Document:

Exhibit 10.3

 

	
  

  	
   

  	
  March 4, 2008

  

 

David M. Malcolm

460 Long Ridge Road

Bedford, NY 10506

 

Dear Mr. Malcolm:

 

We are pleased to confirm our offer to continue
your employment with Cowen Group, Inc. (“Cowen” or the “Company”) based
upon the terms and conditions set forth below, effective as of the date hereof
(the “Effective Date”).  We look forward
to continuing a mutually beneficial professional relationship.  As more fully set forth below, this agreement
(the “Agreement”) shall supersede any and all prior employment agreements and
letters concerning your employment with Cowen.

 

1.             Term.

 

a.             This
letter provides the details of the terms of your employment from the Effective
Date through December 31, 2010, subject to Paragraph 1(b) below (the “Term”),
and certain other terms and conditions of, and that continue through, your
employment with the Company unless restricted to the Term or as otherwise
specified.

 

b.             In
the event this Agreement is not otherwise renewed prior to December 31,
2010, it shall automatically renew on an annual basis on January 1 of each
successive year, on such terms and conditions as may be agreed to between you
and the then current Chairman of the Board of the Company.  Notice of intent not to renew the Term must
be provided by either party to this Agreement in writing at least ninety (90)
days prior to the relevant January 1. 
Delivery of a notice of intent not to renew, if by the Company, shall be
made by the Office of the General Counsel, upon the direction of the Board of
Directors. However, this letter is not a guarantee of employment for any term
or duration, since your employment will be “at will,” as defined under New York
law.

 

2.             Position.  You shall be
employed as the Chief Executive Officer and President of the Company, and as the
Chairman, Chief Executive Officer and President of Cowen and Company, LLC. You
shall also be appointed, promptly following the Effective Date, to serve as a
member of the Board of Directors of the Company.  Your goals, responsibilities, duties and/or
authority may be reviewed and modified from time to time by the

 

 

Board of
Directors of the Company.  You shall
continue to be subject to, and must comply with, all policies and procedures
applicable to Cowen employees, as now existing or as may be modified or
supplemented by Cowen in its sole discretion.

 

3.             Compensation
and Benefits.

 

a.             Base
Salary.  You will be paid a base salary at the rate of
Two Hundred Fifty Thousand Dollars ($250,000) per annum, less applicable tax
and payroll deductions, payable in accordance with Cowen’s prevailing payroll
practices (“Base Salary”).  Any
obligation to pay your Base Salary will cease upon the termination of your
employment.

 

b.             Annual
Bonus. For each such calendar year in
which you are employed by Cowen, you shall be entitled to earn an annual
performance-based bonus pursuant to a Company bonus plan as determined by the
Compensation Committee of the Board of Directors of Cowen. The total annual
bonus that may be earned by you for any year during the Term is referred to
herein as the “Annual Bonus.” Your Annual Bonuses for the 2008 through 2010
calendar years, and for any years thereafter, may, at the discretion of the
Board of Directors of Cowen, and consistent with other senior executives of
Cowen, include a certain percentage of shares, restricted shares, options, or
other form of equity ownership and/or other deferred compensation.

 

                                                c.             CHRP Interest.  Following the Effective Date, in addition to
any other compensation you are entitled to receive, the Company will cause you
to be admitted as a member of Cowen Healthcare Royalty GP, LLC (“GP LLC”), such
that your interest in GP LLC equals six and one-quarter percent (6.25%) as of
such date; provided, however, that your interest in GP LLC will relate only to
the initial Cowen Healthcare Royalty Partners fund (the “Healthcare Fund”).  Such membership interest in GP LLC is
referred to herein as the “CHRP Interest.” 
At the time you are admitted as a member of GP LLC, you shall purchase
your interest in GP LLC from Cowen Capital Partners II, LLC or its successor
entity (“CCP II”) at a price equal to the aggregate amount paid by CCP II as of
that date relating to the interest so purchased.  Thereafter, you shall be obligated to make
all future payments and contributions relating to capital calls by the
Healthcare Fund and shall be entitled to receive all future distributions.  You shall not be entitled to any amounts that
are distributed prior to your purchase of such interest.   The CHRP Interest shall vest with regard to
fifty percent (50%) on January 1, 2009 and the remaining fifty percent
(50%) on January 1, 2010.

 

d.             Benefits.  While employed, you may continue to
participate in and receive benefits on the same basic terms and conditions as
you have been participating, in accordance with the terms and eligibility
requirements of Cowen’s benefit plans, which may be modified, suspended or
terminated by Cowen in its sole discretion.

 

 

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4.             Termination
of Employment.

 

a.             By the Company Other than for Death, Disability or
for Cause; By You for Good Reason. 
If your employment is terminated (i) by Cowen on or prior to the
expiration of the Term for any reason other than due to (x) your death or
Disability (as defined below) or (y) for Cause (as defined below) or (ii) by
your resignation/voluntary termination with Good Reason (as defined below),
your rights and interests in the CHRP Interest shall immediately vest. Further,
in the event that your Employment terminates during the Term, other than for
death, Disability, Cause, or your resignation/voluntary termination without
Good Reason, you shall be entitled to receive a lump sum cash payment equal to
that portion of your Base Salary and any other benefits or compensation earned
but unpaid as of the date of termination plus an amount (the “Severance Amount”)
equal to Three Million Dollars ($3,000,000), less applicable tax and payroll
deductions.  In addition, you shall be
entitled to receive a lump sum cash payment equal to the aggregate
Post-Retirement Benefits, as defined herein in Paragraph 4b.  In addition, any outstanding equity awards
shall become fully vested and exercisable and any restrictions thereon shall
lapse, provided you have not otherwise violated the terms of the award
agreement pursuant to which such equity awards were granted. Any outstanding
stock options shall remain exercisable for the remainder of the respective
terms of such stock options (taking into account any provisions of the equity
incentive plan or option agreements that cause them to expire or be replaced in
connection with changes in control or similar events). You will also be
required to sign a Settlement Agreement and Release of the Company in a form
prepared by the Company, which will include a general release of known and
unknown claims, a return of Company Property, nondisparagement and a
requirement to cooperate regarding any future litigation. Such compensation
shall be paid to you within thirty (30) days of the date of termination of your
Employment, assuming you have signed the severance agreement referred to in the
prior sentence.

 

b.             Post-Retirement Benefits.  When, by reason of the expiration of the
Term, or by reason of your retirement (as that term is defined in the Company’s
2007 Equity and Incentive Plan) at any time on or after the date that annual
bonuses are paid by Cowen in connection with the 2010 calendar year
compensation cycle, you cease to serve as the Chief Executive Officer and
President of the Company, and as the Chairman, Chief Executive Officer and
President of Cowen and Company, LLC, provided you are otherwise an employee in
good standing at that time, and continuing for a three (3) year period,
Cowen will employ you as a Senior Advisor. 
In that capacity, you will be entitled to receive an annual salary of
Seven Hundred Fifty Thousand Dollars ($750,000).  Your duties and responsibilities shall be
limited and defined by mutual agreement by you and the Board of the Directors
of the Company; provided that your time commitment to Cowen as a Senior Advisor
shall not exceed twenty percent (20%) of the average level of bona fide
services performed by you on behalf of Cowen during the thirty-six (36) month
period immediately preceding the commencement of your service as a Senior
Advisor.  During your service as Senior
Advisor, you, your spouse and your eligible dependents shall continue to
receive health and medical benefits, to the extent such eligibility is
permissible under the health and medical benefit plans in place at the Company
at that time.  All such health and
medical benefits shall be provided in accordance with the terms

 

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and eligibility requirements of their
respective plans, but in no event on terms that are less favorable than those
then existing and applied to Cowen Managing Directors.  Upon ninety (90) days’ written notice, you
may terminate your service as a Senior Advisor. Your employment as a Senior
Advisor may be terminated for “Cause”, as that term is defined in Paragraph 4d
herein, following a  vote of the Board of
Directors of the Company, excluding you. 
During your service as a Senior Advisor, you shall be subject to the
applicable policies and procedures of Cowen.

 

c.             Death or Disability.  Your employment shall terminate on your
death.  If you become “Disabled,” Cowen
may terminate your employment by giving you thirty (30) days’ written notice of
its intention to do so unless you return to full-time performance of your duties
within such thirty (30)-day period.  “Disabled”
and “Disability,” as used herein, shall mean your inability to perform the
essential duties and responsibilities of your job with or without reasonable
accommodation, for a continuous period of ninety (90) days or more, or for one
hundred twenty (120) days or more in a twelve (12)-month period, due to a
physical or mental condition.  Disputes
on the issues of Disability shall be determined by an impartial, reputable
physician agreed upon by the parties or their respective doctors.  Upon termination under this paragraph 4d, you
or your estate shall be entitled to retain all rights and interest in the CHRP
Interest.  In addition, you or your
estate shall be entitled to receive only that portion of your Base Salary
earned, but unpaid, as of the date of termination.

 

d.             Termination for Cause.  The Company may terminate your employment for
Cause.  Upon termination of employment
for Cause, you shall be entitled to receive only the Base Salary earned and
unpaid as of the date of termination, and shall not be entitled to any bonus
compensation for fiscal years ending after such termination date. Upon
termination under this paragraph, you or your estate shall be entitled to
retain any amounts distributed to you in connection with your receipt of the
CHRP Interest; provided, however, the entirety of your membership interest in
GP LLC shall revert back to CCP II at cost, and CCP II shall pay to you the sum
of your membership interest payments (i.e., the amount you paid to CCP II for
the interest) plus any amounts subsequently paid by you in connection with
capital calls, if any. For purposes of this Agreement, “Cause” shall mean the
occurrence of an event set forth in clauses (i) through (iv) below as
determined by the Board of Directors of Cowen in good faith:

 

i.              your
conviction of any crime (whether or not related to your duties at Cowen), with
the exception of minor traffic offenses;

 

ii.             fraud,
dishonesty, gross negligence or substantial misconduct in the performance of
your duties and responsibilities;

 

iii.            your
violation of or failure to comply with the Company’s internal policies or the rules and
regulations of any regulatory or self-regulatory organization with jurisdiction
over Cowen;

 

4

iv.            your
failure to perform the material duties of your position, including, by way of
example and not of limitation, the failure or refusal to follow instructions
reasonably given by your superiors in the course of employment.

 

e.             Termination
with or without Good Reason.  You may terminate your employment with or
without “Good Reason”.  Subject to the
provisions of Paragraph 4d herein, upon termination of employment without Good
Reason, you shall be entitled to receive only the Base Salary earned and unpaid
as of the date of termination, that portion of the CHRP Interest that has
vested at that time, but you  shall not
be entitled to any bonus compensation for fiscal years ending after such termination
date nor the Post-Retirement Benefits. 
For purposes of this Agreement, “Good Reason” shall mean:

 

i.              any
requirement that your services during the
Term be rendered primarily at a location or locations other than Cowen’s
offices in New York, New York;

 

ii.             a material
diminution by the Company of your role and responsibility as the Chief
Executive Officer and President of the Company, and as the Chairman, Chief
Executive Officer and President of Cowen and Company, LLC.

 

A resignation for ‘Good Reason’ under this
Agreement requires that you give written notice of your intent to resign
pursuant to such event within 90 days following such occurrence, provide the
Company with at least 30 days to cure the requirement or diminution, and resign
no later than 90 days after the requirement or diminution.

 

f.              Further
Effect of Termination on Board and Officer Positions.  If your employment
ends for any reason, you agrees that you will cease immediately to hold any and
all officer or director positions you then have with the Company or any
subsidiary, absent a contrary direction from the Board (which may include
either a request to continue such service or a direction to cease serving upon
notice without regard to whether your employment has ended), except to the
extent that you reasonably and in good faith determine that ceasing to serve as
a director would breach your fiduciary duties to the Company.  You hereby irrevocably appoint the Company to
be your attorney to execute any documents and do anything in your name to
effect your ceasing to serve as a director and officer of the Company and any
subsidiary, should you fail to resign following a request from the Company to
do so.  A written notification signed by
a director or duly authorized officer of the Company that any instrument,
document or act falls within the authority conferred by this clause will be
conclusive evidence that it does so.

 

g.             Offset.  In the event of your termination of
employment, the Company may offset, to the fullest extent permitted by law, any
amounts due to the Company from you,

 

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or advanced or loaned to you by
the Company, from any monies owed to you or your estate by reason of your
termination.

 

5.             Change in Control.

 

(a)           Upon a Change in Control (as defined below) during the
Term, any outstanding equity award shall become fully vested and exercisable
and any restrictions thereon shall lapse. Any outstanding stock options shall
remain exercisable for the remainder of the respective terms of such stock
options, subject to any earlier termination under the applicable equity
incentive plan in light of the Change in Control and taking into account any
other provisions of the equity incentive plan or option agreements that cause
them to expire or be replaced in connection with similar events.

 

(b)           Upon your termination of Employment (other than for Cause
or resulting from your death or Disability) within twelve (12) months following
a Change in Control (as defined below) during the Term, you shall be entitled
to the compensation and benefits described in Paragraph 4a ; provided, however,
that in the event of a company-initiated termination other than for Cause or a
resignation/voluntary termination for Good Reason, in lieu of the Severance
Amount set forth in Paragraph 4a, you shall be entitled to receive an amount
(the “Change in Control Severance Amount”) equal to Five Million Dollars
($5,000,000), less applicable tax and payroll deductions.

 

(c)           For purposes of this Agreement, a “Change in Control”
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:

 

(i)                                     any Person is
or becomes the beneficial owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
more than forty percent (40%) of the combined voting power of the Company’s
then outstanding voting securities, excluding any Person who becomes such a
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934 (the “Exchange Act”)) in connection with a transaction described in
clause (A) of paragraph (iii) below; or

 

(ii)                                  the following
individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date of this Agreement,
constitute the Board of Directors of the Company (the “Board”) and any new
director (other than a director whose initial assumption of office is in

 

6

 

connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date of
this Agreement or whose appointment, election or nomination for election was
previously so approved or recommended by such directors, provided, that no
Change of Control for this purpose shall be deemed to occur by virtue of  (i) the death, disability, retirement or
voluntary resignation of any directors or (ii) the resignation, removal or
other departure of any director under circumstances involving cause or under
circumstances involving the affirmative vote, approval or acceptance of such
departure by a majority of the remaining directors; or

 

(iii)                               there is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation or other entity, other
than (A) a merger or consolidation which results in the voting securities
of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof), more
than fifty percent (50%) of the combined voting power of the voting securities
of the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates) representing more than forty percent (40%)
of the combined voting power of the Company’s then outstanding securities; or

 

(iv)                              the
stockholders of the Company approve a plan of liquidation or dissolution of the
Company or there is consummated an agreement for the sale or other disposition,
directly, or indirectly, by the Company of all or substantially all of the
Company’s assets,other than such sale or other disposition by the Company of
all or substantially all of the Company’s assets

 

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to an entity, more than
fifty percent (50%) of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale
and other than a sale.

 

 “Person” shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (1) the Company or any subsidiary
corporation, (2) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any subsidiary corporation, (3) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (4) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, or (5) an individual, entity or group
which, pursuant to Rule 13d-l promulgated pursuant to the Exchange Act, is
permitted to, and actually does, report its beneficial ownership of securities
of the Company on Schedule 13G (or any successor Schedule); provided that, if
any such individual, entity or group subsequently becomes required to or does
report its beneficial ownership on Schedule 13D (or any successor Schedule),
then, for purposes of this paragraph, such individual, entity or group shall
thereupon become a “Person” and shall be deemed to have first acquired, on the
first date on which such individual, entity or group becomes required to or
does so report, beneficial ownership of all of the Company securities
beneficially owned by it on such date.

 

6.             Notice of Retirement/Resignation.  You shall not voluntarily Retire, resign
(other than for Good Reason) or otherwise terminate your employment
relationship with the Company or any of its affiliates without first giving the
Company at least one hundred eighty (180) days’ prior written notice of the
effective date of your retirement, resignation or other termination (the “Notice
Period”).  Such written notice shall be
sent by certified mail to Cowen and Company, LLC, Attn:  Human Resources Department, 1221 Avenue of
the Americas, New York, NY  10020.  The Company retains the right to waive the
notice requirement in whole or in part or to place you on paid leave for all or
part of the Notice Period.  In the
alternative, at any time after you give notice, the Company may, but shall not
be obligated to, provide you with work and (i) require you to comply with
such conditions as it may specify in relation to transitioning your duties and
responsibilities; (ii) assign you other duties; or (iii) withdraw any
powers vested in, or duties assigned to you.

 

7.             Non-Solicitation. 
You agree that if you voluntarily terminate your employment or if your
employment is terminated for any reason, you shall not, while employed and for
a period of one year following the expiration of the Notice Period, without the
prior written consent of the Board of Directors, directly or indirectly:  (a) solicit or induce, or cause others
to solicit or induce, any employees of the Company to leave the Company or

 

8

 

in any way modify their
relationship with the Company; (b) hire or cause others to hire any
employees of the Company; (c) encourage or assist in the hiring process of
any employees of the Company or in the modification of any such employee’s
relationship with the Company, or cause others to participate, encourage or
assist in the hiring process of any employees of the Company; or (d) directly
or indirectly solicit the trade or patronage of any clients or customers or any
prospective clients or customers of the Company with respect to any investment
banking products, services, trade secrets or other investment banking matters
in which the Company is active.  This
provision shall survive the expiration of the Term.

 

8.             Non-Disclosure of Confidential
Information.  You shall not at any
time, whether during your employment or following the termination of your employment,
for any reason whatsoever, directly or indirectly disclose or furnish to any
entity, firm, corporation or person, except as otherwise required by law or in
the direct performance of your duties, any confidential or proprietary
information of the Company with respect to any aspect of its operations,
business or clients. “Confidential or proprietary information” shall mean
information generally unknown to the public to which you gain access by reason
of your employment by the Company and includes, but is not limited to,
information relating to all present or potential customers, business and
marketing plans, sales, trading and financial data and strategies, operational
costs, and employment benefits and compensation.  This provision shall survive the expiration
of the Term.

 

9.             Company Property.  All records, files, memoranda, reports,
customer information, client lists, documents and equipment relating to the
business of the Company, which you prepare, possess or come into contact with
while you are an employee of the Company, shall remain the sole property of the
Company. You agree that upon the termination of your employment, you shall
provide to the Company all documents, papers, files or other material in your
possession and under your control that are connected with or derived from your
services to the Company.  You agree that
the Company owns all work product, patents, copyrights and other material
produced by you during your employment with the Company.  This provision shall survive the expiration
of the Term.

 

10.           Injunctive Relief.  In the event of a breach by you of your
obligations under this Agreement, the Company, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.  You acknowledge that the Company shall suffer
irreparable harm in the event of a breach or prospective breach of paragraphs
6, 7, 8, and/or 9 hereof and that monetary damages would not be adequate
relief.  Accordingly, the Company shall
be entitled to seek injunctive relief in any federal or state court of
competent jurisdiction located in New York County, or in any state in which you
reside.  You further agree that the
Company and its affiliates shall be entitled to recover all costs and expenses
(including attorneys’ fees) incurred in connection with the enforcement of the
Company’s rights hereunder.  This
provision shall survive the expiration of the Term.

 

9

 

11.           Arbitration.  Any and all disputes arising out of or
relating to your employment or the termination of your employment with Cowen,
including any statutory claims based on alleged discrimination, will be
submitted to and resolved exclusively by the American Arbitration Association (“AAA”)
pursuant to the AAA’s Employment Arbitration Rules and Mediation
Procedures.  The arbitration shall be
held in the City of New York.  The
Company and you each hereby irrevocably waive any right to a trial by jury in any
action, suit or other legal proceeding arising under or relating to any
provision of this Agreement.   The
arbitration award shall be binding upon both parties, and judgment upon the
award may be entered in a court of competent jurisdiction.

 

12.           Severability.  Should any provision herein be rendered or
declared legally invalid or unenforceable by a court of competent jurisdiction
or by the decision of an authorized governmental agency, invalidation of such
part shall not invalidate the remaining portions thereof.

 

13.           Other Agreements.  You represent and warrant that you are not a
party to any agreement or bound by any obligation, restrictive covenant or
non-competition agreement that would prohibit you in any way from accepting and
agreeing to this offer or from fully performing the obligations of your
employment with Cowen.

 

14.           Complete Agreement.  The provisions herein contain the entire
agreement and understanding of the parties regarding compensation and your
employment and fully supersede any and all prior agreements, representations,
promises or understandings, written or oral, between them pertaining to the
subject matter.  The provisions of this
Agreement may not be changed or altered except in writing signed by you and a
duly authorized agent of Cowen.

 

15.           Choice of Law.  The interpretation and application of the
terms herein, and your employment relationship at Cowen, shall be governed by
the laws of the State of New York without regard to principles of conflict of
laws.

 

16.           No Waiver.  Any failure by either party to exercise its
rights to terminate this offer or to enforce any of its provisions shall not
prejudice such party’s rights of termination or enforcement for any subsequent
or further violations, breaches or defaults by the other party.  A waiver of any provision of this Agreement
shall not be valid or effective unless memorialized in writing and signed by
both parties to this letter.

 

17.           Assignment.  The rights and obligations of Cowen under
this offer will be transferable, and all of its covenants and agreements will
be binding upon and be enforceable by its successors and assigns.  You may not assign your rights under this
letter and the terms and conditions stated herein.

 

10

 

18.           Tax Compliance.  The Company or any of its applicable
affiliates shall withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld under any
applicable law or regulation and other required or applicable deductions.  If and to the extent any portion of any
payment, compensation or other benefit provided to you in connection with your
separation from service (as defined in Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”))
is determined to constitute “nonqualified deferred compensation”  within the meaning of Section 409A and
you are a specified employee as defined in Section 409A(a)(2)(B)(i), as
determined by the Company or any of its applicable affiliates in accordance
with its procedures, by which determination you hereby agree that you are
bound, such portion of the payment, compensation or other benefit shall not be
paid before the day that is six months plus one day after the date of
separation from service (as determined under Section 409A (the “New Payment Date”), except as Section 409A
may then permit.  The aggregate of any
payments that otherwise would have been paid to you during the period between
the date of separation from service and the New Payment Date shall be paid to
you in a lump sum on such New Payment Date, and any remaining payments will be
paid on their original schedule.  For
purposes of this Agreement, each amount to be paid or benefit to be provided
shall be construed as a separate identified payment for purposes of Section 409A,
and any payments that are due within the “short term deferral period” as defined in Section 409A
shall not be treated as deferred compensation unless applicable law requires
otherwise.  Neither the Company nor any
of its applicable affiliates nor you shall have the right to accelerate or
defer the delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A.  This Agreement is intended to comply with the
provisions of Section 409A and the Agreement shall, to the extent
practicable, be construed in accordance therewith.  Terms defined in the Agreement shall have the
meanings given such terms under Section 409A if and to the extent required
to comply with Section 409A.  In any
event, neither the Company nor any of its affiliates makes any representations
or warrant and shall have no liability to you or any other person if any
provisions of or payments under this Agreement are determined to constitute
deferred compensation subject to Section 409A but not to satisfy the
conditions of that section.

 

 

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Please indicate your acceptance of these terms
by signing and returning one copy of this letter.  The second copy is for your records.

 

	
   

  	
   

  	
  Yours very
  truly,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COWEN
  GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  E. Toffolon, Jr.

  	
   

  
	
   

  	
   

  	
  John E.
  Toffolon, Jr.

  
	
   

  	
   

  	
  Lead Director

  
	
   

  	
   

  	
  Board of
  Directors

  
	
   

  	
   

  	
  Cowen
  Group, Inc.

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND
  AGREED TO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David M. Malcolm

  	
   

  	
   

  	
   

  
	
  David M. Malcolm

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   March 4, 2008

  	
   

  	
   

  	
   

  
						

 

 

 

12Exhibit 4.1

 

CLECO KATRINA/RITA HURRICANE RECOVERY FUNDING LLC

 

Issuer

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

Trustee

 

INDENTURE

 

Dated as of March 6, 2008

 

 

Securing Storm Recovery Bonds

 

Issuable in Series

 

 

Table of
Contents

 

	
  ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  2

  
	
  SECTION 1.01.

  	
  DEFINITIONS

  	
  2

  
	
  SECTION 1.02.

  	
  INCORPORATION BY REFERENCE OF THE TRUST INDENTURE
  ACT

  	
  2

  
	
  SECTION 1.03.

  	
  RULES OF CONSTRUCTION

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE STORM RECOVERY BONDS

  	
  3

  
	
  SECTION 2.01.

  	
  FORM

  	
  3

  
	
  SECTION 2.02.

  	
  EXECUTION, AUTHENTICATION AND DELIVERY

  	
  4

  
	
  SECTION 2.03.

  	
  DENOMINATIONS; STORM RECOVERY BONDS ISSUABLE IN
  SERIES

  	
  4

  
	
  SECTION 2.04.

  	
  TEMPORARY STORM RECOVERY BONDS

  	
  6

  
	
  SECTION 2.05.

  	
  REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE

  	
  6

  
	
  SECTION 2.06.

  	
  MUTILATED, DESTROYED, LOST OR STOLEN STORM RECOVERY
  BONDS

  	
  8

  
	
  SECTION 2.07.

  	
  PERSONS DEEMED OWNER

  	
  9

  
	
  SECTION 2.08.

  	
  PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; INTEREST ON
  OVERDUE PRINCIPAL AND PREMIUM, IF ANY; PRINCIPAL, PREMIUM AND INTEREST RIGHTS
  PRESERVED

  	
  9

  
	
  SECTION 2.09.

  	
  CANCELLATION

  	
  10

  
	
  SECTION 2.10.

  	
  AMOUNT; AUTHENTICATION AND DELIVERY OF STORM
  RECOVERY BONDS

  	
  11

  
	
  SECTION 2.11.

  	
  BOOK-ENTRY STORM RECOVERY BONDS

  	
  13

  
	
  SECTION 2.12.

  	
  NOTICES TO CLEARING AGENCY

  	
  14

  
	
  SECTION 2.13.

  	
  DEFINITIVE STORM RECOVERY BONDS

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE III COVENANTS

  	
  15

  
	
  SECTION 3.01.

  	
  PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST

  	
  15

  
	
  SECTION 3.02.

  	
  MAINTENANCE OF OFFICE OR AGENCY

  	
  15

  
	
  SECTION 3.03.

  	
  MONEY FOR PAYMENTS TO BE HELD IN TRUST

  	
  16

  
	
  SECTION 3.04.

  	
  EXISTENCE

  	
  17

  
	
  SECTION 3.05.

  	
  PROTECTION OF TRUST ESTATE

  	
  17

  
	
  SECTION 3.06.

  	
  OPINIONS AS TO TRUST ESTATE

  	
  18

  
	
  SECTION 3.07.

  	
  PERFORMANCE OF OBLIGATIONS; COMMISSION FILINGS

  	
  18

  
	
  SECTION 3.08.

  	
  NEGATIVE COVENANTS

  	
  20

  
	
  SECTION 3.09.

  	
  ANNUAL STATEMENT AS TO COMPLIANCE

  	
  21

  
	
  SECTION 3.10.

  	
  ISSUER MAY CONSOLIDATE, ETC

  	
  21

  
	
  SECTION 3.11.

  	
  SUCCESSOR OR TRANSFEREE

  	
  22

  
	
  SECTION 3.12.

  	
  NO OTHER BUSINESS

  	
  22

  

 

i

 

	
  SECTION 3.13.

  	
  NO BORROWING

  	
  22

  
	
  SECTION 3.14.

  	
  GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES

  	
  22

  
	
  SECTION 3.15.

  	
  CAPITAL EXPENDITURES

  	
  23

  
	
  SECTION 3.16.

  	
  RESTRICTED PAYMENTS

  	
  23

  
	
  SECTION 3.17.

  	
  NOTICE OF EVENTS OF DEFAULT

  	
  23

  
	
  SECTION 3.18.

  	
  INTENTIONALLY OMITTED

  	
  23

  
	
  SECTION 3.19.

  	
  INSPECTION

  	
  23

  
	
  SECTION 3.20.

  	
  SALE AGREEMENT, ADMINISTRATION AGREEMENT AND SERVICING AGREEMENT COVENANTS

  	
  23

  
	
  SECTION 3.21.

  	
  TAXES

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV SATISFACTION AND DISCHARGE; DEFEASANCE

  	
  26

  
	
  SECTION 4.01.

  	
  SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE

  	
  26

  
	
  SECTION 4.02.

  	
  CONDITIONS TO DEFEASANCE

  	
  28

  
	
  SECTION 4.03.

  	
  APPLICATION OF TRUST MONEY

  	
  30

  
	
  SECTION 4.04.

  	
  REPAYMENT OF MONEYS HELD BY PAYING AGENT

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIES

  	
  30

  
	
  SECTION 5.01.

  	
  EVENTS OF DEFAULT

  	
  30

  
	
  SECTION 5.02.

  	
  ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT

  	
  31

  
	
  SECTION 5.03.

  	
  COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
  BY TRUSTEE

  	
  32

  
	
  SECTION 5.04.

  	
  REMEDIES; PRIORITIES

  	
  35

  
	
  SECTION 5.05.

  	
  OPTIONAL PRESERVATION OF THE TRUST ESTATE

  	
  36

  
	
  SECTION 5.06.

  	
  LIMITATION OF PROCEEDINGS

  	
  36

  
	
  SECTION 5.07.

  	
  UNCONDITIONAL RIGHTS OF STORM RECOVERY BONDHOLDERS TO RECEIVE
  PRINCIPAL, PREMIUM, IF ANY, AND INTEREST

  	
  37

  
	
  SECTION 5.08.

  	
  RESTORATION OF RIGHTS AND REMEDIES

  	
  37

  
	
  SECTION 5.09.

  	
  RIGHTS AND REMEDIES CUMULATIVE

  	
  38

  
	
  SECTION 5.10.

  	
  DELAY OR OMISSION NOT A WAIVER

  	
  38

  
	
  SECTION 5.11.

  	
  CONTROL BY STORM RECOVERY BONDHOLDERS

  	
  38

  
	
  SECTION 5.12.

  	
  WAIVER OF PAST DEFAULTS

  	
  39

  
	
  SECTION 5.13.

  	
  UNDERTAKING FOR COSTS

  	
  39

  
	
  SECTION 5.14.

  	
  WAIVER OF STAY OR EXTENSION LAWS

  	
  39

  
	
  SECTION 5.15.

  	
  ACTION ON STORM RECOVERY BONDS

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI THE TRUSTEE

  	
  40

  
	
  SECTION 6.01.

  	
  DUTIES AND LIABILITIES OF TRUSTEE

  	
  40

  
	
  SECTION 6.02.

  	
  RIGHTS OF TRUSTEE

  	
  41

  
	
  SECTION 6.03.

  	
  INDIVIDUAL RIGHTS OF TRUSTEE

  	
  42

  
	
  SECTION 6.04.

