Option shall be equal to the purchase price attributable to the number of shares
of Common Stock issuable upon  conversion of such Series A Preferred or exercise
of such Option less, in the case of the Option, the exercise price thereof.

          (b)  Each  Stockholder  selling  shares  of  the  Company  in an  Exit
Transaction (a "Drag-Along  Seller"),  agrees to cooperate in  consummating  the
Exit Transaction, including, without limitation, by becoming a party to the sale
agreement  and all  other  appropriate  related  agreements,  delivering  at the
consummation of the Exit Transaction,  stock  certificates and other instruments
for such shares of Common Stock, Series A Preferred or Options duly endorsed for
transfer, free and clear of all liens and encumbrances, and voting or consenting
in favor of such Exit  Transaction (to the extent a vote or consent is required)
and taking any other  necessary or appropriate  action in  furtherance  thereof,
including  the  execution  and  delivery  of any other  appropriate  agreements,
certificates,  instruments and other documents. The Proposing Stockholders shall
be responsible for all of the expenses of the Exit  Transaction  incurred by the
Proposing  Stockholder(s)  and the Drag Along Sellers  (including the reasonable
fees and disbursements of one separate counsel for the Drag Along Sellers,  as a
group).

          13. Restriction on Competition. (a) So long as a Stockholder maintains
a stock interest in the Company,and,  for a period of 12 months thereafter, such
Stockholder and its affiliates shall not, directly or indirectly,

               (i) as a stockholder,  partner,  investor,  lender, or otherwise,
participate or have any interest in the  ownership,  management,  operation,  or
control of any person, firm, corporation or enterprise,  other than the Company,
which is a competitor  of the Company in the  business  conducted by the Company
anywhere  in  North  America;  provided,   however,  such  Stockholder  and  its
affiliates may own, as a group, up to one percent of the equity  securities of a
corporation if the class of such equity  securities is registered  under Section
13(b) or 12(g) of the Securities Exchange Act of 1934 or,

               (ii) hire an employee of the Company or a Founder,  or solicit or
induce,  or authorize  any other person to solicit or induce any employee of the
Company  or a  Founder  to leave  such  employment  during  the  period  of such
employee's  employment  with the Company or a Founder or within six months after
such employment terminates;  provided,  however, nothing herein shall prohibit a
Founder from  continuing  or resuming the  employment of any person who left the
Founder's  employment  to become an  employee  of the  Company  or  remained  an
employee of the Founder while an employee of the Company,  as long as employment
by the Founder is not  prohibited  by any  contract  between such person and the
Company.

          (b) For the purposes of Section  13(a)(i),  the Investors shall not be
deemed  to be  affiliates  of one  another  solely  because  they are  Investors
provided they are not acting in concert.

                                       10
<PAGE>

          14.  Limits  of  Joint  Venture.  The  applicable  provisions  of this
Agreement  shall be  construed  and  deemed to be a joint  venture  for the sole
purposes  set forth  therein.  Nothing  herein  shall be  construed  to create a
general partnership among the parties for any purpose.

          15. Confidential  Information.  (a) In connection with the business of
the Company and the performance of this Agreement,  it is anticipated  that EVCI
and Visio will  disclose to the Company  and one  another,  and that the Company
will  disclose  to  the  Investors,  various  technical  information,  know-how,
proprietary data, and other  confidential  information.  In order to protect the
rights of each Founder and the Company to its  confidential  information,  it is
agreed that,  during the term of this Agreement and any period thereafter that a
Stockholder  is bound by the  non-compete  provisions of Section 13, none of the
Stockholders nor their respective officers, directors, employees or agents shall
disclose  or  use  any  confidential  information  of  the  other,  acquired  in
connection  with the  business  of the  Company,  other than for the  purpose of
furthering the business of the Company. If requested by either Founder or by the
Company,  the other  Stockholders  shall cause each of its officers,  directors,
employees  and agents having access to such  confidential  information  to enter
into an appropriate secrecy and non-disclosure  agreement,  the form and content
of  which  shall  be  reasonably   satisfactory  to  counsel  for  the  parties.
Confidential  information  does not include (i)  information  that is or becomes
publicly  available  through no wrongful act of the recipient,  (ii) information
obtained  from  third  parties  without  a breach  of any  other  non-disclosure
agreement,  (iii)  information  that is  independently  developed by a recipient
without  reference to the  confidential  information or, (iv) information that a
Stockholder is legally  compelled to disclose,  pursuant to any subpoena,  court
order or similar process issued by a court or governmental body.

          (b) A Stockholder  shall give the Company prompt notice of any attempt
to legally compel the Stockholder to disclose  Confidential  Information so that
the Company can seek a protective  order or waive the  Stockholder's  compliance
with the provisions of Section 13(a).

          16. Termination. This Agreement shall terminate the earlier of (i) the
date written  consent  thereto is given by (x) the  Founders  and (y)  Investors
owning 70 percent of outstanding  Series A Preferred and Common Stock into which
the Series A  Preferred  has been  converted;  or (ii) the closing of an IPO; or
(iii) the closing of an Exit Transaction;  or (iv) the date the Founders and the
Investors  collectively  cease to own a majority  of the  outstanding  shares of
Series A Preferred and Common Stock.

          17. Specific  Performance.  The parties hereto  acknowledge that there
would be no  adequate  remedy at law if any party  fails to  perform  any of its
obligations  hereunder and,  accordingly,  agree that each party, in addition to
any  other  remedy to which it may be  entitled  at law or in  equity,  shall be
entitled to compel  specific  performance of the  obligations of the other party
under  this  Agreement  in  accordance  with the  terms and  conditions  of this
Agreement.

          18. Titles.  The titles,  captions or headings of the Sections  herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.

          19. Notices. All notices,  requests,  demands and other communications
which are required or may be given under this Agreement  shall be in writing and
shall be deemed to have been duly given upon  receipt if  personally  delivered,
receipt  acknowledged  (which shall include Federal Express or similar service);
when  transmitted  if  transmitted  by  telecopy,  receipt  confirmed;  and upon

                                       11
<PAGE>

receipt if sent by certified or registered mail,  return receipt  requested.  In
each case notice shall be sent:

                  If to  EVCI:  Educational  Video  Conferencing,  Inc.
                                35 East Grassy Sprain Road
                                Suite 200
                                Yonkers, NY 10710
                                Attn: Dr. Arol I. Buntzman, Chairman
                                Facsimile: (914) 395-5111

               with a copy to:  Fischbein Badillo Wagner Harding
                                909 Third Avenue
                                New York, NY 10022
                                Attn: Joseph D. Alperin, Esq.
                                Facsimile: (212) 644-3601

                  If to Visio:  Visiocom Worldwide, S.A.
                                13/15 Avenue Charles Madoux
                                Brussels, Belgium 1160
                                Attn: Patrick Lang, President
                                Facsimile: 011-322-629-8971

                with a copy to: Hutchins, Wheeler & Dittmar
                                101 Federal Street
                                Boston, MA  02110
                                Attn: James Westra, Esq.
                                Facsimile: (617) 951-1295

           If to the Investors: L&L Capital Partners LLC
                                274 Riverside Avenue
                                Westport, CT  06880
                                Attn: E. Bulkeley Griswold
                                Facsimile: (203) 222-3033

                with a copy to: Levett Rockwood P.C.
                                33 Riverside Avenue
                                Westport, CT  06880
                                Attn: Cheryl L. Johnson, Esq.
                                Facsimile: (203) 226-8025

          20. Jointly Drafted  Agreement.  The parties  acknowledge that each of
them, and their  attorneys,  have had the  opportunity to draft and comment upon
this  Agreement,  and have in fact done so, and that this Agreement is the joint
product of negotiations  between them. The parties agree that in construing this
Agreement  each term shall be given its  ordinary  meaning.  Each  party  waives
application of the doctrine of construction against the drafter and acknowledges
that  the  parties  shall  jointly  be  considered  to be the  drafters  of this
Agreement.

          21.  Successors and Assigns.  This Agreement shall be binding upon and
shall  inure to the  benefit  of the  parties  and  their  respective  permitted
transferees of their shares of the

                                       12
<PAGE>

Company.  If any Stockholder or any such transferee  shall acquire any shares of
the  Company,  in any manner,  whether by operation  of law or  otherwise,  such
shares  shall be held  subject  to all of the terms of this  Agreement  and,  by
taking and holding such shares, such person shall be conclusively deemed to have
agreed to be bound by and to  perform  all of the terms and  provisions  of this
Agreement.

          22.  Governing Law. This Agreement shall be governed and construed and
enforced in accordance with the laws of the State of Delaware, without regard to
the principles of conflicts of law.

          23. Severability.  If any term or provision of this Agreement shall to
any extent be invalid or  unenforceable,  the remainder of this Agreement  shall
not be affected  thereby,  and each other term and  provision of this  Agreement
shall be valid and enforceable to the fullest extent  permitted by law. Upon the
determination that any term or other provision is invalid,  illegal or incapable
of being  enforced,  the parties  shall  negotiate  in good faith to modify this
Agreement  so as to effect their  original  intent as closely as possible to the
end that transactions contemplated hereby are fulfilled to the extent possible.

          24. No Third Party  Beneficiaries.  The  provisions of this  Agreement
shall be only for the  benefit  of the  parties to this  Agreement  and no other
person  or  entity  shall  have any  third  party  beneficiary  or  other  right
hereunder.

          25. Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits hereto,  constitutes the entire agreement  between the parties
pertaining to the subject  matter hereof and  supersedes  all prior  agreements,
understandings,  negotiations and discussions,  whether oral or written,  of the
parties.  No amendment,  supplement,  modification  or waiver of this  Agreement
shall be binding  unless  executed in writing by the party to be bound  thereby,
except that all of the Investors  shall be bound if Investors  owning 70 percent
of the Common  Stock owned by all of the  Investors,  assuming  for such purpose
that the Series A Preferred has been  converted  into Common Stock in accordance
with its terms.  No waiver of any provision of this Agreement shall be deemed or
shall  constitute  a  waiver  of any  other  provision  hereof  (whether  or not
similar),  nor shall any waiver  constitute a continuing waiver unless otherwise
expressly provided therein.

          26.  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

          27. Dispute Resolution.  Any and all disputes, claims or controversies
arising out of or relating to this  Agreement  that are not  resolved  within 10
business days may be submitted to final and binding arbitration in New York City
before J-A-M-S, or its successor, pursuant to the United States Arbitration Act,
9 U.S.C. Sec. 1 et seq. A party may commence the arbitration  process called for
in this Agreement by filing a written demand for arbitration with J-A-M-S,  with
a  copy  to  all  persons  and  entities  entitled  to  notices  hereunder.  The
arbitration  will be conducted in  accordance  with the  provisions  of J-A-M-S'
Streamlined  Arbitration Rules and Procedures in effect at the time of filing of
the demand for  arbitration.  The parties to the arbitration will cooperate with
J-A-M-S and with one another in selecting an arbitrator  from J-A-M-S'  panel of
neutrals,  and in  scheduling  the  arbitration  proceedings  so  that  a  final
determination  can be made within 30 days after  submission to arbitration.  The
parties  to  the  arbitration   covenant  that  they  will  participate  in  the
arbitration  in good  faith,  and that they will  share  equally  in its  costs.
However, once an award is entered, the losing

                                       13
<PAGE>

party shall be responsible  for paying all of the winner's costs and expenses of
the  arbitration,  including  attorneys' fees. The provisions of this Section 27
may be enforced by any Court of competent  jurisdiction,  and the party  seeking
enforcement  shall be  entitled  to an award of all  costs,  fees and  expenses,
including  attorneys'  fees, to be paid by the party against whom enforcement is
ordered.

          28. Survival. The provisions of 13, 15, 17, 18, 19, 20, 21, 22, 23, 27
and 28 shall survive the termination of this Agreement.

          29.  Expenses.  The Company shall pay or reimburse all reasonable fees
and disbursements of legal counsel to EVCI, Visio and the Investors upon receipt
of  appropriate  invoices and all of the proceeds of the sale of the  Securities
under this Agreement (the "Closing").

          30. Consulting Fees. Promptly after the Closing, the Company shall pay
Alfus Financial Services LLC $30,000 and L&L Capital Partners,  LLC $112,050 for
services  rendered in  connection  with the  transactions  contemplated  by this
Agreement.

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

EDUCATIONAL VIDEO CONFERENCING, INC.            VISIOCOM WORLDWIDE, S.A.

By:/s/ Arol I. Buntzman                         By:/s/ Patrick Lang
   ---------------------------------------         -----------------------------
      Arol I. Buntzman, Chairman                      Patrick Lang, President

VISIOCOM USA INCORPORATED

By:/s/ Arol I. Buntzman                         By:/s/ E. Bulkeley Griswold
   ---------------------------------------         -----------------------------
      Arol I. Buntzman, Chairman                       E. Bulkeley Griswold

                                                 NAKOMA INVESTMENTS, LLC

/s/ Kenneth Fadner                               By: /s/ Irwin F. Smith
--------------------------------------------        ----------------------------
              Kenneth Fadner                            Irwin F. Smith
                                                        Authorized Signatory

L&L CAPITAL PARTNERS, LLC                        SOUTH SHORE CAPITAL FUND LTD.

By: /s/   E. Bulkeley Griswold                  By: /s/ David K. Sing
    ---------------------------------------         ----------------------------
      E. Bulkeley Griswold                             David S. King
      Authorized Signatory                             Authorized Signatory
                                                       Navigator Management Ltd.
                                                       Director
                                       14

<PAGE>

            The  undersigned  hereby  agree  to be bound  by the  provisions  of
Section 12 of the foregoing Subscription and Stockholder's Agreement and to also
be bound  by,  and to be  deemed  a  Stockholder  for all  purposes  under  such
Agreement  with  respect to of any shares of Common  Stock  acquired by him upon
exercise of stock options or otherwise.

                                                /s/ Timothy Gilbert
                                                --------------------------------
                                                    Timothy Gilbert

                                                /s/ Patrick Dessein
                                                --------------------------------
                                                    Patrick Dessein

                                       15
<PAGE>

                                                                       Exhibit A

                   INVESTORS IN VISIOCOM USA INCORPORATED
                   --------------------------------------
<TABLE>
<CAPTION>

                                                                     No. of Shares of Series A
                                                                            Preferred                Total
       Name                                 Address                         Purchased            Purchase Price
       ----                                 -------                  -------------------------   --------------

<S>                                <C>                                   <C>                        <C>
E. Bulkeley Griswold                L&L Capital Partners, LLC              3,000                     $75,000
                                    274 Riverside Avenue
                                    Westport, CT  06880

L&L Capital Partners, LLC           c/o Stephen T. Rossetter               1,000                      25,000
                                    274 Riverside Avenue
                                    Westport, CT  06880

Nakoma Investments, LLC             c/o Irwin F. Smith                    12,000                     300,000
                                    7716 East Black Mountain Road
                                    Scottsdale, AZ  85262

Southshore Capital Fund LTD         c/o Daniel Pickett                     6,000                     150,000
                                    Southridge Capital
                                    90 Grove Street
                                    Ridgefield, CT  06877

Kenneth Fadner                      145 Pipers Hill Road                  18,000                     450,000
                                                                          ------                  ----------
                                    Wilton, CT  06897

                                                                          40,000                  $1,000,000
                                                                          ======                  ==========
</TABLE>

<PAGE>

                                                                       Exhibit B

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                            SERIES A PREFERRED STOCK

                   (Pursuant to Section 151(g) of the General

                    Corporation Law of the State of Delaware)

          VISIOCOM USA INCORPORATED,  a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"),  does hereby certify that
pursuant to authority  conferred upon the Board of Directors of the  Corporation
(the  "Board") by Article  FOURTH of the  Certificate  of  Incorporation  of the
Corporation  (the  "Certificate  of  Incorporation")  and Section  151(g) of the
General  Corporation  Law of the State of Delaware (the  "DGCL"),  the Board has
duly  adopted the  following  resolutions,  which are not in  conflict  with any
provisions of the Certificate of Incorporation or the Corporation's Bylaws.

          RESOLVED,  that the Board hereby fixes and determines the  designation
of, the number of shares constituting, and the rights, preferences,  privileges,
and restrictions relating to, a series of Preferred Stock, as follows:

          1. Designation; Amount; Stated Value.
             ---------------------------------

          From the Corporation's  100,000  authorized shares of Preferred Stock,
$.0001 par value,  60,000 shares are hereby  designated Series A Preferred Stock
("Series A Preferred") with the rights, preferences, privileges and restrictions
specified herein.  Each share of Series A Preferred shall have a stated value of
$25.00 (the "Stated  Value") and all shares of Series A Preferred  shall have an
aggregate Stated Value of $1,500,000.

          2. Dividends.
             ---------

               (a) The  holders  of record of the  Series A  Preferred  shall be
entitled to receive dividends upon the occurrence of the first to occur of (i) a
liquidation  pursuant  to Section 3, (ii) an  automatic  conversion  pursuant to
Section 5 and (iii) a  redemption  pursuant  to  Section  8, out of any  surplus
legally  available  therefor,  at a rate per annum equal to nine percent (9%) of
the Stated  Value.  Dividends  shall accrue from the initial date of issuance of
the Series A Preferred (the  "Original  Issue Date") and shall be cumulative and
compounded annually.

               (b) Shares of Series A Preferred that are automatically converted
pursuant  to  Section 5 or  redeemed  pursuant  to  Section  8 shall not  accrue
dividends following the date the conversion or redemption is deemed effected. In
the case of conversion,  all accrued and unpaid dividends shall be paid,  either
in cash or by  issuance to the record  holder  thereof a number of shares of the
Corporation's  Common Stock, $.0001 par value (the "Common Stock"),  which, when
multiplied by the Conversion Price,  equals the aggregate amount of the dividend
to be paid. The Board shall determine, in its sole discretion, whether dividends
are to be paid in cash or by the issuance of shares of Common Stock. In the case
of redemption, all accrued and unpaid dividends shall be paid in cash.

<PAGE>

               (c) No dividends  or other  distributions  shall be paid,  or set
apart for payment,  on any shares of Common Stock or other  capital stock of the
Corporation ranking junior as to dividends to the Series A Preferred, unless and
until all accrued and unpaid dividends on the Series A Preferred shall have been
paid or set apart for payment.

          3. Liquidation  Preference.  Subject  to Section 5, in the event of a
liquidation or dissolution and winding up of the Corporation,  whether voluntary
or  involuntary,  the  holders  of record  of the  Series A  Preferred  shall be
entitled to receive  ratably in full,  out of lawfully  available  assets of the
Corporation, whether such assets are stated capital or surplus of any nature, an
amount in cash per  outstanding  share of Series A Preferred equal to the sum of
the Stated Value and all dividends  (whether or not declared) accrued and unpaid
thereon, as of the date of final distribution hereunder to such holders,  before
any payment shall be made or any assets distributed to the holders of the Common
Stock or other capital stock of the Corporation ranking junior as to liquidation
to the Series A Preferred. If, upon any liquidation, dissolution and winding up,
the amount available for such payment to the holders of Series A Preferred shall
not be sufficient to pay in full the amounts  payable on the Series A Preferred,
the  holders of the  Series A  Preferred,  and any other  class or series of the
Corporation's  capital stock which may hereafter be created  having parity as to
liquidation rights with the Series A Preferred,  shall share in the distribution
of the amount available in proportion to the respective  preferential amounts to
which each is entitled.

          4. Voting Rights. Each share of a Series A Preferred shall entitle the
holder  thereof to such number of votes per share on matters  requiring the vote
or  consent  of the  holders of Common  Stock as shall  equal the  number  (with
fractions  being  rounded to the nearest whole number) of shares of Common Stock
into which each share of Series A Preferred  is  convertible  at the record date
for the determination of stockholders entitled to vote on such matters or, if no
such record date is  established,  at the date such vote is taken or any written
consent  of  stockholders  is  solicited.  The  holders  of  shares  of Series A
Preferred  and the holders of Common Stock shall at all times vote as one class,
together  with the  holders  of any  other  class  of  stock of the  Corporation
accorded  such general  class  voting  right.  In addition,  the approval of any
action either (i) altering the rights, preferences or privileges of the Series A
Preferred  or (ii)  creating  any new class or series of shares  having  rights,
preference  or  privileges  senior to or on parity with the Series A  Preferred,
shall require the consent of a majority in interest of the outstanding shares of
Series A Preferred.

          5. Automatic Conversion.
             --------------------

          (a)  All   outstanding   shares  of  Series  A   Preferred   shall  be
automatically  converted  into  fully paid and  non-assessable  shares of Common
Stock,  in the event of (i) an initial public  offering of equity  securities of
the  Corporation,  (ii) a  liquidation  or  dissolution  and  winding  up of the
Corporation,  or (iii) the sale of the  Corporation  pursuant  to a stock  sale,
merger, consolidation, recapitalization,  reorganization, restructuring, sale of
all or substantially all of the assets of the Corporation or similar transaction
or series  of  transactions  (each of (i),  (ii) and  (iii)  being a  "Liquidity
Transaction"),   and  provided  the   Corporation's   value  in  such  Liquidity
Transaction is not less than $7,050,000. Such conversion shall be at the rate of
one share of Common Stock for each $5.00,  subject to  adjustment as provided in
Section 6 (the  "Conversion  Price")  of an  amount  equal to the sum of (x) the
Stated Value of the Series A Preferred duly  surrendered  for conversion and (y)
any accrued and unpaid dividends thereon that the Corporation has elected to pay
in Common Stock.  Written notice of such automatic  conversion shall be given by
the Corporation to the holders of Series A

                                      B-2

<PAGE>

Preferred  at least 10 days prior to the  closing of the  Liquidity  Transaction
(the  "Liquidity  Transaction  Closing"),   unless  the  Corporation  reasonably
believes a holder of Series A Preferred has actual  knowledge of such  automatic
conversion.

               (b) In order to receive  certificates  for shares of Common Stock
into which Series A Preferred shall have been automatically  converted, a holder
of record of Series A Preferred shall surrender the certificate(s)  representing
such shares, endorsed in blank or accompanied by stock powers endorsed in blank,
in  either  case  with  signature  guaranteed,  at the  principal  office of the
Corporation or the Corporation's transfer agent for its Common Stock, or at such
other office as the Corporation may designate,  and shall give written notice to
the  Corporation,  that sets forth the name or names in which the certificate or
certificates  for shares of Common  Stock are to be issued;  provided,  however,
that nothing in this  Certificate of Designations  shall be deemed to permit any
holder of Series A Preferred  to  designate  another  person to be the holder of
Common Stock issuable upon  conversion of the Series A Preferred if the issuance
to such other  person  would  violate  Federal or state  securities  laws or any
agreement  a holder of Series A  Preferred  has with the  Corporation  regarding
restrictions on  transferability  of any securities of the  Corporation  held by
such  holder.  Within 10 business  days after  surrender  of the  certificate(s)
representing  the Series A Preferred and payment by the holder of any applicable
transfer  or similar  taxes,  the  Corporation  shall  issue and  deliver  (i) a
certificate  or  certificates  for the  number of full  shares  of Common  Stock
issuable upon  conversion,  in the name or names and to the address or addresses
specified  in the  Conversion  Notice,  subject  to  any  such  restrictions  on
transferability,  and (ii) a check in payment for any fractional shares pursuant
to Section 10 and any accrued and unpaid dividends, if any, that the Corporation
has elected to pay in cash pursuant to Section 2(b).

               (c) The  conversion of the Series A Preferred  shall be deemed to
have  been  effected  simultaneously  with  the  consummation  of the  Liquidity
Transaction Closing. Whereupon, each holder shall cease to be a stockholder with
respect to the Series A Preferred and all rights whatsoever with respect to such
shares  shall  terminate  (except the rights of the holder to receive  shares of
Common Stock and cash in respect of fractional shares pursuant to Section 10 and
to receive  accrued  and unpaid  dividends  pursuant to Section  2(b)),  and the
person or persons in whose name any certificate(s) for Common Stock are issuable
upon such conversion  shall be deemed to have become the holder of record of the
shares represented thereby.

          6. Adjustment of Conversion Price.
             ------------------------------

               (a) In the event the Corporation (i) declares any dividend on the
Common Stock in shares of its capital stock,  (ii)  subdivides  the  outstanding
shares of the Common Stock into a larger  number of shares,  (iii)  combines the
outstanding  shares of the Common Stock into a smaller number of shares, or (iv)
issues by  reclassification of the Common Stock any shares of its capital stock,
then the  Conversion  Price in effect on the record date for such dividend or on
the effective date of such subdivision, combination or reclassification shall be
proportionately  adjusted  so that the  record  holder of any shares of Series A
Preferred

                                      B-3
<PAGE>

converted  after such date shall be  entitled  to receive the kind and amount of
shares which such holder  would have owned or have been  entitled to receive had
such shares of Series A Preferred been converted immediately prior to such date.
Such adjustment shall be made successively whenever any event listed above shall
occur. If, as a result of an adjustment made hereunder, the holder of any shares
of Series A Preferred  shall  become  entitled to receive  shares of two or more
classes of capital  stock or shares of Common Stock and other  capital  stock of
the  Corporation,  the Board shall  determine  the  allocation  of the  adjusted
Conversion  Price  between  shares of such classes of capital stock or shares of
Common Stock and other capital stock.

               (b) After each  adjustment of the  Conversion  Price  pursuant to
this Section 6, the Corporation  will promptly  prepare a certificate  signed by
the Chief  Financial  Officer of the  Corporation  setting forth the  Conversion
Price as so adjusted,  and a brief  statement of the facts  accounting  for such
adjustment.  The Company will promptly cause a brief summary  thereof to be sent
by ordinary first class mail to each record holder of Series A Preferred at such
holder's  last  address  as it  shall  appear  on  the  registry  books  of  the
Corporation or its transfer agent, unless the Corporation  reasonably believes a
holder of Series A Preferred has actual notice of the adjusted  Conversion Price
and the facts accounting for such adjustment. No failure to mail such notice nor
any defect therein or in the mailing  thereof shall affect the validity  thereof
except to the extent a holder of Series A Preferred  shall have suffered  actual
damages as a result  thereof.  The  affidavit  of the  Secretary or an Assistant
Secretary  of the  Corporation  that such notice has been mailed  shall,  in the
absence of fraud, be prima facie evidence of the facts stated therein.

               (c) As used in this Section 6, the term "Common Stock" shall mean
and include the Corporation's Common Stock authorized on the Original Issue Date
and  shall  also  include  any  capital  stock of any  class of the  Corporation
thereafter authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders  thereof to participate in dividends and in
the  distribution  of assets  upon the  voluntary  liquidation,  dissolution  or
winding up of the Corporation;  provided, however, that the shares issuable upon
conversion  of the Series A Preferred  shall  include  only shares of such class
designated in the Corporation's  Certificate of Incorporation as Common Stock on
the Original Issue Date or, in the case of any reclassification of the character
referred to in Section 6(a),  such shares of Common Stock as so  reclassified or
changed.

               (d)  Any  determination  as  to  whether  an  adjustment  in  the
Conversion Price in effect is required  pursuant to this Section 6, or as to the
amount of any such adjustment, if required, shall be binding upon the holders of
the Series A Preferred and the Corporation if made in good faith by the Board.

          7. Reservation of Shares; Payment of Taxes.
             ---------------------------------------

               (a) The  Corporation  covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon conversion of the Series A Preferred, such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding  Series A
Preferred. The Corporation covenants that all shares of Common Stock which shall
be issuable  upon  conversion  of the Series A Preferred  shall,  at the time of
delivery,  be duly and validly issued,  fully paid,  nonassessable and free from
all taxes,

                                      B-4

<PAGE>

liens and charges with respect to the issue thereof  (other than those which the
Corporation shall promptly pay or discharge, subject to Section 7(b)).

               (b) The Corporation  shall pay all documentary,  stamp or similar
taxes and other  governmental  charges  that may be imposed  with respect to the
issuance of the Series A Preferred, or the issuance or delivery of any shares of
Common Stock upon conversion of the Series A Preferred; provided, however, that,
if the shares of Common  Stock are to be delivered in a name other than the name
of the holder of record of the certificate  representing  any Series A Preferred
being  converted,  then  no  such  delivery  shall  be made  unless  the  person
requesting the same has paid to the  Corporation the amount of transfer taxes or
charges incident thereto, if any.

          8. Optional Redemption; Right of First Refusal.
             -------------------------------------------

               (a) Subject to Section  8(c),  and in the event that a conversion
has not  occurred  pursuant  to  Section  5,  the  Series A  Preferred  shall be
redeemable  at the  sole  option  of the  holder  of  Series  A  Preferred  (the
"Redeeming  Holder"),  exercisable  during  the  period  of 90 days  immediately
following the fourth anniversary of the Original Issue Date at a price per share
equal to the sum of the Stated Value and all dividends (whether or not declared)
accrued  and unpaid  thereon  through  the date the  Redemption  Notice is given
pursuant to Section 8(b) (the "Redemption Price").

               (b) The holder of shares of Series A Preferred  may exercise such
redemption right by giving notice to the Corporation (the "Redemption  Notice"),
within  such  90 day  period,  of  such  holder's  intent  to  surrender  to the
Corporation for redemption all or a specified  portion of the Series A Preferred
(the  "Redemption  Shares"),  at the principal  office of the Corporation or the
Corporation's transfer agent, accompanied by the certificate(s) representing the
Redemption  Shares  being so  surrendered  for  redemption  endorsed in blank or
accompanied  by stock powers  endorsed in blank,  in either case with  signature
guaranteed.

               (c) Within five days after receipt of the  Redemption  Notice and
such  certificate(s),  the  Corporation  shall transmit a copy of the Redemption
Notice   to   the   Corporation's   remaining   stockholders   (the   "Remaining
Stockholders").  Each Remaining Stockholder shall have the right to purchase all
or any  portion of its pro rata  portion of the  Redemption  Shares  (determined
according to ownership  of the  Corporation's  shares,  assuming  conversion  of
Series A Preferred into Common Stock),  at a price per share equal to the higher
of the Per Share Market Price and the Redemption Price, by giving written notice
of  exercise  to the  Redeeming  Holder  and the  Corporation  by the  45th  day
following the date the Corporation  transmits a copy of the Redemption Notice to
each Remaining Stockholder.  "Per Share Market Price" means the price determined
by an independent  appraiser  selected by the Board.  Nothing  contained  herein
shall prohibit the Remaining Stockholders from agreeing among themselves or with
the Redeeming  Holder as to the number of  Redemption  Shares to be purchased by
each of them.

               (d)  The  Redemption  Shares  to be  purchased,  if  any,  by the
Remaining  Stockholders  shall  be sold at a  closing  that  takes  place at the
offices of the attorneys for the  Corporation  within 10 business days after the
45th day referred to in Section  8(c).  The  purchaser  shall not receive  valid
title to any of such shares until  all  of  them  are  purchased.  The  purchase

                                      B-5
<PAGE>

price  (either  the  Redemption  Price or the Per Share  Market  Price)  for the
Redemption   Shares  shall  be  paid  against  receipt  of  the   certificate(s)
representing  the  Redemption  Shares  being  purchased  endorsed  in  blank  or
accompanied  by stock powers  endorsed in blank,  in either case with  signature
guaranteed,  together with such other documents as counsel for the Company shall
deem necessary to permit the transfer of such shares.

               (e) In  the  event  the  Remaining  Stockholders  have  not  duly
exercised  their  rights  to  purchase  a portion  of the  Offered  Shares,  the
Corporation shall redeem such portion of shares (the "Redemption Shares") at the
Redemption Price.  Payment of the Redemption Price shall be made, out of surplus
legally  available  therefor,  in three equal  installments,  of which the first
shall be due the first day of the month next  following the expiration of the 45
day period referred in Section 8(c) and the other two installments  shall be due
on the first and second  anniversary  dates  thereof.  The obligation to pay the
Redemption  Price shall be evidenced by a promissory note of the Corporation and
shall be secured by the Redemption Shares. The Corporation shall, simultaneously
with such first installation payment,  issue and deliver to the Redeeming Holder
a  Certificate  for the  shares of  Series A  Preferred,  if any,  owned by such
Redeeming Holder and not included in the Redemption Shares.

          9. Status of Reacquired Shares. The shares of Series A Preferred which
have been issued and reacquired in any manner by the Corporation  shall have the
status  of  authorized  and  unissued  shares  of  Preferred  Stock  and  may be
reclassified  and  reissued as a part of a new series of  Preferred  Stock to be
created by resolution or resolutions of the Board.

          10. No Fractional  Shares.  The  Corporation  shall not be required to
issue  fractional  shares  of  Common  Stock  upon any  conversion  of  Series A
Preferred  but shall pay, in lieu  thereof,  an amount in cash equal to the same
fraction of a share of Common Stock outstanding after a conversion multiplied by
the Conversion Price.

          11. Determination  of   the  Board.   Whenever   this  Certificate  of
Designations requires  determination to be made by the Board, such determination
shall be conclusive and shall be set forth in a Board resolution.

          12. Notices.  Any notice  required by these  provisions to be given to
the holders of Series A Preferred  shall be deemed  given on the third  business
day after mailing,  first class mail, postage prepaid, or on the day of delivery
if sent by overnight courier, receipt confirmed, in each instance in an envelope
address to each holder of record of Series A Preferred at such holder's  address
appearing on the books of the Corporation.

          RESOLVED,  FURTHER,  that the Chairman of the Board, the Vice Chairman
of the Board and the Secretary of the Corporation are each hereby authorized and
directed to prepare and file a Certificate of  Designations  in accordance  with
this resolution and as required by law.

                                      B-6
<PAGE>

          IN WITNESS  WHEREOF,  the undersigned has executed this Certificate of
Designations  on  behalf  of  Visiocom  USA  Incorporated  and does  affirm  the
foregoing  as true under the  penalties  of perjury  this 29th  day of November,
1999.

                                                 VISIOCOM USA INCORPORATED

                                                 By:____________________________
                                                    Dr. Arol I. Buntzman
                                                    Chairman of the Board

                                      B-7
<PAGE>

                                                                     Exhibit B-1

                                    FORM OF

                     COLLATERAL INSTALLMENT PROMISSORY NOTE
                     --------------------------------------

$____________________                                                     , 20__

          FOR VALUE RECEIVED, Visiocom USA Incorporated, a Delaware corporation,
("Maker"),  hereby  promises  to pay to the order of [insert  name of  Redeeming
Holder]  ("Payee")  at  [insert  address  to which  payment  is to be sent]  the
principal  sum of $ in lawful  money of the United  State of America.  The first
installment shall be due on [ ] and the remaining two installments  shall be due
the first and second  anniversary date respectively of the due date of the first
installment. Each such installment shall be deemed to include interest at a rate
necessary to avoid the imputation of interest under applicable provisions of the
Internal  Revenue  Code of 1986,  as  amended,  and the  rules  and  regulations
thereunder.  When  ever any  installment  falls  due on a  Saturday,  Sunday  or
business  holiday  in New  York  City,  such  installment  shall  be paid on the
immediately succeeding business day with interest calculated to that date.

          This Note may be prepaid  at the option of Maker in whole,  but not in
part, without premium or penalty.

          In the event that Maker shall fail to pay any installment of this Note
when due,  and such failure  shall  continue  for 10 days after  written  notice
thereof shall have been given to Maker by the holder of this Note, the holder of
this Note,  by further  written  notice to Maker,  may at any time  declare  the
entire unpaid  principal  balance of this Note to be immediately due and payable
without  demand,  protest or notice,  all of which are hereby  waived.  Past due
installment  payments  shall  bear  interest  at nine  percent  (9%) per  annum,
compounded annually, computed from the date of this Note.

          As  collateral  for  this  Note,  Maker  has  pledged,   assigned  and
transferred, and by this instrument and delivery of the stock Certificate No(s).
[ ] for [ ] shares of Makers [ ] (the "Shares")  does hereby pledge,  assign and
transfer,  the Shares to Payee and to every  subsequent  holder of the Note (the
Shares and certificates and any property,  including cash, hereafter distributed
as dividends paid or other  distributions  made upon or in respect of the Shares
or in  exchange  for  any or all  the  Shares  or  property,  being  hereinafter
collectively  called  the  "Pledged  Shares").  Payee  acknowledges  receipt  of
Certificate  No(s).  [ ] representing  all of the Pledged Shares  accompanied by
duly executed stock power(s).

          The holder of this Note shall not be entitled  to exercise  any voting
and/or  consensual powers pertaining to Pledged Shares or any part thereof until
Maker  shall  default  in any  payment  of this Note as and when the same  shall
become due and payable, whereupon the holder of the Note shall immediately,  and
without notice to Maker, be entitled to exercise such powers.

          Upon  default  in the  payment  by  Maker  of this  Note,  subject  to
applicable  securities  laws,  the  holder of the Note shall have the rights and
remedies  provided in the Uniform  Commercial Code then in force in the State of
New York.

<PAGE>

          Maker  agrees  to pay all  costs and  expenses,  including  reasonable
attorney's  fees,  incurred  in  connection  with the  collection  of any of the
indebtedness evidenced hereby.

          This  Note  and all the  rights  hereunder  shall be  governed  in all
respects by the law of the State of New York.

