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                               Form 10-Q
                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C.  20549
                     ____________________________
                                   
         [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934
                                   
           For the quarterly period ended September 30, 1998
                                   
                                  OR
                                   
        [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934
                                   
                For the transition period from      to
                                   
                     Commission file number 1-707
                                   
                   KANSAS CITY POWER & LIGHT COMPANY
        (Exact name of registrant as specified in its charter)
                                   
                                   
            Missouri                              44-0308720
 (State or other jurisdiction of               (I.R.S. Employer
 incorporation or organization)              Identification No.)
                                   
                                   
            1201 Walnut, Kansas City, Missouri   64106-2124
         (Address of principal executive offices)   (Zip Code)
                                   
  Registrant's telephone number, including area code: (816) 556-2200


Indicate  by  check  mark whether the registrant  (1)  has  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 registrant was required to file such reports),
and  (2) has been subject to such filing requirements for the past  90
days.

Yes  (X)  No ( )

The  number of shares outstanding of the registrant's Common stock  at
November 9, 1998, was 61,898,020 shares.



PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS

                                                    September 30   December 31
                                                        1998          1997
                                                            (thousands)
ASSETS
UTILITY PLANT, at original cost
 Electric                                             $3,552,745    $3,502,796
 Less-accumulated depreciation                         1,379,035     1,314,154
    Net utility plant in service                       2,173,710     2,188,642
 Construction work in progress                           102,814        93,264
 Nuclear fuel, net of amortization of
  $100,839 and $86,516                                    31,881        41,649
    Total                                              2,308,405     2,323,555

REGULATORY ASSET - RECOVERABLE TAXES                     123,000       123,000

INVESTMENTS AND NONUTILITY PROPERTY                      331,623       345,126

CURRENT ASSETS
 Cash and cash equivalents                                82,481        74,098
 Electric customer accounts receivable, net of
    allowance for doubtful accounts
    of $1,910 and $1,941                                  67,603        28,741
 Other receivables                                        29,622        33,492
 Fuel inventories, at average cost                        17,333        13,824
 Materials and supplies, at average cost                  44,662        46,579
 Deferred income taxes                                     3,831           648
 Other                                                     2,912         7,155
    Total                                                248,444       204,537

DEFERRED CHARGES
 Regulatory assets                                        27,416        30,017
 Other deferred charges                                   30,518        31,798
    Total                                                 57,934        61,815

    Total                                             $3,069,406    $3,058,033

CAPITALIZATION AND LIABILITIES
CAPITALIZATION (see statements)                       $2,008,787    $2,051,489
CURRENT LIABILITIES
 Notes payable to banks                                    6,741         1,243
 Current maturities of long-term debt                     36,287        74,180
 Accounts payable                                         53,899        57,568
 Accrued taxes                                            63,442         1,672
 Accrued interest                                         18,531        22,360
 Accrued payroll and vacations                            22,608        23,409
 Accrued refueling outage costs                            9,832         1,664
 Other                                                    32,243        15,068
     Total                                               243,583       197,164

DEFERRED CREDITS AND OTHER LIABILITIES
 Deferred income taxes                                   642,174       638,679
 Deferred investment tax credits                          59,824        63,257
 Other                                                   115,038       107,444
    Total                                                817,036       809,380

COMMITMENTS AND CONTINGENCIES

   Total                                              $3,069,406    $3,058,033

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                1



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION

                                                    September 30   December 31
                                                        1998          1997
                                                            (thousands)
COMMON STOCK EQUITY
 Common stock-150,000,000 shares authorized
   without par value-61,908,726 shares issued,
   stated value                                      $   449,697   $   449,697
 Retained earnings (see statements)                      461,430       428,452
 Unrealized gain on securities available for sale            697         1,935
 Capital stock premium and expense                        (1,674)       (1,664)
          Total                                          910,150       878,420
CUMULATIVE PREFERRED STOCK
 $100 Par Value
   3.80% - 100,000 shares issued                          10,000        10,000
   4.50% - 100,000 shares issued                          10,000        10,000
   4.20% -  70,000 shares issued                           7,000         7,000
   4.35% - 120,000 shares issued                          12,000        12,000
 No Par Value
   4.37%* - 500,000 shares issued                         50,000        50,000
 $100 Par Value - Redeemable
   4.00%                                                      62            62
          Total                                           89,062        89,062
COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY KCPL
SUBORDINATED DEBENTURES                                  150,000       150,000

LONG-TERM DEBT (excluding current maturities)
 General Mortgage Bonds
    Medium-Term Notes due 1998-2008, 6.90% and
       6.92% weighted-average rate                       386,000       407,500
    4.07%* Environmental Improvement Revenue
       Refunding Bonds due 2012-23                       158,768       158,768
 Guaranty of Pollution Control Bonds
    4.31% as of December 31, 1997, due 2015-17                 0       196,500
 Environmental Improvement Revenue Refunding Bonds
    4.28%* Series A & B due 2015                         106,500             0
    4.50% Series C due 2017                               50,000             0
    4.35% Series D due 2017                               40,000             0
 Subsidiary Obligations
    Affordable Housing Notes due 2000-06, 8.34%
       and 8.48% weighted-average rate                    54,775        61,207
    Bank Credit Agreement due October 31, 1999,
       6.87% and 6.67% weighted-average rate              61,000       107,500
    Other Long-Term Notes                                  2,532         2,532
          Total                                          859,575       934,007
          Total                                       $2,008,787    $2,051,489

*  Variable rate securities, weighted-average rate as of September 30, 1998

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                2



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME



Three Months Ended September 30               1998          1997
                                                  (thousands)
ELECTRIC OPERATING REVENUES                 $313,462      $290,218

OPERATING EXPENSES
 Operation
   Fuel                                       41,039        39,832
   Purchased power                            31,273        17,219
   Other                                      49,631        49,897
 Maintenance                                  18,597        15,973
 Depreciation                                 28,857        27,464
 Income taxes                                 39,058        38,762
 General taxes                                27,934        27,648
    Total                                    236,389       216,795

OPERATING INCOME                              77,073        73,423

OTHER INCOME AND (DEDUCTIONS)
 Allowance for equity funds
  used during construction                       912           779
 Miscellaneous income                         10,471        11,263
 Miscellaneous deductions                    (22,633)      (16,896)
 Income taxes                                 10,804         8,596
    Total                                       (446)        3,742

INCOME BEFORE INTEREST CHARGES                76,627        77,165

INTEREST CHARGES
 Long-term debt                               14,056        15,261
 Short-term debt                                  72           103
 Miscellaneous                                 4,189         4,172
 Allowance for borrowed funds
  used during construction                      (575)         (518)
    Total                                     17,742        19,018

 Net Income                                   58,885        58,147
 Preferred Stock
  Dividend Requirements                          973           952
 Earnings Available for
  Common Stock                               $57,912       $57,195

Average Number of Common
 Shares Outstanding                           61,888        61,896
Basic and Diluted earnings
 per Common Share                              $0.94         $0.92
Cash Dividends per
 Common Share                                 $0.415        $0.405

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                3



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME



Year to Date September 30                     1998          1997
                                                  (thousands)
ELECTRIC OPERATING REVENUES             $    748,599  $    700,382

OPERATING EXPENSES
 Operation
   Fuel                                      112,624       104,045
   Purchased power                            54,317        46,141
   Other                                     143,320       141,358
 Maintenance                                  50,842        52,553
 Depreciation                                 86,238        83,037
 Income taxes                                 70,854        61,128
 General taxes                                72,135        72,366
 Deferred Wolf Creek costs amortization            0         1,368
    Total                                    590,330       561,996

OPERATING INCOME                             158,269       138,386

OTHER INCOME AND (DEDUCTIONS)
 Allowance for equity funds
  used during construction                     2,735         1,772
 Miscellaneous income                         34,390        23,724
 Miscellaneous deductions                    (60,385)      (92,560)
 Income taxes                                 31,168        48,691
    Total                                      7,908       (18,373)

INCOME BEFORE INTEREST CHARGES               166,177       120,013

INTEREST CHARGES
 Long-term debt                               43,426        44,777
 Short-term debt                                 239         1,273
 Miscellaneous                                12,521         8,710
 Allowance for borrowed funds
  used during construction                    (1,816)       (1,891)
    Total                                     54,370        52,869

 Net Income                                  111,807        67,144
 Preferred Stock
  Dividend Requirements                        2,930         2,866
 Earnings Available for
  Common Stock                              $108,877       $64,278

Average Number of Common
 Shares Outstanding                           61,878        61,896
Basic and Diluted earnings
 per Common Share                              $1.76         $1.04
Cash Dividends per
 Common Share                                 $1.225        $1.215

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                4



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME



Twelve Months Ended September 30              1998          1997
                                                  (thousands)
ELECTRIC OPERATING REVENUES                 $944,160      $901,270

OPERATING EXPENSES
 Operation
   Fuel                                      143,088       140,415
   Purchased power                            67,423        57,810
   Other                                     193,859       188,843
 Maintenance                                  69,181        70,009
 Depreciation                                114,099       110,380
 Income taxes                                 80,839        63,514
 General taxes                                93,066        94,345
 Deferred Wolf Creek costs amortization            0         4,273
    Total                                    761,555       729,589

OPERATING INCOME                             182,605       171,681

OTHER INCOME AND (DEDUCTIONS)
 Allowance for equity funds
  used during construction                     3,370         2,605
 Miscellaneous income                         48,178        23,724
 Miscellaneous deductions                    (84,758)      (99,154)
 Income taxes                                 45,511        55,949
    Total                                     12,301       (16,876)

INCOME BEFORE INTEREST CHARGES               194,906       154,805

INTEREST CHARGES
 Long-term debt                               58,947        58,990
 Short-term debt                                 348         1,383
 Miscellaneous                                16,654         9,930
 Allowance for borrowed funds
  used during construction                    (2,266)       (2,407)
    Total                                     73,683        67,896

 Net Income                                  121,223        86,909
 Preferred Stock
  Dividend Requirements                        3,853         3,816
 Earnings Available for
  Common Stock                              $117,370       $83,093

Average Number of Common
 Shares Outstanding                           61,893        61,897
Basic and Diluted earnings
 per Common Share                              $1.90         $1.34
Cash Dividends per
 Common Share                                  $1.63         $1.62

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                5



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS



Year to Date September 30                       1998        1997
                                                   (thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                 $  111,807  $   67,144
 Adjustments to reconcile net income
  to net cash from operating activities:
 Depreciation                                   86,238      83,037
 Amortization of:
  Nuclear fuel                                  14,323      15,211
  Deferred Wolf Creek costs                          0       1,368
  Other                                          6,802       6,049
 Deferred income taxes (net)                       896     (10,168)
 Investment tax credit amortization             (3,433)     (3,170)
 Deferred merger costs                               0      (5,712)
 Kansas rate refund accrual                     11,174           0
 Allowance for equity funds used
   during construction                          (2,735)     (1,772)
 Other operating activities (Note 2)            36,375      25,881

  Net cash from operating activities           261,447     177,868

CASH FLOWS FROM INVESTING ACTIVITIES
 Utility capital expenditures                  (71,941)    (92,782)
 Allowance for borrowed funds used
   during construction                          (1,816)     (1,891)
 Purchases of investments                      (22,338)    (98,500)
 Purchases of nonutility property              (13,686)    (12,271)
 Sale of KLT Power                              53,033           0
 Sale of streetlights                                0      21,500
 Other investing activities                     (7,924)     (8,390)

  Net cash from investing activities           (64,672)   (192,334)

CASH FLOWS FROM FINANCING ACTIVITIES
 Issuance of mandatorily reedemable
   Preferred Securities                              0     150,000
 Issuance of long-term debt                     10,405      66,292
 Repayment of long-term debt                  (122,730)    (26,787)
 Net change in short-term borrowings             5,498         935
 Dividends paid                                (78,829)    (78,094)
 Other financing activities                     (2,736)     (9,413)

  Net cash from financing activities          (188,392)    102,933

NET CHANGE IN CASH AND CASH
      EQUIVALENTS                                8,383      88,467
CASH AND CASH EQUIVALENTS
      AT BEGINNING OF YEAR                      74,098      23,571
CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                          $82,481    $112,038

CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized)           $58,915     $56,562
Income taxes                                      $468          $0

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                6



KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS



Twelve Months Ended September 30                1998        1997
                                                   (thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                 $  121,223  $   86,909
 Adjustments to reconcile net income
  to net cash from operating activities:
 Depreciation                                  114,099     110,380
 Amortization of:
  Nuclear fuel                                  15,948      20,421
  Deferred Wolf Creek costs                          0       4,273
  Other                                          8,976       7,452
 Deferred income taxes (net)                    15,844     (19,438)
 Investment tax credit amortization             (4,113)     (4,227)
 Deferred storm costs                                0      (8,885)
 Deferred merger costs                           5,712      (5,712)
 Kansas rate refund accrual                     11,174           0
 Allowance for equity funds used
   during construction                          (3,370)     (2,605)
 Other operating activities (Note 2)             6,570       8,580

  Net cash from operating activities           292,063     197,148

CASH FLOWS FROM INVESTING ACTIVITIES
 Utility capital expenditures                 (103,893)   (117,105)
 Allowance for borrowed funds used
   during construction                          (2,266)     (2,407)
 Purchases of investments                      (31,441)   (118,305)
 Purchases of nonutility property              (17,148)    (17,286)
 Sale of KLT Power                              53,033           0
 Sale of streetlights                                0      21,500
 Other investing activities                     (8,436)     (4,876)

  Net cash from investing activities          (110,151)   (238,479)

CASH FLOWS FROM FINANCING ACTIVITIES
 Issuance of mandatorily redeemable
   Preferred Securities                              0     150,000
 Issuance of long-term debt                     10,405     176,292
 Repayment of long-term debt                  (124,775)    (46,787)
 Net change in short-term borrowings             5,806     (34,065)
 Dividends paid                               (104,777)   (104,096)
 Other financing activities                      1,872     (11,204)

  Net cash from financing activities          (211,469)    130,140

NET CHANGE IN CASH AND CASH
      EQUIVALENTS                              (29,557)     88,809
CASH AND CASH EQUIVALENTS
      AT BEGINNING OF PERIOD                   112,038      23,229
CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                          $82,481    $112,038

CASH PAID DURING THE PERIOD FOR:
Interest (net of amount capitalized)           $73,625     $63,459
Income taxes                                   $22,853     $17,605

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

                                7




KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


                                              Three Months Ended           Year to Date          Twelve Months Ended
                                                 September 30              September 30              September 30
                                              1998         1997         1998         1997         1998         1997
                                                                           (thousands)
                                                                                         
Net income                                $  58,885    $  58,147    $ 111,807    $  67,144    $ 121,223    $  86,909

Other comprehensive income (loss),
   net of tax:
     Net unrealized gain (loss) on
      securities available for sale          (2,293)          84       (1,238)      (1,315)      (4,472)      (1,769)

Comprehensive Income                      $  56,592    $  58,231    $ 110,569    $  65,829    $ 116,751    $  85,140

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.






CONSOLIDATED STATEMENTS OF RETAINED EARNINGS


                                              Three Months Ended           Year to Date          Twelve Months Ended
                                                 September 30              September 30              September 30
                                              1998         1997         1998         1997         1998         1997
                                                                            (thousands)
Beginning Balance                         $ 429,216    $ 412,890    $ 428,452    $ 455,934    $ 444,984    $ 462,171
Net Income                                   58,885       58,147      111,807       67,144      121,223       86,909
                                            488,101      471,037      540,259      523,078      566,207      549,080
Dividends Declared
  Preferred stock - at required rates           981          986        3,022        2,892        3,903        3,827
  Common stock                               25,690       25,067       75,807       75,202      100,874      100,269
Ending Balance                            $ 461,430    $ 444,984    $ 461,430    $ 444,984    $ 461,430    $ 444,984

The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.

