10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.  20549
FORM 10-Q
[X] QUARTERLY REPORTS PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2002

Or[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15759

CLECO CORPORATION
(Exact name of registrant as specified in its charter)

Louisiana (State or other jurisdiction of incorporation or organization)	72-1445282 (I.R.S. Employer Identification No.)
2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)
Registrant's telephone number, including area code:  (318) 484-7400

Commission file number 1-05663

CLECO POWER LLC
(Exact name of registrant as specified in its charter)

Louisiana (State or other jurisdiction of incorporation or organization)	72-0244480 (I.R.S. Employer Identification No.)
2030 Donahue Ferry Road, Pineville, Louisiana (Address of principal executive offices)	71360-5226 (Zip Code)
Registrant's telephone number, including area code:  (318) 484-7400

Indicate by check mark whether the Registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.

Yes x      No ____

Indicate the number of shares outstanding at each of the issuer's classes of Common Stock, as of the latest practicable date.
Registrant	Description of Class	Shares Outstanding at July 31, 2002
Cleco Corporation	Common Stock, $1.00 Par Value	47,033,559

Cleco Power LLC, a wholly-owned subsidiary of Cleco Corporation, meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format.

This Combined Form 10-Q is separately filed by Cleco Corporation and Cleco Power LLC.  Information contained herein relating to Cleco Power is filed by Cleco Corporation and separately by Cleco Power on its own behalf.  Cleco Power makes no representation as to information relating to Cleco Corporation (except as it may relate to Cleco Power) or any other affiliate or subsidiary of Cleco Corporation.

TABLE OF CONTENTS

To jump to a section, click on the section name.

			Page
	GLOSSARY OF TERMS		2
	DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS		5
PART I		FINANCIAL INFORMATION
ITEM 1		FINANCIAL STATEMENTS
		CLECO CORPORATION - Consolidated Financial Statements	7
		CLECO CORPORATION - Management's Discussion and Analysis of      Results of Operations	15
		CLECO POWER LLC - Financial Statements	31
		CLECO POWER LLC - Narrative Analysis of Results of Operations	37
		NOTES TO FINANCIAL STATEMENTS	38
ITEM 2		MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION	49
ITEM 3		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK OF CLECO CORPORATION	61
PART II
ITEM 1		LEGAL PROCEEDINGS	64
ITEM 4		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	64
ITEM 5		OTHER INFORMATION	65
ITEM 6		EXHIBITS AND REPORTS ON FORM 8-K	65
	SIGNATURE		67

1

GLOSSARY OF TERMS

          References in this filing to "the Company" or "Cleco" mean Cleco Corporation and its subsidiaries, including Cleco Power LLC, and references to "Cleco Power" mean Cleco Power LLC, unless the context clearly indicates otherwise.  Additional abbreviations or acronyms used in this filing are defined below:

Abbreviation or Acronym	Definition
Acadia Aquila Tolling Agreement	Capacity Sale and Tolling Agreement between APP     and Aquila Energy
Acadia Calpine Tolling Agreement	Capacity Sale and Tolling Agreement between APP     and Calpine Energy Services
APP	Acadia Power Partners LLC
APP-related Petitioners	Various citizens and environmental action groups
APB No. 16	Accounting Principles Board Opinion No. 16 -     Business Combinations
APB No. 18	Accounting Principles Board Opinion No. 18 -     The Equity Method of Accounting for     Investments in Common Stock
APB No. 30	Accounting Principles Board Opinion No. 30 -     Reporting the Results of Operations -     Reporting the Effects of Disposal of a     Segment of a Business, and Extraordinary,     Unusual and Infrequently Occurring Events     and Transactions
Aquila	Aquila Energy
Calpine	Calpine Corporation
CLE Resources	CLE Resources, Inc.
Cleco	Cleco Corporation
Cleco Energy	Cleco Energy LLC
Cleco Power	Cleco Power LLC
Dynegy	Dynegy Power Marketing, Inc.
EITF	Emerging Issues Task Force of the FASB
EITF No. 02-3	Accounting for Contracts Involved in Energy     Trading and Risk Management Activities
EITF No. 94-3	Liability Recognition for Certain Employee     Termination Benefits and Other Costs to Exit an     Activity (including Certain Costs Incurred     in a Restructuring)
EITF No. 98-10	Accounting for Contracts Involved in Energy     Trading and Risk Management Activities
ESOP	Employee Stock Ownership Plan
Evangeline	Cleco Evangeline LLC

2

Evangeline Tolling Agreement	Capacity Sale and Tolling Agreement between     Evangeline and Williams Energy
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
Hudson	Hudson SVD LLC
IQ Notes	Cleco Power's insured quarterly notes, the payment     of principal and interest on which is insured by     a financial guaranty insurance policy issued     by Ambac Assurance Corporation
kW	Kilowatt
kWh	Kilowatt-hour
LDEQ	Louisiana Department of Environmental Quality
LPSC	Louisiana Public Service Commission
Marketing & Trading	Cleco Marketing & Trading LLC
Midstream	Cleco Midstream Resources LLC
Mini-perm	Short-term financing used to pay off construction or     commercial property loans, usually in 4 to 6 years
Mirant	Mirant Corporation, formerly Southern Energy Inc.
Mirant Marketing	Mirant Americas Energy Marketing, LP
MISO	Midwest Independent System Operator
MMBtu	Million British thermal units
MW	Megawatt
PB1	Power Block 1 at APP
PB2	Power Block 2 at APP
PEP	Perryville Energy Partners LLC
Quanta	Quanta Services, Inc.
Registrant(s)	Cleco and Cleco Power
RTO	Regional Transmission Organization
SEC	Securities and Exchange Commission
SFAS	Statement of Financial Accounting Standards
SFAS No. 4	Reporting Gains and Losses from Extinguishment     of Debt
SFAS No. 13	Accounting for Leases
SFAS No. 14	Financial Reporting for Segments of a Business     Enterprise
SFAS No. 44	Accounting for Intangible Assets of Motor Carriers
SFAS No. 58	Capitalization of Interest Cost in Financial     Statements That Include Investments Accounted     for by the Equity Method
SFAS No. 64	Extinguishments of Debt Made to Satisfy     Sinking-Fund Requirements
SFAS No. 109	Accounting for Income Taxes

3

SFAS No. 131	Disclosures about Segments of an Enterprise and     Related Information
SFAS No. 133	Accounting for Derivative Instruments and     Hedging Activities
SFAS No. 141	Business Combinations
SFAS No. 143	Accounting for Asset Retirement Obligations
SFAS No. 145	Rescission of FASB Statements No. 4, 44, and 64,     Amendment of FASB Statement No. 13, and     Technical Corrections
SFAS No. 146	Accounting for Exit or Disposal Activities
SPP	Southwest Power Pool
UtiliTech	Utility Construction & Technology Solutions LLC
UTS	UTS, LLC (successor entity to UtiliTech)
VAR	Value-at-risk
Williams Energy	Williams Energy Marketing & Trading Company

4

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

          This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  All statements other than statements of historical fact included in this report are forward-looking statements.  Although Cleco and Cleco Power believe that the expectations reflected in such forward-looking statements are reasonable, such forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks and uncertainties that could cause the actual results to differ materially from Cleco's and Cleco Power's expectations.  In addition to any assumptions and other factors referred to specifically in connection with these forward-looking statements, the following list identifies some of the factors that could cause Cleco's and Cleco Power's actua l results to differ materially from those contemplated in any of Cleco's and Cleco Power's forward-looking statements:

Factors affecting utility operations such as unusual weather conditions or other natural phenomena; catastrophic weather-related damage; unscheduled generation outages; unusual maintenance or repairs; unanticipated changes to fuel costs, gas supply costs or availability constraints due to higher demand, shortages, transportation problems or other developments; environmental incidents; or electric transmission or gas pipeline system constraints;

Increased competition in the electric environment, including effects of industry restructuring or deregulation, transmission system operation or administration, retail wheeling or cogeneration;

Regulatory factors such as unanticipated changes in rate-setting policies or procedures, recovery of investments made under traditional regulation and the frequency and timing of rate increases;

Financial or regulatory accounting principles or policies imposed by the FASB, the SEC, the FERC, the LPSC or similar entities with regulatory or accounting oversight;

Economic conditions, including inflation rates and monetary fluctuations;

Changing market conditions and a variety of other factors associated with physical energy and financial trading activities, including, but not limited to, price, basis, credit, liquidity, volatility, capacity, transmission, interest rate and warranty risks;

Nonperformance by and creditworthiness of counterparties under tolling and power purchase agreements and trading arrangements;

5

Acts of terrorism;

Availability or cost of capital resulting from changes in Cleco or Cleco Power, interest rates, and securities ratings or market perceptions of the electric utility industry and energy related industries;

Employee work force factors, including changes in key executives;

Legal and regulatory delays and other obstacles associated with mergers, acquisitions, capital projects, reorganizations or investments in joint ventures;

Cost and other effects of legal and administrative proceedings, settlements, investigations, claims and other matters; and

Changes in federal, state or local legislative requirements, such as changes in tax laws or rates, regulating policies or environmental laws and regulations.

          All subsequent written and oral forward-looking statements attributable to Cleco or Cleco Power or persons acting on their behalf are expressly qualified in their entirety by the factors identified above.

          Cleco and Cleco Power undertake no obligation to update or revise any forward-looking statements, whether as a result of changes in actual results, changes in assumptions or other factors affecting such statements.

6

CLECO CORPORATION
PART I - FINANCIAL INFORMATION

ITEM 1          FINANCIAL STATEMENTS

          The consolidated financial statements of Cleco have been prepared pursuant to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although Cleco believes that the disclosures are adequate to make the information presented not misleading.  These consolidated financial statements should be read in conjunction with the Financial Statements and the Notes included in the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 2001.

          The unaudited financial information included in the following financial statements reflects all adjustments of a normal recurring nature which are, in the opinion of management of Cleco, necessary for a fair statement of the financial position and the results of operations for the interim periods.  Information for interim periods is affected by seasonal variations in sales, rate changes, timing of fuel expense recovery and other factors and is not necessarily indicative of the results that may be expected for the full fiscal year.

7

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands, except share and per share amounts)
Operating revenue
Electric operations	$    141,322	$   165,222
Energy trading	199,270	107,189
Energy operations	20,881	24,987
Other operations	10,376	8,341
Gross operating revenue	371,849	305,739
Electric customer credits	(1,225)	(1,933)
Total operating revenue	370,624	303,806
Operating expenses
Fuel used for electric generation	30,104	63,104
Power purchased for utility customers	37,678	34,595
Purchases for energy trading	196,523	110,888
Purchases for energy operations	5,442	8,537
Other operations	25,287	17,726
Maintenance	11,424	7,785
Depreciation	15,696	15,379
Taxes other than income taxes	9,741	9,687
Total operating expenses	331,895	267,701
Operating income	38,729	36,105
Interest income	304	405
Allowance for other funds used during construction	512	332
Other income (expense), net	569	1
Income before interest charges	40,114	36,843
Interest charges
Interest charges, including amortization of debt expenses,       premium and discount, net of capitalized interest	13,033	15,147
Allowance for borrowed funds used during construction	(265)	(298)
Total interest charges	12,768	14,849
Net income from continuing operations before income taxes and    preferred dividends	27,346	21,994
Federal and state income taxes	9,564	7,924
Net income from continuing operations	17,782	14,070
Discontinued operations:
Loss on disposal of segment, net of income taxes	--	1,062
Net income before preferred dividends	17,782	13,008
Preferred dividend requirements, net	465	407
Net income applicable to common stock	$      17,317	$     12,601
	========	=======
(Continued on next page)

8

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Continued)
For the three months ended June 30,
(UNAUDITED)

	2002		2001
	(Thousands, except share and per share amounts)
Average shares of common stock outstanding
Basic	46,025,014		45,022,622
Diluted	48,746,034		47,813,125
Basic earnings per share
From continuing operations	$	0.38	$	0.30
From discontinued operations	$	--	$	(0.02)
Net income applicable to common stock	$	0.38	$	0.28
Diluted earnings per share
From continuing operations	$	0.36	$	0.29
From discontinued operations	$	--	$	(0.02)
Net income applicable to common stock	$	0.36	$	0.27
Cash dividends paid per share of common stock	$	0.2250	$	0.2175

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the three months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands)
Net income applicable to common stock	$   17,317	$   12,601
Other comprehensive income (expense), net of tax
Net unrealized gains from derivative instruments	--	521
Net unrealized loss from limited partnership	(213)	--
Net unrealized gains from available-for-sale securities	180	--
Net other comprehensive income (expense)	(33)	521
Comprehensive income	$   17,284	$   13,122
	======	======

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

9

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the six months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands, except share and per share amounts)
Operating revenue
Electric operations	$   263,284	$   314,499
Energy trading	270,869	163,670
Energy operations	41,138	65,610
Other operations	17,173	15,077
Gross operating revenue	592,464	558,856
Electric customer credits	(1,575)	(1,933)
Total operating revenue	590,889	556,923
Operating expenses
Fuel used for electric generation	56,564	123,477
Power purchased for utility customers	69,701	64,819
Purchases for energy trading	267,111	162,716
Purchases for energy operations	13,182	34,110
Other operations	43,305	38,213
Maintenance	18,764	15,031
Depreciation	30,644	30,779
Taxes other than income taxes	19,819	19,191
Total operating expenses	519,090	488,336
Operating income	71,799	68,587
Interest income	527	1,021
Allowance for other funds used during construction	922	504
Other income (expense), net	833	(7)
Income before interest charges	74,081	70,105
Interest charges
Interest charges, including amortization of debt expenses,       premium and discount, net of capitalized interest	25,050	30,382
Allowance for borrowed funds used during construction	(470)	(495)
Total interest charges	24,580	29,887
Net income from continuing operations before income taxes and    preferred dividends	49,501	40,218
Federal and state income taxes	17,666	14,048
Net income from continuing operations	31,835	26,170
Discontinued operations
Loss on disposal of segment, net of income taxes	--	2,468
Net income before preferred dividends	31,835	23,702
Preferred dividend requirements, net	937	880
Net income applicable to common stock	$     30,898	$     22,822
	=======	=======
(Continued on next page)

10

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Continued)
For the six months ended June 30,
(UNAUDITED)

	2002		2001
	(Thousands, except share and per share amounts)
Average shares of common stock outstanding
Basic	45,569,170		45,012,715
Diluted	48,269,913		47,854,663
Basic earnings per share
From continuing operations	$	0.68	$	0.56
From discontinued operations	$	--	$	(0.05)
Net income applicable to common stock	$	0.68	$	0.51
Diluted earnings per share
From continuing operations	$	0.66	$	0.55
From discontinued operations	$	--	$	(0.05)
Net income applicable to common stock	$	0.66	$	0.50
Cash dividends paid per share of common stock	$	0.445	$	0.430

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
For the six months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands)
Net income applicable to common stock	$   30,898	$   22,822
Other comprehensive income (expense), net of tax
Transition adjustment from implementation of SFAS No. 133	--	(4,453)
Net unrealized gains from derivative instruments	--	4,881
Net unrealized loss from limited partnership	(213)	--
Net unrealized gains from available-for-sale securities	180	--
Net other comprehensive income (expense)	(33)	428
Comprehensive income	$   30,865	$   23,250
	======	======

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

11

CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	At June 30,	At December 31,
	2002		2001
	(Thousands)
Assets
Current assets
Cash and cash equivalents	$         4,237		$       11,938
Restricted cash	5,739		5,466
Customer accounts receivable (less allowance for doubtful          accounts of $1,676 in 2002 and $1,561 in 2001)	41,050		25,308
Other accounts receivable	111,653		47,277
Unbilled revenues	21,010		17,863
Fuel inventory, at average cost	14,496		11,990
Material and supplies inventory, at average cost	13,668		16,107
Margin deposits	772		580
Risk management assets	3,888		1,818
Accumulated deferred fuel	10,982		7,979
Accumulated deferred federal and state income taxes, net	3,260		4,270
Other current assets	9,384		9,237
Total current assets	240,139		159,833
Property, plant and equipment
Property, plant and equipment	1,924,297		1,844,569
Accumulated depreciation	(687,091)		(655,738)
Net property, plant and equipment	1,237,206		1,188,831
Construction work-in-progress	312,718		35,816
Total property, plant and equipment, net	1,549,924		1,224,647
Equity investment in investee	251,166		227,169
Prepayments	24,611		19,418
Restricted cash, less current portion	27,755		24,210
Regulatory assets and liabilities - deferred taxes, net	52,455		58,545
Long-term receivable	10,061		5,904
Other deferred charges	59,494		48,421
Total assets	$ 2,215,605		$ 1,768,147
	========		=======

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.


(Continued on next page)

12

CLECO CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
(UNAUDITED)

	At June 30,	At December 31,
	2002		2001
	(Thousands)
Liabilities and shareholders' equity
Current liabilities
Short-term debt	$    164,134		$     180,129
Long-term debt due within one year	81,127		30,838
Accounts payable	143,987		88,605
Retainage	6,228		6,439
Customer deposits	20,976		20,692
Taxes accrued	34,984		11,052
Interest accrued	16,356		15,158
Other current liabilities	5,860		3,428
Total current liabilities	473,652		356,341
Deferred credits
Accumulated deferred federal and state income taxes, net	205,482		208,544
Accumulated deferred investment tax credits	21,615		22,487
Other deferred credits	50,445		45,809
Total deferred credits	277,542		276,840
Long-term debt, net	900,076		627,012
Total liabilities	1,651,270		1,260,193
Shareholders' equity
Preferred stock
Not subject to mandatory redemption	26,590		27,326
Deferred compensation related to preferred stock held by ESOP	(9,778)		(11,338)
Total preferred stock not subject to mandatory redemption	16,812		15,988
Common shareholders' equity
Common stock, $1 par value, authorized 100,000,000 shares,          issued 47,065,152 shares at June 30, 2002, and 45,063,740          shares at December 31, 2001	47,065		45,064
Premium on capital stock	152,970		111,714
Retained earnings	348,133		337,254
Treasury stock, at cost, 54,012 and 102,242 shares          at June 30, 2002, and December 31, 2001, respectively	(612)		(2,066)
Other comprehensive income	(33)		--
Total common shareholders' equity	547,523		491,966
Total shareholders' equity	564,335		507,954
Total liabilities and shareholders' equity	$ 2,215,605		$ 1,768,147
	========		=======

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

13

CLECO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(UNAUDITED)
 

	2002	2001
Operating activities	(Thousands)
Net income before preferred dividends	$    31,835	$     23,702
Adjustments to reconcile net income to net cash provided by       operating activities:
Loss on disposal of segment, net of tax	--	(2,122)
Depreciation and amortization	31,779	31,228
Income from equity investment	(1,276)	--
Allowance for other funds used during construction	(922)	(504)
Amortization of investment tax credits	(871)	(882)
Net deferred income taxes	3,842	4,734
Deferred fuel costs	(3,003)	12,667
Changes in assets and liabilities:
Accounts receivable, net	(79,258)	(27,526)
Unbilled revenues	(3,147)	1,330
Fuel inventory, materials and supplies	(67)	(5,521)
Accounts payable	43,823	(10,731)
Customer deposits	284	279
Long-term receivable	(4,157)	(4,358)
Other deferred accounts	(3,629)	(15,333)
Taxes accrued	24,604	22,315
Interest accrued	660	(139)
Margin deposits	(192)	6,224
Risk management assets and liabilities, net	(2,069)	4,737
Other, net	(1,373)	7,207
Net cash provided by operating activities	36,863	47,307
Investing activities
Additions to property, plant and equipment	(34,742)	(25,347)
Allowance for other funds used during construction	922	504
Proceeds from sale of property, plant and equipment	281	465
Proceeds from disposal of segment	--	4,590
Equity investment in investees	(32,266)	(70,577)
Acquisition of partnership net of cash acquired	(54,561)	--
Net cash used in investing activities	(120,366)	(90,365)
Financing activities
Cash transferred from restricted account	806	27,684
Issuance of common stock	44,300	--
Change in short-term debt, net	(15,995)	33,416
Retirement of long-term obligations	(3,576)	(16,272)
Issuance of long-term debt	75,000	--
Deferred financing costs	(3,775)	--
Dividends paid on common and preferred stock, net	(20,958)	(20,236)
Net cash provided by financing activities	75,802	24,592
Net decrease in cash and cash equivalents	(7,701)	(18,466)
Cash and cash equivalents at beginning of period	11,938	25,018
Cash and cash equivalents at end of period	$       4,237	$       6,552
	=======	======
Supplementary cash flow information
Interest paid (net of amount capitalized)	$     27,740	$     30,464
	=======	======
Income taxes paid	$       3,000	$       7,000
	=======	======
Supplementary non-cash financing activity
Issuance of treasury stock	$       1,515	$       1,224
	=======	======

The accompanying notes, as they relate to Cleco Corporation, are an integral part of the consolidated financial statements.

14

CLECO CORPORATION - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                                                    RESULTS OF OPERATIONS

          Set forth below is information concerning the consolidated results of operations of Cleco for the three months and six months ended June 30, 2002, and June 30, 2001.  The following discussion should be read in combination with Cleco's Financial Statements and the Notes contained in this Form 10-Q.

Comparison of the Three Months Ended June 30, 2002 and 2001

	For the three months ended June 30,
	2002		2001		Variance		Change
	(Thousands)
Operating revenue	$	370,624	$	303,806	$	66,818	22.0 %
Operating expenses	$	331,895	$	267,701	$	64,194	24.0 %
Net income from continuing operations	$	17,782	$	14,070	$	3,712	26.4 %
Loss from discontinued operations, net	$	--	$	1,062	$	(1,062)	(100.0)%
Net income applicable to common stock	$	17,317	$	12,601	$	4,716	37.4 %

          Consolidated net income from continuing operations increased 26.4% in the second quarter of 2002 compared to the second quarter of 2001 due primarily to increased earnings at Cleco Power.  Net income applicable to member's equity at Cleco Power increased $3.0 million in the second quarter of 2002 compared to the second quarter of 2001 due primarily to increased non-fuel related revenue and higher energy trading margins (energy trading revenue less purchases for energy trading).  Net income from continuing operations at Midstream increased $0.2 million in the second quarter of 2002 compared to the second quarter of 2001 due primarily to higher energy trading margins.  Offsetting a $3.2 million increase in the energy trading margins at Midstream was an increase in other operations and maintenance expenses of $4.4 million.  Net income applicable to common stock increased $4.7 million in the sec ond quarter of 2002 compared to 2001 due primarily to the increase in net income from continuing operations before income taxes and preferred dividends and the lack of a loss from discontinued operations in 2002.

          Increased operating revenue for the second quarter of 2002 compared to the second quarter of 2001 was due primarily to a $97.3 million increase at Midstream and a decrease of $34.8 million at Cleco Power.  The $97.3 million increase at Midstream was due primarily to a $100.4 million increase in energy trading revenue, which was partially offset by a decrease of $4.1 million in energy operations revenue.  The $100.4 million increase in energy trading revenue was due primarily to an $80.1 million increase in gas sold and a $26.7 million increase in electricity sold, which was partially offset by a decrease in the per unit cost of natural gas and power.  The decrease of $34.8 million in revenue at Cleco Power was due primarily to a $27.1 million decrease in fuel cost recovery revenue and an $8.3 million decrease in energy trading revenue which was partially offset by an increase in base revenue of $3.2 million.

          The 24.0% increase in operating expenses for the second quarter of 2002 compared to the second quarter of 2001 was due primarily to a $97.2 million increase in purchases for energy

15

trading at Midstream offset by decreased fuel expenses at Cleco Power.  The increase in purchases for energy trading was due to an $80.3 million increase in gas purchased, and a $27.5 million increase in electricity purchased, partially offset by a $9.5 million decrease in gas options expense.  Operating expenses at Midstream increased $98.0 million, while operating expenses at Cleco Power decreased $40.6 million in the second quarter of 2002 compared to the second quarter of 2001.  The increase at Midstream was due to a $97.2 million increase in purchases for energy trading and a $4.4 million increase in other operations and maintenance expenses which was partially offset by a decrease of $3.1 million in purchases for energy operations.  Fuel expenses at Cleco Power decreased $33.3 million in the second quarter of 2002 compared to the second quarter of 2001 due primarily to a decrease in the per unit cost of natural gas.

          Income tax expense for the second quarter of 2002 increased $1.6 million, or 20.7%, compared to the second quarter of 2001 due primarily to an increase in net income applicable to common stock.  Cleco Power's income tax expense increased $3.0 million, or 46.9%, compared to the second quarter of 2001, offset by a $0.6 million, or 37.3%, decrease of Midstream's income tax expense compared to the second quarter of 2001.  Cleco's effective income tax rate for the second quarter of 2002 decreased from 36.0% to 35.0%, compared to the second quarter of 2001 due primarily to a true-up adjustment related to an Internal Revenue Service audit for a prior period.

MIDSTREAM

	For the three months ended June 30,
	2002	2001	Variance	Change
	(Thousands)
Operating revenue
Energy trading	$   193,503	$   93,126	$   100,377	107.8 %
Energy operations	20,881	24,987	(4,106)	(16.4)%
Other operations	3,594	--	3,594	--  %
Affiliate	1,943	4,553	(2,610)	(57.3)%
Total operating revenue	219,921	122,666	97,255	79.3 %
Operating expenses
Purchases for energy trading	191,795	94,591	97,204	102.8 %
Purchases for energy operations	5,412	8,537	(3,125)	(36.6)%
Other operations	9,857	6,841	3,016	44.1 %
Maintenance	2,281	918	1,363	148.5 %
Depreciation	2,143	2,659	(516)	(19.4)%
Taxes other than income taxes	335	258	77	29.8 %
Total operating expenses	211,823	113,804	98,019	86.1 %
Operating income	$       8,098	$     8,862	$        (764)	(8.6)%
	=======	======	======

Energy Trading Operations

          Marketing & Trading generally does not take physical delivery of electricity or natural gas traded, but settles the transactions through the financial markets.

16

          The amount of electricity and natural gas traded during a particular period is generally influenced by several factors:

the market prices of gas or power,

the market price volatility of gas or power,

the power generating and natural gas assets available,

the overall economy in the region, and

the creditworthiness and liquidity of counterparties under trading agreements.

          The combination and intensity of the factors, acting in concert or in opposition, will affect trading volumes in various degrees.  In addition, other factors may occasionally affect trading volumes.  Based on the influences on trading volumes, general trends are difficult to predict.

          The chart below presents a summary of electricity and natural gas traded for the periods indicated.  For the second quarter of 2002, compared to the second quarter of 2001, the increase in electricity and gas volume was due primarily to increased trading activity and to the sale of startup gas and startup power from new generating facilities partially owned by Midstream and its partners, and to a lesser extent, increased power volume for new and existing energy management customers.

	For the three months ended June 30,
	2002	2001	Change
Electricity (Million kWh)	3,285	1,145	186.9%
Natural gas (MMBtu)	28,148,749	2,879,269	877.6%

          The increase of $100.4 million in energy trading revenue in the second quarter of 2002 as compared to the second quarter of 2001 resulted primarily from an increase in the volume of electricity and natural gas traded, which was partially offset by a decrease in the per unit cost of natural gas and power.  Purchases for energy trading increased $97.2 million in the second quarter of 2002 as compared to the second quarter of 2001 due primarily to the same factors affecting energy trading revenues.  Energy trading margins increased $3.2 million in the second quarter of 2002 compared to the second quarter of 2001. Cleco's energy trading activity is considered "trading" under EITF No. 98-10, requiring open positions to be reported at fair market value or "marked-to-market."  The mark-to-market related to these open positions was a gain of $1.3 million in the second quarter of 2002 compared to a loss o f $2.8 million in the same period of 2001. Marketing & Trading's average per unit cost of natural gas in the second quarter of 2002 decreased 27.8% compared to the second quarter of 2001, and Marketing & Trading's average per unit cost of electricity decreased 51.1% for the second quarter of 2002 compared to the second quarter of 2001.  Trading margins generally are not comparable from year to year due

17

to fluctuations in market volatility, gas and power pricing, gas storage levels, and power generation changes.  

	For the three months ended June 30,
		2002	2001	Variance	Change
		(Thousands)
Energy trading revenue		$  192,171	$   95,891	$   96,280	100.4 %
Mark-to-market		1,332	(2,765)	4,097	148.2 %
Total revenue		193,503	93,126	100,377	107.8 %
Energy trading expenses		191,795	94,591	97,204	102.8 %
Trading margin		$      1,708	$   (1,465)	$     3,173	216.6 %
		=======	======	======

Energy Operations

          Cleco Energy generally takes physical delivery of natural gas marketed and sells physical gas instead of settling transactions through the financial markets.  The chart below presents a summary of natural gas marketed for the periods indicated.

	For the three months ended June 30,
	2002	2001	Change
Natural gas (MMBtu)	1,766,498	2,402,927	(26.5)%

          The decrease of $4.1 million in energy operations revenue in the second quarter of 2002 compared to the second quarter of 2001 was due primarily to a decrease in the per unit cost of natural gas.  Natural gas sales volume decreased due to lower sales to a major industrial customer offset by new long-term supply and spot contracts entered into by Cleco Energy in March 2001, October 2001 and February 2002.   Cleco Energy's average per unit cost of natural gas decreased 23.9% in the second quarter of 2002 compared to the second quarter of 2001.  Purchases for energy operations decreased $3.1 million for the second quarter of 2002, compared to the same period in 2001 due primarily to the same factors affecting energy operations revenue.

          Tolling revenue, which is included in energy operations revenue, was $13.9 million in the second quarter of 2002 compared to $13.7 million in the second quarter of 2001, which included $1.2 million in unbilled revenue for amounts earned in the second quarter of 2001 but not billed until July 2001.  The increase was due primarily to increased generation from the Evangeline facility in the second quarter of 2002 compared to the same period of 2001.  In 2002, the plant operated above the minimum capacity factors specified in the tolling agreement resulting in all revenue being billed during the contract year, which runs August 1 through July 31.

          Collectively, purchases for energy operations and other operations and maintenance expense for the Evangeline facility increased $1.2 million for the second quarter of 2002 compared to the same period of 2001 due primarily to increased generation from the facility.  Depreciation expense decreased $0.5 million for the second quarter of 2002 compared to the second quarter of 2001 due to a July 1, 2001, change in the estimated life of the Evangeline facility.

18

          Although Marketing & Trading is primarily a trading organization, it also is engaged in providing energy management services to Evangeline, PEP, APP and several municipalities.  This revenue is shown in energy operations revenue in the table above and increased $0.2 million in the second quarter of 2002 compared to the same period of 2001 due primarily to increased energy management service volumes being provided as compared to the prior period.

CLECO POWER

          Cleco Power's net income applicable to member's equity in the second quarter of 2002 increased $3.0 million over the second quarter of 2001.  The increase was due primarily to higher non-fuel related revenue and energy trading margins, partially offset by slightly higher expenses.  Higher non-fuel related revenues were largely a result of warmer weather, which caused an increase in retail sales, along with service to two new wholesale customers.  The increase in energy trading margins was due primarily to favorable power positions resulting in trading gains during the second quarter of 2002 compared to trading losses in the second quarter of 2001.  Revenue for the second quarter of 2002 was also affected by a $3.3 million decrease in affiliate and other operations revenue, and a $1.2 million accrual for estimated customer credits.  Operating expenses for the second quarter of 2002 were $40.6 million lower compared to the same period in 2001, driven mainly by a decrease of $33.3 million in fuel used for electric generation attributable to lower per unit costs of natural gas, but were partially offset by higher operating expenses for planned power plant maintenance, some catch-up of operating expenses delayed from the first quarter, and higher depreciation expense.  Income tax expense for the second quarter of 2002 was $3.0 million higher compared to the same period in 2001 due to higher net income, which resulted in an increase to the income tax rate.

	For the three months ended June 30,
	2002	2001	Variance	Change
Operating revenue	(Thousands)
Base	$  78,660	$   75,490	$       3,170	4.2  %
Fuel cost recovery	62,662	89,732	(27,070)	(30.2) %
Estimated customer credits	(1,225)	(1,933)	708	36.6  %
Energy trading	5,767	14,063	(8,296)	(59.0) %
Other operations	6,782	8,325	(1,543)	(18.5) %
Affiliate	540	2,347	(1,807)	(77.0) %
Total operating revenue	153,186	188,024	(34,838)	(18.5) %

Operating expenses
Fuel used for electric generation	30,678	63,972	(33,294)	(52.0) %
Power purchased for utility customers	37,678	34,640	3,038	8.8  %
Purchases for energy trading	4,731	16,297	(11,566)	(71.0) %
Purchases for energy operations	30	--	30	--  %
Other operations	16,806	18,962	(2,156)	(11.4) %
Maintenance	9,528	7,206	2,322	32.2  %
Depreciation	13,255	12,642	613	4.8  %
Taxes other than income taxes	9,374	8,933	441	4.9  %
Total operating expenses	122,080	162,652	(40,572)	(24.9) %
Operating income	$  31,106	$   25,372	$       5,734	22.6  %
	======	======	======

19

	For the three months ended June 30,
	2002	2001	Change
	(Million kWh)
Electric sales
Residential	796	719	10.7 %
Commercial	431	400	7.8 %
Industrial	692	662	4.5 %
Other retail	150	141	6.4 %
Unbilled	104	137	(24.1)%
Total retail	2,173	2,059	5.5 %
Sales for resale	182	89	104.5 %
Total sales to regular customers	2,355	2,148	9.6 %
Short-term sales to other utilities	32	37	(13.5)%
Sales from trading activities	71	44	61.4 %
Total electric sales	2,458	2,229	10.3 %
	=====	=====

          Weather influences the demand for electricity, especially among residential customers.  Much of this demand is measured in cooling degree-days and heating degree-days.  A cooling degree-day is an indication of the likelihood of a consumer utilizing air conditioning, while a heating degree-day is an indication of the likelihood of a consumer utilizing heating.  An increase in heating degree-days does not produce the same increase in revenue as an increase in cooling degree-days due to customers' ability to choose an alternative fuel source for heating, such as natural gas.  The following chart indicates the percentage variance from normal conditions and from the prior year for cooling degree-days for the second quarters of 2002 and 2001.

	For the three months ended June 30,
	2002	2001
Cooling degree-days
Increase/(Decrease) from Normal	33.2 %	9.5 %
Increase/(Decrease) from Prior Year	21.7 %	6.4 %

          Sales for resale increased during the second quarter of 2002 compared to the same period in 2001.  This increase did not have a large revenue impact, and was due primarily to sales to the City of Ruston under a three-year contract that began in June 2001 to supply all of its power and a similar five-year contract with the City of Natchitoches that began in January 2002.

          Fuel cost recovery revenue collected from customers decreased primarily as a result of a decrease in the average per unit cost of fuel to $2.44 per MMBtu in the second quarter of 2002 compared to $3.19 per MMBtu in the same period in 2001.  The decrease in the average per unit cost of fuel was primarily a result of a 25.1% decrease in the per unit cost of natural gas for the second quarter of 2002 compared to the second quarter of 2001.  Changes in fuel costs historically have had no effect on Cleco Power's net income, as its fuel costs are generally recovered through fuel cost adjustment clauses that enable Cleco Power to pass on to customers substantially all changes in the cost of generating fuel and power purchased.  These adjustments are reviewed monthly and are regulated by the LPSC (representing about 93% of the total fuel

20

cost adjustment) and the FERC.  Until final approval is received upon completion of a periodic audit by the LPSC, the adjustments are subject to refund.

          An earnings review settlement was reached with the LPSC in 1996 pursuant to which accruals for estimated customer credits are sometimes required.  Revenues for the second quarter of 2002 were decreased by a $1.2 million accrual compared to a $1.9 million accrual in the second quarter of 2001.  The amount of credit due customers, if any, is determined by the LPSC annually based on results for the 12-month period ending September 30 of each year.  For additional information, see Note 9 - Accrual for Estimated Customer Credits in the Notes to the Unaudited Financial Statements in this Report.