  	
  TRUSTEE’S DISCLAIMER

  	
  42

  
	
  SECTION 6.05.

  	
  NOTICE OF DEFAULTS

  	
  43

  
	
  SECTION 6.06.

  	
  REPORTS BY TRUSTEE TO HOLDERS

  	
  43

  

 

ii

 

	
  SECTION 6.07.

  	
  COMPENSATION AND INDEMNITY

  	
  44

  
	
  SECTION 6.08.

  	
  REPLACEMENT OF TRUSTEE

  	
  45

  
	
  SECTION 6.09.

  	
  SUCCESSOR TRUSTEE BY MERGER

  	
  46

  
	
  SECTION 6.10.

  	
  APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE

  	
  46

  
	
  SECTION 6.11.

  	
  ELIGIBILITY; DISQUALIFICATION

  	
  47

  
	
  SECTION 6.12.

  	
  PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER

  	
  48

  
	
  SECTION 6.13.

  	
  REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE

  	
  48

  
	
  SECTION 6.14.

  	
  RIGHTS OF THE AUTHENTICATING AGENT, STORM RECOVERY
  BOND REGISTRAR, PAYING AGENT, AND SECURITIES INTERMEDIARY

  	
  48

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII STORM RECOVERY BONDHOLDERS’ LISTS AND REPORTS

  	
  50

  
	
  SECTION 7.01.

  	
  ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES OF STORM RECOVERY
  BONDHOLDERS

  	
  50

  
	
  SECTION 7.02.

  	
  PRESERVATION OF INFORMATION; COMMUNICATIONS TO STORM RECOVERY
  BONDHOLDERS

  	
  51

  
	
  SECTION 7.03.

  	
  REPORTS BY ISSUER

  	
  51

  
	
  SECTION 7.04.

  	
  REPORTS BY TRUSTEE

  	
  52

  
	
  SECTION 7.05.

  	
  PROVISION OF SERVICER REPORTS

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES

  	
  53

  
	
  SECTION 8.01.

  	
  COLLECTION OF MONEY

  	
  53

  
	
  SECTION 8.02.

  	
  COLLECTION ACCOUNT

  	
  53

  
	
  SECTION 8.03.

  	
  RELEASE OF TRUST ESTATE

  	
  58

  
	
  SECTION 8.04.

  	
  ISSUER OPINION OF COUNSEL

  	
  59

  
	
  SECTION 8.05.

  	
  REPORTS BY INDEPENDENT ACCOUNTANTS

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX SUPPLEMENTAL INDENTURES

  	
  60

  
	
  SECTION 9.01.

  	
  SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF STORM RECOVERY BONDHOLDERS

  	
  60

  
	
  SECTION 9.02.

  	
  SUPPLEMENTAL INDENTURES WITH CONSENT OF STORM RECOVERY BONDHOLDERS

  	
  61

  
	
  SECTION 9.03.

  	
  EXECUTION OF SUPPLEMENTAL INDENTURES

  	
  63

  
	
  SECTION 9.04.

  	
  EFFECT OF SUPPLEMENTAL INDENTURE

  	
  63

  
	
  SECTION 9.05.

  	
  CONFORMITY WITH TRUST INDENTURE ACT

  	
  63

  
	
  SECTION 9.06.

  	
  REFERENCE IN STORM RECOVERY BONDS TO SUPPLEMENTAL
  INDENTURES

  	
  63

  
	
  SECTION 9.07.

  	
  LPSC CONSENT

  	
  64

  
	
   

  	
   

  	
   

  
	
  ARTICLE X REDEMPTION OF STORM RECOVERY BONDS

  	
  64

  
	
  SECTION 10.01.

  	
  MANDATORY REDEMPTION BY ISSUER

  	
  64

  
	
  SECTION 10.02.

  	
  FORM OF REDEMPTION NOTICE

  	
  65

  
	
  SECTION 10.03.

  	
  PAYMENT OF REDEMPTION PRICE

  	
  65

  

 

iii

 

	
  ARTICLE XI MISCELLANEOUS

  	
  66

  
	
  SECTION 11.01.

  	
  COMPLIANCE CERTIFICATES AND OPINIONS, ETC

  	
  66

  
	
  SECTION 11.02.

  	
  FORM OF DOCUMENTS DELIVERED TO TRUSTEE

  	
  66

  
	
  SECTION 11.03.

  	
  ACTS OF STORM RECOVERY BONDHOLDERS

  	
  67

  
	
  SECTION 11.04.

  	
  NOTICES, ETC

  	
  67

  
	
  SECTION 11.05.

  	
  NOTICES TO STORM RECOVERY BONDHOLDERS; WAIVER

  	
  68

  
	
  SECTION 11.06.

  	
  ALTERNATE PAYMENT AND NOTICE PROVISIONS

  	
  69

  
	
  SECTION 11.07.

  	
  NOTICES TO LUXEMBOURG STOCK EXCHANGE

  	
  69

  
	
  SECTION 11.08.

  	
  CONFLICT WITH TRUST INDENTURE ACT

  	
  69

  
	
  SECTION 11.09.

  	
  EFFECT OF HEADINGS AND TABLE OF CONTENTS

  	
  69

  
	
  SECTION 11.10.

  	
  SUCCESSORS AND ASSIGNS

  	
  70

  
	
  SECTION 11.11.

  	
  SEPARABILITY

  	
  70

  
	
  SECTION 11.12.

  	
  BENEFITS OF INDENTURE

  	
  70

  
	
  SECTION 11.13.

  	
  LEGAL HOLIDAYS

  	
  70

  
	
  SECTION 11.14.

  	
  GOVERNING LAW

  	
  70

  
	
  SECTION 11.15.

  	
  COUNTERPARTS

  	
  70

  
	
  SECTION 11.16. 

  	
  ISSUER OBLIGATION

  	
  70

  
	
  SECTION 11.17.

  	
  NO PETITION

  	
  70

  

 

	
  SCHEDULE 1. 

  	
  FORM OF
  SEMIANNUAL SERVICER’S CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A   SERVICING
  CRITERIA TO BE ADDRESSED BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

  	
   

  
	
   

  	
   

  
	
  APPENDIX A.   MASTER
  DEFINITIONS

  	
   

  

 

iv

 

CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:

 

	
  TRUST INDENTURE ACT
  SECTION

  	
   

  	
  INDENTURE
  SECTION(S)

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(1)

  	
   

  	
  6.11

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(2)

  	
   

  	
  6.11

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(3)

  	
   

  	
  6.10(b)

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(4)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  
	
  Section 310(a)(5)

  	
   

  	
  6.11

  
	
   

  	
   

  	
   

  
	
  Section 310(b)

  	
   

  	
  6.08, 6.11

  
	
   

  	
   

  	
   

  
	
  Section 311(a)

  	
   

  	
  6.12

  
	
   

  	
   

  	
   

  
	
  Section 311(b)

  	
   

  	
  6.12

  
	
   

  	
   

  	
   

  
	
  Section 311(c)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  
	
  Section 312(a)

  	
   

  	
  7.01, 7.02

  
	
   

  	
   

  	
   

  
	
  Section 312(b)

  	
   

  	
  7.02

  
	
   

  	
   

  	
   

  
	
  Section 312(c)

  	
   

  	
  7.02

  
	
   

  	
   

  	
   

  
	
  Section 313(a)

  	
   

  	
  7.04

  
	
   

  	
   

  	
   

  
	
  Section 313(b)

  	
   

  	
  7.04

  
	
   

  	
   

  	
   

  
	
  Section 313(c)

  	
   

  	
  7.04

  
	
   

  	
   

  	
   

  
	
  Section 313(d)

  	
   

  	
  7.03, 7.04

  
	
   

  	
   

  	
   

  
	
  Section 314(a)

  	
   

  	
  3.09, 7.03

  
	
   

  	
   

  	
   

  
	
  Section 314(b)

  	
   

  	
  3.06

  
	
   

  	
   

  	
   

  
	
  Section 314(b)(1)

  	
   

  	
  Not Addressed

  
	
   

  	
   

  	
   

  
	
  Section 314(b)(2)

  	
   

  	
  3.06

  
	
   

  	
   

  	
   

  
	
  Section 314(c)(1)

  	
   

  	
  11.01

  
	
   

  	
   

  	
   

  
	
  Section 314(c)(2)

  	
   

  	
  11.01

  

 

v

 

	
  TRUST INDENTURE ACT
  SECTION

  	
   

  	
  INDENTURE
  SECTION(S)

  
	
   

  	
   

  	
   

  
	
  Section 314(c)(3)

  	
   

  	
  11.02

  
	
   

  	
   

  	
   

  
	
  Section 314(d)

  	
   

  	
  8.03, 8.04, 9.02

  
	
   

  	
   

  	
   

  
	
  Section 314(e)

  	
   

  	
  11.01

  
	
   

  	
   

  	
   

  
	
  Section 315(a)

  	
   

  	
  6.01. 6.02

  
	
   

  	
   

  	
   

  
	
  Section 315(b)

  	
   

  	
  6.05

  
	
   

  	
   

  	
   

  
	
  Section 315(c)

  	
   

  	
  6.01

  
	
   

  	
   

  	
   

  
	
  Section 315(d)

  	
   

  	
  6.01

  
	
   

  	
   

  	
   

  
	
  Section 315(e)

  	
   

  	
  5.13

  
	
   

  	
   

  	
   

  
	
  Section 316(a)

  	
   

  	
  5.11, 5.12

  
	
   

  	
   

  	
   

  
	
  Section 316(a)(1)(A)

  	
   

  	
  5.11

  
	
   

  	
   

  	
   

  
	
  Section 316(a)(1)(B)

  	
   

  	
  5.12

  
	
   

  	
   

  	
   

  
	
  Section 316(a)(2)

  	
   

  	
  Not Applicable

  
	
   

  	
   

  	
   

  
	
  Section 316(b)

  	
   

  	
  5.07

  
	
   

  	
   

  	
   

  
	
  Section 316(c)

  	
   

  	
  Not Addressed

  
	
   

  	
   

  	
   

  
	
  Section 317(a)(1)

  	
   

  	
  5.03

  
	
   

  	
   

  	
   

  
	
  Section 317(a)(2)

  	
   

  	
  5.03

  
	
   

  	
   

  	
   

  
	
  Section 317(b)

  	
   

  	
  3.03

  
	
   

  	
   

  	
   

  
	
  Section 318(a)

  	
   

  	
  11.08

  

 

NOTE: This reconciliation and tie sheet shall not, for
any purpose, be deemed to be a part of the Indenture.

 

vi

 

INDENTURE dated as of March 6, 2008, by and among
Cleco Katrina/Rita Hurricane Recovery Funding LLC, a Louisiana limited
liability company (the “Issuer”), and U.S. Bank National Association, a
national banking association, in its capacity as trustee (the “Trustee”).

 

The Issuer has duly authorized the execution and
delivery of this Indenture to provide for one or more Series of Storm
Recovery Bonds, issuable as provided in this Indenture.  Each Series of Storm Recovery Bonds will
be issued only under a separate Series Supplement to this Indenture, duly
executed and delivered by the Issuer and the Trustee.  The Issuer is entering into this Indenture,
and the Trustee is accepting the trusts created hereby, each for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and each intending to be legally bound hereby.

 

The Storm Recovery Bonds of each Series shall be
non-recourse obligations and shall be secured by and payable solely out of the
Storm Recovery Property and the other Trust Estate securing such Series of
Storm Recovery Bonds. If and to the extent such Storm Recovery Property and the
other Trust Estate are insufficient to pay all amounts owing with respect to
the Storm Recovery Bonds secured thereby, then, except as otherwise expressly
provided herein, the Holders shall have no claim in respect of such
insufficiency against the Issuer or any other Person, and the Holders, by their
acceptance of such Storm Recovery Bonds, waive any such claim.

 

All things necessary to (a) make the Storm
Recovery Bonds, when executed and duly issued by the Issuer and authenticated
and delivered by the Trustee hereunder, valid obligations, and (b) make
this Indenture a valid agreement of the Issuer, in each case, in accordance
with their respective terms, have been done.

 

In consideration of the foregoing, the Issuer and the
Trustee agree as follows:

 

That under one or more Series Supplements, the
Issuer will Grant to the Trustee a Lien on and trust interest in the property
described therein (such property with respect to a particular Series being
the “Series Trust Estate” and all such property, collectively, the “Trust
Estate”).  Each Series Trust
Estate shall secure the obligations of the Issuer as more particularly
described in the applicable Series Supplement.

 

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED
between the parties hereto that all Storm Recovery Bonds are to be issued,
countersigned, registered and delivered and the Trust Estate is to be held and
applied, subject to the further covenants, conditions, releases, uses and
trusts hereinafter set forth, and the Issuer, for itself and any successor,
does hereby covenant and agree to and with the Trustee and its successors in
said trust, for the benefit of the Holders, as follows:

 

 

ARTICLE I

 

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

SECTION 1.01.  
DEFINITIONS.  Capitalized terms
used but not otherwise defined in this Indenture have the respective meanings
set forth in Appendix A hereto unless the context otherwise requires.

 

SECTION 1.02.  
INCORPORATION BY REFERENCE OF THE TRUST INDENTURE ACT.  Whenever this Indenture refers to a provision
of the TIA, the provision is incorporated by reference in and made a part of
this Indenture.  Each of the following
TIA terms used in this Indenture has the following meaning:

 

“Commission” means the Securities and Exchange
Commission.

 

“indenture securities” means the Storm Recovery Bonds.

 

“indenture security holder” means a Holder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means
the Trustee.

 

“obligor” on the indenture securities means the Issuer
and any other obligor on the indenture securities.

 

All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meaning assigned to them by such definitions.

 

SECTION 1.03.  
RULES OF CONSTRUCTION.

 

(i)            An
accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from time
to time;

 

(ii)           “including”
means including without limitation;

 

(iii)          with respect to terms defined in Appendix A
hereto, the meanings shall be equally applicable to both the singular and
plural forms of such terms and shall refer to either gender as may be
appropriate;

 

(iv)          unless
otherwise specified, references herein to Sections or Articles are to Sections
or Articles of this Indenture; and

 

(v)           the
words “herein,” “hereof,” “hereunder” and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision.

 

2

 

ARTICLE II

 

THE STORM RECOVERY BONDS

 

SECTION 2.01.   FORM. 
The Storm Recovery Bonds and the Trustee’s certificate of authentication
shall be in substantially the forms set forth in the related Series Supplement,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture or by the related Series Supplement
and may have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may, consistently herewith, be
determined by the Managers of the Issuer executing such Storm Recovery Bonds,
as evidenced by their execution of such Storm Recovery Bonds.  Any portion of the text of any Storm Recovery
Bond may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Storm Recovery Bond. 
Each Storm Recovery Bond shall be dated the date of its authentication.

 

The Storm Recovery Bonds shall be typewritten,
printed, lithographed or engraved or produced by any combination of these
methods (with or without steel engraved borders), all as determined by the
Managers of the Issuer executing such Storm Recovery Bonds, as evidenced by
their execution of such Storm Recovery Bonds.

 

Each Storm Recovery Bond shall bear upon its face the
designation so selected for the Series and Tranche, if any, to which it
belongs.  The terms of all Storm Recovery
Bonds of the same Series shall be the same, unless such Series is
comprised of one or more Tranches, in which case the terms of all Storm
Recovery Bonds of the same Tranche shall be the same.

 

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

 

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

 

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

 

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

 

3

 

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

 

SECTION 2.02. 
EXECUTION, AUTHENTICATION AND DELIVERY. 
The Storm Recovery Bonds shall be executed on behalf of the Issuer by a
Manager.  The signature of any such
Manager on the Storm Recovery Bonds may be manual or facsimile.

 

Storm Recovery Bonds bearing the manual or facsimile
signature of individuals who were at any time Managers shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Storm Recovery Bonds.

 

The
Trustee hereby appoints U.S. Bank National Association as authenticating agent to authenticate the
Storm Recovery Bonds whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. The Trustee shall not be liable for any act or any failure of the
authenticating agent to perform any duty either required herein or authorized
herein to be performed by such person in accordance with this Indenture.

 

At any time and from time to time after the execution
and delivery of this Indenture, the Issuer may deliver Storm Recovery Bonds
executed on behalf of the Issuer to the Trustee pursuant to an Issuer Order for
authentication; and the Trustee shall authenticate and deliver such Storm
Recovery Bonds as provided in this Indenture and not otherwise.

 

No Storm Recovery Bond shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose, unless
there appears on such Storm Recovery Bond a certificate of authentication
substantially in the form provided for herein executed by the Trustee by the
manual signature of one of its authorized signatories, and such certificate
upon any Storm Recovery Bond shall be conclusive evidence, and the only
evidence, that such Storm Recovery Bond has been duly authenticated and
delivered hereunder.

 

If and for so long as any Series of Storm
Recovery Bonds is listed on the Luxembourg Stock Exchange and the rules and
regulations of such exchange so require, a transfer or other agent appointed
pursuant to Section 3.02 shall be authorized on behalf of the Trustee to
execute and deliver such certificate of authentication.

 

SECTION 2.03.  
DENOMINATIONS; STORM RECOVERY BONDS ISSUABLE IN SERIES.   The Storm Recovery Bonds of each Series shall
be issuable as registered Storm Recovery Bonds in Authorized Denominations.

 

4

 

The Storm Recovery Bonds may, at the election of and
as authorized by a Manager and set forth in a Series Supplement, be issued
in one or more Series (each of which may be comprised of one or more
Tranches), and shall be designated generally as the “Storm Recovery Bonds” of
the Issuer, with such further particular designations added or incorporated in
such title for the Storm Recovery Bonds of any particular Series or
Tranche as a Manager of the Issuer may determine and as set forth in the Series Supplement
therefor.

 

Each Series of Storm Recovery Bonds shall be
created by a Series Supplement authorized by a Manager and establishing
the terms and provisions of such Series and, if applicable, any Tranches
thereof.  The several Series and
Tranches thereof may differ as between Series and Tranches, in respect of
any of the following matters:

 

(a)           designation of the Series and,
if applicable, the Tranches thereof;

 

(b)           the aggregate initial
principal amount of the Storm Recovery Bonds of the Series and, if
applicable, each Tranche thereof;

 

(c)           the Bond Rate of the Series and,
if applicable, each Tranche thereof or the formula, if any, used to calculate
the applicable Bond Rate or Bond Rates for the Series and each Tranche
thereof;

 

(d)           the Payment Dates for
the Series and, if applicable, each Tranche thereof;

 

(e)           the Expected Final
Payment Date of the Series, and, if applicable, each Tranche thereof;

 

(f)            the Series Final
Maturity Date for the Series and, if applicable, the Tranche Final
Maturity Date for each Tranche thereof;

 

(g)           the Series Issuance
Date for the Series;

 

(h)           the Series Trust
Estate;

 

(i)            the place or places
for payments with respect to the Series and, if applicable, each Tranche
thereof;

 

(j)            the Authorized
Denominations for the Series and, if applicable, each Tranche thereof;

 

(k)           the provisions, if any,
for redemption of the Series by the Issuer and, if applicable, each
Tranche thereof;

 

(l)            restrictions, if any,
on issuing multiple Series or Tranches;

 

(m)          whether the Storm
Recovery Bonds of the Series are to be Book-Entry Storm Recovery Bonds and
the extent to which Section 2.11 will apply, and whether the Storm
Recovery Bonds of that Series will be listed on the Luxembourg Stock
Exchange or any other securities exchange;

 

5

 

(n)           the Expected
Amortization Schedule for the Series and, if applicable, each Tranche
thereof;

 

(o)           the Required Capital
Amount with respect to the Series;

 

(p)           the Calculation Dates
and Adjustment Dates for the Series;

 

(q)           the subaccounts in the
Collection Account for the Series;

 

(r)            the credit
enhancement, if any, applicable to the Series and each Tranche thereof;
and

 

(s)           any other terms of the Series or
Tranche that are not inconsistent with the provisions of this Indenture and
that will not result in any Rating Agency reducing or withdrawing its rating of
any Outstanding Series or Tranche of Storm Recovery Bonds.

 

SECTION 2.04.  
TEMPORARY STORM RECOVERY BONDS. 
Pending the preparation of definitive Storm Recovery Bonds pursuant to Section 2.13,
or by agreement of the purchasers of all Storm Recovery Bonds or, in the case
of Storm Recovery Bonds held in a book-entry only system by a Clearing Agency,
a Manager on behalf of the Issuer may execute, and upon receipt of an Issuer
Order, the Trustee shall authenticate and deliver temporary Storm Recovery
Bonds which are printed, lithographed, typewritten, mimeographed or otherwise
produced of the tenor of the definitive Storm Recovery Bonds in lieu of which
they are issued and with such variations not inconsistent with the terms of
this Indenture as a Manager executing such Storm Recovery Bonds may determine,
as evidenced by its execution of such Storm Recovery Bonds.

 

If temporary Storm Recovery Bonds are issued, the
Issuer will cause definitive Storm Recovery Bonds to be prepared without
unreasonable delay except where temporary Storm Recovery Bonds are held by a
Clearing Agency.  After the preparation
of definitive Storm Recovery Bonds, the temporary Storm Recovery Bonds shall be
exchangeable for definitive Storm Recovery Bonds upon surrender of the
temporary Storm Recovery Bonds at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Storm Recovery Bonds, a Manager on behalf of the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like Series (and, if applicable, Tranche) and initial principal amount of
definitive Storm Recovery Bonds in Authorized Denominations.  Until so exchanged, the temporary Storm
Recovery Bonds shall in all respects be entitled to the same benefits under
this Indenture as definitive Storm Recovery Bonds.

 

SECTION 2.05.  
REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.  The Issuer shall cause to be kept a register
(the “Storm Recovery Bond Register”) in which, subject to such
reasonable regulations as it may prescribe, the Storm Recovery Bond Registrar
shall provide for the registration of Storm Recovery Bonds and the registration
of transfers of Storm Recovery Bonds. 
U.S. Bank National Association shall be Storm Recovery Bond Registrar
for the purpose of registering Storm Recovery Bonds and transfers of Storm
Recovery Bonds as herein provided.  Upon
any resignation of any Storm Recovery Bond 

 

6

 

Registrar, the Issuer shall promptly appoint a successor or, if it
elects not to make such an appointment, assume the duties of Storm Recovery
Bond Registrar.

 

If a Person other than the Trustee is appointed by the
Issuer as Storm Recovery Bond Registrar, the Issuer shall give the Trustee and
any transfer, paying, or listing agent of the Issuer prompt written notice of
the appointment of such Storm Recovery Bond Registrar and of the location, and any
change in the location, of the Storm Recovery Bond Register, and the Trustee
and any such agent shall have the right to inspect the Storm Recovery Bond
Register at all reasonable times and to obtain copies thereof, and the Trustee
shall have the right to rely conclusively upon a certificate executed on behalf
of the Storm Recovery Bond Registrar by a duly authorized officer thereof as to
the names and addresses of the Holders of the Storm Recovery Bonds and the
principal amounts and number of such Storm Recovery Bonds.

 

Upon surrender for registration of transfer of any
Storm Recovery Bond at the office or agency of the Issuer to be maintained as
provided in Section 3.02, a Manager on behalf of the Issuer shall execute,
and the Trustee shall authenticate and the Storm Recovery Bondholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Storm Recovery Bonds in any Authorized
Denominations of a like Series (and, if applicable, Tranche) and aggregate
outstanding principal amount.

 

At the option of the Holder, Storm Recovery Bonds may
be exchanged for other Storm Recovery Bonds of a like Series (and, if
applicable, Tranche) and aggregate outstanding principal amount in Authorized
Denominations upon surrender of the Storm Recovery Bonds to be exchanged at
such office or agency of the Issuer to be maintained as provided in Section 3.02.  Whenever any Storm Recovery Bonds are so
surrendered for exchange, a Manager on behalf of the Issuer shall execute, and
the Trustee shall authenticate, and the Storm Recovery Bondholder shall obtain
from the Trustee the Storm Recovery Bonds which the Storm Recovery Bondholder
making the exchange is entitled to receive.

 

All Storm Recovery Bonds issued upon any registration
of transfer or exchange of Storm Recovery Bonds shall be the valid obligations
of the Issuer, evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Storm Recovery Bonds surrendered upon such
registration of transfer or exchange.

 

Every Storm Recovery Bond presented or surrendered for
registration of transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer in the form set forth in the
applicable Series Supplement or such other form as is satisfactory to the
Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
authorized in writing, with such signature guaranteed by an Eligible Guarantor
Institution in the form set forth in such Storm Recovery Bond.

 

No service charge shall be made to a Holder for any
registration of transfer or exchange of Storm Recovery Bonds (except as may be
required by the rules and regulations of the Luxembourg Stock Exchange
with respect to any Storm Recovery Bonds listed thereon), but, other than in
respect of exchanges pursuant to Section 2.04 or 9.06 not involving any
transfer, the Issuer or the Trustee may require payment of a sum sufficient to
cover any tax or other 

 

7

 

governmental charge that may be imposed in connection
with any registration of transfer or exchange of Storm Recovery Bonds.

 

The preceding provisions of this Section notwithstanding,
except to the extent otherwise required by the rules and regulations of
the Luxembourg Stock Exchange with respect to any Storm Recovery Bonds listed
thereon, the Issuer shall not be required to make, and the Storm Recovery Bond
Registrar need not register, transfers or exchanges of Storm Recovery Bonds
selected for redemption or transfers or exchanges of any Storm Recovery Bond
for a period of 15 days preceding the Final Maturity Date with respect to such
Storm Recovery Bond.

 

SECTION 2.06.  
MUTILATED, DESTROYED, LOST OR STOLEN STORM RECOVERY BONDS.  If (i) any mutilated Storm Recovery Bond
is surrendered to the Trustee, or the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Storm Recovery Bond, and (ii) there
is delivered to the Trustee such security or indemnity as may be required by it
to hold the Issuer and the Trustee harmless, then, in the absence of written
notice to the Issuer, the Storm Recovery Bond Registrar or the Trustee that
such Storm Recovery Bond has been acquired by a bona fide purchaser, a Manager
on behalf of the Issuer shall execute, and upon a Manager’s written request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Storm Recovery Bond, a replacement Storm
Recovery Bond of like Series (and, if applicable, Tranche), tenor and
initial principal amount in Authorized Denominations, bearing a number not
contemporaneously outstanding; provided, however, that if any
such destroyed, lost or stolen Storm Recovery Bond, but not a mutilated Storm
Recovery Bond, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, instead of issuing a replacement
Storm Recovery Bond, the Issuer may pay such destroyed, lost or stolen Storm
Recovery Bond when so due or payable or upon the Redemption Date without
surrender thereof.  If, after the
delivery of such replacement Storm Recovery Bond or payment of a destroyed,
lost or stolen Storm Recovery Bond pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Storm Recovery Bond in lieu of
which such replacement Storm Recovery Bond was issued, or in respect of which
such payment was made, presents for payment such original Storm Recovery Bond,
the Issuer and the Trustee shall be entitled to recover such replacement Storm
Recovery Bond (or such payment) from the Person to whom it was delivered or any
Person taking such replacement Storm Recovery Bond from such Person to whom
such replacement Storm Recovery Bond was delivered or any assignee of such
Person, except a bona fide purchaser, and 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 Issuer or the Trustee in connection therewith.

 

Upon the issuance of any replacement Storm Recovery
Bond under this Section, the Issuer or the Trustee may require the payment by
the Holder of such Storm Recovery Bond of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee and its
counsel) connected therewith.

 

Every replacement Storm Recovery Bond issued pursuant
to this Section in replacement of any mutilated, destroyed, lost or stolen
Storm Recovery Bond shall constitute an original additional contractual
obligation of the Issuer, whether or not the mutilated, destroyed, lost or
stolen Storm Recovery Bond shall be at any time enforceable by anyone, and
shall be entitled to 

 

8

 

all the benefits of this Indenture equally and
proportionately with any and all other Storm Recovery Bonds duly issued
hereunder.

 

The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Storm Recovery Bonds.

 

SECTION 2.07.  
PERSONS DEEMED OWNER.  Prior to
due presentment for registration of transfer of any Storm Recovery Bond, the
Issuer, the Trustee, the Storm Recovery Bond Registrar and any agent of the
Issuer, the Storm Recovery Bond Registrar or the Trustee may treat the Person
in whose name any Storm Recovery Bond is registered (as of the day of
determination) as the owner of such Storm Recovery Bond for the purpose of
receiving payments of Principal of and premium, if any, and Interest on such
Storm Recovery Bond and for all other purposes whatsoever, whether or not such
Storm Recovery Bond be overdue, and neither the Issuer, the Trustee, the Storm
Recovery Bond Registrar nor any agent of the Issuer, the Storm Recovery Bond
Registrar or the Trustee shall be affected by notice to the contrary.

 

SECTION 2.08.  
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST; INTEREST ON OVERDUE
PRINCIPAL AND PREMIUM, IF ANY; PRINCIPAL, PREMIUM AND INTEREST RIGHTS
PRESERVED.

 

(a)           The Storm Recovery
Bonds of each Series shall accrue Interest as provided in the related Series Supplement,
at the applicable Bond Rate specified therein, and such Interest shall be payable
on each Payment Date as specified therein. 
Any installment of Interest, principal or premium, if any, payable on
any Storm Recovery Bond which is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose name
such Storm Recovery Bond (or one or more Predecessor Storm Recovery Bonds) is
registered on the Record Date for such Payment Date, by check mailed
first-class, postage prepaid, to such Person’s address as it appears on the
Storm Recovery Bond Register on such Record Date, or in such other manner as
may be provided in the related Series Supplement, except that (i) upon
application to the Trustee by any Holder owning Storm Recovery Bonds of any Series or
Tranche in the principal amount of $10,000,000 or more not later than the
applicable Record Date payment will be made by wire transfer to an account
maintained and specified by such Holder and (ii) with respect to
Book-Entry Storm Recovery Bonds, payments will be made by wire transfer in immediately
available funds to the account designated by the Holder of the applicable
global Storm Recovery Bond unless and until such global Storm Recovery Bond is
exchanged for definitive Storm Recovery Bonds (in which event payments shall be
made as provided above) and except for the final installment of principal and
premium, if any, payable with respect to such Storm Recovery Bond on a Payment
Date which shall be payable as provided in Section 2.08(b).  The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.