                                                  VISIOCOM USA INCORPORATED

                                                  By:___________________________
                                                       Authorized Signatory

                                     B-1-2
<PAGE>
                                                                       Exhibit C

                CONNECTICUT BLUE SKY DISQUALIFICATION PROVISIONS
                ------------------------------------------------

(D) (1) The  exemption  hereunder  shall  not be  available  to an issuer if the
issuer,  any of the issuer's  predecessors,  any affiliated  issuer,  any of the
issuer's directors, officers, general partners, beneficial owners of ten percent
(10%)  or  more of any  class  of the  issuer's  equity  securities,  any of the
issuer's  promoters  presently  connected  with the issuer in any capacity,  any
underwriter  of the  securities  to be offered,  or any  partner,  director,  or
officer of such underwriter:
(a) Within the last five years, has filed a registration  statement which is the
subject of a currently  effective  registration  stop order entered by any state
securities administrator or the Securities and Exchange Commission;
(b) Within the last five years,  has been  convicted of any criminal  offense in
connection with the offer,  purchase or sale of any security, or involving fraud
or deceit;
(c) Is  currently  subject  to any state or federal  administrative  enforcement
order or judgment,  entered within the last five years,  finding fraud or deceit
in connection with the purchase or sale of any security; or
(d) Is  currently  subject  to any  order,  judgment  or  decree of any court of
competent  jurisdiction,   entered  with  the  last  five  years,   temporarily,
preliminarily  or permanently  restraining or enjoining such party from engaging
in or continuing to engage in any conduct or practice  involving fraud or deceit
in connection with the purchase or sale of any security.

<PAGE>
                                                                     Exhibit D-1

                         CERTIFICATE OF INCOROPORATION

                                       OF

                            VISIOCOM USA INCORPORATED
   (Under Section 102 of the General Corporation Law of the State of Delaware)

          FIRST: The name of the corporation is VISIOCOM USA  INCORPORATED  (the
"Corporation").

          SECOND:  The  registered  office of  Corporation  is located at 9 East
Loockerman  Street, in the City of Dover, in the County of Kent, in the State of
Delaware. The name of its registered agent at the address is National Registered
Agents, Inc..

          THIRD:  The purpose of the  Corporation is to engage in any lawful act
or  activity  for  which   corporations  may  be  organized  under  the  General
Corporation Law of the State of Delaware.

          FOURTH:  The total  number of shares of all classes of stock which the
Corporation  shall have  authority to issue is 1,100,000  shares,  consisting of
1,000,000  shares of common  stock,  par value  $0.0001;  and 100,000  shares of
preferred stock, par value $0.0001.

          The Board of Directors of the  Corporation is expressly  authorized to
fix by resolution or  resolutions  the  designations  and the powers  (including
voting powers), preferences, and rights, and the qualifications, limitations, or
restrictions  permitted  by Section  151 of the General  Corporation  Law of the
State of  Delaware  in respect of any class or classes of stock or any series of
any class of stock of the  Corporation  which may be desired but which shall not
be fixed by this Certificate of Incorporation.  Such grant of authority includes
the power to specify the number of shares in any series.

          FIFTH:  The name and  mailing  address  of the  sole  incorporator  is
Michael Sufott, Fischbein Badillo Wagner Harding, 909 Third Avenue, New York, NY
10022.

          SIXTH: In furtherance and not in limitation of the powers conferred by
statute,  the Board of Directors of the  Corporation is expressly  authorized to
make,  alter  or  repeal  all  or any of the  provisions  of the  bylaws  of the
Corporation.

          SEVENTH:  A  director  of the  Corporation  shall not be liable to the
Corporation  or its  stockholders  for monetary  damages for breach of fiduciary
duty as a  director,  except to the extent  such  exemption  from  liability  or
limitation  thereof is not permitted  under the General  Corporation  Law of the
State of Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing  sentence shall not adversely affect any
right

<PAGE>

or protection of a director of the  Corporation  hereunder in respect of any act
or  omission  occurring  prior to the time of such  amendment,  modification  or
repeal.

          EIGHTH:  (a) The  Corporation  shall,  to the extent and in the manner
permitted by the General  Corporation Law of the State of Delaware,  as the same
now exists or may hereafter be amended,  indemnify any person  against  expenses
(including  attorneys' fees),  judgments,  fines, and amounts paid in settlement
actually and reasonably  incurred in connection with any threatened,  pending or
completed action,  suit, or proceeding in which such person was or is a party or
is  threatened  to be made a party by reason of the fact that such  person is or
was  a  director  or  officer  of  the   Corporation.   For   purposes  of  such
indemnification,  a "director"  or "officer" of the  Corporation  shall mean any
person (i) who is or was a director or officer of the  Corporation,  (ii) who is
or was  serving at the  request of the  Corporation  as a director or officer of
another corporation,  partnership,  joint venture,  trust or other enterprise or
(iii) who was a director  or officer of a  corporation  which was a  predecessor
corporation of the  Corporation or of another  enterprise at the request of such
predecessor Corporation.

          The  Corporation  shall not be  required  to  indemnify  a director or
officer in connection  with any action,  suit,  or proceeding  (or part thereof)
initiated  by such  director or officer  unless the  initiation  of such action,
suit,  or  proceeding  (or part  thereof)  by the  director  or officer and such
indemnification was authorized by the Board of Directors of the Corporation.

          The Corporation  shall pay the expenses  (including  attorney's  fees)
incurred by a director or officer of the Corporation entitled to indemnification
hereunder  in  defending  any  action,  suit or  proceeding  referred to in this
Article  Eighth in advance of its final  disposition;  provided,  however,  that
payment of  expenses  incurred by a director  or officer of the  Corporation  in
advance of the final  disposition  of such action,  suit or proceeding  shall be
made only upon receipt of an undertaking by the director or officer to repay all
amounts  advanced in the event that it should  ultimately be determined that the
director or officer is not entitled to be indemnified  under this Article Eighth
or otherwise.

          The  rights  conferred  on any person by this  section  (a) of Article
Eighth  shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute,  provision of the  Corporation's  bylaws or
any agreement,  vote of the  stockholders  or  disinterested  directors or other
action provided that the same conforms to the provisions of this  Certificate of
Incorporation, as the same may be amended from time to time, and the laws of the
State of Delaware.

          Any repeal or modification of the foregoing provisions of this Article
shall not adversely  affect any right or  protection  hereunder of any person in
respect of any act or  omission  occurring  prior to the time of such  repeal or
modification.

          (b) The  Corporation  shall have the  power,  to the extent and in the
manner permitted by the General Corporation Law of the State of Delaware, as the
same now exists or may  hereafter  be  amended,  to  indemnify  any  person,  in
addition to directors  and  officers,  against  expenses  (including  attorneys'
fees), judgments,  fines, and amounts paid in settlement actually and reasonably
incurred in connection with any threatened, pending or completed  action,  suit,
or

                                     D-1-2
<PAGE>

proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such  person is or was an  employee or agent of
the  Corporation.  For  purposes  of this  section  (b) of  Article  Eighth,  an
"employee"  or "agent" of the  Corporation  (other  than a director  or officer)
shall mean any person (i) who is or was an employee or agent of the  Corporation
or (ii) who is or was serving at the request of the  Corporation  as an employee
or agent of another  corporation,  partnership,  joint  venture,  trust or other
enterprise  including a predecessor  corporation  of the  Corporation or another
enterprise at the request of such predecessor corporation.

          (c) The Corporation  may purchase and maintain  insurance on behalf of
any  person  who  is or  was a  director,  officer,  employee  or  agent  of the
Corporation,  or is or was  serving  at the  request  of  the  Corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and  incurred by him or her in any such  capacity,  or arising out of his or
her  status as such,  whether  or not the  Corporation  would  have the power to
indemnify him or her against such liability  under the provisions of the General
Corporation Law of Delaware.

          NINTH: The Corporation  reserves the right to amend, alter, change, or
repeal any  provision  contained in this  Certificate  of  Incorporation  in the
manner now or hereafter  prescribed by law, and all rights and powers  conferred
herein on  stockholders,  directors,  and officers are subject to this  reserved
power.

          TENTH: The Corporation  expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.

          I, THE UNDERSIGNED, to form a corporation for the purposes hereinabove
stated,  under and pursuant to the provisions of the General  Corporation Law of
the State of Delaware,  do hereby  certify that the facts stated herein are true
and hereunto set my hand this 30th day of September, 1999.

                                                   /s/  Michael Sufott
                                                   -----------------------------
                                                   Michael Sufott, Incorporator

                                     D-1-3

<PAGE>
                                                                     Exhibit D-2

                                    BYLAWS*

                                       OF

                            VISIOCOM USA INCORPORATED

                                    ARTICLE I
                                    ---------

                                  Stockholders
                                  ------------

          Section 1.1. Annual Meetings.  An annual meeting of stockholders shall
be held for the election of directors on such date and at such place as shall be
fixed from time to time by the Board of Directors. Any other proper business may
be transacted at the annual meeting.

          Section 1.2.  Special  Meetings.  Special meetings of stockholders for
any  purpose or  purposes  may be called at any time by the Board of  Directors.
Special meetings may not be called by any other person or persons.

          Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place,  date and hour of the  meeting  and, in the
case of a special  meeting,  the  purpose or  purposes  for which the meeting is
called.  Unless  otherwise  provided by law, the certificate of incorporation or
these bylaws,  the written notice of any meeting shall be given not less than 10
nor  more  than 60 days  before  the  date of the  meeting  to each  stockholder
entitled to vote at such meeting.  If mailed,  such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation.

          An affidavit of the mailing or other means of giving any notice of any
stockholders'  meeting,  executed by the secretary,  assistant  secretary or any
transfer  agent of the  corporation  giving  the  notice,  shall be prima  facie
evidence of the giving of such notice.

          Section  1.4.  Adjournments.  Any meeting of  stockholders,  annual or
special,  may adjourn  from time to time to  reconvene at the same or some other
place,  and notice need not be given of any such  adjourned  meeting if the time
and place  thereof  are  announced  at the meeting at which the  adjournment  is
taken. Any business which might have been transacted at the original meeting may
be transacted  at the adjourned  meeting.  If the  adjournment  is for more than
thirty  days or, if after the  adjournment  a new  record  date is fixed for the
adjourned  meeting,  notice,  pursuant  to Section 1.3 of these  bylaws,  of the
adjourned  meeting shall be given to each stockholder of record entitled to vote
at the meeting.

          Section  1.5.  Quorum.  Except  as  otherwise  provided  by  law,  the
certificate of  incorporation  or these bylaws,  at each meeting of stockholders
the presence in person or by

 ---------------------
         *As of November 29, 1999.

<PAGE>

proxy of the  holders of shares of stock  having 70  percent of the votes  which
could be cast by the holders of all outstanding shares of stock entitled to vote
at the meeting shall be necessary and sufficient to constitute a quorum.  In the
absence of a quorum, the stockholders present may, by majority vote, adjourn the
meeting from time to time in the manner  provided in Section 1.4 of these bylaws
until a quorum shall attend.

          Section 1.6. Organization.  Meetings of stockholders shall be presided
over by the  Chairman  of the  Board,  or,  in his or her  absence,  by the Vice
Chairman of the Board,  if any, or in his or her absence by the Chief  Executive
Officer,  or in his or her absence,  by the Chief Operating  Officer,  or in the
absence  of the  foregoing  persons  by a  chairman  designated  by the Board of
Directors or, in the absence of such  designation,  by a chairman  chosen at the
meeting.  The Secretary shall act as secretary of the meeting, but in his or her
absence the  chairman of the meeting may appoint any person to act as  secretary
of the meeting.

          Section 1.7.  Voting;  Proxies.  Except as  otherwise  provided by the
certificate of incorporation,  each stockholder  entitled to vote at any meeting
of  stockholders  shall be  entitled to one vote for each share of stock held by
such stockholder which has voting power upon the matter in question.

          Each  stockholder  entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate  action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy shall be voted or acted upon after three years from its date,  unless
the proxy  provides  for a longer  period.  A proxy shall be  irrevocable  if it
states that it is irrevocable and if, and only as long as, it is coupled with an
interest  sufficient by law to support an irrevocable  power. A stockholder  may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by delivering
a proxy in accordance  with applicable law bearing a later date to the Secretary
of the corporation.

          Voting at meetings of stockholders  need not be by written ballot and,
unless  otherwise  required  by law,  need not be  conducted  by  inspectors  of
election  unless so  determined  by the  holders  of  shares  of stock  having a
majority  of the votes  which  could be cast by the  holders of all  outstanding
shares of stock entitled to vote thereon which are present in person or by proxy
at such meeting.

          All elections including the election of directors and questions shall,
unless  otherwise  provided  by law,  be decided  by the vote of the  holders of
shares  of stock  having 70  percent  of the  votes  which  could be cast by the
holders of all shares of stock outstanding and entitled to vote thereon.

     Section 1.8. Fixing Date for  Determination  of Stockholders of Record.  In
order that the corporation may determine the stockholders  entitled to notice of
or to vote at any meeting of  stockholders  or any  adjournment  thereof,  or to
express consent to corporate action in writing without a meeting, or entitled to
receive  payment of any  dividend  or other  distribution  or  allotment  of any
rights, or entitled to exercise any rights in respect of any change,  conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors  may fix a record  date,  which record date shall not precede the date
upon which the  resolution  fixing  the  record  date is adopted by the Board of
Directors  and  which  record  date:  (1)  in  the  case  of   determination  of
stockholders  entitled to vote at any  meeting of  stockholders  or  adjournment
thereof,  shall,  unless otherwise required by law, not be more than 60 nor less
than 10 days before the date of such meeting;  (2) in the case of  determination
of stockholders entitled to express consent to corporate action in writing

                                     D-2-2
<PAGE>

without a  meeting,  shall not be more than 10 days from the date upon which the
resolution fixing the record date is adopted by the Board of Directors;  and (3)
in the case of any other  action,  shall not be more than 60 days  prior to such
other action.

          If no  record  date is  fixed:  (1) the  record  date for  determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the business day next  preceding the day on which
notice is  given,  or, if notice  is  waived,  at the close of  business  on the
business day next preceding the day on which the meeting is held; (2) the record
date for  determining  stockholders  entitled  to express  consent to  corporate
action  in  writing  without  a  meeting,  when no prior  action of the Board of
Directors is required by law,  shall be the first date on which a signed written
consent  setting  forth the action taken or proposed to be taken is delivered to
the  corporation in accordance  with  applicable law, or, if prior action by the
Board of Directors is required by law,  shall be at the close of business on the
day on which the Board of  Directors  adopts the  resolution  taking  such prior
action;  and (3) the  record  date for  determining  stockholders  for any other
purpose  shall be at the  close of  business  on the day on which  the  Board of
Directors adopts the resolution relating thereto.

          A determination  of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

          Section 1.9 List of Stockholders Entitled to Vote. The Secretary shall
prepare  and make,  at least 10 days before  every  meeting of  stockholders,  a
complete list of the stockholders  entitled to vote at the meeting,  arranged in
alphabetical  order,  and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the  examination  of any  stockholder,  for any purpose  germane to the meeting,
during ordinary  business  hours,  for a period of at least 10 days prior to the
meeting,  either at a place  within  the city  where the  meeting is to be held,
which  place  shall be  specified  in the  notice of the  meeting,  or if not so
specified,  at the place where the meeting is to be held. The list shall also be
produced  and kept at the time and place of the  meeting  during  the whole time
thereof and may be inspected by any stockholder who is present.

          Upon the  willful  neglect  or refusal  of the Board of  Directors  to
produce such a list at any meeting for the election of directors,  they shall be
ineligible for election to any office at such meeting.

          The  stock  ledger  shall  be the  only  evidence  as to who  are  the
stockholders  entitled to examine the stock ledger,  the list of stockholders or
the books of the corporation, or to vote in person or by proxy at any meeting of
stockholders.

          Section 1.10.  Action By Consent of Stockholders.  Any action required
or  permitted to be taken at any annual or special  meeting of the  stockholders
may be taken  without a meeting,  without  prior notice and without a vote, if a
consent or  consents  in writing,  setting  forth the

                                     D-2-3

<PAGE>

action so taken,  shall be signed by the holders of outstanding stock having not
less than the minimum  number of votes that would be  necessary  to authorize or
take such action at a meeting at which all shares  entitled to vote thereon were
present and voted and shall be delivered  by hand or by certified or  registered
mail, return receipt requested) to the corporation by delivery to its registered
office in the State of Delaware,  its principal place of business, or an officer
or agent of the corporation  having custody of the book in which  proceedings of
meetings of stockholders are recorded.

          Prompt notice of the taking of the corporate  action without a meeting
by less than unanimous written consent shall be given to those  stockholders who
have not consented in writing.

          Section  1.11.  Conduct of  Meetings.  The Board of  Directors  of the
corporation  may adopt by resolution  such rules and regulations for the conduct
of the  meeting  of  stockholders  as it shall deem  appropriate.  Except to the
extent  inconsistent  with such rules and regulations as adopted by the Board of
Directors,  the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the  judgment  of such  chairman,  are  appropriate  for the  proper
conduct of the meeting. Such rules,  regulations or procedures,  whether adopted
by the Board of Directors  or  prescribed  by the  chairman of the meeting,  may
include,  without limitation,  the following: (1) the establishment of an agenda
or order of business for the meeting;  (2) rules and procedures for  maintaining
order at the  meeting  and the  safety  of those  present;  (3)  limitations  on
attendance at or  participation  in the meeting to stockholders of record of the
corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (4) restrictions on entry to the
meeting after the time fixed for the commencement  thereof;  and (5) limitations
on the time allotted to questions or comments by participants. Unless and to the
extent  determined  by the Board of  Directors  or the  chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.

                                   ARTICLE II
                                   ----------

                               Board of Directors
                               ------------------

          Section 2.1.  Number;  Qualifications.  The Board of  Directors  shall
consist of nine members.

          Section 2.2. Election; Resignation; Removal; Vacancies. At each annual
meeting of  stockholders,  the  stockholders  shall elect directors each of whom
shall  hold  office  for a term of one year or  until  his or her  successor  is
elected and  qualified.  Any director may resign at any time upon written notice
to the corporation.

          Any vacancy  occurring in the Board of Directors  for any cause may be
filled by the vote of seven members of the Board of Directors, or by the vote of
the  stockholders,  and each  director so elected  shall hold  office  until the
expiration  of the term of office of the director whom he or she has replaced or
until his or her successor is elected and qualified.

          Section  2.3.  Regular  Meetings.  Regular  meetings  of the  Board of
Directors  shall be held at least quarterly at such places within or without the
State of Delaware and at such times as the

                                     D-2-4
<PAGE>

Board of Directors may from time to time determine, and if so determined notices
thereof need not be given.

          Section  2.4.  Special  Meetings.  Special  meetings  of the  Board of
Directors  may be held at any time or  place  within  or  without  the  State of
Delaware  whenever  called by the  Chairman of the Board,  Vice  Chairman of the
Board,  if any,  or any three  members  of the Board of  Directors.  Notice of a
special  meeting  of the  Board of  Directors  shall be given by the  person  or
persons  calling  the  meeting at least  forty-eight  hours  before the  special
meeting.

          Section 2.5. Telephonic  Meetings  Permitted.  Members of the Board of
Directors,  or  any  committee  designated  by  the  Board  of  Directors,   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 and be heard by each  other,  and  participation  in a meeting
pursuant to this bylaw shall constitute presence in person at such meeting.

          Section 2.6. Quorum;  Vote Required for Action. At all meetings of the
Board of Directors five members of the whole Board of Directors shall constitute
a quorum for the transaction of business.  The vote of five directors present at
a  meeting  at  which a  quorum  is  present  shall  be the act of the  Board of
Directors  except that the following  actions shall require the affirmative vote
of seven directors at a meeting at which at least seven directors are present:

               (a) The  merger,  reorganization,  consolidation,  sale or  other
disposition of substantially all the assets, recapitalization, reorganization of
the corporation, or similar transaction or series of transactions.

               (b) The amendment of the certificate of  incorporation  or bylaws
of the corporation.

               (c)  The  election  of  officers  of  the   corporation  and  the
assignment  of authority and duties to any officer who is required to act solely
in  accordance  with the  authority and duties to any officer who is required to
act solely in accordance with the authority and duties, if any, assigned to such
officer from time to time by the Board of Directors.

               (d) The approval,  or  modification  by more than $25,000,  of an
annual budget ("Budget").

               (e)  The  incurrence  or  assumption  by the  corporation  of any
liability  for  money  borrowed  or  the  guarantee  by the  corporation  of any
obligation,  of any person,  firm or corporation,  in each case in excess of the
greater of $25,000 or an amount in the current Budget.

               (f) The  establishment  and  maintenance of bank accounts and the
designation of authorized  signatories on such accounts in the event the Finance
Committee of the Board is unwilling or unable to act with respect thereto.

               (g) Any loan made by the corporation.

               (h) The issuance or  repurchase of any shares of any class of the
corporation.

                                     D-2-5
<PAGE>

               (i)  The  establishment,   modification  or  termination  or  any
employee stock grant or option agreement or plan or any other benefit,  pension,
profit sharing, fringe benefit or similar plan.

               (j) The declaration of any dividend in any form.

               (k) The approval of any employment  arrangement with any employee
providing for compensation,  including fringe benefits, in excess of $50,000 per
annum;   provided,   however,  such  approval  shall  not  be  required  if  the
compensation level and the position the employee is being hired to fill has been
included in a Budget approved pursuant to Section 2.6(d).

               (l) The  institution,  or consenting to the  institution,  of any
bankruptcy,  insolvency,   reorganization,   readjustment  of  debt  or  similar
proceeding  relating to the corporation  under the law of any  jurisdiction;  an
assignment for the benefit of creditors; or application for or consenting to the
appointment  for of any receiver,  trustee or similar  officer for any or all of
the property of the corporation.

               (m)  Any  material  change  in  the  principal  business  of  the
corporation or the  establishment  of a new line of business or class of product
or service.

               (n) The entering into of any  transaction  with a stockholder  of
the corporation or any of a stockholder's affiliates.

               (o) The  designation  or change of any  committee of the Board of
Directors.

               (p) The  engagement or discharge of legal counsel or  independent
auditors.

               (q) The dissolution and liquidation of the corporation.

               (r) As required by Section  12(a) of the Stock  Subscription  and
Stockholders' Agreement dated November , 1999, as amended.

               (s) Any Board determination or selection (including the selection
of an independent appraiser) required pursuant to the terms of the corporation's
Series A Preferred Stock.

               (t)  The  discharge  of  any  officer  of the  corporation  whose
employment was approved pursuant to Section 2.6(k).

          Section 2.7. Organization. Meetings of the Board of Directors shall be
presided  over by the  Chairman  of the Board,  or, in his or her absence by the
Vice Chairman of the Board,  if any, or in their absence by a chairman chosen at
the  meeting.  The  Secretary  shall act as secretary of the meeting but, in his
absence,  the chairman of the meeting may appoint any person to act as secretary
of the meeting.

          Section 2.8. Informal Action by Directors. Unless otherwise restricted
by the  certificate of  incorporation  or these bylaws,  any action  required or
permitted  to be taken at any  meeting  of

                                     D-2-6
<PAGE>

the Board of  Directors,  or of any  committee  thereof,  may be taken without a
meeting if all members of the Board of Directors or such committee,  as the case
may be, consent  thereto in writing,  and the writing or writings are filed with
the minutes of proceedings of the Board of Directors or such committee.

                                   ARTICLE III
                                   -----------

                                   Committees
                                   ----------

          Section 3.1.  Committees.  The Board of Directors may designate one or
more  committees,  each  committee to consist of one or more of the directors of
the  corporation.  The Board of Directors may designate one or more directors as
alternate  members of any committee,  who may replace any absent or disqualified
member at any meeting of the committee.  In the absence or disqualification of a
member of the committee,  the member or members  thereof  present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may  unanimously  appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.

          Any such committee,  to the extent  permitted by law and to the extent
provided by resolution  of the Board of  Directors,  shall have and may exercise
all the powers and authority of the Board of Directors in the  management of the
business  and  affairs of the  corporation,  and may  authorize  the seal of the
corporation to be affixed to all papers which may require it.

          Section 3.2. Committee Rules.  Unless the Board of Directors otherwise
provides,  each committee  designated by the Board of Directors may make,  alter
and repeal rules for the conduct of its  business.  In the absence of such rules
each  committee  shall  conduct its  business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these bylaws.

                                   ARTICLE IV
                                   ----------

                                    Officers
                                    --------

          Section   4.1.   Executive   Officers;   Election;   Term  of  Office;
Resignation;  Removal;  Vacancies. The Board of Directors shall elect a Chairman
of the  Board  from  among  its  members,  a Chief  Executive  Officer,  a Chief
Operating Officer, a Chief Financial Officer and a Secretary,  and it may, if it
so  determines,  choose a Vice Chairman of the Board from among its members.  In
addition to presiding at meetings of the  stockholders or the Board of Directors
in the absence of the Chairman of the Board,  the  authority  and duties of Vice
Chairman of the Board shall be limited to the specific  authority and duties, if
any, assigned to him or her by the Board of Directors from time to time pursuant
to Section 2.6 (c) of these  bylaws.  The Board of  Directors  may also choose a
President,  one or more Vice Presidents,  one or more Assistant  Secretaries,  a
Treasurer  and one or more  Assistant  Treasurers.  Any number of offices may be
held by the same person.

          Each such  officer  shall hold office  until the first  meeting of the
Board of Directors after the annual meeting of stockholders  next succeeding his
election,  and until his successor is elected and qualified or until his earlier
resignation or removal.

                                     D-2-7

<PAGE>

          Any  officer  may  resign  at any  time  upon  written  notice  to the
corporation.

          The Board of Directors may remove any officer with or without cause at
any time, but such removal shall be without prejudice to the contractual  rights
of such officer, if any, with the corporation.

          Any  vacancy  occurring  in any  office of the  corporation  by death,
resignation, removal or otherwise may be filled for the unexpired portion of the
term by the Board of Directors at any regular or special meeting of the Board of
Directors.

          Section 4.2. Powers and Duties of Executive Officers.  The officers of
the  corporation  shall have such  powers and  duties in the  management  of the
corporation  as may be  prescribed  in a resolution by the Board of Directors or
any employment  agreements approved by resolution of the Board of Directors and,
to the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board of  Directors.  The Board of  Directors  may
require  any  officer,  agent or  employee  to give  security  for the  faithful
performance of his or her duties.

                                    ARTICLE V
                                    ---------

                                      Stock
                                      -----

          Section 5.1. Certificates.  Every holder of stock shall be entitled to
have a certificate  signed by or in the name of the  corporation by the Chairman
of the Board or Vice  Chairman  of the  Board,  if any,  or the Chief  Executive
Officer,  or  the  Chief  Operating  Officer,  or a Vice  President,  and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
of the corporation  certifying the number of shares owned by such stockholder in
the  corporation.  Any of or all  the  signatures  on the  certificate  may be a
facsimile.  In case any officer,  transfer  agent or registrar who has signed or
whose facsimile  signature has been placed upon a certificate  shall have ceased
to be such officer,  transfer  agent,  or registrar  before such  certificate is
issued,  it may be issued by the corporation  with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.

          Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New  Certificates.  The  corporation may issue a new certificate of stock in the
place of any  certificate  theretofore  issued by it, alleged to have been lost,
stolen or  destroyed,  and the  corporation  may  require the owner of the lost,
stolen or destroyed certificate,  or such owner's legal representative,  to give
the  corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.

                                     D-2-7

                                   ARTICLE VI
                                   ----------

                                  Miscellaneous
                                  -------------

          Section 6.1. Fiscal Year. The fiscal year of the corporation  shall be
determined by resolution of the Board of Directors.

                                     D-2-8

<PAGE>

          Section  6.2.  Seal.  The  corporate  seal  shall have the name of the
corporation  inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.

          Section 6.3. Waiver of Notice of Meetings of  Stockholders,  Directors
and Committees.  Any written waiver of notice,  signed by the person entitled to
notice,  whether  before  or after  the time  stated  therein,  shall be  deemed
equivalent to notice.  Attendance  of a person at a meeting  shall  constitute a
waiver of notice of such meeting,  except when the person  attends a meeting for
the express  purpose of  objecting,  at the  beginning  of the  meeting,  to the
transaction  of any  business  because  the  meeting is not  lawfully  called or
convened.  Neither  the  business to be  transacted  at, nor the purpose of, any
regular  or  special  meeting of the  stockholders,  directors,  or members of a
committee of directors need be specified in any written waiver of notice.

          Section 6.4. Interested Directors;  Quorum. No contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation,  partnership,  association,  or other
organization  in which one or more of its directors or officers are directors or
officers,  or have a financial  interest,  shall be void or voidable  solely for
this  reason,  or solely  because  the  director  or  officer  is  present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose,  if: (1) the material facts as to his  relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee,  and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative  votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a  quorum;  or (2) the  material  facts as to his  relationship  or
interest and as to the contract or transaction are disclosed or are known to the
stockholders  entitled  to vote  thereon,  and the  contract or  transaction  is
specifically  approved  in good  faith by vote of the  stockholders;  or (3) the
contract  or  transaction  is fair as to the  corporation  as of the  time it is
authorized,  approved  or  ratified,  by the  Board of  Directors,  a  committee
thereof, or the stockholders.  Common or interested  directors may be counted in
determining  the  presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.

          Section  6.5.  Form  of  Records.   Any  records   maintained  by  the
corporation in the regular  course of its business,  including its stock ledger,
books of account,  and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape,  photographs,  microphotographs,  or any other information
storage device,  provided that the records so kept can be converted into clearly
legible form within a reasonable time.

          Section  6.6.  Amendment  of  Bylaws.  These  bylaws may be altered or
repealed, and new bylaws made, by the Board of Directors,  but, the stockholders
may make  additional  bylaws and may alter and repeal any bylaws whether adopted
by them or otherwise.

                                     D-2-9Execution Copy

                              CLECO EVANGELINE LLC

                                       to

                          BANK ONE TRUST COMPANY, N.A.

                                   as Trustee

                          -----------------------------
                                 TRUST INDENTURE

                          Dated as of December 10, 1999

                          -----------------------------

                $218,600,000 8.82% Senior Secured Bonds due 2019

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             PAGE

<S>                                                                                           <C>
ARTICLE I DEFINITIONS; INDENTURE TO CONSTITUTE CONTRACT........................................1

   SECTION 1.1    Definition; Construction.....................................................1
   SECTION 1.2    Equal and Ratable Benefit....................................................2
   SECTION 1.3    Compliance Certificates and Opinions.........................................2
   SECTION 1.4    Form of Documents Delivered to Trustee.......................................3

ARTICLE II THE BONDS...........................................................................4

   SECTION 2.1    Authorization, Amount, Terms, and Issuance of Bonds..........................4
   SECTION 2.2    Authorization and Terms of the Bonds; Payments on the Bonds..................4
   SECTION 2.3    Additional Bonds.............................................................5
   SECTION 2.4    Registered Holders Deemed Holders............................................7
   SECTION 2.5    Register; Registration of Bonds; Transfer and Exchange.......................8
   SECTION 2.6    Execution....................................................................8
   SECTION 2.7    Authentication...............................................................9
   SECTION 2.8    Mutilated, Destroyed, Lost or Stolen Bonds...................................9
   SECTION 2.9    Cancellation and Destruction of Surrendered Bonds...........................10

ARTICLE III REDEMPTION OF BONDS...............................................................10

   SECTION 3.1    Optional Redemption.........................................................10
   SECTION 3.2    Election or Requirement to Redeem; Notice to Trustee........................10
   SECTION 3.3    Mandatory Redemption; Selection of Bonds to Be Redeemed.....................11
   SECTION 3.4    Notice of Redemption........................................................14
   SECTION 3.5    Bonds Payable on Redemption Date............................................15
   SECTION 3.6    Bonds Redeemed in Part......................................................15

ARTICLE IV REPRESENTATIONS AND WARRANTIES.....................................................15

   SECTION 4.1    Organization, Power and Status of the Company...............................15
   SECTION 4.2    Authorization; Enforceability; Execution and Delivery.......................15
   SECTION 4.3    No Conflicts; Laws and Contracts; No Default; Representations and
                  Warranties..................................................................16
   SECTION 4.4    Governmental Approvals......................................................16
   SECTION 4.5    Litigation..................................................................17
   SECTION 4.6    Utility Regulation..........................................................17
   SECTION 4.7    Environmental Matters.......................................................17
   SECTION 4.8    Employee Benefit Plans......................................................17
   SECTION 4.9    Business of the Company.....................................................17
   SECTION 4.10   Investment Company Act......................................................18
   SECTION 4.11   Zoning......................................................................18
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                                             Page
<S>                                                                                          <C>
ARTICLE V COVENANTS...........................................................................18

   SECTION 5.1    Payment of Principal of and Interest on Bonds...............................18
   SECTION 5.2    Reporting Requirements......................................................18
   SECTION 5.3    Limited Liability Company Existence.........................................20
   SECTION 5.4    Compliance with Laws........................................................20
   SECTION 5.5    Governmental Approvals; EWG Status..........................................20
   SECTION 5.6    Insurance...................................................................20
   SECTION 5.7    Payment of Taxes and Claims.................................................20
   SECTION 5.8    Books and Records...........................................................21
   SECTION 5.9    Right of Inspection.........................................................21
   SECTION 5.10   Maintenance of Property and Security........................................21
   SECTION 5.11   Performance of Transaction Documents; Construction of the Project...........22
   SECTION 5.12   Rule 144A Information.......................................................22
   SECTION 5.13   Project Revenues............................................................22
   SECTION 5.14   Independent Engineer........................................................22
   SECTION 5.15   Annual Operating Budget.....................................................22
   SECTION 5.16   Use of Proceeds.............................................................23
   SECTION 5.17   Independent Auditor.........................................................23
   SECTION 5.18   Debt  23
   SECTION 5.19   Permitted Liens.............................................................25
   SECTION 5.20   Business Activities.........................................................26
   SECTION 5.21   Fundamental Changes, etc....................................................26
   SECTION 5.22   Affiliate Transactions......................................................26
   SECTION 5.23   Restricted Payments.........................................................26
   SECTION 5.24   Investments.................................................................26
   SECTION 5.25   Investment Company Act......................................................27
   SECTION 5.26   Formation Documents.........................................................27
   SECTION 5.27   Guaranty Obligations........................................................27
   SECTION 5.28   Amendments to Project Documents.............................................27
   SECTION 5.29   Additional Project Documents................................................28
   SECTION 5.30   Change Orders...............................................................28
   SECTION 5.31   Alterations and Additions...................................................28

ARTICLE VI EVENTS OF DEFAULT AND REMEDIES.....................................................29

   SECTION 6.1    Events of Default Defined...................................................29
   SECTION 6.2    Enforcement of Remedies.....................................................32
   SECTION 6.3    Judicial Proceedings Instituted by Trustee..................................33
   SECTION 6.4    Holders May Demand Enforcement of Rights by Trustee.........................35
   SECTION 6.5    Control by Holders..........................................................35
   SECTION 6.6    Waiver of Past Defaults or Events of Default................................35
   SECTION 6.7    Holder May Not Bring Suit Except Under Certain Conditions...................36
   SECTION 6.8    Undertaking to Pay Court Costs..............................................36
   SECTION 6.9    Right of Holders to Receive Payment Not to Be Impaired......................37
   SECTION 6.10   Application of Moneys Collected by Trustee..................................37
   SECTION 6.11   Bonds Held by Certain Persons Not to Share in Distribution..................38
</TABLE>

                                       ii

<PAGE>
<TABLE>
<CAPTION>
                                                                                             Page

<S>        <C>                                                                               <C>
   SECTION 6.12   Waiver of Appraisement, Valuation, Stay, Right to Marshalling...............38
   SECTION 6.13   Remedies Cumulative; Delay or Omission Not a Waiver.........................39
   SECTION 6.14   The Intercreditor Agreement.................................................39
   SECTION 6.15   The Depositary Agreement....................................................39

ARTICLE VII ACTS OF HOLDERS...................................................................40

   SECTION 7.1    Acts of Holders.............................................................40
   SECTION 7.2    Proof of Execution of Instruments and of Holding of Bonds...................40
   SECTION 7.3    Bonds Owned by the Company or Affiliate Deemed Not Outstanding..............40
   SECTION 7.4    Right of Revocation of Action Taken.........................................41

ARTICLE VIII AMENDMENTS AND SUPPLEMENTS.......................................................41

   SECTION 8.1    Amendments and Supplements to Indenture without Consent of Holders..........41
   SECTION 8.2    Amendments and Supplements to Indenture with Consent of Holders.............42
   SECTION 8.3    Trustee Authorized to Join in Amendments and Supplements; Reliance on
                  Counse......................................................................42
   SECTION 8.4    Effect of Supplemental Indentures...........................................43
   SECTION 8.5    Reference in Bonds to Supplemental Indentures...............................43

ARTICLE IX SATISFACTION AND DISCHARGE.........................................................43

   SECTION 9.1    Satisfaction and Discharge of Indenture.....................................43

ARTICLE X THE TRUSTEE.........................................................................44

   SECTION 10.1   Certain Duties and Responsibilities of Trustee..............................44
   SECTION 10.2   Notice of Defaults..........................................................45
   SECTION 10.3   Certain Rights of Trustee...................................................45
   SECTION 10.4   Not Responsible for Recitals or Issuance of Bonds...........................46
   SECTION 10.5   May Hold Bonds..............................................................46
   SECTION 10.6   Money Held in Trust.........................................................47
   SECTION 10.7   Compensation; Reimbursement; Indemnification................................47
   SECTION 10.8   Eligibility.................................................................47
   SECTION 10.9   Resignation and Removal; Appointment of Successor...........................47
   SECTION 10.10  Acceptance of Appointment by Successor......................................48
   SECTION 10.11  Merger, Conversion, Consolidation or Succession to Business.................49
   SECTION 10.12  Maintenance of Offices and Agencies.........................................49

ARTICLE XI MISCELLANEOUS PROVISIONS...........................................................51

   SECTION 11.1      Return of Monies Held by Trustee.........................................51
   SECTION 11.2      Third Party Beneficiaries; No Rights Conferred on Others.................52
   SECTION 11.3      Illegal Provisions Disregarded...........................................52
   SECTION 11.4      Substitute Notice........................................................52
   SECTION 11.5      Notice to the Rating Agency..............................................52
   SECTION 11.6      Notices..................................................................52
</TABLE>

                                      iii

<PAGE>

<TABLE>
<CAPTION>
                                                                                         Page
<S>                                                                                        <C>
   SECTION 11.7   Successors and Assigns...................................................53
   SECTION 11.8   Headings for Convenience Only............................................54
   SECTION 11.9   Counterparts.............................................................54
   SECTION 11.10  APPLICABLE LAW...........................................................54
   SECTION 11.11  Holidays.................................................................55
   SECTION 11.12  Limitation of Liability..................................................55
   SECTION 11.13  Trustee Actions as Secured Party Under Intercreditor Agreement...........55
</TABLE>

SCHEDULE I     -  Principal Amortization
SCHEDULE II    -  Major Maintenance Reserve Required Balance
EXHIBIT A      -  Definitions
EXHIBIT B      -  Form of Initial Bond
EXHIBIT C      -  Subordination Provisions
EXHIBIT D      -  Insurance Requirements

                                       iv

<PAGE>

                                 TRUST INDENTURE

                  THIS TRUST  INDENTURE,  dated as of  December  10,  1999 (this
"Indenture"),  by and between CLECO EVANGELINE LLC, a limited  liability company
organized under the laws of the State of Louisiana (the "Company"), and BANK ONE
TRUST  COMPANY,   N.A.,  a  national  banking  association  (together  with  its
successors in such capacity, the "Trustee").