          Operating expenses decreased $40.6 million, or 24.9%, during the second quarter of 2002 compared to the same period in 2001.  The decrease in operating expenses was primarily the result of decreased fuel used for electric generation.  Purchases for energy trading decreased $11.6 million in the second quarter of 2002 compared to the same period in 2001 due to a decrease in trading volume.  The decrease of $33.3 million in fuel used for electric generation was due to a decrease in the average per unit cost of natural gas from $4.90 per MMBtu during the second quarter of 2001 to $3.67 per MMBtu in the second quarter of 2002.

          Interest expense for the second quarter of 2002 decreased $0.1 million compared to the second quarter of 2001 due primarily to lower interest rates.  For additional information regarding Cleco Power's indebtedness, see Note 8 - Debt in the Notes to the Unaudited Financial Statements in this Report.

          The chart below presents a summary of electricity and natural gas traded for the periods indicated.

	For the three months ended June 30,
	2002	2001	Change
Electricity (Million kWh)	65.5	0.2	-- %
Natural gas (MMBtu)	840,000	1,804,696	(53.5)%

          Total revenue from energy trading operations for the second quarter of 2002 decreased $8.3 million compared to the same period in 2001.  The decrease in total revenue from energy trading operations was due primarily to a lower natural gas trading volume offset by a mark-to-market gain in the second quarter of 2002 compared to a mark-to-market loss in the second quarter of 2001.  Cleco Power's energy trading activity is considered "trading" under EITF No. 98-10, requiring open positions to be reported at fair market value or "marked-to-market."  The

21

mark-to-market related to these open positions was a gain of $0.3 million in the second quarter of 2002 compared to a loss of $1.4 million in the same period of 2001.

	For the three months ended June 30,
		2002	2001	Variance	Change
		(Thousands)
Energy trading revenue		$    5,508	$   15,493	$    (9,985)	(64.4)%
Mark-to-market		259	(1,430)	1,689	118.1 %
Total revenue		5,767	14,063	(8,296)	(59.0)%
Energy trading expenses		4,731	16,297	(11,566)	(71.0)%
Trading margin		$    1,036	$   (2,234)	$     3,270	146.4 %
		======	======	======

          Cleco Power records the effect of income taxes on its financial statements in accordance with SFAS No. 109.  The components of the income tax calculation (deferred tax assets/liabilities, current tax payable, income tax expense, etc.) are based upon various assumptions.  The actual results may be different from the assumptions used, resulting in periodic adjustments to the financial statements.  The differences may have a material effect on Cleco Power's financial condition and results of operations.  Income tax expense in the second quarter of 2002 was $9.5 million, a $3.0 million or 46.9% increase, compared to expense of $6.5 million in the second quarter of 2001 due primarily to a $6.1 million increase in net income before income taxes, which resulted in an increase in the effective income tax rate.  Cleco Power's effective income tax rate for the second quarter of 2002 increase d from 34.3% to 38.1%, compared to the second quarter of 2001, due primarily to an increase in net income before taxes.

CLECO CONSOLIDATED

          Interest expense in the second quarter of 2002 decreased $2.1 million, or 14.0%, compared to the second quarter of 2001 due primarily to the decrease in the average commercial paper discount rate from 4.62% in 2001 to 2.17% in 2002, and an increase in the amount capitalized in the second quarter of 2002 compared to the same period last year.  

          Cleco records the effect of income taxes on its financial statements in accordance with SFAS No. 109.  The components of the income tax calculation (deferred tax assets/liabilities, current tax payable, income tax expense, etc.) are based upon various assumptions.  The actual results may be different from the assumptions used, resulting in periodic adjustments to the financial statements.  The differences may have a material effect on Cleco's financial condition and results of operations.  Income tax expense in the second quarter 2002 was $9.6 million, a $1.6 million or 20.7% increase, compared to expense of $7.9 million in the second quarter of 2001 due primarily to a $5.4 million, or 24.3%, increase in net income from continuing operations before income taxes and preferred dividends.  Cleco's effective income tax rate for the second quarter of 2002 decreased from 36.0% to 35.0%, compared to the second quarter of 2001 due primarily to a true-up adjustment related to an Internal Revenue Service audit for a prior period.

22

OTHER

          Discontinued operations at UTS reduced second quarter 2001 earnings by $1.1 million or $0.02 per diluted common share.  The $1.1 million loss on disposal of a segment, net, resulted primarily from actual operating losses in excess of estimated operating losses for 2001 that were included in the loss on disposal of segment for the year ended December 31, 2000.  No such loss was recorded in the second quarter of 2002.  For additional information, see Note 7 - Discontinued Operations in the Notes to the Unaudited Financial Statements in this Report.

Comparison of the Six Months Ended June 30, 2002 and 2001

	For the six months ended June 30,
	2002		2001		Variance		Change
	(Thousands)
Operating revenue	$	590,889	$	556,923	$	33,966	6.1 %
Operating expenses	$	519,090	$	488,336	$	30,754	6.3 %
Net income from continuing operations	$	31,835	$	26,170	$	5,665	21.7 %
Loss from discontinued operations, net	$	--	$	2,468	$	(2,468)	(100.0)%
Net income applicable to common stock	$	30,898	$	22,822	$	8,076	35.4 %

          Consolidated net income from continuing operations increased 21.7% in the first six months of 2002 compared to the first six months of 2001 due primarily to increased earnings at Cleco Power.  Net income applicable to member's equity at Cleco Power increased $8.3 million in the first six months of 2002 compared to the first six months of 2001 due primarily to increased non-fuel related revenues, higher energy trading margins, as well as lower other operations and maintenance expenses.  Net income from continuing operations at Midstream decreased $2.7 million in the first six months of 2002 compared to the first six months of 2001 due primarily to lower energy trading margins.  Compounding the earnings impact of the decrease in the energy trading margins at Midstream was an increase in maintenance expenses of $2.2 million.  Net income applicable to common stock increased $8.1 million in the f irst six months of 2002 compared to 2001 due primarily to the increase in net income from continuing operations and the lack of a loss from discontinued operations in 2002.

          Increased operating revenue for the first six months of 2002 compared to the first six months of 2001 was due primarily to an $89.2 million increase at Midstream and a decrease of $62.1 million at Cleco Power.  The $89.2 million increase at Midstream was due primarily to a $114.2 million increase in energy trading revenue, which was partially offset by a decrease of $24.5 million in energy operations revenues.  The $114.2 million increase in energy trading revenues is due primarily to a $108.7 million increase in gas sold and a $37.7 million increase in electricity sold offset by a $35.9 million decrease in gas options income.  The decrease of $62.1 million in revenues at Cleco Power was due primarily to a $57.0 million decrease in fuel cost recovery revenues partially offset by an increase in base revenues of $5.8 million.

          The 6.3% increase in operating expenses for the first six months of 2002 compared to the first six months of 2001 was caused mainly by a $115.4 million increase in purchases for energy

23

trading at Midstream and decreased fuel expenses at Cleco Power.  The increase in purchases for energy trading was due primarily to a $107.7 million increase in gas purchased and a $41.7 million increase in electricity purchased partially offset by a $32.4 million decrease in gas options expense.  Total operating expenses at Midstream increased $94.4 million, while total operating expenses at Cleco Power decreased $75.6 million in the first six months of 2002 compared to the first six months of 2001.  The increase at Midstream was due primarily to a $115.4 million increase in purchases for energy trading and a $21.0 million decrease in purchases for energy operations.  Fuel expenses at Cleco Power decreased $67.1 million in the first six months of 2002 compared to the first six months of 2001 due primarily to a decrease in the per unit cost of natural gas.

          Income tax expense in the first six months of 2002 increased $3.6 million, or 25.8%, compared to the first six months of 2001 due primarily to an increase in net income applicable to common stock and a resulting increase in the effective income tax rate.  Cleco Power's income tax expense increased $6.5 million, or 59.6%, compared to the first six months of 2001.  Midstream's income tax expense decreased $2.3 million, or 63.9%, compared to the first six months of 2001.  Cleco's effective income tax rate in the first six months of 2002 increased from 34.9% to 35.7%, compared to the first six months of 2001, due primarily to an increase in net income applicable to common stock.

MIDSTREAM

	For the six months ended June 30,
	2002	2001	Variance	Change
	(Thousands)
Operating revenue
Energy trading	$  264,314	$  150,114	$   114,200	76.1 %
Energy operations	41,108	65,610	(24,502)	(37.3)%
Other operations	3,964	2	3,962	-- %
Affiliate	3,212	7,625	(4,413)	(57.9)%
Total operating revenue	312,598	223,351	89,247	40.0 %
Operating expenses
Purchases for energy trading	261,467	146,086	115,381	79.0 %
Purchases for energy operations	13,152	34,110	(20,958)	(61.4)%
Other operations	15,520	16,812	(1,292)	(7.7) %
Maintenance	3,994	1,792	2,202	122.9 %
Depreciation	4,215	5,305	(1,090)	(20.5)%
Taxes other than income taxes	896	710	186	26.2 %
Total operating expenses	299,244	204,815	94,429	46.1 %
Operating income	$    13,354	$    18,536	$     (5,182)	(28.0)%
	======	======	======

Energy Trading Operations

          The chart below presents a summary of electricity and natural gas traded for the periods indicated.  For the first six months of 2002, as compared to the first six months of 2001, the increase in electricity and gas volume was due primarily to increased trading activity, the

24

sale of startup gas and startup power from new generating facilities partially owned by Midstream and its partners and, to a lesser extent, increased power volume for new and existing energy management customers.

	For the six months ended June 30,
	2002	2001	Change
Electricity (Million kWh)	4,428	1,466	202.0%
Natural gas (MMBtu)	45,344,056	4,581,714	889.7%

          The increase of $114.2 million in energy trading revenue for the first six months of 2002 compared to the same period of 2001 was due primarily to an increase in volumes of electricity and natural gas traded, which was partially offset by a decrease in the per unit cost of natural gas and power.  Purchases for energy trading increased $115.4 million for the first six months of 2002 compared to the same period of 2001 mainly because of the same factors affecting energy trading revenues.  Energy trading margins decreased $1.2 million for the first six months of 2002 compared to the same period of 2001.   Marketing & Trading's energy trading activity is considered "trading" under EITF No. 98-10, requiring open positions to be reported at fair market value or "marked-to-market."  The mark-to-market related to these open positions was a gain of $3.2 million in the first six months of 2002 compared to a loss of $0.7 million in the same period of 2001.  Marketing & Trading's average per unit cost of natural gas for the first six months of 2002 decreased 45.4% compared to the same period of 2001, and Marketing & Trading's average per unit cost of electricity decreased 50.1% for the first six months of 2002 compared to the same period of 2001.  Trading margins generally are not comparable from year to year due to fluctuations in market volatility, gas and power pricing, gas storage levels, and power generation changes.  

	For the six months ended June 30,
		2002	2001	Variance	Change
		(Thousands)
Energy trading revenue		$   261,108	$  150,849	$  110,259	73.1 %
Mark-to-market		3,206	(735)	3,941	-- %
Total revenue		264,314	150,114	114,200	76.1 %
Energy trading expenses		261,467	146,086	115,381	79.0 %
Trading margin		$       2,847	$      4,028	$    (1,181)	(29.3) %
		=======	======	======

Energy Operations

          Cleco Energy generally takes physical delivery of natural gas marketed and sells physical gas instead of settling transactions through the financial markets.  The chart below presents a summary of natural gas marketed for the periods indicated.

	For the six months ended June 30,
	2002	2001	Change
Natural gas (MMBtu)	4,400,914	5,877,509	(25.1)%

          The decrease of $24.5 million in energy operations revenue for the first six months of 2002 compared to the same period of 2001 was due primarily to a decrease in the per unit cost of

25

natural gas.  Natural gas sales volume decreased due to lower sales to a major industrial customer offset by new long-term supply and spot contracts entered into during March 2001, October 2001, and February 2002.  Cleco Energy's average per unit cost of natural gas decreased 58.8% for the first six months of 2002 compared to the same period of 2001.  Purchases for energy operations decreased $20.9 million for the first six months of 2002 compared to the same period of 2001 due primarily to the same factors affecting energy operations revenue.

          Tolling revenue, which is included in energy operations revenue, was $25.5 million for the first six months of 2002 compared to $23.8 million in the same period of 2001.  The increase was due primarily to increased generation from the Evangeline facility for the first six months of 2002 compared to the same period of 2001.

          Collectively, purchases for energy operations and other operations and maintenance expense for the Evangeline facility increased $1.8 million for the first six months of 2002 compared to the same period of 2001 due primarily to increased generation from the Evangeline facility.  Depreciation expense decreased $1.1 million for the first six months of 2002 compared to the same period of 2001 due to a July 1, 2001, change in the estimated life of the Evangeline facility.

          Although Marketing & Trading is primarily a trading organization, it also is engaged in providing energy management services to Evangeline, PEP, APP, and several municipalities.  Marketing & Trading acts as an energy manager for contracted municipalities, Cleco subsidiaries, and Midstream business partners.  This revenue is shown in energy operations revenue in the table above and increased $0.1 million for the first six months of 2002 compared to the same period of 2001 due primarily to increased energy management service volumes.

CLECO POWER

          Cleco Power's net income applicable to member's equity in the first six months of 2002 increased $8.3 million over the first six months of 2001.  The increase was due primarily to higher non-fuel related revenues and energy trading margins, as well as lower other operations and maintenance expenses.  Higher non-fuel related revenues were largely a result of warmer weather in the first six months of 2002 compared to the first six months of 2001 and service to two new wholesale customers.  The increase in energy trading margins was due primarily to favorable power positions resulting in trading gains during the first six months of 2002 compared to trading losses in the first six months of 2001.  Other operations and maintenance expenses were lower primarily as a result of a decrease in production operations and administrative and general expenses.  Operating expenses for the first six months of 2002 were $75.6 million lower compared to the same period in 2001, driven mainly by a decrease of $67.1 million in fuel used for electric generation attributable to lower natural gas prices, and an $11.0 million decrease in purchases for energy trading.  Income tax expense for the first six months of 2002 was $6.5 million higher compared to the same period in 2001 due to higher net income, which resulted in an increase in the income tax rate.

26

	For the six months ended June 30,
	2002	2001	Variance	Change
Operating revenue	(Thousands)
Base	$ 146,014	$   140,263	$       5,751	4.1 %
Fuel cost recovery	117,270	174,236	(56,966)	(32.7)%
Estimated customer credits	(1,575)	(1,933)	358	18.5 %
Energy trading	6,556	13,556	(7,000)	(51.6)%
Energy operations	30	--	30	-- %
Other operations	13,201	15,034	(1,833)	(12.2)%
Affiliate	974	3,456	(2,482)	(71.8)%
Total operating revenue	282,470	344,612	(62,142)	(18.0)%

Operating expenses
Fuel used for electric generation	57,237	124,369	(67,132)	(54.0)%
Power purchased for utility customers	69,701	64,786	4,915	7.6 %
Purchases for energy trading	5,647	16,629	(10,982)	(66.0)%
Purchases for energy operations	30	--	30	-- %
Other operations	30,293	36,096	(5,803)	(16.1)%
Maintenance	15,611	13,623	1,988	14.6 %
Depreciation	25,980	25,327	653	2.6 %
Taxes other than income taxes	18,618	17,879	739	4.1 %
Total operating expenses	223,117	298,709	(75,592)	(25.3)%
Operating income	$  59,353	$    45,903	$    13,450	29.3 %
	======	======	======

	For the six months ended June 30,
	2002	2001	Change
	(Million kWh)
Electric sales
Residential	1,568	1,501	4.5 %
Commercial	806	775	4.0 %
Industrial	1,308	1,344	(2.7)%
Other retail	281	276	1.8 %
Unbilled	111	1	-- %
Total retail	4,074	3,897	4.5 %
Sales for resale	317	150	111.3 %
Total sales to regular customers	4,391	4,047	8.5 %
Short-term sales to other utilities	59	72	(18.1)%
Sales from trading activities	122	47	159.6 %
Total electric sales	4,572	4,166	9.7 %
	====	====

27

          The following chart indicates the percentage variance from normal conditions and from the prior year for cooling degree-days and heating degree-days for the first six months of 2002 and 2001.

	For the six months ended June 30,
	2002	2001
Cooling degree-days
Increase/(Decrease) from Normal	34.5 %	4.0 %
Increase/(Decrease) from Prior Year	29.3 %	(6.5)%
Heating degree-days
Increase/(Decrease) from Normal	(1.0)%	12.2 %
Increase/(Decrease) from Prior Year	(11.8)%	51.3 %

          Sales for resale increased during the first six months of 2002 compared to the same period in 2001.  This increase did not have a large revenue impact, and was due primarily to sales to the City of Ruston under a three-year contract that began in June 2001 to supply all of its power and a similar five-year contract with the City of Natchitoches that began in January 2002.

          Fuel cost recovery revenue collected from customers decreased primarily as a result of a decrease in the average per unit cost of fuel to $2.34 per MMBtu in the first six months of 2002 compared to $3.36 per MMBtu in the same period in 2001.  The decrease in the average per unit cost of fuel was primarily a result of a 43.1% decrease in the per unit cost of natural gas for the first six months of 2002 compared to the first six months of 2001.  For information on Cleco Power's ability to pass on to customers changes in the cost of generating fuel and power purchased, see - Comparison of the Three Months Ended June 30, 2002 and 2001 - Cleco Power, above.

          Revenues for the first six months of 2002 were decreased by a $1.6 million accrual for estimated customer credits compared to $1.9 million in the first six months of 2001.   For additional information, see Note 9 - Accrual for Estimated Customer Credits in the Notes to the Unaudited Financial Statements in this Report.

          Operating expenses decreased $75.6 million, or 25.3%, during the first six months of 2002 compared to the same period in 2001.  The decrease in operating expenses was primarily the result of decreased costs for fuel used for electric generation and trading expenses.  The decrease of $67.1 million in fuel used for electric generation was due primarily to a decrease in the average per unit cost of natural gas from $5.73 per MMBtu during the first six months of 2001 to $3.26 per MMBtu in the first six months of 2002.  Purchases for energy trading operations decreased $11.0 million in the first six months of 2002 compared to the same period in 2001 due primarily to a decrease in trading volume and a decrease in the per unit cost of natural gas.  The 7.7% decrease in other operations and maintenance expenses in the first six months of 2002 compared to the first six months of 2001 was due primaril y to a decrease in production operations and administrative and general expenses.

28

          Interest expense for the first six months of 2002 decreased $0.9 million compared to the first six months of 2001 due primarily to lower interest rates.  For additional information, see Note 8 - Debt in the Notes to the Unaudited Financial Statements in this Report.

          The chart below presents a summary of electricity and natural gas traded for the periods indicated.

	For the six months ended June 30,
	2002	2001	Change
Electricity (Million kWh)	108.4	0.9	-- %
Natural gas (MMBtu)	840,000	1,834,696	(54.2)%

          Total revenue from energy trading for the first six months of 2002 decreased $7.0 million compared to the same period in 2001.  The decrease in total revenue from energy trading was due primarily to a decrease in trading volume offset by lower mark-to-market losses in the first six months of 2002 compared to the first six months of 2001.   The mark-to-market related to these open positions was a loss of $60.0 thousand in the first six months of 2002 compared to a loss of $2.9 million in the same period of 2001.

	For the six months ended June 30,
		2002	2001	Variance	Change
		(Thousands)
Energy trading revenue		$     6,616	$   16,424	$   (9,808)	(59.7)%
Mark-to-market		(60)	(2,868)	2,808	97.9 %
Total revenue		6,556	13,556	(7,000)	(51.6)%
Energy trading expenses		5,647	16,629	(10,982)	(66.0)%
Trading margin		$       909	$   (3,073)	$     3,982	129.6 %
		======	=====	=====

          Cleco Power records the effect of income taxes on its financial statements in accordance with SFAS No. 109.  The components of the income tax calculation (deferred tax assets/liabilities, current tax payable, income tax expense, etc.) are based upon various assumptions.  The actual results may be different from the assumptions used, resulting in periodic adjustments to the financial statements.  The differences may have a material effect on Cleco Power's financial condition and results of operations.  Income tax expense in the first six months of 2002 was $17.4 million, a $6.5 million or 59.6% increase, compared to expense of $10.9 million in the first six months of 2001 due primarily to a $14.8 million increase in net income before income taxes and a resulting increase in the income tax rate.  Cleco Power's effective income tax rate in the first six months of 2002 increased from 3 4.0% to 37.1%, compared to the first six months of 2001, due primarily to an increase in net income before taxes.

CLECO CONSOLIDATED

          Interest expense in the first six months of 2002 decreased $5.3 million, or 17.8%, compared to the first six months of 2001 due primarily to a decrease in the average commercial paper discount rate and an increase in the amount capitalized in the first six months of 2002 compared to the same period in 2001.

29

          Cleco records the effect of income taxes on its financial statements in accordance with SFAS No. 109.  The components of the income tax calculation (deferred tax assets/liabilities, current tax payable, income tax expense, etc.) are based upon various assumptions.  The actual results may be different from the assumptions used, resulting in periodic adjustments to the financial statements.  The differences may have a material effect on Cleco's financial condition and results of operations.  Income tax expense in the first six months of 2002 was $17.7 million, a $3.6 million or 25.7% increase, compared to expense of $14.0 million in the first six months of 2001 due primarily to a $9.3 million or 23.0% increase in net income from continuing operations before income taxes and preferred dividends.  Cleco's effective income tax rate in the first six months of 2002 increased from 34.9% t o 35.7%, compared to the first six months of 2001, due primarily to an increase in net income from continuing operations before income taxes and preferred dividends.

OTHER

          Discontinued operations at UTS reduced the first six months of 2001 earnings by $2.5 million or $0.05 per diluted common share.  The $2.5 million loss on disposal of a segment, net, resulted primarily from actual operating losses in excess of estimated operating losses for 2001 that were included in the loss on disposal of segment for the year ended December 31, 2000.  No such loss was recorded in the first six months of 2002.  For additional information, see Note 7 - Discontinued Operations in the Notes to the Unaudited Financial Statements in this Report.

30

CLECO POWER LLC
PART I - FINANCIAL INFORMATION

ITEM 1          FINANCIAL STATEMENTS

          The financial statements of Cleco Power have been prepared pursuant to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although Cleco Power believes that the disclosures are adequate to make the information presented not misleading.  These financial statements should be read in conjunction with the Financial Statements and the Notes included in the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 2001.

          The unaudited financial information included in the following financial statements reflects all adjustments of a normal recurring nature which are, in the opinion of management of Cleco Power, necessary for a fair statement of the financial position and the results of operations for the interim periods.  Information for interim periods is affected by seasonal variations in sales, rate changes, timing of fuel expense recovery, and other factors and is not necessarily indicative of the results that may be expected for the full fiscal year.

31

Cleco Power LLC
STATEMENTS OF INCOME
For the three months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands)
Operating revenue
Electric operations	$  141,322	$  165,222
Energy trading	5,767	14,063
Other operations	6,782	8,325
Affiliate	540	2,347
Gross operating revenue	154,411	189,957
Electric customer credits	(1,225)	(1,933)
Total operating revenue	153,186	188,024
Operating expenses
Fuel used for electric generation	30,678	63,972
Power purchased for utility customers	37,678	34,640
Purchases for energy trading operations	4,731	16,297
Purchases for energy operations	30	--
Other operations	16,806	18,962
Maintenance	9,528	7,206
Depreciation	13,255	12,642
Taxes other than income taxes	9,374	8,933
Total operating expenses	122,080	162,652
Operating income	31,106	25,372
Interest income	181	133
Allowance for other funds used during construction	512	332
Other income (expense), net	61	99
Income before interest charges	31,860	25,936
Interest charges
Interest charges, including amortization of debt expenses,       premium and discount	7,267	7,436
Allowance for borrowed funds used during construction	(266)	(298)
Total interest charges	7,001	7,138
Net income before income taxes	24,859	18,798
Federal and state income taxes	9,478	6,452
Net income applicable to member's equity	$    15,381	$    12,346
	======	======

The accompanying notes, as they relate to Cleco Power, are an integral part of the financial statements.

32

Cleco Power LLC
STATEMENTS OF INCOME
For the six months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands)
Operating revenue
Electric operations	$   263,284	$    314,499
Energy trading	6,556	13,556
Energy operations	30	--
Other operations	13,201	15,034
Affiliate	974	3,456
Gross operating revenue	284,045	346,545
Electric customer credits	(1,575)	(1,933)
Total operating revenue	282,470	344,612
Operating expenses
Fuel used for electric generation	57,237	124,369
Power purchased for utility customers	69,701	64,786
Purchases for energy trading operations	5,647	16,629
Purchases for energy operations	30	--
Other operations	30,293	36,096
Maintenance	15,611	13,623
Depreciation	25,980	25,327
Taxes other than income taxes	18,618	17,879
Total operating expenses	223,117	298,709
Operating income	59,353	45,903
Interest income	290	152
Allowance for other funds used during construction	922	504
Other income (expense), net	(145)	(19)
Income before interest charges	60,420	46,540
Interest charges
Interest charges, including amortization of debt expenses,       premium and discount	14,008	14,964
Allowance for borrowed funds used during construction	(470)	(495)
Total interest charges	13,538	14,469
Net income before income taxes	46,882	32,071
Federal and state income taxes	17,403	10,901
Net income applicable to member's equity	$     29,479	$      21,170
	=======	======

The accompanying notes, as they relate to Cleco Power, are an integral part of the financial statements.

33

Cleco Power LLCBalance Sheets
(UNAUDITED)

	At June 30,	At December 31,
	2002	2001
	(Thousands)
Assets
Utility plant and equipment:
Property, plant and equipment	$   1,596,128	$  1,585,686
Accumulated depreciation	(662,154)	(637,390)
Net property, plant and equipment	933,974	948,296
Construction work-in-progress	51,525	28,642
Total utility plant, net	985,499	976,938
Current assets:
Cash and cash equivalents	2,271	3,123
Accounts receivable, net
Customer accounts receivable (less allowance for                   doubtful accounts of $1,451 in 2002 and $1,336 in 2001)	35,482	22,080
Other accounts receivable	24,388	19,952
Affiliates	4	385
Unbilled revenues	19,041	14,802
Fuel inventory, at average cost	14,496	11,990
Material and supplies inventory, at average cost	11,710	14,178
Risk management asset	48	104
Accumulated deferred fuel	10,982	7,979
Accumulated deferred federal and state income taxes, net	2,472	3,518
Other current assets	4,486	3,918
Total current assets	125,380	102,029
Prepayments	8,685	8,300
Regulatory assets - deferred taxes	52,455	58,545
Other deferred charges	44,754	39,797
Total assets	$  1,216,773	$  1,185,609
	========	=======
(Continued on next page)

34

Cleco Power LLCBALANCE SHEETS (Continued)
(UNAUDITED)

	At June 30,	At December 31,
	2002	2001
	(Thousands)
Liabilities and member's equity
Member's equity	$    411,932	$    413,457
Long-term debt, net	336,260	311,260
Total capitalization	748,192	724,717
Current liabilities:
Short-term debt	11,950	63,742
Long-term debt due within one year	75,000	25,000
Accounts payable	41,140	57,426
Accounts payable - affiliates	6,232	5,575
Customer deposits	21,009	20,699
Taxes accrued	40,963	740
Taxes accrued - payable to parent	--	15,072
Interest accrued	8,893	8,068
Risk management liabilities	36	--
Other current liabilities	2,488	1,423
Total current liabilities	207,711	197,745
Deferred credits
Accumulated deferred federal and state income taxes, net	199,418	205,316
Accumulated deferred investment tax credits	21,616	22,487
Other deferred credits	39,836	35,344
Total deferred credits	260,870	263,147
Total liabilities and member's equity	$ 1,216,773	$ 1,185,609
	========	=======

The accompanying notes, as they relate to Cleco Power, are an integral part of the financial statements.

35

CLECO POWER LLC
STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(UNAUDITED)

	2002	2001
	(Thousands)
Operating activities
Net income	$   29,479	$   21,170
Adjustments to reconcile net income to net cash provided by       operating activities:
Depreciation and amortization	26,406	25,776
Allowance for other funds used during construction	(922)	(504)
Amortization of investment tax credits	(871)	(882)
Deferred income taxes	1,110	6,945
Deferred fuel costs	(3,003)	12,667
Changes in assets and liabilities:
Accounts receivable, net	(17,839)	(8,177)
Accounts and notes receivable - affiliates	380	2
Unbilled revenues	(4,239)	(3,828)
Fuel, material and supplies inventories	(38)	(4,923)
Accounts payable	(16,289)	(23,992)
Accounts payable - affiliates	656	(4,894)
Customer deposits	310	260
Other deferred accounts	3,013	(1,588)
Taxes accrued	25,151	16,535
Interest accrued	824	--
Risk management assets and liabilities, net	93	3,538
Other, net	75	(1,473)
Net cash provided by operating activities	44,296	36,632
Investing activities
Additions to property, plant and equipment	(34,784)	(23,740)
Allowance for other funds used during construction	922	504
Proceeds from sales of property, plant and equipment	281	464
Net cash used in investing activities	(33,581)	(22,772)
Financing activities
Retirement of long-term obligations	--	(15,000)
Issuance of long-term obligations	75,000	--
Deferred financing costs	(3,775)	--
Increase (decrease) in short-term debt, net	(51,792)	22,127
Distribution to parent	(31,000)	(19,391)
Net cash used in financing activities	(11,567)	(12,264)
Net increase (decrease) in cash and cash equivalents	(852)	1,596
Cash and cash equivalents at beginning of period	3,123	2,224
Cash and cash equivalents at end of period	$      2,271	$     3,820
Supplementary cash flow information
Interest paid (net of amount capitalized)	$    17,262	$   15,214
	=======	======
Income taxes paid	$      2,906	$     8,179
	=======	======

The accompanying notes, as they relate to Cleco Power, are an integral part of the financial statements.

36

CLECO POWER LLC - NARRATIVE ANALYSIS OF RESULTS OF                                              OPERATIONS

          Set forth below is information concerning the results of operations of Cleco Power for the three months and six months ended June 30, 2002, and June 30, 2001.  The following narrative analysis should be read in combination with Cleco Power's Unaudited Financial Statements and Notes contained in this Form 10-Q.

          Cleco Power meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q and is therefore permitted to use the reduced disclosure format for wholly-owned subsidiaries of reporting companies.  Accordingly, Cleco Power has omitted from this report the information called for by Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and Item 3 (Quantitative and Qualitative Disclosures About Market Risk) of Part I of Form 10-Q and the following Part II items of Form 10-Q: Item 2 (Changes in Securities and Use of Proceeds), Item 3 (Defaults Upon Senior Securities) and Item 4 (Submission of Matters to a Vote of Security Holders).  The following discussion explains material changes in the amount of revenue and expense items of Cleco Power between the second quarter of 2002 and the second quarter of 2001 and the first six months of 2002 and 2001.   Reference is made to Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 2001.

          For an explanation of material changes in the amount of revenue and expense items of Cleco Power between the second quarter of 2002 and the second quarter of 2001, see "Item 1 Financial Statements - Cleco Corporation - Management's Discussion and Analysis of Results of Operations - Comparison of the Three Months Ended June 30, 2002 and 2001 - Cleco Power" of this Form 10-Q, which discussion is incorporated herein by reference.

          For an explanation of material changes in the amount of revenue and expense items of Cleco Power between the first six months of 2002 and the first six months of 2001, see "Item 1 Financial Statements - Cleco Corporation - Management's Discussion and Analysis of Results of Operations - Comparison of the Six Months Ended June 30, 2002 and 2001 - Cleco Power" of this Form 10-Q, which discussion is incorporated herein by reference.

37

INDEX TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY REGISTRANT

NOTE 1	Reclassifications	Cleco Corporation and Cleco Power
NOTE 2	Disclosures About Segments	Cleco Corporation
NOTE 3	Restricted Cash	Cleco Corporation
NOTE 4	Equity Investment in Investees	Cleco Corporation
NOTE 5	Litigation	Cleco Corporation and Cleco Power
NOTE 6	Recent Accounting Standards	Cleco Corporation and Cleco Power
NOTE 7	Discontinued Operations	Cleco Corporation
NOTE 8	Debt	Cleco Corporation and Cleco Power
NOTE 9	Accrual for Estimated Customer Credits	Cleco Corporation and Cleco Power
NOTE 10	Acquisition	Cleco Corporation
NOTE 11	Subsequent Events	Cleco Corporation and Cleco Power

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Note 1 - Reclassifications

          Certain financial statement items from prior periods have been reclassified to conform to the current year's presentation.  These reclassifications had no effect on net income or shareholders' (member's) equity.

Note 2 - Disclosures About Segments

          Cleco has determined that its reportable segments are based on Cleco's method of internal reporting, which disaggregates its business units by second-tier subsidiary.  Reportable segments were determined by applying SFAS No. 131.  Cleco's reportable segments are Cleco Power and Midstream.  The Other segment consists of the parent company, a shared services subsidiary, an investment subsidiary, and the discontinued operations of UTS.  The Other segment subsidiaries operate within Louisiana and Delaware.  Cleco has determined that UTS is no longer a reportable segment since it no longer meets the quantitative thresholds as defined by SFAS No. 131, it no longer engages in business activities, and management has judged it is not of continuing significance.  For additional information about UTS, see Note 7 - Discontinued Operations in the Notes to the Unaudited Financial S tatements in this Report.

          Each reportable segment engages in business activities from which it earns revenues and incurs expenses.  Segment managers report periodically to Cleco's Chief Executive Officer (the chief decision-maker) with discrete financial information and at least quarterly present discrete financial information to Cleco's Board of Directors.  Each reportable segment prepared budgets for 2002 that were presented to and approved by Cleco's Board of Directors.  The reportable segments exceeded the quantitative thresholds as defined in SFAS No. 131.

          The financial results of Cleco's segments are presented on an accrual basis.  Management evaluates the performance of its segments and allocates resources to them based on segment profit (loss) before income taxes and preferred stock dividends.  Material intersegment transactions occur on a regular basis.

38

          The tables below present information about the reported operating results and net assets of Cleco's reportable segments.