 

(b)           The principal of each
Storm Recovery Bond of each Series (and, if applicable, Tranche) shall be
payable in installments on each Payment Date specified in the Expected
Amortization Schedule included in the form of Storm Recovery Bond attached to
the Series Supplement for such Storm Recovery Bonds, but only to the
extent that moneys are available for such payment pursuant to Section 8.02;
provided that installments of principal not paid when 

 

9

 

scheduled
to be paid shall be paid upon receipt of moneys available for such purpose, in
the manner set forth in the applicable Expected Amortization Schedule.  Failure to pay principal of each Storm
Recovery Bond of a Series in accordance with such Expected Amortization
Schedule because moneys are not available pursuant to Section 8.02 to make
such payments shall not constitute a Default or Event of Default under this
Indenture with respect to that Series. 
Notwithstanding the foregoing, the entire unpaid principal amount of the
Storm Recovery Bonds of any Series or Tranche shall be due and payable, if
not previously paid (i) on the Series Final Maturity Date (or, if
applicable, Tranche Final Maturity Date) therefor, (ii) on the date on
which the Storm Recovery Bonds of all Series have been declared
immediately due and payable in accordance with Section 5.02 or (iii) on
the Redemption Date, if any, therefor. 
The Trustee shall notify the Person in whose name a Storm Recovery Bond
is registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
premium, if any, and Interest on such Storm Recovery Bond will be paid.  Such notice shall be mailed no later than
five days prior to such Expected Final Payment Date and shall specify that such
final installment of principal and premium, if any, will be payable only upon
presentation and surrender of such Storm Recovery Bond and shall specify the
place where such Storm Recovery Bond may be presented and surrendered for
payment of such installment, which, so long as any Storm Recovery Bonds are
listed on the Luxembourg Stock Exchange, shall include the office of the paying
agent in Luxembourg appointed pursuant to Section 3.02.  Notices in connection with redemptions of
Storm Recovery Bonds shall be mailed to Storm Recovery Bondholders as provided
in Section 10.02.

 

(c)           If the Issuer defaults
in a payment of Interest on the Storm Recovery Bonds of any Series, the Issuer
shall pay defaulted Interest (plus Interest on such defaulted Interest at the
applicable Bond Rate to the extent lawful) in any lawful manner.  The Issuer may pay such defaulted Interest to
the Persons who are Storm Recovery Bondholders on a subsequent special record
date, which date shall be at least fifteen Business Days prior to the special
payment date.  The Issuer shall fix or
cause to be fixed any such special record date and payment date, and, at least
10 days before any such special record date, the Issuer shall mail to each
affected Storm Recovery Bondholder a notice that states the special record
date, the payment date and the amount of defaulted Interest to be paid.

 

SECTION 2.09.  
CANCELLATION.  All Storm Recovery
Bonds surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by the Trustee.  The Issuer may at any time deliver to the
Trustee for cancellation any Storm Recovery Bonds previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Storm Recovery Bonds so delivered shall be promptly
canceled by the Trustee.  No Storm
Recovery Bonds shall be authenticated in lieu of or in exchange for any Storm
Recovery Bonds canceled as provided in this Section, except as expressly
permitted by this Indenture.  All
canceled Storm Recovery Bonds may be held or disposed of by the Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided that such Issuer Order is timely and the
Storm Recovery Bonds have not been previously disposed of by the Trustee.

 

10

 

SECTION 2.10.  
AMOUNT; AUTHENTICATION AND DELIVERY OF STORM RECOVERY BONDS.  The aggregate principal amount of Storm
Recovery Bonds that may be authenticated and delivered under this Indenture
shall not exceed $180,600,000.

 

Storm Recovery Bonds of each Series created and
established by a Series Supplement shall be executed by a Manager on
behalf of the Issuer and delivered to the Trustee for authentication and
thereupon the same shall be authenticated and delivered by the Trustee upon
Issuer Request and upon delivery to the Trustee at the Issuer’s expense of the
following; provided, however, that except with respect to items
(1), (4)(a)(i) and (4)(a)(vi) below, compliance with the following
conditions and delivery of the following documents shall be required only in
connection with the original issuance of a Storm Recovery Bond or Bonds of such
Series:

 

(1)   Issuer Action.  An Issuer Order authorizing and directing the
execution, authentication and delivery of the Storm Recovery Bonds by the
Trustee or the authenticating agent and specifying the principal amount of
Storm Recovery Bonds to be authenticated.

 

(2)   Authorizing Certificate.  A certified resolution of the Managers
authorizing the execution and delivery of the Series Supplement for the
Storm Recovery Bonds applied for and the execution, authentication and delivery
of such Storm Recovery Bonds.

 

(3)   Series Supplement.  A Series Supplement in form satisfactory
to the Trustee for the Series of Storm Recovery Bonds being issued, which
shall set forth the provisions and form of the Storm Recovery Bonds of such Series (and,
if applicable, each Tranche thereof).

 

(4)   Certificates of the Issuer
and the Seller.

 

(a)   An
Issuer Officer’s Certificate dated as of the Series Issuance Date,
stating:

 

(i)            that no Default has
occurred and is continuing under this Indenture and that the issuance of the
Storm Recovery Bonds being issued will not result in any Default;

 

(ii)           that the Issuer has not
assigned any interest or participation in the Series Trust Estate, except
for the Grant contained in the applicable Series Supplement; that the
Issuer has the power and authority to Grant the Series Trust Estate, and
to Grant a security interest in and a Lien upon the Series Trust Estate,
to the Trustee, free and clear of any other security interest, Liens, adverse
claims and options; and that such security interest is a perfected security
interest in all right, title and interest in and to the Series Trust
Estate free and clear of any Lien, except the Lien of this Indenture;

 

(iii)          that the Issuer has
appointed an Independent registered public accounting firm contemplated in Section 8.05
and identifying such firm;

 

(iv)          that attached thereto
are duly executed, true and complete copies of the applicable Sale Agreement,
Servicing Agreement and Administration Agreement;

 

11

 

(v)           that all filings with
the LPSC pursuant to the Securitization Act and the Financing Order and all
filings required under the Securitization Act and all UCC financing statements
with respect to the Series Trust Estate for that Series of Storm
Recovery Bonds that are required to be filed by the terms of the Financing
Order, the Securitization Act, the applicable Sale Agreement, the applicable
Servicing Agreement or this Indenture have been filed as required; and

 

(vi)          that all conditions
precedent provided in the Basic Documents relating to the authentication and
delivery of the Storm Recovery Bonds have been complied with.

 

(b)   An
Officer’s Certificate from the Seller, dated as of the Series Issuance
Date, to the effect that:

 

(i)            in the case of the
Storm Recovery Property to be transferred to the Issuer on such date,
immediately prior to the conveyance thereof to the Issuer pursuant to the
applicable Sale Agreement, the Seller was the sole owner of the rights and
interests under the Financing Order that comprises such Storm Recovery Property
and such ownership interest was perfected; such Storm Recovery Property has
been validly transferred and sold to the Issuer free and clear of all Liens
(other than Liens created by the Issuer pursuant to this Indenture) and such
transfer is absolute, irrevocable and has been perfected; the Seller has the
power and authority to own, sell and assign the rights and interests under the
Financing Order that comprises such Storm Recovery Property; and the Seller has
duly authorized such sale and assignment to the Issuer; and

 

(ii)           the Financing Order
creating such Storm Recovery Property attached to such certificate is in full
force and effect and the copy of the Financing Order attached thereto is true
and complete.

 

(5)   Issuer Opinion of Counsel.  An Issuer Opinion or Opinions of Counsel,
portions of which may be delivered by counsel for the Issuer and portions of
which may be delivered by counsel for the Seller and/or the Servicer, dated as
of the Series Issuance Date subject to customary qualifications,
acceptable to the Trustee, to the collective effect that (or, in the case of
subsection (d), in the form of):

 

(a)   all
conditions precedent provided for in this Indenture relating to (i) the
authentication and delivery of the Issuer’s 2008 Senior Secured Storm Recovery
Bonds and (ii) the execution of the First Supplemental Indenture to this
Indenture dated as of the date of this Indenture, have been complied with;

 

(b)   the
First Supplemental Indenture to this Indenture dated as of the date of this
Indenture is permitted by Article IX of this Indenture;

 

(c)   the
execution of the First Supplemental Indenture to this Indenture dated as of the
date of this Indenture is permitted by this Indenture; and

 

12

 

(d)   Annexes
I(d) - I(p) of that certain Underwriting Agreement dated February 28,
2008 by and among the Issuer, Cleco Power and the Underwriters named in
Schedule II thereto relating to the Issuer’s 2008 Senior Secured Storm Recovery
Bonds.

 

(6)   Reserved.

 

(7)   Rating Agency Condition.  The Trustee shall receive written
confirmation from each Rating Agency that such Series of Storm Recovery
Bonds will be rated as set forth in the applicable Series Supplement.

 

(8)   Required Capital Amount.  Evidence satisfactory to the Trustee that the
Required Capital Amount for such Series has been credited to the Capital
Subaccount.

 

SECTION 2.11. 
BOOK-ENTRY STORM RECOVERY BONDS. 
Unless otherwise specified in the related Series Supplement, each Series of
Storm Recovery Bonds, upon original issuance, will be issued in the form of a
typewritten Storm Recovery Bond or Storm Recovery Bonds representing the
Book-Entry Storm Recovery Bonds, to be delivered to DTC (or its custodian), as
the initial Clearing Agency, by, or on behalf of, the Issuer.  Such Storm Recovery Bond shall initially be
registered on the Storm Recovery Bond Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Storm Recovery Bond
Owner will receive a definitive Storm Recovery Bond representing such Storm
Recovery Bond Owner’s interest in such Storm Recovery Bond, except as provided
in Section 2.13.  Unless and until
definitive, fully registered Storm Recovery Bonds of any Series (the “Definitive
Storm Recovery Bonds”) replacing the Book-Entry Storm Recovery Bonds have
been issued to Storm Recovery Bondholders of that Series pursuant to Section 2.13
or pursuant to any applicable Series Supplement relating thereto:

 

(a)           the provisions of this Section shall
be in full force and effect;

 

(b)           the Storm Recovery Bond
Registrar and the Trustee shall be entitled to deal with the Clearing Agency
for all purposes of this Indenture (including the payment of Principal of and
premium, if any, and Interest on the Storm Recovery Bonds and the giving of
instructions or directions hereunder) as the sole Holder of the Storm Recovery
Bonds, and shall have no obligation to the Storm Recovery Bond Owners;

 

(c)           to the extent that the
provisions of this Section conflict with any other provisions of this
Indenture, the provisions of this Section shall control;

 

(d)           the rights of Storm
Recovery Bond Owners shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between such Storm
Recovery Bond Owners and the Clearing Agency or the Clearing Agency
Participants.  Pursuant to the DTC
Agreement, unless and until Definitive Storm Recovery Bonds are issued pursuant
to Section 2.13, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
payments of Principal of and premium, if any, and Interest on the Storm
Recovery Bonds to such Clearing Agency Participants; and

 

(e)           whenever this Indenture
requires or permits actions to be taken based upon instructions or directions
of Holders of Storm Recovery Bonds evidencing a specified percentage 

 

13

 

of
the Outstanding Amount of the Storm Recovery Bonds or a Series or Tranche
thereof, the Clearing Agency shall be deemed to represent such percentage only
to the extent that it has received instructions to such effect from Storm
Recovery Bond Owners or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Storm
Recovery Bonds or such Series or Tranche and has delivered such
instructions to the Trustee.

 

SECTION 2.12.  
NOTICES TO CLEARING AGENCY. 
Whenever a notice or other communication to the Storm Recovery
Bondholders is required under this Indenture, unless and until Definitive Storm
Recovery Bonds shall have been issued to Storm Recovery Bond Owners pursuant to
Section 2.13 and the applicable Series Supplement, the Trustee, the
Servicer and the Paying Agent shall give all such notices and communications
specified herein to be given to Storm Recovery Bondholders to the Clearing
Agency, and shall have no obligation to the Storm Recovery Bond Owners.

 

SECTION 2.13.  
DEFINITIVE STORM RECOVERY BONDS. 
If (i) the Clearing Agency or the Issuer advises the Trustee in
writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities as nominee and depository with respect to any
Book-Entry Series or Tranche of Storm Recovery Bonds and the Issuer is
unable to locate a qualified successor, (ii) the Issuer advises the
Trustee in writing that it elects to discontinue use of the book-entry-only
transfers through the Clearing Agency with respect to any Series or
Tranche of Storm Recovery Bonds and to deliver certificated Storm Recovery
Bonds to the Clearing Agency or (iii) after the occurrence of an Event of
Default, Storm Recovery Bond Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Storm Recovery
Bonds of all Series maintained as Book-Entry Storm Recovery Bonds advise
the Issuer and, through the Clearing Agency, the Trustee in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Storm Recovery Bond Owners of such Series, then the
Trustee shall notify all affected Storm Recovery Bond Owners and the Issuer of
the occurrence of any such event and of the availability of Definitive Storm
Recovery Bonds to affected Storm Recovery Bond Owners requesting the same.  Upon surrender by the Clearing Agency to the
Trustee of the typewritten Storm Recovery Bond or Storm Recovery Bonds
representing the Book-Entry Storm Recovery Bonds of that Series, accompanied by
registration instructions, a Manager on behalf of the Issuer shall execute and
the Trustee shall authenticate the Definitive Storm Recovery Bonds in
accordance with the instructions of the Clearing Agency.  None of the Issuer, the Storm Recovery Bond
Registrar or the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions.  Upon the issuance of
Definitive Storm Recovery Bonds, the Trustee shall recognize the Holders of the
Definitive Storm Recovery Bonds as Storm Recovery Bondholders.

 

Definitive Storm Recovery Bonds will be transferable
and exchangeable at the offices of the Storm Recovery Bond Registrar or, with
respect to any Storm Recovery Bonds listed on the Luxembourg Stock Exchange, at
the offices of the transfer agent appointed pursuant to the second paragraph of
Section 3.02.  With respect to any
transfer of such listed Storm Recovery Bonds, the new Definitive Storm Recovery
Bonds registered in the names specified by the transferee and the original
transferor shall be available at the offices of such transfer agent.

 

14

 

ARTICLE III

 

COVENANTS

 

SECTION 3.01.  
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.  The Issuer will duly and punctually pay the
Principal of and premium, if any, and Interest on the Storm Recovery Bonds in
accordance with the terms of the Storm Recovery Bonds, this Indenture and the
applicable Series Supplement; provided that except on the Series Final
Maturity Date, the Tranche Final Maturity Date or the Redemption Date for a Series or
Tranche of Storm Recovery Bonds or upon the acceleration of the Storm Recovery
Bonds following the occurrence of an Event of Default, the Issuer shall only be
obligated to pay the Principal of such Storm Recovery Bonds on each Payment
Date therefor to the extent moneys are available for such payment pursuant to Section 8.02.  Amounts properly withheld under the Code or
other applicable tax laws by any Person from a payment to any Storm Recovery
Bondholder of Interest or Principal or premium, if any, shall be considered as
having been paid by the Issuer to such Storm Recovery Bondholder for all
purposes of this Indenture.

 

SECTION 3.02.  
MAINTENANCE OF OFFICE OR AGENCY. 
The Issuer will maintain in the Borough of Manhattan, the City of New
York or in St. Paul, Minnesota, an office or agency where Storm Recovery Bonds
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Storm Recovery Bonds and
this Indenture may be served.  The Issuer
hereby initially appoints the office of the Trustee at 60 Livingston Avenue,
Mailcode EP MN WS3D, St. Paul, Minnesota 
55107 to serve as its agent for the foregoing purposes.  The Issuer will give prompt written notice to
the Holders and the Trustee of the location, and of any change in the location,
of any such office or agency.  If at any
time the Issuer shall fail to maintain any such office or agency or shall fail
to furnish such agent with the address thereof, such surrenders, notices and
demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints U.S. Bank National Association as its agent to receive all such
surrenders, notices and demands.

 

To the extent any of the Storm Recovery Bonds are
listed on the Luxembourg Stock Exchange and the rules of such exchange so
require, (i) the Issuer will maintain in Luxembourg (A) an office and
a transfer agent where Storm Recovery Bonds may be surrendered for registration
of transfer or exchange, (B) an office and a listing agent where notices
and demands to or upon the Issuer in respect of the Storm Recovery Bonds and
this Indenture may be served, and (C) an office and a paying agent where
payments in respect of the Storm Recovery Bonds may be made and (ii) any
reference in this Indenture to the office or agency of the Issuer referred to in
this Section 3.02 shall also refer to such offices, and the transfer,
listing and paying agents, of the Issuer in Luxembourg, as applicable.  The Issuer shall give the Trustee and any
other agent appointed under this Section 3.02 written notice of the location
and identity, and of any change in the location or identity, of any such office
or agency.

 

SECTION 3.03.  
MONEY FOR PAYMENTS TO BE HELD IN TRUST. 
As provided in Section 8.02(a), all payments of Principal of, or
premium and Interest on, the Storm Recovery Bonds that are to be made from
amounts withdrawn from the Collection Account pursuant to Section 8.02(d) or
(e) or Section 4.03 shall be made on behalf of the Issuer by the
Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection
Account for payments 

 

15

 

of Storm Recovery Bonds shall be paid over to the Issuer except as
provided in this Section and in Section 8.02.

 

The Issuer hereby appoints U.S. Bank National Association
as the Paying Agent hereunder and, in connection therewith the Paying Agent
agrees that it will (and the Issuer shall cause any other Paying Agent other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee (and during such time as the
Trustee acts as Paying Agent, it hereby so agrees that it will)), subject to
the provisions of this Section:

 

(a)           hold all sums held by it for the payment of Principal
of, or premium or Interest on, the Storm Recovery 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 and pay such sums to such
Persons as herein provided;

 

(b)           give the Trustee written notice of any Default by the
Issuer (or any other obligor upon the Storm Recovery Bonds) of which the Paying
Agent has actual knowledge in the making of any payment required to be made
with respect to the Storm Recovery Bonds;

 

(c)           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;

 

(d)           immediately resign as a Paying Agent and forthwith pay
to the Trustee all sums held by the Paying Agent in trust for the payment of
Storm Recovery Bonds if at any time the Paying Agent ceases to meet the
standards required of Paying Agents at the time of its appointment; and

 

(e)           comply with all requirements of the Code and other
applicable tax laws with respect to the withholding from any payments made by
it on any Storm Recovery Bonds of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith.

 

The Issuer may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, by Issuer Order direct any Paying Agent to pay to the Trustee all sums
held in trust by such Paying Agent, such sums to be held by the Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Trustee, such Paying Agent
shall be released from all further liability with respect to such money.

 

Subject to applicable laws with respect to escheat of
funds, any money held by the Trustee or any Paying Agent in trust for the
payment of any amount of Principal of, premium, if any, or Interest on any
Storm Recovery Bond and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and be paid to the
Issuer upon delivery by the Issuer of an Issuer Order; and the Holder of such
Storm Recovery Bond shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts
so paid to the Issuer), and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the

 

16

 

expense of the Issuer cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer.  The Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including mailing notice of such repayment to Holders whose Storm
Recovery Bonds have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Trustee or of any Paying Agent, at the
last address of record for each such Holder).

 

SECTION 3.04.  
EXISTENCE.  Subject to Section 3.10,
the Issuer shall keep in full effect its existence, rights and franchises as a
statutory limited liability company under the laws of the State of Louisiana
(unless it becomes, or any successor Issuer hereunder is or becomes, organized
under the laws of any other State or of the United States of America, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Indenture, the Storm Recovery Bonds, the Trust Estate and each other instrument
or agreement included in the Trust Estate.

 

SECTION 3.05.  
PROTECTION OF TRUST ESTATE.  The
Issuer shall from time to time execute and deliver, and file if required, all
such supplements and amendments hereto and all such filings (including filings
with the LPSC pursuant to the Securitization Act), financing statements,
continuation statements, instruments of further assurance and other
instruments, and shall take such other action reasonably necessary to:

 

(a)           maintain and preserve the Grant, Lien and security
interest (and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof;

 

(b)           perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture, including all Series Supplements;

 

(c)           enforce any of the Trust Estate;

 

(d)           preserve and defend title to the Trust Estate and the
rights of the Trustee and the Storm Recovery Bondholders in the Trust Estate
against the claims of all Persons and parties; or

 

(e)           pay any and all taxes levied or assessed upon all or
any part of the Trust Estate.

 

The Issuer hereby authorizes the Trustee to execute
upon written direction any filing with the LPSC, financing statement,
continuation statement or other instrument required to be filed pursuant to
this Section.

 

SECTION 3.06.  
OPINIONS AS TO TRUST ESTATE.  (a) On
or before March 31 in each calendar year, while any Series is
outstanding, beginning on March 31, 2009, the Issuer shall furnish to the
Trustee an Issuer Opinion of Counsel stating that, in the opinion of such
counsel, either (i) all actions or filings (including filings and re-filings
with the Louisiana Filing

 

17

 

Officer in accordance with the rules prescribed under the
Securitization Act and the UCC) necessary to maintain perfection of the Lien
and security interest created by this Indenture have been taken or made, and
reciting the details of such actions and filings or (ii) no such actions
or filings are necessary to maintain such Lien and security interest.  Such Issuer Opinion of Counsel shall also
describe the recording, filing, re-recording and re-filing of this Indenture,
any Supplemental Indentures and any other requisite documents, and the
execution and filing of any filings pursuant to the Securitization Act, the
Financing Order or the UCC, financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the Grant,
Lien and security interest of this Indenture until March 31 in the
following calendar year.

 

(b)           Prior to the effectiveness of any amendment to any
Sale Agreement or Servicing Agreement, the Issuer shall furnish to the Trustee
an Issuer Opinion of Counsel either (i) stating that, in the opinion of
such counsel, all actions or filings (including filings and re-filings with the
Louisiana Filing Officer in accordance with the rules prescribed under the
Securitization Act and the UCC) necessary to preserve and protect the interest
of the Issuer and the Trustee in the Storm Recovery Property and the proceeds
thereof have been taken or made, and reciting the details of such actions and
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such
actions or filings shall be necessary to preserve and protect such interest.

 

SECTION 3.07. 
PERFORMANCE OF OBLIGATIONS; COMMISSION FILINGS.

 

(a)           The Issuer (i) shall diligently pursue any and
all actions to enforce its rights under the Basic Documents and each other
instrument or agreement included in the Trust Estate and (ii) shall not
take any action and will use its best efforts not to permit any action to be
taken by others that would release any Person from any of such Person’s
covenants or obligations under any such Basic Document, instrument or agreement
or that would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of, any
such Basic Document, instrument or agreement, except, in each case, as
expressly provided in such Basic Document or such other instrument or
agreement.

 

(b)           The Issuer may contract with other Persons to assist
it in performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Trustee in an Issuer Officer’s Certificate
shall be deemed to be action taken by the Issuer.  Initially, the Issuer has contracted with the
Administrator to assist the Issuer in performing its duties under this
Indenture.

 

(c)           The Issuer shall punctually perform and observe all of
its obligations and agreements contained in the Basic Documents and in all
other instruments and agreements included in the Trust Estate.

 

(d)           The Issuer shall file with the Commission such
periodic reports, if any, as are required (without regard to the number of
Holders of Bonds to the extent permitted by and consistent with the Issuer’s
obligations under applicable law) from time to time under Section 13 or Section 15(d) of
the Exchange Act so long as any Storm Recovery Bonds remain Outstanding. The
Issuer shall also, to the extent permitted by and consistent with the Issuer’s
obligations under applicable law, post on its website or furnish or file in the
periodic reports and other reports to be

 

18

 

filed with the Commission pursuant to the Exchange Act, as described
below, the following information in respect of each series of Outstanding Storm
Recovery Bonds to the extent such information is reasonably available to the
Issuer:

 

(i)            the final prospectus relating to the Series of
Storm Recovery Bonds;

 

(ii)           a statement of Storm Recovery Charge
remittances to the Trustee (to be included in a Form 10-D or Form 10-K
filed subsequent to the respective report);

 

(iii)          a
statement reporting the balance in the Collection Account and the balance in
each subaccount of the Collection Account as of the end of each quarter or the
most recent date available (to be included in a Form 10-D or Form 10-K);

 

(iv)          a statement showing the balance of
Outstanding Storm Recovery Bonds that reflects the actual periodic payments
made on the Storm Recovery Bonds (to be included in the next Form 10-D or Form 10-K);

 

(v)           the Semiannual Servicer’s Certificate
which is required to be submitted pursuant to the applicable Servicing
Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K);

 

(vi)          any reports and other information that
the Issuer is required to file with the Commission under the Exchange Act; and

 

(vii)         a
current organization chart for the Issuer and the Servicer (unless the Servicer
is not an Affiliate of the Issuer, in which case the Servicer shall post two
separate organization charts), in each case disclosing the parent company and
material subsidiaries of the Issuer and the Servicer.

 

In addition, the Issuer shall, to the extent permitted by and
consistent with the Issuer’s obligations under applicable law, cause to be
posted on the website associated with the Issuer’s parent’s website:

 

A.            the final prospectus (as filed with the
Commission under Rule 424 of the Securities Act) for each series of
Outstanding Storm Recovery Bonds;

 

B.            the Semiannual Servicer’s Certificate
delivered for each Series of Storm Recovery Bonds pursuant to each
Servicing Agreement;

 

C.            the periodic reports described above in
this subsection (d); and

 

D.            a current organization chart for the
Issuer and the Servicer (unless the Servicer is not related to the Issuer, in
which case the Servicer shall post two separate organization charts), in each
case disclosing the parents and material subsidiaries of the Issuer and the
Servicer.

 

19

 

(e)           The Issuer shall make all filings required under the
Securitization Act relating to the transfer of the ownership or security
interest in the Storm Recovery Property other than those required to be made by
the Seller or any Servicer pursuant to the Basic Documents.

 

SECTION 3.08.  
NEGATIVE COVENANTS.  So long as
any Storm Recovery Bonds are Outstanding, the Issuer shall not:

 

(i)            except as expressly permitted by this
Indenture, any Supplemental Indenture, any Sale Agreement or any Servicing
Agreement, sell, transfer, exchange or otherwise dispose of any of the assets
of the Issuer or the Trust Estate, unless directed to do so by the Trustee in
accordance with Article V;

 

(ii)           terminate its existence, dissolve or
liquidate in whole or in part, except as Section 3.10 permits;

 

(iii)          claim
any credit on, or make any deduction from the Principal or premium, if any, or
Interest payable in respect of, the Storm Recovery Bonds (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Storm Recovery Bondholder by reason of the
payment of taxes levied or assessed upon the Issuer or any part of the Trust
Estate;

 

(iv)          (A) permit the validity or
effectiveness of this Indenture to be impaired, or permit the Lien of this
Indenture to be amended, hypothecated, subordinated, terminated or discharged,
or permit any Person to be released from any covenants or obligations with respect
to the Storm Recovery Bonds under this Indenture except as may be expressly
permitted hereby, (B) permit any Lien (other than the Lien created by this
Indenture) to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the proceeds
thereof or (C) permit the Lien of this Indenture not to constitute a
continuing valid first priority security interest in the Trust Estate;

 

(v)           except as contemplated by this Indenture,
any Supplemental Indenture, any Sale Agreement, or any Servicing Agreement,
enter into any swap, hedge or other similar financial arrangement;

 

(vi)          elect to be classified as an association
taxable as a corporation for federal income tax purposes or otherwise take any
action, file any tax return or make any election inconsistent with the
treatment of the Issuer, for purposes of federal taxes and, to the extent
consistent with applicable state tax law, state income and franchise tax
purposes, as a disregarded entity that is not separate from the sole owner of
the Issuer; or

 

(vii)         take
any action that is the subject of a Rating Agency Condition if such action
would result in a reduction or withdrawal of the then-current rating on any
Outstanding Series or Tranche of Storm Recovery Bonds.

 

SECTION 3.09.  
ANNUAL STATEMENT AS TO COMPLIANCE. 
The Issuer will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Issuer (which, as of the date hereof, is the calendar
year) commencing with the fiscal year 2008, an Issuer Officer’s

 

20

 

Certificate (a copy of which the Issuer will deliver to each Rating
Agency and the LPSC) stating, as to the Manager signing such Issuer Officer’s
Certificate, that

 

(i)            a review of the activities of the Issuer
during such year (or relevant portion thereof) and of performance under this
Indenture has been made under such Manager’s supervision; and

 

(ii)           to the best of such Manager’s knowledge,
based on such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such fiscal year (or relevant portion thereof),
or, if there has been a default in compliance with any such condition or
covenant, describing each such default known to the Manager and the nature and
status thereof.

 

SECTION 3.10.  
ISSUER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.  The Issuer shall not consolidate or merge
with or into or convert into any other Person or sell substantially all of its
assets to any other Person, unless:

 

(i)            the Person (if other than the Issuer)
formed by or surviving such consolidation, merger or conversion or to whom
substantially all of such assets are sold shall be a Person organized and
existing under the laws of the United States of America or any State and shall
expressly assume by a Supplemental Indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment of
the Principal of and premium, if any, and Interest on all Outstanding Storm
Recovery Bonds and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein and in the applicable Series Supplement
or any other Supplemental Indenture;

 

(ii)           the Person (if other than the Issuer)
formed by or surviving such consolidation, merger or conversion or to whom
substantially all of such assets are sold shall expressly assume all
obligations and succeed to all rights of the Issuer under the Basic Documents to
which the Issuer is a party (or under which the Issuer has rights) pursuant to
an assignment and assumption agreement executed and delivered to the Trustee,
in form satisfactory to the Trustee;

 

(iii)          immediately
after giving effect to such consolidation, merger, conversion or sale, no
Default or Event of Default shall have occurred and be continuing;

 

(iv)          prior notice to the Rating Agencies shall
have been provided and the Rating Agency Condition shall have been satisfied
with respect to such consolidation, merger, conversion or sale;

 

(v)           the Issuer shall have received an opinion
of Independent counsel (and shall have delivered copies thereof to the Trustee)
to the effect that such consolidation, merger, conversion or sale (a) will
not have any material adverse tax consequence to the Issuer or any Storm
Recovery Bondholder, (b) complies with this Indenture and all of the
conditions precedent herein relating to such transaction and (c) will
result in the Trustee maintaining a continuing valid first priority perfected
security interest in the Trust Estate;

 

21

 

(vi)          none of the Storm Recovery Property, any
Financing Order or the Issuer’s rights under the Securitization Act or the
Financing Order shall be impaired thereby; and

 

(vii)         any
action as is necessary to maintain the Lien created by this Indenture shall
have been taken.

 

SECTION 3.11.  
SUCCESSOR OR TRANSFEREE.

 

(a)           Upon any consolidation, merger or conversion of the
Issuer in accordance with Section 3.10, the Person formed by or surviving
such consolidation, merger or conversion (if other than the Issuer) shall
succeed to, and be substituted for, and may exercise every right and power of,
the Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.

 

(b)           Except for such obligations set forth in Section 6.07,
upon any sale by the Issuer of substantially all of its assets in a sale which
complies with Section 3.10, immediately upon the delivery of written notice
to the Trustee from the Person acquiring such assets stating that the Issuer is
to be so released, the Issuer will be released from every covenant and
agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Storm Recovery Bonds and from every covenant and
agreement of the Basic Documents to be observed or performed on the part of the
Issuer.