8 KANSAS CITY POWER & LIGHT COMPANY Certain Forward-looking Information Statements made in this report which are not based on historical facts are forward-looking and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Any forward-looking statements are intended to be as of the date on which such a statement is made. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, we are providing the following important factors that could cause actual results to differ materially from provided forward-looking information. These important factors include: (a) the proposed Western Resources Inc. (Western Resources) merger (see Note 1 to the Consolidated Financial Statements); (b) future economic conditions in the regional, national and international markets; (c) state, federal and foreign regulation and possible additional reductions in regulated electric rates; (d) weather conditions; (e) financial market conditions, including, but not limited to changes in interest rates; (f) inflation rates; (g) increased competition, including, but not limited to, the deregulation of the United States electric utility industry, and the entry of new competitors; (h) ability to carry out marketing and sales plans; (i ) ability to achieve generation planning goals and the occurrence of unplanned generation outages; (j) nuclear operations; (k) ability to enter new markets successfully and capitalize on growth opportunities in nonregulated businesses; (l) unforeseen events that would prevent correction of internal or external information systems for Year 2000 problems, and (m) adverse changes in applicable laws, regulations or rules governing environmental (including air quality regulations), tax or accounting matters. This list of factors may not be all inclusive since it is not possible for us to predict all possible factors. Notes to Consolidated Financial Statements In management's opinion, the consolidated interim financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations for the interim periods presented. These statements and notes should be read in connection with the financial statements and related notes included in our 1997 annual report on Form 10-K. 1. AMENDED AND RESTATED PLAN OF MERGER WITH WESTERN RESOURCES Western Resources, Inc. (Western Resources) delivered an unsolicited exchange offer and an amended offer to KCPL's Board of Directors during the second quarter of 1996. After careful consideration, KCPL's Board of Directors rejected both offers. In July 1996 Western Resources commenced an exchange offer for KCPL Common Stock. In late 1996 KCPL began discussing a possible merger with Western Resources leading to a February 7, 1997 agreement. In December 1997 KCPL canceled its previously scheduled special meeting of shareholders to vote on the transaction because Western Resources advised KCPL that its investment bankers, Salomon Smith Barney, had indicated that it was unlikely that Salomon would be in a position to issue a fairness opinion for the merger transaction on the basis of the February 7, 1997 agreement. During 1997 KCPL incurred and deferred $7 million of merger-related costs that were expensed in December 1997. On March 18, 1998, KCPL and Western Resources entered into an Amended and Restated Agreement and Plan of Merger (Amended Agreement). This Amended Agreement provides for the combination of the regulated electric utilities of KCPL and Western Resources into Westar Energy, a new company, using purchase accounting. Westar Energy would be owned approximately 80.1% by Western Resources and approximately 19.9% by KCPL shareholders. At closing, KCPL shareholders would receive for every share of KCPL Common Stock one share of Westar Energy 9 Common Stock and a fraction of a share of Western Resources Common Stock worth not less than $21.50 and not more than $26.50 pursuant to a collar adjustment mechanism. The estimated trading value per share of Westar Energy Common Stock to be issued to KCPL shareholders in connection with the Amended Agreement was estimated to be in the range of $10 to $11 per share (as stated in the Joint Proxy Statement dated June 9, 1998). Since Westar Energy would be a newly formed entity with no trading history, there can be no assurance that Westar Energy would trade within the initial estimated range. On July 30, 1998, KCPL's and Western Resources' shareholders approved the Amended Agreement at special meetings of shareholders. The transaction is subject to several closing conditions, including approval by a number of regulatory and governmental agencies and verification that no sales or use tax is payable in connection with the proposed transactions. If the merger has not been closed by December 31, 1999, either party may terminate the Amended Agreement as long as they did not contribute to the delay. If Western Resources Index Price is less than or equal to $29.78 five trading days prior to closing, either party can terminate this Amended Agreement. Applications for regulatory approvals of the Amended Agreement have been filed with the Kansas Corporation Commission (KCC), the Missouri Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC). In the Kansas proceeding, the KCC set a procedural schedule that requires the KCC Staff and intervenors to file their testimony in the case by December 11, 1998. In the Missouri proceeding, a number of parties to the case filed a joint pleading on October 7, 1998, recommending a procedural schedule for the case. In that pleading, the MPSC Staff indicated that, in conjunction with the merger case, the MPSC Staff would review KCPL's earnings. In the FERC proceeding, the FERC Staff, on August 24, 1998, requested that the Companies amend their filing by providing additional analyses using updated information. Such revised information is in the process of being prepared. We cannot predict the timing or outcome of the proceedings. As part of the foregoing conditions, the obligation of Western Resources to effect the merger is subject to the following: (A) That the final orders are obtained from the various federal and state regulators on terms and conditions which would not have a material adverse effect on the benefits anticipated by Western Resources in the merger. In many utility mergers state regulators require a portion of savings from merger synergies to be allocated to customers as a condition for their approval of a transaction. Western Resources believes, and has discussed its position with KCPL, that in light of the rate reductions associated with the merger and already allocated to customers, any efforts by the relevant state regulators to seek further rate reductions would give Western Resources the right to trigger such condition. Western Resources and KCPL have each already implemented rate reductions in Kansas and Missouri. KCPL has (i) already implemented rate reductions to share anticipated merger synergies with customers in Missouri from its previously planned merger with UtiliCorp and (ii) entered into a stipulation in Kansas which states that the Kansas Commission staff and the Citizen's Utility Ratepayers Board will not request rate reductions or rate refunds from Western Resources, KCPL or their affiliates sooner than one year after consummation of the merger. Moreover, Western Resources believes that the rate reductions it has begun to implement in Kansas take into account synergies that are related to the merger. However, there is no assurance that the state regulators will not require Westar Energy to share additional merger-related synergies with customers or require rate reductions for other reasons in Missouri or Kansas as a condition to their approval of the merger or that Western Resources will waive this condition and consummate the merger if state regulators require additional rate reductions. (B) That Western Resources will be reasonably satisfied that it will be exempt from all of the provisions of the Public Utility Holding Company Act of 1935 (1935 Act) other than Section 9(a)(2) thereof. Western Resources seeks an exemption under section 3(a)(1) of the 1935 Act pursuant to 10 Rule 2. To qualify for an exemption under Section 3(a)(1) of the 1935 Act, Westar Energy must be predominantly intrastate in character and carry on its utility business substantially in the state in which both Westar Energy and Western Resources are incorporated, Kansas. As a result of the merger, Westar Energy will derive utility revenues from outside of the state of Kansas in an amount at the high-end of the range of out-of-state utility revenues of utility subsidiaries of holding companies that currently are exempt from the 1935 Act pursuant to Section 3(a)(1) and Rule 2. In the event that Western Resources determines prior to the consummation of the merger that an exemption under Section 3(a)(1) of the 1935 Act is not available, Western Resources must either (i) waive this condition and become a registered holding company under the 1935 Act or (ii) determine to assert that this condition has not been satisfied and choose not to consummate the merger. Although Western Resources anticipates that after the merger it will qualify for an exemption under Section 3(a)(1) of the 1935 Act pursuant to Rule 2, there is no assurance that the SEC will not challenge Western Resources' stated intention to file for an exemption pursuant to Rule 2 or that this condition will be satisfied. The Amended Agreement allows the KCPL Board discretion to make changes (including increases) in the KCPL Common Stock dividend consistent with past practice exercising good business judgment. On August 4, 1998, KCPL's Board approved an increase to the common stock dividend raising it to an annualized dividend of $1.66 per share from $1.62 per share. The Amended Agreement also requires KCPL to redeem all outstanding shares of cumulative preferred stock prior to consummation of the proposed transactions. If the Amended Agreement is terminated under certain other circumstances and KCPL, within two and one-half years following termination, agrees to consummate a business combination with a third party that made a proposal to combine prior to termination, a payment of $50 million will be due Western Resources. Under certain circumstances, if KCPL determines not to consummate its merger into Westar Energy due to its inability to receive a favorable tax opinion from its legal counsel, it must pay Western Resources $5 million. Western Resources will pay KCPL $5 million to $35 million if the Amended Agreement is terminated and all closing conditions are satisfied other than conditions relating to Western Resources receiving a favorable tax opinion from its legal counsel, favorable statutory approvals or an exemption from the Public Utility Holding Company Act of 1935. 2. CONSOLIDATED STATEMENTS OF CASH FLOWS - OTHER OPERATING ACTIVITIES Year to Date Twelve Months Ended 1998 1997 1998 1997 Cash flows affected by changes (thousands) in: Receivables $(34,992) $(16,478) $(17,541) $ (9,528) Fuel inventories (3,509) 3,121 (1,377) 3,584 Materials and supplies 1,917 340 2,332 (505) Accounts payable (3,669) (9,811) 8,092 (175) Accrued taxes 61,770 44,369 630 (4,250) Accrued interest (3,829) (3,192) 669 4,579 Wolf Creek refueling outage accrual 8,168 5,097 (2,446) 7,731 Pension and postretirement benefit obligations (1,478) (4,335) 612 (2,020) Other 11,997 6,770 15,599 9,164 Total $ 36,375 $ 25,881 $ 6,570 $ 8,580 3. ACCOUNTING CHANGES Change in Accounting Estimate In 1998 KCPL adopted the American Institute of Certified Public Accountants Statement of Position (SOP) 98-1 -- Accounting for the Costs of Computer Software Developed or Obtained For 11 Internal Use. KCPL was generally in conformance with this SOP prior to adoption in regards to external direct costs and interest costs incurred in the development of computer software for internal use. This SOP also provides that once the capitalization criteria of the SOP have been met, payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use computer software project should be capitalized. Costs capitalized in accordance with SOP 98-1 will be amortized on a straight-line basis over estimated service lives of 5 to 10 years. The effect of adopting SOP 98-1 for the nine-months ended September 30, 1998, is an increase of net income of approximately $2,200,000 ($0.04 per share). Comprehensive Income In 1998 KCPL adopted Financial Accounting Standards Board Statement No. 130 -- Reporting Comprehensive Income which establishes standards for reporting of comprehensive income and its components. 4. SECURITIES AVAILABLE FOR SALE Certain investments in equity securities are accounted for as securities available for sale and adjusted to market value with unrealized gains (or losses), net of deferred income taxes, reported as a separate component of comprehensive income and common stock equity. The cost of securities available for sale held by KLT Inc. (KLT), a wholly-owned subsidiary of KCPL, was $4.8 million as of September 30, 1998, and $5.1 million as of December 31, 1997. Unrealized gains were $0.7 million net of $0.4 million deferred income taxes, at September 30, 1998, decreasing from $1.9 million, net of $1.1 million deferred income taxes, at December 31, 1997. 5. CAPITALIZATION KCPL Financing I (Trust), a wholly-owned subsidiary of Kansas City Power & Light Company, has previously issued $150,000,000 of 8.3% preferred securities. The sole asset of the Trust is the $154,640,000 principal amount of 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037, issued by KCPL. In August 1998 KCPL refinanced the full amount of its Guaranty of Pollution Control Bonds with unsecured Environmental Improvement Revenue Refunding Bonds. The maturity dates of the Bonds were not extended. From October 1 through November 9, 1998, KLT's borrowings under its bank credit agreement increased $18 million. 6. INTANGIBLE ASSETS The application of purchase accounting for certain investments has resulted in about $19 million in goodwill recognition. These amounts are included in Other deferred charges and Investments and Nonutility Property on the consolidated balance sheets and are being amortized over 10 to 40 years. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS STATUS OF MERGER See Note 1 to the Consolidated Financial Statements as to the current status of the merger agreement with Western Resources Inc. (Western Resources) including the Amended and Restated Agreement and Plan of Merger (Amended Merger Agreement) dated March 18, 1998. In December 1996 the Federal Energy Regulatory Commission (FERC) issued a statement concerning electric utility mergers. Under the statement, companies must demonstrate that their merger does not adversely affect competition or wholesale rates. As remedies, FERC may consider a range of conditions including transmission upgrades, divestitures of generating assets or formation of independent system operators. REGULATION AND COMPETITION As competition develops throughout the electric utility industry, we are positioning Kansas City Power & Light Company (KCPL) to excel in an open market. We are improving the efficiency of KCPL's core utility operations, lowering prices and offering new services. In particular, value-added services for large energy users can include contracts for natural gas commodities. Competition in the electric utility industry was accelerated with the National Energy Policy Act of 1992. This Act gives FERC the authority to require electric utilities to provide transmission line access to independent power producers (IPPs) and other utilities (wholesale wheeling). KCPL, already active in the wholesale wheeling market, was one of the first utilities to receive FERC's approval of an open-access tariff for wholesale wheeling transactions. In April 1996 FERC issued an order requiring all owners of transmission facilities to adopt open-access tariffs and participate in wholesale wheeling. We have made the necessary filings to comply with that order. FERC's April 1996 order has encouraged more movement toward retail competition at the state level. An increasing number of states have already adopted open access requirements for utilities' retail electric service, allowing competing suppliers access to their retail customers (retail wheeling). Many other states are actively considering retail wheeling. In Kansas, the retail wheeling task force proposed a restructuring bill that would implement retail competition on July 1, 2001. Some of the key points included in the proposed bill are: 1) the Kansas Corporation Commission (KCC) will determine the amount of under-utilized assets (stranded costs) each utility is allowed to recover and 2) a unit charge per kwh will be assessed to all customers for recovery of competitive transition costs (these costs include stranded costs, other regulatory assets, nuclear decommissioning, etc.). In Missouri, a legislative committee has been formed to study the issue. The retail wheeling task force formed by the Missouri Public Service Commission (MPSC) issued its report in May 1998. The report identifies issues and various options for the legislature to address. No retail wheeling bill was passed in either the Kansas or Missouri legislatures in 1998. Competition through retail wheeling could result in market-based rates below current cost-based rates. This would provide growth opportunities for low-cost producers and risks for higher-cost producers, especially those with large industrial customers. Lower rates and the loss of major customers could result in stranded costs and place an unfair burden on the remaining customer base or shareholders. Testimony filed in the merger case in Kansas for KCPL indicated that stranded costs are approximately $1 billion. An independent study prepared at the request of the KCC concluded that there are no stranded costs. We cannot predict the extent that stranded costs 13 will be recoverable in future rates. If an adequate and fair provision for recovery of these lost revenues is not provided, certain generating assets may have to be evaluated for impairment and appropriate charges recorded against earnings. In addition to lower profit margins, market-based rates could also require generating assets to be depreciated over shorter useful lives, increasing operating expenses. Although Missouri and Kansas have not yet authorized retail wheeling, we believe KCPL is positioned well to compete in an open market with its diverse customer mix and pricing strategies. About 20% of KCPL's retail mwh sales are to industrial customers which is below the utility industry average. KCPL has a flexible rate structure with industrial rates that are competitively priced with other companies in the region. In addition, long-term contracts are in place or under negotiation for a large portion of KCPL's industrial sales. Although there currently is no direct competition for retail electric service within KCPL's service territory, it does exist within the bulk power market, between alternative fuel suppliers and among third-party energy management companies. Third-party energy management companies are seeking to initiate relationships with large users in an attempt to enhance their chances to directly supply electricity if retail wheeling is authorized. Increased competition could also force utilities to change accounting methods. Financial Accounting Standards Board (FASB) Statement No. 71 - Accounting for Certain Types of Regulation, applies to regulated entities whose rates are designed to recover the costs of providing service. An entity's operations could stop meeting the requirements of FASB 71 for various reasons, including a change in regulation or a change in the competitive environment for a company's regulated services. For those operations no longer meeting the requirements of regulatory accounting, regulatory assets would be written off. KCPL's regulatory assets, totaling $150 million at September 30, 1998, will be maintained as long as FASB 71 requirements are met. It is possible that competition could eventually have a materially adverse affect on KCPL's results of operations and financial position. Should competition eventually result in a significant charge to equity, capital costs and requirements could increase significantly. NONREGULATED OPPORTUNITIES KLT Inc. (KLT) is a wholly-owned subsidiary pursuing nonregulated business ventures. On July 31, 1998, KLT sold 100% of the common stock of KLT Power Inc., a wholly-owned subsidiary of KLT, resulting in an after-tax gain of approximately $2.4 million. Remaining ventures include investments in domestic and China power production, energy services, oil and gas development and production, telecommunications, telemetry technology and affordable housing limited partnerships. KCPL had a total equity investment in KLT of $119 million as of September 30, 1998. KLT's net income for the nine-months ended September 30, 1998, totaled $9.0 million compared to $2.7 million for the nine-months ended September 30, 1997. KLT's consolidated assets at September 30, 1998, totaled $302 million. On May 29, 1998, Home Service Solutions Inc. (HSS), a wholly- owned subsidiary of KCPL, entered into a stock purchase agreement to obtain a 50% interest in R.S. Andrews Enterprises, Inc. (RSAE), a consumer services company in Atlanta, Georgia. RSAE expects to make future acquisitions in other key U.S. markets. On August 28, 1998, HSS formed Worry Free, Inc. to acquire the Worry Free non-regulated business from KCPL. As a residential service provider, Worry Free, Inc. bundles financing, preventative maintenance and warranty services for heating and 14 air conditioning equipment. KCPL had a total equity investment in Home Service Solutions Inc. of $21 million as of September 30, 1998. The growth of KLT and the investment in RSAE by HSS account for most of the increase in KCPL's consolidated investments and nonutility property. RESULTS OF OPERATIONS Three-month Three months ended September 30, 1998, period: compared with three months ended September 30, 1997 Nine-month Nine months ended September 30, 1998, period: compared with nine months ended September 30, 1997 Twelve-month Twelve months ended September 30, 1998, period: compared with twelve months ended September 30, 1997 EARNINGS OVERVIEW Earnings Per Share (EPS) For the Periods Ended September 30 Increase excluding Merger Merger 1998 1997 Increase Expenses Expenses Three months $0.94 $0.92 $0.02 $(0.09) $0.11 ended Nine months $1.76 $1.04 $0.72 $ 0.33 $0.39 ended Twelve months $1.90 $1.34 $0.56 $ 0.26 $0.30 ended EPS for all periods excluding merger expenses increased primarily due to increases in retail sales because of warmer than normal weather and continued load growth. Additionally, EPS for all periods increased due to increased bulk power revenues. Partially offsetting these increases to EPS are the effects of increased fuel production costs and purchased power expenses as a result of outages at the Hawthorn 5 and LaCygne 1 generating units (see the Fuel and Purchased Power section). Growth in subsidiary income increased EPS for the three-month period by $0.07, the nine-month period by $0.10 and the twelve-month period by $0.18. EPS for the three-month period was reduced by $0.04 because of the implementation of rate reductions approved by the KCC effective January 1, 1998. EPS for the nine- and twelve-month periods was reduced by $0.11 because of the KCC rate reductions. EPS for the nine- and twelve-month periods was also reduced by increased interest expense related to the mandatorily redeemable preferred securities and increased depreciation expense. Merger expenses for the three-months ended September 30, 1998, were $5.8 million ($0.09 per share). Merger expenses for the nine- months ended September 30, 1998, were $12.0 million ($0.19 per share). During the nine-months ended September 30, 1997, KCPL paid $53 million ($0.52 per share) to UtiliCorp United Inc. (UtiliCorp) for terminating the merger agreement with UtiliCorp and announcing an agreement to combine with Western Resources. Merger expenses for the twelve-months ended September 30, 1998, reduced EPS by $0.26. For the twelve-months ended September 30, 1997, EPS was reduced by $0.52 for the payment to UtiliCorp. Costs to 15 implement the new merger structure with Western Resources announced March 18, 1998, are being expensed as incurred. MEGAWATT-HOUR (MWH) SALES AND OPERATING REVENUES Sales and revenue data: (revenue change in millions) Periods ended September 30, 1998 versus September 30, 1997 Three Months Nine Months Twelve Months Mwh Revenues Mwh Revenues Mwh Revenues Increase (decrease) Retail Sales: Residential 13 % $ 14 11 % $ 27 11 % $ 31 Commercial 7 % 8 7 % 18 6 % 21 Industrial 2 % 2 5 % 4 3 % 4 Other 10 % - 10 % (4) 6 % (6) KS rate refund accrual (4) (11) (11) Total Retail 8 % 20 8 % 34 7 % 39 Sales for Resale: Bulk Power Sales (13)% 3 13 % 13 (11)% 2 Other 12 % - 13 % - 16 % - Total 23 47 41 Other revenues - 1 2 Total Operating Revenues $ 23 $ 48 $ 43 The KCC approved a settlement agreement, effective January 1, 1998, authorizing a $14.2 million revenue reduction and an increase in depreciation expense of $2.8 million. When the KCC approves a new rate design, which is expected to be implemented February 1, 1999, KCPL will refund the amount that has accrued between January 1, 1998, and the implementation date. Recorded revenues for the three-month period are reduced by about $4 million and the nine- and twelve-month periods are reduced by about $11 million as a result of an accrual (recorded in Other in Current Liabilities on the Consolidated Balance Sheet) for this rate refund. Higher summer rates, which are in effect from June through September, and seasonally higher mwh sales in September 1998 versus December 1997 resulted in a higher customer accounts receivable balance at September 30, 1998, compared with December 31, 1997. Warmer than normal weather and continued load growth resulted in an increase in retail mwh sales for all periods. Load growth consists of higher usage-per-customer as well as the addition of new customers. In addition, retail mwh sales during the nine- and twelve-months ended September 30, 1997, reflected reduced sales to a major industrial customer because of a strike by its employees. For the three-month period, Other retail revenues remained approximately the same and for the nine- and twelve-month periods Other retail revenues decreased while Other retail mwh sales increased for all periods. These differences are due to the sale of the public streetlight system to the City of Kansas City, Missouri in August 1997. The rate per mwh paid by the city was reduced as a result of the sale agreement, as the new rate is for electricity only. The city has entered into a separate maintenance agreement with KCPL. 16 On August 19, 1998, KCPL set a record peak demand for the consumption of energy of 3,175 megawatts. This reflects the higher than normal megawatt demand on the system during the summer of 1998. KCPL has long-term sales contracts with certain major industrial customers. These contracts are tailored to meet customers' needs in exchange for their long-term commitment to purchase energy. Bulk power sales vary with system requirements, generating unit and purchased power availability, fuel costs and the requirements of other electric systems. For all periods, the price per mwh of bulk power sales increased and even resulted in increased revenues for the three- and twelve-month periods even though mwh sales decreased. Outages at the LaCygne 1 and 2 generating units in the second quarter of 1997 contributed to lower bulk power sales in the nine- and twelve- months ended September 30, 1997. Total revenue per mwh sold varies with changes in rate tariffs, the mix of mwh sales among customer classifications and the effect