Segment Information
For the three months ended June 30,(Thousands)

2002	Cleco Power	Midstream	Other	Unallocated Items, Reclassifications & Eliminations	Consolidated
Revenue
Electric operations	$   141,322	$             --	$             --	$            ---	$   141,322
Energy trading	5,767	193,503	--	---	199,270
Energy operations	--	20,881	--	---	20,881
Other operations	6,782	3,594	12	(12)	10,376
Intersegment revenue	540	1,943	8,627	(11,110)	--
Electric customer credits	(1,225)	--	--	--	(1,225)
Total operating revenue	$   153,186	$   219,921	$       8,639	$   (11,122)	$   370,624
	======	======	======	======	======
Segment profit (loss)	$     24,859	$       3,676	$      (1,189)	$             --	$     27,346
	======	======	======	======	======
Segment assets	$1,216,773	$   992,149	$   525,782	$ (519,099)	$2,215,605
Reconciliation of segment profit (loss) to consolidated profit:
Segment profit			$  27,346
Unallocated items
Income taxes			9,564
Preferred dividends			465
Net income applicable to common stock			$  17,317
			=====
2001
Revenue
Electric operations	$   165,222	$            --	$            --	$              --	$   165,222
Energy trading	14,063	93,126	--	--	107,189
Energy operations	--	24,987	--	--	24,987
Other operations	8,325	--	23	(7)	8,341
Intersegment revenue	2,347	4,553	16,212	(23,112)	--
Electric customer credits	(1,933)	--	--	--	(1,933)
Total operating revenue	$   188,024	$  122,666	$   16,235	$     (23,119)	$   303,806
	======	======	======	======	======
Segment profit from continuing    operations	$     18,798	$      4,033	$      (837)	$              --	$     21,994
Loss from discontinued operations,    net of income taxes	--	--	1,062	--	1,062
Segment profit (loss)	$     18,798	$      4,033	$   (1,899)	$              --	$     20,932
	======	======	======	======	======
Segment assets	$1,225,524	$  540,975	$ 429,420	$  (413,554)	$1,782,365
Reconciliation of segment profit (loss) to consolidated profit:
Segment profit			$   20,932
Unallocated items
Income taxes			7,924
Preferred dividends			407
Net income applicable to common stock			$   12,601
			=====

39

Segment Information
For the six months ended June 30,(Thousands)

2002	Cleco Power	Midstream	Other	Unallocated Items, Reclassifications & Eliminations	Consolidated
Revenue
Electric operations	$  263,284	$             --	$              --	$               --	$   263,284
Energy trading	6,556	264,314	--	(1)	270,869
Energy operations	30	41,108	--	--	41,138
Other operations	13,201	3,964	31	(23)	17,173
Intersegment revenue	974	3,212	14,857	(19,043)	--
Electric customer credits	(1,575)	--	--	--	(1,575)
Total operating revenue	$   282,470	$   312,598	$      14,888	$     (19,067)	$   590,889
	======	======	======	======	======
Segment profit (loss)	$     46,882	$       4,381	$       (1,762)	$                --	$     49,501
	======	======	======	======	======
Segment assets	$1,216,773	$   992,149	$    525,782	$   (519,099)	$2,215,605
Reconciliation of segment profit (loss) to consolidated profit:
Segment profit			$  49,501
Unallocated items
Income taxes			17,666
Preferred dividends			937
Net income applicable to common stock			$  30,898
			=====
2001
Revenue
Electric operations	$    314,499	$            --	$             --	$              --	$   314,499
Energy trading	13,556	150,114	--	--	163,670
Energy operations	--	65,610	--	--	65,610
Other operations	15,034	2	49	(8)	15,077
Intersegment revenue	3,456	7,625	37,367	(48,448)	--
Electric customer credits	(1,933)	--	--	--	(1,933)
Total operating revenue	$    344,612	$  223,351	$     37,416	$    (48,456)	$   556,923
	======	======	======	======	======
Segment profit from continuing    operations	$      32,071	$      9,295	$     (1,148)	$              --	$     40,218
Loss from discontinued operations,    net of income taxes	--	--	2,468	--	2,468
Segment profit (loss)	$      32,071	$      9,295	$     (3,616)	$              --	$     37,750
	======	======	======	======	======
Segment assets	$ 1,225,524	$  540,975	$   429,420	$  (413,554)	$1,782,365
Reconciliation of segment profit (loss) to consolidated profit:
Segment profit			$   37,750
Unallocated items
Income taxes			14,048
Preferred dividends			880
Net income applicable to common stock			$   22,822
			=====

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Note 3 - Restricted Cash

          Restricted cash represents cash to be used for specific purposes.  At June 30, 2002, $28.9 million of cash was restricted under the Evangeline bond indenture until certain of its provisions are met and $4.6 million of cash was restricted under an agreement with the lender for the Perryville power plant.  As the provisions under these agreements are met, cash is transferred out of the escrow account and is available for general corporate purposes.  For additional information about Cleco's purchase of Perryville, see Note 10 - Acquisition in the Notes to the Unaudited Financial Statements in this Report.

Note 4 - Equity Investment in Investees

          Equity investment in investees includes Midstream's approximate $250.5 million investment in APP and Cleco Energy's approximate $0.7 million investment in Hudson.  For the second quarter of 2002, no material earnings were recorded for APP nor Hudson.

          APP is a joint venture 50% owned by Midstream and 50% owned by Calpine.  APP was formed to construct, own and operate an 1,160-MW combined-cycle, natural gas-fired power plant located near Eunice, Louisiana.  Total construction costs of the plant to be incurred by APP are estimated to be between $555.0 million and $580.0 million.  Cleco reports its investment in APP on the equity method of accounting as defined in APB No. 18.  As of June 30, 2002, Midstream had invested $250.5 million in cash and land in APP.  Midstream's member's equity as reported in the balance sheet of APP at June 30, 2002, was $232.1 million.  The majority of the difference of $18.4 million between the equity investment in investee and the member's equity was the interest capitalized on funds used to contribute to APP as required by SFAS No. 58.  The table below is unaudited summa rized financial information for 100% of APP.  No income statement information is presented because APP is in the construction phase and all costs are capitalized.

	At June 30,
	2002	2001
	(Thousands)
Current assets	$        927	$      2,027
Construction work in progress	482,589	342,767
Total assets	$ 483,516	$ 344,794
	=======	======
Current liabilities	$   19,130	$   32,151
Partners' capital	464,386	312,643
Total liabilities and partners' capital	$ 483,516	$ 344,794
	=======	======

          APP plans to obtain nonrecourse project financing in the third quarter of 2002 and, if successful, will reimburse Cleco for a portion of its equity investment in APP.  Construction on PB1, which is tolled to Aquila, was completed on July 1, 2002, and construction on PB2, which is tolled to Calpine, was completed on August 2, 2002.

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          Cleco Energy owns 50% of Hudson which owns interests in several other entities that own and operate natural gas pipelines in Texas and Louisiana.  Cleco reports its investment in Hudson on the equity method of accounting as defined in APB No. 18.  On June 30, 2002, the member's equity as reported on Hudson's balance sheet was approximately $0.7 million, which equals the equity investment in investee on Cleco Energy's balance sheet.

Note 5 - Litigation

          Air and water permits issued in July 2000 by the LDEQ to APP were judicially appealed by APP-related Petitioners in early August 2000.  APP owns and operates a new electric generating plant near Eunice, Louisiana.  APP-related Petitioners filed their appeals to the air and water permits in the 19^th Judicial District Court in Baton Rouge, Louisiana.  APP-related Petitioners asked the court to reverse the air and water permits issued by the LDEQ and alleged that LDEQ's decision to issue the permits was arbitrary, capricious and procedurally inadequate.  APP-related Petitioners asked the court to stay APP's power plant construction activities pending resolution of the litigation.  APP denied APP-related Petitioners' allegations and vigorously defended the validity of the permits issued to it by the LDEQ.  On February 5, 2001, oral arguments on the appeal of th ese permits were held.  In its decision issued on February 23, 2001, the court ordered the matter remanded to the LDEQ but did not vacate the permits or halt construction.  On December 17, 2001, the court signed its Order formally remanding this matter to the LDEQ, ordering LDEQ to, among other things, (1) request additional information from APP regarding alternative site analysis; (2) allow for a new public comment period and public hearing; and (3) reconsider its permit decisions in light of additional information and comments and issue a revised basis for decision.

          On April 18, 2002, following a confidential settlement agreement reached between APP and most of the APP-related Petitioners, the court dismissed with prejudice the judicial appeals of the air and water permits.  The settlement did not have a material adverse effect on Cleco's financial condition or results of operations.

          Cleco is involved in regulatory, environmental and legal proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business, some of which involve substantial amounts.  In several lawsuits, Cleco has been named as a defendant by individuals who claim injury due to exposure to asbestos while working at sites in central Louisiana.  Most of these claimants have been workers who participated in construction of various industrial facilities, including power plants, and some of the claimants have worked at locations owned by Cleco.  Cleco's management regularly analyzes current information and, as necessary, provides accruals for probable liabilities on the eventual disposition of these matters.  Cleco's management believes that the effects on Cleco and its affiliates' respective financial statements, if any, from the di sposition of these matters will not have a material adverse effect on Cleco's financial condition, results of operations or cash flows.

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Note 6 - Recent Accounting Standards

          In July 2001, FASB issued SFAS No. 143, which requires the recognition of a liability for an asset's retirement obligation in the period in which the event that triggers the liability occurs.  When the liability is initially recorded, the cost of the related asset is increased.  The capitalized cost of the retirement liability is depreciated over the asset's useful life.  The liability is adjusted to its present value each period with a corresponding charge to expense.  The standard is effective for fiscal years beginning after June 15, 2002.  Cleco is in the process of evaluating the impact of this statement and has not yet determined the effect of adopting this statement on its financial statements.

          In April 2002, FASB issued SFAS No. 145, which rescinds SFAS Nos. 4, 44, and 64, amends SFAS No. 13, and contains various technical corrections. The rescission of SFAS Nos. 4 and 64 requires that a gain or loss from the extinguishment of debt meet the criteria in APB No. 30 before the extinguishment is classified as extraordinary.  In the year ended December 31, 2000, Cleco reported an extraordinary gain from the extinguishment of debt.  The rescission of SFAS Nos. 4 and 64 will not change the reporting of the extinguishment since it met the criteria stated in APB No. 30. The rescission of SFAS No. 44, the amendment of SFAS No. 13 and the technical corrections will have no impact on Cleco's financial statements.  The rescission of SFAS Nos. 4 and 64 is effective for fiscal years beginning after June 15, 2002.  The amendment of SFAS No. 13 is effective for transactions occurring aft er May 15, 2002.  The rescission of SFAS No. 44 and most technical corrections are effective for financial statements issued on or after May 15, 2002.

          In June 2002, the EITF reached a consensus on Issue 1 and Issue 3 of EITF No. 02-3.  The consensus reached in Issue 1 requires that all gains and losses from energy trading contracts, as defined in EITF No. 98-10, be reported on the income statement on anet basis.  Net reporting consists of aggregating revenues and expenses and reporting the net number in one line item on the statements of income.  Gross reporting consists of recording revenue and associated expenses as separate line items in the statements of income.  Cleco's current accounting policy is to report unrealized gains and losses, also referred to as "mark-to-market", net and to report realized gains and losses on a gross basis.  The consensus on Issue 1 requires that prior periods be restated and is effective for periods ending after July 15, 2002.  The netting requirement will reduce Cleco's gross operating revenues and expenses reported in the statements of income prepared after the effective date.  Net income and shareholders' equity will not be affected.  Issue 3 clarifies disclosures about energy trading contracts by requiring disclosure of significant assumptions used to estimate fair value, the sensitivity of near-term changes in estimates, and the duration of contracts.  Issue 3 is effective for the first year ending after July 15, 2002.

          In June 2002, FASB issued SFAS No. 146, which defines when a liability is recognized for costs relating to exiting an activity and replaces EITF No. 94-3.  SFAS No. 146 requires that a liability be recognized for costs relating to exiting an activity when the liability is incurred, not when an entity commits to an exit plan as was required under EITF No. 94-3.  This statement is effective for exit or disposal activities that are initiated after December 31, 2002.  The adoption of this standard will not have a material effect on Cleco's financial statements.

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Note 7 - Discontinued Operations

          In December 2000, management decided to sell substantially all of UTS' assets and discontinue UTS' operations after the sale.  On March 31, 2001, management signed an asset purchase agreement to sell UTS to Quanta for approximately $3.1 million in cash and assumption of an operating lease for equipment of approximately $11.6 million.  Quanta acquired the trade names under which UTS operated, crew tools, equipment under the operating lease, contracts, inventory relating to certain contracts, and work force in place.  UTS retained approximately $2.2 million in accounts receivable, net of allowance for uncollectibles, and equipment under the operating lease with an aggregate unamortized balance of approximately $2.8 million.

          For the year 2001, the $2.0 million loss on disposal of a segment, net, resulted primarily from actual operating losses in 2001 in excess of estimated operating losses for 2001 that were included in the loss on disposal of a segment for the year ended December 31, 2000; the $1.3 million loss on the auction of equipment in June 2001 and subsequent extinguishment of the operating lease; and the final asset and receivable settlement agreement signed in November 2001.

          At June 30, 2002, UTS had only nominal assets since receivables have been either collected or written off.

          As of June 30, 2002, several contingent liabilities relating to UTS existed.  Under the asset purchase agreement, UTS and its sole member have agreed to indemnify Quanta for losses resulting from certain breaches or failures by UTS and its sole member to fulfill their obligations under the asset purchase agreement, for taxes, and other losses arising from events occurring prior to the sale.  The indemnification amount is limited to approximately $5.0 million and terminates on April 1, 2003.  The limitation does not apply to fraudulent misrepresentations.  At June 30, 2002, no amounts have been recorded for the indemnifications because no claim has been asserted by Quanta, and management has determined a claim is not probable.

          Additional information about UTS is as follows:

	For the three months ended June 30,
	2002		2001
	(Thousands)
Revenue	$	--	$	431
Loss on disposal of segment, net	$	--	$	(1,062)
Income tax benefit associated with
loss on disposal of segment	$	--	$	664

	For the six months ended June 30,
	2002		2001
	(Thousands)
Revenue	$	--	$	3,947
Loss on disposal of segment, net	$	--	$	(2,468)
Income tax benefit associated with
loss on disposal of segment	$	--	$	1,539

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Note 8 - Debt

          On May 9, 2002, Cleco Power issued $50.0 million aggregate principal amount of its 6.05% IQ Notes due June 1, 2012.  The IQ Notes were registered under the Securities Act of 1933, as amended, pursuant to the shelf registration statement (Registration No. 333-52540) of Cleco Power.  Payment of regularly scheduled principal and interest on the IQ Notes is insured by a financial guaranty insurance policy issued by Ambac Assurance Corporation.  Cleco Power can redeem the IQ Notes at its option on or after June 1, 2004.  Representatives of deceased beneficial owners of the IQ Notes have the option to redeem the IQ Notes, subject to certain limitations.

          On June 5, 2002, Cleco and Cleco Power each entered into new 364-day credit facilities with optional conversions to one-year term loans.  Cleco's facility totals $225.0 million, up from the $200.0 million facility that expired in June 2002.  Cleco Power's facility totals $107.0 million, up from the $100.0 million facility that also expired in June 2002.  Midstream's $35.0 million credit facility with the Bank of New York, which was due to expire in June 2002, was extended in June 2002 through September 30, 2002.

          On June 14, 2002, Cleco Power gave formal notice of its intention to call two series of medium-term notes, which became redeemable at Cleco Power's option on July 15, 2002.  The two series were the 7.55%, $15.0 million note and the 7.50%, $10.0 million note.  Both had scheduled maturity dates of July 15, 2004.  The notes were repaid on July 15, 2002, using proceeds from commercial paper issuances.  At June 30, 2002, these notes were classified as a current liability on Cleco Power's Unaudited Balance Sheets.

          As a part of the purchase of Mirant's interest in PEP, a PEP construction note payable with a principal balance outstanding at June 30, 2002, of $226.9 million was consolidated into Cleco.  Any borrowings under the PEP construction note must be used to construct the Perryville power plant.  The construction note converts to a term note which matures in five years after construction of the entire Perryville power plant is completed.  Total borrowings under both the construction note and the term note cannot exceed $300.0 million.  Interest on both notes is calculated using either a prime rate or a Eurodollar rate plus a margin.  The margin for Eurodollar construction notes is 1.375% while the margin for a prime rate construction note is 0.625%.  The margins on the term notes change as follows:

Term loan year	Eurodollar margin rate	Prime margin rate
1-2	1.375%	0.625%
3-4	1.500%	0.750%
5	1.750%	1.000%

45

          Principal payments under the term loans are paid quarterly and are calculated using the balance outstanding of the construction notes converted into term notes multiplied by the following percentages.

Term loan year	Quarterly percentage of principal due
1	0.4500%
2	0.8625%
3	0.9000%
4	0.7500%
5	0.7875%
Final payment	85.0000%

          Both the construction notes and the term notes are collateralized with the PEP assets.  At June 30, 2002, the construction notes had not been converted into term notes.

          As part of the purchase of PEP, a PEP note payable to Mirant with a principal balance outstanding at June 30, 2002 of $25.0 million was consolidated into Cleco.  By September 18, 2002, PEP is required to either repay the entire $25.0 million or execute a long-term note payable to Mirant.  The current interest rate on the note is one-half of the five-year PEP term note interest rate discussed above.  The long-term note payable will have the same maturity schedule and interest rate as the five-year PEP term note discussed above.

Note 9 - Accrual for Estimated Customer Credits

          Cleco's reported earnings in the quarter ended June 30, 2002, reflect a $1.2 million accrual within Cleco Power for estimated customer credits that may be required under terms of an earnings review settlement reached with the LPSC in 1996.  The 1996 LPSC settlement, and a subsequent amendment, set Cleco Power's rates until the year 2004 and also provided for annual base rate tariff reductions of $3.0 million in 1997 and $2.0 million in 1998.  As part of the settlement, Cleco Power is allowed to retain all regulated earnings up to a 12.25% return on equity, and to share equally with customers, as credits on their bills, all regulated earnings between 12.25% and 13% return on equity.  All regulated earnings above a 13% return on equity are credited to customers.  The amount of credits due customers, if any, is determined by the LPSC annually based on 12-month-ending results as of September 30 of each year.  The settlement provides for such credits to be made on customers' bills the following summer.

          Cleco Power's Unaudited Balance Sheets, under the line item other deferred credits, reflect a $2.6 million accrual for estimated customer credits.  Of the $2.6 million accrual, $1.0 million relates to the 12-months cycle ended September 30, 2001, and was recorded as a reduction in revenue.  The remaining $1.6 million relates to the 12-months cycle ending September 30, 2002. There is some uncertainty about the amount of credit due customers, if any, for the cycle ended September 30, 2001, since the LPSC is behind schedule in reviewing our 2001 filing. In previous years, the LPSC has made this determination during the month of July.  It is anticipated that the LPSC will determine the amount, if any, related to the 2001 cycle at their September 2002

46

meeting.  No meetings are held in August.  This delay may affect the assumptions used for the 12-months cycle ended September 30, 2002.

Note 10 - Acquisition

          PEP, formerly a joint venture between Midstream and Mirant, completed constructing a 725-MW, natural gas-fired power plant in Perryville, Louisiana on June 30, 2002.  A 157-MW combustion turbine operating in simple cycle became operational on July 1, 2001.   Commercial operation of the 568-MW combined-cycle unit began on July 1, 2002.  Total construction costs of the plant are estimated to be between $335.0 and $340.0 million.  As of June 30, 2002, PEP had incurred $323.9 million constructing the plant.  Long-term nonrecourse financing was received during June 2001.  

          On April 30, 2001, PEP announced the signing of a long-term tolling agreement for the output of its 725-MW facility, the Perryville Power Station.  The 20-year contract is with Mirant Marketing, Mirant's risk management, trading and marketing organization.  Under the terms of the contract, Mirant Marketing will supply the natural gas needed to fuel the plant and will own the plant's output.  The agreement requires Mirant to pay PEP various capacity reservation fees, the price of which depends upon the type of capacity and ultimate availability declared by PEP.  In addition to the capacity reservation payments from Mirant, PEP will collect revenues associated with both fixed and variable operating and maintenance expenses anticipated at the Perryville facility.  Tolling revenues are primarily affected by the availability of the PEP power plant to operate and other characteristics of the plant.  For information regarding potential obligations under tolling agreements, please read "- New Power Plants" below.  For information regarding the credit ratings of Cleco's counterparties under Cleco's tolling agreements, please read "- Financial Condition - Liquidity and Capital Resources" below.

          On June 20, 2002, Midstream purchased Mirant's 50% ownership interest in PEP.  Cleco paid Mirant $54.6 million in cash as repayment of project debt, Mirant's invested capital to date and other miscellaneous costs.  The terms of the agreement required Cleco to retire $48.0 million in project debt owed to Mirant and assume Mirant's total equity commitment of up to $19.5 million.  In connection with the existing project financing, Mirant issued a $25.0 million subordinated loan to the project.  Mirant retains certain obligations as a project sponsor, some of which are subject to indemnification by Cleco.  The indemnification relates to various construction contracts guaranties.  These indemnifications are not reflected on Cleco's Consolidated Unaudited Balance Sheets because it is not probable that payments will be required.  For more information regarding PEP guar anties, please read "- Financial Condition - Off-Balance Sheet Commitments" below.  Cleco used a combination of newly issued common equity and debt to acquire Mirant's interest.  The acquisition was accounted for as a purchase in accordance with SFAS No. 141.  Cleco discontinued the equity method of accounting effective July 1, 2002, and consolidated PEP assets and liabilities as of June 30, 2002.  As of June 30, 2002, PEP's assets and liabilities were $328.0 million and $263.8 million, respectively.  PEP's revenues and expenses will be reported in the Statement of Income beginning July 1, 2002.

47

          Cleco Corporation consolidated results as if the acquisition had occurred on January 1, 2001, follow:

	For the three months ended June 30,
	2002	2001
	(Thousands)
Revenue	$     370,600	$    303,806
Net income	$       17,634	$      12,601
Earnings per share (basic)	$           0.38	$          0.28
Earnings per share (diluted)	$           0.36	$          0.27

	For the six months ended June 30,
	2002	2001
	(Thousands)
Revenue	$      591,947	$   556,923
Net income	$        31,585	$     22,822
Earnings per share (basic)	$            0.69	$         0.51
Earnings per share (diluted)	$            0.65	$         0.50

          The following is the PEP Unaudited Balance Sheet as of June 30, 2002, after Midstream purchased Mirant's 50% ownership interest.

	At June 30, 2002
	(Thousands)
Current assets	$         880
Property, plant and equipment	64,661
Construction work-in-progress	257,320
Other assets	5,075
Total assets	$  327,936
	======
Current liabilities	$    11,892
Long-term debt	251,930
Member's equity	64,114
Total liabilities and member's equity	$  327,936
	======

Note 11 - Subsequent Events

          On June 14, 2002, Cleco Power gave formal notice of its intention to call two series of medium-term notes, which became redeemable at Cleco Power's option on July 15, 2002.  Both the 7.55%, $15.0 million note and the 7.50%, $10.0 million note had scheduled maturity dates of July 15, 2004.  The notes were repaid on July 15, 2002, using proceeds from commercial paper issuances.  At June 30, 2002, the notes were classified as a current liability on Cleco Power's Unaudited Balance Sheets.

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ITEM 2     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                   CONDITION

          The following discussion and analysis should be read in combination with the Registrants' Combined Annual Report on Form 10-K for the year ended December 31, 2001, and Cleco Corporation's and Cleco Power's Unaudited Financial Statements contained in this Form 10-Q.  The information included therein is essential to understanding the following discussion and analysis.

RESULTS OF OPERATIONS

         "Item 1 Financial Statements - Cleco Corporation - Management's Discussion and Analysis of Results of Operations" and "Item 1 Financial Statements - Cleco Power - Narrative Analysis of Results of Operations" of this Form 10-Q are incorporated herein by reference.

FINANCIAL CONDITION

Liquidity and Capital Resources

          Financing for construction requirements and operational needs is dependent upon the cost and availability of external funds from capital markets and financial institutions at both company and project levels.  Access to funds is dependent upon factors such as general economic conditions, regulatory authorizations and policies, Cleco's credit rating, the credit rating of its subsidiaries, the operations of projects funded, the credit ratings of project counterparties, and the economics of projects under construction.  The credit ratings of the senior unsecured debt of Williams Companies, Inc., Mirant, Aquila, Inc. and Calpine, the parent companies of the counterparties under our tolling agreements, have recently been downgraded or placed on watch for possible downgrade by one or more rating agencies.  While remaining investment grade, bonds issued by Evangeline to finance the Evangeline facility were recently downgrad ed by Moody's Investors Service and placed on review for further downgrade as a result of the recent credit downgrade of The Williams Companies, Inc., which guarantees the tolling agreement between Williams Energy and Evangeline.  If any of Cleco's counterparties fail to perform their obligations under their respective tolling agreements, Cleco's financial condition and results of operations may be adversely affected by their failure to pay amounts due to Cleco.  In addition, Cleco may not be able to enter into agreements in replacement of its existing tolling agreements on terms as favorable as its existing agreements or at all.  Recently, Standard & Poor's placed Cleco on credit watch with negative implications, and Moody's Investors Service revised the outlook to negative from stable for the securities issued by Cleco.  Being placed on credit watch is not necessarily a precursor to any additional steps by that rating agency.  If Cleco's credit rating a s determined by outside rating agencies were to be downgraded, Cleco would be required to pay additional fees and higher interest rates.

49

          At June 30, 2002, and December 31, 2001, there were $164.1 million and $180.1 million, respectively, of short-term debt outstanding in the form of commercial paper and bank loans.  If Cleco were to default under covenants in its various credit facilities, Cleco would be unable to borrow additional funds from its credit facilities.  If Cleco's credit rating as determined by outside rating agencies were to be downgraded, Cleco would be required to pay additional fees and higher interest rates.  As of the date of this filing, Cleco was in compliance with the covenants in its credit facilities and has maintained its current credit rating since May 8, 2000.

          On May 8, 2002, Cleco issued 2.0 million shares of common stock in a public offering.  Net proceeds from the issuance were approximately $44.3 million.

          On May 9, 2002, Cleco Power issued $50.0 million aggregate principal amount of its 6.05% IQ Notes due June 1, 2012.  The IQ Notes were registered under the Securities Act of 1933, as amended, pursuant to the shelf registration statement (Registration No. 333-52540) of Cleco Power.  Payment of regularly scheduled principal and interest on the IQ Notes is insured by a financial guaranty insurance policy issued by Ambac Assurance Corporation.  Cleco Power can redeem the IQ Notes at its option on or after June 1, 2004.  Representatives of deceased beneficial owners of the IQ Notes have the option to redeem the IQ Notes, subject to certain limitations.

          On June 5, 2002, Cleco and Cleco Power each entered into new 364-day credit facilities with optional conversions to one-year term loans.  Cleco's facility totals $225.0 million, up from the $200.0 million facility that expired in June 2002.  Cleco Power's facility totals $107.0 million, up from the $100.0 million facility that also expired in June 2002.  Midstream's $35.0 million credit facility with the Bank of New York, which was due to expire in June 2002, was extended in June 2002 through September 30, 2002.

          On July 31, 2002, the 364-Day Credit Agreement by and among Cleco and the Bank of New York, as administrative agent, was amended to exclude Evangeline from conditions that would have otherwise created an event of default if Evangeline were to fail to make payments in respect of any of its material obligations.  Other changes were also made to the definitions of fees and pricing.

          The following table shows short-term debt by subsidiary.

Subsidiary	At June 30, 2002	At December 31, 2001
	(Thousands)
Cleco Corporation (Holding Company Level)
Commercial paper, net	$  146,815	$    36,933
Bank loans	3,702	77,574
Cleco Power
Commercial paper, net	11,800	63,742
Bank loans	150	--
Midstream
Bank loans	1,667	1,880
Total	$  164,134	$  180,129
	=======	======

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Cleco Corporation (Holding Company Level)

          Short-term debt increased in the second quarter of 2002 in order to fund project development at Midstream.  A credit facility for Cleco in the amount of $225.0 million, scheduled to terminate in June 2003, provides for an optional conversion to a one-year term loan.  The facility provides for working capital and other needs of Cleco and its subsidiaries and provides support for the issuance of commercial paper.  Off-balance sheet commitments entered into by Cleco with third parties for certain types of transactions between those parties and Cleco's affiliates, other than Cleco Power, reduce the amount of credit available to Cleco under the facility by an amount equal to the stated or determinable amount of the primary obligation.  For more information about the commitments, see "Off-Balance Sheet Commitments" below.  In addition, certain indebtedness incurred by Cleco outside o f the facility will reduce the amount of the facility available to Cleco.  The amount of such commitments and other indebtedness at June 30, 2002, and December 31, 2001, totaled $77.8 million and $70.1 million, respectively.  An uncommitted line of credit with a bank in an amount up to $5.0 million is also available to support working capital needs.

Off-Balance Sheet Commitments

          Cleco has entered into various off-balance sheet commitments in the form of guaranties and a standby letter of credit in order to facilitate the activities of its affiliates.  These off-balance sheet commitments require Cleco to make payments to various counterparties if its affiliates do not fulfill certain contractual obligations.  The off-balance sheet commitments are not recognized on the Consolidated Balance Sheets, because Cleco has determined that it is not probable that payments will be required since Cleco has determined that its affiliates are able to perform the obligations under their contracts.  Certain amounts of these commitments reduce the amount of the credit facility available to Cleco by an amount defined by the credit agreement.  The following table has a schedule of off-balance sheet commitments grouped by the affiliate on whose behalf each commitment was entered.&nb sp; The schedule shows the face amount of the commitment, any reductions, the net amount and reductions in Cleco's ability to draw on its credit facility.

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Affiliates	Face amount	Reductions	Net amount	Reductions to the amount available to be drawn on Cleco's credit facility
	(Thousands)
Acadia Power Holding LLC
Guaranties issued to:
APP Tolling Agreement counterparty	$  12,500	$             --	$  12,500	$  12,500
APP plant construction contractor	2,829	--	2,829	2,829
APP (under APP's partnership agreement)	250,000	232,193	17,807	--
Perryville Energy Holdings LLC
Guaranties issued to:
PEP Tolling Agreement counterparty	13,500	--	13,500	13,500
PEP plant construction contractor	8,695	--	8,695	8,695
PEP (equity subscription)	36,045	10,692	25,353	25,353
Marketing & Trading
Guaranties issued to various       trading counterparties	198,250	111,000	87,250	- --
Evangeline
Standby letter of credit issued to       Tolling Agreement counterparty	15,000	--	15,000	15,000
	$ 536,819	$ 353,885	$ 182,934	$  77,877
	======	======	======	======

          If APP, PEP or Evangeline fail to perform certain obligations under their respective tolling agreements, Cleco will be required to make payments to the respective tolling agreement counterparties of APP, PEP or Evangeline under the commitments listed in the above schedule.  Cleco's obligations under the APP and PEP commitments are in the form of guaranties and are limited to $12.5 million and $13.5 million, respectively.  Cleco's obligation under the Evangeline commitment is in the form of a standby letter of credit and is limited to $15.0 million.  The Company's management expects APP, PEP and Evangeline to be able to meet their respective obligations under the tolling agreements and does not expect Cleco to be required to make payments to the counterparties.  However, under the covenants associated with Cleco's credit facility, the entire net amount of the commitments reduces the amount Cl eco can borrow from its credit facility.  The guaranties for APP and PEP are in force until 2022.  The letter of credit for Evangeline is expected to be renewed annually untilthe year 2020.

          If APP or PEP cannot pay the contractors building their plants, Cleco will be required to pay the current amount outstanding.  Cleco's obligation under the PEP arrangement was in the form of a guaranty and is limited to the lesser of the balance of invoices outstanding or $24.0 million.  If PEP cannot pay the contractors building the plant, Cleco will be required to pay the current amount outstanding which was $8.7 million at June 30, 2002.    Since PEP began commercial operations on July 1, 2002, that obligation is expected to cease during the third

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quarter of 2002 once the PEP construction contracts are fully completed and paid.  Cleco's obligation under the APP arrangement is in the form of a guaranty and is limited to 50% of the current total for the current contractor's amount outstanding.  Since construction of APP is expected to be fully complete during the third quarter of 2002, that obligation is expected to cease.  The Company's management expects both affiliates to have the ability to pay their respective contractor as scheduled and does not expect to pay the bill on behalf of the affiliates.  However, under the covenants associated with the Company's credit facility, the current monthly amount due to the contractors reduces the amount Cleco can borrow from its credit facility.  These guaranties issued to APP's and PEP's construction contractors are in force until the contractors are finished constructing the plants and final payments are made by APP and PEP, respectively.

          Cleco has issued a guaranty to APP to contribute up to $250.0 million to APP.  The $250.0 million is reduced by the guaranty issued to the APP construction contractor and cash previously contributed to APP by Cleco.  The $250.0 million guaranty will be replaced with an equity contribution when project-level financing is obtained.  Cleco currently expects project-level financing to occur in the third quarter of 2002.

          At June 30, 2002 Cleco had an equity subscription obligation to make up to a $36.0 million equity contribution to PEP.  The plant began commercial operation on July 1, 2002, but at that date numerous construction contracts had not yet been fully closed and completed.  As the remaining construction contracts are completed and paid, the equity subscription will be satisfied by equity contributions.  Under the covenants associated with Cleco's credit facility, the entire remaining equity subscription reduces the amount Cleco can borrow from its credit facility.

          Upon conversion of the PEP construction loan to an interim loan, Cleco will provide an $8.25 million guaranty to pay interest and principal under the PEP loan should PEP be unable to pay its debt service.  The loan is expected to convert to an interim loan in the third quarter of 2002.

          In conjunction with Midstream entering into a $35.0 million line of credit, Cleco entered into a subordinated guaranty with the bank issuing the line of credit.  Under the terms of the guaranty, Cleco will pay principal and interest if Midstream is unable to pay.  At June 30, 2002, no principal or interest was payable under the line of credit; therefore, Cleco was not exposed under the guaranty.

          Cleco has issued guaranties to Marketing & Trading's counterparties in order to facilitate energy trading.  In conjunction with the guaranties issued, Marketing & Trading has received guaranties from certain counterparties and has entered into netting agreements whereby Marketing & Trading is only exposed to the net open position with each counterparty.  The guaranties issued and received expire at various times.  The balance of net Marketing & Trading's guaranties does not affect the amount Cleco can borrow under its credit facility.  However, the total amount of guarantied net open positions with all of Marketing & Trading's counterparties over $20.0 million reduces the amounts Cleco can borrow under its

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credit facility.  At June 30, 2002, the total guarantied net open positions were $14.3 million, so the borrowing restriction in Cleco's credit facility was not affected as of such date.  From time to time, Marketing & Trading will trade with new counterparties, and it is expected that Cleco may be required to issue guaranties to these new counterparties.  Marketing & Trading may also change the amount of trading with current counterparties and stop trading with current counterparties.  As counterparties and amounts traded change, corresponding changes will be made in the level of guaranties issued.

          Midstream's purchase of Mirant's 50% ownership interest in PEP during the second quarter of 2002 increased Midstream's ownership of PEP to 100%. Cleco's guaranties to the tolling agreement counterparty did not change.  The plant construction contractor guarantee increased to include 100% of the outstanding contractor's invoice balance.  For additional information about Cleco's purchase of Mirant's 50% ownership of the joint venture, see Note 10 - Acquisition in the Notes to the Unaudited Financial Statements in this Report.  

Cleco Power

          Commercial paper decreased at Cleco Power by $51.9 million at June 30, 2002, compared to December 31, 2001, due primarily to the issuance of $75.0 million in IQ Notes during the first six months of 2002.  A $107.0 million revolving credit facility at Cleco Power, scheduled to terminate in June 2003, provides for an optional conversion to a one-year term loan.  This facility provides support for the issuance of commercial paper and working capital needs.  When the facility expires, Cleco Power intends to renew it or enter into a similar agreement with similar terms.  An uncommitted line of credit with a bank in an amount up to $5.0 million is also available to support working capital needs.

          On May 9, 2002, Cleco Power issued $50.0 million aggregate principal amount of its 6.05% IQ Notes.  The notes mature on June 1, 2012, but the notes are redeemable at the option of Cleco Power on or after June 1, 2004.  The proceeds of the notes were used to repay short-term debt in the form of commercial paper.  The debt securities were issued pursuant to a shelf registration statement of Cleco Power registering the issuance of up to $200.0 million of Cleco Power's debt securities.  Cleco Power has issued a total of $75.0 million in aggregate principal amounts through May 9, 2002, pursuant to the shelf registration statement.

          On June 14, 2002, Cleco Power gave formal notice of its intention to call two series of medium-term notes, which became redeemable at Cleco Power's option on July 15, 2002.  The two series were the 7.55%, $15 million note and the 7.50%, $10 million note.  Both had scheduled maturity dates of July 15, 2004.  The notes were repaid on July 15, 2002, using proceeds from commercial paper issuances.  At June 30, 2002, these notes were classified as a current liability on Cleco Power's Unaudited Balance Sheets.

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Midstream

          On June 25, 2001, Midstream entered into a $35.0 million line of credit.  This line of credit may be used to support Midstream's generation activities.  Midstream may borrow at a rate of interest equal to the higher of the Federal Funds Rate plus applicable spread or the bank's prime rate in effect on such date.  Outstanding balances under this line of credit are guaranteed by Cleco on a subordinated basis.  The 364-day facility was scheduled to terminate in June 2002, but was extended through September 2002.  At June 30, 2002, there were no balances outstanding under this line of credit.