                                                 W I T N E S S E T H:
                                                 - - - - - - - - - -

                  WHEREAS,  the  Company  has been  formed for the  purposes  of
acquiring,  improving  and operating  the Project  (these and other  capitalized
terms used and not otherwise  defined herein shall have the meanings assigned to
them in Exhibit A); and

                  WHEREAS,  in  furtherance  of such  purposes,  the Company has
determined  to issue its 8.82% Senior  Secured  Bonds due 2019 in the  aggregate
principal amount of $218,600,000 (collectively, with any bonds from time to time
issued hereunder in substitution therefor, the "Initial Bonds"); and

                  WHEREAS,  pursuant  to this  Indenture,  the  proceeds  of the
Initial Bonds will be used by the Company to pay the costs  associated  with the
development,  construction  and  start-up  of the  Project,  including,  without
limitation, interest during construction and pre-Completion O&M Costs; and

                  WHEREAS,  the  execution and delivery of the Initial Bonds and
of this Indenture have been duly authorized and all things necessary to make the
Initial Bonds,  when executed by the Company and  authenticated  by the Trustee,
valid and binding legal  obligations of the Company and to make this Indenture a
valid and binding legal  obligation of the Company and to make this  Indenture a
valid and binding agreement have been done.

                  NOW,  THEREFORE,  for and in consideration of the premises and
of the  covenants  herein  contained and of the purchase of the Initial Bonds by
the Holders thereof,  it is mutually  covenanted and agreed,  for the benefit of
the parties hereto and the equal and proportionate benefit of all Holders of the
Initial Bonds and any Additional Bonds hereafter issued hereunder, as follows:

                                   ARTICLE I

                  DEFINITIONS; INDENTURE TO CONSTITUTE CONTRACT

SECTION 1.1 Definition; Construction. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:

                  (a)  capitalized  terms used and not otherwise  defined herein
shall have the meanings assigned to them in Exhibit A, which Exhibit A is hereby
incorporated  by reference  herein,  and shall include the plural as well as the
singular;

<PAGE>

                  (b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;

                  (c) all references in this Indenture to designated "Articles,"
"Sections,"  "Exhibits" and other  subdivisions are to the designated  Articles,
Sections, Exhibits and other subdivisions of this Indenture;

                  (d) the words  "herein,"  "hereof" and  "hereunder"  and other
words of  similar  import  refer  to this  Indenture  as a whole  and not to any
particular Article, Section or other subdivision;

                  (e)  unless  otherwise  expressly  specified,  any  agreement,
contract or document  defined or referred to herein  shall mean such  agreement,
contract  or  document  as in  effect  as of the  date  hereof,  as the same may
thereafter be amended, restated, supplemented or otherwise modified from time to
time in accordance  with the terms  thereof and of this  Indenture and the other
Financing  Documents  and  including  any  agreement,  contract  or  document in
substitution or replacement of any of the foregoing in accordance with the terms
of this Indenture and the other Financing Documents;

                  (f)  unless  the  context  clearly  intends  to the  contrary,
pronouns  having a masculine  or feminine  gender shall be deemed to include the
other; and

                  (g) any reference to any Person shall  include its  successors
and  assigns,  and in  the  case  of  any  Governmental  Authority,  any  Person
succeeding to its functions and capacities.

                  SECTION  1.2  Equal  and  Ratable  Benefit.   The  provisions,
covenants and each of the  agreements  herein set forth to be performed by or on
behalf of the Company shall be for the equal benefit, protection and security of
the  Holders of any and all of the Bonds.  All of the Bonds,  regardless  of the
time or times of their  issuance  or  maturity,  shall be of equal rank  without
preference,  priority or  distinction of any of the Bonds over any other thereof
except as expressly provided in or pursuant to this Indenture.

                  SECTION 1.3 Compliance  Certificates  and Opinions.  Except as
otherwise expressly provided by this Indenture,  upon any application or request
by the  Company  to the  Trustee  that the  Trustee  take any  action  under any
provision of this  Indenture,  the Company  shall  furnish to the Trustee (i) an
Officer's  Certificate stating that all conditions  precedent,  if any, provided
for in this  Indenture  relating to the proposed  action have been complied with
and (ii) an Opinion of Counsel  stating  that in the opinion of such counsel all
such conditions  precedent,  if any, have been complied with, except that in the
case of any  particular  application  or request as to which the  furnishing  of
documents is specifically  required by any provision of this Indenture  relating
to such particular  application or request, no additional certificate or opinion
need be furnished unless otherwise required hereby.

                  Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                  (a) a statement that each individual  signing such certificate
or opinion has read such covenant or condition;

                                       2

<PAGE>

                  (b) a  brief  statement  as to the  nature  and  scope  of the
examination or investigation  upon which the statements or opinions contained in
such certificate or opinion are based;

                  (c) a statement that, in the opinion of each such  individual,
such examination or  investigation  has been made as is necessary to enable such
individual to express an informed  opinion as to whether or not such covenant or
condition has been complied with;

                  (d) a  statement  as to  whether,  in the opinion of each such
individual, such condition or covenant has been complied with;

                  (e) in the case of an Officer's  Certificate of the Company, a
statement  that no Default or Event of Default under this Indenture has occurred
and is continuing  (unless such  Officer's  Certificate  relates to a Default or
Event of Default); and

                  (f) a statement that, in the opinion of each such  individual,
such opinion or certificate complies with the provisions of this Section 1.3 and
that the Trustee may rely on such certificate.

                  SECTION 1.4 Form of  Documents  Delivered  to Trustee.  In any
case where  several  matters are required to be  certified  by, or covered by an
opinion of, any specified  Person,  it is not necessary that all such matters be
certified  by, or covered by the opinion of, only one such Person,  or that they
be so certified by only one document, but one such Person may certify or give an
opinion  with  respect to some  matters and one or more other such Persons as to
other  matters,  and any such  Person may  certify or give an opinion as to such
matters in one or several documents.

                  Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or  representations  by, counsel (which shall be  additionally  addressed to the
Trustee and the Holders of the Bonds),  unless such officer  knows or has reason
to believe that the  certificate or opinion or  representations  with respect to
the  matters  upon  which  such  Officer's  Certificate  or opinion is based are
erroneous.  Any such certificate or Opinion of Counsel may be based,  insofar as
it relates to factual matters,  upon a certificate of or  representations  by an
Authorized  Representative  of the Company  stating  that the  information  with
respect to such factual matters is in the possession of the Company, unless such
counsel  knows that the  certificate  or  representations  with  respect to such
matters are erroneous.

                  Any  Opinion of Counsel  stated to be based on the  opinion of
other counsel shall be  accompanied by a copy of such other opinion (which shall
be additionally addressed to the Trustee and the Holders of the Bonds).

                  Where any Person is required  to make,  give or execute two or
more applications,  requests, consents,  certificates,  statements,  opinions or
other instruments under this Indenture,  they may, but need not, be consolidated
and form one instrument.

                                       3

<PAGE>

                                   ARTICLE II

                                    THE BONDS

                  SECTION 2.1  Authorization,  Amount,  Terms,  and  Issuance of
Bonds(a) . (a) Bonds may be issued  hereunder from time to time. No Bonds may be
issued  under this  Indenture  except in  accordance  with this  Article II. The
maximum  principal amount of Bonds which may be issued hereunder is not limited.
The Bonds shall be designated  "Cleco  Evangeline LLC Senior Secured Bonds" or a
substantially   similar   designation.   The  Bonds  may  bear  such  notations,
endorsements  or  legends as may be  required  to conform to usage or Law and as
incorporated or used or directed to be incorporated or used by the Company.  The
Initial Bonds shall be in the form of Initial Bond set forth in Exhibit B.

                  (b) "Private  Placement" numbers issued by S&P's CUSIP Service
Bureau may be printed on the Bonds.  Neither the  Company nor the Trustee  shall
have any  responsibility  for any defect in the  Private  Placement  number that
appears on any Bond, check, advice of payment or redemption notice, and any such
document may contain a statement to the effect that  Private  Placement  numbers
have been assigned by an  independent  service for  convenience of reference and
that neither the Company nor the Trustee  shall be liable for any  inaccuracy in
such numbers.

                  SECTION 2.2 Authorization and Terms of the Bonds;  Payments on
the  Bonds(a) . (a) The  Initial  Bonds to be issued  under this  Indenture  are
hereby created.  The Company may issue the Initial Bonds, in the form of Exhibit
B, upon the execution of this Indenture, and the Trustee shall, at the Company's
written request, authenticate the Initial Bonds and deliver them as specified in
the request.

                  (b) The Initial  Bonds shall be dated as of the Closing  Date,
shall be issued in the aggregate principal amount of $218,600,000 and shall have
a final  maturity  date of  September  1, 2019 and bear  interest at the rate of
8.82% per annum.  Initial Bonds  subsequently  issued pursuant to Section 2.5(b)
hereof shall be dated as of the date of authentication thereof.

                  (c) The principal  of,  premium (if any) and interest on, each
Initial  Bond shall be payable in any coin or currency  of the United  States of
America which, at the respective dates of payment  thereof,  is legal tender for
the payment of public and private debts.  Subject to Section 2.2(f),  payment of
principal  of,  premium (if any) and interest on the Initial Bonds shall be made
on the Scheduled  Payment Date to the registered  owner thereof at the Corporate
Trust  Office  against  presentation  of the Initial  Bonds for  notation of the
payment or  prepayment  made thereon or, in the case of a payment or  prepayment
which  will  discharge  all  Debt  of the  Company  evidenced  thereby,  against
surrender thereof.

                  (d) Interest on the Initial  Bonds shall be paid  semiannually
in  arrears  on each  Scheduled  Payment  Date  commencing  March  1,  2000  and
concluding on the Final  Maturity  Date.  Interest on the Initial Bonds shall be
computed  upon the basis of a 360-day  year,  consisting  of twelve  (12) thirty
(30)-day months.  The Initial Bonds shall bear interest on any overdue principal
and, to the extent enforceable under applicable law, on any overdue interest and
premium (if any) at the Default Rate.

                                       4

<PAGE>

                  (e) On each Scheduled Payment Date,  commencing March 1, 2001,
principal on the Initial Bonds shall be paid in the respective principal amounts
set forth in Schedule I annexed to each Initial Bond,  which amounts shall be in
the same proportion, respectively, to the amounts set forth in Schedule I hereto
as the original  principal  amount of such  Initial Bond bears to  $218,600,000,
provided  that the final such payment shall in any event be sufficient to pay in
full the accrued  interest on, premium,  if any, and unpaid  principal amount of
such Initial Bond.

                  (f)  Notwithstanding  any  provision of this  Indenture or the
Initial  Bonds to the  contrary,  payments of all amounts  which  become due and
payable in respect of any  Initial  Bond shall be payable in U. S.  Dollars  and
shall be made by the  Trustee  directly  to the  Holder  of such  Initial  Bond,
without surrender or presentation of such Initial Bond to the Trustee,  if there
shall be filed with the Trustee a copy of an  agreement  between the Company and
such Holder (or the Person for whom such Holder is a nominee) providing that (1)
such  payments  will be so made and (2) such Holder  will not sell,  transfer or
otherwise dispose of such Initial Bond unless, if applicable,  the date to which
payments thereon have been paid shall be noted thereon or otherwise  provided to
the transferee thereof. The Trustee hereby acknowledges receipt of a copy of the
Bond Purchase  Agreement in  satisfaction  of the  foregoing  provisions of this
Section in respect of the Initial  Purchasers  party thereto.  The Trustee shall
have no  responsibility  regarding  notations  of  payment by any Holder who has
entered into such an agreement  and the Trustee  shall be  responsible  only for
maintaining  its records in accordance  with this Indenture and absent  manifest
error the  records  of the  Trustee  shall be  controlling  as to  payments  and
repayments in respect of the Initial Bonds.

                  (g)  The  Trustee  is  authorized  to set up  such  funds  and
accounts from time to time as may be necessary to receive and disburse  funds as
provided under this Indenture.

                  SECTION 2.3 Additional  Bonds(a) . (a)  Additional  Bonds may,
upon the satisfaction of the conditions set forth in this Section,  be issued in
the amounts and for the purposes  permitted  herein.  All Additional Bonds shall
rank pari passu with the Initial  Bonds,  shall be secured by the Collateral and
shall  bear such date or dates,  bear  such  interest  rate or rates,  have such
maturity dates,  redemption dates and redemption premiums,  be in such form, and
be issued at such prices as shall be approved in writing by the Company.

                  (b) Upon (i) the satisfaction of the applicable conditions set
forth in paragraph  (c) of this Section 2.3,  (ii) the execution and delivery of
(x) an appropriate  Supplemental  Indenture in compliance  with paragraph (c) of
this Section 2.3, and (y) appropriate supplements to the Financing Documents (if
any),  and  (iii)  receipt  by  the  Securities  Intermediary  of  an  Officer's
Certificate  confirming that the sum of cash and Permitted Investments in, plus,
if applicable,  the available  amount of any Acceptable  Credit Support provided
for, the Debt Service Reserve Account shall, after giving effect to the issuance
of such Additional Bonds, be equal to the Debt Service Reserve Required Balance,
the Company shall execute Additional Bonds and deliver them to the Trustee,  and
the Trustee  upon the written  request of the Company  shall  authenticate  such
Additional  Bonds and deliver them to the purchasers  thereof as may be directed
by the Company; provided, however, that notwithstanding anything to the contrary
contained  herein,  no Additional  Bonds may be issued hereunder (A) without the
prior  written  consent  of the  Company,  and (B) at any time when a Default or
Event of Default  shall have  occurred  and be  continuing  or if such  issuance
would,  upon notice or the passage of time, cause a

                                       5

<PAGE>

Default or Event of Default.  Upon the  issuance of any  Additional  Bonds,  the
Company  shall  promptly  provide the Trustee with a revised  Schedule I to this
Indenture that will provide for the payment of principal of and interest on such
Additional Bonds.

                  (c)  Additional  Bonds may be issued by the Company,  provided
that the following conditions are satisfied: --------

                          (i) such Additional Bonds shall  constitute  Permitted
                  Debt under clause (a) of the  definition  thereof as certified
                  at the time of  authentication of such Additional Bonds to the
                  Trustee by an Authorized  Officer of the Company (on which the
                  Trustee may conclusively rely);

                          (ii) no  Default or Event of  Default  shall  exist at
                  time of such  issuance  of the  Additional  Bonds,  before and
                  after  giving  effect  to  such  issuance,  and an  Authorized
                  Officer of the Company so certifies to the Trustee;

                          (iii) all of the net proceeds of such Additional Bonds
                  shall  be used by the  Company  to fund or  refinance  capital
                  improvements  described in subclause  (A),  (B), (C) or (D) of
                  clause (a) of Section  5.18,  in each case as certified at the
                  time of authentication of such Additional Bonds to the Trustee
                  by an Authorized Officer of the Company;

                          (iv) the  Trustee  shall have  received  an Opinion of
                  Counsel  reasonably  satisfactory  to the  Trustee  as to such
                  matters as the  Trustee  may request (on which the Trustee may
                  conclusively rely);

                          (v) there shall have been delivered to the Trustee the
                  certifications and other information, if any, required by this
                  Section 2.3(c) (on which the Trustee may  conclusively  rely);
                  and

                          (vi)  there  shall  be  established  in  one  or  more
                  Supplemental  Indentures,  prior to the issuance of Additional
                  Bonds of any series:

                      (A) the  title  of the  Additional  Bonds  of such  series
                  (which shall  distinguish the Additional  Bonds of such series
                  from all  other  Bonds)  and the  form or forms of  Additional
                  Bonds of such series;

                      (B) any limit upon the aggregate  principal  amount of the
                  Additional Bonds of such series that may be authenticated  and
                  delivered under this Indenture and the Supplemental  Indenture
                  (except for Additional Bonds  authenticated and delivered upon
                  registration  of transfer  of, or in exchange  for, or in lieu
                  of, other Additional Bonds of such series and except for Bonds
                  that are deemed never to have been authenticated and delivered
                  hereunder or under the Supplemental Indenture);

                      (C) the  date or  dates  on  which  the  principal  of the
                  Additional  Bonds of such  series is  payable,  the amounts of
                  principal payable on such date or dates; and the date or dates
                  on or as of which the Additional Bonds of such series shall be
                  dated;

                                       6

<PAGE>

                      (D) the rate or rates at  which  the  Additional  Bonds of
                  such series shall bear  interest,  or the method by which such
                  rate or rates  shall  be  determined,  the date or dates  from
                  which such interest shall accrue,  the interest  payment dates
                  on which  such  interest  shall be  payable,  and the basis of
                  computation of interest;

                      (E) the  place  or  places  where  (x) the  principal  of,
                  premium,  if any,  and  interest on  Additional  Bonds of such
                  series shall be payable,  (y) Additional  Bonds of such series
                  may be surrendered  for  registration  of transfer or exchange
                  and (z)  notices and demands to or upon the Company in respect
                  of the  Additional  Bonds of such series and this Indenture or
                  the Supplemental Indenture may be served;

                      (F) the price or prices at which,  the  period or  periods
                  within  which  and  the  terms  and   conditions   upon  which
                  Additional  Bonds of such series may be redeemed,  in whole or
                  in part, at the option of the Company;

                      (G) the  obligation,  if any,  of the  Company  to redeem,
                  purchase or repay  Additional Bonds of such series pursuant to
                  any sinking fund or analogous  provision or at the option of a
                  Holder thereof and the price or prices at which, the period or
                  periods within which and the terms and  conditions  upon which
                  Additional  Bonds of such series shall be redeemed,  purchased
                  or repaid, in whole or in part, pursuant to such obligations;

                      (H) the  denominations  in which  Additional Bonds of such
                  series shall be issuable;

                      (I)  the  restrictions  or  limitations,  if  any,  on the
                  transfer or exchange of the Additional Bonds of such series;

                      (J) any other terms of such series  (which terms shall not
                  contravene the provisions of this Indenture); and

                      (K) any trustees, authenticating or paying agents, warrant
                  agents,  transfer  agents or  registrars  with  respect to the
                  Additional Bonds of such series.

                  SECTION 2.4 Registered Holders Deemed Holders. The Company and
the  Trustee  may deem and treat  the  Person  in whose  name any Bond  shall be
registered  as provided in Section 2.5 as the absolute  owner and holder of such
Bond for the purpose of receiving payment of all amounts payable with respect to
such Bond and for all other purposes,  and the Company and the Trustee shall not
be affected by any notice to the contrary.

                  SECTION 2.5  Register;  Registration  of Bonds;  Transfer  and
Exchange(a)  . (a)  The  Company  shall  cause  to be  kept a  register  (herein
sometimes  referred to as the "Bonds  Register")  in which the  registration  of
Bonds  of each  series  and the  registration  of  transfers  and  exchanges  of
registered  Bonds  shall be  entered.  The Bonds  Register  shall be kept at the
Corporate  Trust  Office of the  Trustee,  and the  Trustee is hereby  appointed
"Registrar" for the
                                       7

<PAGE>

purpose of  registering  Bonds and  transfers  and  exchanges of Bonds as herein
provided. Upon surrender for transfer of any Bonds at the Corporate Trust Office
of the Trustee,  the Company shall execute,  and the Trustee shall  authenticate
and deliver,  in the name of the designated  transferee or  transferees,  one or
more new Bonds of the same series and in a like aggregate  principal  amount. At
the option of the Holder thereof,  Bonds may be exchanged for other Bonds of the
same series and in a like aggregate principal amount upon surrender of the Bonds
to be  exchanged  at  the  Corporate  Trust  Office.  Every  Bond  presented  or
surrendered for registration of transfer or exchange shall be duly endorsed,  or
be accompanied by a written  instrument of transfer in form  satisfactory to the
Company,  the Trustee and the Registrar or any transfer agent,  duly executed by
the  Holder  thereof or such  Holder's  attorney  duly  authorized  in  writing.
Whenever any Bonds are so  surrendered  for exchange the Company shall  execute,
and the  Trustee  shall  authenticate  and  deliver,  the Bonds which the Holder
making the  exchange is entitled to receive.  All Bonds issued upon any transfer
or exchange of any Bonds shall be the same valid obligation, and entitled to the
same security and benefits under this Indenture,  as the Bonds  surrendered upon
such transfer or exchange. The Trustee shall make a notation on each new Bond of
the amount of all payments of principal previously made on the old Bond or Bonds
with respect to which such new Bond is issued and the date to which  interest on
such old Bond or Bonds has been paid.

                  (b) All Bonds delivered in transfer or exchange shall be dated
pursuant  to Section  2.2(b)  hereof so that  neither  gain nor loss in interest
shall result from the transfer or exchange.  No service charge shall be made for
any  exchange or transfer,  but the Company or the Trustee,  as the case may be,
may require  payment of a sum sufficient to cover any tax or other  governmental
charge that may be imposed in relation thereto.

                  (c) Each Bond (and all Bonds  issued in  exchange  therefor or
substitution thereof), shall bear the legend in substantially the form set forth
in the form of Initial Bond attached hereto as Exhibit B.

                  (d) New Bonds delivered upon any transfer or exchange shall be
valid  obligations  of the  Company,  evidencing  the  same  debt  as the  Bonds
surrendered,  shall be secured by this Indenture and shall be entitled to all of
the  security  and  benefits  of the  Indenture  to the same extent as the Bonds
surrendered.

                  SECTION 2.6  Execution(a) . (a) The Bonds shall be executed by
the manual or  facsimile  signature  of the  Chairman  of the  Board,  the Chief
Executive Officer,  the President or any Senior Vice President or Vice President
of the Company.

                  (b) Bonds  executed  as  provided in clause (a) above shall be
issued and shall be authenticated  by the Trustee upon the written  direction of
the Company (upon which the Trustee may exclusively rely),  notwithstanding that
any officer  signing such Bonds or whose  facsimile  signature  appears  thereon
shall have ceased to hold office at the time of  issuance or  authentication  or
shall not have held office at the date of the Bond.

                  SECTION 2.7  Authentication.  No Bond shall be entitled to any
benefit under this  Indenture or be valid or obligatory  for any purpose until a
certificate of authentication in the form set forth on Exhibit B shall have been
duly executed by the Trustee. Such authentication

                                       8

<PAGE>

shall be  conclusive  proof  that  such  Bond has been  duly  authenticated  and
delivered  under this  Indenture and that the Holder  thereof is entitled to the
benefit of the trust hereby  created.  The Trustee shall, at the written request
of the  Company,  authenticate  the Bonds at the  initial  issuance  thereof and
deliver  them to the  purchasers  thereof  upon  payment  to the  Trustee of the
purchase price therefor.

                  ANY BONDS  SUBSEQUENTLY  ISSUED  UNDER THIS  INDENTURE  MAY BE
AUTHENTICATED  BY THE  TRUSTEE  OR ANY  AUTHENTICATING  AGENT  APPOINTED  BY THE
TRUSTEE, AND SUCH AUTHENTICATION  SHALL, FOR ALL PURPOSES OF THIS INDENTURE,  BE
DEEMED TO BE THE AUTHENTICATION OF AND DELIVERY BY THE TRUSTEE.

                  SECTION 2.8 Mutilated,  Destroyed,  Lost or Stolen  Bonds(a) .
(a) If any Bond shall become mutilated,  destroyed,  lost or stolen, the Company
shall,  subject to the satisfaction of applicable  conditions  contained in this
Section  2.8(a),  upon the written  request of the registered  Holder of a Bond,
execute,  and the Trustee shall authenticate and deliver, in replacement thereof
a new Bond of the same  series  and of like  tenor,  payable  in like  principal
amount  and  dated the same date as the Bond so  mutilated,  destroyed,  lost or
stolen.  If the Bond being replaced has been mutilated,  it shall be surrendered
at the Corporate  Trust Office.  If the Bond being replaced has been  destroyed,
lost or stolen,  the Holder of such Bond shall  furnish to the  Company  and the
Trustee such reasonable security or indemnity as may be required by them to save
the Company and the Trustee harmless, together with evidence satisfactory to the
Company and the Trustee and their respective agents of the destruction,  loss or
theft of such  Bond and the  ownership  and  authentication  thereof;  provided,
however,  that  if the  Holder  of  such  Bond  is an  Initial  Purchaser  or an
institutional  investor  with a net  worth of not less  than  $100,000,000,  the
written  undertaking  of such  Holder  delivered  to the Company and the Trustee
shall be sufficient  security and  indemnity  and the written  statement of such
Holder to such effect shall be satisfactory evidence of the destruction, loss or
theft  of such  Bond  and the  ownership  thereof.  The  cost of  providing  any
substitute  Bond  under the  provisions  of this  Section  shall be borne by the
Holder  for whose  benefit  such  substitute  Bond is  provided.  If,  after the
delivery of such new Bond, a bona fide purchaser of the original Bond in lieu of
which such new Bond was issued  presents for payment  such  original  Bond,  the
Company,  the  Registrar  and the Trustee  shall be entitled to recover such new
Bond for the Person to whom it was  delivered  or any Person  taking  therefrom,
except a bona fide purchaser,  and in any case shall be entitled to recover upon
the security or indemnity  provided therefor to the extent of any loss,  damage,
cost or  expense  incurred  by the  Company,  the  Registrar  or the  Trustee in
connection therewith.

                  (b) Every  substitute Bond issued pursuant to this Section 2.8
shall constitute an additional contractual obligation of the Company, whether or
not the Bond alleged to have been destroyed, lost or stolen shall be at any time
enforceable  by  anyone,  and  shall be  entitled  to all the  benefits  of this
Indenture equally and  proportionately  with any and all other Bonds duly issued
hereunder.

                  (c) All  Bonds  shall  be held  and  owned  upon  the  express
condition  that the foregoing  provisions  are, to the extent  permitted by Law,
exclusive with respect to the  replacement  or payment of mutilated,  destroyed,
lost or stolen Bonds, and shall preclude any and all other rights or remedies.

                                       9

<PAGE>

                  SECTION 2.9 Cancellation and Destruction of Surrendered Bonds.
Bonds  surrendered for payment,  or exchanged and surrendered to the Trustee for
cancellation by the Company, shall be cancelled and destroyed by the Trustee.

                                  ARTICLE III

                               REDEMPTION OF BONDS

                  SECTION 3.1 Optional Redemption.  At any time the Bonds or any
series of the Bonds may be redeemed at the election of the  Company,  as a whole
or, after Completion, in part, at any time on any Business Day, at the option of
the Company,  at par plus in the case of the Initial Bonds  accrued  interest to
but excluding the date of redemption plus a Make-Whole  Premium specified in the
form of Initial Bond attached  hereto as Exhibit B. Any  redemption of less than
all of the Bonds pursuant to this Section 3.1 shall be pro rata among all of the
series of Bonds Outstanding at such time, and any redemption of less than all of
the Bonds of any series pursuant to this Section 3.1 shall be pro rata among all
of the Bonds of such series Outstanding at such time.

                  SECTION  3.2  Election  or  Requirement  to Redeem;  Notice to
Trustee.  If the Company  elects or is required to redeem any Bonds  pursuant to
this Indenture or otherwise,  it shall, except to the extent that the Trustee is
required to select the  Redemption  Date  pursuant to Section  3.3(a),  at least
thirty (30) days prior to the date upon which notice of  redemption  is required
to be given to the  Holders  pursuant  to Section  3.4 hereof  (unless a shorter
notice period shall be  satisfactory  to the Trustee,  provided that the Trustee
shall be under no  obligation  to agree to a  shorter  period),  deliver  to the
Trustee and the Securities Intermediary an Officer's Certificate, specifying the
date on which such redemption shall occur (the "Redemption  Date") as determined
in accordance  with this Article III and the series and the principal  amount of
Bonds to be  redeemed.  Upon  receipt  of any such  Officer's  Certificate,  the
Trustee shall  establish a non-interest  bearing special purpose trust fund (the
"Redemption Fund") into which shall be deposited by the Company,  the Securities
Intermediary,  the Collateral Agent or any other Person, as the case may be, not
later  than one (1)  Business  Day  prior to the  Redemption  Date,  immediately
available  funds to be held by the Trustee and applied to the redemption of such
Bonds on the Redemption  Date. The Redemption  Fund shall at all times be in the
exclusive  possession  of, and under the exclusive  dominion and control of, the
Trustee.

                  SECTION 3.3  Mandatory  Redemption;  Selection  of Bonds to Be
Redeemed(a)  . (a) All or a portion  of the Bonds  shall be  redeemed,  prior to
maturity,  at a  Redemption  Price  equal to par plus  accrued  interest  to and
including the date of redemption, in the following circumstances:

                      (A) (a) if the Company receives Loss Proceeds in excess of
                  $5,000,000 in connection  with a Loss Event and determines not
                  to, or cannot,  restore the Project to permit  operation  on a
                  commercially  feasible  basis,  in which  case all of the Loss
                  Proceeds   received   will   (subject  to  the  terms  of  the
                  Intercreditor   Agreement)   be  applied   to  the   mandatory
                  redemption of Bonds (any such redemption  being referred to as
                  a "Loss Event  Redemption"),  and (b) if the Company  receives
                  Loss Proceeds in connection with a Loss
                  Event and more than

                                       10

<PAGE>

                  $5,000,000 of such Loss Proceeds remain after the Company uses
                  a portion  of such Loss  Proceeds  to restore  the  Project to
                  permit  operation on a commercially  feasible  basis, in which
                  case all remaining Loss Proceeds will (subject to the terms of
                  the  Intercreditor  Agreement)  be  applied  to the  mandatory
                  redemption of Bonds (any such redemption  being referred to as
                  an "Excess Loss Proceeds Redemption");

                      (B) (a) if the Company  receives Title Insurance  Proceeds
                  in excess of $5,000,000 in connection  with a Title Defect and
                  determines  not to, or cannot,  correct  such Title  Defect to
                  permit  operation  of the Project on a  commercially  feasible
                  basis, then all of the Title Insurance  Proceeds received will
                  (subject  to the  terms  of the  Intercreditor  Agreement)  be
                  applied  to  the  mandatory  redemption  of  Bonds  (any  such
                  redemption a "Title Event Redemption"), and (b) if the Company
                  receives Title  Insurance  Proceeds in connection with a Title
                  Defect  and  more  than  $5,000,000  of such  Title  Insurance
                  Proceeds remain after the Company uses a portion of such Title
                  Insurance  Proceeds  to correct  such  Title  Defect to permit
                  operation of the Project on a commercially  feasible basis, in
                  which  case  all  remaining  Title  Insurance   Proceeds  will
                  (subject  to the  terms  of the  Intercreditor  Agreement)  be
                  applied  to  the  mandatory  redemption  of  Bonds  (any  such
                  redemption an "Excess Title Proceeds Redemption");

                      (C) the Company receives  performance  liquidated  damages
                  pursuant to the EPC Contract and more than  $5,000,000 of such
                  performance   liquidated   damages  remain  after  application
                  thereof  to an  Approved  Completion  Plan (if any)  ("Buydown
                  Damages"), in which case such remaining performance liquidated
                  damages  will  (subject  to the  terms  of  the  Intercreditor
                  Agreement) be applied to the mandatory redemption of Bonds;

                      (D) the  Company (a) fails to cause the Project to achieve
                  Completion on or prior to the  Guaranteed  Completion  Date or
                  (b) abandons the construction of the Project (any such event a
                  "Non-Completion  Event"),  in which case the  Company  will be
                  required to redeem all of the Outstanding Bonds unless, in the
                  case of clause (a), the Rating Agency confirms in writing that
                  such  failure  will not result in the Bonds  being rated lower
                  than "Baa3" by the Rating Agency; and

                      (E) the Company  receives a payment of damages pursuant to
                  Paragraph 1(ii) of the Tolling  Guaranty upon a termination of
                  the  Tolling  Agreement  for  cause by the  Company  (any such
                  payment a "Tolling Agreement Damages Payment"),  in which case
                  such payment will  (subject to the terms of the  Intercreditor
                  Agreement) be applied to the mandatory redemption of Bonds.

                  The Redemption  Date shall be: (i) in the case of a Loss Event
Redemption,  any date selected by the Trustee during the 10-day period following
the date on which Loss  Proceeds  in excess of  $5,000,000  are  received by the
Collateral  Agent on behalf of the  Company;  (ii) in the case of an Excess Loss
Proceeds  Redemption,  any date selected by the Trustee during the 10-day period
following the date on which the Company establishes that there are Loss Proceeds
in excess of  $5,000,000  remaining in the Loss Proceeds  Sub-account  following
completion of any

                                       11

<PAGE>

rebuilding, repairing, or restoring of the Project; (iii) in the case of a Title
Event  Redemption,  any date  selected by the Trustee  during the 10-day  period
following  the date on which such Title  Proceeds  in excess of  $5,000,000  are
received by the Collateral  Agent on behalf of the Company;  (iv) in the case of
an Excess Title Proceeds Redemption, any date selected by the Trustee during the
10-day period following the date on which the Company establishes that there are
Title Insurance Proceeds in excess of $5,000,000 in the Title Defect Sub-account
following  completion  of curing  the Title  Defect,  (v) in the case of Buydown
Damages, following application of the performance liquidated damages giving rise
to such Buyout Damages to an Approved Completion Plan (if applicable),  any date
selected by the Trustee  during the 10-day  period  following  the date on which
such  Buydown  Damages  are  received by the  Collateral  Agent on behalf of the
Company,  (vi) in the case of a  Non-Completion  Event, any date selected by the
Trustee  during the  10-day  period  following  the date of  occurrence  of such
Non-Completion  Event  and  (vii) in the  case of a  Tolling  Agreement  Damages
Payment, any date selected by the Trustee during the 10-day period following the
date on  which  such  Tolling  Agreement  Damages  Payment  is  received  by the
Collateral Agent on behalf of the Company.

                  (b) Within thirty (30) days of the occurrence of any Change of
Control,  the Company shall provide  written notice of such Change of Control (a
"Change of Control Notice") to the Trustee, which Change of Control Notice shall
contain an offer by the Company to redeem from each  Holder,  on the  Redemption
Date specified in such Change of Control Notice (which shall be not less than 30
days nor more than 60 days after the date of such Change of Control  Notice) all
of the Outstanding Bonds held by each Holder at a Redemption Price equal to 101%
of the  principal  amount of the  Outstanding  Bonds  held by such  Holder  plus
accrued and unpaid interest on the principal amount of such Outstanding Bonds to
and including such  Redemption  Date.  Upon receipt  thereof,  the Trustee shall
immediately  forward such Change of Control  Notice to the Holders in accordance
with the terms of this Indenture.  The offer contained in such Change of Control
Notice  shall be deemed to lapse as to any  Holder  whose  affirmative  reply in
writing shall not have been  received by the Trustee  within 15 days of the date
on which the  Company  provided  such Change of Control  Notice to the  Trustee.
Within 10 (ten) days after any such affirmative  reply by a Holder,  the Company
shall pay to the Trustee for deposit in the  Redemption  Fund an amount of funds
sufficient to redeem the Outstanding Bonds subject to such request in accordance
with this clause (b). The Trustee  shall apply all such funds  received by it to
the redemption of the  Outstanding  Bonds pursuant to this Section 3.3(b) on the
Redemption  Date in accordance  with written  allocation  instructions  from the
Company  provided to the Trustee in accordance  with the notice  provisions  set
forth in this  Article III. The Company will not be required to make an offer to
redeem  Bonds upon the  occurrence  of any Change of  Control  pursuant  to this
Section 3.3(b) if another Person makes such offer at the same purchase price, at
the same times and otherwise in substantial  compliance with the requirements of
this Section 3.3(b) and such Person purchases all Bonds validly tendered and not
withdrawn under such offer in accordance with the terms of such offer.