of declining price per mwh as usage increases. An automatic fuel adjustment provision is included only in sales that apply to less than 1% of revenues. Future mwh sales and revenues per mwh will also be affected by national and local economies, weather and customer conservation efforts. Competition, including alternative sources of energy such as natural gas, co-generation, IPPs and other electric utilities, may also affect future sales and revenue. FUEL AND PURCHASED POWER Combined fuel and purchased power expenses for the three-month period increased 27% while total mwh sales (total of retail and sales for resale) increased 5%. Combined fuel and purchased power expenses for the nine-month period increased 11% while total mwh sales increased 9%. Combined fuel and purchased power expenses for the twelve-month period increased 6% while total mwh sales increased 3%. The differences are due mainly to additional replacement power expenses incurred during the three-, nine- and twelve-months ended September 30, 1998, due to outages at the Hawthorn 5 and LaCygne 1 generating units. Additionally, the per unit cost of generation increased during all periods as a result of more generation from oil and gas which are substantially higher in cost per MMBTU than coal or nuclear. The price per unit of purchased power also increased during all periods due to less purchased power availability and the widespread use of market-based rates in the competitive wholesale market. Partially offsetting these factors, the nine- and twelve- months ended September 30, 1997, included additional replacement power costs incurred during outages at the LaCygne generating units. Nuclear fuel costs per MMBTU decreased 6% for the twelve-month period. Nuclear fuel costs per MMBTU remain substantially less than the MMBTU price of coal averaging 60% of the MMBTU price of coal for the twelve-months ended September 30, 1998 and 1997. We expect this relationship and the price of nuclear fuel to remain fairly constant through the year 2001. For the twelve-months ended September 30, 1998, fossil plants represented about 76% of generation and the nuclear plant about 24%. For the twelve-months ended September 30, 1997, fossil plants represented about 70% of generation and the nuclear plant about 30%. The twelve-months ended September 30, 1998, reflected a higher percentage of total generation by the fossil plants due mainly to the fall 1997 refueling and maintenance outage at Wolf Creek that lasted for 58 days in the fourth quarter of 1997. Additionally, the outages at the LaCygne coal-fired generating units in 1997 17 reduced the percentage of total generation by the fossil plants for the twelve-months ended September 30, 1997. The MMBTU price of coal decreased 6% for the twelve-month period. Our coal procurement strategies continue to provide coal costs well below the regional average. We expect coal costs to remain fairly consistent with current levels through 2001. OTHER OPERATION AND MAINTENANCE EXPENSES Combined other operation and maintenance expenses for all periods increased. The three-month period increased due to increased maintenance expenses resulting from outages at LaCygne 1 and Hawthorn 5 during the three-months ended September 30, 1998. Repairs to Hawthorn 5 to fix the damage from a steam line rupture will be reimbursed by insurance except for the deductible. Certain maintenance projects originally scheduled for the 1999 spring outage were rescheduled to be completed during this outage resulting in higher maintenance expenses in 1998. Other operation expenses increased for the nine-month period but were partially offset by decreased maintenance expenses as outages at the LaCygne 1 and 2 generating units resulted in additional maintenance expenses in the nine-months ended September 30, 1997. Combined other operation and maintenance expenses for the twelve-month period increased due largely to increases in other power supply expenses, Wolf Creek non-fuel operations, customer service expenses and sales expenses. We continue to emphasize new technologies, improved work methodologies and cost control. We are continuously improving our work processes to provide increased efficiencies and improved operations. Through the use of cellular technology, a majority of customer meters are read automatically. DEPRECIATION The increase in depreciation expense for all periods reflects the implementation of the KCC settlement agreement and normal increases in depreciation from capital additions. TAXES The increase in operating income taxes for all periods reflects higher taxable operating income. Additionally, for the twelve-months ended September 30, 1997, income taxes had been reduced to reflect adjustments for the filing of the 1995 tax returns and the settlement with the Internal Revenue Service regarding tax issues included in the 1985 through 1990 tax returns. Components of general taxes: Three Months Nine Months Twelve Months Ended Ended Ended September 30 September 30 September 30 1998 1997 1998 1997 1998 1997 (thousands) Property $10,508 $11,235 $31,525 $33,704 $41,350 $44,125 Gross receipts 14,472 13,824 32,922 31,764 42,006 41,227 Other 2,954 2,589 7,688 6,898 9,710 8,993 Total $27,934 $27,648 $72,135 $72,366 $93,066 $94,345 18 Property taxes decreased for all periods reflecting changes in Kansas tax law which reduced the mill levy rates and because of reductions in Missouri and Kansas property tax assessed valuations. Gross receipts taxes increased for all periods reflecting higher billed Missouri revenues. OTHER INCOME AND (DEDUCTIONS) Miscellaneous income for the nine- and twelve-month periods increased because of increased revenues from non-utility and subsidiary operations. The gain on the sale of 100% of the common stock of KLT Power Inc., dividends on the investment in a fossil-fuel generator in Argentina (prior to the sale of the investment), revenues from an energy services subsidiary in which KLT obtained a controlling interest during 1997 and increased oil and gas production contributed to the increase in miscellaneous income from subsidiary operations for the nine- and twelve-month periods. Miscellaneous deductions for all periods included increased non- utility expenses. Additionally, the nine- and twelve-month periods increased because of increased subsidiary operating costs. Increased gas operations and the inclusion of three small companies in which KLT obtained controlling interests during 1997 are the primary activities that contributed to the increase in subsidiary operating costs. Miscellaneous deductions for the nine- and twelve-month periods decreased primarily due to the $53 million payment to UtiliCorp in the prior periods. During the nine-months ended September 30, 1998, $12 million of merger expenses were incurred related to the Amended Merger Agreement with Western Resources. The twelve-months ended September 30, 1998, includes an additional $7 million of merger expenses related to the original merger agreement with Western Resources. Income taxes for all periods reflect the tax impact of the excess of miscellaneous deductions over miscellaneous income. Additionally, during the first nine months of 1998 and 1997 we accrued tax credits of $19 million and $16 million, respectively, or three-fourths of the total expected annual credits, related to affordable housing partnership investments and oil and gas investments. Non-taxable increases in the cash surrender value of corporate-owned life insurance contracts and certain non-deductible expenses also affected the relationship between net miscellaneous income and deductions and income taxes. INTEREST CHARGES The increase in miscellaneous interest charges for the nine- and twelve-month periods is primarily due to interest costs incurred on the $150 million of 8.3% preferred securities issued in April 1997. We use interest rate swap and cap agreements to limit the volatility in interest expense on a portion of KLT's variable-rate, bank credit agreement and KCPL's variable-rate, long-term debt. Although these agreements are an integral part of our interest rate management, their incremental effect on interest expense and cash flows is not significant. We do not use derivative financial instruments for speculative purposes. WOLF CREEK Wolf Creek is one of KCPL's principal generating units representing about 16% of its accredited generating capacity. The plant's operating performance has remained strong, contributing about 26% of the annual mwh generation while operating at an average capacity of 19 88% over the last three years. It has the lowest fuel cost per MMBTU of any of KCPL's generating units. The incremental operating, maintenance and replacement power costs for planned outages are accrued evenly over the unit's operating cycle, normally 18 months. As actual outage expenses are incurred, the refueling liability and related deferred tax asset are reduced. Wolf Creek's ninth refueling and maintenance outage, budgeted for 35 days, began in early October 1997 and was completed in December 1997 (58 days). The extended length of the ninth outage was caused by several equipment problems. The extended length of the outage was the primary reason for a $7 million increase in Wolf Creek related replacement power and operating and maintenance expenses for the twelve-month period. Wolf Creek's tenth refueling and maintenance outage is scheduled for the spring of 1999 and is estimated to be a 40- day outage. Currently, no major equipment replacements are expected. An extended shut-down of Wolf Creek could have a substantial adverse effect on KCPL's business, financial condition and results of operations. Higher replacement power and other costs would be incurred as a result. Although not expected, an unscheduled plant shut-down could be caused by actions of the Nuclear Regulatory Commission reacting to safety concerns at the plant or other similar nuclear units. If a long-term shut-down occurred, the state regulatory commissions could consider reducing rates by excluding the Wolf Creek investment from rate base. Ownership and operation of a nuclear generating unit exposes KCPL to risks regarding the cost of decommissioning the unit at the end of its life and to potential retrospective assessments and property losses in excess of insurance coverage. ENVIRONMENTAL MATTERS KCPL's policy is to act in an environmentally responsible manner and use the latest technology available to avoid and treat contamination. We continually conduct environmental audits designed to ensure compliance with governmental regulations and detect contamination. However, these regulations are constantly evolving; governmental bodies may impose additional or more rigid environmental regulations that could require substantial changes to operations or facilities. The Clean Air Act Amendments of 1990 contain two programs significantly affecting the utility industry. KCPL has spent about $5 million for the installation of continuous emission monitoring equipment to satisfy the requirements under the acid rain provision. The other utility-related program calls for a study of certain air toxic substances which has now been completed. Based on the interpretation of this study, regulation of these substances, including mercury, could be required. We cannot predict the likelihood of any such regulations or compliance costs. In July 1997 the United States Environmental Protection Agency (EPA) published new air quality standards for particulate matter. Additional regulations implementing these new particulate standards have not been finalized. Without the implementation regulations, the real impact of the standards on KCPL cannot be determined. However, the impact on KCPL and other utilities that use fossil fuels could be substantial. Under the new fine particulate regulations the EPA is in the process of implementing a three-year study of fine particulate emissions. Until this testing and review period has been completed, KCPL cannot determine additional compliance costs, if any, associated with the new particulate regulations. 20 In 1997 the EPA also issued new proposed regulations on reducing nitrogen oxide (NOx) emissions. Final regulations implementing reductions in NOx emissions were announced by the EPA on September 24, 1998. These regulations require 22 states, including Missouri, to submit plans for controlling NOx emissions by September 1999. The regulations will require a significant reduction in NOx emissions from 1990 levels from KCPL's Missouri coal-fired plants by the year 2003. In order to achieve these reductions, KCPL will incur significantly higher capital costs or will purchase power or NOx emissions allowances. It is possible that purchased power or emissions allowances may be too costly or unavailable. Preliminary analysis of the regulations indicate that selective catalytic reduction technology will be required for some of the KCPL units, as well as other changes. Currently, KCPL estimates that additional capital expenditures to comply with these regulations could range from $90 to $150 million over the period from 1999 to 2002. Operations and maintenance expenses could also increase by more than $10 million per year, beginning in 2003. We will continue to refine these preliminary estimates and explore alternatives to comply with these new regulations in order to minimize, to the extent possible, KCPL's capital costs and operating expenses. The ultimate cost of these regulations could be significantly different than the amounts estimated above. KCPL will continue to question whether such significant reductions in NOx emissions are economically justified. The final resolution of this matter may require federal legislative action or litigation. At a December 1997 meeting in Kyoto, Japan, the Clinton Administration supported changes to the International Global Climate Change treaty which would require a seven percent reduction in United States carbon dioxide (CO2) emissions below 1990 levels. President Clinton has stated that this change in the treaty will not be submitted to the U.S. Senate at this time where ratification is uncertain. If future national restrictions on electric utility CO2 emissions are eventually required, the financial impact upon KCPL could be substantial. IMPACT OF THE YEAR 2000 ISSUE The Year 2000 Issue is the result of computer programs using two digits instead of four digits to define the applicable year. Computer programs with date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations. In our ongoing assessment of the Year 2000 Issue, we have been examining KCPL's systems, processes and operations to ensure readiness for the year 2000 and plan for the protection of the KCPL electric system. We have determined that it is necessary to modify or replace some of KCPL's hardware and internal software so that its systems will properly utilize dates beyond December 31, 1999. We believe that with the planned modifications and conversions of KCPL's hardware and software, Year 2000 problems will be minimized. We are utilizing both internal and external resources, as necessary, to address the Year 2000 Issue. We have substantially completed the inventory and assessment phases of our Year 2000 project. The remediation and testing phases of the project are in process and we expect to be substantially complete with the remediation phase by July 1999 and with the testing phase prior to the end of 1999. The monitoring phase of our Year 2000 project will continue through at least the first quarter of 2000. For the past several years, KCPL has made approximately $39 million in capital investments for new and innovative technologies that place it in a stronger competitive position for the future. We believe all replacement systems will be Year 2000 ready. As a result, the cost of the Year 2000 project has been lessened and is estimated to be under $7 million of additional costs. These additional costs are being expensed as incurred. However, there is no guarantee that current cost 21 estimates of the Year 2000 project will not be exceeded. Specific factors that might cause costs to exceed estimates include, but are not limited to, the availability and cost of appropriately trained personnel, the ability to locate and correct all relevant computer codes, the ability to locate and replace non-Year 2000 ready embedded microprocessors and similar uncertainties. A Nuclear Regulatory Commission (NRC) audit of the Wolf Creek nuclear generating unit's Year 2000 program is scheduled for the week beginning November 19, 1998. To date, we believe we are in compliance with the NRC's Year 2000 regulations including being on schedule to meet the July 1, 1999, deadline for a written response confirming Year 2000 state of readiness. We have initiated formal communications with all of KCPL's large suppliers and customers to evaluate KCPL's vulnerability to those third parties' failure to remediate their own Year 2000 Issue. However, there is no guarantee that third party systems on which KCPL's systems rely will be timely converted, or that a failure to convert, or a conversion that is incompatible with KCPL's systems, would not have a material adverse effect on KCPL. Contingency plans are being developed for critical suppliers to minimize the affect of third party failures. KCPL's electrical system is included in the Eastern Interconnection that connects utilities throughout the United States and Canada, east of the Rocky Mountains. The interconnection is essential to the reliability, stability and operational integrity of each connected electric utility. Failure of electric facilities due to the millennium change could affect the interconnection and, if severe, could result in electric service disruptions. KCPL could encounter difficulties supplying electric service if other utilities in the interconnected grid fail to achieve Year 2000 compliance. Recognizing this risk, we are preparing operating contingency plans to protect KCPL's customers and equipment. KCPL's existing emergency procedures for start up after system blackout and its load reduction and restoration procedures will be reviewed and updated. We are evaluating the possibility of forming one or more "islands" to protect a portion of KCPL's system from disruptions and if needed, to provide electricity to assist in the restoration of its system. Alternatives developed during contingency planning will be tested, where feasible, prior to their use. Additionally, we are working with other electric industry organizations, such as the Electric Power Research Institute, to share Year 2000 information. KCPL will also be participating in the operating contingency plans and drills developed by the Southwest Power Pool and the North American Electric Reliability Council. PROJECTED CONSTRUCTION EXPENDITURES On November 3, 1998, KCPL's Board of Directors approved a plan to increase generation capacity to help ensure that KCPL will be able to meet future load demands of its customers. This plan could result in approximately $58 million of additional capital expenditures in 1999 with additional costs in later years, unless we enter into operating leases to obtain the capacity. CAPITAL REQUIREMENTS AND LIQUIDITY As of November 9, 1998, the liquid resources of KCPL included cash flows from operations; $300 million of registered but unissued, unsecured medium-term notes; $150 million of registered but unissued, preferred securities and $281 million of unused bank lines of credit. The unused lines consisted of KCPL's short-term bank lines of credit of $210 million and KLT's bank credit agreement of $71 million. KCPL continues to generate positive cash flows from operating activities although individual components of working capital items will vary with normal business cycles and operations including the timing of receipts and payments. Cash from operating activities increased for the nine- and 22 twelve-month periods primarily due to increased net income during the current periods, additional income taxes deferred and Kansas rate refund accrued but not refundable until 1999. Additionally, the timing of the Wolf Creek outage affects the refueling outage accrual, deferred income taxes and amortization of nuclear fuel. The increase in accrued taxes from December 31, 1997, to September 30, 1998, mainly reflects the increase in taxable income during the first nine months of 1998, refunds of federal and state income taxes after the 1997 tax returns were filed and the timing of income tax and property tax payments. Coal inventory levels at the end of September 1998 are at approximately 100% of targeted levels compared to 75% of targeted levels at December 31, 1997. Cash used for investing activities varies with the timing of utility capital expenditures and purchases of investments and nonutility properties. Cash used for investing activities decreased for the nine- and twelve-month periods, partially due to $53 million of proceeds from the July 31, 1998, sale of 100% of the common stock of KLT Power Inc. Additionally, KLT made several large investments during the first three months of 1997. Partially offsetting these activities, the nine- and twelve-months ended September 30, 1997, reflect $21.5 million of proceeds from the sale of streetlights to the City of Kansas City, Missouri at a minimal gain. Cash used for financing activities for the nine- and twelve- months ended September 30, 1998, was primarily for repayment of long- term debt by KCPL and KLT and for dividend payments by KCPL. The proceeds from the sale of 100% of the common stock of KLT Power Inc. were primarily used by KLT for repayment of borrowings under its bank credit agreement. The majority of cash from financing activities for the nine- and twelve-months ended September 30, 1997, was used to repay short-term debt, pay merger expenses and finance additional purchases of investments and nonutility properties by KLT. Financings consisted of KCPL Financing 1, a wholly-owned subsidiary of KCPL, issuance of $150 million of preferred securities and borrowings by KLT on its bank credit agreement. KCPL's common dividend payout ratio was 86% for the twelve-months ended September 30, 1998, and 121% for the twelve-months ended September 30, 1997. The ratio for the twelve-months ended September 30, 1997, is higher due mainly to the reduction in earnings because of significant merger-related expenses. We expect to meet day-to-day operations, utility construction requirements and dividends with internally-generated funds. Uncertainties affecting KCPL's ability to meet these requirements with internally-generated funds include the effect of inflation on operating expenses, the level of mwh sales, regulatory actions, compliance with future environmental regulations and the availability of generating units. The funds needed for the retirement of $346 million of maturing debt through the year 2002 will be provided from operations, refinancings or short-term debt. KCPL might issue additional debt and/or additional equity to finance growth or take advantage of new opportunities. 23 PART II - OTHER INFORMATION Item 3. Legal Proceedings In Kansas City Power & Light Co. v. Western Resources, Inc., et al . (previously discussed in the Company's Form 10-K for the year ended December 31, 1997), the United States Court of Appeals for the Eight Circuit, on July 6, 1998, awarded approximately $500,000 in attorneys' fees and related expenses to Manson, an intervenor. The Company and Manson have both appealed the award. Manson has withdrawn his original appeal filed on September 23, 1997. The appeals regarding attorneys' fees are all that remain of this litigation. State of Missouri ex rel. Inter-City Beverage Co., Inc., et al. vs. The Public Service Commission of the State of Missouri, et al.; and Jewish Community Campus of Greater Kansas City, Inc. vs. Kansas State Corporation Commission et al . (previously discussed in the Company's Form 10-Q for the quarter ended March 31, 1998) were dismissed by the Missouri Court of Appeals, Western District (transfer to the Missouri Supreme Court was denied) and the Kansas Court of Appeals respectively. Complainants in these two cases have exhausted all judicial remedies. Item 4. Submission of Matters to A Vote of Security Holders. The Company held a Special Meeting of Shareholders on July 30, 1998, to vote on matters relating to the proposed merger of the Company, Western Resources, Inc., Kansas Gas and Electric Company, NKC, Inc. (to be renamed Westar Energy), and the merger of KCPL with and into Westar Energy. At that meeting, votes cast with respect to the approval and adoption of the Amended and Restated Agreement and Plan of Merger dated as of March 18, 1998, were as follows: FOR AGAINST ABSTAIN 46,005,335 2,444,476 531,913 With respect to the approval of granting discretionary power to adjourn or postpone the Special Meeting to solicit additional votes for Item 1, the votes case were as follows: FOR AGAINST ABSTAIN 38,087,360 9,948,578 945,786 Item 5. Other Information Shareholder Proposals. Shareholder proposals intended to be presented at the KCPL 1999 Annual Meeting of Shareholders must be received at the Corporate Secretary's Office at the Company's principal office, 1201 Walnut, Kansas City, Missouri 64106-2124, on or before December 11, 1998, for consideration for inclusion in the proxy statement and form of proxy relating to that meeting. If a shareholder intends to bring a matter before the 1999 Annual Meeting, other than by submitting a proposal for inclusion in the Company's proxy statement for that meeting, the 24 shareholder must give timely notice according to the Company's By-laws. To be timely, a shareholder's notice must be received by the Corporate Secretary's Office at the Company's principal office, 1201 Walnut, Kansas City, Missouri 64106, not less than sixty (60) days nor more than ninety (90) days prior to the date of the Annual Meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the meeting is given to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. To be in proper written form, a shareholder's notice must set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the shareholder's name and record address, (iii) the class and number of shares of Company stock the shareholder owns beneficially or of record, (iv) a description of all arrangements or understandings between the shareholder and any other person or persons (including their names) in connection with the proposal of such business by the shareholder, and any material interest of the shareholder in such business, and (v) the shareholder's representation that they intend to appear in person or by proxy at the annual meeting to bring such business before the meeting. New President. The Board of Directors of the Company on November 3, 1998, elected Bernard J. Beaudoin as President and member of the Board effective January 1, 1999. Mr. Beaudoin, who joined the Company in 1980, is currently Executive Vice President and Chief Financial Officer. Item 6. Exhibits and Reports on Form 8-K. Exhibits Exhibit 10(a) Credit Agreement dated as of August 11, 1998, among Kansas City Power & Light Company, Certain Lenders, The First National Bank of Chicago and NationsBank, N.A. Exhibit 10(b) Railcar Lease dated as of September 8, 1998, with CCG Trust Corporation. Exhibit 27 Financial Data Schedule (for the nine months ended September 30, 1998). Reports on Form 8-K No reports on Form 8-K were filed with the Securities and Exchange Commission for the quarter ended September 30, 1998. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. KANSAS CITY POWER & LIGHT COMPANY Dated: November 9, 1998 By: /s/Drue Jennings (Drue Jennings) (Chief Executive Officer) Dated: November 9, 1998 By: /s/Neil Roadman (Neil Roadman) (Principal Accounting Officer)