 

SECTION 3.12.  
NO OTHER BUSINESS.  The Issuer
shall not engage in any business other than purchasing and owning the Storm
Recovery Property provided for in Financing Orders issued by the LPSC from time
to time, issuing Storm Recovery Bonds from time to time, pledging its interest
in the Trust Estate to the Trustee under this Indenture in order to secure the
Issuer’s obligations as set forth in the Series Supplements, entering into
and performing under the Basic Documents relating to the Storm Recovery Bonds,
and performing activities that are necessary, suitable or convenient to
accomplish these purposes or are incidental thereto.

 

SECTION 3.13.  
NO BORROWING.  The Issuer shall
not issue, incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness except for the Storm Recovery Bonds and any
obligations under any credit enhancement for any Series of Storm Recovery
Bonds and except as contemplated by the Basic Documents.

 

SECTION 3.14.  
GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.  Except as contemplated by the Basic
Documents, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another’s payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person other than any Eligible
Investments.

 

SECTION 3.15.  
CAPITAL EXPENDITURES.  The Issuer
shall not make any expenditure (by long-term or operating lease or otherwise)
for capital assets (either realty or personalty) other than the Storm Recovery
Property purchased from the Seller pursuant to, and in accordance with, any
Sale Agreement.

 

22

 

SECTION 3.16.  
RESTRICTED PAYMENTS.  The Issuer
shall not, directly or indirectly, (i) pay any dividend or make any
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, to any owner of a beneficial interest in
the Issuer or otherwise with respect to any ownership or equity interest in, or
ownership security of, the Issuer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that if no Event of Default shall
have occurred and be continuing, the Issuer may make, or cause to be made, any
such distributions to any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer using funds distributed to the Issuer pursuant to Section 8.02(d) or
which are not otherwise subject to the Lien of this Indenture to the extent
that such distributions would not cause the book value of the remaining equity
in the Issuer to decline below 0.5% of the original principal amount of all Series of
Storm Recovery Bonds which remain outstanding. 
The Issuer will not, directly or indirectly, make payments to or
distributions from the Collection Account except in accordance with the Basic
Documents.

 

SECTION 3.17.  
NOTICE OF EVENTS OF DEFAULT.  The
Issuer agrees to deliver to the Trustee, the LPSC, the Rating Agencies and, to
the extent the rules and regulations of the Luxembourg Stock Exchange so
require, any agent in Luxembourg appointed pursuant to the second paragraph of Section 3.02
written notice in the form of an Issuer Officer’s Certificate of any Default or
Event of Default hereunder or under any of the Basic Documents, its status and
what action the Issuer is taking or proposes to take with respect thereto
within five Business Days after the occurrence thereof.

 

SECTION 3.18.  INTENTIONALLY OMITTED.

 

SECTION 3.19.   INSPECTION. 
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Trustee, during the Issuer’s normal business hours, to
examine all the books of account, records, reports, and other papers of the
Issuer, to make copies and extracts therefrom, to cause such books to be
audited annually by an Independent registered public accounting firm, and to discuss
the Issuer’s affairs, finances and accounts with the Issuer’s officers,
employees and an Independent registered public accounting firm, all at such
reasonable times and as often as may be reasonably requested.  The Trustee shall hold and shall cause its
representatives to hold, in confidence all such information except to the
extent disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.

 

SECTION 3.20.  
SALE AGREEMENT, ADMINISTRATION AGREEMENT AND SERVICING AGREEMENT
COVENANTS.

 

(a)           The Issuer agrees to take all such lawful actions to
enforce its rights under any Sale Agreement, the Administration Agreement and
any Servicing Agreement and to compel or secure the performance and observance
by the Seller, the Administrator, the Servicer and Cleco Power of each of their
respective obligations to the Issuer under or in connection with any Sale
Agreement, the Administration Agreement and any Servicing Agreement in
accordance with the terms thereof.  So
long as no Event of Default occurs and is continuing, but subject to Section 

 

23

 

3.20(f),
the Issuer may exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with any Sale
Agreement, the Administration Agreement and any Servicing Agreement; provided
that such action shall not adversely affect the interests of the Holders in any
material respect.

 

(b)           If an Event of Default occurs and is continuing, the
Trustee may, and at the direction (which direction shall be in writing) of the
holders of a majority of the Outstanding Amount of Storm Recovery Bonds of all Series or
Tranches affected thereby shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Administrator, the Seller and
the Servicer, as the case may be, under or in connection with the
Administration Agreement and the applicable Sale Agreement and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Administrator, the Seller or the Servicer of
each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the
Administration Agreement and the applicable Sale Agreement and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.

 

(c)           Except as set forth in Section 3.20(e) of
this Indenture, with the prior written consent of the Trustee and the consent
of the LPSC pursuant to Section 9.07 if the amendment increases ongoing
Financing Costs, the Administration Agreement, any Sale Agreement and Servicing
Agreement may be amended in accordance with the provisions thereof, so long as
the Rating Agency Condition is satisfied in connection therewith, at any time
and from time to time, without the consent of the Storm Recovery Bondholders of
the related Series; provided that such amendment shall not adversely
affect the interest of any Storm Recovery Bondholder of that Series in any
material respect, as evidenced by an Issuer Opinion of Counsel delivered to the
Trustee.  The Trustee shall also be
entitled to receive an Opinion of Counsel pursuant to Section 9.01(c).

 

(d)           Except as set forth in Section 3.20(e) of
this Indenture, if the Issuer, the Seller, Cleco Power, the Administrator, the
Servicer or any other party to the respective agreement proposes to amend,
modify, waive, supplement, terminate or surrender, or agree to any amendment,
modification, waiver, supplement, termination or surrender of, the terms of the
Administration Agreement or any Sale Agreement or Servicing Agreement, or waive
timely performance or observance by the Administrator, the Seller or the
Servicer under the Administration Agreement or any Sale Agreement or Servicing
Agreement, in each case in such a way as would materially and adversely affect
the interests of Storm Recovery Bondholders of any Series, the Issuer shall
first notify the Rating Agencies of the proposed amendment, modification,
waiver, supplement, termination or surrender and, upon receipt of notification
regarding whether the Rating Agency Condition has been satisfied, shall notify
the Trustee, the Paying Agent, the Storm Recovery Bond Registrar and the LPSC
in writing and the Trustee shall notify the Storm Recovery Bondholders of such Series of
the proposed amendment, modification, waiver, supplement, termination or
surrender and whether the Rating Agency Condition has been satisfied with
respect thereto.  The Trustee shall
consent to such proposed amendment, modification, waiver, supplement,
termination or surrender only with the prior written consent of the holders of
a majority of the Outstanding Amount of Storm Recovery Bonds of the Series or
Tranches materially and adversely affected thereby and, if the proposed
amendment, modification, waiver, supplement, termination or surrender would
increase ongoing 

 

24

 

Financing
Costs, the consent of the LPSC pursuant to Section 9.07.  If any such amendment, modification, waiver,
supplement, termination or surrender shall be so consented to by the Trustee or
such Holders, the Issuer agrees to execute and deliver, in its own name and at
its own expense, such agreements, instruments, consents and other documents as
shall be necessary or appropriate in the circumstances.  For so long as any of the Storm Recovery
Bonds are listed on the Luxembourg Stock Exchange and the rules of that
exchange so require, notice of such proposed action will be published by an
agent to be appointed by the Issuer in accordance with such rules promptly
following its effectiveness.

 

(e)           If the Issuer or the Servicer proposes to amend,
modify, waive, supplement, terminate or surrender, or to agree to any
amendment, modification, supplement, termination, waiver or surrender of, the
Storm Recovery Charge Adjustment Process, the Issuer shall notify the LPSC, the
Trustee, the Paying Agent and the Storm Recovery Bond Registrar in writing and
the Trustee shall notify the Storm Recovery Bondholders of such proposal and
the Trustee shall consent thereto only with the consent of the LPSC pursuant to
Section 9.07 and the prior written consent of the holders of a majority of
the Outstanding Amount of Storm Recovery Bonds of the Series or Tranches
materially and adversely affected thereby and only if the Rating Agency
Condition has been satisfied with respect thereto.

 

(f)            Promptly following a default by the Seller under any
Sale Agreement, by the Administrator under the Administration Agreement, or the
occurrence of a Servicer Default under any Servicing Agreement, and at the
Issuer’s expense, the Issuer agrees to take all such lawful actions as the
Trustee may request in writing to compel or secure the performance and
observance by each of the Seller, the Administrator or the Servicer of their
obligations under and in accordance with that Sale Agreement, Administration
Agreement or Servicing Agreement, as the case may be, in accordance with the
terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with such
agreements to the extent and in the manner directed by the Trustee, including
the transmission of notices of any default by the Seller, the Administrator or
the Servicer, respectively, thereunder and the institution of legal or
administrative actions or Proceedings to compel or secure performance of their
obligations under that Sale Agreement, Administration Agreement or Servicing
Agreement, as applicable.

 

(g)           If the Issuer shall have knowledge of the occurrence
of a Servicer Default under any Servicing Agreement, the Issuer shall (i) promptly
give written notice thereof to the Trustee, the LPSC, the Paying Agent, the
Storm Recovery Bond Registrar and the Rating Agencies, (ii) specify in
such notice the action, if any, the Issuer is taking with respect to such
default and (iii) take such reasonable steps as are available to it to
remedy such defaults or shall take such actions as shall have been directed by
the Trustee, as the case may be, provided that, notwithstanding the
foregoing, the Issuer shall not take any action to terminate the Servicer’s
rights and powers under that Servicing Agreement unless a Servicer Default
shall have occurred and be continuing, and the Trustee shall not direct the
Issuer to take such action unless a Servicer Default shall have occurred and be
continuing.

 

(h)           As promptly as possible after the giving of notice of
termination to the Servicer, the LPSC and the Rating Agencies of the Servicer’s
rights and powers pursuant to that Servicing Agreement, the Trustee upon the written
direction of the majority of the Outstanding Amount of 

 

25

 

Storm
Recovery Bonds of the related Series shall appoint a successor Servicer
(the “Successor Servicer”), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Issuer and the
Trustee.  A person shall qualify as a
Successor Servicer only if such Person satisfies the requirements set forth in
that Servicing Agreement.  If within 30
days after the delivery of the notice referred to above, a Successor Servicer
shall not have been appointed and accepted its appointment as such, the Trustee
may petition the LPSC or a court of competent jurisdiction to appoint a
Successor Servicer.  In connection with
any such appointment, the Issuer may make such arrangements for the
compensation of such Successor Servicer as it and such Successor Servicer shall
agree, subject to the limitations set forth below and in that Servicing
Agreement, and in accordance with that Servicing Agreement, the Issuer shall
enter into an agreement with such Successor Servicer for the servicing of the
Storm Recovery Property related to that Series (such agreement to be in
form and substance satisfactory to the Trustee).

 

(i)            Upon termination of the Servicer’s rights and powers
pursuant to any Servicing Agreement, the Trustee shall promptly notify the
Issuer, the LPSC, the Storm Recovery Bondholders of the related Series and
the Rating Agencies in writing of such termination.  As soon as a Successor Servicer is appointed,
the Issuer shall notify the Trustee, the LPSC, the Storm Recovery Bondholders
of the related Series, the Paying Agent, the Storm Recovery Bond Registrar and
the Rating Agencies of such appointment, specifying in such notice the name and
address of such Successor Servicer.

 

SECTION 3.21.  
TAXES.  So long as any of the
Storm Recovery Bonds are outstanding, the Issuer shall pay all taxes,
assessments and governmental charges imposed upon it or any of its properties
or assets or with respect to any of its franchises, business, income or
property before any penalty accrues thereon if the failure to pay any such
taxes, assessments and governmental charges would, after any applicable grace
periods, notices or other similar requirements, result in a Lien on the Trust
Estate.

 

ARTICLE IV

 

SATISFACTION AND
DISCHARGE; DEFEASANCE

 

SECTION 4.01.  
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE.

 

(a)                                 The Storm Recovery Bonds of any Series,
all moneys payable with respect thereto and this Indenture as it applies to
such Series shall cease to be of further effect and the Lien hereunder
shall be released with respect to such Series, Interest shall cease to accrue
on the Storm Recovery Bonds of such Series and the Trustee, on written
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Storm Recovery Bonds of such Series, when

 

(A)          either

 

(1)           all Storm Recovery Bonds of such Series theretofore
authenticated and delivered (other than (i) Storm Recovery Bonds that 

 

26

 

have been destroyed, lost or stolen and that have been replaced or paid
as provided in Section 2.06 and (ii) Storm Recovery Bonds for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the Trustee for
cancellation; or

 

(2)           the Issuer has irrevocably deposited or caused to be
irrevocably deposited with the Trustee cash, in trust for such purpose, in an
amount sufficient to make payments of Principal of and, premium, if any, and
Interest on the Storm Recovery Bonds of such Series and to pay and
discharge the entire indebtedness on such Storm Recovery Bonds not theretofore
delivered to the Trustee;

 

(B)           the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer with respect to such Series; and

 

(C)           the Issuer has delivered to the Trustee an Issuer
Officer’s Certificate, an Issuer Opinion of Counsel and (if required by the TIA
or the Trustee) an Independent Certificate from an Independent registered
public accounting firm, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture with
respect to Storm Recovery Bonds of such Series have been complied with.

 

(b)           Subject to Sections 4.01(c) and 4.02, the Issuer
at any time may terminate (i) all its obligations under this Indenture
with respect to the Storm Recovery Bonds of any Series (“Legal
Defeasance Option”) or (ii) its obligations under Sections 3.05, 3.06
(other than with respect to the Defeasance Subaccounts and all funds and U.S.
Government Obligations therein), 3.07(a), (b) and (c), 3.08, 3.10, 3.16
and 3.19 and the operation of Section 5.01(iv) (other than with
respect to the Defeasance Subaccount and U.S. Government Obligations therein) (“Covenant
Defeasance Option”) with respect to any Series of Storm Recovery
Bonds.  The Issuer may exercise the Legal
Defeasance Option with respect to any Series of Storm Recovery Bonds
notwithstanding its prior exercise of the Covenant Defeasance Option with
respect to such Series.

 

If the Issuer exercises the Legal Defeasance Option
with respect to any Series, the maturity of the Storm Recovery Bonds of such Series may
not be (a) accelerated because of an Event of Default or (b) except
as provided in Section 4.02, redeemed. 
If the Issuer exercises the Covenant Defeasance Option with respect to
any Series, the maturity of the Storm Recovery Bonds of such Series may
not be accelerated because of an Event of Default specified in Section 5.01(iv).

 

Upon satisfaction of the conditions set forth herein
to the exercise of the Legal Defeasance Option or the Covenant Defeasance
Option with respect to any Series of Storm Recovery Bonds, the Trustee, on
written demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of the obligations that
are terminated pursuant to such exercise.

 

27

 

(c)           Notwithstanding Sections 4.01(a) and (b) above,
(i) rights of registration of transfer and exchange, (ii) rights of
substitution of mutilated, destroyed, lost or stolen Storm Recovery Bonds, (iii) rights
of Storm Recovery Bondholders to receive payments of Principal, premium, if
any, and Interest, but only from the amounts deposited with the Trustee for
such payments, (iv) Sections 4.03 and 4.04, (v) the rights,
obligations and immunities of the Trustee hereunder (including the rights of
the Trustee under Section 6.07 and the obligations of the Trustee under Section 4.03)
and (vi) the rights of Storm Recovery Bondholders under this Indenture
with respect to the property deposited with the Trustee payable to all or any
of them, shall survive until the Storm Recovery Bonds of the Series as to
which this Indenture or certain obligations hereunder have been satisfied and
discharged pursuant to Section 4.01(a) or 4.01(b) and have been
paid in full.  Thereafter, the
obligations in Sections 6.07 and 4.04 with respect to such Series shall
survive.

 

SECTION 4.02.  
CONDITIONS TO DEFEASANCE.  The
Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance
Option with respect to any Series of Storm Recovery Bonds only if:

 

(a)           the Issuer irrevocably deposits or causes to be
deposited in trust with the Trustee cash or U.S. Government Obligations for the
payment of Principal of and premium, if any, and Interest on such Series of
Storm Recovery Bonds to the Expected Final Payment Date or Redemption Date
therefor, as applicable, and all other amounts due and payable hereunder, such
deposit to be made in the Defeasance Subaccount for such Series of Storm
Recovery Bonds;

 

(b)           the deposit in the Defeasance Subaccount pursuant to
subsection (a) of this Section 4.02 constitutes proceeds from a
refunding of the Storm Recovery Bonds;

 

(c)           the Issuer delivers to the Trustee a certificate from
a nationally recognized Independent registered public accounting firm
expressing its opinion that the payments of Principal and Interest when due and
without reinvestment on the deposited U.S. Government Obligations plus any deposited
cash without investment will provide cash at such times and in such amounts
(but, in the case of the Legal Defeasance Option only, not more than such
amounts) as will be sufficient to pay in respect of the Storm Recovery Bonds of
such Series (i) subject to clause (ii), Principal in accordance with
the Expected Amortization Schedule therefor, (ii) if such Series is
to be redeemed, the redemption price therefor on the Redemption Date therefor
and (iii) Interest when due;

 

(d)           in the case of the Legal Defeasance Option, the
expiration of 95 days after the deposit is made and during such 95-day period
no Default specified in Section 5.01(v) or (vi) shall have
occurred and be continuing at the end of the period; provided, however,
that in determining whether a default under Section 5.01(v) has
occurred, the requirement that the decree or order shall remain unstayed and in
effect for 90 days shall be disregarded;

 

(e)           no Default has occurred and is continuing on the day
of such deposit and after giving effect thereto;

 

(f)            in the case of the Legal Defeasance Option, the Issuer
delivers to the Trustee an Issuer Opinion of Counsel stating that (i) the
Issuer has received from, or there has been

 

28

 

published
by, the Internal Revenue Service a ruling, or (ii) since the date of
execution of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of the Storm Recovery Bonds of such Series will
not recognize income, gain or loss for federal income tax purposes as a result
of the exercise of such Legal Defeasance Option and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such legal defeasance had not occurred;

 

(g)           in the case of the Covenant Defeasance Option, the
Issuer delivers to the Trustee an Issuer Opinion of Counsel to the effect that
the Holders of the Storm Recovery Bonds of such Series will not recognize
income, gain or loss for federal income tax purposes as a result of the
exercise of such Covenant Defeasance Option and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred;

 

(h)           the Issuer delivers to the Trustee an Issuer Officer’s
Certificate and an Issuer Opinion of Counsel, each stating that all conditions
precedent to the satisfaction and discharge of the Storm Recovery Bonds of such
Series to the extent contemplated by this Article IV have been
complied with;

 

(i)            the Issuer delivers to the Trustee an Opinion of
Counsel to the effect that (i) in a case under the Bankruptcy Code in which
Cleco Power (or any of its Affiliates, other than the Issuer) is the debtor,
the court would hold that the deposited cash or U.S. Government Obligations
would not be in the bankruptcy estate of Cleco Power (or any of its Affiliates,
other than the Issuer, that deposited the cash or U.S. Government Obligations);
and (ii) in the event Cleco Power (or any of its Affiliates, other than
the Issuer, that deposited the cash or U.S. Government Obligations), were to be
a debtor in a case under the Bankruptcy Code, the court would not disregard the
separate legal existence of Cleco Power (or any of its Affiliates, other than
the Issuer, that deposited the cash or U.S. Government Obligations) and the
Issuer so as to order substantive consolidation under the Bankruptcy Code of
the Issuer’s assets and liabilities with the assets and liabilities of Cleco
Power (or any of its Affiliates, other than the Issuer, that deposited the cash
or U.S. Government Obligations), and

 

(j)            the Rating Agency Condition shall have been satisfied
with respect to the exercise of any Legal Defeasance Option or Covenant
Defeasance Option.

 

Notwithstanding any other provision of this Section 4.02
to the contrary, no delivery of cash or U.S. Government Obligations to the
Trustee under this Section shall terminate any obligations of the Issuer
under this Indenture with respect to any Storm Recovery Bonds which are to be
redeemed prior to the Expected Final Payment Date therefor until such Storm
Recovery Bonds shall have been irrevocably called or designated for redemption
on a date thereafter on which such Storm Recovery Bonds may be redeemed in
accordance with the provisions of this Indenture and proper notice of such
redemption shall have been given in accordance with the provisions of this Indenture
or the Issuer shall have given the Trustee, in form satisfactory to the
Trustee, irrevocable written instructions to give, in the manner and at the
times prescribed herein, notice of redemption of such Series.

 

29

 

SECTION 4.03.  
APPLICATION OF TRUST MONEY.  All
moneys or U.S. Government Obligations deposited with the Trustee pursuant to Section 4.01
or 4.02 hereof with respect to any Series of Storm Recovery Bonds shall be
held in trust in the Defeasance Subaccount for such Series and applied by
it, in accordance with the provisions of the Storm Recovery Bonds and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Trustee may determine, to the Holders of the particular Storm Recovery Bonds
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for Principal, premium, if
any, and Interest.  Such moneys shall be
segregated and held apart solely for paying such Storm Recovery Bonds and such
Storm Recovery Bonds shall not be entitled to any amounts on deposit in the
Collection Account other than amounts on deposit in the Defeasance Subaccount
for such Storm Recovery Bonds.

 

SECTION 4.04.  
REPAYMENT OF MONEYS HELD BY PAYING AGENT.  In connection with the satisfaction and
discharge of this Indenture or the Covenant Defeasance Option or Legal
Defeasance Option with respect to the Storm Recovery Bonds of any Series, all
moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Storm Recovery Bonds shall,
upon written demand of the Issuer, be paid to the Trustee to be held and
applied according to Section 4.03 and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.01.  
EVENTS OF DEFAULT.  “Event of
Default” with respect to any Series, wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

 

(i)            default in the payment of any Interest on
any Storm Recovery Bond of such Series when the same becomes due and
payable and the continuation of such default for five Business Days;

 

(ii)           default in the payment of the then unpaid
Principal of any Storm Recovery Bond of such Series on the Series Final
Maturity Date for such Series or, if applicable, any Tranche of such Series on
the Tranche Final Maturity Date for such Tranche;

 

(iii)          default
in the payment of the redemption price for any Storm Recovery Bond on the
Redemption Date therefor;

 

(iv)          default in the observance or performance
of any covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of which is
specifically dealt with in clause (i), (ii) or (iii) above), any
covenant or agreement of the Issuer made in any credit enhancement agreement
permitted under Section 3.13 hereof and any Series Supplement, or any
representation or warranty of the Issuer made herein or therein or in any
certificate or

 

30

 

other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when made (other than a
covenant, agreement or representation or warranty expressly included herein or
in a Series Supplement solely for the benefit of a different Series of
Storm Recovery Bonds), and any such default shall continue or not be cured, for
a period of 30 days after the earlier of (A) there shall have been given,
by registered or certified mail, to the Issuer by the Trustee or to the Issuer
and the Trustee by the Holders of at least 25% of the Outstanding Amount of
Storm Recovery Bonds of such Series, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a “Notice of Default” hereunder or (B) the
date the Issuer has knowledge of the default;

 

(v)           the filing of a decree or order for
relief by a court having jurisdiction in respect of the Issuer or any
substantial part of the Trust Estate securing such Series in an
involuntary case or Proceeding under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for the Issuer or its property or for any substantial part
of the Series Trust Estate securing such Series, or ordering the
winding-up or liquidation of the Issuer’s affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days;

 

(vi)          the commencement by the Issuer of a
voluntary case or Proceeding under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
the Issuer to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Series Trust
Estate securing such Series, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer generally
to pay its debts as such debts become due, or the taking of action by the
Issuer in furtherance of any of the foregoing;

 

(vii)         any
act or failure to act by the State of Louisiana or any of its agencies
(including the LPSC), officers or employees that violates or is not in
accordance with the pledge of the State of Louisiana in Section 1234 of
the Securitization Act or the Commission Pledge in the Financing Order,
including, without limitation, the failure of the LPSC to implement the
statutorily guaranteed true-up mechanism in accordance with the Financing
Order; or

 

(viii)        any
other event designated as an Event of Default in the related Series Supplement.

 

SECTION 5.02.  
ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.  If an Event of Default other than an Event of
Default under Section 5.01(vii) occurs and is continuing, then and in
every such case either the Trustee or the Holders holding not less than a
majority of the Outstanding Amount of Storm Recovery Bonds of the Series with
respect to which an Event of Default has occurred, voting as a class, may, but
need not, declare all the Storm Recovery Bonds of such Series to be
immediately due and payable, by a notice in

 

31

 

writing to the Issuer (and to the Trustee if given by Storm Recovery
Bondholders), and upon any such declaration the unpaid principal amount of the
Storm Recovery Bonds of such Series, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.

 

At any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article V
provided, the Holders holding not less than a majority of the Outstanding
Amount of Storm Recovery Bonds of such Series, by written notice to the Issuer
and the Trustee, may rescind and annul such declaration and its consequences
if:

 

(i)            the Issuer has paid or deposited with the
Trustee, for deposit in the General Subaccount of the Collection Account of
such Series, a sum sufficient to pay

 

(A)          all payments of Principal of and premium, if any, and
Interest on all Storm Recovery Bonds of such Series due and owing at such
time as if such Event of Default had not occurred and was not continuing and
all other amounts that would then be due hereunder or upon such Storm Recovery
Bonds as if the Event of Default giving rise to such acceleration had not
occurred and was not continuing; and

 

(B)          all sums paid or advanced by the Trustee hereunder
with respect to such Series and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel with
respect to such Series; and

 

(ii)           all Events of Default other than the
nonpayment of the Principal of the Storm Recovery Bonds of the Series that
has become due solely by such acceleration have been cured or waived as
provided in Section 5.12.

 

No such rescission shall affect any subsequent Default
or impair any right consequent thereto.

 

SECTION 5.03.  
COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.

 

(a)           The Issuer covenants that if (i) Default is made
in the payment of any Interest on any Storm Recovery Bond when such Interest
becomes due and payable and such Default continues for five Business Days, (ii) Default
is made in the payment of the then unpaid Principal of any Storm Recovery Bond
on the Series Final Maturity Date or Tranche Final Maturity Date, as
applicable, therefor, or (iii) Default is made in the payment of the
redemption price for any Storm Recovery Bond on the Redemption Date therefor,
the Issuer shall, upon demand of the Trustee, pay to it, for the benefit of the
Holders of the Storm Recovery Bonds of such Series, such amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee
and its agents and counsel and the whole amount then due and payable on such
Storm Recovery Bonds for Principal, premium, if any, and Interest, with
interest upon the overdue Principal and premium, if any, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of Interest, at the respective Bond Rate of such Series or
the applicable Tranche of such Series.

 

32

 

(b)           In case the Issuer shall fail forthwith to pay the
amounts specified in Section 5.03(a) upon such demand, the Trustee,
in its own name and as trustee of an express trust, may institute a Proceeding
for the collection of the sums so due and unpaid, and may prosecute such
Proceeding to judgment or final decree, and subject to the limitations on
recourse set forth herein, may enforce the same against the Issuer or other
obligor upon such Storm Recovery Bonds and collect in the manner provided by
law out of the Series Trust Estate and the proceeds thereof, the whole
amount then due and payable on the Storm Recovery Bonds of such Series for
Principal, premium, if any, and Interest, with interest upon the overdue
Principal and premium, if any, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of Interest,
at the respective rate borne by the Storm Recovery Bonds of such Series or
the applicable Tranche of such Series and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel.

 

(c)           If an Event of Default other than the Event of Default
described in Section 5.01(vii) occurs and is continuing, the Trustee
may, as more particularly provided in Section 5.04, proceed to protect and
enforce its rights and the rights of the Storm Recovery Bondholders of all
materially and adversely affected Series by such appropriate Proceedings
as the Trustee shall deem most effective to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy or legal or equitable right vested in the
Trustee by this Indenture or by law, including foreclosing or otherwise
enforcing the Lien on the Series Trust Estate securing those Series of
Storm Recovery Bonds or applying to the LPSC or a court of competent
jurisdiction for sequestration of revenues arising with respect to such Storm
Recovery Property.

 

(d)           In case there shall be pending, relative to the Issuer
or any other obligor upon any Series of Storm Recovery Bonds or any Person
having or claiming an ownership interest in the Series Trust Estate
securing that Series, Proceedings under Title 11 of the United States Code or
any other applicable federal or State bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon that Series of Storm Recovery
Bonds, or to the creditors or property of the Issuer or such other obligor, the
Trustee, irrespective of whether the principal of that Series of Storm
Recovery 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 pursuant to the provisions of this Section, shall be entitled
and empowered to the extent permitted by applicable law, by intervention in
such Proceedings or otherwise:

 

(i)            to file and prove a claim or claims for the whole
amount of Principal, premium, if any, and Interest owing and unpaid in respect
of the Storm Recovery Bonds and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances made,
by

 

33

 

the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Storm Recovery Bondholders
allowed in such Proceedings;

 

(ii)           unless prohibited by applicable law and regulations,
to vote on behalf of the Holders of Storm Recovery Bonds in any election of a
trustee, a standby trustee or Person performing similar functions in any such
Proceedings;

 

(iii)          to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Storm Recovery Bondholders and of the Trustee
on their behalf;

 

(iv)          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 or the Holders of Storm Recovery Bonds allowed in any judicial
Proceedings relative to the Issuer, its creditors and its property; and

 

(v)           to participate as a member, voting or otherwise, of
any official committee of creditors appointed in such matter,

 

and any trustee, receiver, liquidator, custodian or
other similar official in any such Proceeding is hereby authorized by each of
such Storm Recovery Bondholders to make payments to the Trustee, and, in the
event that the Trustee shall consent to the making of payments directly to such
Storm Recovery Bondholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee except as a result of negligence or bad faith.

 

(e)           Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Storm Recovery Bondholder any plan of reorganization, arrangement,
adjustment or composition affecting the Storm Recovery Bonds or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the claim
of any Storm Recovery Bondholder in any such Proceeding except, as aforesaid,
to vote for the election of a trustee in bankruptcy or similar Person.

 

(f)            All rights of action and of asserting claims under
this Indenture, or under any Series of Storm Recovery Bonds, may be
enforced by the Trustee without the possession of any of those Storm Recovery
Bonds or the production thereof in any trial or other Proceedings relative
thereto, and any such action or Proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of those
Storm Recovery Bonds.

 

(g)           In any Proceedings brought by the Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to represent
all the Holders of the Storm Recovery Bonds, and it shall not be necessary to
make any Storm Recovery Bondholder a party to any such Proceedings.