                  (c) If Cleco makes a Default Equity Contribution,  the Company
shall, upon receipt of such Default Equity Contribution,  provide written notice
thereof (a "Default Equity Contribution  Notice") to the Trustee,  which Default
Equity  Contribution  Notice  shall  specify the amount of such  Default  Equity
Contribution  and shall  contain  an offer by the  Company  to redeem  from each
Holder,  on the Redemption  Date specified by the Company in such Default Equity
Contribution Notice (which shall be not less than 30 nor more than 60 days after
the date

                                       12

<PAGE>

of such  notice),  a principal  amount of the Initial  Bonds held by such Holder
equal to such Holder's pro-rata share of such Default Equity Contribution at par
plus accrued  interest.  Upon receipt  thereof,  the Trustee  shall  immediately
forward  such  notice  to the  Holders  in  accordance  with  the  terms of this
Indenture. The offer contained in such notice shall be deemed to lapse as to any
Holder whose  affirmative  reply in writing  shall not have been received by the
Trustee  within 15 days of the date on which the Company  provided  such Default
Equity  Contribution  Notice to the Trustee. On the Redemption Date specified by
the Company in such Default Equity Contribution Notice, the Company shall make a
mandatory  redemption  of a principal  amount of the Initial  Bonds held by each
Holder  which has  affirmatively  replied to such  Default  Equity  Contribution
Notice,  such mandatory  redemption to be of a principal amount of Bonds held by
such  Holder  equal  to such  Holder's  pro-rata  share of such  Default  Equity
Contribution at par plus accrued interest to and including the Redemption Date.

                  (d) Upon any  partial  mandatory  redemption  of the  Bonds in
accordance  with this Section  3.3,  each  payment  remaining  in the  scheduled
principal  amortization  of the Bonds as set forth on Schedule I hereto shall be
reduced  by an  amount  equal to the  product  of (x) such  scheduled  principal
amortization  of the Bonds then in effect,  multiplied  by (y) a  fraction,  the
numerator of which is equal to the principal amount of the Outstanding  Bonds to
be  redeemed  and the  denominator  of  which  is the  principal  amount  of the
Outstanding Bonds immediately prior to such redemption.

                  (e) If less than all the Bonds are to be redeemed  pursuant to
clause (a) of this  Section  3.3,  the Bonds  shall be  redeemed  ratably by the
Trustee from the  Outstanding  Bonds not  previously  called for  redemption  in
whole.

                  (f) For all  purposes  of this  Indenture,  unless the context
otherwise  requires,  all  provisions  relating to the redemption of Bonds shall
relate, in the case of any Bonds redeemed or to be redeemed only in part, to the
portion  of the  principal  amount  of  such  Bonds  that  has  been or is to be
redeemed.

                  SECTION 3.4 Notice of Redemption.  Notice of redemption  shall
be given in the manner  provided in Section  11.6 hereof to the Holders of Bonds
of such series to be redeemed at least  thirty (30) days but not more than sixty
(60) days prior to the Redemption Date. All notices of redemption shall state:

                  (a) the Redemption Date;

                  (b) the Redemption Price;

                  (c) the new scheduled principal  amortization of the Bonds, as
reflected in a revised Schedule I hereto;

                  (d) if less than all Outstanding Bonds are to be redeemed, the
principal amount of the Bonds held by each Holder to be redeemed;

                  (e) in the case of Bonds to be redeemed in part,  if requested
by the Holder  thereof,  the  principal  amount of such Bonds to be redeemed and
that after the Redemption  Date

                                       13

<PAGE>

upon surrender of such Bonds, new Bonds in the aggregate  principal amount equal
to the unredeemed portion thereof will be issued;

                  (f) that Bonds called for  redemption  must be  surrendered to
the Paying Agent to collect the Redemption Price;

                  (g) that on the Redemption  Date,  the  Redemption  Price will
become due and payable upon each such Bond or portion thereof,  and that (unless
the Company shall default in payment of the Redemption  Price) interest  thereon
shall cease to accrue on and after said date;

                  (h)  that  the  availability  in the  Redemption  Fund  on the
Redemption  Date  of an  amount  of  immediately  available  funds  to  pay  the
Redemption Price in full is a condition precedent to the redemption; and

                  (i) the  paragraph of the Bonds or the  Indenture  pursuant to
which the Bonds are being redeemed.

                  Notice of  redemption  of Bonds to be redeemed at the election
of the  Company  shall be given by the  Company  or,  at the  Company's  written
request, by the Trustee in the name and at the expense of the Company. Notice of
a mandatory  redemption of the Bonds shall be given by the Trustee,  in the name
and at the expense of the Company.

                  With respect to mandatory  redemption  pursuant to Section 3.3
hereof,  notice of  redemption  may be given by the Trustee  prior to receipt of
funds sufficient to pay the Redemption Price.

                  Failure to give notice of redemption in the manner provided in
Section  11.6 or any defect in such notice to the Holder of any Bond  designated
for  redemption  in whole or in part shall not affect the validity of the notice
to any other Holder.

                  SECTION 3.5 Bonds  Payable on  Redemption  Date.  If notice of
redemption is given in accordance with this Article III, and the conditions,  if
any, set forth in such notice have been satisfied, the Bonds or portions thereof
to be redeemed shall become due and payable on the Redemption  Date, and (unless
the Company  shall  default in payment of the  Redemption  Price) from and after
such date such Bonds or portions thereof shall cease to bear interest.

                  SECTION  3.6  Bonds  Redeemed  in Part.  At the  option of any
Holder thereof,  any Bond that is to be redeemed only in part may be surrendered
at the place of  payment  therefor  (with,  if the  Company  or the  Trustee  so
requires,  due  endorsement  by, or a written  instrument  of  transfer  in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing),  and the Company shall execute, and
the Trustee shall  authenticate and make available for delivery to the Holder of
such Bond,  without service charge,  a new Bond or Bonds of the same series,  in
denominations  of $100,000 or any multiple  thereof as may requested  (plus,  if
applicable,  one Bond in such other  denomination  as may be  requested  by such
Holder)  and of like tenor and in  aggregate  principal  amount  equal to and in
exchange for the remaining unpaid principal amount of the Bond so surrendered.

                                       14

<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  The Company  represents  and warrants to the Trustee as of the
date of issuance of the Bonds:

                  SECTION 4.1 Organization, Power and Status of the Company. The
Company (a) is a limited  liability  company duly organized and validly existing
under the laws of the State of Louisiana  and (b) is duly  qualified and in good
standing, if applicable, as a foreign limited liability company or other limited
liability entity in each  jurisdiction  where the nature of its activities makes
such  qualification  necessary.  The Company has all requisite limited liability
company power and authority to carry on its business as now being  conducted and
as proposed to be conducted.

                  SECTION  4.2  Authorization;   Enforceability;  Execution  and
Delivery(a) . (a) The Company has all necessary  limited liability company power
and  authority  to  execute,  deliver and  perform  its  obligations  under this
Indenture, the Bonds and each other Transaction Document to which it is a party.

                  (b) All action on the part of the Company that is required for
the authorization,  execution,  delivery and performance of this Indenture,  the
Bonds and each other  Transaction  Document  to which the Company is a party has
been duly and effectively taken, and the execution,  delivery and performance of
this Indenture,  the Bonds and each other Transaction  Document to which it is a
party does not require  the  approval or consent of any holder or trustee of any
debt or other  obligations of the Company,  except such approvals or consents as
have been duly obtained and are in full force and effect.

                  (c) This  Indenture,  the  Bonds  and each  other  Transaction
Document to which the Company is a party have been duly authorized, executed and
delivered  by the  Company.  Each of this  Indenture,  the Bonds and each  other
Transaction  Document to which the Company is a party constitutes a legal, valid
and  binding  obligation  of the  Company  enforceable  against  the  Company in
accordance  with the terms  hereof  and  thereof,  except as the  enforceability
thereof may be limited by  bankruptcy,  insolvency,  or similar  laws  affecting
creditors' rights generally, and subject to general principles of equity.

                  SECTION  4.3 No  Conflicts;  Laws and  Contracts;  No Default;
Representations  and  Warranties(a).  (a) Neither the  execution,  delivery  and
performance of this Indenture,  the Bonds or each other Transaction  Document to
which the Company is a party,  nor the  consummation of any of the  transactions
contemplated  hereby or thereby (i)  contravenes any provision of Law applicable
to the Company or any of the Collateral,  (ii) conflicts or is inconsistent with
or  constitutes  a  default  under or  results  in the  acceleration  of (x) any
obligation  under  the  Certificate  of  Limited  Liability  Company,  Operating
Agreement or other constituent  documents of the Company or (y) any terms of any
other  Transaction  Document or any other  agreement or  instrument to which the
Company is a party or by which the  Company or any of its  property or assets is
bound  or to  which  the  Company  may be  subject  except  any  such  conflict,
inconsistency,  default or violation  which,  individually  or in the aggregate,
could not reasonably

                                       15

<PAGE>

be  expected  to result in a  Material  Adverse  Effect or (iii)  results in the
creation  or  imposition  of (or the  obligation  to create or impose) any Liens
(other than Permitted Liens) on the Collateral.

                  (b) The  Company  is in  compliance  with  any  and  all  Laws
applicable to it, except any such  noncompliance  which,  individually or in the
aggregate,  could not  reasonably  be expected  to result in a Material  Adverse
Effect.

                  SECTION 4.4 Governmental Approvals. All Governmental Approvals
which are required to be obtained by, in the name of or on behalf of the Company
in connection with (a) the issuance of the Bonds (b) the execution, delivery and
performance by the Company of the Transaction  Documents to which the Company is
a party and (c) the construction and the operation of the Project have been duly
obtained or made,  were validly  issued and are in full force and effect,  other
than  any  such   Governmental   Approvals  the  failure  of  which  to  obtain,
individually or in the aggregate,  could not reasonably be expected to result in
a Material Adverse Effect. No event has occurred which permits,  or after notice
or lapse of time or both would permit,  the  revocation or termination of any of
the foregoing Governmental Approvals. The Company does not have knowledge of any
fact that is likely to result in the denial of an application or renewal, or the
revocation,  modification,  nonrenewal  or  suspension  of any of the  foregoing
Governmental Approvals.

                  SECTION 4.5 Litigation.  There are no claims,  actions, suits,
investigations  or proceedings at law or in equity  (including any Environmental
Claims) or by or before any  arbitrator  or  Governmental  Authority now pending
against or, to the knowledge of the Company,  threatened  against the Company or
any  property or other  assets or rights of the Company  which (a)  question the
validity of any Transaction Document or any action taken or to be taken pursuant
to or in connection  with any  Transaction  Document or (b) could  reasonably be
expected to result in a Material Adverse Effect.

                  SECTION 4.6 Utility Regulation.  The Company is not subject to
regulation  by any  Governmental  Authority  under  PUHCA as a  "public  utility
company" or an  "affiliate"  or  "subsidiary  company" of a "registered  holding
company" or a company subject to registration under PUHCA.

                  SECTION 4.7  Environmental  Matters(a) . (a) The Project is in
compliance  with all existing  applicable  Environmental  Laws,  except any such
noncompliance which,  individually or in the aggregate,  could not reasonably be
expected to result in a Material Adverse Effect.

                  (b) To the Company's  knowledge,  there are no existing facts,
circumstances  or conditions which could under any existing  Environmental  Law,
individually  or in the aggregate  with all other  circumstances  or conditions,
reasonably be expected to result in a Material Adverse Effect.

                  SECTION 4.8 Employee Benefit Plans.  Except to the extent that
the following  could not reasonably be expected to result in a Material  Adverse
Effect,  each  Plan  (including  without  limitation  each  Plan  of a  Commonly
Controlled  Entity) as to which the Company may have any  liability  complies in
all material  respects with all applicable  requirements of Law and regulations,
and (i) no  "reportable  event" (as defined in Section 4043 of

                                       16

<PAGE>

ERISA (other than an event for which a 30-day notice requirement has been waived
by the PBGC) has occurred with respect to any such Plan,  (ii) there has been no
withdrawal  from any  Multiemployer  Plan or steps taken to do so, (iii) no Plan
has been terminated or has commenced to be terminated  other than in a "standard
termination"  under Section 4041(b) of ERISA,  (iv) no contribution  failure has
occurred  with  respect  to any Plan  sufficient  to give  rise to a lien  under
Section  302(f) of ERISA or Section 412 of the Code and (v) no condition  exists
or event or  transaction  has occurred  with respect to any Plan,  in each case,
that could reasonably be expected to result in a Material Adverse Effect.

                  SECTION 4.9 Business of the Company.  The Company is a special
purpose  limited  liability  company  and is not  and  has  not  engaged  in any
activities  other  than  those  incident  to  its   organization,   acquisition,
improvement  and  operation  of the  Project,  the  offering  of the Bonds,  and
transactions related thereto.

                  SECTION 4.10  Investment  Company Act. The Company is not, and
following  the  issuance  and sale of the  Bonds,  will not be,  an  "investment
company"  or, to the  knowledge  of the Company,  an entity  "controlled"  by an
"investment  company" as such terms are defined in the Investment Company Act of
1940, as amended.

                  SECTION 4.11 Zoning.  The  construction,  operation and use of
the Project as an electric generating facility complies, and upon the completion
of  construction  shall  comply,  with  all Laws (if  any)  relating  to  zoning
including,  without  limitation,  those relating to use, height,  setback lines,
building coverage and gross floor area of building space.

                                   ARTICLE V

                                    COVENANTS

                  SECTION 5.1 Payment of Principal of and Interest on Bonds. The
Company shall  promptly pay or cause to be paid the  principal  of,  premium (if
any) and interest on every Bond issued  hereunder  according to the terms hereof
and thereof.

                  SECTION 5.2 Reporting Requirements.  The Company shall deliver
to the Trustee (and the Trustee shall deliver copies to any Holder of an Initial
Bond and, upon written request, which may be a continuing request, to any Holder
of an  Additional  Bond),  the  Collateral  Agent,  the Rating  Agency and, with
respect to clauses (f),  (h), (i) and (j) only (and,  in the case of clause (j),
only with respect to amendments and  supplements to the Project  Documents which
are material) the Independent Engineer:

                  (a)  within 45 days  after the end of each of the first  three
            fiscal  quarters  of  each  fiscal  year of the  Company,  unaudited
            quarterly financial statements of the Company;

                  (b)  within 90 days after the end of each  fiscal  year of the
            Company, audited annual financial statements of the Company;

                  (c) at the  time  of  delivery  of  the  financial  statements
            described  in  clauses  (a)  and  (b)  above,  a  certificate  of an
            Authorized  Officer of the  Company on behalf of the

                                       17

<PAGE>

Company to the effect  that (i) the  Company  is in  compliance  with all of its
material obligations under the terms of the Transaction  Documents,  and (ii) no
Default or Event of Default  known to the Company has occurred and is continuing
or, if any Default or Event of Default  known to the Company has occurred and is
continuing, specifying the nature and extent thereof and what action the Company
is taking or proposes to take in response thereto;

                  (d)  promptly  and in any  event  within  ten  days  after  an
Authorized  Officer of the Company obtains actual knowledge  thereof,  notice of
the occurrence of any event or condition which constitutes a Default or an Event
of Default,  describing  such event or condition and any action that the Company
is taking or proposes to take with respect thereto;

                  (e)  promptly  and in any  event  within  ten  days  after  an
Authorized  Officer of the Company obtains actual knowledge  thereof,  notice of
any litigation, arbitration or other governmental proceeding against the Company
or with  respect to any  Transaction  Document  to which the  Company is a party
which, individually or in the aggregate,  could reasonably be expected to result
in a Material Adverse Effect;

                  (f)  promptly  and in any  event  within  ten  days  after  an
Authorized  Officer of the  Company  obtains  knowledge  thereof,  notice of the
occurrence  of any Loss  Event or Title  Defect,  describing  such Loss Event or
Title  Defect,  as the case may be, and any action that the Company is taking or
proposes to take with respect thereto;

                  (g) copies of material  notices  delivered in connection  with
the Project Documents;

                  (h) until the Project has achieved Completion,  within 30 days
after the end of each fiscal  quarter of the Company,  a quarterly  construction
report describing the progress of the Project's construction and the expenditure
of funds in connection therewith;

                  (i)  within 30 days after the end of each  fiscal  year of the
Company occurring after the Project has achieved Completion  (including the year
in which Completion  occurs), an annual operation and maintenance report for the
Project;

                  (j) all amendments and supplements to the Project Documents;

                  (k) notice of any  pending  Environmental  Claim  against  the
Company  which could  reasonably  be  expected  to result in a Material  Adverse
Effect; and

                  (l)  within 45 days after the end of each  fiscal  year of the
Company,  an  Officer's  Certificate  of the  Company  (i)  confirming  that all
insurance policies required pursuant to Section 5.6 are in full force and effect
on the date thereof,  (ii)  confirming  the names of the companies  issuing such
policies,  (iii)  confirming the amounts and expiration  dates of such policies,
(iv) including  evidence of payment of all premiums or other amounts due on such
insurance  policies  during such fiscal year and (v) stating that such  policies
comply  with the  requirements  of the  Financing  Documents.  The  Trustee  may

                                       18

<PAGE>

conclusively  rely upon any  Officer's  Certificate  delivered  pursuant to this
clause (l) and shall have no  responsibility to examine any policies referred to
therein to determine compliance with the provisions of this Indenture.

                  SECTION 5.3 Limited Liability Company  Existence.  The Company
shall  at all  times  preserve  and  maintain  (a) its  existence  as a  limited
liability   company  under  the  laws  of  the  State  of  Louisiana,   (b)  its
qualification  to do business and good standing,  if  applicable,  in each other
jurisdiction  in which the  character  of its  properties  or the  nature of its
activities  makes  such  qualification  necessary  and (c) its  rights,  powers,
privileges and franchises,  except, in the case of clauses (b) and (c) where the
failure  to do so could not  reasonably  be  expected  to  result in a  Material
Adverse Effect.

                  SECTION 5.4  Compliance  with Laws.  The Company  shall comply
with all applicable Laws, except where the failure to do so could not reasonably
be expected to result in a Material Adverse Effect.

                  SECTION 5.5  Governmental  Approvals;  EWG Status(a) . (a) The
Company  shall  obtain,  maintain  and comply  with all  Governmental  Approvals
necessary for (i) the issuance of the Bonds,  (ii) the  ownership,  construction
and operation of the Project and (iii) the execution,  delivery and  performance
of its  obligations  under  the  Transaction  Documents  to which it is a party,
except, in the case of clauses (ii) and (iii),  where the failure to do so could
not reasonably be expected to result in a Material Adverse Effect.

                  (b) The  Company  shall  maintain  the  Project as an Eligible
Facility owned by an Exempt Wholesale Generator.

                  SECTION 5.6 Insurance. For all periods both prior to and after
completion of construction  of the Project,  the Company shall maintain or cause
to be  maintained  insurance  as is generally  carried by  companies  engaged in
similar  businesses during such respective periods and owning similar properties
in the same  general area and  financed in the same  general  manner.  As of the
Closing Date,  the Company has in place the insurance set forth in Exhibit D. In
the event the Company desires to maintain insurance that is materially different
than the type and amounts of insurance set forth in Exhibit D, the Company shall
provide to the Trustee a certificate  of the Insurance  Consultant  stating that
the criteria set forth in the first  sentence of this Section 5.6 will be met by
the Company.  All insurance  maintained by the Company  pursuant to this Section
5.6 shall (i) name the Trustee,  the  Collateral  Agent and the Company,  in the
case of all liability  policies,  as insureds,  and in all other cases,  as loss
payees, as their interests may appear;  (ii) provide that all insurance proceeds
shall be payable to the Collateral Agent; (iii) include effective waivers by the
insurer of all claims for insurance premiums against the Trustee, the Collateral
Agent  and  the  Holders;   (iv)  provide  that  any  losses  shall  be  payable
notwithstanding  (A) any  foreclosure  or other  proceedings  or  notice of sale
relating  to the  Facility  or (B) any  change in title to or  ownership  of the
Facility;  and (v) provide that no cancellation thereof shall be effective until
at least 30 days  after  receipt  by the  Collateral  Agent and the  Trustee  of
written notice thereof.

                  SECTION 5.7 Payment of Taxes and  Claims.  The Company  shall,
prior to the time penalties  attach thereto,  pay and discharge,  or cause to be
paid and discharged, all taxes,

                                       19

<PAGE>

assessments,  claims and  governmental  charges or levies  imposed  upon it, its
assets or property or its income or profits; provided that the Company shall not
be required to pay any such obligation if the same is being diligently contested
in good  faith  by  appropriate  proceedings  and  adequate  cash  reserves  are
established in accordance with GAAP.

                  SECTION 5.8 Books and Records.  The Company shall at all times
keep proper books and records of all of its business  and  financial  affairs in
accordance with GAAP.

                  SECTION 5.9 Right of Inspection.  The Company shall permit the
Trustee,  the Collateral  Agent,  the Securities  Intermediary,  the Independent
Engineer  or  any  duly  authorized  agents  or  representatives  of  any of the
foregoing,  from time to time  during  normal  business  hours,  (i) to  conduct
reasonable  inspections and examinations of the records,  assets and property of
the  Company  and (ii) to discuss  the  affairs,  finances  and  accounts of the
Company with the principal  officers of the Company,  all upon reasonable notice
and at  such  reasonable  times  as  the  Trustee,  the  Collateral  Agent,  the
Securities  Intermediary  or the  Independent  Engineer  may  desire,  provided,
however, that, in the absence of a specific instruction to the contrary from the
Required Holders,  this right shall not be deemed to be a duty or responsibility
of the Trustee, the Collateral Agent or the Securities Intermediary.

                  SECTION 5.10 Maintenance of Property and Security(a) . (a) The
Company (i) shall use,  maintain and operate the Project and the site thereof in
material  compliance  with prudent  industry  practice,  all applicable laws and
Governmental  Approvals and the Project  Documents  and (ii) shall  preserve and
maintain (except as otherwise specifically contemplated or permitted pursuant to
the  Mortgage)  (x) good and  marketable  title to or valid  leasehold  or other
rights to or in the  Project,  the site of the Project and all other  Collateral
owned by it (subject  only to  Permitted  Liens) and (y) a valid and  subsisting
grant  of  all  easements,  licenses,  franchises,  rights  of way  and  similar
non-possessory  real  property  interests  necessary  for the  construction  and
operation of the Project and the use of the site of the Project.

                  (b) The  Company  shall  take or cause  to be  taken  all acts
reasonably  required to maintain and preserve the Liens  purported to be created
by the Security Documents. The Company shall from time to time execute, or cause
to be executed, any and all further instruments (including financing statements,
continuation  statements and similar statements) reasonably required to maintain
and preserve the Liens purported to be created by the Security Documents.

                  (c) In the event the Project or the Land shall become  subject
to any zoning Laws, the Company shall not,  without the Trustee's  prior written
consent,  use or permit  the use of the  Project  or the Land in a manner  which
would result in such use becoming a nonconforming use under such zoning Laws.

                  SECTION   5.11    Performance   of   Transaction    Documents;
Construction  of the  Project(a) . (a) The Company  shall (i) perform all of its
obligations and covenants contained in the Transaction  Documents to which it is
a party,  (ii) enforce,  defend and protect all of its rights  contained in such
Transaction  Documents  and (iii) take all  actions  necessary  to  prevent  the
termination or cancellation of any such  Transaction  Documents,  except in each
case where the failure to do so could not  reasonably be expected to result in a
Material Adverse Effect.

                                       20

<PAGE>

                  (b) The Company shall cause the construction of the Project to
be  completed  in a  timely  manner  and in  accordance  with  prudent  industry
practice,  all  applicable  Laws  and  Governmental  Approvals  and the  Project
Documents.

                  SECTION  5.12  Rule  144A  Information.  At any time  when the
Company is not  subject to Section  13 or 15(d) of the  Exchange  Act,  upon the
request of any Holder of the Bonds,  the Company shall promptly  furnish to such
Holder or to a prospective  purchaser of a Bond  designated  by such Holder,  or
beneficial  owner the  information  required  to be  delivered  pursuant to Rule
144A(d)(4) under the Securities Act.

                  SECTION 5.13 Project  Revenues.  The Company shall deposit all
revenues received by it into the Revenue Account and shall irrevocably  instruct
all  Project  Parties  that make  payments  to the  Company  under  the  Project
Documents to deposit such payments into the Revenue Account.

                  SECTION 5.14  Independent  Engineer.  The Company shall permit
the Independent  Engineer to (a) inspect the Project upon reasonable  notice and
(b) witness and verify the  performance  tests under the EPC  Contract.  SECTION
5.15 Annual Operating Budget(a). (a) Not less than 30 days prior to (a) the date
on  which  the  Project  is  expected  to  commence  commercial  operation,  and
thereafter (b) the commencement of each fiscal year of the Company,  the Company
shall submit to the Independent  Engineer a proposed operating budget,  detailed
by month (an "Annual Operating Budget"). The first Annual Operating Budget shall
cover the period from the date of commencement of commercial  operation  through
the end of the  fiscal  year in which  commercial  operation  occurs or, if such
period  consists  of less  than 6  months,  through  the end of the  immediately
succeeding  fiscal  year.  Each Annual  Operating  Budget  (other than the first
Annual Operating  Budget referred to above) shall be, in all material  respects,
consistent  with the  provisions of the Project  Documents and shall specify the
Company's good faith estimate of sales of power from the Project,  the rates and
revenues for such sales,  all O&M Costs and working  capital  requirements,  all
major  maintenance  costs,  a forecast of  personnel to operate and maintain the
Project  and a periodic  inspection,  maintenance  and repair  schedule.  To the
extent the Independent Engineer shall have provided its comments, if any, to the
Company  within 30 days of the  Independent  Engineer's  receipt of the proposed
Annual Operating Budget, the Company shall reasonably  consider such comments in
its preparation of a final Annual Operating Budget, which shall then be provided
to the Trustee,  the Collateral  Agent, the Independent  Engineer and the Rating
Agency.  The Trustee and the Collateral  Agent shall have no  responsibility  to
review or approve the Annual Operating Budget. SECTION 5.16 Use of Proceeds. The
Company shall use the net proceeds of the Bonds only to pay Project Costs.

                  SECTION 5.17 Independent  Auditor.  The Company shall retain a
nationally  recognized  independent  accounting firm and permit the Trustee, the
Collateral Agent, the Securities Intermediary and, upon an Event of Default, the
initial Holders of the Bonds,  to discuss the affairs,  finances and accounts of
the Company with such accounting  firm upon reasonable  notice and at reasonable
times (and by this provision the Company  authorizes  such

                                       21

<PAGE>

accounting  firm  to so  discuss  the  affairs,  finances  and  accounts  of the
Company); provided, however, that this right shall not be deemed to be a duty or
responsibility   of  the  Trustee,   the  Collateral  Agent  or  the  Securities
Intermediary.

                  SECTION  5.18 Debt.  The Company  shall not create or incur or
suffer  to exist  any Debt in  addition  to the  Initial  Bonds  other  than the
following  (such Debt,  together with the Initial  Bonds,  being  referred to as
"Permitted Debt"):

                  (a) Additional  Bonds,  the proceeds of which are used for any
of the following purposes:

                      (A)  to  finance  Required  Modifications,  provided  that
                  either (i) after giving effect to the incurrence of such Debt,
                  the minimum  projected  Debt Service  Coverage  Ratio for each
                  fiscal year during the remaining term of the Bonds is equal to
                  or greater  than 1.30 to 1.0, as  confirmed  in writing by the
                  Independent  Engineer,  or (ii) the Rating Agency  confirms in
                  writing that,  after giving  effect to the  incurrence of such
                  Debt for such purpose, the Bonds will be rated at least "Baa3"
                  by the Rating Agency;

                      (B) to finance Optional  Modifications,  provided that (i)
                  no Default or Event of Default  has  occurred  and is --------
                  continuing  or would result from the  incurrence  of such Debt
                  for such  purpose,  (ii) either (A) after giving effect to the
                  incurrence  of such  Debt,  (1)  the  minimum  projected  Debt
                  Service  Coverage  Ratio  for  each  fiscal  year  during  the
                  remaining  term of the Bonds is equal to or greater  than 1.70
                  to 1.0, as confirmed in writing by the  Independent  Engineer,
                  and (2) the average  annual  projected  Debt Service  Coverage
                  Ratio  during the  remaining  term of the Bonds is equal to or
                  greater  than 1.80 to 1.0,  as  confirmed  in  writing  by the
                  Independent  Engineer,  or (B) the Rating  Agency  confirms in
                  writing that the incurrence of such Debt for such purpose will
                  not result in the Bonds  being  rated lower than "Baa3" by the
                  Rating Agency, and (iii) so long as the Williams Subordination
                  Agreement  remains in effect,  the  incurrence of such Debt is
                  permitted thereunder;

                      (C) to finance Expansion Modifications,  provided that (i)
                  no Default or Event of Default has occurred and is  continuing
                  or would  result  from the  incurrence  of such  Debt for such
                  purpose,  (ii) the Rating Agency  confirms in writing that the
                  incurrence  of such Debt for such purpose will not result in a
                  Rating   Downgrade  and  that,  after  giving  effect  to  the
                  incurrence of such Debt,  the ratings for the Bonds will be at
                  least "Baa3",  (iii) at least 80% of the total capacity of the
                  Project,  after giving effect to the Expansion  Modifications,
                  must be contracted under a power purchase  agreement,  tolling
                  agreement or similar  agreement with a term that extends to at
                  least the final  maturity date of the Bonds,  and (iv) so long
                  as the Williams Subordination Agreement remains in effect, the
                  incurrence of such Debt is permitted thereunder; and

                      (D) in addition to Debt  permitted  under clauses (A), (B)
                  and (C) above,  to finance the acquisition of assets useful in
                  the development, construction,

                                       22

<PAGE>

                  operation or maintenance of the Project,  provided that (i) no
                  Default or Event of Default has occurred and is  continuing or
                  would  result  from  the  incurrence  of such  Debt  for  such
                  purpose, (ii) the aggregate amount of such Debt outstanding at
                  any one time shall not exceed  $10,000,000,  (iii) such assets
                  are subjected to the liens of the Security Documents, and (iv)
                  so long as the  Williams  Subordination  Agreement  remains in
                  effect, the incurrence of such Debt is permitted thereunder;

                  (b) Debt issued to one or more Affiliates of the Company which
is (x)  subordinated to the Bonds pursuant to  subordination  terms set forth in
Exhibit C ("Subordinated Debt") and (y) not secured by the Collateral,  provided
that no Default or Event of Default  has  occurred  and is  continuing  or would
result from the incurrence of such Debt;

                  (c)  Debt  incurred  pursuant  to  an  ACS  LOC  Reimbursement
Agreement,  provided  that  the  conditions  set  forth  in  clause  (a)  of the
definition of "Acceptable Credit Support" have been satisfied;

                  (d) unsecured Debt for working  capital  purposes in an amount
not to exceed $5,000,000;

                  (e) letters of credit and other financial  obligations arising
under the Project Documents;

                  (f) purchase money  obligations  incurred to finance  discrete
items of equipment  not  comprising  an integral part of the Project that extend
only to the  equipment  being  financed  and that do not in the  aggregate  have
annual debt service or lease obligations exceeding $5,000,000 (such amount to be
escalated for inflation based on the Consumer Price Index);

                  (g) trade  accounts  payable  (other than for borrowed  money)
which arise in the ordinary  course of business and which are payable  within 90
days;

                  (h)   obligations  in  respect  of  surety  bonds  or  similar
instruments in an amount not to exceed $5,000,000; and

                  (i) Debt incurred  under Interest Rate  Protection  Agreements
entered  into in  order to  provide  a hedge  against  changes  in the  rates of
interest  on  Permitted  Debt which  accrues  interest at a floating or variable
rate,  provided that the notional amount of the obligations  subject to any such
Interest  Rate  Protection  Agreement  cannot at any time  exceed the  aggregate
principal amount of such Permitted Debt.

                  SECTION 5.19  Permitted  Liens.  The Company shall not create,
suffer to exist or permit any Lien upon or with respect to any of its properties
other than the following ("Permitted Liens"):

                  (a) Liens  specifically  permitted  or required by, or created
by, any Security Document;

                  (b) Liens to secure  Permitted Debt permitted under clause (c)
and  clause (i) of Section  5.18,  provided  that the holder of such Debt (or an
agent or trustee on behalf of such

                                       23

<PAGE>

holder),  becomes  a  "Secured  Party"  under  the  Intercreditor  Agreement  in
accordance with the terms thereof;

                  (c) Liens for taxes, assessments or governmental charges which
are  either  not yet due or are  being  diligently  contested  in good  faith by
appropriate  proceedings  and for which  adequate  reserves are  established  in
accordance with GAAP;

                  (d)   liens  in   connection   with   workers'   compensation,
unemployment insurance or other social security or pension obligations;

                  (e)   mechanics',   workmen's,   materialmen's,    suppliers',
construction  or  other  statutory  liens  arising  in the  ordinary  course  of
business,  so long as such liens are securing amounts not yet due and payable or
are being diligently contested in good faith and by appropriate  proceedings and
for which adequate reserves are established in accordance with GAAP;

                  (f) servitudes, easements, rights-of-way,  restrictions, minor
defects  or  irregularities  in title and such  other  encumbrances  or  charges
against real property or interests therein as are of a nature generally existing
with  respect  to  properties  of a  similar  character  and which do not in any
material way interfere with (i) the use thereof by the Company in the conduct of
its business or (ii) the Lien of the Mortgage;

                  (g) other liens  incidental  to the  conduct of the  Company's
business or the  ownership of  properties  and assets which were not incurred in
connection  with the  borrowing of money or the  obtaining of advances or credit
(other  than  vendor's  liens for  accounts  payable in the  ordinary  course of
business) and which do not  materially  impair the use thereof by the Company in
the conduct of its business; and

                  (h)  liens  arising  from  judgments,  provided  that  (1) the
execution or other  enforcement of such lien is effectively  stayed and evidence
reasonably  satisfactory  to the  Trustee  and its  counsel  to that  effect  is
delivered to the Trustee and its counsel,  (2) the judgment  secured  thereby is
being  actively  appealed in good faith and by appropriate  proceedings  and (3)
adequate  reserves shall have been  established  and be maintained  with respect
thereto in accordance with GAAP.

                  SECTION 5.20 Business Activities. The Company shall not engage
in any business other than (a) the issuance of the Bonds,  (b) the  development,
construction,  ownership,  operation and  maintenance  of the Project and (c) as
otherwise contemplated by the Financing Documents.

                  SECTION 5.21 Fundamental  Changes,  etc. The Company shall not
(a) enter into any  transaction of merger or  consolidation,  change its form of
organization  or its  business,  liquidate  or  dissolve  itself  (or suffer any
liquidation or dissolution) or sell all or substantially all of its assets,  (b)
sell,  transfer,  assign,  hypothecate,  pledge,  lease,  sublease or  otherwise
dispose of (in one transaction or in a series of transactions) any of its assets
except in the ordinary course of business or to the extent that such property is
worn out or is no longer useful or necessary in connection with the operation of
the Project, (c) acquire, by purchase or otherwise,  all or substantially all of
the property or assets of any Person or (d) create or acquire any subsidiary.

                                       24

<PAGE>

                  SECTION 5.22  Affiliate  Transactions.  The Company  shall not
enter  into any  transaction  or  agreement  with any  Affiliate  other than (a)
transactions  contemplated by the Transaction Documents and (b) transactions and
agreements in the ordinary  course of business on fair and  reasonable  terms no
less  favorable to the Company than the Company would obtain in an  arm's-length
transaction with a Person that is not an affiliate of the Company.

                  SECTION 5.23 Restricted  Payments.  The Company shall not make
any  Restricted  Payment other than as permitted by the terms of this  Indenture
and the Depository Agreement.

                  SECTION  5.24  Investments.  The  Company  shall  not make any
investments other than the following ("Permitted Investments"):

                  (a)  securities  issued or directly  and fully  guaranteed  or
insured by the United States of America or any agency or instrumentality thereof
(provided  that the full  faith and  credit of the  United  States of America is
pledged in support  thereof)  having a maturity not  exceeding 180 days from the
date of issuance;

                  (b)  time  deposits  and  certificates  of  deposit  having  a
maturity not  exceeding 180 days of any domestic  commercial  bank of recognized
standing having capital and surplus in excess of $500,000,000;

                  (c) commercial  paper issued by the parent  corporation of any
domestic  commercial  bank of recognized  standing having capital and surplus in
excess of $500,000,000 and commercial paper of any domestic corporation rated at
least "A-1" or the equivalent thereof by S&P or at least "P-1" or the equivalent
thereof by Moody's and, in each case,  having a maturity not  exceeding 180 days
from the date of acquisition;

                  (d) fully secured  repurchase  obligations  with a term of not
more than 7 days for underlying  securities of the types described in clause (a)
above  entered  into with any bank  meeting the  qualifications  established  in
clause (b) above;

                  (e)  corporate  bonds  rated at least  "AA" or the  equivalent
thereof by S&P and at least "Aa2" or the equivalent thereof by Moody's; and

                  (f) money market funds registered under the Federal Investment
Company Act of 1940,  whose shares are  registered  under the Securities Act and
which are rated "AAAm" or "AAAmG" or better by S&P.

                  SECTION 5.25  Investment  Company  Act. The Company  shall not
take any  action  which  would  cause it to be in  violation  of the  Investment
Company Act of 1940.

SECTION 5.26 Formation Documents. The Company shall not amend its Certificate of
Limited  Liability   Company  or  Operating   Agreement  or  any  of  its  other
organizational documents unless (a) such amendment may be required in connection
with  and to give  effect  to a  transfer  by  Cleco  Midstream  Resources  LLC,
Louisiana  limited  liability  company and the holder of 100% of the outstanding
member  interests  in the  Company  ("Cleco  Midstream"),  of all of its  member
interests in the Company to Cleco Business  Development

                                       25

<PAGE>

LLC, a Louisiana  limited  liability  company and a  wholly-owned  subsidiary of
Cleco Midstream  ("Cleco Business  Development") or (b) such amendment could not
reasonably be expected to result in a Material Adverse Effect.

                  SECTION  5.27  Guaranty  Obligations.  The  Company  shall not
contingently  or otherwise  be or become  liable,  directly or in  directly,  in
connection with any Guaranty Obligation.