                                        Exhibit 10(a)


                      CREDIT AGREEMENT

                         Arranged by

             FIRST CHICAGO CAPITAL MARKETS, INC.

                 Dated as of August 11, 1998

                            among

             KANSAS CITY POWER & LIGHT COMPANY,

                      CERTAIN LENDERS,
                              
             THE FIRST NATIONAL BANK OF CHICAGO,

                   as Administrative Agent

                             and

                     NATIONSBANK, N.A.,

                   as Documentation Agent



                      TABLE OF CONTENTS
                                                                        Page
ARTICLE I
DEFINITIONS                                                              1

ARTICLE II
THE CREDITS                                                             10
        2.1.  Commitment                                                10
        2.2.  Required Payments; Termination                            10
        2.3.  Ratable Loans                                             10
        2.4.  Types of Advances                                         10
        2.5.  Commitment Fee; Reductions in Aggregate Commitment        10
        2.6.  Minimum Amount of Each Advance                            11
        2.7.  Optional Principal Payments                               11
        2.8.  Method of Selecting Types and Interest Periods
              for New Advances                                          11
        2.9.  Conversion and Continuation of Outstanding Advances       11
        2.10. Changes in Interest Rate, etc.                            12
        2.11. Rates Applicable After Default                            12
        2.12. Method of Payment                                         13
        2.13. Noteless Agreement; Evidence of Indebtedness              13
        2.14. Telephonic Notices                                        14
        2.15. Interest Payment Dates; Interest and Fee Basis            14
        2.16. Notification of Advances, Interest Rates, Prepayments
              and Commitment Reductions                                 14
        2.17. Lending Installations                                     15
        2.18. Non-Receipt of Funds by the Administrative Agent          15 
        2.19. Extension of Facility Termination Date                    15

ARTICLE III
YIELD PROTECTION; TAXES                                                 16
        3.1.  Yield Protection                                          16
        3.2.  Changes in Capital Adequacy Regulations                   16
        3.3.  Availability of Types of Advances                         17
        3.4.  Funding Indemnification                                   17
        3.5.  Taxes                                                     17
        3.6.  Lender Statements; Survival of Indemnity                  19

ARTICLE IV
CONDITIONS PRECEDENT                                                    19
        4.1.  Initial Advance                                           19
        4.2.  Each Advance                                              20

                                Page i



ARTICLE V
REPRESENTATIONS AND WARRANTIES                                          21
        5.1.  Existence and Standing                                    21
        5.2.  Authorization and Validity                                21
        5.3.  No Conflict; Government Consent                           22
        5.4.  Financial Statements                                      22
        5.5.  Material Adverse Change                                   22
        5.6.  Taxes                                                     22
        5.7.  Litigation and Contingent Obligations                     22
        5.8.  ERISA                                                     23
        5.9.  Accuracy of Information                                   23
        5.10. Regulation U                                              23
        5.11. Material Agreements                                       23
        5.12. Compliance With Laws                                      23
        5.13. Ownership of Properties                                   23
        5.14. Plan Assets; Prohibited Transactions                      24
        5.15. Environmental Matters                                     24
        5.16. Investment Company Act                                    24
        5.17. Public Utility Holding Company Act                        24
        5.18. Pari Passu Indebtedness                                   24
        5.19. Year 2000 Problem                                         24

ARTICLE VI
COVENANTS                                                               24
        6.1.  Financial Reporting                                       25
        6.2.  Use of Proceeds                                           26
        6.3.  Notice of Default                                         26
        6.4.  Conduct of Business                                       26
        6.5.  Taxes                                                     26
        6.6.  Insurance                                                 26
        6.7.  Compliance with Laws                                      27
        6.8.  Maintenance of Properties                                 27
        6.9.  Inspection                                                27
        6.10. Consolidations, Mergers and Sale of Assets                27
        6.11. Liens                                                     28
        6.12. Affiliates                                                29

ARTICLE VII
DEFAULTS                                                                30

ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES                          31
        8.1.  Acceleration                                              31
        8.2.  Amendments                                                32

                                Page ii



       8.3.   Preservation of Rights                                     32

ARTICLE IX
GENERAL PROVISIONS                                                      33
       9.1.   Survival of Representations                               33
       9.2.   Governmental Regulation                                   33
       9.3.   Headings                                                  33
       9.4.   Entire Agreement                                          33
       9.5.   Several Obligations; Benefits of this Agreement           33
       9.6.   Expenses; Indemnification                                 33
       9.7.   Numbers of Documents                                      34
       9.8.   Accounting                                                34
       9.9.   Severability of Provisions                                34
       9.10.  Nonliability of Lenders                                   34
       9.11.  Confidentiality                                           35
       9.12.  Nonreliance                                               35

ARTICLE X
THE AGENTS                                                              35
      10.1.   Appointment; Nature of Relationship                       35
      10.2.   Powers                                                    36
      10.3.   General Immunity                                          36
      10.4.   No Responsibility for Loans, Recitals, etc.               36
      10.5.   Action on Instructions of Lenders                         37
      10.6.   Employment of Administrative Agents and Counsel           37
      10.7.   Reliance on Documents; Counsel                            37
      10.8.   Administrative Agent's Reimbursement and Indemnification  37
      10.9.   Notice of Default                                         38
      10.10.  Rights as a Lender                                        38
      10.11.  Lender Credit Decision                                    38
      10.12.  Successor Administrative Agent                            38
      10.13.  Administrative Agent's Fee.                               39
      10.14.  Delegation to Affiliates.                                 39

ARTICLE XI
SETOFF; RATABLE PAYMENTS                                                40
      11.1.   Setoff                                                    40
      11.2.   Ratable Payments                                          40

ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS                       40
      12.1.   Successors and Assigns                                    40
      12.2.   Participations                                            41

                                Page iii



      12.2.1. Permitted Participants; Effect                            41
      12.2.2. Voting Rights                                             41
      12.2.3. Benefit of Setoff                                         41
      12.3.   Assignments                                               42
      12.3.1. Permitted Assignments                                     42
      12.3.2. Effect; Effective Date                                    42
      12.3.3. Substitution of Lenders                                   42
      12.4.   Dissemination of Information                              43
      12.5.   Tax Treatment                                             43

ARTICLE XIII
NOTICES                                                                 43
      13.1.   Notices                                                   43
      13.2.   Change of Address                                         44

ARTICLE XIV
COUNTERPARTS                                                            44

ARTICLE XV
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL            44
      15.1.   CHOICE OF LAW                                             44
      15.2.   CONSENT TO JURISDICTION                                   44
      15.3.   WAIVER OF JURY TRIAL                                      45

EXHIBIT A      FORM OF OPINION

EXHIBIT B      COMPLIANCE CERTIFICATE

EXHIBIT C      ASSIGNMENT AGREEMENT

EXHIBIT D      LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

EXHIBIT E      NOTE

SCHEDULE 1     LIENS

                                Page iv



                      
                      CREDIT AGREEMENT

      This  Agreement, dated as of August 11, 1998, is  among
Kansas  City  Power & Light Company, the Lenders,  The  First
National  Bank  of  Chicago,  as  Administrative  Agent   and
NationsBank,  N.A.,  as  Documentation  Agent.   The  parties
hereto agree as follows:

                          ARTICLE I

                         DEFINITIONS

     As used in this Agreement:

      "Administrative Agent" means The First National Bank of
Chicago in its capacity as contractual representative of  the
Lenders  pursuant  to Article X, and not  in  its  individual
capacity as a Lender, and any successor Administrative  Agent
appointed pursuant to Article X.

      "Advance" means a borrowing hereunder (or conversion or
continuation thereof) consisting of the aggregate  amount  of
the several Loans made on the same Borrowing Date (or date of
conversion or continuation) by the Lenders to the Borrower of
the  same  Type and, in the case of Eurodollar Advances,  for
the same Interest Period.

      "Affiliate"  of  any  Person  means  any  other  Person
directly  or indirectly controlling, controlled by  or  under
common  control  with  such Person.   For  purposes  of  this
definition, "control" (including, with correlative  meanings,
the  terms  "controlled by" and "under common control  with")
shall  mean  the possession, directly or indirectly,  of  the
power  to direct or cause the direction of the management  or
policies of a Person, whether through the ownership of voting
securities or by contract or otherwise.

      "Aggregate  Commitment"  means  the  aggregate  of  the
Commitments of all the Lenders, as reduced from time to  time
pursuant to the terms hereof.

      "Agreement" means this credit agreement, as it  may  be
amended or modified and in effect from time to time.

      "Alternate  Base Rate" means, for any day,  a  rate  of
interest  per annum equal to the higher of (i) the  Corporate
Base  Rate for such day and (ii) the sum of the Federal Funds
Effective Rate for such day plus 1/2% per annum.

     "Applicable Fee Rate" means, at any time, the percentage
rate per annum at which  commitment fees are accruing on  the
unused  portion of the Aggregate Commitment at such  time  as
set forth in the Pricing Schedule.

      

      "Applicable Margin" means, with respect to Advances  of
any Type at any time, the percentage rate per annum which  is
applicable at such time with respect to Advances of such Type
as set forth in the Pricing Schedule.

      "Arranger" means First Chicago Capital Markets, Inc., a
Delaware corporation, and its successors.

      "Article"  means  an article of this  Agreement  unless
another document is specifically referenced.

      "Authorized Officer" means any of the Treasurer or  the
Chief Financial Officer of the Borrower, acting singly.

     "Bonds" is defined in Section 6.2.

      "Bond  Documents" means the Bonds, any related offering
circular  and  all  documents, instruments  and  certificates
delivered in connection therewith.

      "Borrower" means Kansas City Power & Light  Company,  a
Missouri corporation, and its successors and assigns.

      "Borrowing  Date" means a date on which an  Advance  is
made hereunder.

      "Borrowing Notice" is defined in Section 2.8.

      "Business Day" means (i) with respect to any borrowing,
payment  or  rate  selection of Eurodollar  Advances,  a  day
(other  than  a Saturday or Sunday) on which banks  generally
are  open  in  Chicago  and  New  York  for  the  conduct  of
substantially all of their commercial lending activities  and
on  which dealings in United States dollars are carried on in
the  London interbank market and (ii) for all other purposes,
a  day  (other  than  a Saturday or Sunday)  on  which  banks
generally   are   open  in  Chicago  for   the   conduct   of
substantially all of their commercial lending activities.

      "Capitalized  Lease" of a Person  means  any  lease  of
Property  by such Person as lessee which would be capitalized
on a balance sheet of such Person prepared in accordance with
GAAP.

      "Capitalized Lease Obligations" of a Person  means  the
amount  of  the obligations of such Person under  Capitalized
Leases which would be shown as a liability on a balance sheet
of such Person prepared in accordance with GAAP.

      "Code"  means  the Internal Revenue Code  of  1986,  as
amended, reformed or otherwise modified from time to time.

                                Page 2

      

      
      "Commitment" means, for each Lender, the obligation  of
such  Lender to make Loans not exceeding the amount set forth
opposite its signature below or as set forth in any Notice of
Assignment  relating  to  any  assignment  that  has   become
effective pursuant to Section 12.3.2, as such amount  may  be
modified from time to time pursuant to the terms hereof.

     "Contingent Obligation" of a Person means any agreement,
undertaking  or  arrangement by which  such  Person  assumes,
guarantees,  endorses,  contingently agrees  to  purchase  or
provide funds for the payment of, or otherwise becomes or  is
contingently liable upon, the obligation or liability of  any
other  Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person,  or
otherwise  assures any creditor of such other Person  against
loss.

      "Conversion/Continuation Notice" is defined in  Section
2.9.

      "Controlled  Group" means all members of  a  controlled
group  of  corporations or other business  entities  and  all
trades  or  businesses  (whether or not  incorporated)  under
common  control which, together with the Borrower or  any  of
its  Subsidiaries,  are  treated as a single  employer  under
Section 414 of the Code.

      "Corporate Base Rate" means a rate per annum  equal  to
the  corporate  base  rate  of interest  announced  by  First
Chicago  from  time  to  time,  changing  when  and  as  said
corporate base rate changes.

     "Default" means an event described in Article VII.

      "Documentation Agent" means NationsBank, N.A.,  in  its
capacity as documentation agent for the Lenders.

      "Environmental Laws" means any and all federal,  state,
local   and   foreign  statutes,  laws,  judicial  decisions,
regulations,  ordinances, rules, judgments, orders,  decrees,
plans, injunctions, permits, concessions, grants, franchises,
licenses,  agreements  and  other  governmental  restrictions
relating  to (i) the protection of the environment, (ii)  the
effect  of  the environment on human health, (iii) emissions,
discharges or releases of pollutants, contaminants, hazardous
substances  or  wastes into surface water,  ground  water  or
land, or (iv) the manufacture, processing, distribution, use,
treatment,  storage,  disposal,  transport  or  handling   of
pollutants, contaminants, hazardous substances or  wastes  or
the clean-up or other remediation thereof.

      "ERISA"  means the Employee Retirement Income  Security
Act  of  1974, as amended from time to time, and any rule  or
regulation issued thereunder.

      "Eurodollar  Advance"  means  an  Advance  which  bears
interest at the applicable Eurodollar Rate.

                        Page 3

      

       "Eurodollar  Base  Rate"  means,  with  respect  to  a
Eurodollar Advance for the relevant Interest Period, the rate
determined  by  the Administrative Agent to be  the  rate  at
which  First Chicago offers to place deposits in U.S. dollars
with  first-class  banks in the London  interbank  market  at
approximately  11:00  a.m. (London time)  two  Business  Days
prior  to  the  first  day of such Interest  Period,  in  the
approximate  amount  of First Chicago's  relevant  Eurodollar
Loan  and  having  a  maturity approximately  equal  to  such
Interest Period.

      "Eurodollar Loan" means a Loan which bears interest  at
the applicable Eurodollar Rate.

      "Eurodollar  Rate" means, with respect to a  Eurodollar
Advance for the relevant Interest Period, the sum of (i)  the
quotient of (a) the Eurodollar Base Rate applicable  to  such
Interest  Period,  divided  by  (b)  one  minus  the  Reserve
Requirement  (expressed  as  a decimal)  applicable  to  such
Interest  Period, plus the Applicable Margin.  The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16  of
1% if the rate is not such a multiple.

      "Excluded Taxes" means, in the case of each  Lender  or
applicable Lending Installation and the Administrative Agent,
taxes  imposed on its overall net income, and franchise taxes
imposed  on  it, by (i) the jurisdiction under  the  laws  of
which such Lender or the Administrative Agent is incorporated
or   organized  or  (ii)  the  jurisdiction  in   which   the
Administrative  Agent's or such Lender's principal  executive
office  or  such Lender's applicable Lending Installation  is
located.

     "Exhibit" refers to an exhibit to this Agreement, unless
another document is specifically referenced.

     "Extension Date" is defined in Section 2.19.

     "Extension Request" is defined in Section 2.19.