 

34

 

SECTION 5.04.  
REMEDIES; PRIORITIES.  (a) If
an Event of Default other than the Event of Default described in Section 5.01(vii) occurs
and is continuing, the Trustee shall do one or more of the following at the
written direction of the holders of a majority of the Outstanding Amount of
Storm Recovery Bonds of such Series affected thereby or may do one or more
of the following in reliance upon Sections 6.01 and 6.02 of this Indenture
(subject, in either event, to Section 5.05):

 

(i)            institute Proceedings in its own name and
as trustee of an express trust for the collection of all amounts then payable
on the Storm Recovery Bonds or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained and collect
from the Issuer or the Servicer moneys adjudged due;

 

(ii)           institute Proceedings from time to time
for the complete or partial foreclosure of this Indenture with respect to the Series Trust
Estate securing such Series;

 

(iii)          exercise
any remedies of a secured party under the UCC or Section 1231 of the
Securitization Act or any other applicable law and take any other appropriate
action to protect and enforce the rights and remedies of the Trustee and the
Holders of the Storm Recovery Bonds of such Series;

 

(iv)          sell the Series Trust Estate
securing such Series or any portion thereof or rights or interest therein,
at one or more public or private sales called and conducted in any manner
permitted by law; and

 

(v)           exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Administrator, the Seller and
the Servicer under or in connection with, and pursuant to the terms of, the
Administration Agreement or any applicable Sale Agreement or Servicing
Agreement;

 

provided, however, that the Trustee may not sell or
otherwise liquidate any portion of the Series Trust Estate securing such Series following
an Event of Default, unless the Final Payment Date of the Storm Recovery Bonds
of such Series has occurred or the Storm Recovery Bonds have been declared
due and payable and (A) the Holders of 100% of the Outstanding Amount of
the Storm Recovery Bonds of all Series consent thereto, (B) the
proceeds of such sale or liquidation distributable to the Storm Recovery
Bondholders of such Series are sufficient to discharge in full all amounts
then due and unpaid upon such Storm Recovery Bonds for Principal, premium, if
any, and Interest on all Outstanding Storm Recovery Bonds or (C) the
Trustee determines that the Series Trust Estate securing such Series will
not continue to provide sufficient funds for all payments on the Storm Recovery
Bonds of such Series as they would have become due if the Storm Recovery
Bonds had not been declared due and payable, and the Trustee obtains the
written consent of Holders of 66-2/3% of the Outstanding Amount of the Storm
Recovery Bonds of such Series.  In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Trustee may, but need not, obtain and conclusively rely upon an
opinion of an Independent investment banking firm or Independent registered
public accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Series Trust Estate for
such purpose.

 

35

 

If an Event of Default
occurs and is continuing, the amounts on deposit in the Collection Account
shall continue to be distributed in accordance with Sections 8.02(d) and
(e).

 

(b)           If an Event of Default under Section 5.01(vii) occurs
and is continuing, the Trustee, for the benefit of the Storm Recovery
Bondholders, shall be entitled and empowered to the extent permitted by
applicable law to institute or participate in Proceedings reasonably necessary
to compel performance of or to enforce the pledge of the State of Louisiana in Section 1234
of the Securitization Act or the Commission Pledge in the Financing Order and
to collect any monetary damages incurred by the Storm Recovery Bondholders or
the Trustee as a result of any such Event of Default, and may prosecute any
such Proceeding to final judgment or decree. 
Such remedy shall be the only remedy that the Trustee may exercise if
the only Event of Default that has occurred and is continuing is an Event of
Default under Section 5.01(vii).

 

(c)           If the Trustee collects any money
pursuant to this Article V, it shall pay out such money in accordance with
the priorities set forth in Section 8.02(d) and (e).

 

SECTION 5.05.   OPTIONAL PRESERVATION OF THE TRUST
ESTATE.  If the Storm Recovery Bonds of a
Series have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have
not been rescinded and annulled, the Trustee may, but need not, elect, as
provided in Section 5.11(iii), to maintain possession of the Series Trust
Estate securing that Series in accordance with Section 5.04(a).  It is the desire of the parties hereto and
the Storm Recovery Bondholders that there be at all times sufficient funds for
the payment of Principal of and premium, if any, and Interest on the Storm
Recovery Bonds of any Series, and the Trustee shall take such desire into
account when determining whether or not to maintain possession of the Series Trust
Estate securing that Series or sell or liquidate the same.  In determining whether to maintain possession
of the Series Trust Estate or sell or liquidate the same, the Trustee may,
but need not, obtain and conclusively rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Series Trust
Estate for such purpose.

 

SECTION 5.06.   LIMITATION OF PROCEEDINGS.  No Holder of any Storm Recovery Bond of any Series shall
have any right to institute any Proceeding, judicial or otherwise, or to avail
itself of the remedies provided in 1231 of the Securitization Act, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:

 

(i)            such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the affected Series;

 

(ii)           the
Holders of not less than a majority of the Outstanding Amount of the Storm
Recovery Bonds of such Series have made written request to the Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Trustee hereunder;

 

36

 

(iii)          such
Holder or Holders have offered to the Trustee security or indemnity reasonably
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in complying with such request;

 

(iv)          the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute such Proceedings; and

 

(v)           no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority of the Outstanding
Amount of the Storm Recovery Bonds of such Series,

 

it being understood and intended that no one or more
Holders of Storm Recovery Bonds shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Storm Recovery Bonds or
to obtain or to seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture, except in the manner herein
provided.

 

In the event the Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Storm
Recovery Bonds, each representing less than a majority of the Outstanding
Amount of the Storm Recovery Bonds of all Series, the Trustee may determine
what action, if any, shall be taken, notwithstanding any other provisions of
this Indenture.

 

SECTION 5.07.   UNCONDITIONAL RIGHTS OF STORM RECOVERY
BONDHOLDERS TO RECEIVE PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.  Notwithstanding any other provisions in this
Indenture, the Holder of any Storm Recovery Bond shall have the right, which is
absolute and unconditional, and shall not be impaired without the consent of
each such Holder, (a) to receive payment of (i) the Interest, if any,
on such Storm Recovery Bond on or after the due dates thereof expressed in such
Storm Recovery Bond or in this Indenture, (ii) the unpaid Principal, if
any, of such Storm Recovery Bonds on or after the Final Maturity Date therefor
or (iii) in the case of redemption, the unpaid Principal, if any, of and
premium, if any, and Interest, if any, on such Storm Recovery Bond on or after
the Redemption Date therefor and (b) to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent
of such Holder.

 

SECTION 5.08.   RESTORATION OF RIGHTS AND REMEDIES.  If the Trustee or any Storm Recovery
Bondholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Storm
Recovery Bondholder, then and in every such case the Issuer, the Trustee and
the Storm Recovery Bondholders shall, subject to any determination in such
Proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the Storm
Recovery Bondholders shall continue as though no such Proceeding had been
instituted.

 

SECTION 5.09.   RIGHTS AND REMEDIES CUMULATIVE.  No right or remedy herein conferred upon or
reserved to the Trustee or to the Storm Recovery Bondholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the 

 

37

 

extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise.  The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

 

SECTION 5.10.   DELAY OR OMISSION NOT A WAIVER.  No delay or omission by the Trustee or any
Storm Recovery Bondholder to exercise any right or remedy accruing upon any
Default or Event of Default shall impair any such right or remedy or constitute
a waiver of any such Default or Event of Default or an acquiescence
therein.  Every right and remedy given by
this Article V or by law to the Trustee or to the Storm Recovery
Bondholders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Storm Recovery Bondholders, as the case may
be.

 

SECTION 5.11.   CONTROL BY STORM RECOVERY BONDHOLDERS.  The Majority Holders (or, if less than all Series or
Tranches are affected, the Holders of a majority of the Outstanding Amount of
the Storm Recovery Bonds of the affected Series or Tranche or Tranches)
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee with respect to the Storm Recovery
Bonds (or the Storm Recovery Bonds of such affected Series or Tranche or
Tranches) or exercising any trust or power conferred on the Trustee with
respect to the Storm Recovery Bonds (or the Storm Recovery Bonds of such
affected Series or Tranche or Tranches); provided that

 

(i)            such
direction shall not be in conflict with any rule of law or with this
Indenture;

 

(ii)           any
direction to the Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Storm Recovery Bonds representing not less than 100% of the
Outstanding Amount of the Storm Recovery Bonds of all Series;

 

(iii)          if
the conditions set forth in Section 5.05 have been satisfied and the
Trustee elects to retain the Series Trust Estate securing such Series pursuant
to such Section and elects not to sell or liquidate the same, then any
direction to the Trustee by Holders of Storm Recovery Bonds representing less
than 100% of the Outstanding Amount of the Storm Recovery Bonds of all affected
Series to sell or liquidate such Series Trust Estate shall be of no
force and effect; and

 

(iv)          the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction;

 

provided, however, that, subject to Section 6.01,
the Trustee need not take any action that it determines might involve it in
liability for which it reasonably believes it will not be indemnified to its
reasonable satisfaction against the costs, expenses and liabilities which might
be incurred by it in complying with this request.  The Trustee also need not take any action
that it determines might materially and adversely affect the rights of any
Storm Recovery Bondholders not consenting to such action.

 

SECTION 5.12.   WAIVER OF PAST DEFAULTS.  Prior to the declaration of the acceleration
of the maturity of the Storm Recovery Bonds of a Series affected as
provided in 

 

38

 

Section 5.02, the Holders of a majority of the
Outstanding Amount of Storm Recovery Bonds of such Series or Tranche
affected thereby, by written notice to the Trustee, may waive any past Default
or Event of Default and its consequences except a Default (i) in payment
of Principal of or premium, if any, or Interest on any of the Storm Recovery
Bonds or (ii) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Storm Recovery
Bond of such Series or Tranche affected. 
In the case of any such waiver, the Issuer, the Trustee and the Holders
of the Storm Recovery Bonds shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.

 

Upon any such waiver, such Default shall cease to
exist and be deemed to have been cured and not to have occurred, and any Event
of Default arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.

 

SECTION 5.13.  
UNDERTAKING FOR COSTS.  All
parties to this Indenture agree, and each Holder of any Storm Recovery Bond by
such Holder’s acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys’ fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any
suit instituted by the Trustee, (b) any suit instituted by any Storm
Recovery Bondholder, or group of Storm Recovery Bondholders, in each case
holding in the aggregate more than 10% of the Outstanding Amount of the Storm
Recovery Bonds of a Series or (c) any suit instituted by any Storm
Recovery Bondholder for the enforcement of the payment of (i) Interest on
any Storm Recovery Bond on or after the due dates expressed in such Storm
Recovery Bond and in this Indenture, (ii) the unpaid Principal, if any, of
any Storm Recovery Bond on or after the Series Final Maturity Date or
Tranche Final Maturity Date, if applicable, therefor or (iii) in the case
of redemption, the unpaid Principal of and premium, if any, and Interest on any
Storm Recovery Bond on or after the Redemption Date therefor.

 

SECTION 5.14.  
WAIVER OF STAY OR EXTENSION LAWS. 
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever, claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

SECTION 5.15.  
ACTION ON STORM RECOVERY BONDS. 
The Trustee’s right to seek and recover judgment on the Storm Recovery
Bonds or under this Indenture shall not be affected by the seeking, obtaining
or application of any other relief under or with respect to this 

 

39

 

Indenture.  Neither the Lien of this Indenture nor any
rights or remedies of the Trustee or the Storm Recovery Bondholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the Trust
Estate or upon any of the other assets of the Issuer.

 

ARTICLE VI

 

THE TRUSTEE

 

SECTION 6.01.   DUTIES AND LIABILITIES OF TRUSTEE.

 

(a)                                 If an Event of Default has occurred and
is continuing, the Trustee shall exercise 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 Person would exercise or use under the circumstances in the conduct of
such Person’s own affairs.

 

(b)                                Except during the continuance of an Event
of Default:

 

(i)            the Trustee is hereby authorized and
undertakes to execute, deliver and perform the Basic Documents to the extent
called for by such documents and otherwise 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.

 

(c)                                  The Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:

 

(i)            this subsection (c) does not
limit the effect of subsection  (b) of
this Section 6.01;

 

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

 

(iii)          the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance
with a direction received by it hereunder.

 

(d)                                Every provision of this Indenture that in
any way relates to the Trustee is subject to subsections (a), (b) and (c) of
this Section 6.01.

 

(e)                                 The Trustee shall not be liable for
interest on any money received by it except as provided in this Indenture.

 

40

 

(f)            Money held in trust by the Trustee
need not be segregated from other funds held by the Trustee except to the
extent required by law or the terms of this Indenture, the Administration
Agreement or the applicable Sale Agreement or Servicing Agreement.

 

(g)           No provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
liability, financial or otherwise, 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 to believe that repayments of such funds or indemnity
reasonably satisfactory to it against such risk or liability is not reasonably
assured to it.

 

(h)           Every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section 6.01 and
to the provisions of the TIA.

 

(i)            Under no circumstances shall the
Trustee be liable for any indebtedness of the Issuer, the Seller, the
Administrator or the Servicer evidenced by or arising under the Storm Recovery
Bonds or any Basic Document.

 

(j)            On or before March 15th
of each fiscal year ending December 31, with respect to which the Issuer
is obligated to file reports with the Commission pursuant to the Exchange Act,
the Trustee shall (i) deliver, at the expense of the Issuer, to the Issuer
a report (addressed to the Issuer and signed by an authorized officer of the
Trustee) regarding the Trustee’s assessment of compliance, during the
immediately preceding fiscal year ending December 31, with each of the
applicable servicing criteria specified on Exhibit A hereto as
required under Rules 13a-18 and 15d-18 of the Exchange Act and
Item 1122 of Regulation AB, together with such backup certification as to
compliance within the knowledge or under the control of the Trustee as the
Servicer may reasonably request and (ii) deliver to the Issuer a report of
an Independent registered public accounting firm that attests to and reports
on, in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act, the assessment of
compliance made by the Trustee and delivered pursuant to clause (i) of
this subsection 6.01(j).

 

SECTION 6.02.   RIGHTS OF TRUSTEE.

 

(a)           The Trustee may rely conclusively and
shall be fully protected in acting or refraining from acting in accordance with
any document believed by it to be genuine and to have been signed or presented
by the proper Person.  The Trustee need
not investigate any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains
from acting, it may require an Issuer Officer’s Certificate or an Issuer
Opinion of Counsel.  The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on an Issuer Officer’s Certificate or an Issuer Opinion of Counsel.

 

(c)           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 or a custodian or nominee, and the Trustee
shall not be responsible for any misconduct or negligence on the part of, or
for

 

41

 

the supervision of, any such agent, attorney,
custodian or nominee appointed with due care by it thereunder.

 

(d)           The Trustee shall not be liable for
any action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers; provided, however,
that the Trustee’s conduct does not constitute willful misconduct, negligence
or bad faith.

 

(e)           The Trustee may consult with counsel,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture and the Storm Recovery Bonds shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.

 

(f)            The Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by or pursuant
to this Indenture at the request, order or direction of any of the Holders
unless such Holders shall have offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that might be
incurred by it in compliance with such request, order or direction.

 

(g)           In the event that the Trustee is also
acting in the capacity of Paying Agent or Storm Recovery Bond Registrar
hereunder, the rights, protections, immunities and indemnities afforded to the
Trustee pursuant to this Article VI shall also be afforded to the Trustee
in its capacity as Paying Agent or Storm Recovery Bond Registrar.

 

SECTION 6.03.   INDIVIDUAL RIGHTS OF TRUSTEE.  The Trustee in its individual or any other
capacity may become the owner or pledgee of Storm Recovery Bonds and may
otherwise deal with the Issuer or its affiliates with the same rights it would
have if it were not Trustee.  Any Paying
Agent, Storm Recovery Bond Registrar, co-registrar or co-paying agent may do
the same with like rights.  However, the
Trustee must comply with Sections 6.11 and 6.12.

 

SECTION 6.04.   TRUSTEE’S DISCLAIMER.  The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of this Indenture or the
Storm Recovery Bonds.  The Trustee shall
not be accountable for the Issuer’s use of the proceeds from the Storm Recovery
Bonds, and the Trustee shall not be responsible for any statement of the Issuer
in the Indenture or in any document issued in connection with the sale of the
Storm Recovery Bonds or in the Storm Recovery Bonds other than the Trustee’s
certificate of authentication.  The
Trustee shall not be responsible for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate, or for or in respect
of the validity or sufficiency of the Storm Recovery Bonds (other than the
certificate of authentication for the Storm Recovery Bonds) or the Basic
Documents and the Trustee shall in no event assume or incur any liability, duty
or obligation to any Holder of a Storm Recovery Bond, other than as expressly
provided for in this Indenture.  The
Trustee shall not be liable for the default or misconduct of the Issuer, the
Seller, the Administrator, the Servicer or any Manager under any Basic Document
or otherwise and the Trustee shall have no obligation or liability to perform
the obligations of the Issuer.

 

42

 

SECTION 6.05.  
NOTICE OF DEFAULTS.  If a Default
occurs and is continuing with respect to any Tranche or Series and if it
is actually known to a Responsible Officer of the Trustee, the Trustee shall
mail to the LPSC, each Rating Agency and to each Holder of Storm Recovery Bonds
of all Tranches or Series affected thereby notice of the Default within 10
Business Days after it is actually known to a Responsible Officer of the
Trustee.  Except in the case of a Default
in payment of Principal of or premium, if any, or Interest on any Storm
Recovery Bond, the Trustee may withhold the notice if and so long as a Responsible
Officer of the Trustee in good faith determines that withholding the notice is
in the interests of Storm Recovery Bondholders.

 

SECTION 6.06.  
REPORTS BY TRUSTEE TO HOLDERS.

 

(a)           If applicable and so long as Storm
Recovery Bonds are Outstanding, within the prescribed period of time for tax reporting
purposes after the end of each calendar year, the Storm Recovery Bond Registrar
or, in its absence or failure the Paying Agent, shall deliver to each relevant
current or former Holder of Storm Recovery Bonds such information as may be
required to enable such Holder to prepare its federal and State income tax
returns.

 

(b)           With respect to each Series and
Tranche of Storm Recovery Bonds, on each Payment Date therefor, upon receipt by
the Trustee from the Servicer of the “Semiannual Servicer’s Certificate,”
the form of which is attached hereto as Schedule 1, the Storm Recovery Bond
Registrar or, in its absence or failure the Paying Agent, shall make such
Semiannual Servicer’s Certificate available to each Holder (and beneficial
owner) of Storm Recovery Bonds on its website www.usbank.com/abs and will
deliver such Semiannual Servicer’s Certificate to the LPSC and to each Rating
Agency, which will include (to the extent applicable) the following information
(and any other information so specified in the Series Supplement for such
Series) as to the Storm Recovery Bonds of such Series and Tranche with
respect to such Payment Date or the period since the previous Payment Date, as
applicable:

 

(i)            the amount to be paid to Holders of
the Storm Recovery Bonds of such Series and Tranche in respect of
Principal, such amount also to be expressed as a dollar amount per thousand;

 

(ii)           the amount to be paid to Holders of
the Storm Recovery Bonds of such Series and Tranche in respect of
Interest, such amount also to be expressed as a dollar amount per thousand;

 

(iii)          the Storm Recovery Bond Balance, after
giving effect to the payments to be made on such Payment Date, and the
Projected Storm Recovery Bond Balance, in each case for such Series and
Tranche and as of such Payment Date;

 

(iv)          the amount on deposit in the Capital
Subaccount for such Series as of such Payment Date;

 

(v)           the amount, if any, on deposit in the
Excess Funds Subaccount for such Series as of such Payment Date;

 

43

 

(vi)          the amount to be paid to the Trustee
relating to that Series on such Payment Date;

 

(vii)         the amount to be paid to the Servicer
relating to that Series on such Payment Date; and

 

(viii)        any other transfers and payments
relating to that Series made pursuant to this Indenture.

 

(c)           If any Storm Recovery Bonds are
listed on the Luxembourg Stock Exchange and rules of such exchange so
require, the Issuer’s listing agent shall arrange for publication in accordance
with such rules a notice that such certificate shall be available with the
Issuer’s listing agent in Luxembourg appointed pursuant to the second paragraph
of Section 3.02.

 

(d)           The Storm Recovery Bond Registrar’s
or Paying Agent’s responsibility for distributing the information described in
subsection (b) above to Holders of a Series of Storm Recovery Bonds
is limited to the availability, timeliness and accuracy of the information
provided by the Servicer pursuant to Sections 3 and 4 and Annex 1 of the
applicable Servicing Agreement.

 

SECTION 6.07.   COMPENSATION AND INDEMNITY.  Subject in all respects to
the provisions of Article VIII hereof, the Issuer shall pay to the Trustee
from time to time reasonable compensation for its services as set forth in the
fee schedule between the Trustee and Cleco Power dated October 18, 2007.  To the extent permitted by law, the Trustee’s
compensation shall not be limited by any law on compensation of a trustee of an
express trust.  The Issuer shall
reimburse the Trustee for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by it, including costs of collection, in addition
to the compensation for its services. 
Such expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee’s agents, counsel, accountants and experts.  The Issuer shall indemnify and hold harmless
the Trustee and its officers, directors, employees and agents from and against
any and all Losses or other amounts whatsoever (including reasonable counsel
fees and expenses) directly or indirectly incurred by the Trustee in connection
with the administration of this trust, the enforcement of this trust and all of
the Trustee’s rights, powers and duties under this Indenture (including this Section 6.07)
and the performance by the Trustee of the duties and obligations of the Trustee
under or pursuant to this Indenture, the Administration Agreement and any Sale
Agreement or Servicing Agreement; provided, however, that
notwithstanding the foregoing, the failure to pay to the Trustee by the Issuer
(including without limitation from Collections deposited into the Collection
Account or through the Storm Recovery Charge Adjustment Process) any amounts in
respect of indemnification hereunder in excess of an aggregate amount equal to
any Indemnity Amounts payable to the Trustee in accordance with Section 8.02(d) of
this Indenture shall not constitute a Default or Event of Default under Section 5.01
of this Indenture.  The Trustee shall
notify the Issuer promptly of any claim for which it may seek indemnity.  Failure by the Trustee so to notify the
Issuer shall not relieve the Issuer of its obligations hereunder.  The Issuer shall defend the claim and the
Trustee may have separate counsel and the Issuer shall pay the reasonable fees
and expenses of such counsel.  Notwithstanding
the foregoing, the

 

44

 

Issuer need not reimburse any expense or indemnify
against any Loss incurred by the Trustee (i) through the Trustee’s own
willful misconduct, negligence or bad faith or (ii) to the extent the
Trustee was reimbursed for or indemnified against any such Loss by the Seller
or the Servicer pursuant to the Administration Agreement or any Sale Agreement
or Servicing Agreement.  The obligations of
the Issuer under this Section shall survive the termination of this
Agreement and the earlier resignation or removal of the Trustee.

 

When the Trustee incurs expenses after the occurrence
of a Default specified in Section 5.01(v) or (vi) with respect
to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or State bankruptcy, insolvency or similar law.

 

SECTION 6.08.   REPLACEMENT OF TRUSTEE.  The Trustee may resign at any time upon 30
days’ written notice to the Issuer.  The
Issuer shall remove the Trustee by written notice if:

 

(i)            the Trustee fails to comply with Section 6.11;

 

(ii)           the Trustee is adjudged a bankrupt or
insolvent;

 

(iii)          a receiver or other public officer
takes charge of the Trustee or its property;

 

(iv)          the Trustee otherwise becomes
incapable of acting; or

 

(v)           the Trustee fails to provide to the
Issuer any information reasonably requested by the Issuer pertaining to the
Trustee and necessary for the Issuer or Cleco Power or its parent entity to
comply with its reporting obligations under the Exchange Act and Regulation AB
and such failure is not resolved to the Issuer’s and the Trustee’s mutual
satisfaction within a reasonable period of time.

 

If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the “Retiring Trustee”), the Issuer shall promptly
appoint a successor Trustee.

 

In addition, the Majority Holders may remove the
Trustee by so notifying the Issuer and the Trustee in writing and such Holders
may appoint a successor Trustee.

 

A successor Trustee shall deliver a written acceptance
of its appointment to the Retiring Trustee and to the Issuer.  Thereupon the resignation or removal of the
Retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture.  No resignation or removal of the Trustee will
become effective until the acceptance of the appointment by a successor
Trustee.  The successor Trustee shall
mail a notice of its succession to the Storm Recovery Bondholders.  The Retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee.

 

If a successor Trustee does not take office within 60
days after the Retiring Trustee resigns or is removed, the Retiring Trustee at
the expense of the Issuer, the Issuer or the Majority

 

45

 

Holders may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee fails to comply with Section 6.11,
any Storm Recovery Bondholder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.

 

Notwithstanding the replacement of the Trustee
pursuant to this Section 6.08, the Issuer’s obligations under Section 6.07
shall continue for the benefit of the Retiring Trustee.

 

SECTION 6.09.   SUCCESSOR TRUSTEE BY MERGER.  If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation or banking association, the resulting,
surviving or transferee corporation or banking association shall, without any
further act, be the successor Trustee. 
Notice of any such event shall be promptly given to the LPSC and to each
Rating Agency by the successor Trustee and any agent in Luxembourg appointed
pursuant to the second paragraph of Section 3.02.

 

In case at the time such successor or successors by
merger, conversion, consolidation or transfer shall succeed to the trusts
created by this Indenture any of the Storm Recovery Bonds shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any Retiring Trustee, and deliver such
Storm Recovery Bonds so authenticated; and in case at that time any of the
Storm Recovery Bonds shall not have been authenticated, any successor to the
Trustee may authenticate such Storm Recovery Bonds either in the name of any
Retiring Trustee hereunder or in the name of the successor to the Trustee; and
in all such cases such certificates shall have the full force and effect granted
by the Storm Recovery Bonds or by this Indenture and this force and effect
shall be equal to any certificate issued by the Trustee.

 

SECTION 6.10.  
APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.

 

(a)           Notwithstanding any other provisions
of this Indenture, at any time, for the purpose of meeting any legal
requirement of any jurisdiction in which any part of the Trust Estate may at
the time be located, the Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee
or co-trustees, or separate trustee or separate trustees, of all or any part of
the Trust Estate, and to vest in such Person or Persons, in such capacity and
for the benefit of the Storm Recovery Bondholders, such title to the Trust
Estate, or any part hereof, and, subject to the other provisions of this Section 6.10,
such powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable.  No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 6.11 and no notice to Storm Recovery
Bondholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof. 
Notice of any such appointment shall be promptly given to each Rating
Agency and the LPSC by the Trustee.

 

(b)           Every separate trustee and co-trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:

 

46

 

(i)            all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;

 

(ii)           no trustee hereunder shall be
personally liable by reason of any act or omission of any other trustee
hereunder; and

 

(iii)          the Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.

 

(c)           Any notice, request or other writing
given to the Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.  Every instrument appointing any separate
trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI.  Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to the Trustee.  Every such
instrument shall be filed with the Trustee.

 

(d)           Any separate trustee or co-trustee
may at any time constitute the Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name.  If any separate trustee or co-trustee shall
die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

 

SECTION 6.11.  ELIGIBILITY; DISQUALIFICATION.  The Trustee and any co-trustee shall at all
times satisfy the requirements of TIA Section 310(a)(1) and (a)(5) and
Section 26(a)(1) of the Investment Company Act of 1940, as
amended.  In addition, the Trustee and
any co-trustee shall have a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition and it
shall have a long term debt rating of “Baa3” or better by Moody’s, “BBB-” or
better by S&P and, if Fitch provides a rating thereon, “BBB-” or better by
Fitch.  The Trustee and any co-trustee
shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence
of TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

 

47

 

SECTION 6.12. 
PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER.  The Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b).  A Trustee who has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated.

 

SECTION 6.13. 
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.  The Trustee hereby represents and warrants
that:

 

(a)           the Trustee is a national banking
association validly existing in good standing under the laws of the United
States of America; and

 

(b)           the Trustee has full power, authority
and legal right to execute, deliver and perform this Indenture and all the
Basic Documents to which the Trustee is a party and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Indenture and such Basic Documents.

 

SECTION 6.14. 
RIGHTS OF THE AUTHENTICATING AGENT, STORM RECOVERY BOND REGISTRAR AND
PAYING AGENT.

 

(a)           Each of the authenticating agent,
Storm Recovery Bond Registrar and Paying Agent undertakes to perform such
duties and only such duties as are specifically set forth in this
Indenture.  The authenticating agent,
Storm Recovery Bond Registrar and Paying Agent shall not have any duties or
responsibilities except those expressly set forth in this Indenture or be a
trustee for or have any fiduciary obligation to any party hereto.

 

(b)           In the absence of bad faith on the
part of the authenticating agent, Storm Recovery Bond Registrar or Paying
Agent, respectively, such party may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to such party that conform to the
requirements of this Indenture.

 

(c)           None of the authenticating agent,
Storm Recovery Bond Registrar and Paying Agent shall be liable for any error of
judgment made in good faith by an officer or officers of that party, unless it
shall be conclusively determined by a court of competent jurisdiction that such
party was negligent.

 

(d)           None of the authenticating agent,
Storm Recovery Bond Registrar or Paying Agent shall be liable with respect to
any action taken or omitted to be taken by that party in good faith in
accordance with any direction of the Issuer or the Trustee given under this
Indenture.

 

(e)           None of the provisions of this
Indenture shall require any of the authenticating agent, Storm Recovery Bond
Registrar or Paying Agent to expend or risk its own funds or otherwise to incur
any liability, financial or otherwise, 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 indemnity
satisfactory to it against such risk or liability is not assured to it.

 

48

 

(f)            Each of the authenticating agent,
Storm Recovery Bond Registrar and Paying Agent may conclusively rely and shall
be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties.

 

(g)           Each of the authenticating agent,
Storm Recovery Bond Registrar and Paying Agent may consult with counsel and the
advice or any opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by that party hereunder in
good faith and in accordance with such advice or opinion of counsel.

 

(h)           None of the authenticating agent,
Storm Recovery Bond Registrar or Paying Agent shall be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, entitlement
order, approval or other paper or document.

 

(i)            None of the authenticating agent,
Storm Recovery Bond Registrar or Paying Agent shall have any obligation to
invest and reinvest any cash held in the accounts in the absence of timely and
specific written investment direction from the Issuer.  In no event shall any of the authenticating
agent, Storm Recovery Bond Registrar or Paying Agent be liable for the selection
of investments or for investment losses incurred thereon.  None of the authenticating agent, Storm
Recovery Bond Registrar or Paying Agent shall have any liability in respect of
losses incurred as a result of the liquidation of any investment prior to its
stated maturity or the failure of the Issuer to provide timely written
investment direction.

 

(j)            Each of the authenticating agent,
Storm Recovery Bond Registrar and Paying Agent may at any time resign by giving
30 days’ written notice of resignation to the Issuer and the Trustee.  Upon receiving such notice of resignation,
the Issuer shall promptly appoint a successor and, upon the acceptance by the
successor of such appointment, release the resigning party from its obligations
hereunder by written instrument, a copy of which instrument shall be delivered
to the Issuer, the Trustee, the resigning party and the successor.  If no successor shall have been so appointed
and have accepted appointment within 45 days after the giving of such notice of
resignation, the resigning party may petition any court of competent
jurisdiction for the appointment of a successor.