                  SECTION  5.28  Amendments  to Project  Documents.  The Company
shall not  terminate  (except in the case of a  scheduled  termination),  assign
(other than  pursuant to the Security  Documents),  amend,  supplement,  modify,
waive its rights  under or consent to any  termination  (except in the case of a
schedule   termination),   assignment  (other  than  pursuant  to  the  Security
Documents),  amendment,  supplement  or  modification  of or waiver  under,  any
Project Document,  unless (a) such termination,  assignment (other than pursuant
to the  Security  Documents),  amendment,  supplement,  modification,  waiver or
consent could not reasonably be expected to result in a Material Adverse Effect,
(b) in the case of any termination of the Tolling  Agreement or the EPC Contract
and any material amendment, supplement or modification,  waiver or consent to or
under the Tolling  Agreement or the EPC  Contract,  (i) the Rating  Agency shall
have  confirmed  in  writing  that  such  termination,   amendment,  supplement,
modification,  waiver or consent will not result in a Rating Downgrade or in the
Bonds being rated lower than "Baa3" and (ii) the Independent Engineer shall have
certified that such termination, amendment, supplement,  modification, waiver or
consent could not reasonably be expected to result in a Material  Adverse Effect
and (c) in the case of any  termination  of all or any  part of the  Maintenance
Agreement pursuant to Section 12.4 thereof,  the Independent Engineer shall have
certified that the arrangements entered into by the Company for the provision of
services  to  replace  those  formerly  provided  pursuant  to  the  Maintenance
Agreement,  including  the identity of the  replacement  vendor  providing  such
services, are reasonably satisfactory.

                  SECTION 5.29 Additional Project  Documents.  The Company shall
not enter into any Additional Project Document or any other additional agreement
or undertaking unless (a) entering into such Additional Project Document or such
additional  agreement or undertaking  could not reasonably be expected to result
in a Material  Adverse Effect and (b) if such Additional  Project  Document is a
Material Project  Document,  the Company delivers a Consent with respect to such
Additional Project Document to the Collateral Agent.

SECTION  5.30 Change  Orders.  The Company  shall not initiate or consent to any
change order under the EPC Contract unless an Authorized  Officer of the Company
certifies  to the Trustee and the  Collateral  Agent that (a) such change  order
would not reasonably be expected to result in a Material Adverse Effect, (b) the
implementation  of such  change  order is not  reasonably  expected to cause the
Project to achieve  Completion  after the Guaranteed  Completion  Date, (c) such
change order is reasonable and is consistent with sound engineering practice and
(d)  unless  the  Independent   Engineer  has  concurred  in  writing  with  the
certifications  set forth in clauses (a),  (b) and (c) above,  such change order
does not  individually  exceed  $3,000,000,  or when  aggregated  with all other
change orders that have not been concurred with in writing or otherwise approved
or ratified by the Independent Engineer,  exceed $6,000,000;  provided that such
maximum  amounts  shall be increased by the amount of a related  increase in

                                       26

<PAGE>

the maximum amount of equity contributions required to be made by Cleco pursuant
to Section 2(c) of the Equity Contribution Agreement.

SECTION 5.31  Alterations  and  Additions(a) . (a) The Company may make,  cause,
suffer or permit to be made,  alterations of,  additions or improvements to, the
Project,  provided that (i) any such alteration,  addition or improvement  shall
not  reasonably  be expected to have a Material  Adverse  Effect;  (ii) any such
alteration,  addition or improvement shall be effected with due diligence,  in a
good and  workmanlike  manner and,  except  where the failure so to do could not
reasonably  be expected to result in a Material  Adverse  Effect,  in compliance
with all applicable Laws, insurance  requirements and any agreements,  contracts
or documents of record by which the Company is bound, other than, in the case of
any  thereof,  where  the  failure  to  be in  compliance  therewith  could  not
reasonably be expected to result in a Material  Adverse  Effect;  (iii) any such
alteration,  addition or improvement shall be conducted under the supervision of
a licensed  architect or engineer;  and (iv) each such  alteration,  addition or
improvement shall be promptly and fully paid for by the Company.

                  (b) The  Company's  right to make,  or  suffer or permit to be
made,  any  alteration,  addition  or  improvement  which  may cost in excess of
$5,000,000 shall also be subject to the following additional provisions: (i) any
such alteration,  addition or improvement shall not, in the reasonable  judgment
of the  Company,  diminish  the  value  of the  Collateral;  (ii)  prior  to the
commencement of any such alteration,  addition or improvement, the Company shall
deliver to the Trustee  certified  copies of all approvals from all municipal or
governmental  authorities having jurisdiction  thereof and permits required with
respect thereto; (iii) the Company shall procure and maintain such insurance and
performance,  labor,  and material bonds as are customary for similar  projects;
and  (iv)  promptly  upon  completion  of  any  such  alteration,   addition  or
improvement, the Company shall give notice thereof to the Trustee, together with
(A)  certificates  of the Company and a licensed  architect or engineer,  to the
effect that (1) such  alteration,  addition or  improvement  has been  completed
substantially in accordance with the applicable plans and specifications, to the
satisfaction  of the Company and such  architect or engineer,  and in a good and
workmanlike  manner and in  compliance  with all  applicable  Laws and insurance
requirements  and (2) all  contractors,  subcontractors,  materialmen  and other
suppliers  who could claim a lien on the Land or the Project by reason of having
supplied  labor or materials in  connection  with such  alteration,  addition or
improvement have been paid in full or bonded or have duly and effectually waived
or released all rights to any such liens; (B) original  counterparts of receipts
and  waivers  of liens  from or copies of bonds  relating  to such  contractors,
subcontractors,  materialmen  and other  suppliers who supply labor or materials
costing in excess of $50,000; (C) a permanent  certificate of occupancy covering
such  alteration,  addition  or  improvement,  if required to permit the use and
occupancy thereof; and (D) such other certificates, information and documents as
the Trustee may reasonably request.

                                       27

<PAGE>

                                   ARTICLE VI

                         EVENTS OF DEFAULT AND REMEDIES

                  SECTION  6.1 Events of  Default  Defined.  The term  "Event of
Default," whenever used herein, shall mean any of the following events (whatever
the reason for such event and whether it shall be  voluntary or  involuntary  or
come  about  or be  effected  by  operation  of  Law,  or be  pursuant  to or in
compliance with any applicable  Law), and any such event shall continue to be an
Event of Default if and for so long as it has not been remedied:

                  (a) the Company shall fail to pay any  principal  of,  premium
(if any) or interest on any Bond when the same becomes due and payable,  whether
by scheduled  maturity or required  redemption or by  acceleration or otherwise,
and such failure shall continue uncured for five or more days; or

                  (b) any  representation or warranty made by the Company in any
Financing  Document,  or in any  certificate or other document  furnished to any
Person in accordance with the terms of the Financing  Documents,  shall prove to
have been false or misleading in any respect as of the time made,  and the fact,
event or circumstance that gave rise to such  misrepresentation  has resulted in
or is  reasonably  expected  to result in a  Material  Adverse  Effect  and such
misrepresentation  or such Material Adverse Effect shall continue uncured for 30
or more  days  from  the  date an  Authorized  Officer  of the  Company  obtains
knowledge thereof; provided that if the Company commences efforts to cure (or to
cause to be cured) such misrepresentation by curing (or causing to be cured) the
factual situation resulting in such  misrepresentation  or such Material Adverse
Effect within such 30-day period,  the Company may continue to effect (or cause)
such cure, and such  misrepresentation  shall not be deemed an Event of Default,
for an  additional  60  days so long as an  Authorized  Officer  of the  Company
certifies to the Trustee and the Collateral Agent that such misrepresentation or
such Material  Adverse  Effect is reasonably  capable of being cured within such
period and that the Company is diligently pursuing (or causing) such cure; or

                  (c) the Company  fails to perform or observe  any  covenant or
agreement contained in Sections 5.2(d), 5.3, 5.6, 5.10(a)(ii), 5.18, 5.19, 5.20,
5.21,  5.22,  5.23, 5.24, 5.25, 5.26, 5.27, 5.28, 5.29 or 5.30, and such failure
shall  continue  uncured for 30 or more days after an Authorized  Officer of the
Company has actual knowledge of such failure; or

                  (d) the  Company  shall fail to perform or observe  any of its
covenants  contained in any other provision herein (other than those referred to
in clause (a) or (c) above) or any other  Financing  Document  and such  failure
shall  continue  uncured for 30 or more days after an Authorized  Officer of the
Company  has actual  knowledge  of such  failure;  provided  that if the Company
commences  efforts to cure such default within such 30-day  period,  the Company
may continue to effect such cure of the default  (and such default  shall not be
deemed an Event of Default) for an  additional  60 days so long as an Authorized
Officer of the Company provides an Officer's  Certificate to the Trustee and the
Collateral Agent stating that such default is reasonably  capable of being cured
within such period and that the Company is diligently pursuing such cure; or

                                       28

<PAGE>

                  (e) the Company,  Cleco or any provider of  Acceptable  Credit
Support  under the Equity  Contribution  Agreement  (if such  Acceptable  Credit
Support is not  replaced  within 30 days) (i)  applies  for or  consents  to the
appointment of, or the taking of possession by, a receiver,  custodian,  trustee
or liquidator of itself or of all or a  substantial  part of its property,  (ii)
admits in writing its inability, or be generally unable to pay its debts as such
debts  become  due,  (iii)  makes a general  assignment  for the  benefit of its
creditors,  (iv) commences a voluntary case under the Federal  Bankruptcy  Code,
(v) files a petition  seeking to take  advantage  of any other Law  relating  to
bankruptcy,   insolvency,   reorganization,   winding-up,   or   composition  or
readjustment  of debts,  (vi) fails to  controvert  within  sixty (60) days,  or
acquiesces in writing to, any petition filed against it in an  involuntary  case
under the Federal  Bankruptcy  Code or (vii) takes any formal limited  liability
company action for the purpose of effecting any of the foregoing; or

                  (f) a proceeding or case is commenced  without the application
or consent of the Company,  Cleco or any provider of Acceptable  Credit  Support
under the Equity  Contribution  Agreement (if such Acceptable  Credit Support is
not replaced within 30 days) in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization,  dissolution, winding-up, or the composition or
readjustment of debts or (ii) the appointment of a trustee, receiver, custodian,
liquidator  or the like for it or a  substantial  part of its property or assets
under any Laws relating to bankruptcy, insolvency,  reorganization,  winding-up,
or the  composition  or  readjustment  of  debts,  and such  proceeding  or case
continues  undismissed,  or any order,  judgment or decree approving or ordering
any of the  foregoing is entered and  continues  unstayed  and in effect,  for a
period of sixty (60) or more  consecutive  days, or any order for relief against
the Company,  Cleco or any such provider of Acceptable Credit Support is entered
in an involuntary case under the Federal Bankruptcy Code; or

                  (g)  any  Lien  granted  or  purported  to be  granted  in the
Security Documents shall cease to be a perfected lien in favor of the Collateral
Agent on the  Collateral  described  therein with the  priority  purported to be
created under the Security Documents; or

                  (h) any  event  of  default  under  any  Debt  of the  Company
(including  Permitted  Debt) shall occur and, as a result  thereof,  Debt of the
Company  in excess of  $10,000,000  shall  become due and  payable  prior to its
stated maturity; or

                  (i) a final and  non-appealable  judgment or judgments for the
payment of money in excess of $10,000,000  shall be rendered against the Company
and the  same  shall  remain  unpaid  or  unstayed  for a  period  of 60 or more
consecutive days; or

                  (j) an Event of Abandonment shall occur; or

                  (k) any Governmental Approval required for the construction or
operation  of the Project is revoked,  terminated,  withdrawn or ceases to be in
full force and effect and such revocation,  termination, withdrawal or cessation
could  reasonably be expected to result in a Material  Adverse Effect and is not
cured within 60 days following the occurrence thereof; or

                  (l) with respect to any Project Document,  (x) a material term
of such Project Document (i) ceases to be a valid and binding  obligation of the
parties thereto or (ii) is declared  unenforceable by a Governmental  Authority,
(y) such Project Document is terminated (prior to

                                       29

<PAGE>

its normal expiration), or (z) a Project Party denies its liability with respect
to  such  Project  Document  or a  Project  Party  defaults  in  respect  of its
obligations  under such  Project  Document  (and any grace or cure  period  with
respect  to such  failure  has  expired),  and in any  such  case  other  than a
termination  of the Tolling  Agreement  (prior to its normal  expiration),  such
event described in clause (x), (y) or (z) could reasonably be expected to result
in a Material  Adverse  Effect;  provided  that,  with  respect  to any  Project
Document  other than the Tolling  Agreement,  none of such events  described  in
clause (x),  (y) or (z) shall be deemed an Event of Default with respect to such
Project  Document if within 180 days from the occurrence of any such event,  the
Company  shall  have  (i)  with  respect  to any such  event  which is  curable,
diligently  proceeded to cure and cured or caused the relevant  Project Party to
cure the circumstances  described in clause (x), (y) or (z), as applicable,  and
caused the relevant  Project Party to resume  performance in accordance with the
relevant Project Document,  or (ii) entered into a Replacement  Project Document
in   substitution  of  the  relevant   Project   Document  which  is  reasonably
satisfactory to the Independent Engineer; or

                  (m) Cleco shall fail to perform any of its  obligations  under
the Equity Contribution Agreement.

                  SECTION 6.2  Enforcement  of  Remedies(a).  (a) If one or more
Events of Default occurs and is continuing, then:

                      (i) in the  case  of an  Event  of  Default  described  in
              Section  6.1(a),  the Trustee  shall,  upon the  direction  of the
              Holders of at least 33-1/3% in aggregate  principal  amount of the
              Outstanding  Bonds,  declare  the entire  principal  amount of the
              Outstanding Bonds, all interest accrued and unpaid thereon and all
              other amounts  payable under this  Indenture to be due and payable
              whereupon the same shall become immediately due and payable;

                      (ii) in the  case of an  Event  of  Default  described  in
              Section  6.1(e)  or  (f),  the  entire  principal  amount  of  the
              Outstanding Bonds, all interest accrued and unpaid thereon and all
              other amounts  payable under this  Indenture  shall  automatically
              become due and  payable  without  any action by the  Trustee,  the
              Holders of the Bonds or any other Person; and

                      (iii)  in the case of any  other  Event  of  Default,  the
              Trustee shall, upon the direction of the Required Holders, declare
              the entire principal amount of the Outstanding Bonds, all interest
              accrued and unpaid  thereon and all other  amounts  payable  under
              this  Indenture  to be due and payable,  whereupon  the same shall
              become immediately due and payable.

                  (b) At any time after the  principal  of the Bonds  shall have
become due and payable  upon a declared  acceleration  as provided  herein,  and
before  any  judgment  or decree  for the  payment  of the money so due,  or any
portion  thereof,  is entered,  the  Required  Holders by written  notice to the
Company  and the  Trustee,  may  rescind  and  annul  such  declaration  and its
consequences if:

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<PAGE>

                  (i)  there  shall  have  been  paid to or  deposited  with the
              Trustee a sum sufficient to pay:

                  (A) all overdue installments of interest on the Bonds;

                  (B) the  principal  of and  premium (if any) on any Bonds that
              have become due other than by such declaration of acceleration and
              interest thereon at the respective rates provided in the Bonds for
              late payments of principal;

                  (C) to the extent  that  payment of such  interest  is lawful,
              interest upon overdue  installments  of interest at the respective
              rates provided in the Bonds for late payments of interest; and

                  (D) all sums paid or advanced by the Trustee hereunder and the
              reasonable   compensation   of  the  Trustee  for   ordinary   and
              extraordinary services, expenses,  disbursements,  and advances of
              the Trustee, its agents and counsel; and

                  (ii) all Events of Default,  other than the  nonpayment of the
        principal of the Bonds that has become due solely by such  acceleration,
        have been cured or waived as provided in Section 6.6 hereof.

                  No such  rescission  shall  affect any  subsequent  Default or
Event of Default or impair any right consequent thereon.

                  SECTION 6.3 Judicial Proceedings Instituted by Trustee.

                  (a)  Trustee  May  Bring  Suit.  Subject  to the  terms of the
Intercreditor  Agreement  and Section 6.2 hereof,  if an Event of Default  shall
have  occurred  and be  continuing,  then the Trustee,  in its own name,  and as
trustee of an express  trust,  subject to the  provisions of Section 6.2 hereof,
shall be entitled and empowered to institute any suits,  actions or  proceedings
at Law, in equity or otherwise, for the collection of the sums so due and unpaid
on the Bonds,  and may  prosecute  any such claim or  proceeding  to judgment or
final decree,  and, subject to the  Intercreditor  Agreement with respect to the
Collateral, may enforce any such judgment or final decree and collect the moneys
adjudged or decreed to be payable in any manner provided by Law, whether before,
after or during the pendency of any  proceedings  for the  enforcement of any of
the Trustee's rights or the rights of the Holders under this Indenture, and such
power of the  Trustee  shall not be  affected  by any sale  hereunder  or by the
exercise  of any  other  right,  power  or  remedy  for the  enforcement  of the
provisions of this Indenture.

                  (b) Trustee May Recover  Unpaid Debt after Sale of Collateral.
Subject to the terms of the  Intercreditor  Agreement,  in the case of a sale of
the  Collateral  and of the  application  of the  proceeds  of such  sale to the
payment of the Debt secured by this Indenture,  the Trustee in its own name, and
as  trustee  of an  express  trust,  shall be  entitled  and  empowered,  by any
appropriate means, legal, equitable or otherwise,  to enforce payment of, and to
receive all amounts then remaining due and unpaid upon, all or any of the Bonds,
for the benefit of the Holders thereof,  with interest at the rates specified in
the  respective  Bonds on the overdue  principal of and premium (if any) and (to
the extent that payment of such interest is legally  enforceable) on the overdue
installments of interest.

                                       31

<PAGE>

                  (c) Recovery of Judgment Does Not Affect  Rights.  No recovery
of any such judgment or final decree by the Trustee and no levy of any execution
under any such judgment upon any of the Collateral,  or upon any other property,
shall in any manner or to any extent  affect any  rights,  powers or remedies of
the Trustee, or any liens,  rights,  powers or remedies of the Holders,  but all
such liens, rights, powers or remedies shall continue unimpaired as before.

                  (d) Trustee May File Proofs of Claim;  Appointment  of Trustee
as  Attorney-in-Fact  in  Judicial  Proceedings.  Subject  to the  terms  of the
Intercreditor  Agreement,  the  Trustee  in its own name,  and as  trustee of an
express trust, or as attorney-in fact for the Holders,  or in any one or more of
such capacities  (irrespective  of whether the principal of the Bonds shall then
be due and payable as therein  expressed  or by  declaration  or  otherwise  and
irrespective  of whether the Trustee  shall have made any demand for the payment
of overdue  principal,  premium (if any) or  interest),  shall be  entitled  and
empowered  to file such proofs of claim and other  papers or documents as may be
necessary  or  advisable  in order to have the claims of the  Trustee and of the
Holders  (whether  such claims be based upon the  provisions  of the Bonds or of
this Indenture)  allowed in any equity,  receivership,  insolvency,  bankruptcy,
liquidation,  readjustment,  reorganization  or any other  judicial  proceedings
relating to the Company or any other obligor on the Bonds,  the creditors of the
Company or any such obligor, the Collateral or any other property of the Company
or  any  such  obligor,  and  any  receiver,   assignee,  trustee,   liquidator,
sequestrator  (or other  similar  official) in any such  judicial  proceeding is
hereby  authorized  by each Holder to make such  payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the  Holders,  to pay to the Trustee any amount due to it for the  reasonable
compensation,  expenses,  disbursements and advances of the Trustee,  its agents
and counsel. Subject to the terms of the Intercreditor Agreement, the Trustee is
hereby  irrevocably  appointed  (and the  successive  respective  Holders of the
Bonds, by taking and holding the same,  shall be conclusively  deemed to have so
appointed the Trustee) the true and lawful  attorney-in-fact  of the  respective
Holders, with authority to:

                  (i)  make  and file in the  respective  names  of the  Holders
              (subject to  deduction  from any such claims of the amounts of any
              claims filed by any of the Holders  themselves),  any claim, proof
              of claim or amendment  thereof,  debt,  proof of debt or amendment
              thereof, petition or other document in any such proceedings and to
              receive payment of any amounts distributable on account thereof;

                  (ii) execute any such other papers and documents and to do and
              perform any and all such acts and things for and on behalf of such
              Holders,  as may be  necessary  or  advisable in order to have the
              respective  claims of the Trustee  and of the Holders  against the
              Company or any such obligor,  the Collateral or any other property
              of the Company or any such obligor allowed in any such proceeding;
              and

                  (iii)  receive  payment of or on  account  of such  claims and
              debt;

provided,  however,  that nothing contained in this Indenture shall be deemed to
give to the Trustee any right to accept or consent to any plan of reorganization
or  otherwise  by action of any  character  in any such  proceeding  to waive or
change in any way any right of any Holder.  Any moneys  collected by the Trustee
under this Section shall be applied as provided in Section 6.10 hereof.

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<PAGE>

                  (e) Trustee Need Not Have  Possession of Bonds.  All proofs of
claim,  rights of action and rights to assert  claims  under this  Indenture  or
under any of the Bonds may be enforced by the Trustee  without the possession of
the Bonds or the production thereof at any trial or other proceedings instituted
by the  Trustee.  In any  proceedings  brought  by the  Trustee  (and  also  any
proceedings  involving the  interpretation of any provision of this Indenture or
the Bonds to which the Trustee  shall be a party) the  Trustee  shall be held to
represent all the Holders of the Bonds and it shall not be necessary to make any
such Holders parties to such proceedings.

                  (f) Suit to Be Brought for Ratable Benefit of Holders.  Except
with respect to a suit, action or other proceeding at law brought to seek moneys
owed to the Trustee,  any suit,  action or other proceeding at law, in equity or
otherwise which is instituted by the Trustee under any of the provisions of this
Indenture or the Bonds shall be for the equal, ratable and common benefit of all
the Holders, subject to the provisions of this Indenture.

                  (g) Trustee May Be Restored to Former  Position  and Rights in
Certain  Circumstances.  If the Trustee institutes any proceeding to enforce any
right,  power or remedy under this Indenture or the Bonds by foreclosure,  entry
or otherwise, and such proceedings are determined adversely to the Trustee, then
and in every such case the Company  and the  Trustee  shall be restored to their
former positions and rights  hereunder,  and all rights,  powers and remedies of
the Trustee shall continue as if no such proceedings had been taken.

                  SECTION  6.4  Holders  May  Demand  Enforcement  of  Rights by
Trustee.  If any Event of Default shall have  occurred and shall be  continuing,
the Trustee shall, subject to the terms of the Intercreditor Agreement, upon the
written request of the Required  Holders proceed to institute one or more suits,
actions  or  proceedings  at law,  in  equity  or  otherwise,  or take any other
appropriate  remedy, to enforce payment of the principal of, or premium (if any)
or  interest  on,  the  Bonds,  to  deliver  notice to the  Collateral  Agent in
accordance with the Intercreditor Agreement requesting that the Collateral Agent
foreclose  under  the  Security  Documents  or to sell  the  Collateral  under a
judgment or decree of a court or courts of competent  jurisdiction  or under the
power of sale granted in the Security Documents,  or the Trustee may, subject to
the terms of the Intercreditor  Agreement,  take such other  appropriate  legal,
equitable  or other  remedy,  as the  Trustee,  which may be advised by counsel,
deems reasonably  designed to protect and enforce any of the rights or powers of
the Trustee or the Holders,  or, in case such Holders  request a specific method
of enforcement permitted hereunder, in the manner required, subject to the terms
of the Intercreditor Agreement, provided that such action shall not be otherwise
than in  accordance  with  Law and the  provisions  of this  Indenture,  and the
Trustee,  subject to Section 10.1, shall have the right to decline to follow any
such  request  if the  Trustee  in good  faith  shall  determine  that the suit,
proceeding  or exercise of the remedy so  requested  would expose the Trustee to
personal liability or expense.

                  SECTION 6.5 Control by Holders.  The  Required  Holders  shall
have the right to direct the time, method and place of conducting any proceeding
for any  remedy  available  to the  Trustee  or  exercising  any  trust or power
conferred  on the  Trustee,  provided  that (i) such  direction  shall not be in
conflict with any Law, this Indenture or the Intercreditor  Agreement,  and (ii)
the Trustee may take any other action  deemed proper by the Trustee which is not
inconsistent with such direction.

                                       33

<PAGE>

                  SECTION 6.6 Waiver of Past Defaults or Events of Default.  The
Required  Holders  may,  on behalf of the  Holders of all Bonds,  waive any past
Default or Event of Default and its consequences  except that (i) in the case of
a Default or Event of Default in respect of a covenant or provisions hereof that
under  Section 8.2 hereof  cannot be modified or amended  without the consent of
Holders holding at least 662/3% in aggregate principal amount of the Outstanding
Bonds, the Holders of not less than 662/3% in aggregate  principal amount of the
Outstanding  Bonds must vote to waive such  Default or Event of Default and (ii)
in the case of a  Default  or Event of  Default  in  respect  of a  covenant  or
provisions  hereof that under  Section 8.2 hereof  cannot be modified or amended
without the consent of each Holder  affected by such  modification or amendment,
each Holder affected by such Default or Event of Default must vote to waive such
Default or Event of Default.  Upon any such waiver such  Default  shall cease to
exist and any Event of Default  arising  therefrom  shall be deemed to have been
cured for every purpose of this Indenture or the Intercreditor Agreement, but no
such waiver shall extend to any  subsequent or other Default or Event of Default
or impair any right consequent thereon.

                  SECTION  6.7 Holder May Not Bring Suit  Except  Under  Certain
Conditions.  A Holder shall not have the right to institute any suit,  action or
proceeding at law or in equity or otherwise for the appointment of a receiver or
for the enforcement of any other remedy under or upon this Indenture, unless:

                  (a) such Holder  previously  has given  written  notice to the
Trustee of a continuing Event of Default;

                  (b) the  Required  Holders  (or,  in the  case of an  Event of
Default described in Section 6.1(a), the Holders of at least twenty-five percent
(25%) in  aggregate  principal  amount of the  Outstanding  Bonds)  request  the
Trustee in writing to institute such action, suit or proceeding;

                  (c) the  Trustee  refuses or neglects  to  institute  any such
action,  suit or proceeding for sixty (60) days after the Trustee  receives such
notice;

                  (d) no direction  inconsistent  with such written  request has
been given to the Trustee during such 60-day period by the Required Holders; and

                  (e) the institution of such suit,  action or proceeding is not
prohibited by the Intercreditor Agreement.

                  It is  understood  and  intended  that  no one or  more of the
Holders has any right in any manner whatever hereunder or under the Bonds to (i)
surrender,  impair, waive, affect, disturb or prejudice the Lien of the Security
Documents  on any property  subject  thereto or the rights of the Holders of any
other Bonds, (ii) obtain or seek to obtain priority or preference over any other
such  Holder or (iii)  enforce  any right  under this  Indenture,  except in the
manner herein provided and for the equal,  ratable and common benefit of all the
Holders,  subject to the  provisions  of this  Indenture  and the  Intercreditor
Agreement.

                  SECTION 6.8  Undertaking  to Pay Court  Costs.  All parties to
this Indenture,  and each Holder by his acceptance of a Bond, shall be deemed to
have agreed that any court may in its discretion require, in any suit, action or
proceeding for the enforcement of any right or remedy hereunder,  or in any suit
against the Trustee for any action taken or omitted by it as

                                       34

<PAGE>

Trustee  hereunder,  the filing by any party  litigant  in such suit,  action or
proceeding  of any  undertaking  to pay  the  costs  of  such  suit,  action  or
proceeding, and that such court may, in its discretion, assess reasonable costs,
including  reasonable  attorneys' fees, against any party litigant in such suit,
action or  proceeding  having  due  regard to the  merits  and good faith of the
claims or defenses  made by such party  litigant;  provided,  however,  that the
provisions  of this  Section  6.8 shall  not  apply to (a) any  suit,  action or
proceeding  instituted  by the  Trustee,  (b) any  suit,  action  or  proceeding
instituted by any Holder or group of Holders  holding in the aggregate more than
ten percent (10%) in aggregate  principal amount of the Outstanding Bonds (other
than with respect to the Trustee if it is an adverse party in such suit,  action
or  proceeding) or (c) any suit,  action or proceeding  instituted by any Holder
for the  enforcement  of the payment of the principal of, or premium (if any) or
interest on, any of the Bonds,  on or after the respective  due dates  expressed
therein  (other than with  respect to the  Trustee if it is an adverse  party in
such suit, action or proceeding).

SECTION 6.9 Right of Holders to Receive Payment Not to Be Impaired.  Anything in
this  Indenture  to the  contrary  notwithstanding,  the right of any  Holder to
receive  payment of the principal of,  premium (if any) and interest on, a Bond,
on or after the  respective  due dates  expressed  in such Bond (or,  in case of
redemption,  on the Redemption  Date fixed for such Bond),  or to institute suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

SECTION 6.10  Application of Moneys  Collected by Trustee.  At any time when the
Company is in default of payment of fees owed to the  Trustee or  following  the
application  of funds as  provided  in the  Intercreditor  Agreement,  any money
collected or to be applied by the Trustee pursuant to this Article VI in respect
of the Bonds of a series,  together with any other moneys which may then be held
by the Trustee under any of the provisions of this Indenture as security for the
Bonds of such series  (other than moneys at the time required to be held for the
payment of specific Bonds of such series at their stated maturities or at a time
fixed for the redemption  thereof) shall be applied in the following  order from
time to time, on the date or dates fixed by the Trustee:

              FIRST:  to the  payment  of all  amounts  due the  Trustee  or any
         predecessor Trustee under Section 10.7 Thereof;

              SECOND: if the unpaid principal amount of the Outstanding Bonds of
         such  series or any of them has not become  due,  to the payment of any
         interest  in  default,  in the order of the  maturity  of the  payments
         thereof,  with interest at the rates specified in the respective  Bonds
         of such  series in  respect  of overdue  payments  (to the extent  that
         payment of such interest shall be legally  enforceable) on the payments
         of interest then overdue;

              THIRD:  if  the  unpaid  principal  amount  of a  portion  of  the
         Outstanding  Bonds of such series has become due,  first to the payment
         of accrued  interest  on all  Outstanding  Bonds of such  series in the
         order of the maturity of the  payments  thereof,  with  interest at the
         respective  rates  specified  in the Bonds of such  series for  overdue
         payments of principal, premium (if any) and (to the extent that payment
         of such interest shall be

                                       35

<PAGE>

         legally enforceable)  interest then overdue, and next to the payment of
         the unpaid principal amount of the portion of all Outstanding  Bonds of
         such series then due;

              FOURTH:  if the  unpaid  principal  amount of all the  Outstanding
         Bonds of such series has become due,  first to the payment of the whole
         amount  then due and unpaid upon the  Outstanding  Bonds of such series
         for interest,  including  interest at the respective rates specified in
         the Bonds of such series for overdue payments on principal, premium (if
         any) and (to the extent that payment of such interest  shall be legally
         enforceable)  interest  then overdue and second,  to the payment of the
         whole  amount  then due and unpaid upon the  Outstanding  Bonds of such
         series for principal and premium (if any); and

              FIFTH: if the unpaid principal amount of all the Outstanding Bonds
         of such series has become due, and all of the Outstanding Bonds of such
         series shall have been fully paid, any surplus then remaining  shall be
         paid to the  Company,  or to  whomsoever  may be  lawfully  entitled to
         receive the same, or as a court of competent jurisdiction may direct;

         provided,  however,  that all  payments  in  respect  of the Bonds of a
         series to be made pursuant to clauses "SECOND" through "FOURTH" of this
         Section  6.10  shall be made  ratably  to the  Holders of Bonds of such
         series entitled thereto,  without  discrimination or preference,  based
         upon the ratio of (i) the unpaid  principal amount of the Bonds of such
         series in respect of which such  payment is to be made that are held by
         each such  Holder to (ii) the unpaid  principal  amount of all Bonds of
         such series.

                  SECTION  6.11 Bonds Held by  Certain  Persons  Not to Share in
Distribution.  Any Bonds known to the Trustee to be owned or held by, or for the
account or benefit of, the Company or an Affiliate  of the Company  shall not be
entitled to share in any payment or distribution provided for in this Article VI
until all Bonds held by other Persons have been indefeasibly paid in full.

                  SECTION 6.12 Waiver of Appraisement, Valuation, Stay, Right to
Marshalling.  To the full extent it may lawfully do so, the Company,  for itself
and for any other Person who may claim through or under it, hereby:

                  (a) agrees  that  neither it nor any such  Person will set up,
plead,  claim or in any manner  whatsoever  take  advantage  of, any  appraisal,
valuation,  stay, extension or redemption laws, now or hereafter in force in any
jurisdiction which may delay, prevent or otherwise hinder (i) the performance or
enforcement of this Indenture,  (ii) the foreclosure of the Security  Documents,
(iii) the sale of any of the  Collateral or (iv) the putting of the purchaser or
purchasers thereof into possession of such Collateral immediately after the sale
thereof;

                  (b) waives all benefit or advantage of any such Laws;

                  (c) consents and agrees that the Collateral may be sold by the
Collateral Agent as an entirety or in parts; and

                  (d) waives  and  releases  all  rights to have the  Collateral
marshaled upon any foreclosure,  sale or other  enforcement of this Indenture or
the Security Documents.

                                       36

<PAGE>

                  SECTION  6.13  Remedies  Cumulative;  Delay or Omission  Not a
Waiver.  Each and every right, power and remedy herein specifically given to the
Trustee shall be cumulative and shall be in addition to every other right, power
and remedy  herein  specifically  given or now or hereafter  existing at law, in
equity  or by  statute,  and each and every  right,  power  and  remedy  whether
specifically  herein given or otherwise  existing may be exercised  from time to
time and as often and in such order as may be deemed  expedient  by the  Trustee
and the  exercise or the  commencement  of the  exercise of any right,  power or
remedy  shall not be  construed  to be a waiver of the right to  exercise at the
same  time or  thereafter  any other  right,  power or  remedy,  and no delay or
omission by the Trustee in the exercise of any right,  power or remedy or in the
pursuance of any remedy  shall  impair any such right,  power or remedy or to be
construed  to be a waiver of any  default  on the part of the  Company  or be an
acquiescence therein.

SECTION 6.14 The Intercreditor Agreement.  Simultaneously with the execution and
delivery of this Indenture and the Depositary Agreement, the Trustee shall enter
into the  Intercreditor  Agreement as a Secured  Party  thereunder  on behalf of
itself and all Holders of the Outstanding Bonds and all future Holders of any of
the Bonds.  All rights,  powers and  remedies  available  to the Trustee and the
Holders of the Outstanding Bonds and all future Holders of any of the Bonds with
respect  to the  Security  Documents  shall  be  subject  to  the  Intercreditor
Agreement.  In the event of any conflict or inconsistency  between the terms and
provisions of this Indenture and the terms and  provisions of the  Intercreditor
Agreement,  the terms and provisions of the Intercreditor Agreement shall govern
and control.  By their  purchase of the Bonds and by the sale of the Bonds,  the
Holders and the Company, respectively, authorize and direct the Trustee to enter
into the  Intercreditor  Agreement.  Any actions taken by the Trustee as Secured
Party under the Intercreditor Agreement shall be subject to the terms of Section
11.13 of this Indenture.  The Trustee shall have no  responsibility or liability
for the acts of the Collateral Agent under the Intercreditor Agreement.

SECTION 6.15 The Depositary Agreement. On the Closing Date, the Collateral Agent
shall enter into the Depositary  Agreement on behalf of the Trustee, all Holders
of the Outstanding  Bonds, all future Holders of any Bonds and all other present
and  future  Secured  Parties.  In the event of any  conflict  or  inconsistency
between the terms and  provisions of this Indenture and the terms and provisions
of the  Depositary  Agreement,  the  terms  and  provisions  of  the  Depositary
Agreement  shall govern and control.  By their  purchase of the Bonds and by the
sale of the Bonds,  the Holders and the  Company,  respectively,  authorize  and
direct the Trustee to direct the  Collateral  Agent to enter into the Depositary
Agreement.  The Trustee shall have no liability  for the acts of the  Securities
Intermediary or the Collateral Agent under the Depositary Agreement.

                                   ARTICLE VII

                                 ACTS OF HOLDERS

SECTION 7.1 Acts of Holders.  Any  request,  demand,  authorization,  direction,
notice,  consent,  waiver or other action provided by this Indenture to be given
or taken by Holders  (collectively,  an "Act" of such  Holders,  which term also
shall  refer  to the  instrument  or  instruments  and/or  record  embodying  or
evidencing the same) may be embodied in and evidenced by one or more instruments
of  substantially  similar tenor signed by such Holders in

                                       37

<PAGE>

Person  or by agent  or proxy  duly  appointed  in  writing.  Except  as  herein
otherwise  expressly  provided,  any such Act shall become  effective  when such
instrument  or  instruments  are  delivered  to  the  Trustee,  and  when  it is
specifically  required  herein,  to the Company.  Proof of execution of any such
instrument or  instruments  or of a writing  appointing  any such agent shall be
sufficient  for any purpose of this  Indenture  and  conclusive  in favor of the
Trustee and the Company, if made in the manner provided in this Section 7.1.