Other

          At June 30, 2002, CLE Resources held $0.2 million of cash and marketable securities compared to $0.4 million at December 31, 2001.

          Restricted cash represents cash to be used for specific purposes.  At June 30, 2002, $28.9 million of cash was restricted under the Evangeline bond indenture until certain of its provisions are met and $4.6 million of cash was restricted under an agreement with the lender for the Perryville power plant.  As the provisions under these agreements are met, cash is transferred out of the escrow account and is available for general corporate purposes.  For additional information about the Perryville purchase, see Note 10 - Acquisition in the Notes to the Unaudited Financial Statements in this Report.

Regulatory Matters - Retail Electric Competition

          In 2001, the LPSC determined retail choice was not currently in the best interest of Louisiana electric utility customers.  Cleco Power and a number of parties, including the other Louisiana electric utilities, certain power marketing companies, and various associations representing industry and consumers, participated in electric industry restructuring proceedings before the LPSC since 1997.  In November 2001, the LPSC directed its staff to organize a series of collaboratives to more fully explore the unresolved issues in the proposed retail choice plan presented by staff earlier in the year.  The staff is also to monitor surrounding states and if any commence retail access, the staff is to report back the success or failure of that effort twelve months after the initiative begins.  The troubled electric supply situation in California has led many in the industry to reexamine the restructur ing process.  While the competitive model continues to be espoused in some areas, several states have reduced or eliminated their restructuring efforts or have asked for delays in implementing rules or legislation already passed.  Management believes the situation in California will continue to influence future decisions and plans at both the federal and state levels, including Louisiana.  Management expects the customer choice debate and other related issues to continue in legislative and regulatory bodies through 2002.  At this time, the Company cannot predict whether any legislation or regulation will be adopted or enacted during 2002 and, if enacted, what form such legislation or regulation would take.

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          Currently, the LPSC does not provide fully exclusive service territories for electric utilities under its jurisdiction.  Instead, retail service is determined by a customers premise location or through long-term nonexclusive franchises.  If the customer locates a new premise, the LPSC uses a "300 foot rule" to determine if that customer has the right to chose among suppliers.  The application of this rule has led to competition with neighboring utilities for retail customers at the borders of our service areas.  Cleco Power also competes in its service area with suppliers of alternative forms of energy, some of which may be less costly than electricity for certain applications.  Cleco Power could experience some competition for electric sales to industrial customers in the form of cogeneration or from independent power producers.

Regulatory Matters - Wholesale Electric Competition

          In 1999, the FERC issued Order No. 2000, which establishes a general framework for all transmission-owning entities in the nation to voluntarily place their transmission facilities under the control of an appropriate RTO.  Although participation is voluntary, the FERC has made it clear that any jurisdictional entity not participating in an RTO will be subject to further regulatory directives.  These directives could take the form of review and/or denial of market-based rates for independent power sales.  On July 11, 2001, FERC issued orders stating its intention to form four regional RTOs covering the Northeast, Southeast, Midwest and West.  Since this date, the FERC has relaxed its mandate for the four RTOs, but is still insisting upon the large regional RTO model.  Many transmission-owning utilities and system operators have been trying to interpret and implement the FER C directives by trying to organize acceptable RTOs.  In November 2001, Entergy and Southern Companies announced a combined effort to form a Southeastern RTO, the "SeTrans".  At the same time, SPP and MISO announced their combined effort to design a Midwestern RTO.  On April 1, 2002, MISO filed the necessary documents at FERC to allow the consolidation of MISO and SPP to proceed.  FERC approved a consolidation of MISO and SPP tariffs, moving the merger closer to completion.  On June 27, 2002, the Se Trans sponsors filed a Petition for Declaratory Order, requesting FERC to approve the governance structure and business model of the Se Trans RTO as consistent with Order 2000 and FERC precedent.  Depending upon neighboring utilities' RTO participation, Cleco Power could potentially have an opportunity to participate in either the SeTrans or the MISO due to its proximity to both proposed RTOs.  Cleco Power continues to be involved in the ongoing RTO development process.  Cleco Power cannot anticipate the final form and configuration that this organizational process will yield nor which specific RTO it will join.  Additionally, various parties, including several state commissions, utilities, and other industry participants, are now contesting FERC's jurisdiction in this matter.  It is uncertain how or when this debate will be resolved.

          In September 2001, the LPSC issued Order No. U-25965 requiring Cleco Power and other transmission-owning entities in Louisiana to show cause why they should not be enjoined from transferring ownership or control of the bulk transmission assets, paid for by jurisdictional ratepayers, to another entity, such as an RTO.  This order also requires that Cleco Power and the other Louisiana transmission-owning entities show cause why the LPSC should not declare that the pricing and cost transfers required by the recommendation of the Administrative Law Judge

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in FERC Docket No. RTO1-100-000 conflict with the public interest.  The order does not limit Cleco Power's ability to participate in RTO development.  In August 2002, the LPSC filed a protest to the June 27, 2002 Petition for Declaratory Order concerning the proposed Se Trans RTO.  The LPSC asserted that the Se Trans Petition should be denied and that the Se Trans RTO should not receive the preliminary approval requested.  The LPSC, absent an adequate study or sufficient evidence demonstrating that the benefits to ratepayers of joining an RTO outweigh the costs, opposes the participation of Cleco and Entergy in the Se Trans, or any other RTO.

          The transfer of control of Cleco Power's transmission facilities to an RTO has the potential to materially affect Cleco's financial condition and results of operations.  Additionally, Cleco Power cannot predict the possible impact to financial earnings that may arise from the adoption of new transmission rates resulting from Cleco Power's possible membership in an RTO.

          Federal regulators and legislators continue to study the potential effects of restructuring the vertically integrated utility systems and providing retail customers a choice of supplier.  Congress is also evaluating electricity production and delivery as part of their formation of a national energy policy.  At this time, it is not possible to predict when or if retail customers nationwide will be able to choose their electric suppliers as a result of federal legislation.  Cleco cannot predict what future legislation may be proposed and/or passed and what impact it may have upon its results of operations and financial condition.

Franchises

          Cleco Power operates under nonexclusive franchise rights granted by governmental units, such as municipalities and parishes (counties), and enforced by state regulation.  These franchises are for fixed terms, which may vary from 10 years to 50 years.  The franchise with the Town of Franklinton expires April 25, 2003.  The effort to renew the franchise is currently underway and an offer will be sent by October 30, 2002, to the Town of Franklinton.  In the past, Cleco Power has been substantially successful in the timely renewal of franchises as each reaches the end of its term.

Lignite Deferral

          Effective May 31, 2001, Cleco Power signed a lignite contract with a new miner at the Dolet Hills mine.  As defined in LPSC Order No. U-21453, U-20925(SC) and U-22092(SC) (Subdocket G), retail ratepayers are receiving fuel costs savings equal to 2% of the projected previous mining contract costs through 2011.  Costs above 98% of the previous contract's projected costs are deferred.  Deferred costs are passed through the fuel adjustment clause to retail ratepayers when the actual costs of the new contract are below 98% of the projected costs of the previous contract.  As of June 30, 2002, Cleco Power has deferred $5.4 million in costs and interest relating to the new mining contract.  Management expects the new miner's cumulative costs to fall below the 98% threshold and therefore expects to recover the amounts deferred.  If the miner's cumulative costs do not fall bel ow the 98% threshold, Cleco Power may be required to write-off some or all of the deferred amount. Cleco Power will continue to monitor

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and assess the recoverability of these amounts on a periodic basis; however, management believes the recovery of the deferred amount is probable.

NEW POWER PLANTS

          APP, a joint venture owned 50% by Midstream and 50% by Calpine, constructed an 1,160-MW combined cycle, natural gas-fired power plant near Eunice, Louisiana.  Construction on PB1, which is tolled to Aquila, was completed on July 1, 2002, and construction on PB2, which is tolled to Calpine, was completed on August 2, 2002.  Total construction costs of the plant incurred by APP are estimated to be between $555.0 and $580.0 million.   Long-term nonrecourse financing is expected to be received in the third quarter of 2002.  The investment in APP is being accounted for using the equity method of accounting by Cleco.  As of June 30, 2002, Midstream had contributed $250.5 million in cash and land to APP.

          APP has entered into a tolling agreement with Aquila for 580-MW of capacity starting on July 1, 2002, and continuing for 20 years.  Under the tolling agreement, Aquila will supply the natural gas required to generate 580-MW and will own the electricity.  The agreement requires Aquila to pay APP various capacity reservation fees, the price of which depends upon the type of capacity and ultimate availability declared by APP.  In addition to the capacity reservation payments from Aquila, APP will collect revenues associated with both fixed and variable operating and maintenance expenses anticipated at the Acadia facility.  Tolling revenues are primarily affected by the availability of the APP power plant to operate and other characteristics of the plant.  For information regarding the credit ratings of Cleco's counterparties under Cleco's tolling agreements, please read "- Financial C ondition - Liquidity and Capital Resources" above.

        On July 30, 2001, APP executed the Acadia Calpine Tolling Agreement with Calpine Energy Services.  Under the terms of the agreement, Calpine Energy Services will provide the natural gas needed to generate 580-MW of electricity at the Acadia facility and will have the right to own and market the electricity produced for 20 years.  The agreement requires Calpine to pay APP various capacity reservation fees, the price of which depends upon the type of capacity and ultimate availability declared by APP.  In addition to the capacity reservation payments from Calpine, APP will collect revenues associated with both fixed and variable operating and maintenance expenses anticipated at the Acadia facility.  Tolling revenues are primarily affected by the availability of the APP power plant to operate and other characteristics of the plant.

          PEP completed constructing a 725-MW, natural gas-fired power plant in Perryville, Louisiana on June 30, 2002, and full commercial operation of the 568-MW combined-cycle unit began on July 1, 2002.  A 157-MW combustion turbine operating in simple cycle became operational on July 1, 2001.  Total construction costs of the plant are estimated to be between $335.0 million and $340.0 million.  As of June 30, 2002, PEP had incurred $323.9 million constructing the plant.  Long-term nonrecourse financing was received during June 2001.

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          On April 30, 2001, PEP announced the signing of a long-term power purchase agreement for the output of its 725-MW facility, the Perryville Power Station.  The 20-year contract is with Mirant Marketing, Mirant's risk management, trading and marketing organization.  Under the terms of the contract, Mirant Marketing will supply the natural gas needed to fuel the plant and will own the plant's output.  The agreement requires Mirant to pay PEP various capacity reservation fees, the price of which depends upon the type of capacity and ultimate availability declared by PEP.  In addition to the capacity reservation payments from Mirant, PEP will collect revenues associated with both fixed and variable operating and maintenance expenses anticipated at the Perryville facility.  Tolling revenues are primarily affected by the availability of the PEP power plant to operate and other characteris tics of the plant.

          Affiliates of Cleco engaged in providing electric generating capacity and electricity under tolling agreements have certain obligations under their respective agreements which expose them to possible adverse financial penalties and requirements.  Obligations under the respective tolling agreements include, but are not limited to:

maintaining various types of insurance at specified levels,

maintaining electricity and natural gas metering equipment,

paying scheduled interest and principal payments on debt,

maintaining plant operating characteristics at specified levels such as heat rate and demonstrated generating capacity, and

maintaining specified availability levels with a combination of plant availability and replacement power.

          If the physical plants fail to operate within specified requirements, replacement power may need to be purchased on the open market and provided to the tolling counterparties.  Providing replacement power maintains availability levels but exposes Cleco and its affiliates to electricity commodity price volatility and transmission constraints.  If obligations under the tolling agreements are not met or economical electricity commodity and transmission are not available, Cleco's financial condition and results of operations could be materially adversely affected.

          On June 20, 2002, Midstream purchased Mirant's 50% ownership interest in PEP.  Cleco paid Mirant $54.6 million in cash as repayment of project debt, Mirant's invested capital to date and other miscellaneous costs.  The terms of the agreement required Cleco to retire $48.0 million in project debt owed to Mirant and assume Mirant's total equity commitment of up to $19.5 million.  In connection with the existing project financing, Mirant issued a $25.0 million subordinated loan to the project.  Mirant retains certain obligations as a project sponsor, some of which are subject to indemnification by Cleco.  The obligation retained by Mirant and subject to indemnity relates primarily to an existing 20-year tolling agreement with a Mirant subsidiary.  Cleco used a combination of newly issued common equity and debt to acquire Mirant's interest.  The acquisition was acco unted for as a purchase in accordance with SFAS No. 141.  Cleco discontinued the equity method of accounting effective July 1, 2002, and consolidated PEP assets and liabilities as of June 30, 2002.  As of June 30, 2002, PEP's assets and liabilities were $328.0 million and $263.8 million, respectively.  PEP's revenues and expenses will be reported in the Statement of Income beginning July 1, 2002.

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Constraints on Purchased Power

          Cleco Power's generating facilities do not supply enough electric power to meet its customers' current demand (native load demand) and it must purchase additional generating capacity and/or purchase power to satisfy these needs.  In March 2000, following a competitive bid process, Cleco Power entered into three contracts for firm electric capacity and energy with Williams Energy and Dynegy, for 605-MW of capacity in 2000, increasing to 760-MW of capacity in 2004.  These contracts were approved by the LPSC in March 2000.  Cleco Power obtains approximately 40% of the capacity needed to provide power to its customers under these contracts.  Management expects to meet substantially all of its native load demand through 2004 with Cleco Power's own generation capacity and the power purchase agreements with Williams Energy and Dynegy.  If Williams Energy or Dynegy failed to provide po wer to Cleco Power in accordance with the power purchase agreements, Cleco Power would have to acquire replacement power at market prices in order to meet its customers' demands.  The power market can be volatile, and the prices at which Cleco Power would acquire replacement power could be significantly higher than the prices Cleco Power currently pays under the power purchase agreements.  The LPSC may not allow Cleco Power to recover, through an increase in its rates, part or all of any additional amounts Cleco Power may pay in order to obtain replacement power.  If this occurred, Cleco Power's financial condition and results of operations could be adversely affected.  Because of its location on the transmission grid, Cleco Power relies on one main supplier of electric transmission and is sometimes constrained as to the amount of purchased power it can bring into its system.  The power contracts described above are not expected to be affected by such transmi ssion constraints.

RECENT ACCOUNTING STANDARDS

          For discussion of recent accounting standards, see Note 6 - Recent Accounting Standards in the Notes to the Unaudited Financial Statements in this Report, which is incorporated herein by reference.

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ITEM 3     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                    RISK OF CLECO CORPORATION

          The market risk inherent in Cleco's market risk-sensitive instruments and positions is the potential change arising from changes in the short-, medium- and long-term interest rates, the commodity price of electricity traded on the different electricity exchanges, and the commodity price of natural gas traded.  Generally, Cleco Power's market risk-sensitive instruments and positions are characterized as "other than trading"; however, Cleco Power does have positions that are considered "trading" as defined in EITF No. 98-10.  Cleco Power has entered into positions to mitigate its recoverable fuel costs risks.  These positions are marked-to-market; with the resulting gain or loss recorded on the balance sheet as a component of the accumulated deferred fuel asset or liability.  When these positions close, actual gains (losses) will be included in the fuel adjustment clause and reflected on c ustomers' bills.   Cleco Energy's positions do not qualify for hedge accounting under SFAS No. 133 and are marked-to-market, similar to positions characterized as "trading".  Marketing & Trading generally does not take physical delivery of electricity or natural gas traded, but settles the transactions through the financial markets.  These trades are considered "trading" and are marked-to-market.

          For additional information concerning Cleco's market risk associated with its counterparties, see "Item 2 Management's Discussion and Analysis of Financial Condition - Results of Operation - Financial Condition - Liquidity and Capital Resources" of this Form 10-Q.

          Cleco's exposure to market risk, as discussed below, represents an estimate of possible changes in the fair value or future earnings that would occur, assuming possible future movements in the interest rates and commodity prices of electricity and natural gas.  Management's views on market risk are not necessarily indicative of actual results, nor do they represent the maximum possible gains or losses.  The views do represent, within the parameters disclosed, what management estimates may happen.

Interest Rate Risks

          Cleco has entered into various fixed- and variable-rate debt obligations.  The calculations of the changes in fair market value and interest expense of the debt securities are made over a one-year period.

          Sensitivity to changes in interest rates for fixed-rate obligations is computed by calculating the current fair market value using a net present value model based upon a 1.0% change in the average interest rate applicable to such debt.  Sensitivity to changes in interest rates for variable-rate obligations is computed by assuming a 1.0% change in the current interest rate applicable to such debt.

          As of June 30, 2002, the carrying value of Cleco's consolidated short-term variable-rate debt was approximately $164.1 million, which approximates the fair market value.  Fair value

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was determined using quoted market prices.  Each 1.0% change in the average interest rates applicable to such debt would result in a change of approximately $1.6 million in Cleco's pretax earnings.

          As of June 30, 2002, the carrying value of Cleco Power's short-term variable-rate debt was approximately $11.9 million, which approximates the fair market value.  Each 1.0% change in the average interest rates applicable to such debt would result in a change of approximately $0.1 million in Cleco Power's pretax earnings.

          Cleco monitors its mix of fixed- and variable-rate debt obligations in light of changing market conditions and, from time to time, may alter that mix by, for example, refinancing balances outstanding under its variable-rate commercial paper program with fixed-rate debt.

Commodity Price Risks

          Management believes Cleco has in place controls to help minimize the risks involved in trading.  Controls over trading consist of a back office (accounting) and middle office (risk management) independent of the trading operations, oversight by a risk management committee comprised of Company officers, and a daily risk report which shows VAR and current market conditions.  Cleco's Board of Directors appoints the members of the Risk Management Committee.  VAR limits are set and monitored by the Risk Management Committee.

          Marketing & Trading engages in trading of electricity and natural gas.  All of Marketing & Trading's trades are considered "trading" under EITF No. 98-10 and are marked-to-market.  Due to market price volatility, mark-to-market reporting may introduce volatility to carrying values and hence to Cleco's Unaudited Financial Statements.  The net marked-to-market figure of trading positions of Marketing & Trading for the six months ended June 30, 2002, was a gain of $3.2 million.

          Cleco Power engages in trading of electricity and natural gas, and provides fuel for generation and purchases power to meet the electricity demands of customers.  Financial positions that are not used to meet the electricity demands of customers, or used to decrease the volatility of fuel costs, are considered "trading."  For the six months ended June 30, 2002, the net mark-to-market figure for those positions was a gain of less than $0.1 million.

      Cleco Energy provides natural gas to wholesale customers, such as municipalities, and enters into positions in order to provide fixed gas prices to some of its customers.  In the fourth quarter of 2001, Cleco Energy discontinued using cash-flow hedges as defined in SFAS No. 133, as amended, and changes in market values of the positions are reflected on the Consolidated Statements of Income.  For the six months ended June 30, 2002, the net marked-to-market impact was a minimal loss.

          Marketing & Trading, Cleco Power and Cleco Energy utilize a VAR model to assess the market risk of their trading portfolios, including derivative financial instruments.  VAR

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represents the potential loss in fair values for an instrument from adverse changes in market factors for a specified period of time and confidence level.  The VAR is estimated using a historical simulation calculated daily assuming a holding period of one day, with a 95% confidence level for natural gas and electricity positions.  Total volatility is based on historical cash volatility, implied market volatility, current cash volatility and option pricing.

          Based on these assumptions, the high, low and average VAR during the three months and six months ended June 30, 2002, as well as the VAR at June 30, 2002, are summarized below:

	For the three months ended June 30, 2002
	High		Low		Average
	(Thousands)
Marketing & Trading	$	1,155	$	3,88	$	758
Cleco Power	$	47	$	--	$	11
Cleco Energy	$	49	$	8	$	20
Consolidated	$	1,212	$	406	$	788
	For the six months ended June 30, 2002
	High		Low		Average
	(Thousands)
Marketing & Trading	$	1,155	$	165	$	630
Cleco Power	$	107	$	--	$	20
Cleco Energy	$	170	$	8	$	39
Consolidated	$	1,212	$	259	$	688
	At June 30, 2002
	(Thousands)
Marketing & Trading	$	417
Cleco Power	$	3
Cleco Energy	$	9
Consolidated	$	430

63

PART II

ITEM 1     LEGAL PROCEEDINGS

          For a description of legal proceedings affecting Cleco, please review Note 5 - Litigation, in the Notes to the Unaudited Financial Statements in this Report, which description is incorporated herein by reference.

          Cleco is involved in regulatory, environmental and legal proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business, some of which involve substantial amounts.  In several lawsuits, Cleco has been named as a defendant by individuals who claim injury due to exposure to asbestos while working at sites in central Louisiana.  Most of these claimants have been workers who participated in construction of various industrial facilities, including power plants, and some of the claimants have worked at locations owned by Cleco.  Cleco's management regularly analyzes current information and, as necessary, provides accruals for probable liabilities on the eventual disposition of these matters.  Cleco's management believes that the effects on Cleco and its affiliates' respective financial statements, if any, from the di sposition of these matters will not have a material adverse effect on Cleco's financial condition, results of operations or cash flows.

ITEM 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)	The Annual Meeting of Shareholders of the Company was held on April 26, 2002, in Alexandria, Louisiana.
(b)	Proxies for the election of directors were solicited pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended.  There was no solicitation in opposition to management's nominees, and all nominees listed in the Proxy Statement were elected.
(c)	The following is a tabulation of the votes cast upon each of the proposals presented at the Annual Meeting of Shareholders of the Company on April 26, 2002.
	(1)     Election of Directors:

Class II Directors	For	Withheld	Brokers Non-Votes
William L. Marks	36,926,978	3,602,117	0
Ray B. Nesbitt	39,958,250	507,845	0
Robert T. Ratcliff	40,176,159	352,936	0
William H. Walker, Jr.	40,219,258	309,837	0

64

The term of office as a director of each of Messrs.  Richard B. Crowell, David M. Eppler,
J. Patrick Garrett, F. Ben James, Jr., Elton R. King, and Ms. Sherian G. Cadoria continued after the meeting.

(2) Appointment of PricewaterhouseCoopers LLP as the Company's auditors for 2002:

For	Against	Abstain	Brokers Non-Votes
39,193,892	1,167,208	167,995	0

ITEM 5     OTHER INFORMATION

          The next annual shareholders' meeting has been set for April 25, 2003.

ITEM 6     EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits
	Cleco Corporation:
	10(a)	364-Day Credit Agreement, dated June 5, 2002
	10(b)	364-Day Credit Agreement, Amendment
	11(a)	Computation of Net Income Per Common Share for the three months ended June 30, 2002 and 2001
	11(b)	Computation of Net Income Per Common Share for the six months ended June 30, 2002 and 2001
	12(a)	Computation of Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends for the three, six and twelve month periods ended June 30, 2002, for Cleco Corporation
	Cleco Power:
	10(c)	364-Day Credit Agreement, dated June 5, 2002
	12(b)	Computation of Ratio of Earnings to Fixed Charges for the three, six and twelve month periods ended June 30, 2002, for Cleco Power

65

(b)	Reports on Form 8-K
	Cleco Corporation:
	On May 2, 2002, Cleco filed a report on Form 8-K dated as of April 30, 2002, including as an exhibit a press release regarding earnings for the first quarter of 2002.
	On May 7, 2002, Cleco filed a report on Form 8-K dated as of May 2, 2002, relating to the signing of an underwriting agreement providing for the sale of 2.0 million shares of its common stock and including as exhibits thereto the underwriting agreement, an opinion as to the legality of the offered securities, and a press release relating to the offering.
	On June 24, 2002, Cleco filed a report on Form 8-K dated as of May 21, 2002 including as an exhibit a press release regarding its purchase of Mirant's 50 percent interest in a 725-MW power plant in northeast Louisiana.
	On July 25, 2002, Cleco filed a report on Form 8-K dated as of July 23, 2002, regarding earnings for the quarter and six months ended June 30, 2002.
	Cleco Power:
	On May 8, 2002, Cleco Power filed a report on Form 8-K dated as of May 6, 2002, relating to the signing of an underwriting agreement providing for the sale of $50.0 million of its 6.05% IQ Notes due June 1, 2012, incorporating certain financial statements by reference therein and including as exhibits thereto the underwriting agreement, form of Supplemental Indenture and forms of Notes, an opinion as the legality of the offered securities and independent auditors' consent.

65

SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    CLECO CORPORATION

                 (Registrant)

By:   /s/ R. Russell Davis        

        R. Russell Davis

        Vice President and Controller

        (Principal Accounting Officer)

Date: August 14, 2002

67

SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    CLECO POWER LLC

                 (Registrant)

By:   /s/ R. Russell Davis        

        R. Russell Davis

        Vice President and Controller

        (Principal Accounting Officer)

Date: August 14, 2002

68

EX-10.A

"The Bank of New York" logo

364-DAY CREDIT AGREEMENT

dated as of June 5, 2002

among

CLECO CORPORATION,
as Borrower

The Lenders Party Hereto

BANK ONE, NA,
as Syndication Agent

WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
as Documentation Agent

THE BANK OF TOKYO-MITSUBISHI, LTD.,
as Managing Agent

CREDIT SUISSE FIRST BOSTON and SOCIETE GENERALE,
as Co-Agents

and

THE BANK OF NEW YORK
as Administrative Agent

BNY CAPITAL MARKETS, INC.,
as Lead Arranger and Book Manager

Bryan Cave LLP

245 Park Avenue

New York, New York 10167

TABLE OF CONTENTS

		Page
ARTICLE 1. DEFINITIONS		1
	Section 1.1 Defined Terms	1
	Section 1.2 Terms Generally	15
	Section 1.3 Accounting Terms	15
ARTICLE 2. AMOUNT AND TERMS OF LOANS		15
	Section 2.1 Revolving Credit Loans	15
	Section 2.2 Notes	15
	Section 2.3 Revolving Credit Loans; Procedure	16
	Section 2.4 Competitive Bid Loans; Procedure	17
	Section 2.5 Termination, Reduction and Increase of Aggregate Commitments	19
	Section 2.6 Prepayments of the Loans	21
	Section 2.7 Conversions and Continuations	21
	Section 2.8 Interest Rate and Payment Dates	22
	Section 2.9 Substituted Interest Rate	23
	Section 2.10 Taxes	24
	Section 2.11 Increased Costs; Illegality	26
	Section 2.12 Break Funding Payments	27
	Section 2.13 Lenders' Records	28
	Section 2.14 Extension of Commitment Period and Maturity Date	28
	Section 2.15 Substitution of Lender	29
ARTICLE 3. FEES; PAYMENTS		30
	Section 3.1 Fees	30
	Section 3.2 Pro Rata Treatment and Application of Principal Payments	30
ARTICLE 4. REPRESENTATIONS AND WARRANTIES		31
	Section 4.1 Subsidiaries; Capitalization	31
	Section 4.2 Existence and Power	32
	Section 4.3 Authority	32
	Section 4.4 Binding Agreement	32
	Section 4.5 Litigation and Regulatory Proceedings	32
	Section 4.6 Required Consents	33
	Section 4.7 No Conflicting Agreements, Compliance with Laws	33
	Section 4.8 Governmental Regulations	33
	Section 4.9 Federal Reserve Regulations; Use of Loan Proceeds	33
	Section 4.10 Plans	34
	Section 4.11 Financial Statements	34
	Section 4.12 Property	34
	Section 4.13 Environmental Matters	34
ARTICLE 5. CONDITIONS TO EFFECTIVENESS		35
	Section 5.1 Evidence of Action	35
	Section 5.2 This Agreement	35
	Section 5.3 Notes	35
	Section 5.4 Approvals	36
	Section 5.5 Certain Agreements	36
	Section 5.6 Opinion of Counsel to the Borrower	36
	Section 5.7 Terminating Indebtedness	36
	Section 5.8 Compliance; Officer's Certificate	36
	Section 5.9 Fees and Expenses	36

ARTICLE 6.	CONDITIONS OF LENDING - ALL LOANS	42
Section 6.1	Compliance	42
Section 6.2	Credit Request; Competitive Bid Request	42
Section 6.3	Law	42
Section 6.4	Other Documents	43
ARTICLE 7.	AFFIRMATIVE COVENANTS	43
Section 7.1	Financial Statements	43
Section 7.2	Certificates; Other Information	44
Section 7.3	Legal Existence	44
Section 7.4	Taxes	45
Section 7.5	Insurance	45
Section 7.6	Payment of Indebtedness and Performance of Obligations	45
Section 7.7	Condition of Property	45
Section 7.8	Observance of Legal Requirements	45
Section 7.9	Inspection of Property; Books and Records; Discussions	46
Section 7.10	Licenses, Intellectual Property	46
Section 7.11	Capitalization	46
Section 7.12	Material/Immaterial Designation of Subsidiaries	46
Section 7.13	Use of Proceeds	47
ARTICLE 8.	NEGATIVE COVENANTS	47
Section 8.1	Indebtedness	47
Section 8.2	Liens	48
Section 8.3	Merger, Consolidation, Purchase or Sale of Assets, Etc	50
Section 8.4	Loans, Advances, Investments, etc	51
Section 8.5	Amendments, etc. of Employee Stock Ownership Plan	52
Section 8.6	Restricted Payments	52
Section 8.7	Transactions with Affiliates	52
Section 8.8	Restrictive Agreements	53
Section 8.9	Permitted Hedge Agreements	53
ARTICLE 9.	EVENTS OF DEFAULT	53
ARTICLE 10.	THE ADMINISTRATIVE AGENT	56
Section 10.1	Appointment	56
Section 10.2	Delegation of Duties	56
Section 10.3	Exculpatory Provisions	56
Section 10.4	Reliance by Administrative Agent	57
Section 10.5	Notice of Default	57
Section 10.6	Non-Reliance on Administrative Agent and Other Lenders	57
Section 10.7	Administrative Agent in Its Individual Capacity	58
Section 10.8	Successor Administrative Agent	58
ARTICLE 11.	OTHER PROVISIONS	59
Section 11.1	Amendments and Waivers	59
Section 11.2	Notices	59
Section 11.3	Survival	60
Section 11.4	Expenses; Indemnity; Damage Waiver	60
Section 11.5	Lending Offices	62
Section 11.6	Assignments and Participations	62
Section 11.7	Counterparts; Integration; Effectiveness	64
(ii)

Section 11.8	Severability	64
Section 11.9	Right of Set-off	64
Section 11.10	Governing Law; Jurisdiction; Consent to Service of Process	65
Section 11.11	WAIVER OF JURY TRIAL	65
Section 11.12	Headings	65

SCHEDULES:

Schedule 1.1	List of Existing Letters of Credit
Schedule 4.1	List of Subsidiaries
Schedule 4.5	List of Litigation and Regulatory Proceedings
Schedule 4.13	List of Environmental Matters
Schedule 8.2	List of Existing Liens
Schedule 8.8	List of Existing Restrictions

EXHIBITS:

Exhibit A	List of Commitments
Exhibit B	Form of Note
Exhibit C	Form of Credit Request
Exhibit D	Form of Competitive Bid Request
Exhibit E	Form of Invitation to Bid
Exhibit F	Form of Competitive Bid
Exhibit G	Form of Competitive Bid Accept/Reject Letter
Exhibit H	Form of Competitive Bid Loan Confirmation
Exhibit I	Form of Notice of Conversion/Continuation
Exhibit J	Form of Assignment and Acceptance Agreement
Exhibit K	Form of Opinion of Counsel to the Borrower
Exhibit L	Approved Subordination Terms
Exhibit M	Form of Compliance Certificate

(iii)

     364-DAY CREDIT AGREEMENT, dated as of June 5, 2002, by and among CLECO CORPORATION, the Lenders party hereto, BANK ONE, NA, as syndication agent hereunder, WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as documentation agent hereunder, THE BANK OF TOKYO-MITSUBISHI, LTD., as managing agent hereunder, CREDIT SUISSE FIRST BOSTON and SOCIETE GENERALE, as co-agents hereunder and THE BANK OF NEW YORK, as Administrative Agent for the Lenders hereunder.

EX-10.B

Exhibit 10(b)

AMENDMENT NO. 1

AMENDMENT NO. 1 (this "Amendment"), dated as of July 31, 2002, to 364-Day Credit Agreement, dated as of June 5, 2002 (as amended, supplemented or otherwise modified, the "Credit Agreement"), by and among Cleco Corporation, the Lenders party thereto, Bank One, NA, as Syndication Agent, Westdeutsche Landesbank Girozentrale, New York Branch, as Documentation Agent, The Bank of Tokyo-Mitsubishi, Ltd., as Managing Agent, Credit Suisse First Boston and Societe Generale, as Co-Agents, and The Bank of New York, as Administrative Agent.

RECITALS

          I.     Unless the context otherwise requires, capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

          II.     The Borrower has requested that the Administrative Agent agree to amend the Credit Agreement upon the terms and subject to the conditions contained herein, and the Administrative Agent is willing so to agree.

          Accordingly, in consideration of the terms and conditions hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, each of the Borrower and the Administrative Agent hereby agree as follows:

          1.     The last sentence of the definition of the term "Applicable Facility Fee Percentage" contained in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Facility Fee Percentage shall be determined using, in the case of a split by one rating category, the Pricing Level within which the lower of the two rating categories would otherwise fall, and in the case of a split by more than one rating category, the Pricing Level that is one level lower (e.g., Pricing Level V is one level lower than Pricing Level VI) than the Pricing Level within which the lower of the two rating categories would otherwise fall."

          2.     The second sentence of clause (c) of the definition of the term "Applicable Margin" contained in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Margin shall be determined using, in the case

of a split by one rating category, the Pricing Level within which the lower of the two rating categories would otherwise fall, and in the case of a split by more than one rating category, the Pricing Level that is one level lower (e.g., Pricing Level V is one level lower than Pricing Level VI) than the Pricing Level within which the lower of the two rating categories would otherwise fall."

          3.     The last sentence of the definition of the term "Applicable Utilization Fee Percentage" contained in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Utilization Fee Percentage shall be determined using, in the case of a split by one rating category, the Pricing Level within which the lower of the two rating categories would otherwise fall, and in the case of a split by more than one rating category, the Pricing Level that is one level lower (e.g., Pricing Level V is one level lower than Pricing Level VI) than the Pricing Level within which the lower of the two rating categories would otherwise fall."

          4.     Clause (f) of Article 9 of the Credit Agreement is hereby amended by inserting the following proviso at the end thereof:

"provided that this clause (f) shall not apply to any Material Obligations of Evangeline."

          5.     The proviso contained in clause (g) of Article 9 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

"provided that this clause (g) shall not apply to (i) secured Indebtedness that becomes due solely as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or (ii) any Indebtedness of Evangeline."

          6.     Paragraphs 1 through 5 hereof shall not be effective until the Administrative Agent (or its counsel) shall have received (i) from each of the Borrower and the Required Lenders either (a) a counterpart of this Amendment signed on behalf of such Person or (b) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission of a signed signature page of this Amendment) that such Person has signed a counterpart of this Amendment and (ii) from the Borrower, for the account of each Lender executing and delivering (without condition) this Amendment to the Administrative Agent at or before 4:00 p.m. (New York City time) on July 30, 2002, an amendment fee equal to 0.125% of the amount of such Lender's Commitment.

2

          7.     The Borrower hereby (i) reaffirms and admits the validity and enforceability of each Loan Document and its obligations thereunder, and agrees and admits that it has no defense to or offset against any such obligation, and (ii) represents and warrants that no Default or Event of Default has occurred and is continuing and that all of the representations and warranties contained in the Loan Documents are true and correct with the same effect as though such representations and warranties had been made on the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date.

          8.     This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. It shall not be necessary in making proof of this Amendment to produce or account for more than one counterpart signed by the party to be charged.