 

(k)           Any corporation into which any of the
authenticating agent, Storm Recovery Bond Registrar or Paying Agent 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
authenticating agent, Storm Recovery Bond Registrar or Paying Agent,
respectively, shall be a party, or any corporation succeeding to the business
of the authenticating agent, Storm Recovery Bond Registrar or Paying Agent,
respectively, shall be the successor of the authenticating agent, Storm
Recovery Bond Registrar or Paying Agent, respectively, hereunder without the
execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto except where an instrument of transfer or
assignment is required by law to effect such succession, anything herein to the
contrary notwithstanding.

 

49

 

(l)            The Issuer shall indemnify and hold
harmless each of the authenticating agent, Storm Recovery Bond Registrar and
Paying Agent and its respective officers, directors, employees and agents from
and against any and all Losses or other amounts whatsoever (including
reasonable counsel fees and expenses) directly or indirectly incurred by such
party in connection with the performance by such party of its duties and
obligations under or pursuant to this Indenture.  Each such party shall notify the Issuer
promptly of any claim for which it may seek indemnity.  Failure by such party so to notify the Issuer
shall not relieve the Issuer of its obligations hereunder.  The Issuer shall defend the claim and such
party may have separate counsel and the Issuer shall pay the reasonable fees
and expenses of such counsel. 
Notwithstanding the foregoing, the Issuer need not reimburse any expense
or indemnify against any Loss incurred by such party (i) through such
party’s own willful misconduct, negligence or bad faith or (ii) to the
extent such party was reimbursed for or indemnified against any such Loss by
the Seller or the Servicer pursuant to the Administration Agreement or any Sale
Agreement or Servicing Agreement.  The
obligations of the Issuer under this Section 6.14(l) shall survive
the termination of this Agreement and the earlier resignation or removal of
such party.

 

SECTION 6.15.  COMPLIANCE WITH APPLICABLE ANTI-TERRORISM AND
MONEY LAUNDERING REGULATIONS.  In order
to comply with the laws, rules, regulations and executive orders in effect from
time to time applicable to banking institutions, including those relating to
the funding of terrorist activities and money laundering (“Applicable Law”),
the Trustee is required to obtain, verify and record certain information
relating to individuals and entities which maintain a business relationship
with the Trustee.  Accordingly, the
Issuer agrees to provide to the Trustee, upon its reasonable request from time
to time such identifying information and documentation as may be available to
it in order to enable the Trustee to comply with Applicable Law.

 

ARTICLE VII

 

STORM RECOVERY
BONDHOLDERS’ LISTS AND REPORTS

 

SECTION 7.01.   ISSUER TO FURNISH TRUSTEE NAMES AND
ADDRESSES OF STORM RECOVERY BONDHOLDERS. 
The Issuer shall furnish or cause to be furnished to the Trustee (a) not
more than five days after the earlier of (i) each Record Date with respect
to each Series and (ii) six months after the last Record Date with
respect to each Series, a list, in such form as the Trustee may reasonably
require, of the names and in the event the Trustee is acting as the Storm
Recovery Bond Registrar the addresses of the Holders of Storm Recovery Bonds of
such Series as of such Record Date, and (b) at such other times as
the Trustee may request in writing, within 30 days after receipt by the Issuer
of any such request, a list of similar form and content as of a date not more
than 10 days prior to the time such list is furnished; provided, however,
that so long as the Trustee is the Storm Recovery Bond Registrar, no such list
shall be required to be furnished.  In
addition, the Issuer shall furnish such list to any listing, transfer or paying
agent appointed under the second paragraph of Section 3.02 to the extent
such information is required by the rules and regulations of the
Luxembourg Stock Exchange.

 

50

 

SECTION 7.02.   PRESERVATION OF INFORMATION; COMMUNICATIONS
TO STORM RECOVERY BONDHOLDERS.

 

(a)           The Trustee shall preserve, in as
current a form as is reasonably practicable, the names and addresses of the
Holders of Storm Recovery Bonds contained in the most recent list furnished to
the Trustee as provided in Section 7.01 and the names and addresses of Holders
of Storm Recovery Bonds received by the Trustee in its capacity as Storm
Recovery Bond Registrar.  The Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon
receipt of a new list so furnished.

 

(b)           Storm Recovery Bondholders may
communicate with other Storm Recovery Bondholders pursuant to Section 312(b) of
the TIA, with respect to their rights under this Indenture or under the Storm
Recovery Bonds.  In addition, upon the
written request of any Holder or group of Holders of Storm Recovery Bonds, each
of whom has held its Storm Recovery Bonds for at least six months, the Trustee
shall afford the Holder or Holders making such request a copy of a current list
of Holders of the Storm Recovery Bonds, for purposes of communicating with
other Holders with respect to their rights hereunder.  The Trustee may elect not to afford the
requesting Holders access to the list of Holders of the Storm Recovery Bonds if
it agrees to mail the desired communication or proxy, on behalf and at the
expense of the requesting Holders, to all Holders of the Storm Recovery Bonds.

 

(c)           The Issuer, the Trustee and the Storm
Recovery Bond Registrar shall have the protection of Section 312(c) of
the TIA.

 

SECTION 7.03.   REPORTS BY ISSUER.

 

(a)   The Issuer
shall:

 

(i)            so long as the Issuer is required to
file such documents with the Commission, provide to the Trustee and, so long as
any Storm Recovery Bonds are listed on the Luxembourg Stock Exchange and its rules so
require, with the listing agent of the Issuer in Luxembourg appointed pursuant
to the second paragraph of Section 3.02, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act;

 

(ii)           provide to the Trustee, file with the
Commission and, so long as any Storm Recovery Bonds are listed on the
Luxembourg Stock Exchange and its rules so require, provide to the listing
agent of the Issuer in Luxembourg appointed pursuant to the second paragraph of
Section 3.02, in accordance with rules and regulations prescribed
from time to time by the Commission or the Luxembourg Stock Exchange,
respectively, such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this Indenture
as may be required from time to time by such rules and regulations;

 

51

 

(iii)          supply to the Trustee (and the Trustee
shall transmit by mail to all Storm Recovery Bondholders described in TIA Section 313(c))
and, so long as any Storm Recovery Bonds are listed on the Luxembourg Stock
Exchange and its rules so require, to the listing agent of the Issuer in
Luxembourg appointed pursuant to the second paragraph of Section 3.02,
such summaries of any information, documents and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as
may be required by rules and regulations prescribed from time to time by
the Commission; and

 

(iv)          file a Form 15 (or applicable
successor form) suspending its obligations to file reports with the Commission
pursuant to the Exchange Act as soon as legally permissible.

 

(b)   Unless the
Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31
of each year.

 

SECTION 7.04.   REPORTS BY TRUSTEE.  If required by TIA Section 313(a),
within 60 days after the end of each fiscal year of the Issuer, commencing with
the year after the issuance of the Storm Recovery Bonds of any Series, the
Trustee shall mail to each Holder of Storm Recovery Bonds of such Series as
required by TIA Section 313(c) a brief report dated as of such date
that complies with TIA Section 313(a). 
The Trustee also shall comply with TIA Section 313(b); provided,
however, that the initial report so issued shall be delivered not more
than 12 months after the initial issuance of each Series.

 

A copy of each report at the time of its mailing to
Storm Recovery Bondholders shall be filed by the Trustee with the Commission
and each stock exchange, if any, on which the Storm Recovery Bonds are listed
(to the extent required by the rules of such exchange).  The Issuer shall notify the Trustee if and
when the Storm Recovery Bonds are listed on any stock exchange.

 

SECTION 7.05.   PROVISION OF SERVICER REPORTS.  Upon the written request of any Storm
Recovery Bondholder, the LPSC or any Rating Agency to the Trustee addressed to
the Corporate Trust Office, the Storm Recovery Bond Registrar, or in its
absence or failure the Paying Agent, shall provide such requesting party, the
Trustee and the Paying Agent or Storm Recovery Bond Registrar, as applicable,
with a copy of any Semiannual Servicer’s Certificate, Annual Accountant’s
Report and any other report of the Servicer referred to in the applicable Servicing
Agreement.  If any Storm Recovery Bonds
are listed on the Luxembourg Stock Exchange and its rules so require, the
Storm Recovery Bond Registrar, or in its absence or failure the Paying Agent,
at the written direction of the Issuer shall also arrange for publication in
accordance with such rules of a notice that a copy of such Semiannual
Servicer’s Certificate, Annual Accountant’s Report or other report shall be
available with the Issuer’s listing agent in Luxembourg appointed pursuant to
the second paragraph of Section 3.02.

 

52

 

 

ARTICLE
VIII

 

ACCOUNTS,
DISBURSEMENTS AND RELEASES

 

SECTION 8.01.   COLLECTION OF MONEY.  Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by
the Trustee pursuant to this Indenture. 
The Trustee shall apply all such money received by it as provided in
this Indenture.  Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, the Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of
appropriate Proceedings.  Any such action
shall be without prejudice to any right to claim a Default or Event of Default
under this Indenture and any right to proceed thereafter as provided in Article V.

 

SECTION 8.02.   COLLECTION ACCOUNT.

 

(a)           (i) 
On or prior to the Series Issuance Date for each Series issued
hereunder, the Issuer shall open, at the Paying Agent’s Corporate Trust Office,
or at another Eligible Institution, one or more segregated non-interest-bearing
trust accounts in the Trustee’s name for the deposit of Collections for that Series of
Storm Recovery Bonds and all other amounts received with respect to the Series Trust
Estate securing that Series (each a “Collection Account” and collectively,
the “Collection Accounts”).  The
Collection Account for each Series shall initially be divided into
subaccounts, which need not be separate accounts: a general subaccount (the “General
Subaccount”), a capital subaccount (the “Capital Subaccount”), an
excess funds subaccount (the “Excess Funds Subaccount”) and one or more
class subaccounts for any Tranche of any Series of Storm Recovery Bonds as
specified in any Series Supplement (each, a “Tranche Subaccount”).  On or prior to the Series Issuance Date
for any Series of Storm Recovery Bonds, the Member shall deposit into the
Capital Subaccount for that Series an amount equal to the Required Capital
Amount for that Series.  Unless otherwise
provided herein, all amounts in the Collection Account for any Series not
allocated to any other subaccount shall be allocated to the General Subaccount
for that Series.  Unless otherwise
provided herein, prior to the initial Payment Date for a Series, all amounts in
the Collection Account for that Series (other than funds deposited into
the Capital Subaccount) shall be allocated to the General Subaccount for that
Series.  Prior to depositing funds or
U.S. Government Obligations in the Collection Account pursuant to Section 4.01
or 4.02, the Issuer shall establish defeasance subaccounts (each a “Defeasance
Subaccount”) for each Series for which funds shall be deposited, as
subaccounts of the Collection Account. 
All references to the Collection Account shall be deemed to include
reference to all subaccounts contained therein. 
Withdrawals from and deposits to each of the foregoing subaccounts of
any Collection Account shall be made as set forth in Section 4.03 and Section 8.02(d) and
(e).  Each Collection Account shall at
all times be maintained as an Eligible Securities Account and only the Trustee
shall 

 

53

 

have access to that Collection Account for the purpose of making
deposits in and withdrawals from that Collection Account in accordance with
this Indenture.  Funds in a Collection
Account shall not be commingled with any other moneys, including moneys in any
other Collection Account.  All moneys
deposited from time to time in a Collection Account, all deposits therein
pursuant to this Indenture, and all investments made in Eligible Investments
with such moneys, including all income or other gain from such investments,
shall be held by the Trustee in that Collection Account as part of the Series Trust
Estate securing that Series as herein provided.

 

(ii)           The Trustee also agrees that (A) each
of the Collection Accounts is, or on the date of its creation will be, and
shall at all times be maintained by the Trustee as, a “securities account”
(within the meaning of Section 8-501 of the New York UCC), (B) the “securities
intermediary’s jurisdiction” (within the meaning of Article 8 of the New
York UCC) of the Trustee is the State of New York, (C) all cash and other
property in each of the Accounts shall be treated by the Trustee as a “financial
asset” (as defined in Section 8-102(a)(9) of the New York UCC), (E) the
“entitlement holder” (as such term is defined in Section 8-102(a)(7) of
the New York UCC or, with respect to Book-Entry Securities, in the applicable
Federal Book-Entry Regulations) shall be the Trustee for the benefit of the
Storm Recovery Bondholders, (E) any financial asset in registered form or
payable to, or to the order of, a Person, and credited to any of the Accounts
shall be registered in the name of, payable to the order of, or specially
indorsed to, the Trustee or in blank, or credited to another securities account
maintained in the name of the Trustee, and in no case will any financial assets
credited to any of the Accounts be registered in the name of, payable to or to
the order of, or specially indorsed to the Issuer or the Trustee, except to the
extent the foregoing have been specially indorsed by the Issuer or the Trustee,
as applicable, to the Trustee or in blank, (F) the Trustee shall not
change the entitlement holder, and (G) the Trustee shall at all times act
as a “securities intermediary” (within the meaning of Section 8-102(a)(14)
of the New York UCC or, with respect to Book-Entry Securities, in the
applicable Federal Book-Entry Regulations) and shall credit to each of the
Accounts each financial asset to be held in or credited to each of the Accounts
pursuant to this Indenture.

 

(iii)          Each of the Accounts shall remain at
all times with a securities intermediary (within the meaning of Section 8-102(a)(14)
of the New York UCC or, with respect to Book-Entry Securities, in the
applicable Federal Book-Entry Regulations) having a combined capital and
surplus of at least $50,000,000 and having a long-term debt rating of at least “A2”
by Moody’s and at least “AA-” by S&P.

 

(iv)          The Trustee shall have sole dominion
and exclusive control over all property in each Collection Account. The Trustee
at the written direction of the Servicer shall also pay from the Collection
Account any amounts requested to be paid by or to the Servicer pursuant to of
the applicable Servicing Agreement.

 

54

 

(v)           Collections shall be deposited in the
applicable General Subaccount as provided in the applicable Servicing
Agreement. All deposits to and withdrawals from a Collection Account, all
allocations to the subaccounts of such Collection Account and any amounts to be
paid to the applicable Servicer under Section 8.02(d) shall be made
by the Trustee in accordance with the written instructions provided by such
Servicer in the Semiannual Servicer’s Certificate or upon other written notice
provided by such Servicer pursuant to such Servicing Agreement, as applicable.

 

(vi)          There are no other agreements entered
into between the Trustee and the Issuer with respect to the Accounts, other than
this Indenture.  In the event of any
conflict between this Section 8.02 (or any portion thereof), any other
provision of this Indenture or any other agreement now existing or hereafter
entered into, the terms of this Section 8.02 shall prevail.

 

(b)           So long as no Default or Event of
Default has occurred and is continuing, the Trustee upon written direction of
the Servicer will invest and reinvest all or a portion of the funds in the
Collection Account for each Series in Eligible Investments; provided,
however, that (i) such Eligible Investments shall not mature later
than the next Payment Date for such Series (except as otherwise provided
in any Series Supplement), (ii) such Eligible Investments shall not
be sold, liquidated or otherwise disposed of at a loss prior to the maturity
thereof, and (iii) no funds in the Defeasance Subaccount for any Series of
Storm Recovery Bonds shall be invested in Eligible Investments or otherwise,
except that U.S. Government Obligations deposited by the Issuer with the Trustee
pursuant to Sections 4.01 or 4.02 shall remain as such.  All income or other gain from investments of
moneys deposited in the Collection Account for that Series shall be
deposited by the Trustee in the Collection Account for that Series, and any
loss resulting from such investments shall be charged to that Collection
Account.  The Servicer shall not direct
the Trustee to make any investment of any funds or to sell any investment held
in the Collection Account for a Series unless the security interest granted
and perfected in such account will continue to be perfected in such investment
or the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Trustee to make any such
investment or sale, if requested by the Trustee, the Issuer shall deliver to
the Trustee an Issuer Opinion of Counsel, acceptable to the Trustee, to such
effect.  Subject to Section 6.01(c),
the Trustee shall not in any way be held liable for the selection of Eligible
Investments or for investment Losses incurred thereon except for Losses
attributable to the Trustee’s failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms. The Trustee shall
have no liability in respect of Losses incurred as a result of the liquidation
of any Eligible Investment prior to its stated maturity or the failure of the
Issuer to provide timely and specific written investment direction.  The Trustee shall have no obligation to
invest or reinvest any amounts held hereunder in the absence of written
investment direction of the Servicer.

 

(c)           Any Collections remitted by the
Servicer to the Trustee with respect to a Series of Storm Recovery Bonds,
any amounts received by the Issuer relating to the indemnification obligations
payable by the Seller pursuant to the Sale Agreement or the Servicer pursuant
to the Servicing Agreement with respect to that Series remitted to the
Trustee, any other amount otherwise received by the Trustee or the Issuer
related to that Series, and any other proceeds of 

 

55

 

Series Trust Estate securing that Series received
by the Servicer, the Issuer or the Trustee shall be deposited in the General
Subaccount for that Series, except that the Trustee shall deposit in the
Capital Subaccount for that Series the Required Capital Amount.  All investment earnings on amounts in the
General Subaccount, the Capital Subaccount (other than released investment
earnings on amounts in the Capital Subaccount pursuant to clause (d)(x) below)
and the Excess Funds Subaccount of a Series will be deposited into the
General Subaccount, the Capital Subaccount and the Excess Funds Subaccount of
that Series, respectively; provided, however, that if on any
Payment Date after making allocations pursuant to clauses (d)(i)-(xi) below,
any excess investment earnings on amounts in the Capital Subaccount for that Series above
the per annum limit set forth in the Series Supplement related to that Series remain
in such Capital Subaccount, then such excess amount shall be allocated to the
Excess Funds Subaccount on such Payment Date.

 

(d)           On each Payment Date for a particular
Series or other date specified in the Series Supplement with respect
to that Series, the Paying Agent pursuant to the written direction provided in
the Semiannual Servicer’s Certificate shall allocate or apply all amounts on
deposit in the General Subaccount of the Collection Account for that Series in
the following priority unless otherwise set forth in any Series Supplement
herein (provided, that no Series Supplement may modify the Pro Rata
payment of amounts described herein as being paid Pro Rata):

 

(i)            fees and expenses (including
reasonable legal fees and expenses) and Indemnity Amounts owed to the Trustee
for such Payment Date shall be paid to the Trustee and, to the extent those
amounts are not separately identified by the Trustee as being payable with
respect to a Series, allocated among all Series of Storm Recovery Bonds
Outstanding on a Pro Rata basis; provided that the amount with respect
to that Series paid to the Trustee for expenses (including reasonable
legal fees and expenses) and Indemnity Amounts during any calendar year
pursuant to this clause (i) may not exceed the amount fixed therefor in
the applicable Series Supplement;

 

(ii)           a pro rata portion of the Servicing
Fee for the current year, which will be a fixed percentage of the initial
principal amount of that Series of Storm Recovery Bonds specified in the
related Servicing Agreement, and all unpaid Servicing Fees from prior Payment
Dates shall be paid to the Servicer;

 

(iii)          a pro rata portion of the
administration fee payable under the Administration Agreement for the current
year shall be paid to the Administrator and a pro rata portion of the fees of
the Issuer’s independent manager for the current year in connection with his or
her acting as a manager under the Issuer LLC Agreement shall be paid to such
independent manager;

 

(iv)          all ordinary periodic Operating
Expenses (such as accounting and audit fees, rating agency fees, legal fees and
Servicer expenses under Sections 3.10 and 5.05 or equivalent provisions of the
applicable Servicing Agreement) other than those referred to in clauses (i), (ii) and
(iii) above shall be paid to the Persons entitled thereto;

 

(v)           an amount equal to the Interest
payable on such Series of Storm Recovery Bonds on such Payment Date;

 

56

 

(vi)          an amount equal to any Principal of
that Series or Tranche of Storm Recovery Bonds payable as a result of
acceleration pursuant to Section 5.02 shall be allocated to that Series or
Tranche and, if there are insufficient funds to make that allocation in full,
on a Pro Rata basis, and an amount equal to any Principal of that Series or
Tranche payable on a Series Final Maturity Date or Tranche Final Maturity
Date for that Series or Tranche and any Principal of and premium, if any,
on that Series or Tranche of Storm Recovery Bonds payable on a Redemption
Date shall be allocated to that Series or Tranche and, if there are
insufficient funds to make that allocation in full, on a Pro Rata basis;

 

(vii)         an amount equal to Principal scheduled
to be paid on a Tranche of that Series of Storm Recovery Bonds on such
Payment Date according to the Expected Amortization Schedule shall be allocated
to the corresponding Tranche and if there are insufficient funds to make that
allocation in full, on a Pro Rata basis;

 

(viii)        all remaining unpaid Operating Expenses
and any other amounts due and owing pursuant to the Basic Documents (including
any remaining amounts owed to the Trustee) shall be paid to the Persons
entitled thereto without duplication of any other payment from any other
source;

 

(ix)           any amount necessary to replenish
amounts drawn from the Capital Subaccount for that Series (other than
released investment earnings on amounts in the Capital Subaccount pursuant to
clause (d)(x) below), plus any amount equal to the deficiency in the
amount of investment earnings on amounts in the Capital Subaccount for that Series allowed
under the Financing Order that have not previously been released to the Issuer
pursuant to clause (d)(x) below, shall be allocated to the Capital
Subaccount;

 

(x)            if the balance in the Capital
Subaccount for that Series is greater than the Required Capital Amount for
that Series after making allocations pursuant to clauses (d)(i)-(ix) above,
an amount equal to investment earnings on amounts in the Capital Subaccount for
that Series, subject to any limits set forth in a Series Supplement, shall
be released to the Issuer; and

 

(xi)           the balance, if any, shall be
allocated to the Excess Funds Subaccount for that Series.

 

Following repayment of
all Storm Recovery Bonds of a Series, the balance, if any, shall be released to
the Issuer free from the Lien of the Indenture.

 

“Pro Rata” means with respect to any Series or
Tranche of Storm Recovery Bonds a ratio:

 

(1) in the case of clause (d)(v) above, the
numerator of which is the aggregate amount of Interest payable with respect to
such Series or Tranche on such Payment Date and the denominator of which
is the sum of the aggregate amounts of Interest payable with respect to all
Outstanding Series or Tranches on such Payment Date; and

 

57

 

(2) in the case of all other clauses in (d) above,
the numerator of which is the aggregate amount of Principal to be paid or
payable pursuant to each such clause with respect to such Series or
Tranche on such Payment Date and the denominator of which is the sum of the
aggregate amounts of Principal to be paid or payable pursuant to each such
clause with respect to all Outstanding Series or Tranches on such Payment
Date, unless and to the extent, with respect to either clause (1) or (2) of
this definition, in the case of a Series comprised of two or more
Tranches, the Series Supplement for such Series provides otherwise.

 

If, on any Payment Date
for a Series of Storm Recovery Bonds, funds on deposit in the General
Subaccount for that Series are insufficient to make the payments or
transfers contemplated by clauses (i) through (ix) above, the Paying
Agent shall draw from amounts on deposit in the following subaccounts in the
following order up to the amount of such shortfall, in order to make such
payments and transfers:

 

(i) from the Excess Funds Subaccount for such Series for
allocations and payments contemplated by clauses (i) through (ix); and

 

(ii) from the Capital Subaccount for such Series for
allocations and payments contemplated by clauses (i) through (viii).

 

(e)           Upon an acceleration of the maturity
of any Series of Storm Recovery Bonds pursuant to Section 5.02, the
aggregate amount of Principal of and Interest accrued on each Storm Recovery
Bond of that Series shall be payable, without priority of interest over
principal or of principal over interest and without regard to Tranche.

 

(f)            The Trustee, shall, if in the future
directed by the Servicer under Section 3.05(e) of the Servicing
Agreement, maintain one or more segregated accounts in the Trustee's name
(each a "Third-Party Collector Deposit Account") at its office
located at the Corporate Trust Office, or at another Eligible Institution, for
any Third-Party Collector (as such term is defined in the Servicing Agreement)
cash deposits, surety bonds or guarantees or letters of credit provided
pursuant to the Tariff (as such term is defined in the Servicing Agreement),
any applicable agreements with such Third-Party Collector, other applicable
tariffs or applicable LPSC Regulation (as such term is defined in the Servicing
Agreement).  The Trustee shall follow the written direction of the
Servicer regarding the allocation and release of funds on deposit in any
Third-Party Collector Deposit Account, as permitted or required by the
Servicing Agreement or any agreement with the Third-Party Collector, the
Tariff, other applicable tariffs or LPSC Regulations.  The Trustee shall
be entitled to conclusively rely on any such written directions from the
Servicer. 

 

SECTION 8.03.   RELEASE OF TRUST ESTATE.

 

(a)           All money and other property
withdrawn from a Collection Account by the Paying Agent for payment to the
Issuer as provided in this Indenture in accordance with Section 8.02 hereof
shall be deemed released from the Indenture when so withdrawn and applied in
accordance with the provisions of Article VIII, without further notice to,
or release or consent by, the Trustee.

 

(b)           Other than as provided for in Section 8.03(a),
the Trustee or the Paying Agent, as applicable, shall release property from the
Lien of this Indenture only as and to the extent permitted by the Basic
Documents and only upon receipt of an Issuer Request accompanied by an Issuer
Officer’s Certificate, an Issuer Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or
an Issuer Opinion of Counsel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent Certificate.

 

(c)           Subject to the payment of its fees
and expenses pursuant to Section 6.07, the Trustee may, and when required
by the provisions of this Indenture shall, execute instruments to release
property from the Lien of this Indenture, or convey the Trustee’s interest in
the same, in a manner and under circumstances that are not inconsistent with
the provisions of this Indenture.  No
party relying upon an instrument executed by the Trustee as provided in this Article VIII
shall be bound to ascertain the Trustee’s authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.

 

58

 

(d)           Subject to Section 8.03(b), the
Trustee shall, at such time as there are no Storm Recovery Bonds of a Series Outstanding
and all sums due the Trustee with respect to that Series pursuant to Section 6.07
have been paid, release any remaining portion of the Series Trust Estate
that secured that Series of Storm Recovery Bonds from the Lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds or investments then on deposit in or credited to the Collection Account
for that Series of Storm Recovery Bonds.

 

SECTION 8.04.   ISSUER OPINION OF COUNSEL.  The Trustee shall receive at least five days’
notice when requested by the Issuer to take any action pursuant to Section 8.03,
accompanied by copies of any instruments involved, and the Trustee may also
require, as a condition to such action, an Issuer Opinion of Counsel, in form
and substance satisfactory to the Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding that
all conditions precedent to the taking of such action have been complied with
and such action will not materially and adversely impair the security for the
Storm Recovery Bonds or the rights of the Storm Recovery Bondholders in
contravention of the provisions of this Indenture; provided, however,
that such Issuer Opinion of Counsel shall not be required to express an opinion
as to the fair value of the Trust Estate. 
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other instrument
delivered to the Trustee in connection with any such action.

 

SECTION 8.05.   REPORTS BY INDEPENDENT ACCOUNTANTS.  The Issuer shall appoint a firm of
Independent certified public accountants of recognized national reputation for
purposes of preparing and delivering the reports or certificates of such
accountants required by this Indenture and the related Series Supplements
and the applicable Servicing Agreement. 
Upon any resignation by such firm, the Issuer shall promptly appoint a
successor thereto that shall also be a firm of Independent certified public
accountants of recognized national reputation. 
If the Issuer shall fail to appoint a successor to a firm of Independent
certified public accountants that has resigned within 15 days after such resignation,
the Trustee shall promptly notify the Issuer of such failure in writing.  If the Issuer shall not have appointed a
successor within 10 days thereafter, the Trustee shall promptly appoint a
successor firm of Independent certified public accountants of recognized
national reputation.  The fees of such
firm of Independent certified public accountants and its successor shall be
payable by the Issuer.

 

ARTICLE
IX

 

SUPPLEMENTAL
INDENTURES

 

SECTION 9.01.   SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
STORM RECOVERY BONDHOLDERS.

 

(a)           Without the consent of the Holders of
any Storm Recovery Bonds but with prior notice to the Rating Agencies, the
Issuer and the Trustee, when authorized by an Issuer Order, with the consent of
the LPSC pursuant to Section 9.07 if such supplemental indenture increases Financing
Costs as defined in the Financing Order (which consent shall not be required with regard to
the first Series Supplement), at any time and from time to time, may enter
into one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust 

 

59

 

Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Trustee, for any of the following
purposes:

 

(i)            to
correct or amplify the description of any Series Trust Estate, or to
better assure, convey and confirm unto the Trustee any Series Trust
Estate, or to subject additional property to the Lien of this Indenture;

 

(ii)           to
evidence the succession, in compliance with the applicable provisions hereof,
of another Person to the Issuer, and the assumption by any applicable successor
of the covenants of the Issuer contained herein and in the Storm Recovery
Bonds;

 

(iii)          to
add to the covenants of the Issuer, for the benefit of the Storm Recovery
Bondholders, or to surrender any right or power herein conferred upon the
Issuer;

 

(iv)          to
convey, transfer, assign, mortgage or pledge any property to the Trustee for
the benefit of the Holders and the Trustee;

 

(v)           to
cure any ambiguity, to correct or supplement any provision herein or in any
Supplemental Indenture which may be inconsistent with any other provision
herein or in any Supplemental Indenture, to make any other provisions with
respect to matters or questions arising under this Indenture or in any Supplemental
Indenture, to change in any manner or eliminate any provisions of this
Indenture or to modify in any manner the rights of the Storm Recovery
Bondholders under this Indenture; provided, however, that (i) such
action shall not, as evidenced by an Issuers’ Opinion of Counsel, adversely
affect in any material respect the interests of any Storm Recovery Bondholder
and (ii) the Rating Agency Condition shall have been satisfied with
respect thereto;

 

(vi)          to
evidence and provide for the acceptance of the appointment hereunder by a
successor Trustee with respect to the Storm Recovery Bonds and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Article VI;

 

(vii)         to
modify, eliminate or add to the provisions of this Indenture to such extent as
shall be necessary to effect the qualification of this Indenture under the TIA
or under any similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may be expressly required by the TIA;

 

(viii)        to
set forth the terms of any Series that has not theretofore been authorized
by a Series Supplement;

 

(ix)           to
qualify the Storm Recovery Bonds for registration with a Clearing Agency; or

 

(x)            to
satisfy any Rating Agency requirements.

 

60

 

The Trustee is hereby authorized to join in the
execution of any such Supplemental Indenture and to make any further
appropriate agreements and stipulations that may be therein contained.