SECTION 7.2 Proof of Execution of Instruments and of Holding of Bonds.  Proof of
execution of any instrument by a Holder, of a writing  appointing any agent of a
Holder or of a written  proxy of a Holder and proof of the holding by any Person
of any of the Bonds shall be sufficient if made in the following manner:

(a) The fact and date of the  execution by any Person of any such  instrument or
writing may be proved by the  certificate  of any notary public or other officer
of any jurisdiction  authorized to take  acknowledgments  of deeds or administer
oaths  that  the  Person  executing  such  instrument  acknowledged  to him  the
execution  thereof,  or by an affidavit of a witness to such execution  sworn to
before any such notary or other such officer,  and where such execution is by an
officer  of a  corporation,  association  or  partnership,  on  behalf  of  such
corporation,  association or  partnership,  such  certificate or affidavit shall
also  constitute  sufficient  proof of his  authority.  The fact and date of the
execution  of any such  instrument  or writing,  or the  authority of the Person
executing  the same,  may also be proved in any other  manner  which the Trustee
deems sufficient.

(b) The  principal  amount and serial  numbers of Bonds held by any Person,  the
date or dates of holding the same, and the ownership of Bonds shall be proved by
the  Bonds  Register  and the  Trustee  shall not be  affected  by notice to the
contrary.

(c) Bonds of any series  authenticated  and  delivered  after any Act of Holders
may, and shall if required by the Trustee,  bear a notation in form  approved by
the Trustee as to any action taken by such Act of Holders.  If the Company shall
so determine,  new Bonds of any series so modified as to conform, in the opinion
of the Trustee and the Company, to such Act, may be prepared and executed by the
Company and  authenticated  and  delivered  by the  Trustee in exchange  for the
Outstanding Bonds of such series.

SECTION 7.3 Bonds Owned by the Company or Affiliate Deemed Not  Outstanding.  In
determining  whether the Holders of the requisite  aggregate principal amount of
Bonds have concurred in any request, demand,  authorization,  direction, notice,
consent and waiver or other act under this  Indenture,  Bonds which are owned by
the Company , any Affiliate of the Company, The Williams Companies,  Inc. or any
entity known by the Trustee to be an Affiliate of The Williams  Companies,  Inc.
shall be  disregarded  and deemed not to be  Outstanding  for the purpose of any
such  determination  except  that for the  purposes of  determining  whether the
Trustee shall be protected in relying on any such direction,  consent or waiver,
only Bonds for which the Trustee has received  written  notice of such ownership
as  conclusively  evidenced by the Bonds Register shall be so  disregarded.  The
Company shall furnish the Trustee,  upon its reasonable request,  with a list of
its Affiliates.

                                       38
<PAGE>

SECTION 7.4 Right of Revocation  of Action Taken.  At any time prior to (but not
after) the evidencing to the Trustee,  as provided in Section 7.1 hereof, of the
taking of any Act by the Holders of the percentage in aggregate principal amount
of the Bonds or of any series of Bonds specified in this Indenture in connection
with such Act,  any Holder of a Bond the serial  number of which is shown by the
evidence to be included in the Bond the Holders of which have  consented to such
Act may,  by  filing  written  notice  with the  Trustee  (or  causing  its duly
appointed  agent to file  written  notice  with the  Trustee)  and upon proof of
holding as provided  in Section  7.2 hereof,  revoke such Act so far as concerns
such  Bond.  Except as  aforesaid,  any such Act taken by the Holder of any Bond
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of such Bond,  and of any Bond  issued in  exchange  therefor or in place
thereof,  irrespective  of whether or not any notation in regard thereto is made
upon such Bond or any Bond issued in exchange  therefor or in place  thereof and
shall be valid  notwithstanding  that such Act is taken in  connection  with the
transfer  of  such  Bond to any  other  Person,  including  the  Company  or any
Affiliate  thereof.  Any Act taken by the Holders of the percentage in aggregate
principal  amount of the Bonds  specified in this  Indenture in connection  with
such Act shall be  conclusively  binding upon the  Company,  the Trustee and the
Holders of all the Bonds.

                                  ARTICLE VIII

                           AMENDMENTS AND SUPPLEMENTS

SECTION 8.1 Amendments and Supplements to Indenture  without Consent of Holders.
This Indenture may be amended or  supplemented by the Company and the Trustee at
any  time and from  time to time,  without  the  consent  of the  Holders,  by a
Supplemental  Indenture authorized by a resolution of the Members of the Company
filed with, and in form  satisfactory to the Trustee,  solely for one or more of
the following purposes:

(a) to add additional  covenants of the Company, to surrender any right or power
herein  conferred  upon the Company or to confer upon the Holders any additional
rights,  remedies,   benefits,  powers  or  authorities  that  may  lawfully  be
conferred;

                  (b) to increase the assets securing the Company's  obligations
under this Indenture;

                  (c) to provide  for the  issuance of  Additional  Bonds on the
conditions set forth in Article II hereof;

                  (d) for any  purpose not  inconsistent  with the terms of this
Indenture  to cure any  ambiguity  or to correct  or  supplement  any  provision
contained  herein or in any  Supplemental  Indenture  which may be  defective or
inconsistent  with any other provision  contained  herein or in any Supplemental
Indenture,  provided that such amendments do not adversely affect Trustee or any
Holder;

(e) in connection with, and to reflect,  any amendments to the provisions hereof
required by the Rating Agency in circumstances where confirmation of the ratings
of the Bonds are required under this Indenture or the Company  otherwise desires
to obtain a Rating

                                       39
<PAGE>

Reaffirmation;  provided,  however, that such amendments do not adversely affect
the Trustee or any Holder; or

                  (f) to  appoint a  successor  Trustee in  accordance  with the
terms and conditions of Article XI.

SECTION 8.2  Amendments  and  Supplements  to Indenture with Consent of Holders.
With the prior  written  consent of the  Holders of not less than a majority  in
aggregate  principal  amount  of the  Outstanding  Bonds  of  each  series  then
outstanding,  this Indenture may be amended or  supplemented  by the Company and
the  Trustee  at any time and from time to time,  for the  purpose of adding any
mutually agreeable provisions to or changing in any manner or eliminating any of
the provisions of, this Indenture,  and compliance with any provision hereof may
be waived; provided that, without the prior written consent of each Holder of an
Outstanding  Bond  of each  series  affected  thereby,  no  such  supplement  or
amendment and no such waiver of  compliance  with any of the  provisions  hereof
shall alter or modify or waive  compliance with (i) any provision  governing the
amount of principal,  premium (if any) or interest payable upon any Bonds of any
series,  (ii) any  provision  governing  the time of payment of  principal of or
premium or interest on any Bonds of any series,  (iii) any  provision  governing
the dates of maturity of any Bonds of any series or (iv) any  provision  of this
Article VIII.  Notice of any such amendment shall be given by the Company to any
Rating Agency then maintaining a rating for the Bonds.

SECTION 8.3 Trustee  Authorized to Join in Amendments and Supplements;  Reliance
on Counsel.  The Trustee is authorized to join with the Company in the execution
and  delivery of any  Supplemental  Indenture  or  amendment  permitted  by this
Article  VIII and in so doing shall be fully  protected by an Opinion of Counsel
that such Supplemental  Indenture or amendment is so permitted and has been duly
authorized  by the Company and that all things  necessary to make it a valid and
binding agreement have been done.

SECTION  8.4  Effect  of  Supplemental  Indentures.  Upon the  execution  of any
Supplemental Indenture under this Article VIII, this Indenture shall be modified
in accordance  therewith,  and such Supplemental  Indenture shall form a part of
this  Indenture  for all  purposes;  and  every  Holder  of Bonds  therefore  or
thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 8.5 Reference in Bonds to Supplemental  Indentures.  Bonds authenticated
and delivered after the execution of any Supplemental Indenture pursuant to this
Article VIII may, and shall if required by the Company,  bear a notation in form
approved by the Company  and the Trustee as to any matter  provided  for in such
Supplemental  Indenture;  and, in such case,  suitable notation may be made upon
Outstanding Bonds after proper  presentation and demand. If the Company shall so
determine,  new Bonds so modified  as to conform,  in the opinion of the Company
and the Trustee, to any such Supplemental Indenture may be prepared and executed
by the Company and  authenticated  and  delivered by the Trustee in exchange for
Outstanding Bonds.

                                       40
<PAGE>

ARTICLE IX

                           SATISFACTION AND DISCHARGE

SECTION 9.1 Satisfaction  and Discharge of Indenture.  This Indenture shall upon
request of the  Company  cease to be of further  effect  (except as  hereinafter
expressly  provided),  and the  Trustee,  at the expense of the  Company,  shall
execute  proper  instruments  acknowledging  satisfaction  and discharge of this
Indenture, when:

(a) the Company shall have  indefeasibly paid in full the principal of, premium,
if any,  and interest on all of the  Outstanding  Bonds in  accordance  with the
terms  hereof and of the Bonds,  and all other  amounts,  if any,  for which the
Company is  obligated  hereunder  or under any other  Transaction  Document  (in
respect of the Bonds) as and when the same  shall have  become due and  payable;
and

(b) the Company  shall have  delivered to the Trustee an  Officer's  Certificate
stating  that the  condition  set  forth in the  preceding  clause  (a) has been
complied with.

                  Upon  satisfaction  of the aforesaid  conditions,  the Trustee
shall,  upon  receipt of a written  request  from the  Company,  acknowledge  in
writing the  satisfaction  and  discharge of this  Indenture  and take all other
action  reasonably  requested by the Company to evidence the  termination of any
and all Liens created with respect to this Indenture or the Security Documents.

                  Notwithstanding   the   satisfaction  and  discharge  of  this
Indenture as  aforesaid,  the  obligations  of the Company and the Trustee under
Section 10.7 hereof and this Article IX shall survive.

                  Upon  satisfaction and discharge of this Indenture as provided
in this Section 9.1, the Trustee shall assign, transfer and turn over to or upon
the order of the Company any and all money,  securities  and other property then
held by the Trustee for the benefit of the Holders.

ARTICLE X

                                   THE TRUSTEE

SECTION  10.1 Certain  Duties and  Responsibilities  of  Trustee. (a) Except
during the continuance of an Event of Default,

(i)      the Trustee  undertakes  to perform such duties and only such duties as
         are specifically set forth in this Indenture,  and no implied covenants
         or obligations  shall be read into this Indenture  against the Trustee;
         and

(ii)     in the absence of bad faith on its part,  the Trustee may  conclusively
         rely,  as to the truth of the  statements  and the  correctness  of the
         opinions expressed therein,  upon certificates or opinions furnished to
         the Trustee and conforming to the  requirements of this Indenture;  but
         in the case of any such certificates or opinions which by any provision
         hereby are  specifically  required to be furnished to the Trustee,

                                       41
<PAGE>

the Trustee  shall be under a duty to examine the same to  determine  whether or
not they appear on their face to conform to the  requirements of this Indenture,
provided  that the  Trustee  may rely upon an Opinion of Counsel in making  such
determinations.

(b) In case an Event of Default  has  occurred  and is  continuing,  the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise,  as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

(c) No  provision  of this  Indenture  shall be construed to relieve the Trustee
from liability for its own negligent  action,  its own negligent failure to act,
or its own willful misconduct, except that

                  (i) this  subsection  (c) shall not be  construed to limit the
effect of subsection (a) of this Section;

(ii)     the Trustee  shall not be liable for any error of judgment made in good
         faith by an  Authorized  Officer,  unless it shall be  proved  that the
         Trustee was negligent in ascertaining the pertinent facts;

(iii)    the  Trustee  shall not be liable with  respect to any action  taken or
         omitted  to be  taken  by it in  good  faith  in  accordance  with  the
         direction of the Holders of at least a majority in principal  amount of
         the Outstanding Bonds; and

(iv)     no provision of this  Indenture  shall require the Trustee to expend or
         risk its own funds or otherwise  incur any  financial  liability in the
         performance of any of its duties  hereunder,  or in the exercise of any
         of its  rights or  powers,  if it shall  have  reasonable  grounds  for
         believing  that repayment of such funds or adequate  indemnity  against
         such risk or liability is not reasonably assured to it.

(d)  Whether or not therein  expressly  so  provided,  every  provision  of this
Indenture,  the Depositary Agreement and the Intercreditor Agreement relating to
the conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.

(e) The Trustee shall  deliver to each Holder of an Initial Bond,  promptly upon
receipt thereof, duplicates or copies of all notices, requests,  instruments and
other  documents  received  by it in  connection  with the  Project  or under or
pursuant to this Indenture,  to the extent that the same have not been furnished
hereto or thereto to such Holders.

(f) The Trustee shall not be responsible for insuring the Project or determining
whether any insurance  complies with the  requirements  of this Indenture or for
collecting  any  insurance  moneys  and  shall  have no  responsibility  for the
financial, physical or other condition of the Project.

                  (g) The Trustee  shall not be  responsible  for the  creation,
perfection,  continuation or priority of any security interest in or Lien on the
Collateral.

                                       42
<PAGE>

SECTION 10.2 Notice of  Defaults.  If payment of any interest on any Bond is not
made when it becomes due and payable and such failure continues unremedied for a
period of three (3) days, the Trustee shall,  as soon thereafter as practicable,
notify the Company that it has failed to make interest  payments by telephone or
telecopy.  Any telephonic notice shall be promptly confirmed in writing.  Within
three  (3)  days  after  the  occurrence  of any  Event  of  Default  of which a
Responsible  Officer of the Trustee  has actual  knowledge,  the  Trustee  shall
transmit by mail to all Holders of Bonds, as their names and addresses appear in
the Bonds Register, notice of such Event of Default known to the Trustee, unless
such Event of Default shall have been cured or waived.

                  Except as otherwise  expressly  provided  herein,  the Trustee
shall not be bound to ascertain or inquire as to the  performance  or observance
of any of the terms, conditions, covenants or agreements herein, in the Security
Documents,  or of any of the documents executed in connection with the Bonds, or
as to the  existence of a Default or an Event of Default  thereunder,  and shall
not be deemed to have  actual  knowledge  of a  Default  or an Event of  Default
unless the Trustee shall have been  notified in writing in  accordance  with the
terms hereof.

SECTION  10.3 Certain  Rights of  Trustee(a) . The Trustee may rely and shall be
protected in acting or refraining from acting upon any resolution,  certificate,
statement,  instrument,  opinion, report, notice, request,  direction,  consent,
order, bond, debenture,  note, other evidence of Debt or other paper or document
believed by it to be genuine and to have been signed or  presented by the proper
party or parties;

                  (b)  any  request  or  direction  of  the  Company   shall  be
sufficiently  evidenced by written instrument signed by an Authorized Officer of
the Company;

(c) whenever in the  administration  of this Indenture the Trustee shall deem it
desirable that a matter be proved or established  prior to taking,  suffering or
omitting any action  hereunder,  the Trustee  (unless  other  evidence is herein
specifically  prescribed  to be relied upon) may, in the absence of bad faith on
its part,  rely upon a  certificate  of an  Authorized  Officer  of the  Company
delivered to the Trustee;

(d) the Trustee may consult with counsel and the written  advice of such counsel
or any  Opinion  of  Counsel  shall  be  full  and  complete  authorization  and
protection in respect of any action  taken,  suffered or omitted by it hereunder
in good faith and in reliance thereon;

(e) the Trustee  shall be under no  obligation  to exercise any of the rights or
powers vested in it by this  Indenture at the request or direction of any of the
Holders  pursuant to this  Indenture,  unless such Holders shall have offered to
the Trustee  reasonable  security or indemnity  against the costs,  expenses and
liabilities and ordinary and extraordinary  compensation which might be incurred
by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any  investigation  into the facts or
matters stated in any resolution,  certificate,  statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of Debt or other paper or

                                       43
<PAGE>

document,  nor shall it be obligated to review the  financial  statements of the
Company to determine  whether the Company is in  compliance  with its  covenants
contained herein;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any
duties  hereunder  either  directly or by or through agents or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder; and

(h) the Trustee may at any time request written  instructions  from the Required
Holders with respect to the  interpretation of this Agreement or with respect to
any action to be taken or suffered or not taken or any condition to be satisfied
hereunder,  and upon receipt of any such written  instructions the Trustee shall
be entitled to rely conclusively thereon.

SECTION 10.4 Not  Responsible  for  Recitals or Issuance of Bonds.  The recitals
contained  herein  and  in the  Bonds,  except  the  Trustee's  certificates  of
authentication, shall be taken as the statements of the Company, and the Trustee
assumes  no  responsibility  for  their   correctness.   The  Trustee  makes  no
representations  as to the validity or  sufficiency  of this Indenture or of the
Bonds.  The Trustee shall not be  accountable  for the use or application by the
Company of Bonds or the proceeds thereof.

SECTION 10.5 May Hold Bonds.  The Trustee or any other agent of the Company,  in
its individual or any other  capacity,  may become the owner or pledgee of Bonds
and may deal with the Company  with the same rights it would have if it were not
Trustee or such other agent.

SECTION 10.6 Money Held in Trust.  Money held by the Trustee in trust  hereunder
need not be  segregated  from other funds except to the extent  required by Law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Company.

SECTION 10.7 Compensation;  Reimbursement;  Indemnification.  The Company agrees
(a) to pay to the Trustee from time to time reasonable ordinary compensation and
from time to time  extraordinary  compensation  for all services  rendered by it
hereunder  (to the extent  permitted by Law) (b) except as  otherwise  expressly
provided  herein,  to reimburse the Trustee upon its request for all  reasonable
expenses,  disbursements and advances  (provided that the Trustee shall be under
no  obligation to make  advances)  incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable  compensation and
the reasonable expenses and disbursements of its agents and counsel), except any
such  expense,  disbursement  or  advance  as may be  attributable  to its gross
negligence  or bad faith,  and (c) to indemnify  the Trustee for, and to hold it
harmless against,  any loss, liability or expense incurred without negligence or
bad faith on its part,  arising out of or in connection  with the  acceptance or
administration  of the  trust or  trusts  hereunder,  including  the  costs  and
expenses of defending  itself against any claim or liability in connection  with
the  exercise  or  performance  of any of its  powers or duties  hereunder.  All
indemnifications  and releases from liability  granted  hereunder to the Trustee
shall extend to its  officers,  directors,  employees,  agents,  successors  and
assigns.

                                       44
<PAGE>

SECTION 10.8 Eligibility.  There shall at all times be a Trustee hereunder which
shall be a  corporation  either (a) having a combined  capital and surplus of at
least  $100,000,000  or (b) having a combined  capital and surplus of at least $
10,000,000  and  being a  wholly-owned  subsidiary  of a  corporation  having  a
combined capital and surplus of at least $100,000,000,  and in each case subject
to  supervision  or  examination  by Federal or state or  District  of  Columbia
authority  and  having a  corporate  trust  office in New York,  New York to the
extent  there is such an  institution  eligible  and  willing to serve.  If such
corporation publishes reports of condition at least annually, pursuant to Law or
to the requirements,  of said supervising or examining  authority,  then for the
purposes of this Section,  the combined  capital and surplus of such corporation
shall be deemed to be its combined  capital and surplus as set forth in its most
recent report of condition so published.  If at any time the Trustee shall cease
to be eligible in  accordance  with the  provisions  of this  Section,  it shall
resign  immediately in the manner and with the effect  hereinafter  specified in
this Article X.

SECTION 10.9  Resignation  and Removal;  Appointment  of  Successor(a)  . (a) No
resignation or removal of the Trustee and no appointment of a successor  Trustee
pursuant  to this  Article X shall  become  effective  until the  acceptance  of
appointment  by  the  successor   Trustee  in  accordance  with  the  applicable
requirements of Section 10.10 hereof.

(b) The Trustee may resign at any time by giving  written  notice thereof to the
Company, provided that in the event the Trustee is also the Collateral Agent and
Securities  Intermediary,  it must  also at the same time  resign as  Collateral
Agent  and  Securities  Intermediary.  If  the  instrument  of  acceptance  by a
successor Trustee required by Section 10.10 hereof shall not have been delivered
to the  Trustee  within  thirty  (30) days  after the  giving of such  notice of
resignation,   the  resigning  Trustee  may  petition  any  court  of  competent
jurisdiction for the appointment of a successor Trustee.

                  (c)  The  Trustee  may be  removed  at any  time by act of the
Required Holders of the Outstanding  Bonds,  delivered to the Trustee and to the
Company.

                  (d) If at any time:

                  (i) the  Trustee  ceases to be  eligible  under  Section  10.8
hereof and falls to resign after written  request  therefor by the Company or by
any such Holder, or

                  (ii) the Trustee becomes  incapable of acting or is adjudged a
bankrupt  or  insolvent  or a  receiver  of the  Trustee or of its  property  is
appointed or any public officer takes charge or control of the Trustee or of its
property  of  affairs  for  the  purpose  of  rehabilitation,   conservation  or
liquidation,  then,  in any such case,  (i) the Company by a  resolution  of its
Members or (ii) the Required Holders may remove the Trustee.

                  (e)  If  the  Trustee  shall  resign,  be  removed  or  become
incapable  of action,  or if a vacancy  shall occur in the office of Trustee for
any cause, the Company, by a resolution of its Members, shall promptly appoint a
successor  Trustee or Trustees and a successor  Collateral  Agent and  successor
Securities  Intermediary  and shall comply with the applicable  requirements  of
Section  10.10  hereof.  If,  within  thirty  (30) days after such  resignation,
removal or incapability, or the occurrence of such vacancy, no successor Trustee
shall  have been so

                                       45
<PAGE>

appointed by the Company a successor  Trustee shall be appointed by the Required
Holders by written instrument delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall,  forthwith upon its acceptance of such
appointment  in accordance  with the  applicable  requirements  of Section 10.10
hereof,  become the  successor  Trustee  and  supersede  the  successor  Trustee
appointed by the Company.  If no successor  Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner required by
Section 10.10  hereof,  any Holder who has been a bona fide Holder of a Bond for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent  jurisdiction for the appointment of a successor
Trustee.

(f) The Company  shall give notice of each  resignation  and each removal of the
Trustee and each appointment of a successor Trustee by mailing written notice of
such event by  first-class  mail,  postage  prepaid,  to all Holders of Bonds as
their names and addresses appear in the Bonds Register and to the Rating Agency.
Each notice shall include the name of the  successor  Trustee and the address of
its principal trust office.

SECTION 10.10  Acceptance of  Appointment  by  Successor(a) . (a) If a successor
Trustee is appointed hereunder,  every such successor Trustee so appointed shall
execute,  acknowledge and deliver to the Company and to the retiring  Trustee an
instrument accepting such appointment,  and thereupon the resignation or removal
of the retiring  Trustee  shall become  effective  and such  successor  Trustee,
without any further act,  deed or  conveyance,  shall become vested with all the
rights, powers, trust and duties of the retiring Trustee; but, on the request of
the Company or the successor Trustee,  such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign,  transfer and deliver to such  successor  Trustee all property and money
held by such retiring Trustee hereunder.

(b) Upon request of any such  successor  Trustee,  the Company shall execute any
and all  instruments  for more fully and certainly  vesting in and confirming to
such  successor  Trustee  all such  rights,  powers  and trusts  referred  to in
paragraph (a) of this Section.

(c) No successor Trustee shall accept its appointment unless at the time of such
acceptance  such  successor  Trustee shall be qualified and eligible  under this
Article X.

SECTION 10.11 Merger,  Conversion,  Consolidation or Succession to Business. Any
corporation  into which the Trustee may be merged or  converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation  to  which  the  Trustee  shall  be a  party,  or any  corporation
succeeding  to all or  substantially  all the  corporate  trust  business of the
Trustee,  shall be the  successor of the Trustee  hereunder,  provided that such
corporation  shall be otherwise  qualified  and  eligible  under this Article X,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto. In case any Bonds shall have been authenticated,  but
not  delivered,  by the  Trustee  then  in  office,  any  successor  by  merger,
conversion  or  consolidation  to such  authenticating  Trustee  may adopt  such
authentication and deliver the Bonds so authenticated with the same effect as if
such successor Trustee had itself authenticated such Bonds.

                                       46
<PAGE>

SECTION 10.12  Maintenance  of Offices and  Agencies(a) . (a) There shall at all
times be maintained in the Borough of  Manhattan,  the City of New York,  and in
such other places of payment, if any, as shall be specified for the Bonds of any
series in the related Supplemental  Indenture, an office or agency of the Paying
Agent where Bonds may be presented or surrendered  for  registration of transfer
or exchange and for payment of principal,  premium,  if any, and interest.  Such
Paying Agent shall be initially:

                  Bank One Trust Company, N.A.
                  14 Wall Street
                  8th Floor, Suite 4607
                  New York, NY  10005

(b) There shall at all times be a Registrar  and a Paying  Agent  hereunder.  In
addition, at any time when any Bonds remain Outstanding, the Trustee may appoint
an  authenticating  agent or  agents  with  respect  to the Bonds of one or more
series which shall be authorized to act on behalf of the Trustee to authenticate
Bonds of such series issued upon original  issuance,  exchange,  registration of
transfer or partial  redemption thereof or pursuant to Section 2.8, and Bonds so
authenticated  shall be entitled to the benefits of this  Indenture and shall be
valid  and  obligatory  for all  purposes  as if  authenticated  by the  Trustee
hereunder (it being understood that wherever reference is made in this Indenture
to the  authentication  and  delivery of Bonds by the  Trustee or the  Trustee's
certificate  of  authentication,  such  reference  shall be  deemed  to  include
authentication and delivery on behalf of the Trustee by an authenticating  agent
and a  certificate  of  authentication  executed  on behalf of the Trustee by an
authenticating agent). If an appointment of an authenticating agent with respect
to the  Bonds of one or more  series  shall  be made  pursuant  to this  Section
10.12(b), the Bonds of such series may have endorsed thereon, in addition to the
Trustee's   certificate   of   authentication,   an  alternate   certificate  of
authentication in the following form:

                  This  Bond is one of the  series of Bonds  referred  to in the
within-mentioned Indenture.

                                        ________________________________________
                                        Trustee

                                        By:_____________________________________
                                             Authenticating Agent

                                        By:_____________________________________
                                             Authorized Signatory

                  Any authorized  agent shall be a bank or trust company,  shall
be a Person  organized and doing business under the laws of the United States or
any  State  thereof,   having  a  combined  capital  and  surplus  of  at  least
$250,000,000 and shall be authorized under such laws to exercise corporate trust
powers,  subject  to  supervision  by  Federal  or  state  authorities.  If such
authorized agent publishes reports of its condition at least annually,  pursuant
to  law  or to  the  requirements  of the  aforesaid  supervising  or  examining
authority, then for the purposes of this

                                       47
<PAGE>

Section 10.12,  the combined  capital and surplus of such authorized agent shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an authorized agent shall cease
to be eligible in accordance  with the  provisions of this Section  10.12,  such
Authorized  Agent  shall  resign  immediately  in the manner and with the effect
specified in this Section 10.12.  The Trustee at its office specified in Section
10.12(a) is hereby appointed as Paying Agent and Bonds Registrar hereunder.

(c) Any  Paying  Agent  (other  than the  Trustee)  from time to time  appointed
hereunder  shall  execute and deliver to the Trustee an instrument in which said
Paying Agent shall agree with the  Trustee,  subject to the  provisions  of this
Section 10.12, that such Paying Agent will:

(i)      hold all sums held by it for the payment of principal  of, and premium,
         if any,  and  interest on Bonds in trust for the benefit of the Persons
         entitled  thereto  until  such sums  shall be paid to such  Persons  or
         otherwise disposed of as herein provided;

(ii)     give the Trustee within three (3) days thereafter notice of any default
         by any  obligor  upon the Bonds in the  making of any such  payment  of
         principal, premium, if any, or interest; and

(iii)    at any  time  during  the  continuance  of any such  default,  upon the
         written  request of the Trustee,  forthwith pay to the Trustee all sums
         so held in trust by such Paying Agent.

                  Notwithstanding  any other  provision of this  Indenture,  any
payment  required to be made to or  received or held by the Trustee  may, to the
extent authorized by written instructions of the Trustee, be made to or received
or held by a Paying Agent in the Borough of Manhattan, the City of New York, for
the account of the Trustee.

(d) Any Person into which any  authorized  agent may be merged or  converted  or
with which it may be  consolidated,  or any Person  resulting  from any  merger,
consolidation  or conversion to which any authorized  agent shall be a party, or
any  corporation  succeeding to the corporate  trust  business of any authorized
agent,  shall be the  successor  of such  authorized  agent  hereunder,  if such
successor  Person is otherwise  eligible under this Section  10.12,  without the
execution  or filing of any paper or any  further act on the part of the parties
hereto or such authorized agent or such successor Person.

(e) Any  authorized  agent may at any time  resign by giving  written  notice of
resignation to the Trustee and the Company.  The Company may, and at the request
of the Trustee shall, at any time,  terminate the agency of any authorized agent
by giving written notice of such  termination to the authorized agent and to the
Trustee.  Upon the resignation or termination of an authorized  agent or in case
at any time any such  authorized  agent shall  cease to be  eligible  under this
Section 10.12 (when, in either case, no other  authorized  agent  performing the
functions of such authorized agent shall have been appointed), the Company shall
promptly appoint one or more qualified  successor  authorized agents approved by
the Trustee to perform the functions of the authorized  agent which has resigned
or whose  agency has been  terminated  or

                                       48
<PAGE>

who shall have ceased to be eligible under this Section 10.12. The Company shall
give written  notice of any such  appointment  to all Holders as their names and
addresses appear on the Bonds Register.

ARTICLE XI

                            MISCELLANEOUS PROVISIONS

SECTION 11.1      Return of Monies Held by Trustee

(a) If the principal of any Bonds becoming due, either at maturity or otherwise,
together with all interest  accruing  thereon to the due date,  has been paid to
the  Trustee for the benefit of such  Holder,  all  interest on such Bonds shall
cease to accrue on the due date and all  liability  of the Company  with respect
thereto shall likewise  cease,  except as hereinafter  provided.  Thereafter the
Holders of such Bonds shall be restricted  exclusively to the funds so deposited
with the Trustee for any claim of whatsoever  nature with respect to such Bonds,
and the Trustee shall hold such funds in trust for such Holders.

(b) Moneys so  deposited  with the Trustee  which remain  unclaimed  three years
after the date payment  thereof becomes due shall, at the request of the Company
if at the time, to the knowledge of the Trustee,  no Event of Default shall have
occurred and be continuing,  be paid to the Company and the Holders of the Bonds
for which the deposit was made shall  thereafter  be limited to a claim  against
the Company;  provided,  however, that the Trustee, before making payment to the
Company, may, at the expense of the Company, cause a notice to be published once
in a newspaper or financial  journal of general  circulation in the State of New
York and the City of New  York,  New York,  stating  that the  moneys  remaining
unclaimed will be returned to the Company after a specified date.

SECTION 11.2 Third Party Beneficiaries;  No Rights Conferred on Others.  Nothing
herein  contained  shall  confer any  benefit or any legal or  equitable  right,
remedy or claim  under this  Indenture  upon any Person  other than the  parties
hereto and their respective  successors and permitted assigns and the registered
Holders of the Bonds.

SECTION  11.3  Illegal  Provisions  Disregarded.  In case any  provision in this
Indenture  or the  Bonds  shall  for any  reason  be held  invalid,  illegal  or
unenforceable  in any respect,  this Indenture or the Bonds, as the case may be,
shall be construed as if such provision had never been contained herein.

SECTION 11.4 Substitute Notice. If for any reason it shall be impossible to make
publication of any notice required hereby in a newspaper or financial journal of
general circulation in the State of New York and the City of New York, New York,
then such  publication or other notice in lieu thereof as shall be made with the
approval of the Trustee shall constitute a sufficient giving of such notice.

SECTION 11.5 Notice to the Rating  Agency.  Upon the  occurrence of any Event of
Default of which a  Responsible  Officer  of the  Trustee  has actual  knowledge
hereunder, the Trustee shall promptly give notice thereof to the Rating Agency.

                                       49
<PAGE>

SECTION  11.6  Notices.  (a)  Any  notice,  request,   complaint,   demand,
communication  or other  paper shall be  sufficiently  given and shall be deemed
given when delivered or mailed by registered or certified mail, postage prepaid,
or sent by overnight  delivery,  telecopy,  telegram or telex,  addressed to the
parties as follows:

The Company:                            Cleco Evangeline LLC
                                        2030 Donahue Ferry Road
                                        Pineville, Louisiana  71367

                                        Attention:       Chief Financial Officer
                                        Telephone:       (318) 484-7400
                                        Fax:             (318) 484-7777

Trustee:                                Bank One Trust Company, N.A.
                                        27th Floor

                             201 St. Charles Avenue

                              New Orleans, LA 70170

                                        Telephone:       (504) 623-1640
                                        Fax:             (504) 623-1432
                                        Attention:       Denis Milliner

Moody's:                                Moody's Investors Service

                                        99 Church Street
                                        New York, New York 10007

                                        Telephone:       (212) 553-0300
                                        Fax:             (212) 553-4997
                                        Attention:       Project Finance Group

The above  parties  may, by notice  given  hereunder,  designate  any further or
different  addresses  to  which  subsequent   notices,   certificates  or  other
communications shall be sent.

(b) Where this  Indenture  provides  for  notice to  Holders of any event,  such
notice shall be sufficiently given (unless otherwise herein expressly  provided)
if in  writing  and  mailed,  first-class  postage  prepaid  or  made,  given or
furnished by courier  service,  to each Holder,  at its address as it appears in
the Bonds Register, not later than the latest date, if any, and not earlier than
the earliest date, if any, prescribed for the giving of such notice.  Where this
Indenture  provides  for  notice in any  manner,  such  notice  may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee,  but such filing shall not be
a condition  precedent to the validity of any action taken in reliance upon such
waiver. In any case where notice to Holders is given by mail or courier service,
neither the failure to give such notice, nor any defect in any notice so mailed,
to any  particular  Holder  shall  affect the  sufficiency  of such  notice with
respect  to other  Holders,  and any  notice  that is mailed

                                       50
<PAGE>

or sent by courier  service in the manner herein  provided shall be conclusively
presumed to have been duly given.

SECTION  11.7  Successors  and  Assigns.  All of  the  covenants,  promises  and
agreements in this Indenture by or on behalf of the Company,  or by or on behalf
of the  Trustee,  shall bind and inure to the benefit of and be  enforceable  by
their respective successors and assigns, whether so expressed or not.

SECTION 11.8 Headings for  Convenience  Only. The  descriptive  headings in this
Indenture are inserted for convenience  only and shall not control or affect the
meaning or construction of any of the provisions hereof.

SECTION  11.9  Counterparts.  The  Indenture  may be  executed  in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original;  but such  counterparts  shall together  constitute but one and the
same instrument.

SECTION  11.10  APPLICABLE  LAW. (a) THIS  INDENTURE  AND THE BONDS SHALL BE
GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT  GIVING EFFECT TO THE PRINCIPLES  THEREOF  RELATING TO CONFLICTS OF LAW
EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

(b) ANY LEGAL ACTION OR PROCEEDING  WITH RESPECT TO THIS INDENTURE AND THE BONDS
AND ANY ACTION FOR ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF MAY BE BROUGHT
IN THE  COURTS OF THE STATE OF NEW YORK OR OF THE UNITED  STATES OF AMERICA  FOR
THE  SOUTHERN  DISTRICT OF NEW YORK,  AND,  BY  EXECUTION  AND  DELIVERY OF THIS
INDENTURE,  EACH OF THE COMPANY AND THE TRUSTEE HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT  OF ITS  PROPERTY,  GENERALLY  AND  UNCONDITIONALLY,  THE  NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF.  THE
COMPANY  HEREBY  IRREVOCABLY  DESIGNATES,  APPOINTS AND EMPOWERS CT  CORPORATION
SYSTEMS AS ITS DESIGNEE,  APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF,  AND IN RESPECT OF ITS  PROPERTY,  SERVICE OF ANY AND ALL
LEGAL PROCESS,  SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION
OR  PROCEEDING  IN THE  STATE OF NEW  YORK.  IF FOR ANY  REASON  SUCH  DESIGNEE,
APPOINTEE  AND AGENT SHALL  CEASE TO BE  AVAILABLE  TO ACT AS SUCH,  THE COMPANY
AGREES TO DESIGNATE A NEW DESIGNEE,  APPOINTEE AND AGENT IN NEW YORK CITY ON THE
TERMS AND FOR THE PURPOSES OF THIS PROVISION  SATISFACTORY TO THE TRUSTEE.  EACH
OF THE COMPANY AND THE  TRUSTEE  IRREVOCABLY  CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED  COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,  POSTAGE PREPAID,  TO
THE COMPANY AND THE TRUSTEE AT ITS ADDRESS  REFERRED TO IN SECTION 11.6. EACH OF
THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT IT
MAY DO SO UNDER

                                       51
<PAGE>

APPLICABLE  LAW, ANY OBJECTION  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY OF THE  AFORESAID  ACTIONS OR  PROCEEDINGS  ARISING OUT OF OR IN
CONNECTION  WITH THIS  INDENTURE  BROUGHT  IN THE COURTS  REFERRED  TO ABOVE AND
HEREBY FURTHER  IRREVOCABLY  WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT  THAT ANY SUCH  ACTION OR  PROCEEDING  BROUGHT  IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT  FORUM.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY
PARTY  HERETO  TO SERVE  PROCESS  IN ANY  OTHER  MANNER  PERMITTED  BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED IN ANY OTHER JURISDICTION.

(c) EACH OF THE COMPANY AND THE TRUSTEE HEREBY  IRREVOCABLY  WAIVES ALL RIGHT OF
TRIAL BY JURY IN ANY ACTION,  PROCEEDING  OR  COUNTERCLAIM  ARISING OUT OF OR IN
CONNECTION WITH THIS INDENTURE OR ANY MATTER ARISING HEREUNDER.

SECTION 11.11  Holidays.  If any date for the payment of principal,  premium (if
any) or of interest on the Bonds is not a Business  Day, then such payment shall
be due on the first Business Day thereafter.