          9.     Each Loan Document shall in all other respects remain in full force and effect.

          10.     THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

[SIGNATURE PAGES TO FOLLOW]

3

CLECO CORPORATION
AMENDMENT NO. 1

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

CLECO CORPORATION

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

THE BANK OF NEW YORK, as Administrative Agent

By:                                                               

Name:                                                          

Title:                                                            

CONSENTED TO AND AGREED:

THE BANK OF NEW YORK

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

BANK ONE, NA

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

THE BANK OF TOKYO-MITSUBISHI, LTD.

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

CREDIT SUISSE FIRST BOSTON

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

SOCIETE GENERALE

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

DEXIA CREDIT LOCAL, NEW YORK AGENCY

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

REGIONS BANK

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

WHITNEY NATIONAL BANK

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

HIBERNIA NATIONAL BANK

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

BANK HAPOALIM B.M.

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

FORTIS CAPITAL CORP.

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

CLECO CORPORATION
AMENDMENT NO. 1

CONSENTED TO AND AGREED:

KBC BANK N.V.

By:                                                               

Name:                                                          

Title:                                                            

By:                                                               

Name:                                                          

Title:                                                            

EX-10.C

Exhibit 10(a)

'The Bank of New York logo"

364-DAY CREDIT AGREEMENT

dated as of June 5, 2002

among

CLECO POWER LLC,
as Borrower

The Lenders Party Hereto

Bank One, NA,
as Syndication Agent

Westdeutsche Landesbank Girozentrale, NEW YORK BRANCH
as Documentation Agent

The Bank of Tokyo-Mitsubishi, Ltd.,
as Managing Agent

Credit Suisse First Boston and Societe Generale,
as Co-Agents

and

THE BANK OF NEW YORK,
as Administrative Agent

BNY CAPITAL MARKETS, INC.,
as Lead Arranger and Book Manager

Bryan Cave LLP
245 Park Avenue
New York, New York 10167

TABLE OF CONTENTS

		Page
ARTICLE 1. DEFINITIONS		1
	Section 1.1 Defined Terms	1
	Section 1.2 Terms Generally	15
	Section 1.3 Accounting Terms	15
ARTICLE 2. AMOUNT AND TERMS OF LOANS		15
	Section 2.1 Revolving Credit Loans	15
	Section 2.2 Notes	15
	Section 2.3 Revolving Credit Loans; Procedure	16
	Section 2.4 Competitive Bid Loans; Procedure	17
	Section 2.5 Termination, Reduction and Increase of Aggregate Commitments	19
	Section 2.6 Prepayments of the Loans	21
	Section 2.7 Conversions and Continuations	21
	Section 2.8 Interest Rate and Payment Dates	22
	Section 2.9 Substituted Interest Rate	23
	Section 2.10 Taxes	24
	Section 2.11 Increased Costs; Illegality	26
	Section 2.12 Break Funding Payments	27
	Section 2.13 Lenders' Records	28
	Section 2.14 Extension of Commitment Period and Maturity Date	28
	Section 2.15 Substitution of Lender	29
ARTICLE 3. FEES; PAYMENTS		30
	Section 3.1 Fees	30
	Section 3.2 Pro Rata Treatment and Application of Principal Payments	30
ARTICLE 4. REPRESENTATIONS AND WARRANTIES		31
	Section 4.1 Subsidiaries; Capitalization	31
	Section 4.2 Existence and Power	32
	Section 4.3 Authority	32
	Section 4.4 Binding Agreement	32
	Section 4.5 Litigation and Regulatory Proceedings	32
	Section 4.6 Required Consents	33
	Section 4.7 No Conflicting Agreements, Compliance with Laws	33
	Section 4.8 Governmental Regulations	33
	Section 4.9 Federal Reserve Regulations; Use of Loan Proceeds	33
	Section 4.10 Plans	34
	Section 4.11 Financial Statements	34
	Section 4.12 Property	34
	Section 4.13 Environmental Matters	34
ARTICLE 5. CONDITIONS TO EFFECTIVENESS		35
	Section 5.1 Evidence of Action	35
	Section 5.2 This Agreement	35
	Section 5.3 Notes	35
	Section 5.4 Approvals	36
	Section 5.5 Certain Agreements	36
	Section 5.6 Opinion of Counsel to the Borrower	36
	Section 5.7 Terminating Indebtedness	36
	Section 5.8 Compliance; Officer's Certificate	36
	Section 5.9 Fees and Expenses	36

TABLE OF CONTENTS

		Page
ARTICLE 6. CONDITIONS OF LENDING - ALL LOANS		36
	Section 6.1 Compliance	37
	Section 6.2 Borrowing Request; Competitive Bid Request	37
	Section 6.3 Law	37
	Section 6.4 Other Documents	37
ARTICLE 7. AFFIRMATIVE COVENANTS		37
	Section 7.1 Financial Statements	37
	Section 7.2 Certificates; Other Information	38
	Section 7.3 Legal Existence	39
	Section 7.4 Taxes	39
	Section 7.5 Insurance	39
	Section 7.6 Payment of Indebtedness and Performance of Obligations	39
	Section 7.7 Condition of Property	40
	Section 7.8 Observance of Legal Requirements	40
	Section 7.9 Inspection of Property; Books and Records; Discussions	40
	Section 7.10 Licenses, Intellectual Property	40
	Section 7.11 Capitalization	41
	Section 7.12 Material/Immaterial Designation of Subsidiaries	41
	Section 7.13 Use of Proceeds	41
ARTICLE 8. NEGATIVE COVENANTS		41
	Section 8.1 Liens	41
	Section 8.2 Merger, Consolidation, Purchase or Sale of Assets, Etc.	43
	Section 8.3 Loans, Advances, etc	45
	Section 8.4 Amendments, etc. of Certain Agreements	45
ARTICLE 9. EVENTS OF DEFAULT		45
ARTICLE 10. THE ADMINISTRATIVE AGENT		48
	Section 10.1 Appointment	48
	Section 10.2 Delegation of Duties	48
	Section 10.3 Exculpatory Provisions	48
	Section 10.4 Reliance by Administrative Agent	49
	Section 10.5 Notice of Default	49
	Section 10.6 Non-Reliance on Administrative Agent and Other Lenders	49
	Section 10.7 Administrative Agent in Its Individual Capacity	50
	Section 10.8 Successor Administrative Agent	50
ARTICLE 11. OTHER PROVISIONS		51
	Section 11.1 Amendments and Waivers	51
	Section 11.2 Notices	51
	Section 11.3 Survival	51
	Section 11.4 Expenses; Indemnity; Damage Waiver	52
	Section 11.5 Lending Offices	53
	Section 11.6 Assignments and Participations	54
	Section 11.7 Counterparts; Integration; Effectiveness	55
	Section 11.8 Severability	56
	Section 11.9 Right of Set-off	56
	Section 11.10 Governing Law; Jurisdiction; Consent to Service of Process	56
	Section 11.11 WAIVER OF JURY TRIAL	57
	Section 11.12 Headings	57

(ii)

SCHEDULES:

Schedule 4.1	List of Subsidiaries
Schedule 4.5	List of Litigation and Regulatory Proceedings
Schedule 4.13	List of Environmental Matters
Schedule 8.1	List of Existing Liens

EXHIBITS:

Exhibit A	List of Commitments
Exhibit B	Form of Note
Exhibit C	Form of Borrowing Request
Exhibit D	Form of Competitive Bid Request
Exhibit E	Form of Invitation to Bid
Exhibit F	Form of Competitive Bid
Exhibit G	Form of Competitive Bid Accept/Reject Letter
Exhibit H	Form of Competitive Bid Loan Confirmation
Exhibit I	Form of Notice of Conversion/Continuation
Exhibit J	Form of Assignment and Acceptance Agreement
Exhibit K	Form of Opinion of Counsel to the Borrower
Exhibit L	Form of Increase Supplement
Exhibit M	Form of Compliance Certificate

     364-DAY CREDIT AGREEMENT, dated as of June 5, 2002, by and among CLECO POWER LLC, the Lenders party hereto, Bank One, NA, as syndication agent hereunder, Westdeutsche Landesbank Girozentrale, NEW YORK BRANCH, as documentation agent hereunder, THE BANK OF TOKYO-MITSUBISHI, LTD., as managing agent hereunder, CREDIT SUISSE FIRST BOSTON and SOCIETE GENERALE, as co-agents hereunder, and THE BANK OF NEW YORK, as Administrative Agent for the Lenders hereunder.

ARTICLE 1. DEFINITIONS

     Section 1.1      Defined Terms

          As used in this Agreement, terms defined in the preamble have the meanings therein indicated, and the following terms have the following meanings:

          "ABR Advances": the Revolving Credit Loans (or any portions thereof) at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Alternate Base Rate.

          "Accountants": PricewaterhouseCoopers, L.L.P. (or any successor thereto), or such other firm of certified public accountants of recognized national standing selected by the Borrower.

          "Administrative Agent": BNY, in its capacity as administrative agent for the Lenders hereunder.

          "Administrative Questionnaire": an Administrative Questionnaire in a form supplied by the Administrative Agent.

          "Advance": with respect to a Revolving Credit Loan, an ABR Advance or a Eurodollar Advance, as the case may be.

          "Affected Advance": as defined in Section 2.9.

          "Affiliate": with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

          "Agents": collectively, the Administrative Agent, the Syndication Agent, the Documentation Agent, the Managing Agent and the Co-Agents.

          "Aggregate Commitments": on any date, the sum of all Commitments on such date. The initial amount of the Aggregate Commitments on the Agreement Date is $107,000,000.

          "Agreement": this 364-Day Credit Agreement.

          "Agreement Date": the first date appearing in this Agreement.

          "Alternate Base Rate": on any date, a rate of interest per annum equal to the higher of (i) the Federal Funds Rate in effect on such date plus 1/2 of 1% or (ii) the BNY Rate in effect on such date.

          "Applicable Facility Fee Percentage": with respect to the amount of the Aggregate Commitments, at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level, subject to the provisos set forth below:

Pricing Level	Applicable Facility Fee Percentage
Pricing Level I	0.0800%
Pricing Level II	0.1000%
Pricing Level III	0.1250%
Pricing Level IV	0.1500%
Pricing Level V	0.2000%
Pricing Level VI	0.2250%

          Changes in the Applicable Facility Fee Percentage resulting from a change in the Pricing Level shall become effective on the effective date of any change in the Senior Debt Rating from S&P or Moody's. Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Facility Fee Percentage shall be determined using, in the case of a split by one rating category, the higher Pricing Level, and in the case of a split by more than one rating category, the Pricing Level that is one level lower than the Pricing Level within which the higher of the two rating categories would otherwise fall.

           "Applicable Lending Office": in respect of any Lender, (i) in the case of such Lender's ABR Advances and Competitive Bid Loans, its Domestic Lending Office or (ii) in the case of such Lender's Eurodollar Advances, its Eurodollar Lending Office.

           "Applicable Margin":

          (a)     subject to the provisions of clause (b) below, with respect to the unpaid principal amount of Eurodollar Advances at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level, subject to the provisos set forth in clause (c) below:

Pricing Level	Applicable Margin
Pricing Level I	0.420%
Pricing Level II	0.650%
Pricing Level III	0.750%
Pricing Level IV	0.850%
Pricing Level V	1.050%
Pricing Level VI	1.775%

          (b)     in the event that the Borrower exercises its option under Section 2.14(b) to extend the Maturity Date, with respect to the unpaid principal amount of Eurodollar Advances, at all times from and after the Commitment Termination Date during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level, subject to the provisos set forth in clause (c) below:

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Pricing Level	Applicable Margin
Pricing Level I	0.670%
Pricing Level II	0.900%
Pricing Level III	1.000%
Pricing Level IV	1.100%
Pricing Level V	1.300%
Pricing Level VI	2.275%

          (c)     Changes in the Applicable Margin resulting from a change in the Pricing Level shall become effective on the effective date of any change in the Senior Debt Rating from S&P or Moody's. Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Margin shall be determined using, in the case of a split by one rating category, the higher Pricing Level, and in the case of a split by more than one rating category, the Pricing Level that is one level lower than the Pricing Level within which the higher of the two rating categories would otherwise fall.

          "Applicable Utilization Fee Percentage": with respect to the amount of the Aggregate Commitments, at all times during which the applicable Pricing Level set forth below is in effect, the percentage set forth below next to such Pricing Level, subject to the provisos set forth below:

Pricing Level	Applicable Utilization Fee Percentage
Pricing Level I	0.125%
Pricing Level II	0.125%
Pricing Level III	0.125%
Pricing Level IV	0.125%
Pricing Level V	0.125%
Pricing Level VI	0.250%

          Changes in the Applicable Utilization Fee Percentage resulting from a change in the Pricing Level shall become effective on the effective date of any change in the Senior Debt Rating from S&P or Moody's. Notwithstanding anything herein to the contrary, in the event of a split in the Senior Debt Rating from S&P and Moody's that would otherwise result in the application of more than one Pricing Level (had the provisions regarding the applicability of other Pricing Levels contained in the definitions thereof not been given effect), then the Applicable Utilization Fee Percentage shall be determined using, in the case of a split by one rating category, the higher Pricing Level, and in the case of a split by more than one rating category, the Pricing Level that is one level lower than the Pricing Level within which the higher of the two rating categories would otherwise fall.

          "Approved Fund" means, with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

          "Asset Sale": any sale, transfer or other disposition by the Borrower or any of the Material Subsidiaries to any Person of any Property (including any Stock or other securities of another Person) of the Borrower or any of the Material Subsidiaries, other than inventory or accounts receivables or other receivables sold, transferred or otherwise disposed of in the ordinary course of business,

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provided that, notwithstanding anything in this definition to the contrary, for purposes of the Loan Documents, the term "Asset Sale" shall not include the creation or granting of any Lien other than a conditional sale or other title retention arrangement.

          "Assignment and Acceptance Agreement": an assignment and acceptance agreement executed by a Lender and an assignee (with the consent of any party whose consent is required by Section 11.6), and accepted by the Administrative Agent, substantially in the form of Exhibit J.

          "Bid Rate": as defined in Section 2.4(b).

          "BNY": The Bank of New York.

          "BNY Rate": the rate of interest per annum publicly announced from time to time by BNY as its prime commercial lending rate at its principal office in New York City; each change in the BNY Rate being effective from and including the date such change is publicly announced as being effective. The BNY Rate is not intended to be lowest rate of interest charged by BNY in connection with extensions of credit to borrowers.

          "Borrower": Cleco Power LLC, a Louisiana limited liability company.

          "Borrowing Date": any Business Day on which (i) the Lenders make Revolving Credit Loans in accordance with a Borrowing Request, or (ii) one or more Lenders make Competitive Bid Loans pursuant to Competitive Bids which have been accepted by the Borrower.

          "Borrowing Request": a request for Revolving Credit Loans in the form of Exhibit C.

          "Business Day": for all purposes other than as set forth in clause (ii) below, (i) any day other than a Saturday, a Sunday or a day on which commercial banks located in New York City are authorized or required by law or other governmental action to close and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Advances, any day which is a Business Day described in clause (i) above and which is also a day on which dealings in foreign currency and exchange and Eurodollar funding between banks may be carried on in London, England.

          "Capital Lease Obligations": with respect to any Person, obligations of such Person with respect to leases which, in accordance with GAAP, are required to be capitalized on the financial statements of such Person.

          "Change in Law": (i) the adoption of any law, rule or regulation after the Agreement Date, (ii) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Agreement Date or (iii) compliance by any Credit Party (or, for purposes of Section 2.11(b), by any lending office of such Credit Party or by such Credit Party's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Agreement Date.

          "CLECO Mortgage": the Indenture of Mortgage, dated as of July 1, 1950, made by the Borrower to Bank One Trust Company, N.A., as Trustee.

          "Closing Date": the date on which the conditions specified in Article 5 are satisfied (or waived in accordance with Section 11.1).

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          "Co-Agents": Credit Suisse First Boston and Societe Generale, in their capacities as co-agents for the Lenders hereunder.

          "Code": the Internal Revenue Code of 1986.

          "Commitment": with respect to each Lender, the commitment of such Lender to make Revolving Credit Loans hereunder in an aggregate outstanding amount not exceeding the amount of such Lender's Commitment as set forth on Exhibit A, in the initial Increase Supplement executed and delivered by such Lender, the Borrower and the Administrative Agent, or in the Assignment and Acceptance Agreement pursuant to which such Lender shall have assumed its Commitment, as applicable, as such Commitment may be reduced or increased from time to time pursuant to Section 2.5 or pursuant to assignments by or to such Lender pursuant to Section 11.6.

          "Commitment Percentage": as of any date and with respect to each Lender, the percentage equal to a fraction (i) the numerator of which is the Commitment of such Lender on such date (or, if there are no Commitments on such date, on the last date upon which one or more Commitments were in effect), and (ii) the denominator of which is the sum of the Commitments of all Lenders on such date (or, if there are no Commitments on such date, on the last date upon which one or more Commitments were in effect).

          "Commitment Period": the period from the Agreement Date until the day before the Commitment Termination Date.

          "Commitment Termination Date": the day which is 364 days after the Agreement Date (or, if such date is not a Business Day, the Business Day immediately preceding such day), as the same may be extended from time to time in accordance with Section 2.14(a), or such earlier date on which the Aggregate Commitments shall terminate in accordance with Section 2.5 or Article 9.

          "Competitive Bid": an offer by a Lender, in the form of Exhibit F, to make a Competitive Bid Loan.

          "Competitive Bid Accept/Reject Letter": a notification given by the Borrower pursuant to Section 2.4 in the form of Exhibit G.

          "Competitive Bid Loan": each Loan from a Lender to the Borrower pursuant to Section 2.4.

          "Competitive Bid Loan Confirmation": a confirmation by the Administrative Agent to a Lender of the acceptance by the Borrower of any Competitive Bid (or Portion thereof) made by such Lender, substantially in the form of Exhibit H.

          "Competitive Bid Request": a request by the Borrower, substantially in the form of Exhibit D, for Competitive Bids.

          "Competitive Interest Period": as to any Competitive Bid Loan, the period commencing on the date of such Competitive Bid Loan and ending on the date requested in the Competitive Bid Request with respect to such Competitive Bid Loan, which date shall not be earlier than 7 days after the date of such Competitive Bid Loan or later than 180 days after the date of such Competitive Bid Loan; provided, however, that if any Competitive Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such next succeeding

5

Business Day would be a date on or after the Maturity Date, in which case such Competitive Interest Period shall end on the next preceding Business Day, and provided further that no Competitive Interest Period shall end after the Maturity Date. Interest shall accrue from and including the first day of a Competitive Interest Period to but excluding the last day of such Competitive Interest Period.

          "Compliance Certificate": a certificate substantially in the form of Exhibit M.

          "Contingent Obligation": as to any Person, any obligation of such Person guaranteeing or in effect guaranteeing any return on any investment made by another Person or any Indebtedness, lease, dividend or other obligation of any other Person in any manner, whether contingent or whether directly or indirectly, including any obligation in respect of the liabilities of any partnership in which such other Person is a general partner, except to the extent that such liabilities of such partnership are nonrecourse to such other Person and its separate Property. The amount of any Contingent Obligation of a Person shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith, provided that, notwithstanding anythin g in this definition to the contrary, the amount of any Contingent Obligation of a Person in respect of any agreement by any other Person to purchase electricity, gas or fuel from a counterparty shall be deemed to be the maximum reasonably anticipated liability of such other Person, as determined in good faith by such Person, net of any obligation or liability of such counterparty to purchase electricity, gas or fuel from such other Person, provided further that the obligations of such other Person to so purchase electricity, gas or fuel from such counterparty shall be terminable at the election of such other Person in the event of a default by such counterparty in its obligations to so purchase electricity, gas or fuel for such other Person.

          "Continuing Lenders": as defined in Section 2.14(a)(ii).

          "Conversion/Continuation Date": the date on which (i) a Eurodollar Advance is converted to an ABR Advance, (ii) the date on which an ABR Advance is converted to a Eurodollar Advance or (iii) the date on which a Eurodollar Advance is continued as a new Eurodollar Advance.

          "Corporate Officer": with respect to the Borrower, the chairman of the board, the president, any vice president, the chief executive officer, the chief financial officer, the secretary, the treasurer, or the controller thereof.

          "Credit Parties": collectively, the Agents and the Lenders.

          "Default": any of the events specified in Article 9, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

          "Documentation Agent": Westdeutsche Landesbank Girozentrale, New York Branch, in its capacity as documentation agent for the Lenders hereunder.

          "Dollars" and "$": lawful currency of the United States.

          "Domestic Lending Office": in respect of any Lender, initially, the office or offices of such Lender designated as such on its Administrative Questionnaire; thereafter, such other office of such Lender through which it shall be making or maintaining ABR Advances or Competitive Bid Loans, as reported by such Lender to the Administrative Agent and the Borrower, provided that any Lender may so report different Domestic Lending Offices for all of its ABR Advances and all of its Competitive Bid

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Loans, whereupon references to the Domestic Lending Office of such Lender shall mean either or both of such offices, as applicable.

          "Eligible Assignee": any of the following: (i) commercial banks, finance companies, insurance companies and other financial institutions and funds (whether a corporation, partnership or other entity) engaged generally in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business; provided that any such entity shall be entitled, as of the date such entity becomes a Lender, to receive payments under its Note without deduction or withholding with respect to United States federal income tax, (ii) each of the Lenders and (iii) any Affiliate or Approved Fund of a Lender.

          "Employee Stock Ownership Plan": The Cleco Utility Group Inc. 401(k) Savings and Investment Plan ESOP Trust.

          "Environmental Laws": any and all federal, state and local laws relating to the use, storage, transporting, manufacturing, handling, discharge, disposal or recycling of Hazardous Substances or pollutants and including (i) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 USCA 9601 et seq., (ii) the Resource Conservation and Recovery Act of 1976, as amended, 42 USCA 6901 et seq., (iii) the Toxic Substance Control Act, as amended, 15 USCA 2601 et. seq., (iv) the Water Pollution Control Act, as amended, 33 USCA 1251 et. seq., (v) the Clean Air Act, as amended, 42 USCA 7401 et seq., (vi) the Hazardous Materials Transportation Authorization Act of 1994, as amended, 49 USCA 5101 et seq., and (viii) all rules and regulations under any of the foregoing and under any analogous state laws, judgments, decrees and injunctions and any analogous state laws applicable to the Borrower or any of the Material Subsidiaries .

          "ERISA": the Employee Retirement Income Security Act of 1974.

          "ERISA Affiliate": any trade or business (whether or not incorporated) that, together with the Borrower or any Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

          "ERISA Event": (i) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (ii) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (iii) the filing pursuant to Section 412(d) of the Code or Section 303(a) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iv) the incurrence by the Borrower, any Subsidiary or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (v) the receipt by the Borrower, any Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) the incurrenc e by the Borrower, any Subsidiary or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (vii) the receipt by the Borrower, any Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower, any Subsidiary or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

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          "Eurodollar Advances": collectively, the Revolving Credit Loans (or any portions thereof) at such time as they (or such portions) are made and/or being maintained at a rate of interest based upon the Eurodollar Rate.

          "Eurodollar Interest Period": with respect to any Eurodollar Advance requested by the Borrower, the period commencing on, as the case may be, the Borrowing Date or the Conversion/Continuation Date with respect to such Eurodollar Advance and ending one, two, three or six months thereafter, as selected by the Borrower in its irrevocable Borrowing Request or its irrevocable Notice of Conversion/Continuation, provided, however, that (i) if any Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month or beyond the Maturity Date, in which event such Eurodollar Interest Period shall end on the immediately preceding Business Day, (ii) any Eurodollar Interest Period that begins on the last Business Day of a calendar month (o r on a day for which there is no numerically corresponding day in the calendar month at the end of such Eurodollar Interest Period) shall end on the last Business Day of a calendar month and (iii) the Borrower shall select Interest Periods so as not to have more than five different Eurodollar Interest Periods outstanding at any one time for all Eurodollar Advances.

          "Eurodollar Lending Office": in respect of any Lender, initially, the office, branch or affiliate of such Lender designated as such on its Administrative Questionnaire (or, if no such office branch or affiliate is specified, its Domestic Lending Office); thereafter, such other office, branch or affiliate of such Lender through which it shall be making or maintaining Eurodollar Advances, as reported by such Lender to the Administrative Agent and the Borrower.

          "Eurodollar Rate": with respect to the Eurodollar Interest Period applicable to any Eurodollar Advance, a rate of interest per annum, as determined by the Administrative Agent and then rounded to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%, equal to the rate, as reported by BNY to the Administrative Agent, quoted by BNY to leading banks in the interbank eurodollar market as the rate at which BNY is offering Dollar deposits in an amount equal approximately to the Eurodollar Advance of BNY to which such Eurodollar Interest Period shall apply for a period equal to such Eurodollar Interest Period, as quoted at approximately 11:00 a.m. two Business Days prior to the first day of such Eurodollar Interest Period.

          "Event of Default": any of the events specified in Article 9, provided that any requirement specified in Article 9 for the giving of notice, the lapse of time, or both, or any other condition specified in Article 9, has been satisfied.

          "Extension Request": as defined in Section 2.14(a)(i).

          "Facility Fee": as defined in Section 3.1(a).

          "Federal Funds Rate": for any day, a rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%), equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (i) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average of the quotations for

8

such day on such transactions received by BNY as determined by BNY and reported to the Administrative Agent.

          "FERC": the Federal Energy Regulatory Commission or any Governmental Authority succeeding to the functions thereof.

          "FERC Order": that certain letter order issued to Cleco Utility Group Inc., the predecessor-in-interest to the Borrower, dated July 21, 2000, in Docket No. ES00-44-000, issued by FERC, or any renewal or replacement order thereof, together with any supplemental order thereto, in each case authorizing the Borrower to issue notes or drafts maturing not more than one year after the date of issue or renewal thereof or assumption of liability thereon (in each case as described in Section 204(e) of the Federal Power Act, as amended and in effect from time to time) in an aggregate principal amount not less than the sum of the Commitments hereunder plus the aggregate principal amount of any such notes or drafts of the Borrower (other than the Notes) outstanding from time to time.

          "Financial Statements": as defined in Section 4.11.

          "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than United States, any State thereof or the District of Columbia.

          "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statement by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied. If at any time any change in GAAP would affect the computation of any financial requirement set forth in this Agreement, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such requirement to reflect such change in GAAP (subject to the approval of the Required Lenders), provided that, until so amended, (i) such requirement shall continue to be computed in accordance with GAAP prior to such change therein and ( ii) the Borrower shall provide to the Credit Parties financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such requirement made before and after giving effect to such change in GAAP.

          "Governmental Authority": any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any court or arbitrator.

          "Hazardous Substance": (i) any hazardous or toxic substance, material or waste listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302), and amendments thereto and replacements therefor, and (ii) any substance, pollutant or material defined as, or designated in, any Environmental Law as a "hazardous substance," "toxic substance," "hazardous material," "hazardous waste," "restricted hazardous waste," "pollutant," "toxic pollutant" or words of similar import.

          "Highest Lawful Rate": as to any Lender, the maximum rate of interest, if any, that at any time or from time to time may be contracted for, taken, charged or received by such Lender on the Note held thereby or which may be owing to such Lender pursuant to this Agreement and the other Loan Documents under the laws applicable to such Lender and this transaction.

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          "Immaterial Subsidiary": any Subsidiary of the Borrower that is not designated as a Material Subsidiary, or that is designated as an Immaterial Subsidiary, in each case in accordance with the terms hereof.

          "Increase Supplement": an increase supplement in the form of Exhibit M.

          "Indebtedness": as to any Person, at a particular time, all items which constitute, without duplication, (i) indebtedness for borrowed money or the deferred purchase price of Property (other than trade payables incurred in the ordinary course of business), (ii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iii) obligations with respect to any conditional sale or title retention agreement, (iv) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer's payment of such drafts, (v) all liabilities secured by any Lien on any Property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof (other than carriers', warehousemen's, me chanics', repairmen's or other like non-consensual statutory Liens arising in the ordinary course of business), (vi) liabilities in respect of any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect of any shares of equity securities or any option, warrant or other right to acquire any shares of equity securities, (vii) obligations under Capital Lease Obligations, and (viii) Contingent Obligations of such Person in respect of Indebtedness of others.

          "Indemnified Person": as defined in Section 11.4(b).

          "Intellectual Property": all copyrights, trademarks, servicemarks, patents, trade names and service names.

          "Inter-Affiliate Policies Agreement": the Inter-Affiliate Policies and the Inter-Affiliate Procedures of Cleco Corporation, each dated as of December 18, 2000.

          "Interest Payment Date": (i) as to any ABR Advance, the last day of each March, June, September and December commencing on the first of such days to occur after such ABR Advance is made or any Eurodollar Advance is converted to an ABR Advance, (ii) as to any Eurodollar Advance in respect of which the Borrower has selected a Eurodollar Interest Period of one, two or three months, the last day of such Interest Period, (iii) as to any Eurodollar Advance in respect of which the Borrower has selected a Eurodollar Interest Period of six months, the day which is three months after the first day of such Interest Period and the last day of such Interest Period, (iv) as to any Competitive Bid Loan as to which the Borrower has selected an Interest Period of 90 days or less, the last day of such Competitive Interest Period, and (v) as to any Competitive Bid Loan as to which the Borrower has selected a Competitive Interest Period of more than 90 days, the day which is 90 days after the first day of such Competitive Interest Period and the last day of each subsequent 90-day period thereafter or, if sooner, the last day of such Competitive Interest Period.

          "Interest Period": a Eurodollar Interest Period or a Competitive Interest Period, as the context may require.

          "Invitation to Bid": an invitation to make Competitive Bids in the form of Exhibit E.

          "Lenders": the Persons listed on Exhibit A and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance Agreement or an Increase Supplement, other

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than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance Agreement.

          "Lien": any mortgage, pledge, hypothecation, assignment, deposit or preferential arrangement, encumbrance, lien (statutory or other), or other security agreement or security interest of any kind or nature whatsoever, including any conditional sale or other title retention agreement and any capital or financing lease having substantially the same economic effect as any of the foregoing.

          "Loan Documents": collectively, this Agreement and the Notes.

          "Loans": the Revolving Credit Loans and/or the Competitive Bid Loans, as the case may be.

          "LPSC": the Louisiana Public Service Commission or any Governmental Authority succeeding to the functions thereof.

          "Managing Agent": The Bank of Tokyo-Mitsubishi, Ltd., in its capacity as managing agent for the Lenders hereunder.

          "Margin Stock": any "margin stock", as defined in Regulation U of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time.

          "Material Adverse Change": a material adverse change in (i) the financial condition, operations, business, prospects or Property of (a) the Borrower or (b) the Borrower and the Material Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Credit Parties to enforce their rights and remedies under the Loan Documents.

          "Material Adverse Effect": a material adverse effect on (i) the financial condition, operations, business, prospects or Property of (a) the Borrower or (b) the Borrower and the Material Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Credit Parties to enforce their rights and remedies under the Loan Documents.

          "Material Obligations": as of any date, Indebtedness (other than Indebtedness under the Loan Documents) or operating leases of any one or more of the Borrower or any Material Subsidiary or, in the case of the Borrower only, any Contingent Obligation, in an aggregate principal amount exceeding $20,000,000. For purposes of determining Material Obligations, the "principal amount" of Indebtedness, operating leases or Contingent Obligations at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Material Subsidiary, as applicable, would be required to pay if such Indebtedness, operating leases or Contingent Obligations became due and payable on such day.

          "Material Subsidiary": each of the Subsidiaries of the Borrower designated as such on Schedule 4.1 and any other Subsidiary of the Borrower that has been designated as such in accordance with Section 7.12, in each case unless and until such Subsidiary or other Subsidiary, as the case may be, is designated as an Immaterial Subsidiary pursuant to such Section.

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          "Material Total Assets": as of any date of determination, the total assets of the Borrower and the Material Subsidiaries, determined on a consolidated basis in accordance with GAAP.

          "Maturity Date": the Commitment Termination Date or, if the Borrower has duly extended the Maturity Date in accordance with Section 2.14(b), the Repayment Extension Date.

          "Maximum Offer": as defined in Section 2.4(b).

          "Maximum Request": as defined in Section 2.4(a).

          "Moody's": Moody's Investors Service, Inc., or any successor thereto.

          "Multiemployer Plan": a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

          "Non-Extending Lender": as defined in Section 2.14(a)(ii).

          "Note": with respect to each Lender in respect of such Lender's Revolving Credit Loans and Competitive Bid Loans, a promissory note, substantially in the form of Exhibit B, payable to the order of such Lender; each such promissory note having been made by the Borrower and dated the Closing Date, including all replacements thereof and substitutions therefor.

          "Notice of Conversion/Continuation": a notice substantially in the form of Exhibit I.

          "Participant": as defined in Section 11.6(e).

          "PBGC": the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

          "Permitted Liens": Liens permitted to exist under Section 8.1.

          "Person": any individual, firm, partnership, joint venture, corporation, association, business enterprise, limited liability company, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity, and for the purpose of the definition of "ERISA Affiliate", a trade or business.

          "Plan": any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower, any Subsidiary or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

          "Portion": as defined in Section 2.4(b).

          "Pricing Level": Pricing Level I, Pricing Level II, Pricing Level III, Pricing Level IV, Pricing Level V, or Pricing Level VI, as the context may require.

          "Pricing Level I": any time when (i) no Event of Default has occurred and is continuing, and (ii) the Senior Debt Rating is A+ or higher by S&P or A1 or higher by Moody's.

          "Pricing Level II": any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is A- or higher by S&P or A3 or higher by Moody's and (iii) Pricing Level I does not apply.

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          "Pricing Level III": any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is BBB+ or higher by S&P or Baa1 or higher by Moody's and (iii) Pricing Levels I and II do not apply.

          "Pricing Level IV": any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is BBB or higher by S&P or Baa2 or higher by Moody's and (iii) Pricing Levels I, II and III do not apply.

          "Pricing Level V": any time when (i) no Event of Default has occurred and is continuing, (ii) the Senior Debt Rating is BBB- or higher by S&P or Baa3 or higher by Moody's and (iii) Pricing Levels I, II, III and IV do not apply.

          "Pricing Level VI": any time when none of Pricing Levels I, II, III IV and V are applicable.

          "Property": all types of real, personal, tangible, intangible or mixed property.

          "Real Property": all real property owned or leased (or previously owned or leased) by the Borrower or any of the Material Subsidiaries (or any of their respective predecessors).

          "Register": as defined in Section 11.6(c).

          "Related Parties": with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.

          "Required Lenders": (i) except as provided in clause (ii) below, at any time, Lenders having outstanding Revolving Credit Loans and unused Commitments representing more than 51% of the sum of the total outstanding Revolving Credit Loans and unused Commitments at such time and (ii) for purposes of declaring the Loans to be due and payable pursuant to Article 9, and for all purposes after the Loans become due and payable pursuant to Article 9 or the Commitments expire or terminate, Lenders having outstanding Revolving Credit Loans, Competitive Bid Loans and unused Commitments representing more than 51% of the sum of the total outstanding Revolving Credit Loans, Competitive Bid Loans and unused Commitments at such time.

          "Repayment Extension Date": as defined in Section 2.14(b).

          "Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section 2.1.

          "S&P": Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, or any successor thereto.

          "SEC": the Securities and Exchange Commission or any Governmental Authority succeeding to the functions thereof.

          "Senior Debt Rating": at any date, the credit rating identified by S&P or Moody's as the credit rating which (i) it has assigned to long term unsecured senior debt of the Borrower or (ii) would assign to long term unsecured senior debt of the Borrower were the Borrower to issue or have outstanding any long term unsecured senior debt on such date. If either (but not both) Moody's or S&P

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shall cease to be in the business of rating corporate debt obligations, the Pricing Levels shall be determined on the basis of the ratings provided by the other rating agency.

          "Stock": any and all shares, rights, interests, participations, warrants or other equivalents (however designated) of equity in, or ownership of, any entity, including corporate stock, partnership interests and membership and other limited liability company interests.

          "Submission Deadline": as defined in Section 2.4(b).