     "Facility Termination Date" means August 10, 1999 or any
later  date  as may be specified as the Facility  Termination
Date  in accordance with Section 2.19 or any earlier date  on
which  the  Aggregate  Commitment  is  reduced  to  zero   or
otherwise terminated pursuant to the terms hereof.

      "Federal Funds Effective Rate" means, for any  day,  an
interest rate per annum 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 for such day (or, if such  day  is
not  a  Business Day, for the immediately preceding  Business
Day)  by  the Federal Reserve Bank of New York, or,  if  such
rate is not so published for any day which is a Business Day,
the  average  of the quotations at approximately  10:00  a.m.
(Chicago  time) on such day on such transactions received  by
the Administrative Agent from three Federal funds brokers  of
recognized standing selected by the Administrative  Agent  in
its sole discretion.
      
                                Page 4

      


      "FERC"  means the Federal Energy Regulatory  Commission
and any successor agency thereto.

      "FERC  Order"  means the order issued by  the  FERC  to
Borrower  dated June 4, 1998, Docket No. ES98-26-000,  or  an
extension, renewal or replacement of such order in  form  and
substance satisfactory to the Lenders.

     "First Chicago" means The First National Bank of Chicago
in its individual capacity, and its successors.

      "Floating  Rate" means, for any day, a rate  per  annum
equal  to the Alternate Base Rate for such day, in each  case
changing when and as the Alternate Base Rate changes.

      "Floating  Rate Advance" means an Advance  which  bears
interest at the Floating Rate.

      "Floating Rate Loan" means a Loan which bears  interest
at the Floating Rate.

      "FPA" means the Federal Power Act, as amended, and  all
rules and regulations promulgated thereunder.

      "GAAP"  means generally accepted accounting  principles
set   forth   from   time  to  time  in  the   opinions   and
pronouncements  of the Accounting Principles  Board  and  the
American  Institute  of  Certified  Public  Accountants   and
statements of the Financial Accounting Standards Board.

      "Indebtedness"  of  a Person means  such  Person's  (i)
obligations for borrowed money, (ii) obligations representing
the  deferred  purchase price of Property or services  (other
than  accounts payable arising in the ordinary course of such
Person's  business payable on terms customary in the  trade),
(iii)  obligations, whether or not assumed, secured by  Liens
or  payable  out of the proceeds or production from  property
now  or  hereafter  owned or acquired by  such  Person,  (iv)
obligations  which  are evidenced by notes,  acceptances,  or
other instruments, (v) obligations of such Person to purchase
securities  or other property arising out of or in connection
with the sale of the same or substantially similar securities
or   property,  (vi)  Capitalized  Lease  Obligations,  (vii)
Contingent  Obligations, (ix) all obligations, contingent  or
otherwise,  with  respect to the face amount  of  letters  of
credit (whether or not drawn) and bankers' acceptances issued
for  the  account of such Person and (x) any other obligation
for borrowed money or other financial accommodation which  in
accordance  with  GAAP would be shown as a liability  on  the
consolidated balance sheet of such Person.

      "Interest  Period" means, with respect to a  Eurodollar
Advance, a period of one, two, three or six months commencing
on  a  Business Day selected by the Borrower pursuant to this
Agreement.  Such Interest Period shall end on the  day  which
corresponds numerically to such date one, two, three  or  six
months  thereafter, provided, however, that if  there  is  no

                        Page 5

      


such  numerically  corresponding day in  such  next,  second,
third  or sixth succeeding month, such Interest Period  shall
end  on the last Business Day of such next, second, third  or
sixth   succeeding  month.   If  an  Interest  Period   would
otherwise  end  on  a day which is not a Business  Day,  such
Interest  Period  shall end on the next  succeeding  Business
Day, provided, however, that if said next succeeding Business
Day falls in a new calendar month, such Interest Period shall
end on the immediately preceding Business Day.

      "Lenders" means the lending institutions listed on  the
signature  pages  of  this  Agreement  and  their  respective
successors and assigns.

      "Lending Installation" means, with respect to a  Lender
or  the  Administrative Agent, the office, branch, subsidiary
or  affiliate  of  such  Lender or the  Administrative  Agent
listed  on  the  signature pages hereof or on a  Schedule  or
otherwise selected by such Lender or the Administrative Agent
pursuant to Section 2.17.

      "Lien"  means any lien (statutory or other),  mortgage,
pledge,   hypothecation,  assignment,  deposit   arrangement,
encumbrance   or  preference,  priority  or  other   security
agreement  or preferential arrangement of any kind or  nature
whatsoever (including, without limitation, the interest of  a
vendor  or  lessor  under any conditional  sale,  Capitalized
Lease or other title retention agreement).

      "Loan"  means, with respect to a Lender, such  Lender's
loan  made  pursuant  to  Article II (or  any  conversion  or
continuation thereof).

      "Loan  Documents" means this Agreement  and  any  Notes
issued pursuant to Section 2.13.

      "Material  Adverse  Effect" means  a  material  adverse
effect on (i) the business, Property, condition (financial or
otherwise),  results  of  operations,  or  prospects  of  the
Borrower  and  its Subsidiaries taken as a  whole,  (ii)  the
ability of the Borrower to perform its obligations under  the
Loan Documents or (iii) the validity or enforceability of any
of  the  Loan  Documents or the rights  or  remedies  of  the
Administrative Agent or the Lenders thereunder.

     "Material Indebtedness" is defined in Section 7.5.

     "Moody's" means Moody's Investors Service, Inc.

     "Multiemployer Plan" means a Plan maintained pursuant to
a collective bargaining agreement or any other arrangement to
which the Borrower or any member of the Controlled Group is a
party  to which more than one employer is obligated  to  make
contributions.

     "Non-U.S. Lender" is defined in Section 3.5(iv).

                                Page 6

      

      "Note"  means any promissory note issued at the request
of  a  Lender pursuant to Section 2.13 in the form of Exhibit
E.

     "Notice of Assignment" is defined in Section 12.3.2.

      "Obligations" means all unpaid principal of and accrued
and unpaid interest on the Loans, all accrued and unpaid fees
and  all  expenses,  reimbursements,  indemnities  and  other
obligations of the Borrower to the Lenders or to any  Lender,
the  Administrative  Agent or any indemnified  party  arising
under the Loan Documents.

     "Other Taxes" is defined in Section 3.5(ii).

     "Participants" is defined in Section 12.2.1.

      "Payment  Date"  means the last Business  Day  of  each
March, June, September and December.

      "PBGC"  means the Pension Benefit Guaranty Corporation,
or any successor thereto.

      "Person"  means any natural person, corporation,  firm,
joint   venture,  partnership,  limited  liability   company,
association,   enterprise,   trust   or   other   entity   or
organization,  or any government or political subdivision  or
any agency, department or instrumentality thereof.

      "Plan" means an employee pension benefit plan which  is
covered  by  Title  IV  of ERISA or subject  to  the  minimum
funding  standards under Section 412 of the Code as to  which
the  Borrower or any member of the Controlled Group may  have
any liability.

      "Pricing  Schedule" means the Schedule attached  hereto
identified as such.

      "Property"  of  a  Person means any and  all  property,
whether  real, personal, tangible, intangible, or  mixed,  of
such  Person,  or other assets owned, leased or  operated  by
such Person.

      "PUHCA" means the Public Utility Holding Company Act of
1935, as amended.

     "Purchasers" is defined in Section 12.3.1.

      "Regulation  D"  means Regulation D  of  the  Board  of
Governors of the Federal Reserve System as from time to  time
in  effect  and any successor thereto or other regulation  or
official  interpretation of said Board of Governors  relating
to  reserve  requirements applicable to member banks  of  the
Federal Reserve System.

      "Regulation  U"  means Regulation U  of  the  Board  of
Governors of the Federal Reserve System as from time to  time
in  effect and any successor or other regulation or

                                Page 7

      


official interpretation  of said Board of Governors relating 
to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the
Federal Reserve System.

      "Reportable Event" means a reportable event as  defined
in  Section  4043 of ERISA and the regulations  issued  under
such  section,  with  respect to a Plan, excluding,  however,
such events as to which the PBGC has by regulation waived the
requirement  of Section 4043(a) of ERISA that it be  notified
within  30  days  of the occurrence of such event,  provided,
however,  that a failure to meet the minimum funding standard
of  Section 412 of the Code and of Section 302 of ERISA shall
be  a Reportable Event regardless of the issuance of any such
waiver  of  the notice requirement in accordance with  either
Section 4043(a) of ERISA or Section 412(d) of the Code.

     "Required Lenders" means Lenders in the aggregate having
at  least  66-  %  of  the Aggregate Commitment  or,  if  the
Aggregate  Commitment  has been terminated,  Lenders  in  the
aggregate  holding  at  least 66- % of the  aggregate  unpaid
principal amount of the outstanding Advances.

     "Reserve Requirement" means, with respect to an Interest
Period,  the maximum aggregate reserve requirement (including
all  basic, supplemental, marginal and other reserves)  which
is imposed under Regulation D on Eurocurrency liabilities.

      "S&P"  means  Standard and Poor's Ratings  Services,  a
division of The McGraw Hill Companies, Inc.

      "Schedule"  refers  to  a  specific  schedule  to  this
Agreement,    unless   another   document   is   specifically
referenced.

      "Section"  means a numbered section of this  Agreement,
unless another document is specifically referenced.

      "Significant  Subsidiary"  means,  at  any  time,  each
Subsidiary of the Borrower in which the Borrower has, at such
time,  an  investment,  either  directly  or  indirectly,  of
$100,000,000  or  more, whether through  loans  or  advances,
equity   investments,   capital   contributions,   Contingent
Obligations   or   otherwise,  with  all   such   investments
determined  at  the original amount thereof,  without  giving
effect to any writedowns or writeoffs of any such investment.

      "Single Employer Plan" means a Plan maintained  by  the
Borrower  or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group.

      "Subsidiary" of a Person means (i) any corporation more
than 50% of the outstanding securities having ordinary voting
power  of  which  shall at the time be owned  or  controlled,

                                Page 8

      

directly or indirectly, by such Person or by one or  more  of
its  Subsidiaries or by such Person and one or  more  of  its
Subsidiaries,  or  (ii)  any partnership,  limited  liability
company,  association,  joint  venture  or  similar  business
organization more than 50% of the ownership interests  having
ordinary voting power of which shall at the time be so  owned
or  controlled.   Unless  otherwise expressly  provided,  all
references  herein to a "Subsidiary" shall mean a  Subsidiary
of the Borrower.

       "Substantial  Portion"  means,  with  respect  to  the
Property of the Borrower and its Subsidiaries, Property which
(i)  represents more than 10% of the consolidated  assets  of
the  Borrower and its Subsidiaries as would be shown  in  the
consolidated  financial statements of the  Borrower  and  its
Subsidiaries  as at the beginning of the twelve-month  period
ending with the month in which such determination is made, or
(ii) is responsible for more than 10% of the consolidated net
sales  or of the consolidated net income of the Borrower  and
its  Subsidiaries  as  reflected in the financial  statements
referred to in clause (i) above.

      "Taxes"  means  any and all present  or  future  taxes,
duties, levies, imposts, deductions, charges or withholdings,
and  any  and all liabilities with respect to the  foregoing,
but excluding Excluded Taxes.

      "`34  Act  Reports" means the periodic reports  of  the
Borrower filed with the Securities and Exchange Commission on
Forms 10K, 10Q and 8K (or any successor forms thereto).

     "Transferee" is defined in Section 12.4.

     "Type" means, with respect to any Advance, its nature as
a Floating Rate Advance or a Eurodollar Advance.

      "Unmatured  Default" means an event which but  for  the
lapse  of  time  or  the  giving of notice,  or  both,  would
constitute a Default.

      "Western Merger Transactions" means, collectively,  the
mergers  and related transactions contemplated by the Amended
and  Restated Plan of Merger, dated as of March 18, 1998,  by
and  among  Western Resources, Inc., Kansas  Gas  &  Electric
Company, NKC, Inc. and the Borrower.

      "Wholly-Owned  Subsidiary" of a Person  means  (i)  any
Subsidiary all of the outstanding voting securities of  which
shall  at  the  time  be  owned or  controlled,  directly  or
indirectly,  by  such  Person or  one  or  more  Wholly-Owned
Subsidiaries  of such Person, or by such Person  and  one  or
more  Wholly-Owned Subsidiaries of such Person, or  (ii)  any
partnership,  limited liability company,  association,  joint
venture  or  similar  business  organization  100%   of   the
ownership  interests having ordinary voting  power  of  which
shall at the time be so owned or controlled.

                        Page 9

      

     "Year  2000  Problem"  means  the  risk  that  computer
applications and embedded microchips in non-computing devices
may  be  unable  to  recognize  and  perform  properly  date-
sensitive functions involving certain dates prior to and  any
date after December 31, 1999.

     The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.


                         ARTICLE II

                         THE CREDITS


        2.1.     Commitment.  From and including the date  of
this  Agreement  and prior to the Facility Termination  Date,
each Lender severally agrees, on the terms and conditions set
forth  in this Agreement, to make Loans to the Borrower  from
time to time in amounts not to exceed in the aggregate at any
one  time outstanding the amount of its Commitment.   Subject
to  the  terms  of this Agreement, the Borrower  may  borrow,
repay  and  reborrow  at  any  time  prior  to  the  Facility
Termination  Date.  The Commitments to lend  hereunder  shall
expire on the Facility Termination Date.

          2.2.      Required   Payments;   Termination.   Any
outstanding  Advances and all other unpaid Obligations  shall
be  paid  in full by the Borrower on the Facility Termination
Date.

        2.3.     Ratable Loans.  Each Advance hereunder shall
consist  of  Loans made from the several Lenders  ratably  in
proportion  to  the  ratio that their respective  Commitments
bear to the Aggregate Commitment.

        2.4.     Types  of  Advances.  The  Advances  may  be
Floating   Rate  Advances  or  Eurodollar  Advances,   or   a
combination  thereof, selected by the Borrower in  accordance
with Sections 2.8 and 2.9.

         2.5.     Commitment  Fee;  Reductions  in  Aggregate
Commitment.  The Borrower agrees to pay to the Administrative
Agent  for the account of each Lender a commitment fee  at  a
per  annum rate equal to the Applicable Fee Rate on the daily
unused  portion  of such Lender's Commitment  from  the  date
hereof  to  and  including  the  Facility  Termination  Date,
payable  on  each Payment Date hereafter and on the  Facility
Termination  Date.  The Borrower may permanently  reduce  the
Aggregate  Commitment in whole, or in part ratably among  the
Lenders  in integral multiples of $10,000,000, upon at  least
three   Business   Days'   prior  written   notice   to   the
Administrative Agent, which notice shall specify  the  amount
of  any such reduction, provided, however, that the amount of
the  Aggregate  Commitment  may  not  be  reduced  below  the
aggregate principal amount of the outstanding Advances.   All
accrued  commitment fees shall be payable  on  the  effective
date of any termination of the obligations of the Lenders  to
make Loans hereunder.

                        Page 10

      

         2.6.     Minimum  Amount  of  Each  Advance.    Each
Eurodollar  Advance  shall  be  in  the  minimum  amount   of
$5,000,000  (and  in  multiples of $1,000,000  if  in  excess
thereof),  and  each Floating Rate Advance shall  be  in  the
minimum  amount of $5,000,000 (and in multiples of $1,000,000
if  in  excess thereof), provided, however, that any Floating
Rate  Advance  may  be in the amount of the unused  Aggregate
Commitment.

       2.7.    Optional Principal Payments.  The Borrower may
from  time  to  time  pay, without penalty  or  premium,  all
outstanding  Floating  Rate  Advances,  or,  in   a   minimum
aggregate  amount of $5,000,000 or any integral  multiple  of
$100,000  in  excess thereof, any portion of the  outstanding
Floating  Rate Advances upon two Business Days' prior  notice
to  the Administrative Agent.  The Borrower may from time  to
time   pay,   subject   to  the  payment   of   any   funding
indemnification amounts required by Section 3.4  but  without
penalty or premium, all outstanding Eurodollar Advances,  or,
in  a  minimum aggregate amount of $5,000,000 or any integral
multiple  of $100,000 in excess thereof, any portion  of  the
outstanding  Eurodollar Advances upon  three  Business  Days'
prior notice to the Administrative Agent.

       2.8.    Method of Selecting Types and Interest Periods
for  New  Advances.  The Borrower shall select  the  Type  of
Advance  and,  in  the case of each Eurodollar  Advance,  the
Interest  Period applicable thereto from time to  time.   The
Borrower  shall  give  the Administrative  Agent  irrevocable
notice  (a  "Borrowing  Notice") not later  than  11:00  a.m.
(Chicago  time) on the Borrowing Date of each  Floating  Rate
Advance  and  not later than 11:00 a.m. (Chicago time)  three
Business  Days before the Borrowing Date for each  Eurodollar
Advance, specifying:

          (i)   the Borrowing Date, which shall be a Business
          Day, of such Advance,

          (ii) the aggregate amount of such Advance,

          (iii)     the Type of Advance selected, and

          (iv)  in  the case of each Eurodollar Advance,  the
          Interest Period applicable thereto.

Not  later  than noon (Chicago time) on each Borrowing  Date,
each  Lender shall make available its Loan or Loans in  funds
immediately available in Chicago to the Administrative  Agent
at  its  address  specified pursuant to  Article  XIII.   The
Administrative Agent will make the funds so received from the
Lenders  available  to  the Borrower  at  the  Administrative
Agent's aforesaid address.

        2.9.     Conversion and Continuation  of  Outstanding
Advances.  Floating Rate Advances shall continue as  Floating
Rate  Advances  unless and until such Floating Rate  Advances
are  converted  into  Eurodollar Advances  pursuant  to  this
Section  2.9  or are repaid in accordance with  Section  2.7.
Each  Eurodollar  Advance  shall  continue  as  a  Eurodollar
Advance until the end of the then applicable Interest  Period
therefor,  at  which time such

                                Page 11

      


Eurodollar Advance shall be automatically converted into a 
Floating Rate Advance  unless (x) such Eurodollar Advance is
or was repaid in  accordance with  Section  2.7 or (y) the 
Borrower shall have  given  the Administrative  Agent  a 
Conversion/Continuation  Notice  (as defined  below) requesting 
that, at the end of such  Interest Period,  such  Eurodollar 
Advance continue  as  a  Eurodollar Advance for the same or 
another Interest Period.  Subject  to the terms of Section 2.6, 
the Borrower may elect from time to time  to  convert all or 
any part of a Floating Rate Advance into a Eurodollar Advance.
The Borrower shall give the Administrative Agent irrevocable notice
(a "Conversion/Continuation Notice") of  each  conversion  of  a
Floating   Rate   Advance  into  a  Eurodollar   Advance   or
continuation  of  a Eurodollar Advance not later  than  10:00
a.m. (Chicago time) at least three Business Days prior to the
date of the requested conversion or continuation, specifying:

     (i)  the requested date, which shall be a Business
          Day, of such conversion or continuation,

    (ii)  the aggregate amount and Type of the  Advance
          which is to be converted or continued, and

   (iii)  the amount of such Advance which is to be
          converted into or continued as a Eurodollar Advance
          and  the duration of the Interest Period applicable
          thereto.