SECTION 11.12 Limitation of Liability.  Notwithstanding anything to the contrary
contained in this  Indenture,  the  liability  and  obligation of the Company to
perform and observe and make good the  obligations  contained in this  Indenture
shall not be enforced by any action or proceeding  wherein  damages or any money
judgment or any deficiency  judgment or any judgment  establishing  any personal
obligation or liability shall be sought, collected or otherwise obtained against
any member, manager,  officer,  director or shareholder or related Person of the
Company, and the Trustee, for itself and its successors and assigns, irrevocably
waives  any and all right to sue for,  seek or demand  any such  damages,  money
judgment,  deficiency judgment or personal judgment against any member, manager,
officer,  director or  shareholder  or related Person of the Company under or by
reason of or in connection  with this Indenture and agrees to look solely to the
Company and the security and  Collateral  held in  connection  with the Security
Documents for the  enforcement  for such  obligations  of the Company under this
Indenture.

SECTION 11.13 Trustee  Actions as Secured Party Under  Intercreditor  Agreement.
The Trustee shall not take any action in its capacity as Secured Party under the
Intercreditor  Agreement,  including,  without  limitation,  the  giving  of any
notice,  direction  or  consent  thereunder  or the  waiver  of any of the terms
thereof,  unless directed to do so by the Required Holders,  and any such action
so taken by the Trustee  upon the  direction of the  Required  Holders  shall be
treated  as  having  been  taken on  behalf of the  Holders  of all  Bonds  then
Outstanding.

                                       52
<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Trust Indenture to be executed by one of its duly Authorized Officers, all as of
the day and year first above written.

                                CLECO EVANGELINE LLC

                                By:  /s/ Thomas J. Howlin

                                Name: Thomas J. Howlin
                                Title:    Manager

                                BANK ONE TRUST COMPANY, N.A.
                                as Trustee

                                By:  /s/ Denis L. Milliner

                                Name:  Denis L. Milliner
                                Title:    Reginal Account Executive Authorized
                                Banking Officer

<PAGE>

                                       53

                                                                   Schedule I to
                                                                 Trust Indenture

                             PRINCIPAL AMORTIZATION

The  principal  of the Initial  Bonds due  September  1, 2019 will be payable in
semiannual installments, commencing March 1, 2001, as follows:

                                Principal Amount Payable on $218,600,000
                                              Bonds Issued
Principal Payment Date                 Pursuant to this Indenture
March 1, 2001                                  $2,186,000
     September 1, 2001                          2,186,000
March 1, 2002                                   2,733,000
     September 1, 2002                          2,733,000
March 1, 2003                                   3,006,000
     September 1, 2003                          3,006,000
March 1, 2004                                   2,459,000
     September 1, 2004                          2,459,000
March 1, 2005                                   3,006,000
     September 1, 2005                          3,006,000
March 1, 2006                                   3,552,000
     September 1, 2006                          3,552,000
March 1, 2007                                   3,826,000
     September 1, 2007                          3,826,000
March 1, 2008                                   4,099,000
     September 1, 2008                          4,099,000
March 1, 2009                                   3,552,000
     September 1, 2009                          3,552,000
March 1, 2010                                   4,099,000
     September 1, 2010                          4,099,000
March 1, 2011                                   4,645,000
     September 1, 2011                          4,645,000
March 1, 2012                                   5,192,000
     September 1, 2012                          5,192,000
March 1, 2013                                   6,012,000
     September 1, 2013                          6,012,000
March 1, 2014                                   7,378,000
     September 1, 2014                          7,378,000
March 1, 2015                                   8,198,000
     September 1, 2015                          8,198,000
March 1, 2016                                   9,017,000
     September 1, 2016                          9,017,000
March 1, 2017                                  10,383,000

                                       S-1
<PAGE>

     September 1, 2017                         10,383,000
March 1, 2018                                  11,202,000
     September 1, 2018                         11,202,000
March 1, 2019                                  14,755,000
     September 1, 2019                         14,755,000

--------------------------------------------------------------------------------

<PAGE>

                                       S-2

                                                                       Exhibit A
                                                              to Trust Indenture

                                   Definitions

                  The  following  terms  shall  have  the  respective   meanings
assigned to them:

                  "Acceptable Credit Support" means (a) an irrevocable letter of
credit issued by a bank or other financial  institution  with a combined capital
and  surplus of at least  $1,000,000,000  that is rated at least "A2" by Moody's
and at least "A" by S&P,  provided  that (i) the Company  cannot in any event be
named as the account  party for any letter of credit  issued to support  Cleco's
obligations under the Equity Contribution  Agreement and (ii) the Company cannot
be named as the  account  party for any letter of credit  provided  for the Debt
Service Reserve Account or the Major Maintenance  Reserve Account unless (x) the
minimum  projected  Debt Service  Coverage Ratio for each fiscal year during the
remaining  term of the  Bonds  is  equal  to or  greater  than  1.85 to 1.0,  as
confirmed  in writing by the  Independent  Engineer,  and (y) the Rating  Agency
confirms in writing that the naming of the Company as an account  party for such
letter of credit  will not result in the Bonds  being rated lower than "Baa3" by
the  Rating  Agency,  and  provided  further  that  if at any  time  after  such
confirmation  by the Rating  Agency the Bonds are rated lower than "Baa3" by the
Rating  Agency,  any such  letter of credit in respect  of which the  Company is
named as the account party will cease constituting Acceptable Credit Support, or
(b) an unconditional  guarantee from (i) with respect to any guarantee  provided
for the  Debt  Service  Reserve  Account,  a  Person  (including  Cleco  but not
including  the Company) that has a long-term  unsecured  debt rating of at least
"Baa2" from  Moody's and at least "BBB" from S&P,  and (ii) with  respect to any
other guarantee,  Cleco, so long as Cleco has a long-term  unsecured debt rating
of at least as high as it was rated by Moody's and S&P on the Closing Date.

                  "Account  Collateral" has the meaning specified in Section 2.3
of the Depositary Agreement.

                  "Accounts"  means,  collectively,   the  accounts  established
between the Company and the Securities  Intermediary  pursuant to the Depositary
Agreement, which shall include, but not be limited to, the Construction Account,
the Revenue Account, the O&M Account, the Debt Service Payment Account, the Debt
Service Reserve Account, the Major Maintenance Reserve Account, the Distribution
Account and the Redemption Account.

                  "ACS LOC" means any letter of credit  described in and meeting
the  requirements  of clause (a) of the definition of Acceptable  Credit Support
for which the Company is the account party.

                  "ACS  LOC  Provider"   means  any  commercial  bank  or  other
financial institution issuing an ACS LOC.

                  "ACS LOC Reimbursement  Agreement" means an agreement to which
the Company is a party providing for the issuance of one or more ACS LOCs.

                                      A-1

<PAGE>

                  "Act" when used with  respect to any  Holder,  has the meaning
specified in Section 7.1 of the Indenture.

                  "Additional  Bonds" means any additional Bonds issued pursuant
to the provisions of Section 2.3 of the Indenture.

                  "Additional Project Document" means any agreement entered into
after  the  Closing  Date  by or  on  behalf  of  the  Company  related  to  the
development, construction, operation, administration, maintenance or improvement
of the Project.

                  "Affiliate"  means, with respect to a Person, any other Person
that, directly or indirectly through one or more  intermediaries,  controls,  is
controlled  by or is under  common  control  with such  first  Person.  The term
"control" means the possession,  directly or indirectly,  of the power to direct
or cause the  direction  of the  management  or  policies  of a Person,  whether
through the ownership of voting securities, by contract or otherwise.

                  "Allocation  Certificate"  means each certificate  provided by
the  Company  pursuant  to Section 3 of the  Intercreditor  Agreement  or by the
Required  Secured  Parties  pursuant  to  Section  6(c)  of  the   Intercreditor
Agreement, as applicable,  setting forth the allocation of Loss Proceeds,  Title
Insurance  Proceeds,  Buydown Damages and Tolling  Agreement Damages Payments or
cash proceeds  resulting from  liquidation  of the Collateral  among the Secured
Parties (to the extent the Secured  Obligations  of such Secured  Parties may be
redeemed or prepaid under the applicable Financing Documents).

                  "Annual Operating Budget" has the meaning specified in Section
5.15.

                  "Approved  Completion Plan" means a plan (including budget and
schedule)  to  construct  and  complete  the Project  using  liquidated  damages
payments and/or other funds available to the Company (by borrowing or otherwise,
so long as permitted under the Indenture),  which plan includes a certificate of
the Company,  confirmed  (with  customary  assumptions  and  qualifications)  as
reasonable by the Independent Engineer,  stating that (a) the funds available to
the Company are reasonably  expected to be sufficient to reach Completion of the
Project  and (b) after  reaching  Completion  of the  Project,  the  minimum and
average  projected Debt Service  Coverage Ratios (as confirmed in writing by the
Independent  Engineer) for the remaining term of the Bonds will not be less than
1.65 to 1.0 and 1.75 to 1.0, respectively.

                  "Approved   Construction   Budget   and   Schedule"   means  a
construction  budget  and  schedule   (containing   customary   assumptions  and
qualifications)  prepared  by the  Company  for the  Project  and  confirmed  as
reasonable  by  the  Independent  Engineer  as  referenced  in  the  Independent
Engineer's  Report  contained  as an  appendix to the Final  Memorandum,  as may
thereafter be amended in connection with an event of force majeure,  an event of
default or a change order under the EPC Contract,  provided that the Independent
Engineer  confirms as reasonable the  certification of the Company that (a) such
amendment  could not  reasonably  be  expected  to result in a Material  Adverse
Effect, (b) the Project is reasonably expected to achieve Completion on or prior
to the Guaranteed Completion Date and (c) the funds available to the Company are
reasonably  expected to be sufficient to fund the costs of achieving  Completion
on or prior to the Guaranteed Completion Date.

                                       A-2
<PAGE>

                  "Authorized Officer" or "Authorized Representative" means with
respect to any Person,  (i) in the case of  knowledge  of any default  under any
Financing  Document,  the  manager,   president,   general  counsel,   principal
accounting officer,  treasurer,  senior vice president,  vice president or other
officer of such Person, as the case may be, who in the normal performance of his
or her  operational  duties would have knowledge of such default and the subject
matter relating  thereto,  and (ii) in all other cases, the manager,  president,
general counsel, principal accounting officer, treasurer, senior vice president,
vice  president  or other  officer  or any  Person  authorized  by the  Board of
Directors (or in the case of the Company,  by the operating  manager or managers
thereof) of such Person, as the case may be.

                  "Bonds" means,  collectively,  the Initial Bonds issued by the
Company  under the  Indenture  pursuant to the Bond  Purchase  Agreement and any
Additional  Bonds which may be issued by the Company  under the  Indenture  from
time to time in accordance with the terms thereof.

                  "Bond Proceeds Sub-account" means the sub-account of such name
established  under the  Depositary  Agreement and held under account number 6800
0603 09.

                  "Bond Purchase  Agreement" means the Bond Purchase  Agreement,
dated as of the Closing Date, between the Company and the Initial Purchasers.

                  "Bonds  Register" has the meaning  specified in Section 2.5(a)
of the Indenture.

                  "Business Day" means any day that is not a Saturday, Sunday or
legal holiday in the State of New York,  or a day on which banking  institutions
chartered by the State of New York, or the United States,  are legally  required
or authorized to close.

                  "Buydown   Damages"  has  the  meaning  specified  in  Section
3.3(a)(C) of the Indenture.

                  "Buydown  Damages  Sub-account"  means the sub-account of such
name  established  under the Depositary  Agreement and held under account number
6800 0603 15.

                  "Change of Control"  means Cleco fails to maintain a direct or
indirect  interest in at least 51% of the voting and ownership  interests in the
Company,  unless (1) prior to the date on which the Project achieves Completion,
such failure is approved by Holders  holding at least 66 2/3% of the Outstanding
Bonds, and (2) from and after the date on which the Project achieves Completion,
(a) the Rating Agency confirms in writing that such failure will not result in a
Rating Downgrade and (b) the Independent Engineer confirms that the new operator
of the  Project  is  experienced  in the  operation  of  similar  facilities  in
accordance with prudent utility practice.

                  "Change  of  Control  Notice"  has the  meaning  specified  in
Section 3.3(b) of the Indenture.

                  "Cleco" means Cleco Corporation, a Louisiana corporation.

                                      A-3
<PAGE>

                  "Cleco  Business  Development"  has the meaning  specified  in
Section 5.26 of the Indenture.

                  "Cleco Midstream" has the meaning specified in Section 5.26 of
the Indenture.

                  "Closing Date" means December 15, 1999.

                  "Code" means the Internal Revenue Code of 1986.

                  "Collateral"  means (a) a first priority perfected mortgage on
the  Project and the Site,  all  fixtures  thereon  and all  related  easements,
rights-of-way,  servitudes,  licenses  and  other  real  property  rights of the
Company,  (b) a first priority  perfected  security interest in all tangible and
intangible personal property of the Company, including,  without limitation, (i)
all  equipment,  inventory and other goods used in connection  with the Project,
(ii) all rights of the Company  under the Project  Documents,  (iii) the project
accounts  and all cash,  securities  and other  property  on deposit  therein or
credited  thereto,  and (iv) all Governmental  Approvals  obtained in connection
with the Project (to the extent assignable),  and (c) a first priority perfected
pledge of all of the membership interests in the Company.

                  "Collateral  Agent"  means Bank One Trust  Company,  N.A.,  as
collateral agent for the benefit of the Secured Parties under the  Intercreditor
Agreement, together with its successors and assigns.

                  "Combined   Exposure"   has  the  meaning   specified  in  the
Intercreditor Agreement.

                  "Commonly Controlled Entity" means, as applied to the Company,
any Person who is a member of a group  which is under  common  control  with the
Company,  who together with the Company,  is treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.

                  "Company"  means Cleco  Evangeline  LLC, a  Louisiana  limited
liability company.

                  "Completion"  means  and shall  occur  when (1) all work to be
performed by the  contractor  under the EPC Contract  shall have been  performed
(other than "punch list" items not to exceed  $3,903,000 in respect of which the
Company has reserved funds for the payment thereof) in accordance with the terms
of the EPC  Contract,  (2) all  acceptance or other tests under the EPC Contract
shall  have been  performed  and any  defects  in the  Project  shall  have been
corrected to the  satisfaction of the Company and the Independent  Engineer (or,
to the extent such defects have not been  corrected,  the EPC  Contractor  shall
have paid in full the liquidated  damages due in respect  thereof),  (3) the EPC
Contractor  shall have paid in full any other  liquidated  damages payable under
the EPC Contract,  unless such  liability to pay  liquidated  damages shall have
been fully reserved for with a bond or irrevocable  letter of credit issued by a
financial institution with a rating of at least "A2" by Moody's and at least "A"
by S&P, (4) all Governmental Approvals required for the operation of the Project
shall have been  obtained,  (5) the Project  shall be capable of being  operated
safely in accordance with all applicable laws and Governmental Approvals, (6) no
defective or  incomplete  portions of the Project shall exist that have or could
reasonably  be expected to have a material  adverse  effect on the  operation or
performance thereof in accordance with the operating and performance  conditions
specified  in

                                      A-4

                  the  EPC  Contract,  and  (7)  the  Project  shall  have  been
interconnected with all utilities necessary for the operation thereof; provided,
however,   that  the  Project  shall  be  deemed  to  have  achieved  Completion
notwithstanding  its  failure to satisfy the  condition  set forth in clause (2)
above if (a) the  Company  shall have  redeemed an amount of Bonds such that the
minimum and average  projected Debt Service  Coverage Ratios for the term of the
Bonds are greater than or equal to 1.65 to 1 and 1.75 to 1, respectively and (b)
the  Company  shall  have taken such  other  measures  as the Rating  Agency may
require in order to enable it to confirm (and upon which the Rating Agency shall
confirm) in writing  that such  failure to achieve  Completion  on or before the
Guaranteed  Completion  Date will not lower  the  rating of the Bonds  below the
rating assigned to the Bonds by the Rating Agency on the Closing Date.

                  "Consent" means a consent to assignment  executed by a Project
Party in favor of the Collateral Agent in form and substance similar to the form
of  consent  to be  attached  as an  exhibit  to  this  Indenture  or  otherwise
satisfactory in form and substance to the Required Holders.

                  "Construction   Account"   means  the  Account  of  such  name
established  under the  Depositary  Agreement and held under account number 6800
0603 01.

                  "Construction  Costs"  means all costs  and  expenses  due and
payable by the Company to the EPC Contractor pursuant to the EPC Contract.

                  "Construction  Debt Sub-account" means the sub-account of such
name  established  under the Depositary  Agreement and held under account number
6800 0603 19.

                  "Construction  Debt  Service  Reserve  Sub-account"  means the
sub-account of such name  established  under the  Depositary  Agreement and held
under account number 6800 0603 18.

                  "Construction  Period"  means  the  period  commencing  on the
Effective Date and ending on the Final Completion Date.

                  "Consumer  Price  Index"  means the  consumer  price  index as
published from time to time by the United States Department of Labor,  Bureau of
Labor Statistics.

                  "Corporate  Trust Office" means the corporate  trust office of
the Trustee located in New Orleans,  Louisiana,  which office is, on the date of
delivery of this Indenture, located at the address specified in Section 11.6.

                  "Cost Overrun  Certificate"  has the meaning  specified in the
Equity Contribution Agreement.

                  "Damages"  has the meaning  specified in Section  12(b) of the
Intercreditor Agreement.

                  "Debt" of any Person at any date means,  without  duplication,
(1) all  obligations of such Person for borrowed  money,  (2) all obligations of
such Person evidenced by bonds, debentures,  notes or other similar instruments,
(3) all  obligations  of such  Person  to pay the  deferred  purchase  price  of
property or services,  except  trade  accounts  payable  arising in the

                                   A-5

<PAGE>

ordinary  course of business,  (4) all  obligations  of such Person under leases
which are or should be, in accordance with GAAP,  recorded as capital leases for
which such Person is liable,  (5) all  obligations of such Person under interest
rate or currency  protection  agreements or other hedging  instruments,  (6) all
obligations  of such Person to purchase  securities  (or other  property)  which
arise out of or in connection with the sale of the same or substantially similar
securities  (or  property),  (7) all  deferred  obligations  of such  Person  to
reimburse  any bank or other Person for amounts paid or advanced  under a letter
of credit or other  instrument,  (8) all Debt of others secured by a Lien on any
asset of such Person,  whether or not such Debt is assumed by such  Person,  and
(9) all Debt of others guaranteed directly or indirectly by such Person or as to
which such Person has an obligation  substantially the economic  equivalent of a
guarantee or other arrangement to assure a creditor against loss.

                  "Debt Service Coverage Ratio" means without  duplication,  the
ratio of (1) (a) all revenues of the Company (including interest and fee income,
business  interruption  and delay in start-up  insurance  and Loss  Proceeds and
Title Insurance Proceeds deposited into the Revenue Account,  but excluding Loss
Proceeds and Title Insurance Proceeds not deposited into the Revenue Account and
other similar non-recurring receipts not deposited into the Revenue Account) for
such period  minus (b) all O&M Costs for such period and all  deposits  into the
Major Maintenance  Reserve Account during such period, to (2) the sum of (a) all
principal  and  interest  (other than  interest  during  construction  and other
similar  payments which are  pre-funded  with the proceeds of a debt issuance or
otherwise) payments due with respect to outstanding (without  duplication) Bonds
and other Permitted Debt (other than Subordinated  Debt) during such period, and
(b) all unpaid  principal and interest (other than interest during  construction
and other  similar  payments  which are  pre-funded  with the proceeds of a debt
issuance  or  otherwise)  payments  due with  respect  to  outstanding  (without
duplication)  Bonds and other  Permitted  Debt  (other than  Subordinated  Debt)
during all previous  periods,  all as  determined  on a cash basis in accordance
with GAAP and as confirmed in writing by the Independent Engineer.

                  "Debt Service Payment  Account" means the Account of such name
established  pursuant to the Depositary  Agreement and held under account number
6800 0603 04.

                  "Debt Service Reserve  Account" means the Account of such name
established  pursuant to the Depositary  Agreement and held under account number
6800 0603 06.

                  "Debt Service Reserve Required  Balance" means, at any date of
determination  thereof, the sum of (a) the next succeeding  semiannual principal
and interest payment on the Initial Bonds, (b) the next succeeding principal and
interest  payment on the Additional  Bonds,  if any, and (c) the next succeeding
interest payment under any ACS LOC Reimbursement Agreement with respect to which
the Company is the obligor.

                  "Debt  Termination  Date"  has the  meaning  specified  in the
Intercreditor Agreement.

                  "Default"  means any event or condition  that, with the giving
of notice, lapse of time or failure to satisfy certain specified conditions,  or
any combination thereof, would become an Event of Default.

                                      A-6

<PAGE>

                  "Default Equity  Contribution"  means any Equity  Contribution
required to be made by Cleco pursuant to Section 2(b) of the Equity Contribution
Agreement.

                  "Default Equity Contribution Notice" has the meaning specified
in Section 3.3(d) of the Indenture.

                  "Default   Equity   Contribution    Sub-account"   means   the
sub-account of such name  established  under the  Depositary  Agreement and held
under account number 6800 0603 16.

                  "Default  Rate"  means,  on any  date,  a per  annum  rate  of
interest  equal to the  higher  of (i)  10.82%  and (ii) the per  annum  rate of
interest from time to time  announced by Chase  Manhattan  Bank in New York, New
York as its prime commercial lending rate plus 2%.

                  "Depositary  Agreement"  means the  Deposit  and  Disbursement
Agreement,  dated as of December 10, 1999,  among the  Company,  the  Collateral
Agent and the Securities Intermediary.

                  "Distribution   Account"   means  the  Account  of  such  name
established  under the  Depositary  Agreement and held under account number 6800
0603 08.

                  "Eligible Facility" means an "eligible facility," as that term
is defined in 15 U.S.C.ss.
79z-5a(a)(2).

                  "Environmental  Claim" means any complaint,  order,  citation,
decree, demand, judgment or written notice actually received by the Company from
any Person alleging or asserting that (i) the Company or the Site is or could be
in  violation  of any  Environmental  Law or (ii)  that  the  Company  may  have
liability under any  Environmental Law as a result of any activity or operations
at any time conducted by the Company, including, without limitation:

                  (i) the existence of any  Environmentally  Regulated Materials
at the Site in violation of any Environmental Law;

                  (ii) the release or threatened release of any  Environmentally
Regulated Materials generated at
         the Site in violation of any Environmental Law;

                  (iii)    remediation of any such release at the Site; and

                  (iv)  any  violation  of  any  relevant  Environmental  Law in
connection with the Site.

                  "Environmental  Laws"  means  any and  all  Laws  (as  well as
obligations,  duties and requirements  under common law) relating to: (i) noise,
emissions,  discharges,  spills,  releases or threatened releases of pollutants,
contaminants,   Environmentally   Regulated   Materials,   materials  containing
Environmentally  Regulated Materials,  or hazardous or toxic materials or wastes
into  ambient  air,  surface  water,  groundwater,   watercourses,  publicly  or
privately-owned treatment works, drains, sewer systems, wetlands, septic systems
or onto land surface or subsurface  strata;  (ii) the use,  treatment,  storage,
disposal, handling, manufacture,  processing,  distribution,  transportation, or
shipment  of   Environmentally   Regulated   Materials,   materials   containing

                                      A-7

<PAGE>

Environmentally  Regulated Materials or hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus containing Environmentally
Regulated Materials);  or (iii) pollution or the protection of human health, the
environment or natural resources.

                  "Environmentally  Regulated  Materials"  means  (i)  hazardous
materials,  hazardous wastes, hazardous substances,  extremely hazardous wastes,
restricted hazardous wastes, toxic substances,  toxic pollutants,  contaminants,
pollutants  or  words of  similar  import,  as used  under  Environmental  Laws,
including  but  not  limited  to  the   following:   the   Hazardous   Materials
Transportation  Act,  49 U.S.C.  1801 et seq.,  the  Resource  Conservation  and
Recovery Act, 42 U.S.C. 6901 et seq., the Comprehensive  Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. 9601 et seq., the Clean Water
Act, 33 U.S.C.  1251 et seq., the Clean Air Act, 42 U.S.C.ss.  7401 et seq., the
Toxic  Substances  Control Act, 15 U.S.C.  2601 et seq., the Safe Drinking Water
Act, 42 U.S.C.ss.  3808 et seq., and the Oil Pollution Act, 33 U.S.C.ss. 2701 et
seq., and their State and local counterparts or equivalents;  (ii) petroleum and
petroleum products including crude oil and any fractions thereof;  (iii) natural
gas,  synthetic  gas  and any  mixtures  thereof;  (iv)  radon;  (v)  any  other
hazardous,  radioactive,  toxic or noxious substance,  material,  pollutant,  or
solid,  liquid or gaseous  waste;  and (vi) any substance  that,  whether by its
nature  or  its  use,  is now or  hereafter  subject  to  regulation  under  any
Environmental  Law or  with  respect  to  which  any  Federal,  state  or  local
Environmental   Law  requires   environmental   investigation,   monitoring   or
remediation.

                  "EPC   Contract"   means  the   Agreement   for   Engineering,
Procurement and Construction  Services to be executed by and between the Company
and the EPC  Contractor and any  Replacement  Project  Document  entered into in
substitution therefor.

                  "EPC  Contractor"  means Cleco  Midstream or such other Person
that becomes contractor under the EPC Contract.

                  "EPC  Guaranty"   means  the   Engineering,   Procurement  and
Construction  Completion  Guaranty  to be  executed  by  Cleco  in  favor of the
Company,  and any  Replacement  Project  Document  entered into in  substitution
therefor.

                  "Equity  Contribution"  has the meaning specified in Section 1
of the Equity Contribution Agreement.

                  "Equity Contribution  Agreement" means the Equity Contribution
Agreement,  dated as of the  Closing  Date,  among  Cleco,  the  Company and the
Collateral Agent.

                  "Equity Letter of Credit" has the meaning specified in Section
1 of the Equity Contribution Agreement.

                  "Equity Requisition  Certificate" has the meaning specified in
Section 1 of the Equity Contribution Agreement.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time.

                                   A-8

<PAGE>

                  "Event  of  Abandonment"  means:  (1)  prior  to the  date  of
Completion,   (a)  the  cessation  or  deferral  of  all  or  substantially  all
construction or completion of the Project for more than 120 consecutive days (as
such  period may be  extended  on a  day-for-day  basis  corresponding  with the
occurrence  and  continuance of any event of force majeure (as defined in any of
the  Project  Documents)  so long as the  Company is  diligently  proceeding  to
mitigate the consequences of such event) other than by reason of a Loss Event or
(b) the  announcement  by the  Company of a  decision  to  permanently  cease or
indefinitely  defer the construction or completion of the Project;  or (2) after
the date of Completion,  (a) the suspension for more than 120  consecutive  days
(as such period may be extended on a day-for-day  basis  corresponding  with the
occurrence  and  continuance of any event of force majeure (as defined in any of
the  Project  Documents)  so long as the  Company is  diligently  proceeding  to
mitigate the consequences of such event) of all or  substantially  all operation
of the Project (other than (i) by reason of the failure to be dispatched or (ii)
by reason of the  occurrence  of a Loss Event ) or (b) the  announcement  by the
Company of a decision to permanently cease operation of the Project.

                  "Event of Default"  means the  occurrence of any of the events
specified in Section 6.1 of the Indenture.

                  "Excess Loss Event  Redemption"  has the meaning  specified in
3.3(a)(A) of the Indenture.

                  "Excess Title Proceeds  Redemption" has the meaning  specified
in Section 3.3(a)(B)(b) of the Indenture.

                  "Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.

                  "Exempt  Wholesale   Generator"  means  an  "exempt  wholesale
generator," as that term is defined in 15 U.S.C. ss. 79z-5a(a)(1).

                  "Expansion  Modifications" means modifications or improvements
to the Project  that are  designed to  materially  increase  the net  generating
capacity of the Project,  provided that Expansion  Modifications  do not include
modifications that are Required Modifications.

                  "Facility"  means  the  approximately  710  MW  combined-cycle
electric  generating  facility with 60 MW of supplemental duct firing capability
consisting of refurbished  and repowered  Units 6 and 7 and three 160 MW natural
gas-fired  combustion  generators  which is owned by the  Company and located in
Evangeline  Parish,  Louisiana,  together with the land on which the  generation
units are located,  the  electrical  substation on the site,  gas pipelines that
connect the facility to the off-site pipeline system of CLE Intrastate  Pipeline
Company,  Inc. and the  transmission  lines that connect the  substation  with a
utility transmission system.

                  "Federal  Bankruptcy Code" means Title 11 of the United States
Code.

                  "Final  Completion"  has  the  meaning  specified  in the  EPC
Contract  in effect  as of the  Effective  Date,  without  giving  effect to any
subsequent  amendments or  modifications  thereto (other than such amendments or
modifications which are made in accordance with the Financing Documents).

                                      A-9

<PAGE>

                  "Final  Completion  Date"  means the later of (a) June 1, 2001
and (b) the date on which (i) all of the  conditions  to Final  Completion  have
been fully  satisfied,  (ii) no Default or Event of Default has  occurred and is
continuing and (iii) all of the Accounts are fully funded to their then required
levels in accordance with the Depositary Agreement.

                  "Final Maturity Date" means the latest stated maturity date of
any series of the Bonds.

                  "Final  Memorandum"  means the confidential  private placement
memorandum of the Company,  dated  December 13, 1999  distributed  in connection
with the offering of the Initial Bonds.

                  "Financing  Commitments"  has  the  meaning  specified  in the
Intercreditor Agreement.

                  "Financing Documents" means,  collectively,  the Bond Purchase
Agreement,  the Indenture,  the Bonds, the Equity  Contribution  Agreement,  the
Depositary Agreement, the Intercreditor Agreement and the Security Documents.

                  "Funding  Date" has the meaning  specified  in the  Depositary
Agreement.

                  "GAAP" means generally  accepted  accounting  principles as in
effect in the United States from time to time.

                  "Gas  Transportation  Guaranty"  means the Gas  Transportation
Guaranty to be executed by Cleco in favor of the Company.

                  "Gas   Transportation   Agreement"  means  the  Agreement  for
Intrastate Transportation of Natural Gas, dated as of November 10, 1999, between
the Company and CLE  Intrastate  Pipeline  Company,  Inc.,  and any  Replacement
Project Document entered into in substitution therefor.

                  "Governmental  Approvals"  means all  governmental  approvals,
authorizations,  consents,  decrees, permits, licenses,  waivers, privileges and
filings  with all  Governmental  Authorities  required  to be  obtained  for the
development, acquisition, construction, ownership, start-up and operation of the
Project and the sale of capacity, energy and/or ancillary services therefrom.

                  "Governmental  Authority"  means any government,  governmental
department,    ministry,   commission,   board,   bureau,   agency,   regulatory
instrumentality of any government (central or state),  judicial,  legislative or
administrative  body,  federal,  state or local,  having  jurisdiction  over the
matter or matters in question.

                  "Guaranteed Completion Date" means December 1, 2000.

                  "Guaranty  Obligation"  means, with respect to any Person, any
obligation,  contingent  or  otherwise,  of such Person  directly or  indirectly
guaranteeing in any manner any Debt or similar obligation of any other Person.

                                      A-10

<PAGE>

                  "Holder" means the registered  holder of any Bond from time to
time.

                  "Indenture"  means this Trust Indenture,  dated as of December
10, 1999, between the Company and the
Trustee.

                  "Independent  Engineer"  means  Stone  &  Webster  or  another
recognized  independent  engineering  firm or engineer  retained as  independent
engineer by the Company (provided,  however,  that the Company shall not replace
such  independent  engineer  in  connection  with any  substantive  disagreement
between  the  Company  and  such  independent  engineer  in  connection  with  a
certification to be delivered by the Company or such  independent  engineer or a
consent to be given by such  independent  engineer,  in each case,  as  required
under a Transaction Document).

                  "Initial Bonds shall have the meaning  specified in the second
"WHEREAS" clause of this Indenture.

                  "Initial  Purchasers" means the institutional  investors which
are named in Schedule A to the Bond Purchase Agreement.

                  "Insurance Consultant" means Marsh USA Inc.

                  "Interconnection   Agreement"   means   the   Cleco   Standard
Interconnection Agreement to be executed by and between Cleco Utility Group Inc.
and  the  Company,   and  any  Replacement  Project  Document  entered  into  in
substitution therefor.

                  "Intercreditor  Agreement"  means the  Collateral  Agency  and
Intercreditor  Agreement,  dated as of December 10, 1999, among the Company, the
Trustee,  the Securities  Intermediary,  the  Collateral  Agent on behalf of the
Secured Parties and any Secured Parties from time to time a party thereto.

                  "Interest  Payment  Date" means (i) with respect to the Bonds,
each March 1 and September 1,  commencing on March 1, 2000 and concluding on the
Final  Maturity Date and each other date on which  interest on the Bonds becomes
due and  payable,  whether  on a  Redemption  Date,  the  Final  Maturity  Date,
declaration  of  acceleration  or  otherwise  and (ii) with respect to any other
Secured Obligations,  each regularly scheduled date on which interest is due and
payable  with  respect  to  such  Secured  Obligations,  as  such  date  may  be
established  from time to time,  and any date on which  interest on such Secured
Obligations becomes due and payable,  whether at redemption,  the final maturity
date or declaration of acceleration or otherwise.

                  "Interest  Rate  Protection  Agreements"  means any agreements
between the Company and a Permitted  Counterparty  providing for swaps,  ceiling
rates,  ceiling  and floor  rates,  contingent  participation  or other  hedging
mechanisms with respect to the payment of interest.

                  "Land" has the meaning specified in the Mortgage.

                  "Law" means any  constitution  or treaty,  any law (including,
without  limitation,  Environmental  Laws, laws pertaining to land use or zoning
restrictions, and building, health, fire

                                      A-11

and water use laws), ordinance,  decree, code, regulation (including regulations
governing environmental  matters),  order, rule, permit,  approval,  concession,
grant, franchise, license, agreement, directive, guideline, policy, requirement,
final  judicial or arbitral  decision or other  governmental  restriction or any
similar  form  of  decisions  or  determination  by,  or any  interpretation  or
administration of the foregoing by, any Governmental Authority.

                  "Lien" means any mortgage, pledge, hypothecation,  assignment,
mandatory  deposit  arrangement  with any  Person  owning  Debt of such  Person,
encumbrance,  lien (statutory or other), preference,  priority or other security
agreement of any kind or nature  whatsoever which has the substantial  effect of
constituting a security interest, including, without limitation, any conditional
sale  or  other  title   retention   agreement,   any  financing   lease  having
substantially  the same  effect as any of the  foregoing  and the  filing of any
financing  statement or similar  instrument under the Uniform Commercial Code or
comparable law of any jurisdiction, domestic or foreign.

                  "Loss Event"  means (1) an event  (other than a Title  Defect)
which  causes  all or a portion  of the  Project  to be  damaged,  destroyed  or
rendered  unfit  for  normal  use,  or (2) a  compulsory  transfer  or taking or
transfer  under threat of compulsory  transfer or taking of all or a substantial
portion of the Project by a Governmental Authority.

                  "Loss Event  Redemption" has the meaning  specified in Section
3.3(a)(A)(a) of the Indenture.

                  "Loss Proceeds" means all proceeds received by or on behalf of
the Company in connection with a Loss Event.

                  "Loss Proceeds Sub-account" means the sub-account of such name
established  under the  Depositary  Agreement and held under account number 6800
0603 13.

                  "Maintenance  Agreement" means the Program Parts, Shop Repairs
and Scheduled Outage Services  Contract,  dated as of September 2, 1999, between
the Company and Siemens  Westinghouse  Power  Corporation,  and any  Replacement
Project Document entered into in substitution therefore.

                  "Major Maintenance  Reserve Account" means the Account of such
name  established  under the Depositary  Agreement and held under account number
6800 0603 05.

                  "Major  Maintenance  Reserve Required  Balance" means, for any
Funding  Date,  the amount set forth for such Funding Date on Schedule II to the
Indenture,  provided  that  Schedule II may be revised  from time to time by the
Company as set forth in a substitute Schedule II prepared by the Company to more
closely reflect the anticipated amount and timing of major maintenance  expenses
based  on (i) a  certificate  of an  Authorized  Representative  of the  Company
delivered  to the  Trustee  certifying  that such  substitute  Schedule  II more
closely reflects the anticipated amount and timing of major maintenance expenses
than the then existing Schedule II and otherwise  complies with the requirements
of this definition and (ii) a certificate of the Independent Engineer confirming
that  in its  view  such  substitute  Schedule  II  more  closely  reflects  the
anticipated  amount  and  timing  of major  maintenance  expenses  than the then
existing  Schedule II and is prudent based on the operating  characteristics  of
the Facility.

                                      A-12

<PAGE>

                  "Make-Whole  Premium" means, with respect to any Initial Bond,
an amount equal to the excess,  if any, of the Discounted Value of the Remaining
Scheduled  Payments  with respect to the Called  Principal of such Bond over the
amount of such Called Principal,  provided that the Make-Whole Premium may in no
event be less than zero. For the purposes of determining the Make-Whole Premium,
the following terms have the following meanings:

                  "Called  Principal"  means,  with respect to any Initial Bond,
         the  principal of such Initial Bond that is to be redeemed  pursuant to
         Section 3.1.

                  "Discounted Value" means, with respect to the Called Principal
         of any Initial Bond, the amount  obtained by discounting  all Remaining
         Scheduled  Payments  with respect to such Called  Principal  from their
         respective  scheduled due dates to the Redemption  Date with respect to
         such Called Principal,  in accordance with accepted  financial practice
         and at a discount factor (applied on the same periodic basis as that on
         which   interest  on  such  Initial  Bond  is  payable)  equal  to  the
         Reinvestment Yield with respect to such Called Principal.