          "Subsidiary": as to any Person, any corporation, association, partnership, limited liability company, joint venture or other business entity of which such Person or any Subsidiary of such Person, directly or indirectly, either (i) in respect of a corporation, owns or controls more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors or similar managing body, irrespective of whether a class or classes shall or might have voting power by reason of the happening of any contingency, or (ii) in respect of an association, partnership, joint venture or other business entity, is entitled to share in more than 50% of the profits and losses, however determined. Unless the context otherwise requires, references to a Subsidiary shall be deemed to be references to a Subsidiary of the Borrower.

          "Syndication Agent": Bank One, NA, in its capacity as syndication agent for the Lenders hereunder.

          "Tax": any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature, and whatever called, by a Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed.

          "Tax on the Overall Net Income": as to any Person, a Tax imposed by the jurisdiction in which that Person's principal office (and/or, in the case of a Lender, its Domestic Lending Office) is located, or by any political subdivision or taxing authority thereof, or in which that Person is deemed to be doing business, on all or part of the net income, profits or gains of that Person (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise).

          "Term-Out Notice": as defined in Section 2.14(b).

          "Terminating Indebtedness": the Indebtedness (together with all unpaid and accrued interest and fees and other unpaid sums) of the Borrower under the First Amended and Restated 364-Day Credit Agreement, dated as of May 31, 2001, as amended, by and among the Borrower, the lenders party thereto.

          "Total Capitalization": at any time, the difference between (i) the sum of each of the following at such time with respect to the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP: (a) preferred Stock (less deferred compensation relating to unallocated convertible preferred Stock held by the Employee Stock Ownership Plan), plus (b) common Stock and any premium on capital Stock thereon (as such term is used in the Financial Statements), plus (c) retained earnings, plus (d) Total Indebtedness, and (ii) treasury Stock at such time of the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP.

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          "Total Indebtedness": at any time, all Indebtedness (net of unamortized premium and discount (as such term is used in the Financial Statements)) at such time of the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP.

          "United States": the United States of America.

          "Utilization Fee": as defined in Section 3.1(b).

          "Withdrawal Liability": liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

     Section 1.2     Terms Generally

          The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (ii) any definition of or reference to any law shall be construed as referring to such law as from time to time amended and any successor thereto and the rules and regulations promulgated from time to time thereunder, (iii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iv) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (v) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (vi) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (vii) unless specifically provided in a Loan Document to the contrary, references to a time shall refer to New York City time.

     Section 1.3     Accounting Terms

          Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP. Unless the context otherwise requires, any reference to a fiscal period shall refer to the relevant fiscal period of the Borrower.

ARTICLE 2. AMOUNT AND TERMS OF LOANS

     Section 2.1     Revolving Credit Loans

          Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (each a "Revolving Credit Loan" and, as the context may require, collectively with all other Revolving Credit Loans of such Lender and with the Revolving Credit Loans of all other Lenders, the "Revolving Credit Loans") to the Borrower from time to time during the Commitment Period, provided, however, that immediately after giving effect thereto (i) the outstanding principal balance of such Lender's Revolving Credit Loans would not exceed such Lender's Commitment, and (ii) the aggregate outstanding principal balance of all Lenders' Revolving Credit Loans and Competitive Bid Loans would not exceed the Aggregate Commitments. During the Commitment Period, the Borrower

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may borrow, prepay in whole or in part and reborrow under the Aggregate Commitments, all in accordance with the terms and conditions of this Agreement. The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then outstanding principal balance of each Revolving Credit Loan on the Maturity Date.

     Section 2.2     Notes

          The Revolving Credit Loans and Competitive Bid Loans made by a Lender shall be evidenced by a promissory note of the Borrower, substantially in the form of Exhibit B, payable to the order of such Lender and representing the obligation of the Borrower to pay the sum of (i) the aggregate unpaid principal balance of all Revolving Credit Loans made by such Lender plus (ii) the aggregate unpaid principal balance of all Competitive Bid Loans made by such Lender, in each case with interest thereon as prescribed in Section 2.8. Each Note shall (a) be dated the Closing Date, (b) be stated to mature on the Maturity Date and (c) bear interest from the date thereof on the unpaid principal balance thereof at the applicable interest rate or rates per annum determined as provided in Section 2.8, payable as specified in Section 2.8.

     Section 2.3     Revolving Credit Loans; Procedure

          (a)     The Borrower may borrow Revolving Credit Loans under the Aggregate Commitments on any Business Day during the Commitment Period, provided, however, that the Borrower shall notify the Administrative Agent (by telephone or facsimile) no later than (i) 11:00 a.m., three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Advances, and (ii) 11:30 a.m., on the requested Borrowing Date, in the case of ABR Advances, in each case specifying (A) the aggregate principal amount to be borrowed under the Aggregate Commitments, (B) the requested Borrowing Date, (C) whether such borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a combination thereof, and (D) if the borrowing is to consist of one or more Eurodollar Advances, the length of the Eurodollar Interest Period for each such Eurodollar Advance, provided further, however, that no Eurodollar Inte rest Period selected in respect of any Revolving Credit Loan shall end after the Maturity Date. If the Borrower fails to give timely notice in connection with a request for a Eurodollar Advance, the Borrower shall be deemed to have elected that such Advance shall be made as an ABR Advance. Each such notice shall be irrevocable and confirmed promptly by delivery to the Administrative Agent of a Borrowing Request. Each ABR Advance shall be in an aggregate principal amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess thereof, provided that an ABR Advance may be in an aggregate amount that is equal to the entire unused balance of the Aggregate Commitments. Each Eurodollar Advance shall be in an aggregate principal amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess thereof.

          (b)     Upon receipt of each notice of borrowing from the Borrower, the Administrative Agent shall promptly notify each Lender thereof. Subject to its receipt of the notice referred to in the preceding sentence, each Lender will make the amount of its Commitment Percentage of each borrowing available to the Administrative Agent for the account of the Borrower at the office of the Administrative Agent provided for in Section 11.2 not later than 2:00 p.m. on the relevant Borrowing Date requested by the Borrower, in funds immediately available to the Administrative Agent at such office. The amounts so made available to the Administrative Agent on such Borrowing Date will then, subject to the satisfaction of the terms and conditions of this Agreement, be made available on such date to the Borrower by the Administrative Agent at the office of the Administrative Agent provided for in Section 11.2 by crediting the account of the Borrower on the books of such office with the aggregate of said amounts received by the Administrative Agent.

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          (c)     Unless the Administrative Agent shall have received prior notice from a Lender (by telephone or otherwise, such notice to be promptly confirmed by facsimile or other writing) that such Lender will not make available to the Administrative Agent such Lender's Commitment Percentage of the Revolving Credit Loans requested by the Borrower in accordance with paragraph (b) of this Section, the Administrative Agent may assume that such Lender has made such share available to the Administrative Agent on the Borrowing Date in accordance with this Section, provided that such Lender received notice of the proposed borrowing from the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If and to the extent such Lender shall not have so made its Commitment Percentage of such Loans available to the Administrativ e Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to the Borrower to the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate set forth in Section 2.8 for such Loans, and, in the case of such Lender, the Federal Funds Rate in effect on each such day (as determined by the Administrative Agent in accordance with the definition of "Federal Funds Rate" set forth in Section 1.1). Such payment by the Borrower, however, shall be without prejudice to its rights against such Lender. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender's Revolving Credit Loan as part of the Revolving Credit Loans for purposes of this Agreement, which R evolving Credit Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Revolving Credit Loans. The failure of any Lender to make its Commitment Percentage of any requested Revolving Credit Loan available to the Administrative Agent pursuant to this Section shall not relieve any other Lender of such other Lender's obligation to make its own Commitment Percentage of such Revolving Credit Loan available to the Administrative Agent in accordance with this Section, provided, however, that no Lender shall be liable or responsible for the failure by any other Lender to make any Revolving Credit Loans required to be made by such other Lender.

          (d)     If a Lender makes a new Revolving Credit Loan on a Borrowing Date on which the Borrower is to repay a Revolving Credit Loan from such Lender, such Lender shall apply the proceeds of such new Revolving Credit Loan to make such repayment, and only the excess of the proceeds of such new Revolving Credit Loan over the Revolving Credit Loan being repaid need be made available to the Administrative Agent, for the Borrower's account.

          (e)     Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice of borrowing given to the Administrative Agent, the Administrative Agent may act without liability upon the basis of telephonic notice of such borrowing believed by the Administrative Agent in good faith to be from an authorized officer of the Borrower prior to receipt of written confirmation. In each such case, the Administrative Agent's records with regard to any such telephone notice shall be presumptively correct, absent manifest error.

     Section 2.4     Competitive Bid Loans; Procedure

          (a)     The Borrower may make Competitive Bid Requests by 11:00 a.m. at least two Business Days prior to the proposed Borrowing Date for one or more Competitive Bid Loans. Each Competitive Bid Request given to the Administrative Agent (which shall promptly on the same day give notice thereof to each Lender by facsimile of an Invitation to Bid if the Competitive Bid Request is not rejected pursuant to this Section), shall be by telephone (confirmed by facsimile or other written electronic means promptly on the same day by the delivery of a Competitive Bid Request signed by the Borrower), and shall specify (i) the proposed Borrowing Date, which shall be a Business Day, (ii) the

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aggregate amount of the requested Competitive Bid Loans (the "Maximum Request"), which amount (A) shall not exceed an amount which, on the proposed Borrowing Date and after giving effect to the requested Competitive Bid Loans, would cause the aggregate outstanding principal balance of all Loans of all Lenders to exceed the Aggregate Commitments and (B) shall be in a principal amount equal to $3,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) the Competitive Interest Period(s) therefor and the last day of each such Competitive Interest Period, and (iv) if more than one Competitive Interest Period is so specified, the principal amount allocable to each such Competitive Interest Period (which amount shall not be less than $3,000,000 or an integral multiple of $1,000,000 in excess thereof). A Competitive Bid Request that does not conform substantially to the form of Exhibit D shall be rejected, and the Administrative Agent shall promptly notify the Borrowe r of such rejection. Notwithstanding anything contained herein to the contrary, (1) not more than three Competitive Interest Periods may be requested pursuant to any Competitive Bid Request and (2) not more than five Competitive Bid Loans may be outstanding at any one time.

          (b)     Each Lender in its sole discretion may (but is not obligated to) submit one or more Competitive Bids to the Administrative Agent not later than 10:00 a.m. at least one Business Day prior to the proposed Borrowing Date specified in such Competitive Bid Request (such time being herein called the "Submission Deadline"), by facsimile or other writing, and thereby irrevocably offer to make all or any part (any such part referred to as a "Portion") of any Competitive Bid Loan described in the relevant Competitive Bid Request at a rate of interest per annum (each a "Bid Rate") specified therein in an aggregate principal amount of not less than $3,000,000 or an integral multiple of $1,000,000 in excess thereof, provided that Competitive Bids submitted by the Administrative Agent may only be submitted if the Administrative Agent notifies the Borrower of the terms of its Competitive Bid not later th an thirty minutes prior to the Submission Deadline. Multiple Competitive Bids may be delivered to and by the Administrative Agent. The aggregate Portions of Competitive Bid Loans for any or all Competitive Interest Periods offered by each Lender in its Competitive Bid may exceed the Maximum Request contained in the relevant Competitive Bid Request, provided that each Competitive Bid shall set forth the maximum aggregate amount of the Competitive Bid Loans offered thereby which the Borrower may accept (the "Maximum Offer"), which Maximum Offer shall not exceed the Maximum Request. If any Lender shall elect not to make a Competitive Bid, such Lender shall so notify the Administrative Agent by facsimile not later than the Submission Deadline therefor, provided, however, that the failure by any Lender to give any such notice shall not obligate such Lender to make any Competitive Bid Loan.

          (c)     The Administrative Agent shall promptly give notice by telephone (promptly confirmed by facsimile or other writing) to the Borrower of all Competitive Bids received by the Administrative Agent prior to the Submission Deadline which comply in all material respects with this Section. The Borrower shall, in its sole discretion but subject to Section 2.4(d), irrevocably accept or reject any such Competitive Bid (or any Portion thereof) not later than 1:00 p.m. on the day of the Submission Deadline by notice to the Administrative Agent by telephone (confirmed by facsimile or other writing in the form of a Competitive Bid Accept/Reject Letter promptly the same day). Promptly upon receipt by the Administrative Agent of such a Competitive Bid Accept/Reject Letter, the Administrative Agent will give notice to each Lender that submitted a Competitive Bid as to the extent, if any, that such Lender's Competitive Bid shall have been accepted. If the Administrative Agent fails to receive notice from the Borrower of its acceptance or rejection of any Competitive Bids at or prior to 1:00 p.m. on the day of the Submission Deadline, all such Competitive Bids shall be deemed to have been rejected by the Borrower, and the Administrative Agent will give to each Lender that submitted a Competitive Bid notice of such rejection by telephone on such day. In due course following the acceptance of any Competitive Bid, the Administrative Agent shall notify each Lender which submitted a Competitive Bid, in the form of a Competitive Bid Loan Confirmation, of the amount, maturity date and Bid Rate for each Competitive Bid Loan.

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          (d)     If the Borrower accepts a Portion of a proposed Competitive Bid Loan for a single Competitive Interest Period at the Bid Rate provided therefor in a Lender's Competitive Bid, such Portion shall be in a principal amount of $3,000,000 or an integral multiple of $1,000,000 in excess thereof (subject to such lesser allocation as may be made pursuant to the provisions of this Section 2.4(d)). The aggregate principal amount of Competitive Bid Loans accepted by the Borrower following Competitive Bids responding to a Competitive Bid Request shall not exceed the Maximum Request. The aggregate principal amount of Competitive Bid Loans accepted by the Borrower pursuant to a Lender's Competitive Bid shall not exceed the Maximum Offer therein contained. If the Borrower accepts any Competitive Bid Loans or Portion offered in any Competitive Bid, the Borrower must accept Competitive Bids (and Competitive Bid Loans and Portions t hereby offered) based exclusively upon the successively lowest Bid Rates within each Competitive Interest Period and no other criteria. If two or more Lenders submit Competitive Bids with identical Bid Rates for the same Competitive Interest Period and the Borrower accepts any thereof, the Borrower shall, subject to the first three sentences of this Section 2.4(d), accept all such Competitive Bids as nearly as possible in proportion to the amounts of such Lenders' respective Competitive Bids with identical Bid Rates for such Competitive Interest Period, provided, that if the amount of Competitive Bid Loans to be so allocated is not sufficient to enable each such Lender to make such Competitive Bid Loan (or Portions thereof) in an aggregate principal amount of $3,000,000 or an integral multiple of $1,000,000 in excess thereof, the Borrower shall round the Competitive Bid Loans (or Portions thereof) allocated to such Lender or Lenders as the Borrower shall select as necessary to a minimum of $1,000,000 or an integral multiple of $500,000 in excess thereof.

          (e)     Not later than 2:00 p.m. on the relevant Borrowing Date, each Lender whose Competitive Bid was accepted by the Borrower shall make available to the Administrative Agent at its office provided for in Section 11.2, in immediately available funds, the proceeds of such Lender's Competitive Bid Loan(s). The amounts so made available to the Administrative Agent on such Borrowing Date will then, subject to the satisfaction of the terms and conditions of this Agreement, as determined by the Administrative Agent, be made available on such date to the Borrower by the Administrative Agent at the office of the Administrative Agent provided for in Section 11.2 by crediting the account of the Borrower on the books of such office with the aggregate of said amounts received by the Administrative Agent.

          (f)     All notices required by this Section 2.4 shall be given in accordance with Section 11.2.

          (g)     The Competitive Bid Loans made by each Lender shall be evidenced by a Note referred to in Section 2.2. Each Competitive Bid Loan shall be due and payable on the last day of the Competitive Interest Period applicable thereto.

     Section 2.5     Termination, Reduction and Increase of Aggregate Commitments

          (a)     Unless previously terminated, the Commitments shall terminate on the Commitment Termination Date.

          (b)     The Borrower may at any time terminate, or from time to time reduce, the Aggregate Commitments, provided that (i) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect to any concurrent prepayment of Loans in accordance with Section 2.6, the sum of the outstanding principal balance of all Loans would exceed the total Aggregate Commitments, and (ii) each such reduction shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000.

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          (c)     The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable, provided that a notice of termination of the Aggregate Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Each reduction, and any termination, of the Aggregate C ommitments shall be permanent and each reduction of the Aggregate Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

          (d)     The Borrower may at any time and from time to time, at its sole cost, expense and effort, request any one or more of the Lenders to increase its Commitment (the decision to increase the Commitment of a Lender to be within the sole and absolute discretion of such Lender), or any other Person reasonably satisfactory to the Administrative Agent to provide a new Commitment, by submitting an Increase Supplement duly executed by the Borrower and each such Lender or other Person, as the case may be. If such Increase Supplement is in all respects reasonably satisfactory to the Administrative Agent, the Administrative Agent shall execute such Increase Supplement and deliver a copy thereof to the Borrower and each such Lender or other Person, as the case may be. Upon execution and delivery of such Increase Supplement by the Administrative Agent, (x) in the case of each such Lender, such Lender's Commitment shall be increased to the amount set forth in such Increase Supplement, (y) in the case of each such other Person, such other Person shall become a party hereto and shall for all purposes of the Loan Documents be deemed a "Lender" having a Commitment as set forth in such Increase Supplement, and (z) in each case, the Commitment of such Lender or such other Person, as the case may be, shall be as set forth in the applicable Increase Supplement; provided, however, that:

          (i)     immediately after giving effect thereto, the sum of the Aggregate Commitments after all increases shall not exceed $150,000,000;

          (ii)     each such increase shall be in an amount not less than $5,000,000 or such amount plus an integral multiple of $1,000,000;

          (iii)     if Revolving Credit Loans would be outstanding immediately after giving effect to each such increase, then simultaneously with such increase (A) each such Lender, each such other Person and each other Lender shall be deemed to have entered into a master assignment and acceptance agreement, in form and substance substantially similar to Exhibit J, pursuant to which each such other Lender shall have assigned to each such Lender and each such other Person a portion of its Revolving Credit Loans necessary to reflect proportionately the Commitments as adjusted in accordance with this subsection (d), and (B) in connection with such assignment, each such Lender and each such other Person shall pay to the Administrative Agent, for the account of the other Lenders, such amount as shall be necessary to appropriately reflect the assignment to it of Revolving Credit Loans, and in c onnection with such master assignment each such other Lender may treat the assignment of Eurodollar Advances as a prepayment of such Eurodollar Advances for purposes of Section 2.12; and

          (iv)     each such other Person shall have delivered to the Administrative Agent and the Borrower all forms, if any, that are required to be delivered by such other Person pursuant to Section 2.10.

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     Section 2.6     Prepayments of the Loans

          (a)     Voluntary Prepayments. The Borrower may, at its option, prepay the Revolving Credit Loans without premium or penalty, in full at any time or in part from time to time, by notifying the Administrative Agent in writing no later than 11:30 a.m. on the proposed prepayment date, in the case of ABR Advances, and at least three Business Days prior to the proposed prepayment date, in the case of Eurodollar Advances, specifying the Revolving Credit Loans to be prepaid, the amount to be prepaid and the date of prepayment. The Borrower may not prepay the Competitive Bid Loans. Each such notice of a prepayment under this Section shall be irrevocable and the amount specified in such notice shall be due and payable on the date specified. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender thereof. Each partial prepayment shall be in an aggregate principal amount of (i) $5,000,000 or an integral multiple of $1,000,000 in excess thereof or (ii) if the outstanding principal balance of the Revolving Credit Loans is less that the minimum amount set forth in clause (a)(i) of this Section, then such lesser outstanding principal balance, as the case may be. After giving effect to any partial prepayment with respect to Eurodollar Advances which were made (whether as the result of a borrowing or a conversion) on the same date and which had the same Interest Period, the outstanding principal amount of such Eurodollar Advances shall exceed (subject to Section 2.7) $5,000,000 or an integral multiple of $1,000,000 in excess thereof. If any prepayment is made in respect of any Eurodollar Advance, in whole or in part, prior to the last day of the applicable Eurodollar Interest Period, the Borrower agrees to indemnify the Lenders in accordance with Section 2.12.

          (b)     Mandatory Prepayments Relating to Reductions or Termination of the Aggregate Commitments. Concurrently with each reduction or termination of the Aggregate Commitments under Section 2.5, the Borrower shall prepay the Revolving Credit Loans by the amount, if any, by which the aggregate unpaid principal balance of all Lenders' Revolving Credit Loans and Competitive Bid Loans exceeds the amount of the Aggregate Commitments after giving effect to such reduction or termination, as the case may be.

          (c)     In General. Any prepayments under this Section shall be applied pro rata according to the Commitment Percentage of each Lender.

     Section 2.7     Conversions and Continuations

          (a)     The Borrower may elect from time to time to convert Eurodollar Advances to ABR Advances by giving the Administrative Agent at least one Business Day's prior irrevocable notice of such election (confirmed by the delivery of a Notice of Conversion/Continuation), specifying the amount to be so converted, provided that any such conversion of Eurodollar Advances shall only be made on the last day of the Interest Period applicable thereto. In addition, the Borrower may elect from time to time to (i) convert ABR Advances to Eurodollar Advances and (ii) to continue Eurodollar Advances by selecting a new Eurodollar Interest Period therefor, in each case by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election (confirmed by the delivery of a Notice of Conversion/Continuation), in the case of a conversion to, or continuation of, Eurodollar Advances, specifying the amount to be so converted and the initial Eurodollar Interest Period relating thereto, provided that any such conversion of ABR Advances to Eurodollar Advances shall only be made on a Business Day and any such continuation of Eurodollar Advances shall only be made on the last day of the Eurodollar Interest Period applicable to the Eurodollar Advances which are to be continued as such new Eurodollar Advances. The Administrative Agent shall promptly provide the Lenders with a copy of each such Notice of Conversion/Continuation. ABR Advances and Eurodollar Advances may be converted or continued pursuant to this Section in whole or in part, provided that conversions of ABR Advances to Eurodollar Advances, or continuations of Eurodollar Advances, shall be in an aggregate

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principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof. If the Borrower fails to deliver a notice of conversion or continuation in accordance with this Section with respect to any Advance prior to the last day of the Interest Period applicable thereto, then, unless such Advance is repaid as provided herein, on the last day of such Interest Period, such Advance shall be converted to, or continued as, an ABR Advance.

          (b)     Notwithstanding anything in this Section to the contrary, no ABR Advance may be converted to a Eurodollar Advance, and no Eurodollar Advance may be continued, if a Default or Event of Default has occurred and is continuing either (i) at the time the Borrower shall notify the Administrative Agent of its election to convert or continue or (ii) on the requested Conversion/Continuation Date. In such event, such ABR Advance shall be automatically continued as an ABR Advance, or such Eurodollar Advance shall be automatically converted to an ABR Advance on the last day of the Eurodollar Interest Period applicable to such Eurodollar Advance. If an Event of Default shall have occurred and be continuing, the Administrative Agent shall, at the request of the Required Lenders, notify the Borrower (by telephone or otherwise) that all, or such lesser amount as the Required Lenders shall designate, of the outstanding Eurodollar A dvances shall be automatically converted to ABR Advances, in which event such Eurodollar Advances shall be automatically converted to ABR Advances on the date such notice is given.

          (b)     No Eurodollar Interest Period selected in respect of the conversion or continuation of any Eurodollar Advance shall end after the Maturity Date.

          (b)     Each conversion or continuation shall be effected by each Lender by applying the proceeds of its new ABR Advance or Eurodollar Advance, as the case may be, to its Advances (or portion thereof) being converted (it being understood that such conversion shall not constitute a borrowing for purposes of Articles 4, 5 or 6).

          (b)     Without in any way limiting the obligation of the Borrower to confirm in writing any telephonic notice of borrowing given to the Administrative Agent, the Administrative Agent may act without liability upon the basis of telephonic notice of such borrowing believed by the Administrative Agent in good faith to be from an authorized officer of the Borrower prior to receipt of written confirmation. In each such case, the Administrative Agent's records with regard to any such telephone notice shall be presumptively correct, absent manifest error.

     Section 2.8     Interest Rate and Payment Dates

          (a)     Prior to Maturity. Except as otherwise provided in Section 2.8(b), prior to maturity, the Loans shall bear interest on the outstanding principal balance thereof at the applicable interest rate or rates per annum set forth below:

ADVANCES	RATE
Each ABR Advance	Alternate Base Rate.
Each Eurodollar Advance	Eurodollar Rate for the applicable Eurodollar Interest Period plus the Applicable Margin.
Each Competitive Bid Loan	Bid Rate applicable thereto for the applicable Competitive Interest Period.

          (b)     Late Charges. If all or any portion of the principal balance of or interest payable on any of the Loans or any other amount payable under the Loan Documents shall not be paid when due

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(whether at the stated maturity thereof, by acceleration or otherwise), such overdue balance or amount shall bear interest at a rate per annum (whether before or after the entry of a judgment thereon) equal to (i) in the case of the principal balance of any Loan, 2% plus the rate which would otherwise be applicable pursuant to Section 2.8(a), or (ii) in the case of any other amount, 2% plus the Alternate Base Rate, in each case from the date of such nonpayment to, but not including, the date such balance or such amount, as the case may be, is paid in full. All such interest shall be payable on demand.

          (c)     In General. Interest on (i) ABR Advances to the extent based on the BNY Rate shall be calculated on the basis of a 365 or 366-day year (as the case may be) and (ii) ABR Advances to the extent based on the Federal Funds Rate, on Eurodollar Advances and on Competitive Bid Loans shall be calculated on the basis of a 360-day year, in each case, for the actual number of days elapsed, including the first day but excluding the last. Except as otherwise provided in Section 2.8(b), interest shall be payable in arrears on each Interest Payment Date and upon each payment (including prepayment) of the Loans (on the amount paid (or prepaid)). Any change in the interest rate on the Loans resulting from a change in the Alternate Base Rate shall become effective as of the opening of business on the day on which such change shall become effective. The Administrative Agent shall, as soon as practicable, notify the Borrow er and the Lenders of the effective date and the amount of each such change in the BNY Rate, but any failure to so notify shall not in any manner affect the obligation of the Borrower to pay interest on the Loans in the amounts and on the dates required. Each determination of the Alternate Base Rate or a Eurodollar Rate by the Administrative Agent pursuant to this Agreement shall be conclusive and binding on all parties hereto absent manifest error. At no time shall the interest rate payable on the Loans, together with the Facility Fee, the Utilization Fee and all other amounts payable under the Loan Documents, to the extent the same are construed to constitute interest, exceed the Highest Lawful Rate. If any amount paid hereunder would exceed the maximum amount of interest permitted by the Highest Lawful Rate, then such amount shall automatically be reduced to such maximum permitted amount, and interest for any subsequent period, to the extent less than the maximum amount permitted for such period by the Highest Lawful Rate, shall be increased by the unpaid amount of such reduction. Any interest actually received for any period in excess of such maximum allowable amount for such period shall be deemed to have been applied as a prepayment of the Loans. The Borrower acknowledges that to the extent interest payable on ABR Advances is based on the BNY Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the BNY Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which the Lenders may now or in the future make loans to other borrowers.

     Section 2.9     Substituted Interest Rate

          In the event that (i) the Administrative Agent shall have determined in the exercise of its reasonable discretion (which determination shall be conclusive and binding upon the Borrower) that by reason of circumstances affecting the interbank eurodollar market either reasonable means do not exist for ascertaining the Eurodollar Rate or (ii) the Required Lenders shall have notified the Administrative Agent that they have determined (which determination shall be conclusive and binding on the Borrower) that the applicable Eurodollar Rate will not adequately and fairly reflect the cost to such Lenders of maintaining or funding loans bearing interest based on such Eurodollar Rate, with respect to any portion of the Revolving Credit Loans that the Borrower has requested be made as Eurodollar Advances or Eurodollar Advances that will result from the requested conversion or continuation of any portion of the Advances into or as Eurodollar Advances (each an " Affected Advance"), the Administrative Agent shall promptly notify the Borrower and the Lenders (by telephone or otherwise, to be promptly confirmed in writing) of such determination on or, to the extent practicable, prior to the requested Borrowing Date or Conversion/Continuation Date for such Affected Advances. If the Administrative Agent shall give such

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notice, (a) any Affected Advances shall be made as ABR Advances, (b) the Advances (or any portion thereof) that were to have been converted to or continued as Affected Advances shall be converted to or continued as ABR Advances and (c) any outstanding Affected Advances shall be converted, on the last day of the then current Interest Period with respect thereto, to ABR Advances. Until any notice under clause (i) or (ii), as the case may be, of this Section has been withdrawn by the Administrative Agent (by notice to the Borrower promptly upon either (1) the Administrative Agent's having determined that such circumstances affecting the interbank eurodollar market no longer exist and that adequate and reasonable means do exist for determining the Eurodollar Rate pursuant to Section 2.8 or (2) the Administrative Agent having been notified by such Required Lenders that circumstances no longer render the Advances (or any portion thereof) to be Affected Advances), no further Eurodollar Advances shall be required to be made by the Lenders, nor shall the Borrower have the right to convert or continue all or any portion of the Loans to Eurodollar Advances.

     Section 2.10     Taxes

          (a)     Payments to be Free and Clear. Provided that all documentation, if any, then required to be delivered by any Lender or the Administrative Agent pursuant to Section 2.10(c) has been delivered, all sums payable by the Borrower under the Loan Documents shall be paid free and clear of and (except to the extent required by law) without any deduction or withholding on account of any Tax (other than a Tax on the Overall Net Income of any Lender (for which payment need not be free and clear, but no deduction or withholding shall be made unless then required by applicable law)) imposed, levied, collected, withheld or assessed by or within the United States or any political subdivision in or of the United States or any other jurisdiction from or to which a payment is made by or on behalf of the Borrower or by any federation or organization of which the United States or any such jurisdiction is a member at the time o f payment.

          (b)     Grossing-up of Payments. If the Borrower or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by the Borrower to the Administrative Agent or any Lender under any of the Loan Documents:

          (i)     the Borrower shall notify the Administrative Agent and such Lender of any such requirement or any change in any such requirement as soon as the Borrower becomes aware of it;

          (ii)     the Borrower shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on the Borrower) for its own account or (if that liability is imposed on the Administrative Agent or such Lender, as the case may be) on behalf of and in the name of the Administrative Agent or such Lender, as the case may be;

          (iii)     the sum payable by the Borrower to the Administrative Agent or a Lender in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Administrative Agent or such Lender, as the case may be, receives on the due date therefor a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and

          (iv)     within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Tax which it is required by clause (ii) above to pay, the Borrower shall deliver to the Administrative

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Agent and the applicable Lender evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant Governmental Authority;

          (c)     provided that no additional amount shall be required to be paid to any Lender under clause (iii) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof) or after the date of the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) if any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date of this Agreement or at the date of such Assignment and Acceptance Agreement, as the case may be, in respect of payments to such Lender, and provided further that any Lender claiming any additional amounts payable pursuant to this Section 2.10 shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or take other appropriate action if the making of such a change or the taking of such action, as the case may be, would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

          (d)     Tax Certificates. Each Foreign Lender shall deliver to the Borrower (with a copy to the Administrative Agent), on or prior to the Agreement Date (in the case of each Foreign Lender listed on the signature pages hereof) or on the effective date of the Assignment and Acceptance Agreement pursuant to which it becomes a Lender (in the case of each other Foreign Lender), and at such other times as may be necessary in the determination of the Borrower or the Administrative Agent (each in the reasonable exercise of its discretion), including upon the occurrence of any event requiring a change in the most recent counterpart of any form set forth below previously delivered by such Foreign Lender to the Borrower, such certificates, documents or other evidence, properly completed and duly executed by such Foreign Lender (i) two accurate and complete original signed copies of Internal Revenue Service Form W8-BEN or Fo rm W8-ECI, or successor applicable form and (ii) an Internal Revenue Service Form W-8 or W-9 (or any other certificate or statement of exemption required by Treasury Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to establish that such Foreign Lender is not subject to deduction or withholding of United States federal income tax under Section 1441 or 1442 of the Code or otherwise (or under any comparable provisions of any successor statute) with respect to any payments to such Foreign Lender of principal, interest, fees or other amounts payable under any of the Loan Documents. The Borrower shall not be required to pay any additional amount to any such Foreign Lender under Section 2.11(b)(iii) if such Foreign Lender shall have failed to satisfy the requirements of the immediately preceding sentence; provided that if such Foreign Lender shall have satisfied such requirements on the Agreement Date (in the case of each Foreign Lender listed on the signature pages hereof) or on t he effective date of the Assignment and Acceptance Agreement pursuant to which it becomes a Lender (in the case of each other Foreign Lender), nothing in this Section shall relieve the Borrower of its obligation to pay any additional amounts pursuant to Section 2.11(b)(iii) in the event that, as a result of any change in applicable law, such Foreign Lender is no longer properly entitled to deliver certificates, documents or other evidence at a subsequent date establishing the fact that such Foreign Lender is not subject to withholding as described in the immediately preceding sentence.

     Section.11     Increased Costs; Illegality

          (a)     If any Change in Law shall:

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          (i)     impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Credit Party (except any such reserve requirement reflected in the Eurodollar Rate); or

          (ii)     impose on any Credit Party or the London interbank market any other condition affecting this Agreement, any Eurodollar Loans made by such Credit Party or any participation therein,

and the result of any of the foregoing shall be to increase the cost to such Credit Party of making or maintaining any Eurodollar Loan or to increase the cost to such Credit Party or to reduce the amount of any sum received or receivable by such Credit Party hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Credit Party such additional amount or amounts as will compensate such Credit Party for such additional costs incurred or reduction suffered.

          (b)     If any Credit Party determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Credit Party's capital or on the capital of such Credit Party's holding company, if any, as a consequence of this Agreement or the Loans made by such Credit Party to a level below that which such Credit Party or such Credit Party's holding company could have achieved but for such Change in Law (taking into consideration such Credit Party's policies and the policies of such Credit Party's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Credit Party such additional amount or amounts as will compensate such Credit Party or such Credit Party's holding company for any such reduction suffered; provided, however, that such Credit Party or such Credit Party's holding company agrees to use reasonable effort s (consistent with its internal policy and legal and regulatory restrictions) to mitigate the consequences of any such Change in Law.

          (c)     A certificate of a Credit Party setting forth the amount or amounts necessary to compensate such Credit Party or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Credit Party the amount shown as due on any such certificate within 10 days after receipt thereof.

Failure or delay on the part of any Credit Party to demand compensation pursuant to this Section shall not constitute a waiver of such Credit Party's right to demand such compensation; provided that no Lender shall be entitled to demand such compensation more than 90 days following the last day of the Interest Period in respect of which such demand is made; provided further, however, that the foregoing proviso shall in no way limit the right of any Lender to demand or receive such compensation to the extent that such compensation relates to the retroactive application of any law, regulation, treaty or directive described above if such demand is made within 90 days after the implementation of such retroactive law, interpretation, treaty or directive. A statement setting forth the calculations of any additional amounts payable pursuant to the foregoing submitted by a Lender to the Borrower shall be conclusive absent manifest error.

          (d)     Notwithstanding any other provision of this Agreement, if, after the Agreement Date, any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Borrower and to the Administrative Agent:

          (i)     such Lender may declare that Eurodollar Advances will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for

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additional Interest Periods) and ABR Advances will not thereafter (for such duration) be converted into Eurodollar Advances, whereupon any request for a Eurodollar Advance or to convert an ABR Advance to a Eurodollar Advance or to continue a Eurodollar Advance, as applicable, for an additional Interest Period shall, as to such Lender only, be deemed a request for an ABR Advance (or a request to continue an ABR Advance as such for an additional Interest Period or to convert a Eurodollar Advance into an ABR Advance, as applicable), unless such declaration shall be subsequently withdrawn; and

          (ii)     such Lender may require that all outstanding Eurodollar Advances made by it be converted to ABR Advances, in which event all such Eurodollar Advances shall be automatically converted to ABR Advances, as of the effective date of such notice as provided in the last sentence of this paragraph;

provided, that such Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office or take other appropriate action if the making of such designation or the taking of such action, as the case may be, would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Advances or to continue to fund or maintain Eurodollar Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. In the event any Lender shall exercise its rights under clause (i) or (ii) of this paragraph, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Advances that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Advances made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Advances, as applicable. For purposes of this paragraph, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Advances made by such Lender, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Advances; in all other cases such notice shall be effective on the date of receipt by the Borrower.