      2.10.     Changes in Interest Rate, etc.  Each Floating
Rate Advance shall bear interest on the outstanding principal
amount thereof, for each day from and including the date such
Advance  is  made  or  is  automatically  converted  from   a
Eurodollar  Advance into a Floating Rate Advance pursuant  to
Section  2.9,  to but excluding the date it  is  paid  or  is
converted  into a Eurodollar Advance pursuant to Section  2.9
hereof,  at a rate per annum equal to the Floating  Rate  for
such day.  Changes in the rate of interest on that portion of
any  Advance maintained as a Floating Rate Advance will  take
effect simultaneously with each change in the Alternate  Base
Rate.   Each  Eurodollar Advance shall bear interest  on  the
outstanding  principal amount thereof from and including  the
first  day of the Interest Period applicable thereto to  (but
not  including) the last day of such Interest Period  at  the
interest  rate  determined  by the  Administrative  Agent  as
applicable  to  such  Eurodollar  Advance  based   upon   the
Borrower's selections under Section 2.8 and 2.9 and otherwise
in  accordance with the terms hereof.  No Interest Period may
end after the Facility Termination Date.

        2.11.        Rates    Applicable    After    Default.
Notwithstanding anything to the contrary contained in Section
2.8  or 2.9, during the continuance of a Default or Unmatured
Default the Required Lenders may, at their option, by  notice
to the Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section
8.2 requiring unanimous consent of the Lenders to changes  in
interest  rates), declare that no Advance  may  be  made  as,
converted into or continued as a Eurodollar Advance.   During
the  continuance  of a Default the Required Lenders  may,  at
their option, by notice to the Borrower (which notice may  be
revoked at the option of the Required Lenders notwithstanding
any  provision of Section 8.2 requiring unanimous consent  of
the  Lenders to 

                        Page 12

      

changes in interest rates), declare that (i) each Eurodollar 
Advance shall bear interest for the remainder of the applicable
Interest Period at  the  rate  otherwise applicable to such 
Interest Period plus 2% per annum and (ii) each Floating Rate 
Advance shall bear interest at a rate  per annum equal to the 
Floating Rate in effect from time to  time plus 2% per annum, 
provided that, during the continuance of a Default  under  
Section 7.6 or 7.7, the  interest  rates  set forth  in  clauses 
(i) and (ii) above shall be applicable  to all  Advances without 
any election or action on the  part  of the Administrative Agent 
or any Lender. 

      2.12.      Method  of  Payment.  All  payments  of  the
Obligations   hereunder  shall  be  made,   without   setoff,
deduction, or counterclaim, in immediately available funds to
the   Administrative  Agent  at  the  Administrative  Agent's
address  specified pursuant to Article XIII, or at any  other
Lending Installation of the Administrative Agent specified in
writing by the Administrative Agent to the Borrower, by  noon
(local  time)  on  the  date when due and  shall  be  applied
ratably by the Administrative Agent among the Lenders.   Each
payment delivered to the Administrative Agent for the account
of   any   Lender   shall  be  delivered  promptly   by   the
Administrative Agent to such Lender in the same type of funds
that   the  Administrative  Agent  received  at  its  address
specified  pursuant  to  Article  XIII  or  at  any   Lending
Installation   specified  in  a  notice   received   by   the
Administrative Agent from such Lender.

      2.13.     Noteless Agreement; Evidence of Indebtedness.
(i)   Each Lender shall maintain in accordance with its usual
practice  an  account or accounts evidencing the indebtedness
of  the Borrower to such Lender resulting from each Loan made
by  such  Lender from time to time, including the amounts  of
principal  and interest payable and paid to such Lender  from
time to time hereunder.

      (ii)   The  Administrative Agent  shall  also  maintain
accounts in which it will record (a) the amount of each  Loan
made hereunder, the Type thereof and the Interest Period with
respect  thereto, (b) the amount of any principal or interest
due  and  payable  or  to become due  and  payable  from  the
Borrower to each Lender hereunder and (c) the amount  of  any
sum  received by the Administrative Agent hereunder from  the
Borrower and each Lender's share thereof.

     (iii)  The entries maintained in the accounts maintained
pursuant  to  paragraphs (i) and (ii) above  shall  be  prima
facie   evidence  of  the  existence  and  amounts   of   the
Obligations  therein recorded; provided,  however,  that  the
failure of the Administrative Agent or any Lender to maintain
such  accounts or any error therein shall not in  any  manner
affect   the  obligation  of  the  Borrower  to   repay   the
Obligations in accordance with their terms.

     (iv)  Any Lender may request that its Loans be evidenced
by a promissory note (a "Note").  In such event, the Borrower
shall  prepare,  execute and deliver to such  Lender  a  Note
payable to the order of such Lender in substantially the form
of Exhibit E hereto.  Thereafter, the Loans evidenced by such
Note and interest thereon shall at all times (including after
any  assignment  pursuant to Section 12.3) be represented  by
one  or  more

                        Page 13

      


Notes payable to the order of the payee named therein or any 
assignee pursuant to Section 12.3, except to the extent that  
any such Lender or assignee  subsequently returns any such 
Note for cancellation and requests that such Loans once again 
be evidenced as described in paragraphs (i) and (ii) above.

      2.14.      Telephonic  Notices.   The  Borrower  hereby
authorizes  the  Lenders  and  the  Administrative  Agent  to
extend,  convert or continue Advances, effect  selections  of
Types  of  Advances and to transfer funds based on telephonic
notices  made  by  any person or persons  the  Administrative
Agent  or  any Lender in good faith believes to be acting  on
behalf  of  the  Borrower.  The Borrower  agrees  to  deliver
promptly  to the Administrative Agent a written confirmation,
if such confirmation is requested by the Administrative Agent
or  any  Lender,  of  each telephonic  notice  signed  by  an
Authorized  Officer.  If the written confirmation differs  in
any   material   respect  from  the  action  taken   by   the
Administrative  Agent and the Lenders,  the  records  of  the
Administrative  Agent  and the Lenders  shall  govern  absent
manifest error.

      2.15.      Interest  Payment Dates;  Interest  and  Fee
Basis.  Interest accrued on each Floating Rate Advance  shall
be  payable on each Payment Date, commencing with  the  first
such  date  to  occur after the date hereof and at  maturity.
Interest accrued on each Eurodollar Advance shall be  payable
on  the  last day of its applicable Interest Period,  on  any
date  on which the Eurodollar Advance is prepaid, whether  by
acceleration or otherwise, and at maturity.  Interest accrued
on  each Eurodollar Advance having an Interest Period  longer
than  three months shall also be payable on the last  day  of
each   three-month  interval  during  such  Interest  Period.
Interest  and commitment fees shall be calculated for  actual
days  elapsed on the basis of a 360-day year.  Interest shall
be payable for the day an Advance is made but not for the day
of  any  payment  on the amount paid if payment  is  received
prior  to noon (local time) at the place of payment (it being
understood that the Administrative Agent shall be  deemed  to
have received a payment prior to noon (local time) if (x) the
Borrower  has provided the Administrative Agent with evidence
satisfactory  to the Administrative Agent that  the  Borrower
has  initiated a wire transfer of such payment prior to  such
time  and (y) the Administrative Agent actually receives such
payment  on the same Business Day on which such wire transfer
was  initiated).  If any payment of principal of or  interest
on  an  Advance  shall become due on a day  which  is  not  a
Business  Day,  such  payment  shall  be  made  on  the  next
succeeding  Business  Day and, in the  case  of  a  principal
payment,  such  extension  of  time  shall  be  included   in
computing interest in connection with such payment.

      2.16.      Notification  of Advances,  Interest  Rates,
Prepayments   and  Commitment  Reductions.   Promptly   after
receipt  thereof, the Administrative Agent will  notify  each
Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice, Conversion/Continuation Notice, and
repayment    notice   received   by   it   hereunder.     The
Administrative Agent will notify each Lender of the  interest
rate  applicable  to  each Eurodollar Advance  promptly  upon
determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.

                        Page 14

      

      2.17.     Lending Installations.  Each Lender may  book
its Loans at any Lending Installation selected by such Lender
and  may  change its Lending Installation from time to  time.
All  terms of this Agreement shall apply to any such  Lending
Installation  and  the Loans and any Notes  issued  hereunder
shall  be deemed held by each Lender for the benefit of  such
Lending Installation.  Each Lender may, by written notice  to
the  Administrative Agent and the Borrower in accordance with
Article  XIII,  designate replacement or  additional  Lending
Installations through which Loans will be made by it and  for
whose account Loan payments are to be made.

      2.18.      Non-Receipt  of Funds by the  Administrative
Agent.  Unless the Borrower or a Lender, as the case may  be,
notifies the Administrative Agent prior to the date on  which
it  is  scheduled to make payment to the Administrative Agent
of  (i)  in the case of a Lender, the proceeds of a  Loan  or
(ii)  in  the  case of the Borrower, a payment of  principal,
interest or fees to the Administrative Agent for the  account
of the Lenders, that it does not intend to make such payment,
the  Administrative Agent may assume that  such  payment  has
been  made.  The Administrative Agent may, but shall  not  be
obligated  to, make the amount of such payment  available  to
the intended recipient in reliance upon such assumption.   If
such  Lender or the Borrower, as the case may be, has not  in
fact  made  such  payment  to the Administrative  Agent,  the
recipient   of   such  payment  shall,  on  demand   by   the
Administrative Agent, repay to the Administrative  Agent  the
amount  so  made available together with interest thereon  in
respect of each day during the period commencing on the  date
such amount was so made available by the Administrative Agent
until  the date the Administrative Agent recovers such amount
at a rate per annum equal to (x) in the case of payment by  a
Lender, the Federal Funds Effective Rate for such day or  (y)
in  the  case  of payment by the Borrower, the interest  rate
applicable to the relevant Loan.

      2.19.   Extension  of Facility Termination  Date.   The
Borrower may request an extension of the Facility Termination
Date  by  submitting  a  request  for  an  extension  to  the
Administrative Agent (an "Extension Request") no more than 60
days  prior to the Facility Termination Date.  The  Extension
Request  must  specify  the  new  Facility  Termination  Date
requested  by  the Borrower and the date (which  must  be  at
least 30 days after the Extension Request is delivered to the
Administrative Agent) as of which the Lenders must respond to
the   Extension  Request  (the  "Response  Date").   The  new
Facility  Termination Date shall be no  more  than  364  days
after the Facility Termination Date in effect at the time the
Extension   Request  is  received,  including  the   Facility
Termination Date as one of the days in the calculation of the
days elapsed.  Promptly upon receipt of an Extension Request,
the  Administrative  Agent shall notify each  Lender  of  the
contents thereof and shall request each Lender to approve the
Extension  Request.   Each  Lender  approving  the  Extension
Request  shall deliver its written consent no later than  the
Response  Date.   If the consent of each of  the  Lenders  is
received   by   the   Administrative  Agent,   the   Facility
Termination  Date  specified in the Extension  Request  shall
become  effective  on the existing Facility Termination  Date
and  the  Administrative  Agent  shall  promptly  notify  the
Borrower  and  each  Lender of the new  Facility  Termination
Date.

                        Page 15

      

                         ARTICLE III

                   YIELD PROTECTION; TAXES


      3.1.     Yield Protection.  If, on or after the date of
this  Agreement, the adoption of any law or any  governmental
or  quasi-governmental rule, regulation, policy, guideline or
directive  (whether or not having the force of law),  or  any
change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or
comparable   agency   charged  with  the  interpretation   or
administration  thereof,  or  compliance  by  any  Lender  or
applicable Lending Installation with any request or directive
(whether  or  not  having  the force  of  law)  of  any  such
authority, central bank or comparable agency:

          (i)   subjects any Lender or any applicable Lending
          Installation to any Taxes, or changes the basis  of
          taxation  of payments (other than with  respect  to
          Excluded  Taxes) to any Lender in  respect  of  its
          Eurodollar Loans, or

          (ii)  imposes or increases or deems applicable  any
          reserve,  assessment,  insurance  charge,   special
          deposit  or similar requirement against assets  of,
          deposits  with  or for the account  of,  or  credit
          extended  by, any Lender or any applicable  Lending
          Installation  (other than reserves and  assessments
          taken into account in determining the interest rate
          applicable to Eurodollar Advances), or

          (iii)     imposes any other condition the result of
          which is to increase the cost to any Lender or  any
          applicable Lending Installation of making,  funding
          or  maintaining its Eurodollar Loans or reduces any
          amount  receivable by any Lender or any  applicable
          Lending   Installation  in  connection   with   its
          Eurodollar  Loans, or requires any  Lender  or  any
          applicable Lending Installation to make any payment
          calculated by reference to the amount of Eurodollar
          Loans held or interest received by it, by an amount
          deemed material by such Lender,

and  the  result of any of the foregoing is to  increase  the
cost  to  such  Lender or applicable Lending Installation  of
making  or maintaining its Eurodollar Loans or Commitment  or
to  reduce  the return received by such Lender or  applicable
Lending Installation in connection with such Eurodollar Loans
or Commitment, then, within 15 days of demand by such Lender,
the Borrower shall pay such Lender such additional amount  or
amounts  as  will compensate such Lender for  such  increased
cost or reduction in amount received.

      3.2.     Changes in Capital Adequacy Regulations.  If a
Lender  determines the amount of capital required or expected
to  be maintained by such Lender, any Lending Installation of
such  Lender  or any corporation controlling such  Lender  is
increased  as a result of a Change, then, within 15  days  of
demand by such Lender, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the  rate
of return on the portion of such increased capital which such
Lender determines is attributable to this Agreement, its Loans 

                        Page 16

      


or its Commitment to make Loans hereunder (after taking
into  account such Lender's policies as to capital adequacy).
"Change"  means  (i)  any  change  after  the  date  of  this
Agreement  in the Risk-Based Capital Guidelines or  (ii)  any
adoption  of  or  change in any other  law,  governmental  or
quasi-governmental   rule,  regulation,  policy,   guideline,
interpretation, or directive (whether or not having the force
of  law)  after the date of this Agreement which affects  the
amount  of  capital required or expected to be maintained  by
any  Lender  or  any Lending Installation or any  corporation
controlling  any  Lender.   "Risk-Based  Capital  Guidelines"
means (i) the risk-based capital guidelines in effect in  the
United  States  on  the  date  of this  Agreement,  including
transition   rules,   and  (ii)  the  corresponding   capital
regulations promulgated by regulatory authorities outside the
United States implementing the July 1988 report of the  Basle
Committee  on  Banking  Regulation and Supervisory  Practices
Entitled  "International Convergence of Capital  Measurements
and  Capital Standards," including transition rules, and  any
amendments to such regulations adopted prior to the  date  of
this Agreement.

      3.3.     Availability of Types of Advances.  If (i) any
Lender determines that maintenance of its Eurodollar Loans at
a  suitable Lending Installation would violate any applicable
law,  rule,  regulation, or directive, whether or not  having
the force of law, or (ii) the Required Lenders determine that
(a) deposits of a type and maturity appropriate to match fund
Eurodollar  Advances are not available or  (b)  the  interest
rate  applicable  to  a Type of Advance does  not  accurately
reflect the cost of making or maintaining such Advance,  then
the  Administrative Agent shall suspend the  availability  of
the  affected Type of Advance and, in the case of clause (i),
require  any  affected Eurodollar Advances to  be  repaid  or
converted  to Floating Rate Advances, subject to the  payment
of  any  funding indemnification amounts required by  Section
3.4.

       3.4.     Funding Indemnification.  If any payment of a
Eurodollar Advance occurs on a date which is not the last day
of   the  applicable  Interest  Period,  whether  because  of
acceleration,  prepayment  or  otherwise,  or  a   Eurodollar
Advance is not made on the date specified by the Borrower for
any  reason  other than default by the Lenders, the  Borrower
will  indemnify each Lender for any loss or cost incurred  by
it  resulting  therefrom, including, without limitation,  any
loss or cost in liquidating or employing deposits acquired to
fund or maintain such Eurodollar Advance.

     3.5. Taxes.  (i)  All payments by the Borrower to or for
the  account  of  any  Lender  or  the  Administrative  Agent
hereunder or under any Note shall be made free and  clear  of
and without deduction for any and all Taxes.  If the Borrower
shall  be  required by law to deduct any  Taxes  from  or  in
respect  of  any sum payable hereunder to any Lender  or  the
Administrative Agent, (a) the sum payable shall be  increased
as  necessary  so  that after making all required  deductions
(including  deductions applicable to additional sums  payable
under  this  Section  3.5) such Lender or the  Administrative
Agent  (as the case may be) receives an amount equal  to  the
sum  it would have received had no such deductions been made,
(b) the Borrower shall make such deductions, (c) the Borrower
shall  pay the full amount deducted to the relevant authority
in  accordance with applicable law and (d) the 

                                Page 17

      

Borrower shall furnish to the Administrative Agent the original 
copy of a receipt evidencing payment thereof within 30 days after
such payment is made.

     (ii)  In addition, the Borrower hereby agrees to pay any
present  or future stamp or documentary taxes and  any  other
excise  or  property taxes, charges or similar  levies  which
arise  from any payment made hereunder or under any  Note  or
from  the execution or delivery of, or otherwise with respect
to, this Agreement or any Note ("Other Taxes").

      (iii)   The  Borrower hereby agrees  to  indemnify  the
Administrative Agent and each Lender for the full  amount  of
Taxes  or  Other  Taxes (including, without  limitation,  any
Taxes  or  Other Taxes imposed on amounts payable under  this
Section 3.5) paid by the Administrative Agent or such  Lender
and   any   liability  (including  penalties,  interest   and
expenses)   arising  therefrom  or  with   respect   thereto.
Payments due under this indemnification shall be made  within
30  days of the date the Administrative Agent or such  Lender
makes demand therefor pursuant to Section 3.6.