                  "Reinvestment   Yield"  means,  with  respect  to  the  Called
         Principal of any Initial Bond,  50 basis points  (0.50%) over the yield
         to maturity implied by (i) the yields  reported,  as of 10:00 A.M. (New
         York City time) on the second  Business Day  preceding  the  Redemption
         Date with respect to such Called Principal,  on the display  designated
         as "Gov't PX" of the Bloomberg  Financial  Market  Services (or, if not
         available,  such  other  display  as may  replace  such  display on the
         Bloomberg Financial Market Services or any other nationally  recognized
         trading screen reporting  on-line  intra-day  trading in U.S.  Treasury
         securities),  for actively  traded U.S.  Treasury  securities  having a
         maturity equal to the Remaining  Average Life of such Called  Principal
         as of such Redemption  Date, or (ii) if such yields are not reported as
         of  such  time  or  the  yields  reported  as  of  such  time  are  not
         ascertainable  (including  by  way  of  interpolation),   the  Treasury
         Constant Maturity Series Yields reported,  for the latest day for which
         such  yields  have  been so  reported  as of the  second  Business  Day
         preceding the Redemption Date with respect to such Called Principal, in
         Federal  Reserve  Statistical  Release  H.15  (519) (or any  comparable
         successor  publication)  for actively traded U.S.  Treasury  securities
         having a constant  maturity equal to the Remaining Average Life of such
         Called  Principal  and  trading  in the  secondary  market at the price
         closest to par as of such  Redemption  Date. Such implied yield will be
         determined,   if  necessary,  by  (a)  converting  U.S.  Treasury  bill
         quotations  to  bond-equivalent  yields  in  accordance  with  accepted
         financial  practice  and (b)  interpolating  linearly  between  (1) the
         actively traded U.S.  Treasury  security with a remaining  average life
         closest to and greater than the  Remaining  Average Life and trading in
         the  secondary  market at the price closest to par and (2) the actively
         traded U.S.  Treasury security with a remaining average life closest to
         and less than the  Remaining  Average Life and trading in the secondary
         market at the price closest to par.

                  "Remaining  Average  Life"  means,  with respect to any Called
         Principal,  the number of years (calculated to the nearest  one-twelfth
         year) obtained by dividing (i) such Called  Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal  component of
         each Remaining  Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will  elapse  between

                                      A-13

the Redemption Date with respect to such Called  Principal and the scheduled due
date of such Remaining Scheduled Payment.

                  "Remaining  Scheduled  Payments"  means,  with  respect to the
         Called  Principal  of any  Initial  Bond,  all  payments of such Called
         Principal and interest  thereon that would be due after the  Redemption
         Date with respect to such Called Principal if no payment of such Called
         Principal were made prior to its scheduled due date,  provided that, if
         such Redemption  Date is not a date on which interest  payments are due
         to be made under the terms of such Initial Bond, then the amount of the
         next  succeeding  scheduled  interest  payment  will be  reduced by the
         amount of interest  accrued to such  Redemption Date and required to be
         paid on such Redemption Date pursuant to Article III.

                  "Master Services  Agreements" means,  collectively,  the Human
Resources Master Services Agreements,  dated as of July 1, 1999, entered into by
the Company with each of Cleco, Cleco Utility Group Inc., Utility Construction &
Technology  Solutions  LLC,  Cleco Energy LLC, CLE  Intrastate  Pipeline and CLE
Resources,  and any Replacement  Project  Document  entered into in substitution
therefor.

                  "Master Use Agreements"  means,  collectively,  the Master Use
Agreements for Transfer of Assets, Goods and Services, dated as of July 1, 1999,
entered  into by the  Company  with each of Cleco,  Cleco  Utility  Group  Inc.,
Utility   Construction  &  Technology  Solutions  LLC,  Cleco  Energy  LLC,  CLE
Intrastate  Pipeline and CLE Resources,  and any  Replacement  Project  Document
entered into in substitution therefor.

                  "Material  Adverse Effect" means a material  adverse effect on
(1)  the  business,  property,  prospects,  financial  position  or  results  of
operation of the Company, (2) the validity,  perfection or priority of the Liens
on the Collateral, (3) the ability of the Collateral Agent to enforce its rights
and remedies under the Financing  Documents or (4) the ability of the Company to
perform any of its material obligations under the Transaction Documents.

                  "Material Project Document" means (a) the Project Documents in
effect as the Closing Date and (b) any  Additional  Project  Document (i) with a
term of at least six months or (ii)  pursuant  to which the  revenues  earned or
payments made are in excess of $2,000,000 on an annual basis.

                  "Members" means the members of the Company as set forth in the
Operating Agreement.

                  "Monies" means all cash, payments,  Permitted  Investments and
other amounts (including  instruments  evidencing such amounts) on deposit in or
credited to any Account.

                  "Monthly Date" means the last day of each calendar month.

                  "Moody's" means Moody's Investors Service, Inc., provided that
it  maintains a rating on the Bonds or the Person in  question,  as the case may
be.

                                      A-14
<PAGE>

                  "Mortgage" means the Mortgage,  Assignment of Rents,  Security
Agreement and Financing Statement, dated as of December 10, 1999, by the Company
in favor of the Collateral Agent.

                  "Mortgaged   Property"  has  the  meaning   specified  in  the
Mortgage.

                  "Multiemployer  Plan"  means a Plan which is a  multliemployer
plan as defined in Section 4001(a)(3) of ERISA.

                  "MW" means a unit of  electrical  energy  equal to one million
watts of power.

                  "Non-Cleco Parties" means, collectively,  Siemens Westinghouse
Power Corporation,  Williams Energy Marketing & Trading Company and The Williams
Companies, Inc.

                  "Non-Completion  Event" has the meaning  specified  in Section
3.3(a)(D) of the Indenture.

                  "Officer's  Certificate"  means a  certificate  executed by an
Authorized Representative.

                  "O&M Account" means the Account of such name established under
the Depositary Agreement and held under account number 6800 0603 03.

                  "O&M Contract" means the Operations and Maintenance  Agreement
to be executed by and between the Company and Cleco Generation Services LLC, and
any Replacement Project Document entered into in replacement thereof.

                  "O&M Costs" means all amounts disbursed by or on behalf of the
Company for the operation, maintenance, administration, repair or improvement of
the Project (other than costs funded with withdrawals from the Major Maintenance
Reserve Account), including, without limitation, premiums on insurance policies,
property  and other  taxes,  and  payments  under  the  relevant  operating  and
maintenance  agreements,  leases,  royalty and other land use agreements,  fees,
expenses and any other payments required under the Project Documents.

                  "O&M Guaranty" means the Operation and Maintenance Guaranty to
be  executed  by  Cleco in favor of the  Company,  and any  Replacement  Project
Document entered into in replacement thereof.

                  "O&M  Operator"  means Cleco  Generation  Services LLC or such
other Person that becomes operator under the O&M Contract.

                  "Opinion  of Counsel"  means a written  opinion of counsel for
any  Person  either  expressly  referred  to  herein  or  otherwise   reasonably
satisfactory to the Trustee which may include,  without limitation,  counsel for
the Company and counsel for any  Affiliate of the  Company,  whether or not such
counsel is an employee of the Company or such Affiliate.

                                      A-15
<PAGE>

                  "Optional  Modifications"  means modifications or improvements
to, and for the benefit of, the Project  other than  Required  Modifications  or
Expansion Modifications.

                  "Ordinary Equity  Contribution"  has the meaning  specified in
the Equity Contribution Agreement.

                  "Outstanding,"  in connection with Bonds means, as of the time
in question,  all Bonds authenticated and delivered under the Indenture,  except
(i) Bonds  theretofore  cancelled or required to be cancelled under Section 2.10
of the  Indenture;  (ii) Bonds for which  provision  for payment shall have been
made in accordance with the Indenture; and (iii) Bonds in substitution for which
other Bonds have been authenticated and delivered pursuant to the Indenture, and
subject  in  any  event  to the  terms  and  provisions  of  Section  7.3 of the
Indenture.

                  "Paying Agent" means the Trustee or any other Person appointed
to serve as Paying Agent under Section 10.12 of the Indenture.

                  "Payment Date" means, with respect to any Secured Obligations,
the next Interest Payment Date or Principal Payment Date.

                  "PBGC" means the Pension Benefit Guaranty Corporation.

                  "Permitted Counterparty" means, in connection with an Interest
Rate Protection Agreement, a financial institution whose long term unsecured and
unguaranteed  senior  debt is rated  "A" or  higher by S&P and "A2" or higher by
Moody's or which can be collateralized to such a level.

                  "Permitted Debt" is defined in Section 5.18 of the Indenture.

                  "Permitted  Investments"  is defined  in  Section  5.24 of the
Indenture.

                  "Permitted Lien" is defined in Section 5.19 of the Indenture.

                  "Person"   means   any   individual,    sole   proprietorship,
corporation,  partnership, joint venture, limited liability partnership, limited
liability company, trust, unincorporated association,  institution, Governmental
Authority or any other entity.

                  "Plan" means an employee  benefit or other plan established or
maintained by the Company or any Commonly Controlled Entity and which is covered
by Title IV of ERISA, other than a Multiemployer Plan.

                  "Pledge  Agreement"  means the Pledge  Agreement,  dated as of
December 10, 1999, from Cleco Midstream to the Collateral Agent.

                  "Pre-Completion Revenues" means all revenues received by or on
behalf  of  the  Company  prior  to the  date  on  which  the  Project  achieves
Completion, but excluding Loss Proceeds and Title Insurance Proceeds required to
be  deposited  into the  Redemption  Account  and  other  similar  non-recurring
receipts required to be deposited into the Redemption Account.

                                      A-16

<PAGE>

                  "Principal  Payment Date" means (i) with respect to the Bonds,
the date on which all or a portion of the  principal  of such Bonds  becomes due
and payable as provided therein or in the Indenture, whether on a scheduled date
for  payment of  principal,  at a  Redemption  Date,  the Final  Maturity  Date,
declaration  of  acceleration  or  otherwise  and (ii) with respect to any other
Secured Obligations, the date on which all or a portion of the principal of such
Secured  Obligations  becomes  due and payable  pursuant  to the terms  thereof,
whether on a scheduled  date for payment of principal,  at a redemption  date, a
final maturity date, declaration of acceleration or otherwise.

                  "Project"  means the Facility,  together  with the  associated
equipment, facilities, ancillary structures and related contractual and property
interests, including, without limitation, any capital improvements thereto.

                  "Project  Costs" has the meaning  specified in the  Depository
Agreement.

                  "Project Documents" means collectively, the Tolling Agreement,
the  Tolling  Guaranty,  the Tolling  Side  Letter,  the  Tolling  Subordination
Agreement,  the EPC  Contract,  the EPC  Guaranty,  the  O&M  Contract,  the O&M
Guaranty,  the  Maintenance  Agreement,   the  Master  Use  Agreement,  the  Gas
Transportation  Guaranty,  the Master Services  Agreements,  the Interconnection
Agreement,  the Gas Transportation  Agreement,  the Start-Up Gas Agreement,  the
Start-Up Power Agreement and any Additional Project Document.

                  "Project  Party" means any party to a Project  Document  other
than the Company.

                  "PUHCA" means the Public Utility  Holding Company Act of 1935,
as amended.

                  "Rating Agency" means Moody's, provided that Moody's maintains
a rating on the Bonds or, if Moody's does not retain a rating of the Bonds,  S&P
or any other  nationally  recognized  credit rating  agency of similar  standing
which maintain a rating of the Bonds.

                  "Rating  Downgrade"  means,  at any time,  a  lowering  of the
Rating Agency's then-current rating of the Bonds.

                  "Rating  Reaffirmation"  means a  reaffirmation  by the Rating
Agency of its then current credit ratings of the Bonds.

                  "Redemption   Account"   means  the   Account   of  such  name
established  pursuant  to  the  Depositary  Agreement  and  held  under  account
number6800 0603 07.

                  "Redemption  Date"  means  the  date on  which  Bonds  will be
redeemed  in  accordance  with the terms of this  Indenture,  which date will be
specified in an Officer's  Certificate of the Company or a written determination
of the Trustee, in each case delivered in accordance with this Indenture.

                  "Redemption  Fund" has the meaning specified in Section 3.2 of
the Indenture.

                  "Redemption  Price"  means an  amount  equal to the  principal
amount,  premium (if any) and interest accrued through the Redemption Date to be
paid for Bonds redeemed  prior to

                                      A-17

<PAGE>

maturity in  accordance  with the terms of this  Indenture,  as specified in the
notice of redemption given pursuant to Section 3.4 of the Indenture.

                  "Registrar"  has the meaning  specified  in Section 2.5 of the
Indenture.

                  "Replacement  Project  Document" means any Additional  Project
Document   entered  into  in  replacement   of  a  Project   Document  (1)  with
substantially  similar  economic  effect on the Company as the Project  Document
being  replaced  and  (2)  with  a  counterparty  having  substantially  similar
creditworthiness  and  experience as the  counterparty  to the Project  Document
being replaced.

                  "Required  Holders" means those Holders  holding more than 50%
in aggregate  principal amount of the Outstanding Bonds,  except where otherwise
expressly provided.

                  "Required   Modifications"   means  those   modifications   or
improvements  to the Project which are  reasonably  necessary for the Project to
remain  in  compliance  with  applicable  laws and  Governmental  Approvals,  as
confirmed in writing by the Independent Engineer.

                  "Required  Project  Completion Date" has the meaning specified
in the EPC Contract in effect as of the Closing Date,  without  giving effect to
any subsequent  amendments or modifications  thereto (other than such amendments
or modifications which are made in accordance with the Financing Documents).

                  "Required Secured Parties" means, at any time, Persons that at
such time hold at least a majority of the Combined Exposure;  provided that, for
purposes of directing actions of the Collateral Agent, the Trustee shall vote on
all  matters  under  the  Intercreditor  Agreement  in an  amount  equal  to the
aggregate  principal amount of the Outstanding Bonds,  subject,  however, in all
events, to the terms and provisions of the Indenture.

                  "Responsible Officer" means (i) with respect to the Collateral
Agent,  the president or any vice  president,  assistant  vice  president or the
trust  officer of the  Collateral  Agent to whom any  matter  has been  referred
because of such officer's  knowledge and familiarity with the particular subject
and (ii) with  respect to the  Trustee,  the  president  or any vice  president,
assistant  vice president or the trust officer of the Trustee to whom any matter
has been referred  because of such officer's  knowledge and familiarity with the
particular subject.

                  "Restricted  Payments" means, with respect to any Person,  (1)
the  declaration  and payment of  distributions,  dividends or any other similar
payment  made on  account  of the  equity  of such  Person  in  cash,  property,
obligations or other securities, (2) any payment of the principal of or interest
on any  Subordinated  Debt of such Person or (3) the making of loans or advances
by such Person to any Affiliate of such Person.

                  "Revenue  Account" means the Account of such name  established
under the Depositary Agreement and held under account number 6800 0603 02.

                  "S&P" means Standard & Poor's Ratings Group.

                                      A-18

<PAGE>

                  "Scheduled  Payment  Date"  means,  (1)  with  respect  to the
Indenture  and the Bonds,  each March 1 and September 1, and (2) with respect to
any other Permitted  Debt, the dates set forth in the documents  evidencing such
Permitted  Debt for the  scheduled  payment of principal of and interest on such
Permitted Debt.

                  "Secured  Obligations" shall have the meaning specified in the
Intercreditor Agreement.

                  "Secured Parties" means, collectively,  the Trustee (on behalf
of the  Holders  of the Bonds) and any other  holder of  Permitted  Debt (or any
agent  or  trustee   therefor)   which  becomes  a  "Secured  Party"  under  the
Intercreditor Agreement in accordance with the terms thereof.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Securities  Intermediary" means Bank One Trust Company, N.A.,
and its successors in such capacity.

                  "Security Agreement" means the Security Agreement, dated as of
December 10, 1999, between the Company and the Collateral Agent.

                  "Security   Documents"  means,   collectively,   the  Security
Agreement,  the Mortgage, the Pledge Agreement,  all other documents pursuant to
which a Lien on the  Collateral  is  granted or  purported  to be granted to the
Collateral Agent and the consents to assignment of the Project Documents.

                  "Security  Interest" means any perfected and enforceable  Lien
on Collateral  granted to the Collateral  Agent pursuant to the  requirements of
any applicable Financing Document.

                  "Site"  means the  "Premises"  as such term is  defined in the
Mortgage.

                  "Start-Up   Gas   Agreement"   means  the  Base  Contract  for
Short-Term  Sale and Purchase of Natural Gas,  dated as of November 1, 1999,  by
and between CLE Intrastate Pipeline Company, Inc. and the Company.

                  "Start-Up  Power  Agreement"  means the Agreement for Electric
Service by and between Cleco Utility Group, Inc. and the Company.

                  "Subordinated   ACS  LOC   Payment   Sub-account"   means  the
sub-account of such name  established  under the  Depositary  Agreement and held
under account number 6800 0603 010.

                  "Subordinated  ACS LOC  Principal  Amount" means the principal
amount due on any ACS LOC Loan which is subordinated to the Senior Debt.

                  "Subordinated  Claims  Account" means the Account of such name
established under the Depositary  Agreement and held under the following account
number 6800 0603 12.

                                      A-19

<PAGE>

                  "Subordinated   Debt"  means  Debt  (and  the  note  or  other
instrument  evidencing  the  same)  which  has been  subordinated  on terms  and
conditions  substantially the same as those attached hereto as Exhibit C, to the
prior payment of amounts owing under this Indenture and the Bonds.

                  "Subordinated  Debt  Account"  means the  Account of such name
established  under the  Depositary  Agreement and held under account number 6800
0603 12.

                  "Supplemental  Indenture"  means an indenture  supplemental to
this  Indenture  entered  into by the  Company  and the  Trustee  for any of the
purposes set forth in Article VIII.

                  "Title  Defect" means the existence of any material  defect in
the title to the Site (other than Permitted Liens) in effect on the Closing Date
which  entitles the Collateral  Agent to make a claim under the title  insurance
policy  for the  Project  required  to be  delivered  under  the  Bond  Purchase
Agreement.

                  "Title Defect  Sub-account" means the sub-account of such name
established  under the  Depositary  Agreement and held under account number 6800
0603 14.

                  "Title Event  Redemption" has the meaning specified in Section
3.3(a)(B) of the Indenture.

                  "Title  Insurance  Proceeds"  means all  proceeds  received in
connection with a Title Defect by the Company under the title  insurance  policy
for the Project required to be delivered under the Bond Purchase Agreement.

                  "Tolling  Agreement"  means  the  Capacity  Sale  and  Tolling
Agreement,  dated as of November  10,  1999,  between  the Company and  Williams
Energy Marketing & Trading Company, and any Replacement Project Document entered
into in substitution therefore.

                  "Tolling  Agreement Damages Payment" has the meaning specified
in Section 3.3(a)(E) of the Indenture.

                  "Tolling Agreement Damages  Sub-account" means the sub-account
of such name established  under the Depositary  Agreement and held under account
number 6800 0603 17..

                  "Tolling Guaranty" means the Corporate Guaranty to be executed
by The Williams  Companies,  Inc. in favor of the Company,  and any  Replacement
Project Document entered into in substitution therefor.

                  "Tolling Side Letter"  means the Tolling  Guaranty Side Letter
to be executed by and between  Williams  Energy  Marketing & Trading Company and
the Company.

                  "Tolling  Subordination  Agreement"  means  the  Subordination
Agreement  to be  executed by and between  Williams  Energy  Marketing & Trading
Company, the Trustee and the Collateral Agent.

                                      A-20
<PAGE>

                  "Transaction  Documents"  means,  collectively,   the  Project
Documents and the Financing Documents.

                  "Trigger Event" has the meaning specified in the Intercreditor
Agreement.

                  "Trigger Event Date" has the meaning specified in Section 6(a)
of the Intercreditor Agreement.

                  "Trustee"  means the Person named as "Trustee" in the Preamble
of this  Indenture and its  successors,  and any  corporation  resulting from or
surviving any  consolidation  or merger to which it or its  successors  may be a
party,  or any  successor to all or  substantially  all of its  corporate  trust
business,  provided that any such  successor or surviving  corporation  shall be
eligible for appointment as trustee  pursuant to Section 10.8, until a successor
Trustee  shall have become such  pursuant to the  applicable  provisions of this
Indenture, and thereafter shall mean such successor Trustee.

                  "UCC" means the Uniform  Commercial Code as the same may, from
time to time,  be in  effect  in the  State of New  York or any  other  relevant
jurisdiction.

                  "Williams  Subordination  Agreement"  means the  Subordination
Agreement,  dated as of December 10, 1999,  among  Williams  Energy  Marketing &
Trading Company, Bank One Trust Company,  N.A., as Trustee and Collateral Agent,
and the Company.

                                      A-21

<PAGE>

                                                                       Exhibit B
                                                              to Trust Indenture

                             [Form of Initial Bond]

                              CLECO EVANGELINE LLC
                            8.82% Senior Secured Bond
                                    due 2019

                  THIS BOND HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER  APPLICABLE  SECURITIES
LAWS, AND ACCORDINGLY MAY NOT BE SOLD,  PLEDGED OR OTHERWISE  TRANSFERRED  UNDER
CIRCUMSTANCES THAT WOULD RESULT IN A VIOLATION OF THE REGISTRATION  REQUIREMENTS
OF THE SECURITIES ACT OR SUCH OTHER LAWS.

                              CLECO EVANGELINE LLC

                       8.82% Senior Secured Bond due 2019

No. R-__                                       Issue Date:  ______________
$_________                                     Maturity Date:  September 1, 2019
Private Placement Number: 18551* AA 3          New York, New York

                  CLECO EVANGELINE LLC, a Louisiana  limited  liability  company
(hereinafter  called the "Company",  which term includes any successor or assign
under the Indenture  referred to below),  for value received  hereby promises to
pay  to  [__________],  or its  registered  assigns,  the  principal  amount  of
_____________  DOLLARS  ($__________)  such  payment  to be made  in  semiannual
installments on March 1 and September 1 of each year (commencing  March 1, 2001)
and ending on the Maturity Date set forth above (the "Maturity Date"), each such
installment to be in an amount equal to the principal  amount  specified for the
applicable payment date on Schedule I attached hereto (provided that the portion
of the principal amount remaining unpaid on the Maturity Date, together with all
interest accrued  thereon,  shall in any and all cases be due and payable on the
Maturity  Date),  and to pay  interest  on the unpaid  portion of the  principal
amount  hereof at an  interest  rate per  annum  equal to 8.82%  (the  "Interest
Rate"),  such interest to be payable from the most recent interest  payment date
to which interest has been paid or, if no interest has been paid, from the Issue
Date set forth  above,  semiannually  on March 1 and  September  1 of each year,
commencing  March 1, 2000,  until the  principal  amount hereof is paid in full.
This Bond  shall bear  interest  on any  overdue  principal  and,  to the extent
enforceable  under  applicable law, on any overdue interest and premium (if any)
at the Default Rate  specified in the Indenture  referred to below.  Interest on
this Bond shall be computed on the basis of a 360-day year, consisting of twelve
(12) thirty (30) day months.

                  Payments of principal of, interest on and any premium (if any)
with respect to this

                                      B-1

Bond are to be made in  lawful  money of the  United  States of  America  at the
Corporate Trust Office of the Trustee in New Orleans, Louisiana or at such other
place as may be  provided  pursuant  to the  Indenture  referred to below or, in
certain circumstances,  to the holder of this Bond as provided in Section 2.2(f)
of said Indenture.

                  This  Bond is one of an  authorized  series  of  Bonds  of the
Company  known  as its  8.82%  Senior  Secured  Bonds  due  2019  (the  "Bonds")
originally issued in the aggregate principal amount of $218,600,000  pursuant to
the Trust Indenture,  dated as of December 10, 1999 (as the same may be amended,
modified  or  supplemented  from time to time,  the  "Indenture"),  between  the
Company and Bank One Trust Company, N.A., as trustee (the "Trustee",  which term
includes any successor Trustee under the Indenture), as contemplated by the Bond
Purchase  Agreement,   dated  as  of  December  10,  1999  (the  "Bond  Purchase
Agreement"),  between  the  Company  and the  institutional  investors  named in
Schedule A thereto.  All capitalized  terms used herein,  unless defined herein,
shall have the meanings ascribed to them in the Indenture.

                  All Bonds are secured  equally and ratably  with one  another.
Reference is hereby made to the Indenture  for a  description  of the nature and
extent of the Bonds and the respective rights of the Holders of the Bonds and of
the Trustee and the Company in respect of the Bonds and the terms upon which the
Bonds are made and are to be authenticated and delivered.

                  The principal of, and interest on, this Bond are payable from,
and secured by,  assets  subject to the Liens on the  Collateral,  in accordance
with the terms of the Indenture and the Security  Documents.  The Holder of this
Bond is entitled to the benefits of the Bond Purchase  Agreement,  the Indenture
and the Security Documents and, subject in the case of the Security Documents to
the terms of the  Intercreditor  Agreement  referred  to below,  may enforce the
agreements of the Company  contained  therein and exercise the remedies provided
for thereby or otherwise available in respect thereof.

                  The Bonds are subject to a Collateral Agency and Intercreditor
Agreement dated as of December 10, 1999 (the "Intercreditor  Agreement"),  among
the  Company,  the  Trustee,   Bank  One  Trust  Company,   N.A.  as  Securities
Intermediary and Bank One Trust Company, N.A. as Collateral Agent.

                  The Bonds are subject to optional redemption by the Company at
any  time in  whole  or,  after  Completion,  in part  at the  Redemption  Price
specified in the  Indenture,  which  Redemption  Price will include a Make-Whole
Premium.

                  The Bonds are, under certain conditions,  subject to mandatory
redemption as set forth in Section 3.3 of the Indenture.

                  Notice  of any  redemption  of  Bonds  will be  given at least
thirty (30) days but not more than sixty (60) days prior to the Redemption  Date
to each Holder at its registered address.

                  The unpaid  portion of  principal,  together with all interest
accrued thereon and all other amounts due hereunder, shall be due and payable in
full, as provided in the  Indenture,  upon the  occurrence of certain  Events of
Default as set forth in Section 6.1 of the Indenture.

                  Recourse  under  this Bond is  limited as set forth in Section
11.12 of the Indenture.

                                      B-2

<PAGE>

                  This  Bond  is a  registered  Bond,  and  as  provided  in the
Indenture,  upon  surrender  of this Bond for  registration  of  transfer,  duly
endorsed,  or accompanied by a written instrument of transfer duly executed,  by
the  registered  holder  hereof or such  holder's  attorney  duly  authorized in
writing,  a new  Bond  for a like  principal  amount  will  be  issued  to,  and
registered  in the  name  of,  the  transferee.  Prior  to due  presentment  for
registration  of  transfer,  the Company and the Trustee may treat the Person in
whose  name this Bond is  registered  as the owner  hereof  for the  purpose  of
receiving  payment and for all other  purposes,  and neither the Company nor the
Trustee will be affected by any notice to the contrary.  No service  charge will
be made to any Holder of Bonds for any transfer or exchange,  but the  Registrar
may require  payment of a sum sufficient to cover any tax or other  governmental
charge payable in connection therewith.

                  THIS BOND SHALL BE GOVERNED BY, AND  CONSTRUED  IN  ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK  APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK,

                  Unless  the  certificate  of  authentication  hereon  has been
executed by the Trustee by manual or facsimile signature, this Bond shall not be
entitled to any benefit under such Indenture,  or be valid or obligatory for any
purpose.

                  IN WITNESS WHEREOF,  the Company has caused this instrument to
be duly executed.

                                                  CLECO EVANGELINE LLC

                                                  By:___________________________
                                                     Name:
                                                     Title:
                                                     Dated:

                                      B-3

<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This  Bond  is one of the  Initial  Bonds  referred  to in the  within-mentioned
Indenture.

BANK ONE, TRUST COMPANY, N.A.
as Trustee

By:
Name:
Title:
Dated:

                                      B-4

<PAGE>

                                 ASSIGNMENT FORM

                  (To be  executed  by the  registered  Holder  if  such  Holder
desires to transfer this Bond)

To:      Bank One Trust Company, N.A.
         27th Floor
         201 St. Charles Avenue
         New Orleans, Louisiana 70170
         Attention:  Denis Milliner

FOR VALUE RECEIVED the  undersigned  hereby  sell(s),  assign(s) and transfer(s)
unto:

Name of Assignee:  ________________________________
Social Security Number or Other Identifying
Number of Assignee:_____________________________

Typewritten Name and Address

(including zip code) of Assignee:   ___________________________________

the within Bond and all rights thereunder,  hereby irrevocably  constituting and
appointing __________________ attorney to transfer said Bond on the books of the
Company, with full power of substitution in the premises.

By: _________________________

Dated:_______________________

                  NOTICE:  The signature to this assignment must correspond with
the name as  written  upon the  first  page of the  within  instrument  in every
particular, without alteration or enlargement or any change whatsoever

                                      B-5

<PAGE>

                                                                      Schedule I

                             PRINCIPAL AMORTIZATION

         The  principal of this Bond is payable in  semiannual  installments  on
each Principal  Payment Date specified in the table below,  commencing  March 1,
2001,  each such  installment to be in an amount equal to the product of (a) the
principal  amount set forth  opposite  the  applicable  Principal  Payment  Date
specified in such table multiplied by (b) a fraction,  the numerator of which is
the  stated  principal  amount  of this  Bond  and the  denominator  of which is
$218,600,000:

                                  Principal Amount Payable on $218,600,000
                                                Bonds Issued
Principal Payment Date                   Pursuant to this Indenture
March 1, 2001                                    $2,186,000
     September 1, 2001                            2,186,000
March 1, 2002                                     2,733,000
     September 1, 2002                            2,733,000
March 1, 2003                                     3,006,000
     September 1, 2003                            3,006,000
March 1, 2004                                     2,459,000
     September 1, 2004                            2,459,000
March 1, 2005                                     3,006,000
     September 1, 2005                            3,006,000
March 1, 2006                                     3,552,000
     September 1, 2006                            3,552,000
March 1, 2007                                     3,826,000
     September 1, 2007                            3,826,000
March 1, 2008                                     4,099,000
     September 1, 2008                            4,099,000
March 1, 2009                                     3,552,000
     September 1, 2009                            3,552,000
March 1, 2010                                     4,099,000
     September 1, 2010                            4,099,000
March 1, 2011                                     4,645,000
     September 1, 2011                            4,645,000
March 1, 2012                                     5,192,000
     September 1, 2012                            5,192,000
March 1, 2013                                     6,012,000
     September 1, 2013                            6,012,000
March 1, 2014                                     7,378,000
     September 1, 2014                            7,378,000
March 1, 2015                                     8,198,000
     September 1, 2015                            8,198,000
March 1, 2016                                     9,017,000

                                       B-6

     September 1, 2016                            9,017,000
March 1, 2017                                    10,383,000
     September 1, 2017                           10,383,000
March 1, 2018                                    11,202,000
     September 1, 2018                           11,202,000
March 1, 2019                                    14,755,000
     September 1, 2019                           14,755,000

                                      B-7

<PAGE>

                                                                       Exhibit C

                                                              to Trust Indenture

                            SUBORDINATION PROVISIONS

                  All  capitalized  terms used herein and not otherwise  defined
herein shall have the meanings  ascribed thereto in the Trust Indenture dated as
of December 10, 1999 (as amended,  supplemented  or modified  from time to time,
the "Indenture") between Cleco Evangeline LLC and Bank One Trust Company,  N.A.,
in its capacity as Trustee for the holders of the Bonds.

                  [NAME OF  SUBORDINATED  LENDER]  (together with its successors
and assigns,  the  "Subordinated  Lender")  hereby agrees for the benefit of the
Secured Parties that all [DESCRIBE SUBORDINATED  LIABILITIES] (the "Subordinated
Obligations") are and shall be junior and subordinate,  to the extent and in the
manner set forth  hereinafter,  in right of  payment  to the prior  indefeasible
payment or  satisfaction  in full of all  Secured  Obligations.  In  furtherance
thereof,  each of the Secured Parties, the Collateral Agent and the Subordinated
Lender further agrees that:

                  (a) (i) The  Subordinated  Lender shall not ask,  demand,  sue
for, take or receive from the Company,  directly or indirectly, in cash or other
property or by set-off or in any other manner  (including,  without  limitation,
from or by way of the  Collateral  or any  guaranty of payment or  performance),
payment  of all or any of the  Subordinated  Obligations  unless  and  until the
Financing  Commitments  shall have been  terminated and the Secured  Obligations
shall  have been paid or  otherwise  satisfied  in full  except to the extent of
payments from the Subordinated Claims Account and payments from the Subordinated
Debt Account,  in each case in accordance  with Section 3.2(b) of the Depositary
Agreement.  For the purposes of these provisions,  the Secured Obligations shall
not be deemed  to have  been  paid or  satisfied  in full  until  those  Secured
Obligations  shall have been  indefeasibly  so paid to the Secured Parties or so
otherwise satisfied (after the passage of any relevant preference periods).

                  (ii) Upon any  distribution of all or any of the assets of the
Company  to  creditors  of  the  Company  upon  the  dissolution,   winding  up,
liquidation, arrangement,  reorganization or composition of the Company, whether
in any  bankruptcy,  insolvency,  arrangement,  reorganization,  receivership or
similar  proceedings  or upon an assignment  for the benefit of creditors or any
other marshalling of the assets and liabilities of the Company or otherwise, any
payment or  distribution  of any kind (whether in cash,  property or securities)
which  otherwise  would be payable or  deliverable  upon or with  respect to the
Subordinated  Obligations shall be paid or delivered  directly to the Collateral
Agent for application (in the case of cash) to, or as collateral (in the case of
non-cash  property or securities)  for, the payment or prepayment of the Secured
Obligations until the Secured  Obligations have been paid or otherwise satisfied
in full.

                  (iii)  Each  of  the  Secured   Parties  may  demand  specific
performance  of these terms of  subordination,  whether or not the Company shall
have complied with any of the provisions  hereof  applicable to them at any time
when the  Subordinated  Lender  shall  have  failed to  comply  with any of such
provisions  applicable to it. The Subordinated  Lender hereby irrevocably

                                      C-1

waives any  defense  based on the  adequacy  of a remedy at law,  which might be
asserted as a bar to such remedy of specific performance.

                  (iv) So long as there are any Financing  Commitments or any of
the Secured  Obligations  shall  remain  unpaid or  otherwise  unsatisfied,  the
Subordinated  Lender shall not commence or join with any creditor other than the
Collateral  Agent in commencing  any proceeding  referred to in subsection  (ii)
above for the  payment  of any  amounts  which  otherwise  would be  payable  or
deliverable upon or with respect to the Subordinated Obligations.

                  (v) Subject to the  termination  of the Financing  Commitments
and the  indefeasible  payment  or  satisfaction  in full of all of the  Secured
Obligations,  the  Subordinated  Lender shall be subrogated to the rights of the
Secured Parties to receive  payments or  distributions  of assets of the Company
made on the Secured  Obligations  until the  Subordinated  Obligations have been
satisfied in full.

                  The foregoing provisions  regarding  subordination are for the
benefit of the Secured  Parties and the Company and shall be enforceable by them
directly  against the Subordinated  Lender,  and no Secured Party or the Company
shall  be  prejudiced  in  its  right  to  enforce  subordination  of any of the
Subordinated  Obligations  by any act or failure to act by the Company or anyone
in custody of any of its respective assets or property. Notwithstanding anything
to the contrary contained in the foregoing  provisions,  the Subordinated Lender
may receive  distributions in respect of the  Subordinated  Obligations from the
Company to the extent  that such  distributions  are  permitted  pursuant to the
Depositary Agreement.

                  (b) So long as any Secured Obligations remain outstanding, the
following provisions shall apply:

                  (i) If a Trigger Event shall have occurred and be  continuing,
the Collateral Agent, on behalf of the Secured Parties and the Company, shall be
permitted  and is hereby  authorized to take any and all actions to exercise any
and all  rights,  remedies  and  options  which it may have  under the  Security
Documents or the Intercreditor Agreement.

                  (ii) Until the Debt Termination Date, the Subordinated  Lender
shall not,  without  the prior  written  consent  of the  Secured  Parties,  (x)
exercise  any rights or enforce any remedies or assert any claim with respect to
the Collateral,  (y) seek to foreclose any Lien or sell the  Collateral,  or (z)
take any action, directly or indirectly, or institute any proceedings,  directly
or indirectly, with respect to any of the foregoing.

                  (iii) The Subordinated  Lender hereby waives (x) notice of the
existence,  creation or non-payment of all or any of the Secured Obligations and
(y) to the fullest extent permitted by law, any right it may have to require the
Collateral Agent to marshal assets.

                  (c) Subject to the terms of the Intercreditor  Agreement,  the
Secured  Parties may, at any time and from time to time,  without any consent of
or notice to the  Subordinated  Lender and without  impairing or  releasing  the
obligations of the  Subordinated  Lender:  (v) amend in any manner any agreement
under which any of the Secured Obligations is outstanding in accordance with the
terms thereof  (other than the priority of payments to  Subordinated  Debt under
the  Depositary  Agreement);  (w)  sell,  exchange,  release,  not  perfect  and
otherwise  deal  with the

                                      C-2

<PAGE>

Collateral  or other  property  at any time  pledged,
assigned or mortgaged to secure the Secured  Obligations in accordance  with the
Security Documents;  (x) release anyone liable in any manner under or in respect
of the Secured  Obligations;  (y) exercise or refrain from exercising any rights
against  the  Company  and  others;  and (z)  apply  any sums  from time to time
received to payment or satisfaction of the Secured Obligations.

                                      C-3

<PAGE>

                                                                       Exhibit D
                                                              to Trust Indenture

                                      D-1

<PAGE>

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