 

(b)           The Issuer and the Trustee, when
authorized by an Issuer Order, may, also without the consent of any of the
Holders of the Storm Recovery Bonds, with the consent of the LPSC pursuant to Section 9.07
if such indenture or supplemental indenture increases Financing Costs as
defined in the Financing Order, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing in any manner
or eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Storm Recovery Bonds under this
Indenture; provided, however, that (i) as evidenced by an
Issuer’s Opinion of Counsel, such action shall not adversely affect in any
material respect the interests of any Storm Recovery Bondholder and (ii) the
Rating Agency Condition shall have been satisfied with respect thereto;

 

(c)           The Trustee shall not be required to
enter into any indenture supplemental hereto or to consent to or enter into any
amendment of the Basic Documents unless it shall have received an Opinion of
Counsel, addressed to the Trustee, satisfactory to it, that such supplement or
amendment is authorized or permitted by this Article IX.

 

SECTION 9.02.   SUPPLEMENTAL INDENTURES WITH CONSENT OF
STORM RECOVERY BONDHOLDERS.  The Issuer
and the Trustee, when authorized by an Issuer Order, also may, with the consent
of the LPSC pursuant to Section 9.07 if the indenture or supplemental
indenture increases Financing Costs as defined in the Financing Order, prior notice to the Rating Agencies and
the consent of the Holders of not less than a majority of the Outstanding
Amount of the Storm Recovery Bonds of the Series or Tranches to be
affected, by Act of such Holders delivered to the Issuer and the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Storm Recovery Bonds under this Indenture; provided, however,
that no such Supplemental Indenture shall, without the consent of the Holder of
each Outstanding Storm Recovery Bond of the Series or Tranches affected
thereby:

 

(i)            change
the date of payment of any installment of Principal of or premium, if any, or
Interest on any Storm Recovery Bond, or reduce the principal amount thereof,
the Bond Rate thereon or the redemption price or the premium, if any, with
respect thereto, change the provisions of this Indenture and the related
applicable Series Supplement relating to the application of collections
on, or the proceeds of the sale of, the Trust Estate to payment of Principal of
or premium, if any, or Interest on the Storm Recovery Bonds, or change the
currency in which any Storm Recovery Bond or the Interest thereon is payable;

 

(ii)           impair
the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Storm Recovery
Bonds on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);

 

61

 

(iii)          reduce
the percentage of the Outstanding Amount of the Storm Recovery Bonds or of a Series or
Tranche thereof, the consent of the Holders of which is required for any such
Supplemental Indenture, or the consent of the Holders of which is required for
any waiver of compliance with provisions of this Indenture or defaults
hereunder and their consequences provided for in this Indenture or modify or
alter the provisions of the proviso to the definition of the term “Outstanding”;

 

(iv)          reduce
the percentage of the Outstanding Amount of Storm Recovery Bonds of affected Series required
to direct the Trustee to direct the Issuer to sell or liquidate the Series Trust
Estate securing such Series pursuant to Section 5.04 or to preserve
the Series Trust Estate related to such Series pursuant to Section 5.05;

 

(v)           modify
any provision of this Section 9.02 except to increase any percentage
specified herein or to provide that those provisions of this Indenture or the
other Basic Documents referenced in this Section cannot be modified or
waived without the consent of the Holder of each Outstanding Storm Recovery
Bond affected thereby;

 

(vi)          modify
any of the provisions of this Indenture in such manner so as to affect the
amount of any payment of Interest, Principal or premium, if any, payable on any
Storm Recovery Bond on any Payment Date or change the Redemption Dates,
Expected Amortization Schedules or Series Final Maturity Dates or Tranche
Final Maturity Dates of any Storm Recovery Bonds;

 

(vii)         decrease
the Required Capital Amount with respect to any Series;

 

(viii)        modify
or alter the provisions of this Indenture regarding the voting of Storm
Recovery Bonds held by the Issuer, Cleco Power, an Affiliate of either of them
or any obligor on the Storm Recovery Bonds;

 

(ix)           decrease
the percentage of the aggregate principal amount of Storm Recovery Bonds
required to amend the sections of this Indenture which specify the applicable
percentage of the aggregate principal amount of the Storm Recovery Bonds
necessary to amend any Basic Document; or

 

(x)            permit
the creation of any Lien ranking prior to or on a parity with the Lien of this
Indenture with respect to any part of the Trust Estate or, except as otherwise
permitted or contemplated herein, terminate the Lien of this Indenture on any
property at any time subject hereto or deprive the Holder of any Storm Recovery
Bond of the security provided by the Lien of this Indenture.

 

It shall not be necessary for the LPSC or any Act of
Storm Recovery Bondholders under this Section 9.02 to approve the
particular form of any proposed Supplemental Indenture, but it shall be
sufficient if the LPSC or such Act of Storm Recovery Bondholders shall approve
the substance thereof.

 

Promptly after the execution by the Issuer and the Trustee of any
Supplemental Indenture pursuant to this Section 9.02, the Trustee shall
mail to the LPSC and the Holders of the Storm Recovery Bonds to which such
amendment or Supplemental Indenture relates a notice setting 

 

62

 

forth in general
terms the substance of such Supplemental Indenture.  Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such Supplemental Indenture.  If any Storm Recovery Bonds are listed on the
Luxembourg Stock Exchange and the rules of such exchange so require, the
Issuer’s listing agent shall arrange for publication in accordance with such rules of
a notice that the notice regarding the Supplemental Indenture shall be
available with the Issuer’s listing agent in Luxembourg appointed pursuant to
the second paragraph of Section 3.02.

 

SECTION 9.03.   EXECUTION OF SUPPLEMENTAL INDENTURES.  In executing, or permitting the additional
trusts created by any Supplemental Indenture permitted by this Article IX
or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02,
shall be fully protected in relying upon, an Issuer Opinion of Counsel stating
that the execution of such Supplemental Indenture is authorized or permitted by
this Indenture.  The Trustee may, but
shall not be obligated to, enter into any such Supplemental Indenture that
affects the Trustee’s own rights, duties, liabilities or immunities under this
Indenture or otherwise.

 

SECTION 9.04.   EFFECT OF SUPPLEMENTAL INDENTURE.  Upon the execution of any Supplemental
Indenture pursuant to the provisions hereof, this Indenture shall be deemed to
be modified and amended in accordance therewith with respect to each Series or
Tranche of Storm Recovery Bonds affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Trustee, the Issuer and the Holders of the Storm Recovery
Bonds shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments, and all the terms and
conditions of any such Supplemental Indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.

 

SECTION 9.05.   CONFORMITY WITH TRUST INDENTURE ACT.  Every amendment of this Indenture and every
Supplemental Indenture executed pursuant to this Article IX shall conform
to the requirements of the TIA as then in effect so long as this Indenture
shall then be qualified under the TIA.

 

SECTION 9.06.   REFERENCE IN STORM RECOVERY BONDS TO
SUPPLEMENTAL INDENTURES.  Storm Recovery
Bonds authenticated and delivered after the execution of any Supplemental
Indenture pursuant to this Article IX may, and if required by the Trustee
shall, bear a notation in form approved by the Trustee as to any matter
provided for in such Supplemental Indenture. 
If the Issuer or the Trustee shall so determine, new Storm Recovery
Bonds so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such Supplemental Indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Storm Recovery Bonds.

 

SECTION 9.07.  LPSC CONSENT. 
To the extent the consent of the LPSC is required to effect any
amendment to, modification of, or supplemental indenture to this Indenture or
any provision of this Indenture,

 

63

 

(a)           The Issuer may submit the amendment,
modification or supplemental indenture to the LPSC by delivering to the LPSC’s
executive counsel a written request for such consent, which request shall
contain:

 

(i)            a
reference to Docket No. U-29157 and a statement as to the possible effect
of the amendment, modification or supplemental indenture on ongoing Financing
Costs as defined in the Financing Order;

 

(ii)           an
Officer’s Certificate stating that the proposed amendment, modification or
supplemental indenture, as the case may be, has been approved by all parties to
this Indenture; and

 

(iii)          a
statement identifying the person to whom the LPSC or its staff is to address
its consent to the proposed amendment, modification or supplemental indenture
or request additional time.

 

(b)           Any amendment, modification or
supplemental indenture requiring the consent of the LPSC as provided in this Section 9.07
shall become effective on the later of:

 

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

 

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

 

ARTICLE
X

 

REDEMPTION
OF STORM RECOVERY BONDS

 

SECTION 10.01.   MANDATORY REDEMPTION BY ISSUER.  The Issuer shall redeem all Storm Recovery
Bonds of a Series that have been called for redemption pursuant to this
Indenture on the Redemption Date or Dates, if any, in the amounts required, if
any, and at the redemption price specified in the Series Supplement for
such Series, which in any case shall be not less than the outstanding Principal
amount of the Bonds to be redeemed, plus accrued Interest thereon to, but
excluding, such Redemption Date.  If the
Issuer is required to redeem the Storm Recovery Bonds of a Series pursuant
to this Section 10.01, it shall furnish written notice of such requirement
to the Trustee not later than 25 days prior to the Redemption Date for such
redemption and shall deposit with the Trustee the redemption price of the Storm
Recovery Bonds to be redeemed plus all other amounts due and payable hereunder
whereupon all such Storm Recovery Bonds shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 hereof
to each Holder of the Storm Recovery Bonds of such Series pursuant to this
Section 10.01.

 

SECTION 10.02.   FORM OF REDEMPTION NOTICE.  Unless otherwise specified in the Series Supplement
relating to a Series of Storm Recovery Bonds, notice of redemption under Section 10.01
hereof shall be given by the Trustee by first-class mail, postage prepaid,
mailed not less than five days nor more than 45 days prior to the applicable Redemption
Date to each 

 

64

 

Holder of Storm Recovery Bonds to be redeemed, as of
the close of business on the Record Date preceding the applicable Redemption
Date at such Holder’s address appearing in the Storm Recovery Bond Register.

 

All notices of redemption shall state:

 

(1)   the Redemption Date;

 

(2)   if less than all Outstanding Storm Recovery
Bonds of any Series are to be redeemed, the identification (and in the
case of partial redemption of any Storm Recovery Bonds, the principal amounts)
of the particular Storm Recovery Bonds to be redeemed;

 

(3)   the redemption price;

 

(4)   the place where such Storm Recovery Bonds are
to be surrendered for payment of the redemption price and accrued interest
(which shall be the office or agency of the Issuer to be maintained as provided
in the first paragraph of Section 3.02 hereof);

 

(5)   the CUSIP number, if applicable; and

 

(6)   the principal amount of Storm Recovery Bonds
to be redeemed.

 

Notice of redemption of
the Storm Recovery Bonds to be redeemed shall be given by the Trustee in the
name and at the expense of the Issuer. 
For so long as any Storm Recovery Bonds are listed on the Luxembourg
Stock Exchange and the rules of such exchange so require, the Issuer’s
listing agent shall arrange that such notice will also be given by publication
pursuant to such rules at least ten (10) days prior to the Redemption
Date.  Failure to give notice of
redemption, or any defect therein, to any Holder of any Storm Recovery Bond selected
for redemption shall not impair or affect the validity of the redemption of any
other Storm Recovery Bond.  Notice of
optional redemption shall be irrevocable once given.

 

SECTION 10.03.   PAYMENT OF REDEMPTION PRICE.  If notice of redemption has been duly mailed,
or duly waived by the Holders of all Storm Recovery Bonds called for
redemption, and the redemption moneys have been duly deposited with the
Trustee, then the Storm Recovery Bonds called for redemption shall be payable
on the applicable Redemption Date at the applicable redemption price.  No further Interest will accrue on the
principal amount of any Storm Recovery Bonds called for redemption after the
Redemption Date for such redemption if payment of the redemption price thereof
has been duly provided for, and the Holder of such Storm Recovery Bonds will
have no rights with respect thereto, except to receive payment of the
redemption price thereof and unpaid accrued Interest to the Redemption
Date.  Payment of the redemption price
together with accrued Interest shall be made by the Trustee to or upon the
order of the Holders of the Storm Recovery Bonds called for redemption upon
surrender of such Storm Recovery Bonds, and the Storm Recovery Bonds so
redeemed shall cease to be of further effect and the Lien of this Indenture
shall be released with respect to such Storm Recovery Bonds.

 

65

 

ARTICLE
XI

 

MISCELLANEOUS

 

SECTION 11.01.  COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
Upon any application or request by the Issuer to the Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Issuer Officer’s Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Issuer Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent
Certificate from a firm of certified public accountants meeting the applicable
requirements of this Section 11.01, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.

 

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

 

(i)            a
statement that each signatory of such certificate or opinion has read or has
caused to be read such covenant or condition and the definitions herein
relating thereto;

 

(ii)           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;

 

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

 

(iv)          a
statement as to whether, in the opinion of each such signatory, such condition
or covenant has been complied with.

 

SECTION 11.02.   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
or covered 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 the Issuer may be based, insofar as it
relates to legal matters, upon, in the absence of bad faith, an Opinion of
Counsel.

 

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.

 

66

 

Whenever in this Indenture, in connection with any
application or certificate or report to the Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer’s compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case
be conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report.  The foregoing shall not, however, be
construed to affect the Trustee’s right to rely conclusively upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.

 

SECTION 11.03.   ACTS OF STORM RECOVERY BONDHOLDERS.

 

(a)           Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture
to be given or taken by Storm Recovery Bondholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Storm Recovery Bondholders in person or by agents duly appointed in
writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Issuer.  Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the “Act” of the Storm Recovery Bondholders signing such instrument
or instruments.  Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.

 

(b)           The fact and date of the execution by
any Person of any such instrument or writing may be proved in any manner that
the Trustee deems sufficient.

 

(c)           The ownership of Storm Recovery Bonds
shall be proved by the Storm Recovery Bond Register.

 

(d)           Any request, demand, authorization,
direction, notice, consent, waiver or other action by the Holder of any Storm
Recovery Bonds shall bind the Holder of every Storm Recovery Bond issued upon
the registration thereof or in exchange therefor or in lieu thereof, in respect
of anything done, omitted or suffered to be done by the Trustee or the Issuer
in reliance thereon, whether or not notation of such action is made upon such
Storm Recovery Bond.

 

SECTION 11.04.   NOTICES, ETC., TO TRUSTEE, PAYING AGENT,
STORM RECOVERY BOND REGISTRAR, ISSUER, LPSC AND RATING AGENCIES.  Any request, demand, authorization,
direction, notice, consent, waiver or Act of Storm Recovery Bondholders or
other documents provided or permitted by this Indenture to be made upon, given
or furnished to or filed with:

 

(a)           the Trustee, the Paying Agent or the
Storm Recovery Bond Registrar by any Storm Recovery Bondholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing, delivered personally, via facsimile transmission, by
reputable overnight courier or by first-class mail, postage prepaid, to the
Trustee, the Paying Agent or the Storm Recovery Bond Registrar, as applicable,
at its Corporate Trust Office, or

 

67

 

(b)           the Issuer by the Trustee, the Paying
Agent, the Storm Recovery Bond Registrar or any Storm Recovery Bondholder shall
be sufficient for every purpose hereunder if in writing, delivered personally,
via facsimile transmission, by reputable overnight courier or by first-class
mail, postage prepaid, to the Issuer addressed to: Cleco Katrina/Rita Hurricane
Recovery Funding LLC, 2605 Hwy. 28 East, Office Number 12, Pineville, Louisiana
71360-5226, Attention: Manager, or at any other address previously furnished in
writing to the Trustee by the Issuer. 
The Issuer shall promptly transmit any notice received by it from the
Storm Recovery Bondholders to the Trustee, the Paying Agent and the Storm
Recovery Bond Registrar.

 

Notices required to be given to the Rating Agencies by
the Issuer, the Trustee, the Paying Agent, the Storm Recovery Bond Registrar or
a Manager shall be in writing, delivered personally, via facsimile
transmission, by reputable overnight courier or by first-class mail, postage
prepaid, to: (i) in the case of Moody’s: Moody’s Investors Service, Inc.,
Attention: ABS Monitoring Department, 99 Church Street, New York, New York 10007;
(ii) in the case of Standard & Poor’s: Standard & Poor’s,
a division of The McGraw-Hill Companies, 55 Water Street New York, NY 10041,
Attention: Asset Backed Surveillance Department; and (iii) in the case of
Fitch: Fitch, Inc., 1 State Street Plaza, New York, New York 10004,
Attention: ABS Surveillance or, if the foregoing addresses shall change at
their current address.

 

Notices required to be given to the LPSC shall be in
writing, delivered personally, via facsimile transmission, by reputable
overnight courier or by first-class mail, postage prepaid, to Louisiana Public
Service Commission, Galvez Building, 12th Floor, 602 North Fifth Street, Baton
Rouge, Louisiana  70821-9154, Attention:  Executive Counsel.

 

SECTION 11.05.   NOTICES TO STORM RECOVERY BONDHOLDERS;
WAIVER.  Where this Indenture provides
for notice to Storm Recovery Bondholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and delivered by first-class mail, postage prepaid, to each Storm Recovery
Bondholder affected by such event, at the address of such Storm Recovery
Bondholder as it appears on the Storm Recovery Bond Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice.  In any case where
notice to Storm Recovery Bondholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular Storm
Recovery Bondholder shall affect the sufficiency of such notice with respect to
other Storm Recovery Bondholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.

 

Where this Indenture provides for notice in any
manner, such notice may be waived in writing by any 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 Storm Recovery Bondholders 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 a waiver.

 

In case it shall be impractical to deliver notice in
accordance with the first paragraph of this Section 11.05 to the Holders
of Storm Recovery Bonds when such notice is required to be given pursuant to
any provision of this Indenture, then any manner of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be a sufficient giving of
such notice.

 

68

 

Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.

 

SECTION 11.06.   ALTERNATE PAYMENT AND NOTICE
PROVISIONS.  Notwithstanding any
provision of this Indenture or any of the Storm Recovery Bonds to the contrary,
the Issuer may enter into any agreement with any Holder of a Storm Recovery
Bond providing for a method of payment, or notice by the Trustee or any Paying
Agent to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. 
The Issuer will furnish to the Trustee a copy of each such agreement and
the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.

 

SECTION 11.07.   NOTICES TO LUXEMBOURG STOCK EXCHANGE.

 

(a)           For so long as any Storm Recovery
Bonds are listed on the Luxembourg Stock Exchange and to the extent the rules of
such exchange so require, the Issuer shall notify the Luxembourg Stock Exchange
and any agent appointed pursuant to the second paragraph of Section 3.02
if any rating assigned to such Storm Recovery Bonds is reduced or withdrawn and
shall arrange for such notice to be published pursuant to the rules of
such exchange.

 

(b)           For so long as any Storm Recovery
Bonds are listed on the Luxembourg Stock Exchange and the rules of such
exchange so require, the Trustee shall make available to the Holders of such Storm
Recovery Bonds and shall deposit in accordance with the written direction of
the Issuer on file with the Issuer’s listing agent in Luxembourg appointed
pursuant to the second paragraph of Section 3.02 copies of any documents
executed in connection with this Indenture reasonably requested by the Issuer’s
listing agent and the reports of Independent certified public accountants
obtained with respect to the Issuer pursuant to this Indenture.

 

SECTION 11.08.   CONFLICT WITH TRUST INDENTURE ACT.  If any provision hereof limits, qualifies or
conflicts with another provision hereof that is required to be included in this
Indenture by any of the provisions of the TIA, such required provision shall
control.

 

The provisions of TIA Sections 310 through 317 that
impose duties on any Person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are a part of and
govern this Indenture, whether or not physically contained herein.

 

SECTION 11.09.   EFFECT OF HEADINGS AND TABLE OF
CONTENTS.  The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

 

SECTION 11.10.   SUCCESSORS AND ASSIGNS.  All covenants and agreements in this
Indenture and the Storm Recovery Bonds by the Issuer shall bind its successors
and permitted assigns, whether so expressed or not.

 

All agreements of the Trustee in this Indenture shall
bind its successors.

 

69

 

The Trustee shall provide written notice to the Rating
Agencies of any assignment of its obligations under this Agreement.

 

SECTION 11.11.   SEPARABILITY.  In case any provision in this Indenture or in
the Storm Recovery Bonds shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

SECTION 11.12.   BENEFITS OF INDENTURE.  Nothing in this Indenture or in the Storm
Recovery Bonds, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Storm Recovery 

Bondholders, and any other party secured hereunder,
and any other Person with an ownership interest in any part of the Trust
Estate, any benefit or any legal or equitable right, remedy or claim under this
Indenture.

 

SECTION 11.13.   LEGAL HOLIDAYS.  In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Storm Recovery Bonds or this Indenture) payment need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.

 

SECTION 11.14.   GOVERNING LAW.  THIS INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF LOUISIANA
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE OBLIGATIONS OF THE
TRUSTEE HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.

 

SECTION 11.15.   COUNTERPARTS.  This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

 

SECTION 11.16.   ISSUER OBLIGATION.  No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer or the Trustee on the
Storm Recovery Bonds or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the
Member or any Manager, employee or agent of the Issuer or (ii) any
stockholder, officer, director, employee or agent of the Trustee (it being
understood that none of the Trustee’s obligations are in its individual
capacity).

 

SECTION 11.17.   NO PETITION. 
The Trustee, by entering into this Indenture, and each Holder, by
accepting a Storm Recovery Bond (or interest therein) issued hereunder, hereby
covenant and agree that they shall not, prior to the date that is one year and
one day after the termination of this Indenture, acquiesce, petition or
otherwise invoke or cause the Issuer or any Manager to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Issuer under any insolvency law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its respective property, or ordering
the dissolution, winding up or 

 

70

 

liquidation of the affairs of the Issuer. Nothing in
this Section 11.17 shall preclude, or be deemed to estop, such Holder (A) from
taking or omitting to take any action prior to such date in (i) any case
or proceeding voluntarily filed or commenced by or on behalf of the Issuer
under or pursuant to any such law or (ii) any involuntary case or
proceeding pertaining to the Issuer that is filed or commenced by or on behalf
of a person other than such Holder and is not joined in by such Holder (or any
person to which such Holder shall have assigned, transferred or otherwise
conveyed any part of the obligations of the Issuer hereunder) under or pursuant
to any such law, or (B) from commencing or prosecuting any legal action
that is not an involuntary case or proceeding under or pursuant to any such law
against the Issuer or any of its properties.

 

SECTION 11.18. 
STORM RECOVERY BONDS NOT PUBLIC DEBT. 
Each Storm Recovery Bond shall contain on the face thereof a statement
to the following effect: “Neither the full faith and credit nor the taxing
power of the State of Louisiana is pledged to the payment of the principal of,
or interest on, this Storm Recovery Bond.”

 

71

 

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

 

	
   

  	
  CLECO KATRINA/RITA HURRICANE 

  RECOVERY FUNDING LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith D. Crump

  
	
   

  	
  Name:

  	
  Keith D. Crump

  
	
   

  	
  Title:

  	
  Vice President and Manager

  
					

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION, as

  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Melissa A. Rosal

  
	
   

  	
  Name:

  	
  Melissa A. Rosal

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

U.S. BANK NATIONAL ASSOCIATION

hereby agrees to act as Paying Agent, Storm Recovery
Bond Registrar, authenticating agent and agent under Section 3.02 hereof,
all as set forth in this Indenture.

 

	
  By:

  	
  /s/ Melissa A. Rosal

  	
   

  
	
  Name:

  	
  Melissa A. Rosal

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
					

 

72

 

SCHEDULE 1

 

SEMIANNUAL SERVICER’S
CERTIFICATE

 

[INTENTIONALLY OMITTED]

 

1

 

EXHIBIT A

 

SERVICING CRITERIA
TO BE ADDRESSED BY INDENTURE TRUSTEE IN ASSESSMENT OF COMPLIANCE

 

	
  Reg AB

  Reference

  	
   

  	
  Servicing
  Criteria

  	
   

  	
  Applicable

  Trustee

  Responsibility

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General
  Servicing Considerations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(i)

  	
   

  	
  Policies and procedures
  are instituted to monitor any performance or other triggers and events of
  default in accordance with the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(ii)

  	
   

  	
  If any material
  servicing activities are outsourced to third parties, policies and procedures
  are instituted to monitor the third party’s performance and compliance with
  such servicing activities.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iii)

  	
   

  	
  Any requirements in the
  transaction agreements to maintain a back-up servicer for the pool assets are
  maintained.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iv)

  	
   

  	
  A fidelity bond and
  errors and omissions policy is in effect on the party participating in the
  servicing function throughout the reporting period in the amount of coverage
  required by and otherwise in accordance with the terms of the transaction
  agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash
  Collection and Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(i)

  	
   

  	
  Payments on pool assets
  are deposited into the appropriate custodial bank accounts and related bank
  clearing accounts no more than two (2) business days of receipt, or such
  other number of days specified in the transaction agreements.

  	
   

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(ii)

  	
   

  	
  Disbursements made via
  wire transfer on behalf of an obligor or to an investor are made only by
  authorized personnel.

  	
   

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iii)

  	
   

  	
  Advances of funds or
  guarantees regarding collections, cash flows or distributions, and any
  interest or other fees charged for such advances, are made, reviewed and
  approved as specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iv)

  	
   

  	
  The related accounts
  for the transaction, such as cash reserve accounts or accounts established as
  a form of overcollateralization, are separately maintained (e.g., with
  respect to commingling of cash) as set forth in the transaction agreements.

  	
   

  	
  X

  

 

1

 

	
  Reg AB

  Reference

  	
   

  	
  Servicing
  Criteria

  	
   

  	
  Applicable

  Trustee

  Responsibility

  
	
  1122(d)(2)(v)

  	
   

  	
  Each custodial account
  is maintained at a federally insured depository institution as set forth in
  the transaction agreements. For purposes of this criterion, “federally
  insured depository institution” with respect to a foreign financial institution
  means a foreign financial institution that meets the requirements of
  Rule 13k-1(b)(1) of the Exchange Act.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vi)

  	
   

  	
  Unissued checks are
  safeguarded so as to prevent unauthorized access.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vii)

  	
   

  	
  Reconciliations are
  prepared on a monthly basis for all asset-backed securities related bank
  accounts, including custodial accounts and related bank clearing accounts.
  These reconciliations are (A) mathematically accurate; (B) prepared
  within thirty (30) calendar days after the bank statement cutoff date, or
  such other number of days specified in the transaction agreements;
  (C) reviewed and approved by someone other than the person who prepared
  the reconciliation; and (D) contain explanations for reconciling items.
  These reconciling items are resolved within ninety (90) calendar days of
  their original identification, or such other number of days specified in the transaction
  agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investor
  Remittances and Reporting

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(i)

  	
   

  	
  Reports to investors,
  including those to be filed with the Commission, are maintained in accordance
  with the transaction agreements and applicable Commission requirements.
  Specifically, such reports (A) are prepared in accordance with
  timeframes and other terms set forth in the transaction agreements;
  (B) provide information calculated in accordance with the terms
  specified in the transaction agreements; (C) are filed with the
  Commission as required by its rules and regulations; and (D) agree
  with investors’ or the trustee’s records as to the total unpaid principal
  balance and number of pool assets serviced by the Servicer.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(ii)

  	
   

  	
  Amounts due to
  investors are allocated and remitted in accordance with timeframes,
  distribution priority and other terms set forth in the transaction
  agreements.

  	
   

  	
  X

  

 

2

 

	
  Reg AB

  Reference

  	
   

  	
  Servicing
  Criteria

  	
   

  	
  Applicable

  Trustee

  Responsibility

  
	
  1122(d)(3)(iii)

  	
   

  	
  Disbursements made to
  an investor are posted within two (2) business days to the Servicer’s
  investor records, or such other number of days specified in the transaction
  agreements.

  	
   

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iv)

  	
   

  	
  Amounts remitted to
  investors per the investor reports agree with cancelled checks, or other form
  of payment, or custodial bank statements.

  	
   

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pool
  Asset Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(i)

  	
   

  	
  Collateral or security
  on pool assets is maintained as required by the transaction agreements or
  related pool asset documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ii)

  	
   

  	
  Pool assets and related
  documents are safeguarded as required by the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iii)

  	
   

  	
  Any additions, removals
  or substitutions to the asset pool are made, reviewed and approved in
  accordance with any conditions or requirements in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iv)

  	
   

  	
  Payments on pool
  assets, including any payoffs, made in accordance with the related pool asset
  documents are posted to the Servicer’s obligor records maintained no more
  than two (2) business days after receipt, or such other number of days
  specified in the transaction agreements, and allocated to principal, interest
  or other items (e.g., escrow) in accordance with the related pool asset
  documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(v)

  	
   

  	
  The Servicer’s records
  regarding the pool assets agree with the Servicer’s records with respect to
  an obligor’s unpaid principal balance.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vi)

  	
   

  	
  Changes with respect to
  the terms or status of an obligor’s pool assets (e.g., loan modifications or
  re-agings) are made, reviewed and approved by authorized personnel in
  accordance with the transaction agreements and related pool asset documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vii)

  	
   

  	
  Loss mitigation or
  recovery actions (e.g., forbearance plans, modifications and deeds in lieu of
  foreclosure, foreclosures and repossessions, as applicable) are initiated,
  conducted and concluded in accordance with the timeframes or other
  requirements established by the transaction agreements.

  	
   

  	
   

  

 

3

 

	
  Reg AB

  Reference

  	
   

  	
  Servicing
  Criteria

  	
   

  	
  Applicable

  Trustee

  Responsibility

  
	
  1122(d)(4)(viii)

  	
   

  	
  Records documenting
  collection efforts are maintained during the period a pool asset is
  delinquent in accordance with the transaction agreements. Such records are
  maintained on at least a monthly basis, or such other period specified in the
  transaction agreements, and describe the entity’s activities in monitoring
  delinquent pool assets including, for example, phone calls, letters and
  payment rescheduling plans in cases where delinquency is deemed temporary
  (e.g., illness or unemployment).

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ix)

  	
   

  	
  Adjustments to interest
  rates or rates of return for pool assets with variable rates are computed
  based on the related pool asset documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(x)

  	
   

  	
  Regarding any funds
  held in trust for an obligor (such as escrow accounts): (A) such funds
  are analyzed, in accordance with the obligor’s pool asset documents, on at
  least an annual basis, or such other period specified in the transaction
  agreements; (B) interest on such funds is paid, or credited, to obligors
  in accordance with applicable pool asset documents and state laws; and
  (C) such funds are returned to the obligor within thirty (30) calendar
  days of full repayment of the related pool assets, or such other number of
  days specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xi)

  	
   

  	
  Payments made on behalf
  of an obligor (such as tax or insurance payments) are made on or before the
  related penalty or expiration dates, as indicated on the appropriate bills or
  notices for such payments, provided that such support has been received by
  the Servicer at least thirty (30) calendar days prior to these dates, or such
  other number of days specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xii)

  	
   

  	
  Any late payment
  penalties in connection with any payment to be made on behalf of an obligor
  are paid from the Servicer’s funds and not charged to the obligor, unless the
  late payment was due to the obligor’s error or omission.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiii)

  	
   

  	
  Disbursements made on
  behalf of an obligor are posted within two (2) business days to the
  obligor’s records maintained by the Servicer, or such other number of days
  specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiv)

  	
   

  	
  Delinquencies,
  charge-offs and uncollectible accounts are recognized and recorded in
  accordance with the transaction agreements.