     Section 2.12     Break Funding Payments

          In the event of (a) the payment or prepayment (voluntary or otherwise) of any principal of any Eurodollar Loan or Competitive Bid Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.5(c) and is revoked in accordance therewith), (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan, or (e) the assignment of any Eurodollar Loan or Competitive Bid Loan other than on the last day of the Interest Period or maturity date applicable thereto as a result of a request by any Borrower pursuant to Section 2.15, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Eurodollar Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive

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pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten days after receipt thereof.

     Section 2.13     Lenders' Records

          Each Lender's records regarding the amount of each Loan, each payment by the Borrower of principal and interest on the Loans and other information relating to the Loans shall be presumptively correct absent manifest error.

     Section 2.14     Extension of Commitment Period and Maturity Date

          (a)     Extension of Commitment Period

          (i)     Provided that no Default or Event of Default shall exist, the Borrower may request that the Commitment Period be extended for up to 364 days by giving written notice thereof (each an "Extension Request") to the Administrative Agent at any time during the period which is not more than 45 days nor less than 30 days prior to the then current Commitment Termination Date and, upon receipt of each such notice, the Administrative Agent shall promptly notify each Lender thereof. No Lender shall be required to consent to any Extension Request. Each Lender shall endeavor to respond to each Extension Request by no later than 15 days prior to the then current Commitment Termination Date, provided that each Lender which shall have failed so to respond by such time shall be deemed not to have consented thereto. The Administrative Agent shall promptly notify the Borrower as to the name of eac h Lender that, in accordance with this clause (i), consented to such extension. In the event that Lenders having Commitments greater than 50% of the Aggregate Commitments shall not have consented in accordance with this clause (i) to such extension, the then current Commitment Termination Date shall not be extended and shall remain in full force and effect. In the event that all Lenders shall have consented in accordance with this clause (i), then on the date upon which the last such consent shall have been received by the Administrative Agent, the then existing Commitment Termination Date shall be extended to the day which is 364 days after such date (or, if such date is not a Business Day, the Business Day immediately preceding such day).

          (ii)     Notwithstanding any provision in Section 2.14(a)(i) to the contrary, in the event Lenders having Commitments greater than 50% of the Aggregate Commitments consent to an extension of the Commitment Termination Date pursuant to Section 2.14(a)(i) (the "Continuing Lenders"), the Borrower shall have the right, provided no Default or Event of Default shall have occurred and be continuing, to replace or remove each Lender that did not so consent (each a "Non-Extending Lender") by giving the Administrative Agent notice no later than five days prior to the then current Commitment Termination Date of its intent to extend such Commitment Termination Date. On or prior to the then current Commitment Termination Date, the Borrower shall replace each Non-Extending Lender with either an existing Lender willing to assume such Non-Extending Lender's Commitment or with another Eligible Assignee willing to assume such Non-Extending Lender's Commitment. Each Non-Extending Lender agrees, subject to and in accordance with Section 11.6, to assign its rights and obligations under the Loan Documents to an Eligible Assignee selected by the Borrower upon payment by or on behalf of such Eligible Assignee to such Non-Extending Lender of such Non-Extending Lender's Commitment Percentage or other applicable percentage of all outstanding Loans and accrued interest, fees and other sums payable under the Loan Documents. Effective upon such assignment such Non-Extending Lender shall cease to be a "Lender" for purposes of this

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Agreement (except with respect to its rights hereunder to be reimbursed for costs and expenses, and to indemnification with respect to, matters attributable to events, acts or conditions occurring prior to such assignment). In the event that the Borrower shall have elected to replace or remove each Non-Extending Lender pursuant to this clause (ii), then on the date, if any, upon which all of the Borrower's obligations under this clause (ii) shall have been satisfied, if any, the then existing Commitment Termination Date shall be extended to the day which is 364 days after such date (or, if such date is not a Business Day, the Business Day immediately preceding such day), provided, however, that if the Borrower shall not have satisfied such obligations on or prior to the then existing Commitment Termination Date, such Commitment Termination Date shall not be extended.

          (b)     Extension of Maturity Date. Unless a Default shall have occurred and is continuing, effective upon the delivery by the Borrower to the Administrative Agent by no later than the seventh day prior to the then effective Commitment Termination Date of an express written notice (the "Term-Out Notice") that the Borrower intends to extend the Maturity Date to the date certain (the "Repayment Extension Date") set forth in such Term-Out Notice that is not later than one year after the Commitment Termination Date, the Maturity Date shall be extended to such Repayment Extension Date. The delivery by the Borrower to the Administrative Agent of a Term-Out Notice shall constitute a representation and warranty by the Borrower that no Default then exists.

     Section 2.15     Substitution of Lender

          In the event that the Borrower becomes obligated to pay additional amounts to any Lender pursuant to Section 2.10, 2.11 or 2.12, or if any Lender defaults in its obligation to fund Loans hereunder on three or more occasions, the Borrower may, within 60 days of the demand by such Lender for such additional amounts or the relevant default by such Lender, as the case may be, and subject to and in accordance with the provisions of Section 11.6, designate an Eligible Assignee (acceptable to the Administrative Agent) to purchase and assume all its interests, rights and obligations under the Loan Documents, without recourse to or warranty by or expense to, such Lender, for a purchase price equal to the outstanding principal amount of such Lender's Loans plus any accrued but unpaid interest thereon and accrued but unpaid Facility Fees, Utilization Fees in respect of such Lender's Commitment and any other amounts payable to such Lender hereunder, and to assume all the obligations of such Lender hereunder, and, upon such purchase, such Lender shall no longer be a party hereto or have any rights hereunder (except those that survive full repayment hereunder) and shall be relieved from all obligations to the Borrower hereunder, and the Eligible Assignee shall succeed to the rights and obligations of such Lender hereunder. The Borrower shall execute and deliver to such Eligible Assignee a Note. Notwithstanding anything herein to the contrary, in the event that a Lender is replaced pursuant to this Section 2.15 as a result of the Borrower becoming obligated to pay additional amounts to such Lender pursuant to Section 2.10, 2.11 or 2.12, such Lender shall be entitled to receive such additional amounts as if it had not been so replaced.

ARTICLE 3. FEES; PAYMENTS

     Section 3.1     Fees

          (a)     Facility Fee. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, during the period from and including the Closing Date through but excluding the Maturity Date, a fee (the "Facility Fee") equal to the Applicable Facility Fee Percentage per annum of the average daily sum of the Aggregate Commitments, regardless of usage, during such period. The Facility Fee shall be payable (i) quarterly in

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arrears on the last day of each March, June, September and December during such period, (ii) on the date of any reduction in the Aggregate Commitments (to the extent of such reduction) and (iii) on the Maturity Date. The Facility Fee shall be calculated on the basis of a 360-day year for the actual number of days elapsed.

          (b)     Utilization Fee. The Borrower agrees to pay to the Administrative Agent, for the account of the Lenders in accordance with each Lender's Commitment Percentage, during the period from and including the Closing Date through but excluding the Maturity Date, a fee (the "Utilization Fee") equal to (i) the Applicable Utilization Fee Percentage on the aggregate outstanding principal balance of the Loans for each day that such aggregate outstanding principal balance shall exceed 33.0% of the Aggregate Commitments. The Utilization Fee shall be payable (A) quarterly in arrears on the last day of each March, June, September and December during such period and (B) on the Maturity Date. The Utilization Fee shall be calculated on the basis of a 360-day year for the actual number of days elapsed.

          (c)     Other Fees. The Borrower agrees to pay to each of the Credit Parties, for its own account, such fees as have been agreed to in writing by it and the Borrower.

     Section 3.2     Pro Rata Treatment and Application of Principal Payments

          (a)     The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal of Loans, interest or fees, or of amounts payable under Sections 2.10, 2.11, 2.12 or 11.4 or otherwise) prior to 1:00 p.m., on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its office at One Wall Street, New York, New York, or such other office as to which the Administrative Agent may notify the other parties hereto, except that payments pursuant to Sections 2.10, 2.11, 2.12 or 11.4 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.

          (b)     If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal of Loans, interest, fees and commissions then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest, fees and commissions then due to such parties and (ii) second, towards payment of principal of Loans and then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal of Loans then due to such parties.

          (c)     If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of, or interest on, any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of, and accrued interest on, their respective Loans, provided that (i) if any such participations are purchased and all or any portion of the payment giving rise

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thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

          (d)     Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the applicable Credit Parties hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to such Credit Parties the amount due. In such event, if the Borrower has not in fact made such payment, then each such Credit Party severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Credit Party with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

          (e)     If any Credit Party shall fail to make any payment required to be made by it pursuant to Section 2.3(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Credit Party to satisfy such Credit Party's obligations under such Sections until all such unsatisfied obligations are fully paid.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES

     In order to induce the Credit Parties to enter into this Agreement, the Lenders to make the Loans, the Borrower makes the following representations and warranties to the Administrative Agent and each Lender:

     Section 4.1     Subsidiaries; Capitalization

          As of the Agreement Date, the Borrower has only the Subsidiaries set forth on Schedule 4.1, and such Schedule accurately designates as of the Agreement Date whether each such Subsidiary is a Material Subsidiary or an Immaterial Subsidiary for purposes of this Agreement. The shares of each corporate Material Subsidiary are duly authorized, validly issued, fully paid and non-assessable and are owned free and clear of any Liens, other than Liens permitted pursuant to Section 8.1(o). The interest of the Borrower in each non-corporate Material Subsidiary is owned free and clear of any Liens, other than Liens permitted pursuant to Section 8.1(o).

     Section 4.2     Existence and Power

          Each of the Borrower and the Material Subsidiaries is duly organized or formed and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation, has all requisite power and authority to own its Property and to carry on its business as now conducted, and is

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in good standing and authorized to do business as a foreign corporation or other applicable entity in each jurisdiction in which the nature of the business conducted therein or the Property owned therein makes such qualification necessary, except where such failure to qualify could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

     Section 4.3     Authority

          The Borrower has full legal power and authority to enter into, execute, deliver and perform the terms of the Loan Documents and to make the borrowings contemplated hereby and by the Notes, and to execute, deliver and carry out the terms of the Notes and to incur the obligations provided for herein and therein, all of which have been duly authorized by all proper and necessary corporate or other applicable action and are in full compliance with its charter or by-laws or its other organization documents.

     Section 4.4     Binding Agreement

          The Loan Documents (other than the Notes) constitute, and the Notes, when issued and delivered pursuant hereto for value received, will constitute, the valid and legally binding obligations of the Borrower, enforceable in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and general principles of equity.

     Section 4.5     Litigation and Regulatory Proceedings

          (a)     Except as disclosed in Schedule 4.5, there are no actions, suits or proceedings at law or in equity or by or before any Governmental Authority (whether or not purportedly on behalf of the Borrower or any of the Material Subsidiaries) pending or, to the knowledge of the Borrower, threatened against the Borrower or any of the Material Subsidiaries, which (i) if adversely determined, could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, except that the commencement by the Borrower, any of the Material Subsidiaries or any Governmental Authority of a rate proceeding or earnings review before such Governmental Authority shall not constitute such a pending or threatened action, suit or proceeding unless and until such Governmental Authority has made a final determination thereunder that could reasonably be expected to have a Material Adverse Effect, (ii) call into question t he validity or enforceability of any of the Loan Documents, or (iii) could reasonably be expected to result in the rescission, termination or cancellation of any material franchise, right, license, permit or similar authorization held by the Borrower or any of the Material Subsidiaries.

          (b)     Since the Agreement Date, there has been no change in the status of the matters disclosed on Schedule 4.5 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

     Section 4.6     Required Consents

          Except for information filings required to be made in the ordinary course of business which are not a condition to the Borrower's performance under the Loan Documents, no consent, authorization or approval of, filing with, notice to, or exemption by, equityholders, any Governmental Authority or any other Person is required to authorize, or is required in connection with the execution, delivery and performance of the Loan Documents or is required as a condition to the validity or enforceability of the Loan Documents, except such as have been obtained or made and are in full force

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and effect and not subject to any appeals period (including the FERC Order). As of the Closing Date, the FERC Order then in effect expires August 11, 2002.

     Section 4.7     No Conflicting Agreements, Compliance with Laws

          (a)     Neither the Borrower nor any of the Material Subsidiaries is in default (i) under any mortgage, indenture, contract or agreement to which it is a party or by which it or any of its Property is bound or (ii) with respect to any judgment, order, writ, injunction, decree or decision of any Governmental Authority, the effect of which default could reasonably be expected to have a Material Adverse Effect. The execution, delivery or carrying out of the terms of the Loan Documents will not constitute a default under, or require the mandatory repayment of, or result in the creation or imposition of, or obligation to create, any Lien upon any Property of the Borrower or any of the Material Subsidiaries pursuant to the terms of, any such mortgage, indenture, contract or agreement.

          (b)     Each of the Borrower and the Material Subsidiaries (i) is complying in all material respects with all statutes, regulations, rules and orders applicable to the Borrower or such Material Subsidiary of all Governmental Authorities, including Environmental Laws and ERISA, a violation of which could individually or in the aggregate reasonably be expected to have a Material Adverse Effect and (ii) has filed or caused to be filed all tax returns required to be filed and has paid, or has made adequate provision for the payment of, all taxes shown to be due and payable on said returns or in any assessments made against it (other than those being contested as permitted under Section 7.4) which would be material to the Borrower or any of the Material Subsidiaries, and no tax Liens have been filed with respect thereto.

     Section 4.8     Governmental Regulations

          Neither the Borrower nor any of the Material Subsidiaries is (i) an "investment company" or a company "controlled" by an "investment company" as defined in, or is otherwise subject to regulation under, the Investment Company Act of 1940, as amended, or (ii) a "holding company", or an "affiliate" or "subsidiary company" of a "holding company", as those terms are defined in the Public Utility Holding Company Act of 1935, as amended, in each case which is subject to registration thereunder.

     Section 4.9     Federal Reserve Regulations; Use of Loan Proceeds

          Neither the Borrower nor any of the Material Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans will be used, directly or indirectly, for a purpose which violates any law, rule or regulation of any Governmental Authority, including the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System, as amended. No part of the proceeds of the Loans will be used, directly or indirectly, to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock.

     Section 4.10     Plans

          No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements

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reflecting such amounts, exceed by more than $10,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $10,000,000 the fair market value of the assets of all such underfunded Plans.

     Section 4.11     Financial Statements

          The Borrower has heretofore delivered to the Credit Parties copies of its consolidated balance sheet and the related consolidated statements of income, stockholder's equity and cash flows as of and for the fiscal year ended December 31, 2001 and December 31, 2000, reported on by the Accountants (with the applicable related notes and schedules, the "Financial Statements"). The Financial Statements have been prepared in accordance with GAAP and fairly present the consolidated financial condition and results of the operations of the Borrower and the Subsidiaries as of the dates and for the periods indicated therein. Since December 31, 2001, each of the Borrower and the Material Subsidiaries has conducted its business only in the ordinary course and there has been no Material Adverse Change.

     Section 4.12     Property

          Each of the Borrower and the Material Subsidiaries has good and marketable title to all of its Property, title to which is material to the Borrower or such Material Subsidiary, as the case may be, subject to no Liens, except Permitted Liens.

     Section 4.13     Environmental Matters

          (a)     To the best knowledge of the Borrower, the Borrower and each of the Material Subsidiaries is in compliance in all material respects with the requirements of all applicable Environmental Laws.

          (b)     To the best knowledge of the Borrower, except as described in Schedule 4.13, (i) no Hazardous Substances have been generated or manufactured on, transported to or from, treated at, stored at or discharged from any Real Property in violation of any Environmental Laws, (ii) no Hazardous Substances have been discharged into subsurface waters under any Real Property in violation of any Environmental Laws, (iii) no Hazardous Substances have been discharged from any Real Property on or into Property or waters (including subsurface waters) adjacent to any Real Property in violation of any Environmental Laws, and (iv) there are not now, nor ever have been, on any Real Property any underground or above ground storage tanks of the Borrower or any of the Material Subsidiaries regulated under any Environmental Laws, which, as to any of the foregoing actions, events or conditions, individually or collectively, could reason ably be expected to have a Material Adverse Effect.

          (c)     Except as described in Schedule 4.13, neither the Borrower nor any of the Material Subsidiaries (i) has received notice directly or otherwise learned indirectly (through a Corporate Officer) of any claim, demand, suit, action, proceeding, event, condition, report, directive, Lien, violation, non-compliance or investigation indicating or concerning any potential or actual material liability (including potential liability for enforcement, investigatory costs, cleanup costs, government response costs, removal costs, remediation costs, natural resources damages, Property damages, personal injuries or penalties) arising in connection with: (A) any material non-compliance with or violation of the requirements of any applicable Environmental Laws or (B) the presence of any Hazardous Substance on any Real Property (or any Real Property previously owned by the Borrower or any of the Material Subsidiaries) or the release or threatened release of any Hazardous Substance into the environment which

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individually or collectively could reasonably be expected to have a Material Adverse Effect or (ii) has any overtly threatened or actual liability in connection with the presence of any Hazardous Substance on any Real Property (or any Real Property previously owned by the Borrower or any of the Material Subsidiaries) or the release or threatened release of any Hazardous Substance into the environment.

          (d)     Since the Agreement Date, there has been no change in the status of the matters disclosed on Schedule 4.13 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

ARTICLE 5. CONDITIONS TO EFFECTIVENESS

     The obligations of the Lenders to make Loans shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 11.1):

     Section 5.1     Evidence of Action

          The Administrative Agent shall have received a certificate, dated the Closing Date, of the Secretary or Assistant Secretary of the Borrower (i) attaching a true and complete copy of the resolutions of its Board of Directors and of all documents evidencing other necessary corporate action (in form and substance satisfactory to the Administrative Agent) taken by it to authorize the Loan Documents and the transactions contemplated thereby, (ii) attaching a true and complete copy of its charter and by-laws, (iii) setting forth the incumbency of its officer or officers who may sign the Loan Documents, including therein a signature specimen of such officer or officers, and (iv) attaching a certificate of good standing of the Secretary of State of the jurisdiction of its incorporation and each other jurisdiction in which the failure to be in good standing could reasonably be expected to have a Material Adverse Effect.

     Section 5.2     This Agreement

          The Administrative Agent (or its counsel) shall have received, in respect of each Person listed on the signature pages of this Agreement, either (i) a counterpart signature page hereof signed on behalf of such Person or (ii) written evidence satisfactory to the Administrative Agent (which may include a facsimile transmission of a signed signature page of this Agreement) that a counterpart signature page hereof has been signed on behalf of such Person.

     Section 5.3     Notes

          The Administrative Agent (or its counsel) shall have received a Note for each Lender, dated the Closing Date, duly executed by a duly authorized officer of the Borrower.

     Section 5.4     Approvals

          The Administrative Agent shall have received a certificate of a duly authorized officer of the Borrower, in form and substance satisfactory to the Administrative Agent, certifying that all approvals and consents of all Persons required to be obtained in connection with the consummation of the transactions contemplated by the Loan Documents have been duly obtained and are in full force and effect and that all required notices have been given and all required waiting periods have expired, attaching thereto true and complete copies of all such required governmental and regulatory authorizations and approvals, including approval of the FERC.

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     Section 5.5     Certain Agreements

          The Administrative Agent shall have received a certificate of a duly authorized officer of the Borrower, in form and substance satisfactory to the Administrative Agent, (i) certifying that there have been no amendments or other modifications to either the CLECO Mortgage or the Employee Stock Ownership Plan since June 15, 2000, or, if so, setting forth the same, in which case any such amendment or modification shall be in form and substance satisfactory to the Administrative Agent, and (ii) attaching a true, complete and correct copy of each of (x) the Inter-Affiliate Policies Agreement, which shall be in form and substance satisfactory to the Administrative Agent and (y) Sections 1.04 and 5.05 of the CLECO Mortgage together with copies of any defined terms used therein.

     Section 5.6     Opinion of Counsel to the Borrower

          The Administrative Agent shall have received an opinion of Phelps Dunbar, L.L.P., counsel to the Borrower, addressed to the Credit Parties and dated the Closing Date, substantially in the form of Exhibit K, and covering such additional matters as the Required Lenders may reasonably request. It is understood that such opinion is being delivered to the Credit Parties upon the direction of the Borrower and that the Credit Parties may and will rely upon such opinion.

     Section 5.7     Terminating Indebtedness

          The Terminating Indebtedness shall have been fully repaid and all agreements and other documents with respect thereto shall have been canceled or terminated, and the Administrative Agent shall have received reasonably satisfactory evidence thereof or arrangements satisfactory to the Administrative Agent shall have been made by the Borrower and the Subsidiaries to accomplish the foregoing concurrently with the first Loans made hereunder.

     Section 5.8     Compliance; Officer's Certificate

          The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the chief executive officer or the chief financial officer of the Borrower, confirming compliance with the conditions set forth in Section 6.1.

     Section 5.9     Fees and Expenses

          All fees payable to the Credit Parties on the Closing Date, and the reasonable fees and expenses of counsel to the Administrative Agent incurred and recorded to date in connection with the preparation, negotiation and closing of the Loan Documents, shall have been paid.

ARTICLE 6. CONDITIONS OF LENDING - ALL LOANS

          The obligation of each Lender to make any Loan (which shall not include a continuation or conversion of a Loan pursuant to and in accordance with Section 2.7) is subject to the satisfaction of the following conditions:

     Section 6.1     Compliance

          On each Borrowing Date and after giving effect to the Loans to be made thereon (i) there shall exist no Default or Event of Default, (ii) the representations and warranties contained in the Loan Documents shall be true and correct with the same effect as though such representations and warranties

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had been made on such Borrowing Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct on and as of such earlier date, and (iii) since December 31, 2001, there has been no Material Adverse Change. Each request by the Borrower for a Loan shall constitute a certification by the Borrower as of such Borrowing Date that each of the foregoing matters is true and correct in all respects.

     Section 6.2     Borrowing Request; Competitive Bid Request

          In the case of the borrowing of Revolving Credit Loans, the Administrative Agent shall have received a Borrowing Request, or in the case of a borrowing of a Competitive Bid Loan, the Administrative Agent shall have received a Competitive Bid Request and such other documents required to be provided by the Borrower pursuant to Section 2.4, in each case duly executed by a duly authorized officer of the Borrower.

     Section 6.3     Law

          Such Loan shall not be prohibited by any applicable law, rule or regulation.

     Section 6.4     Other Documents

          The Administrative Agent shall have received such other documents as the Administrative Agent or the Lenders shall reasonably request.

ARTICLE 7. AFFIRMATIVE COVENANTS

     Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees and other amounts payable under the Loan Documents shall have been paid in full, the Borrower covenants and agrees with the Credit Parties that:

     Section 7.1     Financial Statements

          The Borrower shall maintain a standard system of accounting in accordance with GAAP, and furnish or cause to be furnished to the Administrative Agent and each Lender:

          (a)     within 120 days after the end of each fiscal year, its audited consolidated balance sheet and related consolidated statements of income, stockholder's equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by the Accountants (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, together with a listing of all Material Subsidiaries designated as Immaterial Subsidiaries, and vice versa, during such fiscal year;

          (b)     within 60 days after the end of each of the first three fiscal quarters of each fiscal year, its consolidated balance sheet and related consolidated statements of income, stockholder's equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of the corresponding period in) the previous fiscal year, all certified by one of its duly authorized financial officers as presenting fairly in all material respects the

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financial condition and results of operations of the Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

          (c)     within 60 days after the end of each of the first three fiscal quarters (120 days after the end of the last fiscal quarter), a Compliance Certificate, signed by the chief financial officer of the Borrower (or such other officer as shall be acceptable to the Administrative Agent) as to the Borrower's compliance, as of such fiscal quarter ending date, with Section 7.11, and as to the occurrence or continuance of no Default or Event of Default as of such fiscal quarter ending date and the date of such certificate; and

          (d)     such other information as the Administrative Agent or any Lender may reasonably request from time to time.

     Section 7.2     Certificates; Other Information

          The Borrower shall furnish or cause to be furnished to the Administrative Agent and each Lender:

          (a)     Prompt written notice if: (i) there shall occur and be continuing a Default or an Event of Default or (ii) a Material Adverse Change shall have occurred;

          (b)     Prompt written notice of: (i) any material citation, summons, subpoena, order to show cause or other document naming the Borrower or any of the Material Subsidiaries a party to any proceeding before any Governmental Authority, and include with such notice a copy of such citation, summons, subpoena, order to show cause or other document, or (ii) any lapse or other termination of, or refusal to renew or extend, any material Intellectual Property, license, permit, franchise or other authorization issued to the Borrower or any of the Material Subsidiaries by any Person or Governmental Authority, provided that any of the foregoing set forth in this subsection (b) could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or call into question the validity or enforceability of any of the Loan Documents;

          (c)     Promptly upon becoming available, copies of all (i) regular, periodic or special reports, schedules and other material which the Borrower or any of the Material Subsidiaries may be required to file with or deliver to any securities exchange or the SEC, or any other Governmental Authority succeeding to the functions thereof, (ii) material news releases and annual reports relating to the Borrower or any of the Material Subsidiaries, and (iii) upon the written request of the Administrative Agent, reports that the Borrower or any of the Material Subsidiaries sends to or files with FERC, the LPSC or any similar state or local Governmental Authority;

          (d)     Prompt written notice of any order, notice, claim or proceeding received by, or brought against, the Borrower or any of the Material Subsidiaries, or with respect to any of the Real Property, under any Environmental Law, that could reasonably be expected to have a Material Adverse Effect;

          (e)     Prompt written notice of any change by either Moody's or S&P in the Senior Debt Rating; and

          (f)     Such other information as the Administrative Agent or any Lender shall reasonably request from time to time.

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     Section 7.3     Legal Existence

          Except as permitted under Section 8.2, the Borrower shall maintain its legal existence in good standing in the jurisdiction of its incorporation or formation and in each other jurisdiction in which the failure so to do could reasonably be expected to have a Material Adverse Effect, and cause each of the Material Subsidiaries to maintain its legal existence in good standing in each jurisdiction in which the failure so to do could reasonably be expected to have a Material Adverse Effect.

     Section 7.4     Taxes

          The Borrower shall pay and discharge when due, and cause each of the Material Subsidiaries so to do, all Taxes, assessments and governmental charges, license fees and levies upon or with respect to the Borrower or such Material Subsidiary, as the case may be, and all Taxes upon the income, profits and Property of the Borrower and the Material Subsidiaries, which if unpaid, could individually or collectively reasonably be expected to have a Material Adverse Effect or become a Lien on the Property of the Borrower or such Material Subsidiary, as the case may be (other than a Lien described in Section 8.1(a)), unless and to the extent only that such Taxes, assessments, charges, license fees and levies shall be contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Material Subsidiary, as the case may be, provided that the Borrower shall give the Administrative Agent prompt notice of such contest and that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor.

     Section 7.5     Insurance

          The Borrower shall maintain, and cause each of the Material Subsidiaries to maintain, with financially sound and reputable insurance companies insurance on all its Property in at least such amounts and against at least such risks (but including in any event public liability and business interruption coverage) as are usually insured against in the same general area by companies engaged in the same or a similar business; and furnish to the Administrative Agent, upon written request of the Administrative Agent or any Lender, full information as to the insurance carried.

     Section 7.6     Payment of Indebtedness and Performance of Obligations

          The Borrower shall pay and discharge when due, and cause each of the Material Subsidiaries to pay and discharge when due, all lawful Indebtedness, obligations and claims for labor, materials and supplies or otherwise which, if unpaid, could individually or collectively reasonably be expected to (i) have a Material Adverse Effect or (ii) become a Lien upon Property of the Borrower or any of the Material Subsidiaries (other than a Permitted Lien), unless and to the extent only that the validity of such Indebtedness, obligation or claim shall be contested in good faith and by appropriate proceedings diligently conducted, provided that the Borrower shall give the Administrative Agent prompt notice of any such contest and that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor.

     Section 7.7     Condition of Property

          The Borrower shall at all times, maintain, protect and keep in good repair, working order and condition (ordinary wear and tear excepted), and cause each of the Material Subsidiaries so to do, all Property necessary to the operation of the Borrower's or such Material Subsidiary's, as the case may be, material businesses.

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     Section 7.8     Observance of Legal Requirements

     The Borrower shall observe and comply in all respects, and cause each of the Material Subsidiaries so to do, with all laws, ordinances, orders, judgments, rules, regulations, certifications, franchises, permits, licenses, directions and requirements of all Governmental Authorities, which now or at any time hereafter may be applicable to it, including ERISA and all Environmental Laws, a violation of which could individually or collectively reasonably be expected to have a Material Adverse Effect, except such thereof as shall be contested in good faith and by appropriate proceedings diligently conducted by it, provided that the Borrower shall give the Administrative Agent prompt notice of such contest and that such reserve or other appropriate provision as shall be required by the Accountants in accordance with GAAP shall have been made therefor.

     Section 7.9     Inspection of Property; Books and Records; Discussions

          The Borrower shall keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities and permit representatives of the Administrative Agent and any Lender to visit its offices, to inspect any of its Property and examine and make copies or abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired, and to discuss the business, operations, prospects, licenses, Property and financial condition of the Borrower and the Material Subsidiaries with the officers thereof and the Accountants; provided that, so long as no Default or Event of Default exists, none of the Administrative Agent, its agents, its representatives or the Lenders shall be entitled to examine or make copies or abstracts of, or otherwise obtain information with respect to, the Borrower's records relating to pending or threatened litigation if any such disclosure by the Borrower could reasonably be expected (i) to give rise to a waiver of any attorney/client privilege of the Borrower or any of the Material Subsidiaries relating to such information or (ii) to be otherwise materially disadvantageous to the Borrower or any of the Material Subsidiaries in the defense of such litigation.

     Section 7.10     Licenses, Intellectual Property

          The Borrower shall obtain or maintain, as applicable, and cause each of the Material Subsidiaries to obtain or maintain, as applicable, in full force and effect, all licenses, franchises, Intellectual Property, permits, authorizations and other rights as are necessary for the conduct of its business and the failure of which to obtain or maintain could individually or collectively, reasonably be expected to have a Material Adverse Effect.

     Section 7.11     Capitalization

          The Borrower shall maintain at all times Total Indebtedness equal to or less than 70% of Total Capitalization.

     Section 7.12     Material/Immaterial Designation of Subsidiaries

          The Borrower shall be permitted to designate a Material Subsidiary as an Immaterial Subsidiary and an Immaterial Subsidiary as a Material Subsidiary by giving the Credit Parties written notice thereof not later than 10 Business Days after such designation, specifying the effective date of such designation and certifying that all of the conditions set forth in this Section shall have been satisfied as of such effective date, provided that: (i) immediately before and after giving effect to such designation, no Default or Event of Default shall exist and (ii) in the case of the designation of an

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Immaterial Subsidiary as a Material Subsidiary, such notice shall also serve as the certification of the Borrower immediately after giving effect to such designation that, with respect to such Material Subsidiary, the representations and warranties contained in the Loan Documents shall be true and correct. In connection with any such designation of a Subsidiary as Material or Immaterial the Borrower may submit such revised Schedules to the Loan Documents to make revisions to the existing Schedules thereto with respect to such Material Subsidiary or Immaterial Subsidiary as may be necessary for the representations and warranties to be true and correct with respect to the applicable Material Subsidiaries. Notwithstanding anything herein to the contrary, the Borrower may not designate a Material Subsidiary as an Immaterial Subsidiary if at the time of such designation (i) the total assets of all Persons that were designated as Immaterial Subsidiaries pursuant to this Section during the immed iately preceding twelve month period, determined on a combined basis in accordance with GAAP (the total assets of a Person designated as Immaterial Subsidiary being determined as of the date of such designation, and shall exclude any assets acquired by such Person pursuant to Section 8.2 or 8.3) exceeds (ii) an amount equal to 5% of the total assets of the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP as of the first day of such immediately preceding twelve month period.

     Section 7.13     Use of Proceeds

          The proceeds of the Loans will be used only as follows: (a) to refinance the Terminating Indebtedness and (b) for general corporate purposes not inconsistent with the terms hereof. No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase, acquire or carry any Margin Stock or for any purpose that entails a violation of any of the regulations of the Board, including Regulations T, U and X.

ARTICLE 8. NEGATIVE COVENANTS

     Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees and other amounts payable under the Loan Documents shall have been paid in full, the Borrower covenants and agrees with the Credit Parties that:

     Section 8.1     Liens

          The Borrower shall not create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, or permit any of the Material Subsidiaries so to do, except:

          (a)     Liens for Taxes, assessments or similar charges incurred in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.4, provided that enforcement of such Liens is stayed pending such contest;

          (b)     Liens (i) in connection with workers' compensation, unemployment insurance or other social security obligations (but not ERISA), (ii) in connection with deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business, (iii) in connection with, or otherwise constituting, zoning ordinances, easements, rights of way, minor defects, irregularities, and other similar restrictions affecting real Property which do not materially and adversely affect the value of such real Property or the financial condition of the Borrower or such Material Subsidiary, as the case may be, or materially impair its use for the operation of the business of the Borrower or such Material Subsidiary, as the case may be, (iv) arising by operation of law such as mechanics', mat erialmen's, carriers', warehousemen's, lessors' and bankers' liens and rights of set-off

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incurred in the ordinary course of business which are not delinquent or which are being contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest, and (v) arising out of judgments or decrees which are being contested in accordance with Section 7.6, provided that enforcement of such Liens is stayed pending such contest;

          (c)     Liens now existing or hereafter arising in favor of the Administrative Agent or the Lenders under the Loan Documents;

          (d)     purchase money Liens on Property of the Borrower or any of the Material Subsidiaries acquired after the date hereof to secure Indebtedness of the Borrower incurred in connection with the acquisition of such Property, provided that each such Lien is limited to such Property so acquired;

          (e)     Liens on Property of the Borrower and the Material Subsidiaries existing on the Agreement Date as set forth on Schedule 8.1 as renewed from time to time, but not any increases in the amounts secured thereby or the Property subjected to such Lien thereon (except under the CLECO Mortgage);

          (f)     Liens existing on Property of the Borrower or any of the Material Subsidiaries acquired after the Agreement Date provided that such Liens are at all times thereafter limited to the Property so acquired and were not created in contemplation of such acquisition;

          (g)     the Lien evidenced by the CLECO Mortgage as renewed from time to time; provided, however, that such Lien shall not extend to or over any Property of a character not subject on the date hereof to the Lien granted under the CLECO Mortgage;

          (h)      "permitted liens" as defined under Section 1.04 of the CLECO Mortgage, as in effect on the date hereof, other than "funded liens" described in clause (ix) of said Section 1.04, other Liens not otherwise prohibited by Section 5.05 of the CLECO Mortgage as in effect on the date hereof, and, in the event the CLECO Mortgage is terminated, Liens of the same type and nature as the foregoing Liens referred to in this clause (h), provided that the amounts secured by such Liens shall not exceed the amounts that may be secured by such foregoing Liens as the last day on which the CLECO Mortgage was in effect;

          (i)     Liens created to secure Indebtedness representing, or incurred to finance, the cost of Property acquired, constructed or improved by the Borrower in the ordinary course of business after the date hereof and not subject to (i) the Lien referred to in clause (g) above or (ii) Liens securing Indebtedness existing on such Property at the time of acquisition thereof, provided, in all cases, such Liens are limited to such Property acquired, constructed or improved;

          (j)     Liens existing on property of any Person at the time that such Person becomes a Subsidiary of the Borrower provided that such Liens were not created to secure the acquisition of such Person;

          (k)     Liens to secure Indebtedness of any Subsidiary of the Borrower to the Borrower or to any of its other Subsidiaries;

          (l)     Liens on Property (including any natural gas, oil or other mineral Property) to secure all or a part of the cost of exploration, drilling or development thereof or to secure Indebtedness incurred to provide funds for any such purpose;

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          (m)     Liens and security interests created, incurred or assumed in connection with the purchase, lease, financing or refinancing of pollution control facilities (and which Liens and security interest are limited to such pollution control facilities);

          (n)     Liens (i) created to secure sales or factoring of accounts receivable and other receivables, and (ii) to the extent not covered by clause (i) of this subsection, Liens on accounts receivables and other receivables, to secure Indebtedness of the Borrower or any of the Material Subsidiaries in an aggregate amount not to exceed $40,000,000;

          (o)     Liens on any equity interest owned or otherwise held by or on behalf of the Borrower or any Material Subsidiary created in connection with any project financing;

          (p)     Liens to secure obligations of the Borrower in respect of agreements to purchase or sell electricity, gas or fuel from counterparties, provided that the aggregate amount secured under this clause (p) shall not exceed $15,000,000; and

          (q)     Liens created for the sole purpose of extending, renewing or replacing in whole or in part Indebtedness secured by any lien, mortgage or security interest referred to in the foregoing clauses (a) through (p); provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured at the time of such extension, renewal or replacement and that such extension, renewal or replacement, as the case may be, shall be limited to all or a part of the property or indebtedness that secured the lien or mortgage so extended, renewed or replaced (and any improvements on such property).