      (iv)   Each Lender that is not incorporated  under  the
laws of the United States of America or a state thereof (each
a  "Non-U.S. Lender") agrees that it will, not less than  ten
Business  Days after the date of this Agreement, (i)  deliver
to each of the Borrower and the Administrative Agent two duly
completed  copies of United States Internal  Revenue  Service
Form 1001 or 4224, certifying in either case that such Lender
is  entitled to receive payments under this Agreement without
deduction or withholding of any United States federal  income
taxes,  and  (ii)  deliver to each of the  Borrower  and  the
Administrative Agent a United States Internal Revenue Form W-
8 or W-9, as the case may be, and certify that it is entitled
to  an  exemption from United States backup withholding  tax.
Each Non-U.S. Lender further undertakes to deliver to each of
the  Borrower  and the Administrative Agent (x)  renewals  or
additional copies of such form (or any successor form) on  or
before  the date that such form expires or becomes  obsolete,
and  (y) after the occurrence of any event requiring a change
in  the most recent forms so delivered by it, such additional
forms or amendments thereto as may be reasonably requested by
the  Borrower  or  the Administrative Agent.   All  forms  or
amendments described in the preceding sentence shall  certify
that  such Lender is entitled to receive payments under  this
Agreement  without  deduction or withholding  of  any  United
States  federal  income  taxes, unless  an  event  (including
without  limitation any change in treaty, law or  regulation)
has  occurred  prior to the date on which any  such  delivery
would  otherwise  be required which renders  all  such  forms
inapplicable  or  which would prevent such Lender  from  duly
completing  and  delivering any such form or  amendment  with
respect  to it and such Lender advises the Borrower  and  the
Administrative  Agent  that it is not  capable  of  receiving
payments  without  any  deduction or  withholding  of  United
States federal income tax.

      (v)  For any period during which a Non-U.S. Lender  has
failed  to  provide  the Borrower with  an  appropriate  form
pursuant to clause (iv), above (unless such failure is due to
a  change in treaty, law or regulation, or any change in  the
interpretation or administration thereof by any  governmental
authority, occurring subsequent to the date on which  a  form

                        Page 18

      

originally was required to be provided), such Non-U.S. Lender
shall  not be entitled to indemnification under this  Section
3.5  with  respect  to Taxes imposed by  the  United  States;
provided  that, should a Non-U.S. Lender which  is  otherwise
exempt  from or subject to a reduced rate of withholding  tax
become  subject to Taxes because of its failure to deliver  a
form  required  under clause (iv), above, the Borrower  shall
take  such  steps  as such Non-U.S. Lender  shall  reasonably
request to assist such Non-U.S. Lender to recover such Taxes.

      (vi)  Any Lender that is entitled to an exemption  from
or  reduction  of  withholding tax with respect  to  payments
under  this Agreement or any Note pursuant to the law of  any
relevant  jurisdiction or any treaty  shall  deliver  to  the
Borrower  (with a copy to the Administrative Agent),  at  the
time  or  times  prescribed by applicable law, such  properly
completed and executed documentation prescribed by applicable
law   as  will  permit  such  payments  to  be  made  without
withholding or at a reduced rate.

       3.6.     Lender Statements; Survival of Indemnity.  To
the  extent reasonably possible and upon the request  of  the
Borrower,  each  Lender shall designate an alternate  Lending
Installation with respect to its Eurodollar Loans  to  reduce
any  liability of the Borrower to such Lender under  Sections
3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar
Advances  under  Section 3.3, so long as such designation  is
not,  in the judgment of such Lender, disadvantageous to such
Lender.   Each  Lender shall deliver a written  statement  of
such   Lender   to  the  Borrower  (with  a   copy   to   the
Administrative  Agent) as to the amount due,  if  any,  under
Section  3.1, 3.2, 3.4 or 3.5.  Such written statement  shall
set  forth  in reasonable detail the calculations upon  which
such  Lender  determined  such amount  and  shall  be  final,
conclusive  and  binding on the Borrower in  the  absence  of
manifest error.  Determination of amounts payable under  such
Sections  in  connection  with a  Eurodollar  Loan  shall  be
calculated  as though each Lender funded its Eurodollar  Loan
through  the  purchase of a deposit of the type and  maturity
corresponding  to  the  deposit  used  as  a   reference   in
determining  the  Eurodollar Rate applicable  to  such  Loan,
whether  in  fact that is the case or not.  Unless  otherwise
provided   herein,  the  amount  specified  in  the   written
statement  of  any Lender shall be payable  on  demand  after
receipt  by  the  Borrower of such  written  statement.   The
obligations of the Borrower under Sections 3.1, 3.2, 3.4  and
3.5  shall survive payment of the Obligations and termination
of this Agreement.


                         ARTICLE IV

                    CONDITIONS PRECEDENT


        4.1.     Initial Advance.  The Lenders shall  not  be
required  to  make the initial Advance hereunder  unless  the
Borrower  has  furnished  to  the Administrative  Agent  with
sufficient copies for the Lenders:

                                Page 19

      

    (i)   Copies  of  the  articles or  certificate  of
          incorporation  of the Borrower, together  with  all
          amendments,  and  a certificate of  good  standing,
          each  certified  by  the  appropriate  governmental
          officer in its jurisdiction of incorporation.

   (ii)   Copies,   certified  by  the  Secretary   or
          Assistant Secretary of the Borrower, of its by-laws
          and  of its Board of Directors' resolutions and  of
          resolutions   or   actions  of   any   other   body
          authorizing the execution of the Loan Documents  to
          which the Borrower is a party.

  (iii)   An  incumbency certificate, executed  by
          the   Secretary  or  Assistant  Secretary  of   the
          Borrower,  which shall identify by name  and  title
          and  bear the signatures of the Authorized Officers
          and  any  other officers of the Borrower authorized
          to sign the Loan Documents to which the Borrower is
          a  party, upon which certificate the Administrative
          Agent  and  the Lenders shall be entitled  to  rely
          until  informed  of any change in  writing  by  the
          Borrower.

   (iv)   A  certificate, signed by the chief financial
          officer  of  the  Borrower,  stating  that  on  the
          initial  Borrowing  Date no  Default  or  Unmatured
          Default has occurred and is continuing.

    (v)   A  written opinion of the Borrower's counsel,
          addressed to the Lenders in substantially the  form
          of Exhibit A.

   (vi)   Any  Notes requested by a Lender pursuant  to
          Section  2.13  payable to the order  of  each  such
          requesting Lender.

  (vii)   A  certified  copy  of  the  FERC  Order
          authorizing  the Borrower to incur the Indebtedness
          contemplated by the Loan Documents.

 (viii)   Written money transfer instructions,  in
          substantially the form of Exhibit D,  addressed  to
          the   Administrative  Agent  and   signed   by   an
          Authorized   Officer,  together  with  such   other
          related  money  transfer  authorizations   as   the
          Administrative Agent may have reasonably requested.

    (ix)  Copies of the Bond Documents, certified by the
          Secretary   or  an  Assistant  Secretary   of   the
          Borrower.

     (x)  Such  other documents as any  Lender  or  its
          counsel may have reasonably requested.

       4.2.      Each  Advance.   The Lenders  shall  not  be
required  to  make any Advance (other than an  Advance  that,
after  giving  effect thereto and to the application  of  the
proceeds  thereof, does not increase the aggregate amount  of
outstanding  Advances),  unless on the  applicable  Borrowing
Date:

                                Page 20
      


     (i)  There exists no Default or Unmatured Default.

    (ii)  The  representations and warranties contained
          in  Article  V  are  true and correct  as  of  such
          Borrowing  Date  except  to  the  extent  any  such
          representation  or  warranty is  stated  to  relate
          solely  to  an  earlier date, in  which  case  such
          representation or warranty shall have been true and
          correct on and as of such earlier date.

   (iii)  The FERC Order shall not have expired  or
          been revoked and shall permit the Borrower to incur
          the  Indebtedness evidenced by such  Advance.   The
          Borrower   shall,   upon   request,   provide   the
          Administrative Agent with evidence satisfactory  to
          the  Administrative Agent that, after giving effect
          to such Advance, the aggregate amount of short-term
          debt instruments issued by the Borrower in reliance
          upon  the  FERC Order shall not exceed the  maximum
          amount  of  Indebtedness  authorized  by  the  FERC
          Order.

      Each Borrowing Notice with respect to each such Advance
shall  constitute  a  representation  and  warranty  by   the
Borrower that the conditions contained in Sections 4.2(i) and
(ii)  have  been  satisfied.  Any Lender may require  a  duly
completed compliance certificate in substantially the form of
Exhibit B as a condition to making an Advance.


                          ARTICLE V

               REPRESENTATIONS AND WARRANTIES


      The  Borrower  represents and warrants to  the  Lenders
that:

       5.1.     Existence and Standing.  Each of the Borrower
and  its  Subsidiaries is a corporation, partnership (in  the
case  of Subsidiaries only) or limited liability company duly
and  properly incorporated or organized, as the case may  be,
validly  existing and (to the extent such concept applies  to
such  entity)  in  good  standing  under  the  laws  of   its
jurisdiction  of incorporation or organization  and  has  all
requisite   authority  to  conduct  its  business   in   each
jurisdiction in which its business is conducted.

       5.2.     Authorization and Validity.  The Borrower has
the  power  and  authority and legal  right  to  execute  and
deliver  the  Loan Documents and to perform  its  obligations
thereunder.   The execution and delivery by the  Borrower  of
the  Loan  Documents and the performance of  its  obligations
thereunder  have  been duly authorized  by  proper  corporate
proceedings,  and the Loan Documents constitute legal,  valid
and  binding obligations of the Borrower enforceable  against
the  Borrower  in  accordance with  their  terms,  except  as
enforceability  may be limited by bankruptcy,  insolvency  or
similar  laws affecting the enforcement of creditors'  rights
generally.

                                Page 21

      


       5.3.     No Conflict; Government Consent.  Neither the
execution and delivery by the Borrower of the Loan Documents,
nor    the   consummation   of   the   transactions   therein
contemplated, nor compliance with the provisions thereof will
violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower  or  (ii)
the  Borrower's  articles or certificate of incorporation  or
by-laws  or (iii) the provisions of any indenture, instrument
or  agreement to which the Borrower is a party or is subject,
or  by which it, or its Property, is bound, or conflict  with
or constitute a default thereunder, or result in, or require,
the  creation  or imposition of any Lien in,  of  or  on  the
Property  of the Borrower pursuant to the terms of  any  such
indenture,  instrument  or  agreement.   No  order,  consent,
adjudication, approval, license, authorization, or validation
of,  or  filing, recording or registration with, or exemption
by,  or other action in respect of any governmental or public
body or authority (including without limitation the FERC), or
any  subdivision thereof, which has not been obtained by  the
Borrower,  is  required to be obtained  by  the  Borrower  in
connection  with  the  execution and  delivery  of  the  Loan
Documents,  the borrowings under this Agreement, the  payment
and  performance  by the Borrower of the Obligations  or  the
legality, validity, binding effect or enforceability  of  any
of the Loan Documents.

       5.4.     Financial Statements.  The December 31,  1997
consolidated  financial statements of the  Borrower  and  its
Subsidiaries   heretofore  delivered  to  the  Lenders   were
prepared  in  accordance  with GAAP and  fairly  present  the
consolidated  financial  condition  and  operations  of   the
Borrower   and  its  Subsidiaries  at  such  date   and   the
consolidated results of their operations for the period  then
ended.

      5.5.     Material Adverse Change.  Since March 31, 1998
there   has   been  no  change  in  the  business,  Property,
prospects,  condition (financial or otherwise) or results  of
operations  of the Borrower and its Subsidiaries which  could
reasonably be expected to have a Material Adverse Effect.

      5.6.     Taxes.  The Borrower and its Subsidiaries have
filed all United States federal tax returns and all other tax
returns  which  are required to be filed and  have  paid  all
taxes  due  pursuant  to  said returns  or  pursuant  to  any
assessment   received  by  the  Borrower  or   any   of   its
Subsidiaries,  except  such  taxes,  if  any,  as  are  being
contested  in  good  faith and as to which adequate  reserves
have been provided in accordance with GAAP and as to which no
Lien  exists.   The United States income tax returns  of  the
Borrower  and  its  Subsidiaries have  been  audited  by  the
Internal  Revenue  Service  through  the  fiscal  year  ended
December  31,  1990.  No tax liens have  been  filed  and  no
material  claims are being asserted with respect to any  such
taxes.   The charges, accruals and reserves on the  books  of
the Borrower and its Subsidiaries in respect of any taxes  or
other governmental charges are adequate.

      5.7.     Litigation and Contingent Obligations.  Except
as  set forth in the Borrower's `34 Act Reports, there is  no
litigation,    arbitration,    governmental    investigation,
proceeding or inquiry pending or, to the knowledge of any  of
their  officers, threatened against or affecting the Borrower
or any of its Subsidiaries which could reasonably be expected
to  have a Material Adverse Effect or which seeks to prevent,
enjoin  or  delay the making of any Loans.

                                Page 22

      

Other than any liability incident to any litigation, arbitration
or proceeding which could not reasonably be expected to  have  a
Material   Adverse  Effect,  the  Borrower  has  no  material
contingent obligations not provided for or disclosed  in  the
financial statements referred to in Section 5.4.

       5.8.     ERISA.  The Borrower and each other member of
the  Controlled Group has fulfilled its obligations under the
minimum  funding standards of ERISA and the Code with respect
to  each  Plan and is in compliance in all material  respects
with  the  presently applicable provisions of ERISA  and  the
Code with respect to each Plan.  Neither the Borrower nor any
other  member of the Controlled Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the Code
in  respect of any Plan, (ii) failed to make any contribution
or  payment  to any Plan or Multiemployer Plan, or  made  any
amendment  to any Plan which has resulted or could result  in
the  imposition of a Lien or the posting of a bond  or  other
security  under  ERISA  or the Code  or  (iii)  incurred  any
liability  under Title IV of ERISA other than a liability  to
the PBGC for premiums under Section 4007 of ERISA.

      5.9.  Accuracy of Information.  No information, exhibit
or   report  furnished  by  the  Borrower  or  any   of   its
Subsidiaries to the Administrative Agent or to any Lender  in
connection with the negotiation of, or compliance  with,  the
Loan Documents contained any material misstatement of fact or
omitted  to  state a material fact or any fact  necessary  to
make the statements contained therein not misleading.

      5.10.      Regulation U.  Margin stock (as  defined  in
Regulation U) constitutes less than 25% of the value of those
assets of the Borrower and its Subsidiaries which are subject
to  any  limitation  on  sale, pledge  or  other  restriction
hereunder.

     5.11.     Material Agreements.  Neither the Borrower nor
any  Subsidiary is a party to any agreement or instrument  or
subject  to any charter or other corporate restriction  which
is  reasonably  likely  to  have a Material  Adverse  Effect.
Neither the Borrower nor any Subsidiary is in default in  the
performance,  observance  or  fulfillment  of  any   of   the
obligations,  covenants  or  conditions  contained   in   any
agreement  to  which  it  is  a party,  which  default  could
reasonably be expected to have a Material Adverse Effect.

      5.12.      Compliance With Laws.  The Borrower and  its
Subsidiaries  have  complied with  all  applicable  statutes,
rules,  regulations, orders and restrictions of any  domestic
or  foreign  government  or  any  instrumentality  or  agency
thereof  having  jurisdiction  over  the  conduct  of   their
respective  businesses or the ownership of  their  respective
Property  except for any failure to comply with  any  of  the
foregoing  which could not reasonably be expected to  have  a
Material Adverse Effect.

      5.13.     Ownership of Properties.  Except as set forth
on  Schedule  1, on the date of this Agreement, the  Borrower
and  its Significant Subsidiaries will have good title,  free
of  all Liens other than those permitted by Section 6.11,  to
all  of  the  Property and assets reflected

                        Page 23

      


in the Borrower's most recent consolidated financial statements
provided to the Administrative Agent as owned by the Borrower
and its Subsidiaries.

       5.14.   Plan  Assets;  Prohibited  Transactions.   The
Borrower is not an entity deemed to hold "plan assets" within
the  meaning of 29 C.F.R.  2510.3-101 of an employee  benefit
plan  (as defined in Section 3(3) of ERISA) which is  subject
to  Title  I  of  ERISA or any plan (within  the  meaning  of
Section 4975 of the Code), and neither the execution of  this
Agreement nor the making of Loans hereunder gives rise  to  a
prohibited transaction within the meaning of Section  406  of
ERISA or Section 4975 of the Code.

     5.15.     Environmental Matters.  Except as set forth in
the  Borrower's  '34  Act Reports, there  are  no  risks  and
liabilities  accruing  to the Borrower due  to  Environmental
Laws  that  could reasonably be expected to have  a  Material
Adverse Effect.

      5.16.     Investment Company Act.  Neither the Borrower
nor  any  Subsidiary is an "investment company" or a  company
"controlled" by an "investment company", within  the  meaning
of the Investment Company Act of 1940, as amended.

      5.17.      Public  Utility Holding  Company  Act.   The
Borrower  is  a  public  utility.  Neither  Borrower  or  any
Subsidiary is a "holding company," a "subsidiary company"  of
a  "holding company" or an "affiliate" of a "holding company"
or  of  a "subsidiary company" of a "holding company", within
the meaning of PUHCA.

      5.18.  Pari Passu Indebtedness.  The Indebtedness under
the  Loan Documents ranks at least pari passu with all  other
unsecured Indebtedness of the Borrower.

       5.19   Year  2000  Problem.   The  Borrower  and   its
Subsidiaries  (a)  have  reviewed  the  areas  within   their
business and operations which could be adversely affected by,
and have developed or are developing a program to address  on
a  timely  basis,  the Year 2000 Problem and  (b)  have  made
appropriate inquiries as to the effect the Year 2000  Problem
will  have on their material suppliers and customers.   Based
on   such   review,  program  and  inquiries,  the   Borrower
reasonably  believes that the "Year 2000  Problem"  will  not
have a Material Adverse Effect.


                         ARTICLE VI

                          COVENANTS


      During  the term of this Agreement, unless the Required
Lenders shall otherwise consent in writing:

                        Page 24

      

        6.1.      Financial  Reporting.   The  Borrower  will
maintain,  for  itself  and  each  Subsidiary,  a  system  of
accounting  established and administered in  accordance  with
generally accepted accounting principles, and furnish to  the
Lenders:

    (i)   Within 90 days after the close of each of its
          fiscal years, an unqualified audit report certified
          by  Coopers  & Lybrand or other firm of independent
          certified  public accountants which is a member  of
          the "Big Four," prepared in accordance with GAAP on
          a   consolidated   basis   for   itself   and   its
          Subsidiaries, including balance sheets  as  of  the
          end  of  such  period  and  related  statements  of
          income,   retained   earnings   and   cash   flows,
          accompanied  by (a) any management letter  prepared
          by  said accountants, and (b) a certificate of said
          accountants   that,   in  the   course   of   their
          examination necessary for their audit report,  they
          have  obtained  no  knowledge  of  any  Default  or
          Unmatured  Default, or if, in the opinion  of  such
          accountants, any Default or Unmatured Default shall
          exist, stating the nature and status thereof.

    (ii)  Within 45 days after the close of  the  first
          three  quarterly  periods of  each  of  its  fiscal
          years, for itself and its Subsidiaries, either  (i)
          consolidated  and  consolidating unaudited  balance
          sheets  as  at  the close of each such  period  and
          consolidated and consolidating profit and loss  and
          reconciliation   of  surplus   statements   and   a
          statement  of  cash flows for the period  from  the
          beginning  of such fiscal year to the end  of  such
          quarter,  all  certified  by  its  chief  financial
          officer  or  (ii)  if  the  Borrower  is   then   a
          "registrant"  within the meaning of  Rule  1-01  of
          Regulation  S-X  of  the  Securities  and  Exchange
          Commission and required to file a report on Form 10-
          Q  with  the Securities and Exchange Commission,  a
          copy of the Borrower's report on Form 10-Q for such
          quarterly period.