  	
   

  	
   

  

 

4

 

	
  Reg AB

  Reference

  	
   

  	
  Servicing
  Criteria

  	
   

  	
  Applicable

  Trustee

  Responsibility

  
	
  1122(d)(4)(xv)

  	
   

  	
  Any external
  enhancement or other support, identified in Item 1114(a)(1) through
  (3) or Item 1115 of Regulation AB, is maintained as set forth in the
  transaction agreements.

  	
   

  	
   

  

 

*With respect to
its custodial functions relating to the Collection Account.

 

5

 

APPENDIX
A

 

MASTER
DEFINITIONS

 

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

 

“Accounts” means, collectively, the Collection Account (and each
sub-account thereof, including, without limitation, the General Subaccount, the
Capital Subaccount, the Defeasance Subaccount, the Excess Funds Subaccount and
each Tranche Subaccount).

 

“Act” has the meaning specified in Section 11.03 of the
Indenture.

 

“Addition Notice” means, with respect to the transfer of
Subsequent Storm Recovery Property to the Issuer, notice, which shall be given
by the Seller to the Issuer, the LPSC and the Rating Agencies not later than 10
days prior to the related Subsequent Transfer Date, specifying the Subsequent Transfer
Date for such Subsequent Storm Recovery Property.

 

“Adjustment Date” has the meaning specified in the applicable
Servicing Agreement.

 

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

 

“Administrator” means Cleco Power as administrator under the
Administration Agreement and each successor to or assignee of Cleco Power in
the same capacity.

 

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

 

“Annual Accountant’s Report” has the meaning assigned to that
term in the applicable Servicing Agreement.

 

“Applicable Law” has the meaning specified in Section 6.15
of the Indenture.

 

“Authorized Denominations” means, with respect to any Series or
Tranche of Storm Recovery Bonds, $1,000 and integral multiples thereof, or such
other denominations as may be specified in the Series Supplement therefor.

 

“Authorized Officer” means (i) with respect to any Person
that is a corporation or a limited liability company, any manager, the Chairman
of the Board, the Chief Executive Officer, the President, any Vice Chairman,
any Executive Vice President, Senior Vice President or Vice President, the
Treasurer or any Assistant Treasurer, the Secretary or any Assistant Secretary of
such Person, (ii) with respect to any Person that is a partnership, the
President, any Vice

 

1

 

President, Treasurer or Secretary (or Assistant
Secretary) of a general partner or managing partner of such Person; provided
that in respect of the Issuer, Authorized Officer means any Manager or the
Member and, with respect to the Member, any officer who is authorized to act
for the Member in matters relating to the Issuer and who is identified on the
list of Authorized Officers delivered by the Member to the Trustee as of the
date hereof (as such list may be modified or supplemented from time to time
thereafter).

 

“Bankruptcy Code” means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time.

 

“Basic Documents” means the Issuer LLC Agreement, the Issuer
Articles of Organization, each Sale Agreement, each Servicing Agreement, the
Administration Agreement, the Indenture, any Supplemental Indentures, each DTC
Agreement, each Underwriting Agreement and any Bills of Sale.

 

“Bill of Sale” means any bill of sale issued by the Seller to
the Issuer pursuant to any Sale Agreement evidencing the sale of Storm Recovery
Property by the Seller to the Issuer.

 

“Bond Rate” means, with respect to each Series or, if
applicable, each Tranche of Storm Recovery Bonds, the rate at which interest
accrues on the principal balance of Storm Recovery Bonds of such Series or
Tranche, as specified in the Series Supplement therefor.

 

“Book-Entry Security” means a security maintained in the form of
entries (including, without limitation, the security entitlements in, and the
financial assets based on, such security) in the commercial book-entry system
of the Federal Reserve System.

 

“Book-Entry Storm Recovery Bonds” means beneficial interests in
the Storm Recovery Bonds, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 2.11 of
the Indenture.

 

“Business Day” means any day other than a Saturday or Sunday or
a day on which banking institutions in the City of New Orleans, Louisiana, in
the City of St. Paul, Minnesota, in the City of Chicago, Illinois, or in the
City of New York, New York, are required or authorized by law or executive
order to remain closed.

 

“Calculation Date” means, with respect to each Series of
Storm Recovery Bonds, the date on which the calculations and filings set forth
in Annex 1 to the applicable Servicing Agreement will be made each year.

 

“Capital Subaccount” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Clearing Agency” means an organization registered as a “clearing
agency” pursuant to Section 17A of the Exchange Act.

 

“Clearing Agency Participant” means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.

 

2

 

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

 

“Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations promulgated thereunder.

 

“Collection Account” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Collections” means amounts collected in respect of Storm
Recovery Charges.

 

“Commission” means the U.S. Securities and Exchange Commission,
and any successor thereof.

 

“Commission Pledge” means the pledge and covenants of the LPSC
contained in Section VI(G) (Ordering Paragraphs 50 - 54) of the
Financing Order issued by the LPSC on September 17, 2007, in Docket No. U-29157.

 

“Corporate Trust Office” means, as the context requires, either (1) the
office of the Trustee at which at any particular time this Indenture shall be
administered, which office as of the date of the execution of this Indenture is
located at 209 South LaSalle Street, Mail Code MK-IL-RY3B, Chicago,
Illinois  60604-1219, Attn: Corporate
Trust Administration, Ref: Cleco Katrina/Rita Hurricane Recovery Funding LLC,
or at such other address as the Trustee may designate from time to time by
notice to the Storm Recovery Bondholders and the Issuer, or the principal
corporate trust office of any successor Trustee (the address of which the successor
Trustee will provide to the Storm Recovery Bondholders and the Issuer) or (2) the
office of the Paying Agent or Storm Recovery Bond Registrar at which at any
particular time this Indenture  shall be
administered, each of which offices as of the date of the execution of this
Indenture is located at 209 South LaSalle Street, Mail Code MK-IL-RY3B,
Chicago, Illinois  60604-1219, or at such
other address as the Paying Agent or Storm Recovery Bond Registrar respectively
may designate from time to time by notice to the Storm Recovery Bondholders and
the Issuer, or the principal corporate trust office of any successor Paying
Agent or Storm Recovery Bond Registrar (the address of which the successor will
provide to the Storm Recovery Bondholders, the Trustee and the Issuer).

 

“Covenant Defeasance Option” has the meaning specified in Section 4.01(b) of
the Indenture.

 

“Default” means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.

 

“Defeasance Subaccount” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Definitive Storm Recovery Bonds” has the meaning specified in Section 2.11
of the Indenture.

 

“DTC” means The Depository Trust Company.

 

3

 

“DTC Agreement” means any applicable Letter of Representations
among the Issuer, the Storm Recovery Bond Registrar and DTC or other applicable
Clearing Agency, relating to the Clearing Agency’s rights and obligations (in
its capacity as Clearing Agency) with respect to any Book-Entry Storm Recovery
Bonds, as the same may be amended and supplemented from time to time.

 

“Eligible Guarantor Institution” means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as “an eligible
guarantor institution,” including (as such terms are defined therein):

 

(a)           a
bank;

 

(b)           a
broker, dealer, municipal securities broker or dealer or government securities
broker or dealer;

 

(c)           a
credit union;

 

(d)           a
national securities exchange, registered securities association or clearing
agency; or

 

(e)           a
savings association that is a participant in a securities transfer association.

 

“Eligible Institution” means:

 

(a)           the
corporate trust department of the Trustee, so long as any of the securities of
the Trustee have a credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade, or

 

(b)           the
trust department of a depository institution organized under the laws of the
United States of America or any State (or any domestic branch of a foreign
bank), which

 

(i)            has
either

 

(A)          with
respect to any Eligible Investment having a maturity of greater than one month,
a long-term unsecured debt rating of “AA-” by Standard & Poor’s, “A2”
by Moody’s and, if Fitch provides a rating thereon, the equivalent of the lower
of those two ratings by Fitch or

 

(B)           with
respect to any Eligible Investment having a maturity of one month or less, a
certificate of deposit rating of “A-1+” by Standard & Poor’s, “P-1” by
Moody’s and, if Fitch provides a rating thereon, “F-1+” by Fitch, or any other
long-term, short-term or certificate of deposit rating acceptable to the Rating
Agencies, and

 

(ii)           whose
deposits are insured by the FDIC.

 

4

 

“Eligible Investments” mean Book-Entry Securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence and may include investments for which the Trustee and/or
its Affiliates acts as an investment manager or advisor:

 

(a)           direct
obligations of, and obligations fully and unconditionally guaranteed as to
timely payment by, the United States of America;

 

(b)           demand
deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States
of America or any State thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by federal or State banking or
depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have either (i) a
long-term unsecured debt rating from Moody’s, Standard & Poor’s and,
if Fitch provides a rating thereon, Fitch of at least “Aa3,” “AA” and “AA,”
respectively, or (ii) a certificate of deposit rating from Moody’s and
Standard & Poor’s of at least “P-1” and “A-1+,” respectively, and, if
Fitch provides a rating thereon, “F-1+” by Fitch;

 

(c)           commercial
paper or other short term obligations of any Person organized under the laws of
any State (other than Cleco Power, Cleco Corporation or any of their
affiliates) whose ratings, at the time of the investment or contractual
commitment to invest therein, from Moody’s and Standard & Poor’s shall
be at least “P-1” and “A-1+,” respectively and, if Fitch provides a rating
thereon, “F-1+” by Fitch;

 

(d)           investments
in money market funds having a rating from Moody’s, Standard & Poor’s
and, if Fitch provides a rating thereon, Fitch of “Aaa,” “AAA” and “AAA,”
respectively (including funds for which the Trustee or any of its Affiliates
act as investment manager or advisor);

 

(e)           bankers’
acceptances issued by any depository institution or trust company referred to
in clause (b) above;

 

(f)            repurchase
obligations with respect to any security that is a direct obligation of, or fully
guaranteed by, the United States of America or any agency or instrumentality
thereof the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with a depository
institution or trust company (acting as principal) described in clause (b) above;

 

(g)           repurchase
obligations with respect to any security or whole loan entered into with

 

(i)            a
depository institution or trust company (acting as principal) described in
clause (b) above (any depository institution or trust company being
referred to in this definition as a “financial institution”),

 

5

 

(ii)           a
broker/dealer (acting as principal) registered as a broker or dealer under Section 15
of the Exchange Act (any broker/dealer being referred to in this definition as
a “broker/dealer”), the unsecured short-term debt obligations of which are
rated at least “P-1” by Moody’s, “A-1+” by Standard & Poor’s and, if
Fitch provides a rating thereon, “F-1+” by Fitch at the time of entering into
this repurchase obligation, or

 

(iii)          an
unrated broker/dealer, acting as principal, that is a wholly-owned subsidiary
of a non-bank or bank holding company the unsecured short-term debt obligations
of which are rated at least “P-1” by Moody’s, “A-1+” by Standard &
Poor’s and, if Fitch provides a rating thereon, “F-1+” by Fitch at the time of
purchase so long as the obligations of such unrated broker/dealer are
unconditionally guaranteed by such non-bank or bank holding company; or

 

(h)           any
other investment permitted by each of the Rating Agencies;

 

provided,
that (a) any Book-Entry Security, instrument or security having a maturity
of one month or less that would be an Eligible Investment but for its failure,
or the failure of the obligor thereon, to have the rating specified above shall
be an eligible investment if such Book-Entry Security, instrument or security,
or the obligor thereon, has a short-term unsecured debt rating of at least “P-1”
by Moody’s, “A-1+” by S&P and, if Fitch provides a rating thereon, “F-1+”
by Fitch, and (b) any Book-Entry Security, instrument or security having a
maturity of greater than one month that would be an eligible investment but for
its failure, or the failure of the obligor thereon, to have the rating
specified above shall be an eligible investment if such Book-Entry Security,
instrument or security, or the obligor thereon, has a long-term unsecured debt
rating of at least “AA-” by S&P or “Aa3” by Moody’s (and, if Fitch provides
a rating thereon, “AA-” by Fitch) and a short-term unsecured debt rating of at
least “P-1” by Moody’s or the equivalent thereof by S&P (and Fitch, if
Fitch provides a rating thereon);

 

provided,
further, that unless otherwise permitted by the applicable Rating Agencies,
upon the failure of any Eligible Institution to maintain any applicable rating
set forth in this definition or the definition of Eligible Institution, the
related investments at that institution shall be reinvested in Eligible
Investments at a successor Eligible Institution within 10 days.

 

“Eligible Securities Account” means either:

 

(a)           a
segregated non-interest-bearing trust account with an Eligible Institution or

 

(b)           a
segregated non-interest-bearing trust account with the corporate trust department
of a depository institution organized under the laws of the United States of
America or any State (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the unsecured securities of such depository
institution shall have a credit rating from each Rating Agency in one of its
generic rating categories which signifies investment grade.

 

“Event of Default” has the meaning specified in Section 5.01
of the Indenture.

 

6

 

“Excess Funds Subaccount” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Expected
Amortization Schedule” means, with respect to each Series or, if
applicable, each Tranche of Storm Recovery Bonds, the expected amortization
schedule for principal thereof, as specified in the Series Supplement
therefor.

 

“Expected Final Payment Date” means, with respect to each Series or,
if applicable, each Tranche of Storm Recovery Bonds, the date when all interest
and principal is scheduled to be paid for that Series or Tranche in
accordance with the Expected Amortization Schedule, as specified in the Series Supplement
therefor.

 

“FDIC” means the Federal Deposit Insurance Corporation or any
successor.

 

“Federal Book-Entry Regulations” means (a) the federal
regulations contained in Subpart B (“Treasury/Reserve Automated Debt Entry
System (TRADES)”) governing Book-Entry Securities consisting of U.S. Treasury
bonds, notes and bills, and Subpart D (“Additional Provisions”) of 31 C.F.R.
part 357, Section 357.10 through Section 357.14 and Section 357.41
through Section 357.44 (including related defined terms in 31 C.F.R. Section 357.2);
and (b) to the extent substantially identical to the federal regulations
referred to in clause (a) above (as in effect from time to time), the
federal regulations governing other Book-Entry Securities.

 

“Final Maturity Date” means, for each Series or, if applicable,
each Tranche of Storm Recovery Bonds, the date by which all Principal and
Interest on that Series or Tranche is required to be paid, as specified in
the Series Supplement therefor.

 

“Financing Costs” has the meaning assigned to that term in the
Securitization Act and the Financing Order.

 

“Financing Order” means Financing Order No. U-29157-B
issued by the LPSC on September 17, 2007, in Docket No. U-29157 and
any subsequent financing order issued by the LPSC to Cleco Power pursuant to
which Cleco Power transfers its rights and interests thereunder to the Issuer
in connection with the issuance of a separate Series of Storm Recovery
Bonds.

 

“Fitch” means Fitch, Inc., or any successor thereto.

 

“General Subaccount” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Grant” means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, deliver, create and grant
a lien upon and a security interest in and right of set-off against, deposit,
set over and confirm pursuant to this Indenture.  A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal, interest and other payments in respect of the Trust Estate and all
other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring 

 

7

 

Proceedings in the name of the Granting party or
otherwise and generally to do and receive anything that the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.

 

“Holder” or “Storm Recovery Bondholder” means the Person
in whose name a Storm Recovery Bond of any Series or Tranche is registered
on the Storm Recovery Bond Register.

 

“Indemnity Amounts” means any indemnification obligations
payable by the Issuer pursuant to Section 6.07 of the Indenture.

 

“Indenture” means this Indenture dated as of March 6, 2008,
among the Issuer and the Trustee, as the same may be amended and supplemented
from time to time by one or more Series Supplements or Supplemental
Indentures, and shall include the forms and terms of the Storm Recovery Bonds
established thereunder.

 

“Independent” means, when used with respect to any specified
Person, that the Person

 

(a)           is
in fact independent of the Issuer, any other obligor upon the Storm Recovery
Bonds, Cleco Power and any Affiliate of any of the foregoing Persons,

 

(b)           does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, Cleco Power or any Affiliate of
any of the foregoing Persons and

 

(c)           is
not connected with the Issuer, any such other obligor, Cleco Power or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.

 

“Independent Certificate” means a certificate or opinion to be
delivered to the Trustee made by an Independent appraiser from a nationally
reputable appraisal firm or other expert appointed by an Issuer Order in the exercise
of reasonable care, and such opinion or certificate shall state that the signer
has read the definition of “Independent” in this Appendix A and that the signer
is Independent within the meaning thereof.

 

“Initial Transfer Date” means the Series Issuance Date for
the first Series of Storm Recovery Bonds.

 

“Interest” means, for any Payment Date for any Series or
Tranche of Storm Recovery Bonds, the sum, without duplication, of:

 

(a)           an
amount equal to the amount of interest accrued at the applicable interest rates
from the prior Payment Date or, with respect to the first Payment Date, the
amount of interest accrued since the Initial Transfer Date, with respect to
that Series or Tranche;

 

(b)           any
unpaid interest plus, to the extent permitted by law, any interest accrued on
this unpaid interest at the applicable interest rate;

 

8

 

(c)           if
the Storm Recovery Bonds have been declared due and payable, all accrued and
unpaid interest thereon; and

 

(d)           with
respect to a Series or Tranche to be redeemed prior to the next Payment
Date, the amount of interest that will be payable as interest on such Series or
Tranche upon such redemption.

 

“Issuer” means Cleco Katrina/Rita Hurricane Recovery Funding
LLC, a Louisiana limited liability company, or any successor thereto pursuant
to Section 3.11 of the Indenture.

 

“Issuer Articles of Organization” means the Articles of
Organization of the Issuer dated October 29, 2007 that was filed with the
Louisiana Secretary of State on October 30, 2007, as the same may be
amended and restated from time to time.

 

“Issuer LLC Agreement” means the Limited Liability Company
Operating Agreement between the Issuer and Cleco Power, as sole Member, dated
and effective as of October 29, 2007, as the same may be amended and
supplemented from time to time.

 

“Issuer Opinion of Counsel” means one or more written opinions
of counsel who may, except as otherwise expressly provided in the Indenture, be
employees of or counsel to the Issuer and who shall be satisfactory to the
Trustee and the LPSC, and which opinion or opinions shall be addressed to the
Trustee, as Trustee, and shall be in a form reasonably satisfactory to the
Trustee.

 

“Issuer Officer’s Certificate” means a certificate on behalf of
the Issuer signed by any Authorized Officer of the Issuer and delivered to the
Trustee.

 

“Issuer Order” or “Issuer Request” means a written order
or request signed in the name of the Issuer by any one of its Authorized
Officers and delivered to the Trustee.

 

“Legal Defeasance Option” has the meaning specified in Section 4.01(b) of
the Indenture.

 

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

 

“Losses” means collectively, any and all liabilities,
obligations, losses, damages, payments, costs or expenses of any kind
whatsoever.

 

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

 

“Majority Holders” means the Holders of a majority of the
Outstanding Amount of the Storm Recovery Bonds of all Series.

 

“Manager” means any manager of the Issuer.

 

“Member” means Cleco Power, as the sole member of the Issuer, or
any successor thereto.

 

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

 

9

 

“Officer’s Certificate” means, in respect of any Person, an
officer’s certificate signed by an Authorized Officer of such Person; provided
that unless otherwise specified, any reference in the Indenture to an Officer’s
Certificate shall be to an Officer’s Certificate of any Authorized Officer of
the Issuer.

 

“Operating Expenses” means, with respect to the Issuer, all
fees, costs and expenses owed by the Issuer with respect to a Series of
Storm Recovery Bonds, including all amounts owed by the Issuer to the Trustee
relating to that Series, the Servicing Fee relating to that Series (but
excluding costs and expenses incurred by the Servicer except as specifically
set forth in Sections 6.08 and 6.10 of the Servicing Agreement relating to that
Series), the fees relating to that Series payable by the Issuer to the
Administrator under the Administration Agreement, the fees and expenses
relating to that Series payable by the Issuer to the independent managers
of the Issuer, legal fees and expenses of the Servicer pursuant to the
applicable Servicing Agreement relating to that Series, the costs and expenses
incurred by the Seller in connection with the performance of the Seller’s
obligations under Section 4.07 of the Sale Agreement and payable by the Issuer,
and legal and accounting fees, costs and expenses of the Issuer relating to
that Series.

 

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

 

“Outstanding” or “outstanding” with respect to Storm
Recovery Bonds means, as of the date of determination, all Storm Recovery Bonds
theretofore authenticated and delivered under the Indenture except:

 

(a)           Storm
Recovery Bonds theretofore canceled by the Storm Recovery Bond Registrar or
delivered to the Storm Recovery Bond Registrar for cancellation;

 

(b)           Storm
Recovery Bonds or portions thereof the payment for which money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Storm Recovery Bonds; provided, however,
that if such Storm Recovery Bonds are to be redeemed, notice of such redemption
has been duly given pursuant to the Indenture or provision therefor,
satisfactory to the Trustee; and

 

(c)           Storm
Recovery Bonds in exchange for or in lieu of other Storm Recovery Bonds which
have been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Trustee is presented that any such Storm Recovery Bonds are
held by a bona fide purchaser;

 

provided
that in determining whether the Holders of the requisite Outstanding Amount of
the Storm Recovery Bonds or any Series or Tranche thereof have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or under any Basic Document, Storm Recovery Bonds owned by the Issuer, any
other obligor upon the Storm Recovery Bonds, Cleco Power or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be fully
protected in relying upon any such request, demand, 

 

10

 

authorization, direction,
notice, consent or waiver, only Storm Recovery Bonds that a Responsible Officer
of the Trustee knows to be so owned shall be so disregarded.  Storm Recovery Bonds so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee’s right so to act with respect
to such Storm Recovery Bonds and that the pledgee is not the Issuer, any other
obligor upon the Storm Recovery Bonds, the Servicer or any Affiliate of any of
the foregoing Persons.

 

“Outstanding Amount” means the aggregate principal amount of all
Outstanding Storm Recovery Bonds or, if the context requires, all Outstanding
Storm Recovery Bonds of a Series or Tranche Outstanding at the date of
determination.

 

“Paying Agent” means the entity so designated in Section 3.03
of the Indenture or any other Person that meets the eligibility standards for
the Trustee specified in Section 6.11 of the Indenture and is authorized
by the Issuer to make the payments of Principal of or premium, if any, or
Interest on the Storm Recovery Bonds on behalf of the Issuer.

 

“Payment Date” means, with respect to each Series or, if
applicable, each Tranche of Storm Recovery Bonds, each date or dates specified
as Payment Dates for such Series or Tranche in the Series Supplement
therefor, provided that if any such date is not a Business Day, the Payment
Date shall be the Business Day immediately succeeding such date.

 

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

 

“Predecessor Storm Recovery Bond” means, with respect to any
particular Storm Recovery Bond, every previous Storm Recovery Bond evidencing
all or a portion of the same debt as that evidenced by such particular Storm
Recovery Bond; and, for the purpose of this definition, any Storm Recovery Bond
authenticated and delivered under Section 2.06 of the Indenture in lieu of
a mutilated, lost, destroyed or stolen Storm Recovery Bond shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Storm
Recovery Bond.

 

“Principal” means, with respect to any Payment Date and each Series or,
if applicable, each Tranche of Storm Recovery Bonds the sum, without
duplication, of:

 

(a)           the
amount of principal scheduled to be paid on such Payment Date in accordance
with the Expected Amortization Schedule;

 

(b)           the
amount of principal due on the Final Maturity Date of any Series or
Tranche if such Payment Date is the Final Maturity Date;

 

(c)           the
amount of principal due as a result of the occurrence and continuance of an
Event of Default and acceleration of the Storm Recovery Bonds;

 

(d)           the
amount of principal and premium, if any, due as a result of a redemption of
Storm Recovery Bonds prior to such Payment Date; and

 

11

 

(e)           any
unpaid and previously scheduled payments of principal and overdue payments of
principal.

 

“Pro Rata” has the meaning specified for such term in Section 8.02(d) of
the Indenture.

 

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

 

“Projected Storm Recovery Bond Balance” means, as of any date,
the anticipated Outstanding Amount of Storm Recovery Bonds after giving effect
to payment of the sum of the amounts provided for in the Expected Amortization
Schedules for each outstanding Series of Storm Recovery Bonds to be paid
on or before such date.

 

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

 

“Rating Agency Condition,” with respect to the issuance of a new
Series of Storm Recovery Bonds, has the meaning set forth in Section 2.10(7) of
the Indenture and, with respect to any other action, means the notification in
writing to each Rating Agency of such action, and confirmation from S&P to
the Trustee and the Issuer that such action will not result in a reduction or
withdrawal of the then current rating by such Rating Agency of any outstanding Series or
Tranche of Storm Recovery Bonds.

 

“Record Date” means, with respect to any Payment Date for a Series or
Tranche, the date set forth as such in the Series Supplement therefor.

 

“Redemption Date” means, with respect to each Series or, if
applicable, each Tranche of Storm Recovery Bonds, the date for the redemption
of the Storm Recovery Bonds of such Series or Tranche pursuant to Section 10.01
of the Indenture or the Series Supplement for such Series or Tranche,
which in each case shall be a Payment Date.

 

“Regulation AB” means the rules of the SEC promulgated
under Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R.
§§229.1100-229.1123, as such may be amended from time to time.

 

“Required Capital Amount” means a capital contribution in an
amount equal to the amount specified in the related Series Supplement,
representing a capital contribution from Cleco Power.

 

“Responsible Officer” means, with respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any Vice
President, Director, Managing Officer, associate, Assistant Vice President,
Secretary, Assistant Secretary, or any other officer of the Trustee having
direct responsibility for the administration of this Indenture and also, with
respect 

 

12

 

to a particular matter, any other officer to whom such
matter is referred because of such officer’s knowledge of and familiarity with
the particular subject.

 

“Retiring Trustee” means a Trustee that resigns or vacates the
office of Trustee for any reason.

 

“Sale Agreement” means the Storm Recovery Property Sale
Agreement for the related Storm Recovery Property, in each case, between the
Seller and the Issuer, as the same may be amended and supplemented from time to
time.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

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

 

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

 

“Semiannual Servicer’s Certificate” means the statement prepared
by the Servicer and delivered to the Trustee with respect to each Series of
Storm Recovery Bonds on or prior to each Payment Date therefor, the form of
which is attached hereto as Schedule 1.

 

“Series” means any series of Storm Recovery Bonds issued by the
Issuer and authenticated by the Trustee pursuant to the Indenture, as specified
in the Series Supplement therefor.

 

“Series Final Maturity Date” means the Final Maturity Date
for a Series.

 

“Series Issuance Date” means, with respect to any Series,
the date on which the Storm Recovery Bonds of such Series are to be
originally issued in accordance with Section 2.10 of the Indenture and the
Series Supplement for such Series.

 

“Series Supplement” means a Supplemental Indenture that
authorizes a particular Series of Storm Recovery Bonds.

 

“Series Trust Estate” has the meaning specified in a Series Supplement
for a particular Series of Storm Recovery Bonds.

 

“Servicer” means Cleco Power and each successor to or assignee
of Cleco Power, in its capacity as Servicer under the applicable Servicing
Agreement for a Series of Storm Recovery Bonds.

 

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

 

13

 

“Servicing Agreement” means any Storm Recovery Property
Servicing Agreement between the Issuer and the Servicer for the related Storm
Recovery Property and acknowledged by the Trustee, as the same may be amended
and supplemented from time to time.

 

“Servicing Fee” means the fee payable by the Issuer to the
Servicer on each Payment Date with respect to each Series of Storm
Recovery Bonds in the amount to be specified in the applicable Servicing
Agreement.

 

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

 

“State” means any one of the 50 states of the United States of
America or the District of Columbia.

 

“Storm Recovery Bond” or “Bond” means any of the “storm recovery
bonds” (as defined in the Securitization Act) issued by the Issuer pursuant to
the Indenture and one or more Series Supplements authorizing such Series.

 

“Storm Recovery Bond Balance” means, as of any date, the
aggregate Outstanding Amount of all Series of Storm Recovery Bonds on such
date.

 

“Storm Recovery Bond Owner” means, with respect to a Book-Entry
Storm Recovery Bond, the Person who is the beneficial owner of such Book-Entry
Storm Recovery Bond, as reflected on the books of the Clearing Agency, or on
the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency).

 

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

 

“Storm Recovery Bond Registrar” means U.S. Bank National
Association, in its capacity as keeper of the Storm Recovery Bond Register, or
any other Person appointed to act in such capacity by the Issuer pursuant to Section 2.05
of the Indenture.

 

“Storm Recovery Charge Adjustment Process” means the process by
which Storm Recovery Charges are adjusted pursuant to the applicable Servicing
Agreement, the Financing Order and the Securitization Act.

 

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

 

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

 

14

 

receive administration and servicer fees, to withdraw
funds from its restricted storm recovery reserve funded by the proceeds from
the sale of the Storm Recovery Property, or to use the Seller’s remaining
portion of those proceeds.

 

“Subsequent Sale” means the sale of Storm Recovery Property
after the date hereof, subject to the satisfaction of the conditions specified
in any Sale Agreement and the Indenture.

 

“Subsequent Transfer Date” means any date on which a Subsequent
Sale will be effective, specified in an Addition Notice.

 

“Subsequent Storm Recovery Property” means Storm Recovery
Property (identified in the related Bill of Sale) sold by the Seller to the
Issuer as of a Subsequent Transfer Date pursuant to a Sale Agreement.

 

“Successor Servicer” has the meaning specified in the Servicing
Agreement.

 

“Supplemental Indenture” means a supplemental indenture entered
into by the Issuer and the Trustee pursuant to Article IX of the
Indenture.

 

“Tranche” means, with respect to any Series, any one of the
classes of Storm Recovery Bonds of that Series, as specified in the Series Supplement
for that Series.

 

“Tranche Final Maturity Date” means the Final Maturity Date of a
Tranche, as specified in the Series Supplement for the related Series.

 

“Tranche Subaccount” has the meaning specified in Section 8.02(a) of
the Indenture.

 

“Trust Estate” means all Series Trust Estate securing all
Storm Recovery Bonds issued under the Indenture.

 

 “Trust Indenture Act” or “TIA”
means the Trust Indenture Act of 1939, as amended, as in force on the date
hereof, unless otherwise specifically provided.

 

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

 

“UCC” means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.

 

“Underwriting Agreement” means any underwriting agreement
entered into by the Issuer, Cleco Power and the underwriters parties thereto in
connection with the issuance of a separate Series of Storm Recovery Bonds
in accordance with a Financing Order.

 

“U.S. Government Obligations” means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America is
pledged and which are not callable at the issuer’s option.

 

15

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