     Section 8.2     Merger, Consolidation, Purchase or Sale of Assets, Etc.

          The Borrower shall not consolidate with, be acquired by, or merge into or with any Person, or convey, sell, lease or otherwise dispose of all or any part of its Property, or enter into any sale-leaseback transaction, or purchase or otherwise acquire (in one or a series of related transactions) any part of the Property (other than purchases or other acquisitions of inventory, materials, equipment and similar Property in the ordinary course of business) of any Person, including acquisitions of the Stock of any Person, or permit any of the Material Subsidiaries so to do, except:

          (a)     Sales or other dispositions of inventory in the ordinary course of business;

          (b)     Sales of accounts receivables and other receivables;

          (c)     Asset Sales by any of the Material Subsidiaries to any of the other Material Subsidiaries;

          (d)     (i) other Asset Sales, provided that (A) no Default or Event of Default shall exist immediately before or after giving effect thereto and (B) the amount of such Asset Sale, when added to the total amount of all Asset Sales made by the Borrower and the Material Subsidiaries during the immediately preceding twelve month period, shall not exceed 15% or more of Material Total Assets as of the first day of such twelve month period and (ii) sales of transmission assets pursuant to the order of any Governmental Authority, provided that fair market value shall have been received for such transmission assets;

          (e)     any of the Material Subsidiaries may merge or consolidate with or into, or acquire control of, or acquire all or any portion of the assets of any Person, provided that immediately

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after giving effect thereto, the total consideration to be paid by the Material Subsidiaries to or for the account of any Person (other than the Borrower and the Material Subsidiaries) in connection therewith, when added to the total consideration paid by the Borrower and the Material Subsidiaries to or for the account of any Person (other than the Borrower and the Material Subsidiaries) in connection with all other mergers, consolidations and acquisitions permitted under Sections 8.2(e) and 8.2(f) during the period from the Agreement Date through and including the date thereof, and all loans, advances and other arrangements outstanding at such time and permitted under Section 8.3, shall not exceed 15% of Material Total Assets as of the most recently completed fiscal quarter; and

          (f)     mergers, consolidations or acquisitions of or by the Borrower with, into or of another Person (including acquisitions by the Borrower of all or any portion of the assets of any Person), in each case as to which the following conditions have been satisfied:

          (i)     immediately before and after giving effect thereto, no Default or Event of Default shall exist;

          (ii)     immediately before and after giving effect thereto, all of the representations and warranties contained in the Loan Documents shall be true and correct except as the context thereof otherwise requires and except for those representations and warranties which by their terms or by necessary implication are expressly limited to a state of facts existing at a time prior to such merger, consolidation or acquisition, as the case may be, or such other matters relating thereto as are identified in a writing to the Administrative Agent and the Lenders and are satisfactory to the Administrative Agent and the Lenders;

          (iii)     the Borrower shall be the surviving entity thereof or, in the event the Borrower shall not be the surviving entity thereof, (1) such surviving entity shall be organized in a State of the United States with substantially all of its assets and businesses located and conducted in the United States and (2) the Administrative Agent shall have received (A) a certificate, in form and substance satisfactory to the Administrative Agent, (x) attaching a true and complete copy of each agreement, instrument or other document effecting such merger, consolidation or acquisition, together with an agreement signed on behalf of such surviving entity pursuant to which such surviving entity shall have expressly assumed all of the indebtedness, liabilities and other obligations of the Borrower under the Loan Documents, each of which shall be in form and substance satisfactory to the Administrative Agent , and (y) certifying that such merger, consolidation or acquisition has been consummated in accordance with such agreements, instruments or other documents referred to in the immediately preceding clause (x), and (B) such documents, legal opinions and certificates as the Administrative Agent shall reasonably request relating to the organization, existence and, if applicable, good standing of such surviving entity, the authorization of such merger, consolidation or acquisition and any other legal matters relating to such surviving entity, the assumption agreement referred to in the immediately preceding clause (x) or such merger, consolidation or acquisition.

          (iv)     immediately after giving effect thereto, the total consideration to be paid by the Borrower to or for the account of any Person (other than the Material Subsidiaries of the Borrower) in connection therewith, when added to the total consideration paid by the Borrower and the Material Subsidiaries to or for the account of any Person (other than the Borrower and the Material Subsidiaries) in connection with all mergers, consolidations and acquisitions permitted under Sections 8.2(e) and 8.2(f) during the period from the Agreement Date through and including the date thereof, and all loans, advances, investments and other

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arrangements outstanding at such time and permitted under Section 8.3, shall not exceed 15% of Material Total Assets as of the most recently completed fiscal quarter, and

          (v)     the Administrative Agent and the Lenders shall have received a certificate duly signed by a duly authorized officer of the Borrower identifying the Person to be merged with or into, consolidated with, or acquired by, the Borrower, and certifying as to each of the matters set forth in subclauses (i) through (iv) of this clause (f).

     Section 8.3     Loans, Advances, etc.

          The Borrower shall not, at any time, make any loan or advance to, or enter into any arrangement for the purpose of providing funds or credit to, any Person, or permit any of the Material Subsidiaries so to do, other than (i) provided that immediately before and after giving effect thereto, no Default or Event of Default shall exist, loans or advances to Cleco Corporation and to any of the Material Subsidiaries and (ii) other loans, advances or arrangements the total outstanding amount of which, when added to the total consideration paid by the Borrower and the Material Subsidiaries in connection with all mergers, consolidations and acquisitions of or by the Borrower and the Material Subsidiaries during the period from the Agreement Date through and including the date thereof, shall not exceed 15% of Material Total Assets as of the most recently completed fiscal quarter.

     Section 8.4     Amendments, etc. of Certain Agreements

          Enter into or agree to any amendment, modification or waiver, or permit any of the Material Subsidiaries so to do, of any term or condition of the CLECO Mortgage or the Employee Stock Ownership Plan (other than amendments and modifications described in the certificate delivered pursuant to Section 5.5 or required by tax laws to maintain the Employee Stock Ownership Plan's qualified status under Section 401(a) of the Code and any adoptive instruments or other agreements providing for the participation in the Employee Stock Ownership Plan by the Borrower's affiliates), which amendment, modification or waiver could, in the reasonable opinion of the Administrative Agent, adversely affect the interests of the Lenders under the Loan Documents.

ARTICLE 9. EVENTS OF DEFAULT

     The following shall each constitute an "Event of Default" hereunder:

          (a)     The failure of the Borrower to pay any installment of principal of any Loan on the date when due and payable; or

          (b)     The failure of the Borrower to pay any interest on any Loan, or any other fees or expenses payable under any Loan Document, on the date when due and payable, and such failure shall continue unremedied for a period of three Business Days;

          (c)     The failure of the Borrower to observe or perform any covenant or agreement contained in Sections 7.3, 7.11, 7.12, 7.13 or Article 8; or

          (d)     The failure of the Borrower to observe or perform any other term, covenant, or agreement contained in any Loan Document and such failure or event shall have continued unremedied for a period of 30 days after the Borrower shall have obtained knowledge of such failure or event; or

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          (e)     Any representation or warranty made in any Loan Document or deemed made by the Borrower pursuant to Section 6.1, or in any certificate, report (other than an auditor's report), opinion (other than an opinion of counsel), or other document delivered or to be delivered pursuant thereto, shall prove to have been incorrect or misleading (whether because of misstatement or omission) in any material respect when made; or

          (f)     the Borrower or any Material Subsidiary shall fail to make any payment (whether of principal, interest or otherwise and regardless of amount) in respect of any Material Obligations, when and as the same shall become due and payable (after giving effect to any applicable grace period);

          (g)     any event or condition occurs that results in any Material Obligations of the Borrower or any Material Subsidiary becoming due prior to their scheduled maturity or payment date, or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Material Obligations or any trustee or agent on its or their behalf to cause any Material Obligations to become due prior to their scheduled maturity or payment date or to require the prepayment, repurchase, redemption or defeasance thereof, prior to their scheduled maturity or payment date (in each case after giving effect to any applicable cure period), provided that this clause (g) shall not apply to secured Indebtedness that becomes due solely as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

          (h)     The Borrower or any of the Material Subsidiaries shall (i) suspend or discontinue its business, (ii) make an assignment for the benefit of creditors, (iii) generally not pay its debts as such debts become due, (iv) admit in writing its inability to pay its debts as they become due, (v) file a voluntary petition in bankruptcy, (vi) become insolvent (however such insolvency shall be evidenced), (vii) file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment of debt, liquidation or dissolution or similar relief under any present or future statute, law or regulation of any jurisdiction, (viii) petition or apply to any tribunal for any receiver, custodian or any trustee for any substantial part of its Property, (ix) be the subject of any such proceeding filed against it which remains undismissed for a period of 45 days, (x) file any answer admitting or not contesting the mat erial allegations of any such petition filed against it or any order, judgment or decree approving such petition in any such proceeding, (xi) seek, approve, consent to, or acquiesce in any such proceeding, or in the appointment of any trustee, receiver, sequestrator, custodian, liquidator, or fiscal agent for it, or any substantial part of its Property, or an order is entered appointing any such trustee, receiver, custodian, liquidator or fiscal agent and such order remains in effect for 45 days, or (xii) take any formal action for the purpose of effecting any of the foregoing or looking to the liquidation or dissolution of the Borrower or such Material Subsidiary, as the case may be; or

          (i)     An order for relief is entered under the United States bankruptcy laws or any other decree or order is entered by a court having jurisdiction (i) adjudging the Borrower or any of the Material Subsidiaries bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, liquidation, arrangement, adjustment or composition of or in respect of the Borrower or any of the Material Subsidiaries under the United States bankruptcy laws or any other applicable Federal or state law, (iii) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Borrower or any of the Material Subsidiaries or of any substantial part of the Property thereof, or (iv) ordering the winding up or liquidation of the affairs of the Borrower or any of the Material Subsidiaries, and any such decree or order continues unstayed and in effect for a period of 45 days; or

          (j)     Judgments or decrees against the Borrower or any of the Material Subsidiaries aggregating in excess of $10,000,000 (which shall not be fully covered by insurance after taking into

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account any applicable deductibles) shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of at least 30 days; or

          (k)     Any Loan Document shall cease, for any reason, to be in full force and effect or the Borrower shall so assert in writing or shall disavow any of its obligations thereunder; or

          (l)     an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect.

     Upon the occurrence of an Event of Default or at any time thereafter during the continuance thereof, (a) if such event is an Event of Default specified in clause (h) or (i) of this Article 9, the Aggregate Commitments shall immediately and automatically terminate and the Loans, all accrued and unpaid interest thereon and all other amounts owing under the Loan Documents shall immediately become due and payable, and the Administrative Agent may, and, upon the direction of the Required Lenders shall, exercise any and all remedies and other rights provided in the Loan Documents, and (b) if such event is any other Event of Default, any or all of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, and upon the direction of the Required Lenders shall, by notice to the Borrower, declare the Aggregate Commitments to be terminated forthwith, whereupon the Aggregate Commitments shall immediately terminate, and (ii) with the consen t of the Required Lenders, the Administrative Agent may, and upon the direction of the Required Lenders shall, by notice of default to the Borrower, declare the Loans, all accrued and unpaid interest thereon, and all other amounts owing under the Loan Documents to be due and payable forthwith, whereupon the same shall immediately become due and payable, and the Administrative Agent may, and upon the direction of the Required Lenders shall, exercise any and all remedies and other rights provided pursuant to the Loan Documents. Except as otherwise provided in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. The Borrower hereby further expressly waives and covenants not to assert any appraisement, valuation, stay, extension, redemption or similar laws, now or at any time hereafter in force which might delay, prevent or otherwise impede the performance or enforcement of any Loan Document.

     In the event that the Aggregate Commitments shall have been terminated or the Loans, accrued and unpaid interest thereon and all other amounts owing under the Loan Documents shall have been declared due and payable pursuant to the provisions of this Section, any funds received by the Administrative Agent and the Lenders from or on behalf of the Borrower shall be applied by the Administrative Agent and the Lenders in liquidation of the Loans and the obligations of the Borrower under the Loan Documents in the following manner and order: (i) first, to the payment of interest on, and then the principal portion of, any Loans which the Administrative Agent may have advanced on behalf of any Lender for which the Administrative Agent has not then been reimbursed by such Lender or the Borrower; (ii) second, to the payment of any fees or expenses due to the Administrative Agent from the Borrower hereunder, (iii) third, to reimburse the Administrative Agent and the Lenders for any expenses (to the extent not paid pursuant to clause (ii) above) due from the Borrower pursuant to the provisions of Section 11.4; (iv) fourth, to the payment of accrued Facility Fees, Utilization Fees and all other fees, expenses and amounts due under the Loan Documents (other than principal of, and interest on, the Loans); (v) fifth, to the payment of interest due on the Loans; (vi) sixth, to the payment of principal outstanding on the Loans, pro rata according to each Lender's aggregate outstanding Loans; and (vii) seventh, to the payment of any other amounts owing to the Administrative Agent and the Lenders under any Loan Document.

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ARTICLE 10.     THE ADMINISTRATIVE AGENT

     Section 10.1     Appointment

          Each Credit Party hereby irrevocably designates and appoints BNY as the Administrative Agent of such Credit Party under the Loan Documents and each such Credit Party hereby irrevocably authorizes BNY, as the Administrative Agent for such Credit Party, to take such action on its behalf under the provisions of the Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in any Loan Document, (i) the Administrative Agent shall not have any duties or responsibilities other than those expressly set forth therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent and (ii) none of the Syndication Agent, the Documentation Agent, the Managing Agent or the Co-Agents shall have any duty or obligation under the Loan Documents.

     Section 10.2     Delegation of Duties

          The Administrative Agent may execute any of its duties under the Loan Documents by or through agents or attorneys-in-fact and shall be entitled to rely upon the advice of counsel concerning all matters pertaining to such duties.

     Section 10.3     Exculpatory Provisions

          Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with the Loan Documents (except the Administrative Agent for its own gross negligence or willful misconduct) or (ii) responsible in any manner to any Credit Party for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, the Loan Documents or for the value, validity, effectiveness, genuineness, perfection, enforceability or sufficiency of any of the Loan Documents or for any failure of the Borrower or any other Person to perform its obligations thereunder. The Administrative Agent shall not be under any obligation to any Credit Party to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, the Loan Documents, or to inspect the properties, books or records of the Borrower. The Administrative Agent shall not be under any liability or responsibility whatsoever, as Administrative Agent, to the Borrower or any other Person as a consequence of any failure or delay in performance, or any breach, by any Lender of any of its obligations under any of the Loan Documents.

     Section 10.4     Reliance by Administrative Agent

          The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, opinion, letter, cablegram, telegram, fax, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may treat each Credit Party, or the Person designated in the last notice filed with it under this Section, as the holder of all of the

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interests of such Credit Party in its Loans and in its Notes until written notice of transfer, signed by such Credit Party (or the Person designated in the last notice filed with the Administrative Agent) and by the Person designated in such written notice of transfer, in form and substance satisfactory to the Administrative Agent, shall have been filed with the Administrative Agent. The Administrative Agent shall not be under any duty to examine or pass upon the validity, effectiveness, enforceability, perfection or genuineness of the Loan Documents or any instrument, document or communication furnished pursuant thereto or in connection therewith, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine, have been signed or sent by the proper parties and are what they purport to be. The Administrative Agent shall be fully justified in failing or refusing to take any action under the Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under the Loan Documents in accordance with a request or direction of the Required Lenders, and such request or direction and any action taken or failure to act pursuant thereto shall be binding upon all the Credit Parties and all future holders of the Notes.

     Section 10.5     Notice of Default

          The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Administrative Agent has received written notice thereof from a Credit Party or the Borrower. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall promptly give notice thereof to the Credit Parties and the Borrower. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders, provided, however, that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem to be in the best interests of the Credit Parties.

     Section 10.6     Non-Reliance on Administrative Agent and Other Lenders

          Each Credit Party expressly acknowledges that neither the Administrative Agent nor any of its Related Parties has made any representations or warranties to it and that no act by the Administrative Agent hereinafter, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Credit Party. Each Credit Party represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Credit Party, and based on such documents and information as it has deemed appropriate, made its own evaluation of and investigation into the business, operations, Property, financial and other condition and creditworthiness of the Borrower and made its own decision to enter into this Agreement. Each Credit Party also represents that it will, independently and without reliance upon the Administrative Agent or any other Credit Part y, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, evaluations and decisions in taking or not taking action under any Loan Document, and to make such investigation as it deems necessary to inform itself as to the business, operations, Property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Credit Parties by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Credit Party with any credit or other information concerning the business, operations, Property, financial and other condition or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

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     Section 10.9     Administrative Agent in Its Individual Capacity

          BNY and its Related Parties may make loans to, accept deposits from, issue letters of credit for the account of, and generally engage in any kind of business with, the Borrower as though BNY were not Administrative Agent hereunder. With respect to the Commitment and Loans made or renewed by BNY and the Note issued to BNY, BNY shall have the same rights and powers under the Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall in each case include BNY.

     Section 10.8     Successor Administrative Agent

          If at any time the Administrative Agent deems it advisable, in its sole discretion, it may submit to each of the Lenders a written notice of its resignation as Administrative Agent under the Loan Documents, such resignation to be effective upon the earlier of (i) the written acceptance of the duties of the Administrative Agent under the Loan Documents by a successor Administrative Agent and (ii) on the 30th day after the date of such notice. Upon any such resignation, the Required Lenders shall have the right to appoint from among the Lenders a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and accepted such appointment in writing within 30 days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and with the consent of the Borrower, such consent not to be unreasonably withheld and n ot to be required during the existence of an Event of Default, appoint a successor Administrative Agent, which successor Administrative Agent shall be a commercial bank organized under the laws of the United States or any State thereof and having a combined capital, surplus, and undivided profits of at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent's rights, powers, privileges and duties as Administrative Agent under the Loan Documents shall be terminated. The Borrower and the Lenders shall execute such documents as shall be necessary to effect such appointment. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of the Loan Documents shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. If at any time there shall not be a duly appointed and acting Administrative Agent, the Borrower agrees to make each payment due under the Loan Documents directly to the Lenders entitled thereto during such time.

ARTICLE 11. OTHER PROVISIONS

     Section 11.1     Amendments and Waivers

          (a)     No failure or delay by any Credit Party in exercising any right or power under any Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Credit Parties under the Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether any Credit Party may have had notice or knowledge of such Default at the time.

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          (b)     Neither any Loan Document nor any provision thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders, provided that no such agreement shall (i) increase any Commitment of any Lender without the written consent of such Lender or increase the Aggregate Commitments (other than increases pursuant to Section 2.5(d)), (ii) reduce the principal amount of any Loan or reduce the rate of any interest, or reduce any fees, payable under the Loan Documents, without the written consent of each Credit Party affected thereby, (iii) postpone the date of payment at stated maturity of any Loan, any interest or any fees payable under the Loan Documents, or reduce the amount of, waive or excuse any such payment, or postpone the stated termination o r expiration of the Commitments without the written consent of each Credit Party affected thereby, (iv) change any provision hereof in a manner that would alter the pro rata sharing of payments required by Section 3.2(b) or the pro rata reduction of Commitments required by Section 2.5(c) or the pro rata funding of Revolving Credit Loans required by Section 2.3(b), without the written consent of each Credit Party affected thereby, (v) change any of the provisions of this Section or the definition of the term "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, or change the currency in which Loans are to be made or payment under the Loan Documents are to be made, or add additional borrowers without the written consent of each Lender, and provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent without its prior written consent.

     Section 11.2     Notices

          Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

          (a)     if to the Borrower, to it at 2030 Donahue Ferry Road, Pineville, LA 71360-5226; Attention: Michael Sawrie (Telephone: (318) 484-7589; Facsimile: (318) 484-7697);

          (b)     if to the Administrative Agent, to it at Agency Funding Administration, One Wall Street, 18th Floor, New York, New York 10286, Attention of: Sandra Morgan, Agency Function Administration, 18th Floor, (Telephone No. (212) 635-4692); Facsimile No. (212) 635-6365 or 6366 or 6367, with a copy to The Bank of New York, at Energy Industries Division, One Wall Street, 19th Floor, New York, New York 10286, Attention of: Steven Kalachman (Telephone No. (212) 635-7881; Facsimile No. (212) 635-7923 or 7924); and

          (c)     if to any other Credit Party, to it at its address (or facsimile number) set forth in its Administrative Questionnaire;

provided that any notice, request or demand by the Borrower to or upon the Administrative Agent or the Lenders pursuant to Sections 2.3, 2.4, 2.5, 2.6 or 2.7 shall not be effective until received. Any party to a Loan Document may rely on signatures of the parties thereto which are transmitted by facsimile or other electronic means as fully as if originally signed. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

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     Section 11.3     Survival

          All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of any Loan Document and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under the Loan Documents is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.9, 2.10, 2.11, 2.12, 1 1.4, 11.10 and 11.11 and Article 10 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the termination of the Commitments or the termination of this Agreement or any provision hereof.

     Section 11.4     Expenses; Indemnity; Damage Waiver

          (a)     The Borrower shall pay (i) all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of each Loan Document or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated thereby shall be consummated), and (i) all reasonable out-of-pocket costs and expenses incurred by any Credit Party, including the reasonable fees, charges and disbursements of any counsel for any Credit Party and any expert witness fees, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such reasonable out-of-pocket costs and expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

          (b)     The Borrower shall indemnify each Credit Party and each Related Party thereof (each such Person being called an "Indemnified Party") against, and hold each Indemnified Party harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnified Party, incurred by or asserted against any Indemnified Party arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated thereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the transactions contemplated by the Loan Documents, (ii) any Loan or the use of the proceeds thereof, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of th e Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of the Subsidiaries or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnified Party is a party thereto, provided that such indemnity shall not, as to any Indemnified Party, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Party or arising solely from claims between one such Indemnified Party and another such Indemnified Party.

          (c)     To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to

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pay to the Administrative Agent an amount equal to the product of such unpaid amount multiplied by a fraction, the numerator of which is the sum of such Lender's unused Commitments plus the outstanding principal balance of such Lender's Loans and the denominator of which is the sum of the unused Commitments plus the outstanding principal balance of all Lenders Loans (in each case determined as of the time that the applicable unreimbursed expense or indemnity payment is sought or, in the event that no Lender shall have any unused Commitments or outstanding Loans at such time, as of the last time at which any Lender had any unused Commitments or outstanding Loans), provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as applicable, was incurred by or asserted against the Administrative Agent, in its capacity as such.

          (d)     To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct and actual damages) arising out of, in connection with, or as a result of, any Loan Document or any agreement, instrument or other document contemplated thereby, the transactions contemplated by the Loan Documents or any Loan or the use of the proceeds thereof.

          (e)     All amounts due under this Section shall be payable promptly but in no event later than ten days after written demand therefor.

     Section 11.5     Lending Offices

          Each Lender shall have the right at any time and from time to time to transfer its Loans to a different office, provided that such Lender shall promptly notify the Administrative Agent and the Borrower of any such change of office. Such office shall thereupon become such Lender's Domestic Lending Office or Eurodollar Lending Office, as the case may be, provided, however, that no such Lender shall be entitled to receive any greater amount under Section 2.10, 2.11 or 2.12 as a result of a transfer of any such Loans to a different office of such Lender than it would be entitled to immediately prior thereto unless such claim would have arisen even if such transfer had not occurred.

     Section 11.6     Assignments and Participations

          (a)     The provisions of the Loan Documents shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Credit Party (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in the Loan Documents, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each Credit Party) any legal or equitable right, remedy or claim under or by reason of any Loan Document.

          (b)     Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under the Loan Documents (including all or a portion of its Commitment and the applicable Loans at the time owing to it), provided that (i) except in the case of an assignment to a Lender or an Affiliate or an Approved Fund of a Lender, each of the Borrower, the Administrative Agent must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed)), (ii) except in the case of an assignment to a Lender or an Affiliate or an Approved Fund of a Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance Agreement with respect to such assignment is delivered to the

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Administrative Agent) shall not be less than $5,000,000 unless the Borrower and the Administrative Agent otherwise consent, (iii) no assignments to the Borrower or any of its Affiliates shall be permitted, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance Agreement together with, unless otherwise agreed by the Administrative Agent, a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire, and provided further, that any consent of the Borrower otherwise required under this paragraph shall not be required if a Default has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance Agreement, the assignee thereunder shall be a party hereto and, to the extent of the interest as signed by such Assignment and Acceptance Agreement, have the rights and obligations of a Lender under the Loan Documents, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance Agreement, be released from its obligations under the Loan Documents (and, in the case of an Assignment and Acceptance Agreement covering all of the assigning Lender's rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10, 2.11, 2.12 and 11.4). Any assignment or transfer by a Lender of rights or obligations under the Loan Documents that does not comply with this paragraph shall be treated for purposes of the Loan Documents as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

          (c)     The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in New York City a copy of each Assignment and Acceptance Agreement delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Revolving Credit Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive absent clearly demonstrable error, and the Borrower and each Credit Party may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Credit Party, at any reasonable time and from time to time upon reasonable prior notice.

          (d)     Upon its receipt of a duly completed Assignment and Acceptance Agreement executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance Agreement and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

          (e)     Any Lender may, without the consent of the Borrower or any Credit Party, sell participations to one or more banks or other entities other than the Borrower or any of its Affiliates (each such bank or other entity being called a "Participant") in all or a portion of such Lender's rights and obligations under the Loan Documents (including all or a portion of its Commitment and outstanding Revolving Credit Loans owing to it), provided that (i) such Lender's obligations under the Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower and the Credit Parties shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. Any agreement or instrument pursuant to which a Lender sells such a participation sh all provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of any Loan

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Documents, provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 11.1(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10, 2.11 and 2.12 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.9 as though it were a Lender, provided that such Participant agrees to be subject to Section 3.2(c) as though it were a Lender.

          (f)     A Participant shall not be entitled to receive any greater payment under Section 2.10 or 2.11 than the Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Lender organized under the laws of a jurisdiction other than the United States or any State thereof if it were a Lender shall not be entitled to the benefits of Section 2.10 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.10(d) as though it were a Lender.

          (g)     Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under the Loan Documents to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations under the Loan Documents or substitute any such pledgee or assignee for such Lender as a party hereto.

     Section 11.7     Counterparts; Integration; Effectiveness

          This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which, when taken together, shall constitute but one contract. This Agreement and any separate letter agreements with respect to fees payable to any Credit Party or the syndication of the credit facilities established hereunder constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Article 5, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties and thereafter shall be binding upon and inure to the benefit of the parties her eto and their respective successors and assigns. Delivery of an executed counterpart of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

     Section 11.8     Severability

          In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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     Section 11.9     Right of Set-off

          In addition to any rights and remedies of the Lenders provided by law, upon the occurrence of an Event of Default and the acceleration of the obligations owing in connection with the Loan Documents, or at any time upon the occurrence and during the continuance of an Event of Default under clause (a) of Article 9, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent not prohibited by applicable law, to set-off and apply against any indebtedness, whether matured or unmatured, of the Borrower to such Lender, any amount owing from such Lender to the Borrower, at, or at any time after, the happening of any of the above-mentioned events. To the extent not prohibited by applicable law, the aforesaid right of set-off may be exercised by such Lender against the Borrower or against any trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of cre ditors, receiver, or execution, judgment or attachment creditor of the Borrower, or against anyone else claiming through or against the Borrower or such trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the making, filing or issuance, or service upon such Lender of, or of notice of, any such petition, assignment for the benefit of creditors, appointment or application for the appointment of a receiver, or issuance of execution, subpoena, order or warrant. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application.

     Section 11.10     Governing Law; Jurisdiction; Consent to Service of Process

          (a)     This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

          (b)     The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that, to the extent permitted by applicable law, all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by applicable law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner pr ovided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any other Credit Party may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrower, or any of its property, in the courts of any jurisdiction.

          (c)     The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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        (d)     Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

     Section 11.11     WAIVER OF JURY TRIAL

          EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS CREDIT AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     Section 11.12     Headings

          Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

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CLECO POWER LLC
364 DAY CREDIT AGREEMENT

          IN WITNESS WHEREOF, the parties hereto have caused this 364-Day Credit Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

CLECO POWER LLC

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

THE BANK OF NEW YORK, Individually
and as Administrative Agent

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

BANK ONE, NA, Individually
and as Syndication Agent

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
Individually and as Documentation Agent

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

THE BANK OF TOKYO-MITSUBISHI, LTD.,
Individually and as Managing Agent

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

CREDIT SUISSE FIRST BOSTON, CAYMAN
ISLANDS BRANCH,
Individually and as a Co-Agent

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

SOCIETE GENERALE,
Individually and as a Co-Agent

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

DEXIA CREDIT LOCAL, NEW YORK AGENCY

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

REGIONS BANK

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

WHITNEY NATIONAL BANK

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

HIBERNIA NATIONAL BANK

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

BANK HAPOALIM B.M.

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

FORTIS CAPITAL CORP.

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

CLECO POWER LLC
364 DAY CREDIT AGREEMENT

KBC BANK N.V.

By:                                                      

Name:                                                  

Title:                                                   

By:                                                      

Name:                                                  

Title:                                                   

EX-11.A

Exhibit 11(a)

CLECO CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
(UNAUDITED)

	For the three months ended June 30,
	2002	2001
	(Thousands, except share and per share amounts)
Basic
Net income applicable to common stock	$         17,317	$         12,601
	========	========
Weighted average number of shares of common stock    outstanding during the period	46,025,014	45,022,622
	========	========
Basic net income per common share	$              0.38	$              0.28
	========	========
Diluted
Net income applicable to common stock	$         17,317	$         12,601
Adjustments to net income related to ESOP under the    "if-converted" method:
Add loss of deduction from net income for actual    dividends paid on convertible preferred stock,    net of tax	320	330
Add/(Deduct) additional cash contribution required,    which is equal to dividends on preferred stock    less dividends paid at the common dividend rate, net of tax	(22)	9
Add tax benefit associated with dividends    paid on allocated common shares	152	125
Adjusted income applicable to common stock	$         17,767	$         13,065
	========	========
Weighted average number of shares of common    stock outstanding during the period	46,025,014	45,022,622
Number of equivalent common shares    attributable to ESOP	2,485,748	2,549,347
Common stock under stock option grants	235,272	241,156
Average shares	48,746,034	47,813,125
	========	========
Diluted net income per common share	$              0.36	$              0.27
	========	========

EX-11.B

Exhibit 11(b)

CLECO CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
(UNAUDITED)

	For the six months ended June 30,
	2002	2001
	(Thousands, except share and per share amounts)
Basic
Net income applicable to common stock	$            30,898	$          22,822
	=========	========
Weighted average number of shares of common stock    outstanding during the period	45,569,170	45,012,715
	=========	========
Basic net income per common share	$                0.68	$               0.51
	=========	========
Diluted
Net income applicable to common stock	$            30,898	$          22,822
Adjustments to net income related to ESOP under the    "if-converted" method:
Add loss of deduction from net income for actual    dividends paid on convertible preferred stock,    net of tax	648	668
Add/(Deduct) additional cash contribution required,    which is equal to dividends on preferred stock    less dividends paid at the common dividend rate, net of tax	(33)	11
Add tax benefit associated with dividends    paid on allocated common shares	299	246
Adjusted income applicable to common stock	$            31,812	$          23,747
	=========	========
Weighted average number of shares of common    stock outstanding during the period	45,569,170	45,012,715
Number of equivalent common shares    attributable to ESOP	2,502,367	2,570,133
Common stock under stock option grants	198,376	271,815
Average shares	48,269,913	47,854,663
	=========	========
Diluted net income per common share	$                0.66	$               0.50
	=========	========

EX-12.A

Exhibit 12(a)

CLECO CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(UNAUDITED)

	For the three months ended	For the six months ended	For the twelve months ended
June 30, 2002
(Thousands, except ratios)
Earnings from continuing operations	$     17,782	$    31,835	$     77,938
Income taxes	9,564	17,666	41,974
Earnings from continuing operations before income taxes	$     27,346	$    49,501	$   119,912
	=======	=======	=======
Fixed charges:
Interest, long-term debt	$     13,511	$    26,489	$     52,316
Interest, other (including interest on short-term debt)	1,736	2,929	816
Amortization of debt expense, premium, net	619	1,135	2,186
Portion of rentals representative of an interest factor	164	349	680
Total fixed charges	$     16,030	$    30,902	$     55,998
	=======	=======	=======
Earnings from continuing operations before income taxes	$     27,346	$    49,501	119,912
Plus: total fixed charges from above	16,030	30,902	55,998
Plus: amortization of capitalized interest	180	359	718
Less: long-term interest capitalized	(2,832)	(5,504)	(11,110)
Earnings from continuing operations before income    taxes and fixed charges	$     40,724	$    75,258	$   165,518
	=======	=======	=======
Ratio of earnings to fixed charges	2.54 x	2.44 x	2.96 x
	=======	=======	=======
Total fixed charges from above	$     16,030	$    30,902	$     55,998
Preferred stock dividends*	537	1,094	2,203
Total fixed charges and preferred stock dividends	$     16,567	$    31,996	$     58,201
	=======	=======	=======
Ratio of earnings to combined fixed charges and    preferred stock dividends	2.46 x	2.35 x	2.84 x
	=======	=======	=======

*  Preferred stock dividends multiplied by the ratio of pretax income to net income.

EX-12.B

Exhibit 12(b)

CLECO POWER
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)

	For the three months ended	For the six months ended	For the twelve months ended
	June 30, 2002
	(Thousands, except ratios)
Earnings from continuing operations	$   15,381	$    29,479	$   67,446
Income taxes	9,478	17,403	37,792
Earnings from continuing operations before income taxes	$   24,859	$    46,882	$ 105,238
	======	======	======
Fixed charges:
Interest, long-term debt	$     6,581	$    12,561	$   24,103
Interest, other (including interest on short-term debt)	465	1,021	2,082
Amortization of debt expense, premium, net	220	426	856
Portion of rentals representative of an interest factor	132	286	535
Total fixed charges	$     7,398	$    14,294	$   27,576
	======	======	======
Earnings from continuing operations before    income taxes and fixed charges	$   32,257	$    61,176	$ 132,814
	======	======	======
Ratio of earnings to fixed charges	4.36 x	4.28 x	4.82 x
	======	======	======