   (iii)  Together  with the financial  statements
          required   under  Sections  6.1(i)  and   (ii),   a
          compliance certificate in substantially the form of
          Exhibit  B  signed by its chief accounting  officer
          stating   that  no  Default  or  Unmatured  Default
          exists,  or  if  any  Default or Unmatured  Default
          exists, stating the nature and status thereof.

    (iv)  As soon as possible and in any event within 10
          days  after  the Borrower knows that any Reportable
          Event  has  occurred with respect to  any  Plan,  a
          statement, signed by the chief financial officer of
          the  Borrower, describing said Reportable Event and
          the action which the Borrower proposes to take with
          respect thereto.

     (v)  Promptly upon the furnishing thereof  to  the
          shareholders  of  the  Borrower,  copies   of   all
          financial  statements, reports and proxy statements
          so furnished.

                                Page 25

      

    (vi)  Promptly upon the filing thereof,  copies  of
          all  registration statements and annual, quarterly,
          monthly or other regular reports which the Borrower
          files with the Securities and Exchange Commission.

   (vii)  Promptly  upon  the  request   of   the
          Administrative  Agent or any Lender,  such  updated
          information  or documentation as may  be  requested
          from  time  to  time regarding the efforts  of  the
          Borrower   and  its  Significant  Subsidiaries   to
          address the Year 2000 Problem.

    (ix)  Such    other    information    (including
          non-financial  information) as  the  Administrative
          Agent   or  any  Lender  may  from  time  to   time
          reasonably request.

       6.2.      Use of Proceeds.  The Borrower will use  the
proceeds of the Advances to provide liquidity support for the
remarketing  of  the  Borrower's  $106,500,000  Environmental
Improvement  Revenue  Refunding Bonds (Kansas  City  Power  &
Light  Company  Project)  Series  1998-A  and  Series  1998-B
(collectively,   the  "Bonds"),  and  to  repay   outstanding
Advances.   The Borrower will not use any of the proceeds  of
the  Advances  to  purchase or carry any "margin  stock"  (as
defined in Regulation U).

       6.3.      Notice of Default.  The Borrower  will,  and
will  cause each Subsidiary to, give prompt notice in writing
to  the Lenders of the occurrence of any Default or Unmatured
Default and of any other development, financial or otherwise,
which could reasonably be expected to have a Material Adverse
Effect.

       6.4.     Conduct of Business.  The Borrower will,  and
will  cause  each  Significant Subsidiary to,  carry  on  and
conduct its business in substantially the same manner and  in
substantially  the  same  fields  of  enterprise  as  it   is
presently  conducted  and do all things necessary  to  remain
duly incorporated or organized, validly existing and (to  the
extent  such concept applies to such entity) in good standing
as  a  domestic corporation, partnership or limited liability
company in its jurisdiction of incorporation or organization,
as  the case may be, and maintain all requisite authority  to
conduct  its  business  in  each jurisdiction  in  which  its
business is conducted.

      6.5.     Taxes.  The Borrower will, and will cause each
Significant Subsidiary to, timely file United States  federal
and  applicable foreign, state and local tax returns required
by   law  and  pay  when  due  all  taxes,  assessments   and
governmental  charges  and levies  upon  it  or  its  income,
profits  or Property, except those which are being  contested
in  good faith by appropriate proceedings and with respect to
which  adequate  reserves have been set aside  in  accordance
with GAAP.

       6.6.     Insurance.  The Borrower will, and will cause
each  Significant  Subsidiary to, maintain  with  financially
sound  and  reputable insurance companies  insurance  on  all
their Property in such amounts and covering such risks as  is
consistent  with  sound business 

                                Page 26

      


practice, and the Borrower will furnish to any Lender upon 
request full information as to the insurance carried.

       6.7.     Compliance with Laws.  The Borrower will, and
will  cause each Significant Subsidiary to, comply  with  all
laws,   rules,   regulations,   orders,   writs,   judgments,
injunctions,  decrees or awards to which it  may  be  subject
including, without limitation, all Environmental Laws.

      6.8.     Maintenance of Properties.  The Borrower will,
and  will cause each Significant Subsidiary to, do all things
necessary  to  maintain,  preserve,  protect  and  keep   its
Property  in  good repair, working order and  condition,  and
make   all   necessary  and  proper  repairs,  renewals   and
replacements  so that its business carried on  in  connection
therewith may be properly conducted at all times.

      6.9.     Inspection.  The Borrower will, and will cause
each  Subsidiary to, permit the Administrative Agent and  the
Lenders,  by their respective representatives and agents,  to
inspect  any of the Property, books and financial records  of
the  Borrower and each Subsidiary, to examine and make copies
of  the books of accounts and other financial records of  the
Borrower  and  each Subsidiary, and to discuss  the  affairs,
finances  and  accounts of the Borrower and  each  Subsidiary
with,  and  to be advised as to the same by, their respective
officers  at  such  reasonable times  and  intervals  as  the
Administrative Agent or any Lender may designate.  After  the
occurrence and during the continuance of a Default, any  such
inspection shall be at the Borrower's expense; at  all  other
times,  the Borrower shall not be liable to pay the  expenses
of  the Administrative Agent or any Lender in connection with
such inspections.

      6.10.      Consolidations, Mergers and Sale of  Assets.
The  Borrower  will not, nor will it permit  any  Significant
Subsidiary to, sell, lease, transfer, or otherwise dispose of
all  or  substantially all of its assets (whether by a single
transaction  or a number of related transactions and  whether
at  one time or over a period of time) or consolidate with or
merge into any Person or permit any Person to merge into  it,
except

    (i)   A Wholly-Owned Subsidiary may be merged  into
          the Borrower.

   (ii)   The Borrower may sell all or substantially all
          of  its  assets  to, or consolidate with  or  merge
          into,  any  other  corporation, or  permit  another
          corporation  to  merge into it; provided,  however,
          that   (a)  the  surviving  corporation,  if   such
          surviving corporation is not the Borrower,  or  the
          transferee corporation in the case of a sale of all
          or  substantially all of the Borrower's assets  (1)
          shall be a corporation organized and existing under
          the laws of the United States of America or a state
          thereof or the District of Columbia, and (2)  shall
          expressly  assume in writing the due  and  punctual
          payment of the Obligations and the due and punctual
          performance of and compliance with all of the terms
          of   this  Credit  Agreement  and  the  other  Loan
          Documents to be performed or complied 
          
                                Page 27

      

          with by the Borrower, (b) immediately before and  
          after such merger, consolidation or sale, there 
          shall not exist any Default or Unmatured Default and 
          (c) the surviving corporation of such merger or
          consolidation, or the transferee corporation of the
          assets  of  the Borrower, as applicable, has,  both
          immediately   before   and   after   such   merger,
          consolidation or sale, a Moody's Rating of Baa3  or
          better or an S&P Rating of BBB - or better.

  (iii)   The   Western   Merger   Transactions;
          provided,   however,   that   (a)   the   surviving
          corporation   of   any  merger   or   consolidation
          involving the Borrower that is contemplated by  the
          Western  Merger  Transactions,  if  such  surviving
          corporation is not the Borrower, or the  transferee
          corporation  in  the  case of  a  sale  of  all  or
          substantially  all  of  the Borrower's  assets  (1)
          shall be a corporation organized and existing under
          the laws of the United States of America or a state
          thereof or the District of Columbia, and (2)  shall
          expressly  assume in writing the due  and  punctual
          payment of the Obligations and the due and punctual
          performance of and compliance with all of the terms
          of   this  Credit  Agreement  and  the  other  Loan
          Documents to be performed or complied with  by  the
          Borrower,  (b)  immediately before and  after  such
          merger,  consolidation  or sale,  there  shall  not
          exist any Default or Unmatured Default and (c)  the
          surviving    corporation   of   such   merger    or
          consolidation,  or  the transferee  corporation  of
          such  assists of the Borrower, as applicable,  has,
          both immediately before and after giving effect  to
          such  merger,  consolidation  or  sale,  a  Moody's
          Rating of Baa3 or better or an S&P Rating of BBB  -
          or better.

      6.11.      Liens.  The Borrower will not, nor  will  it
permit  any  Significant Subsidiary  to,  create,  incur,  or
suffer  to  exist any Lien in, of or on the Property  of  the
Borrower or any of its Significant Subsidiaries, except:

     (i)  Liens  for taxes, assessments or governmental
          charges or levies on its Property if the same shall
          not at the time be delinquent or thereafter can  be
          paid  without  penalty, or are being  contested  in
          good  faith and by appropriate proceedings and  for
          which  adequate  reserves in accordance  with  GAAP
          shall have been set aside on its books.

     (ii) Liens  imposed  by law,  such  as  carriers',
          warehousemen's  and  mechanics'  liens  and   other
          similar  liens  arising in the ordinary  course  of
          business  which  secure payment of obligations  not
          more  than  60  days past due or  which  are  being
          contested  in good faith by appropriate proceedings
          and for which adequate reserves shall have been set
          aside on its books.

   (iii)  Liens arising out of pledges or deposits
          under   worker's  compensation  laws,  unemployment
          insurance,  old  age  pensions,  or  other   social
          security   or  retirement  benefits,   or   similar
          legislation.

                                Page 28



    (iv)  Utility easements, building restrictions  and
          such  other  encumbrances or charges  against  real
          property as are of a nature generally existing with
          respect  to  properties of a similar character  and
          which  do  not  in  any  material  way  affect  the
          marketability of the same or interfere with the use
          thereof  in  the  business of the Borrower  or  its
          Subsidiaries.

     (v)  The Lien of the General Mortgage Indenture and
          Deed  of  Trust  dated December 1, 1986,  from  the
          Borrower to UMB, N.A.

    (vi)  Liens  existing  on  the  date  hereof   and
          described in Schedule 1.

   (vii)  Judgment Liens which secure  payment  of
          legal  obligations  that  would  not  constitute  a
          Default under Section 7.9.

  (viii)  Liens  on  Property  acquired  by   the
          Borrower or a Significant Subsidiary after the date
          hereof,  existing on such Property at the  time  of
          acquisition   thereof   (and   not    created    in
          anticipation thereof), provided that  in  any  such
          case  no  such  Lien shall extend to or  cover  any
          other  Property of the Borrower or such Significant
          Subsidiary, as the case may be.

    (ix)  Deposits to secure the performance  of  bids,
          trade  contracts  (other than for borrowed  money),
          leases,  statutory obligations, surety  and  appeal
          bonds, performance bonds and other obligations of a
          like  nature  incurred in the  ordinary  course  of
          business   by   the  Borrower  or  any  Significant
          Subsidiary.

     (x)  Liens  which would otherwise not be permitted
          by  clauses  (i)  through (ix) securing  additional
          Indebtedness  of  the  Borrower  or  a  Significant
          Subsidiary,  provided  that  after  giving   effect
          thereto  the aggregate unpaid principal  amount  of
          Indebtedness   (including,   without    limitation,
          Capitalized Lease Obligations) of the Borrower  and
          its  Significant Subsidiaries (including prepayment
          premiums  and  penalties)  secured  by  such  Liens
          permitted  by  this  clause (x)  shall  not  exceed
          $50,000,000.

      6.12.  Affiliates.  The Borrower will not, and will not
permit   any   Subsidiary  to,  enter  into  any  transaction
(including, without limitation, the purchase or sale  of  any
Property  or  service) with, or make any payment or  transfer
to,  any  Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Borrower's
or  such  Subsidiary's business and upon fair and  reasonable
terms  no  less favorable to the Borrower or such  Subsidiary
than  the  Borrower  or such Subsidiary  would  obtain  in  a
comparable arms-length transaction.

                                Page 29
      


                         ARTICLE VII

                          DEFAULTS


      The  occurrence  of any one or more  of  the  following
events shall constitute a Default:

       7.1.     Any representation or warranty made or deemed
made  by or on behalf of the Borrower to the Lenders  or  the
Administrative  Agent  under  or  in  connection  with   this
Agreement,  any  Loan,  or  any  certificate  or  information
delivered in connection with this Agreement or any other Loan
Document  shall be materially false on the date as  of  which
made.

       7.2.     Nonpayment of principal of any Loan when due,
or  nonpayment of interest upon any Loan or of any commitment
fee  or  other  obligations under any of the  Loan  Documents
within five days after the same becomes due.

      7.3.     The breach by the Borrower of any of the terms
or provisions of Section 6.2, 6.10, 6.11 or 6.12.

       7.4.      The  breach by the Borrower  (other  than  a
breach  which constitutes a Default under another Section  of
this  Article VII) of any of the terms or provisions of  this
Agreement  which  is  not  remedied within  five  days  after
written notice from the Administrative Agent or any Lender.

       7.5.      Failure  of  the  Borrower  or  any  of  its
Significant  Subsidiaries to pay when  due  any  Indebtedness
aggregating    in    excess    of   $15,000,000    ("Material
Indebtedness"); or the default by the Borrower or any of  its
Significant  Subsidiaries  in the performance  of  any  term,
provision or condition contained in any agreement under which
any such Material Indebtedness was created or is governed, or
any other event shall occur or condition exist, the effect of
which  default or event is to cause, or to permit the  holder
or  holders  of  such Material Indebtedness  to  cause,  such
Material  Indebtedness  to become due  prior  to  its  stated
maturity; or any Material Indebtedness of the Borrower or any
of  its Significant Subsidiaries shall be declared to be  due
and  payable or required to be prepaid or repurchased  (other
than  by  a regularly scheduled payment) prior to the  stated
maturity  thereof; or the Borrower or any of its Subsidiaries
shall not pay, or admit in writing its inability to pay,  its
debts generally as they become due.

       7.6.      The  Borrower  or  any  of  its  Significant
Subsidiaries shall (i) have an order for relief entered  with
respect  to it under the Federal bankruptcy laws  as  now  or
hereafter in effect, (ii) make an assignment for the  benefit
of creditors, (iii) apply for, seek, consent to, or acquiesce
in,  the  appointment  of  a  receiver,  custodian,  trustee,
examiner,  liquidator  or similar  official  for  it  or  any
Substantial  Portion  of  its Property,  (iv)  institute  any
proceeding  seeking  an order for relief  under  the  Federal
bankruptcy  laws as now or hereafter in effect or 

                                Page 30

      


seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution,   winding   up,   liquidation,   reorganization,
arrangement,  adjustment or composition of it  or  its  debts
under   any   law  relating  to  bankruptcy,  insolvency   or
reorganization or relief of debtors or fail to file an answer
or  other  pleading denying the material allegations  of  any
such  proceeding filed against it, (v) take any corporate  or
partnership  action  to  authorize  or  effect  any  of   the
foregoing actions set forth in this Section 7.6 or (vi)  fail
to  contest  in  good  faith  any appointment  or  proceeding
described in Section 7.7.

       7.7.      Without the application, approval or consent
of  the  Borrower  or  any of its Subsidiaries,  a  receiver,
trustee,  examiner, liquidator or similar official  shall  be
appointed for the Borrower or any of its Subsidiaries or  any
Substantial   Portion  of  its  Property,  or  a   proceeding
described in Section 7.6(iv) shall be instituted against  the
Borrower  or  any  of its Subsidiaries and  such  appointment
continues   undischarged   or   such   proceeding   continues
undismissed or unstayed for a period of 30 consecutive days.

       7.8.      Any court, government or governmental agency
shall  condemn,  seize  or  otherwise  appropriate,  or  take
custody or control of, all or any portion of the Property  of
the  Borrower and its Subsidiaries which, when taken together
with  all other Property of the Borrower and its Subsidiaries
so  condemned,  seized, appropriated,  or  taken  custody  or
control  of, during the twelve-month period ending  with  the
month  in  which  any  such  action  occurs,  constitutes   a
Substantial Portion.

       7.9.      The  Borrower  or  any  of  its  Significant
Subsidiaries  shall  fail within 30  days  to  pay,  bond  or
otherwise discharge any judgment or order for the payment  of
money  in  excess  of $15,000,000 (either singly  or  in  the
aggregate with other such judgments), which is not stayed  on
appeal  or  otherwise being appropriately contested  in  good
faith.


                        ARTICLE VIII

       ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES


       8.1.      Acceleration.  If any Default  described  in
Section  7.6 or 7.7 occurs with respect to the Borrower,  the
obligations  of  the  Lenders to make Loans  hereunder  shall
automatically terminate and the Obligations shall immediately
become due and payable without any election or action on  the
part of the Administrative Agent or any Lender.  If any other
Default  occurs, the Required Lenders (or the  Administrative
Agent with the consent of the Required Lenders) may terminate
or  suspend  the  obligations of the Lenders  to  make  Loans
hereunder, or declare the Obligations to be due and  payable,
or  both,  whereupon the Obligations shall become immediately
due  and  payable,  without presentment, demand,  protest  or
notice  of  any  kind,  all  of  which  the  Borrower  hereby
expressly waives.

                                Page 31

      

     If, within 30 days after acceleration of the maturity of
the  Obligations  or  termination of the obligations  of  the
Lenders  to  make Loans hereunder as a result of any  Default
(other  than any Default as described in Section 7.6  or  7.7
with  respect  to  the Borrower) and before any  judgment  or
decree for the payment of the Obligations due shall have been
obtained  or  entered, the Required Lenders  (in  their  sole
discretion) shall so direct, the Administrative Agent  shall,
by   notice   to  the  Borrower,  rescind  and   annul   such
acceleration and/or termination.

      8.2.     Amendments.  Subject to the provisions of this
Article  VIII,  the  Required Lenders (or the  Administrative
Agent  with  the consent in writing of the Required  Lenders)
and  the  Borrower  may  enter into  agreements  supplemental
hereto  for the purpose of adding or modifying any provisions
to the Loan Documents or changing in any manner the rights of
the  Lenders or the Borrower hereunder or waiving any Default
hereunder;  provided,  however,  that  no  such  supplemental
agreement shall, without the consent of all of the Lenders:

     (i)  Extend  the  final maturity of  any  Loan  or
          forgive all or any portion of the principal  amount
          thereof, or reduce the rate or extend the  time  of
          payment of interest or fees thereon.

    (ii)  Reduce  the  percentage  specified  in   the
          definition of Required Lenders.

   (iii)  Extend the Facility Termination Date,  or
          reduce  the amount or extend the payment date  for,
          the  mandatory payments required under Section 2.2,
          or  increase  the amount of the Commitment  of  any
          Lender  hereunder, or permit the Borrower to assign
          its rights under this Agreement.

    (iv)  Amend this Section 8.2.

No  amendment of any provision of this Agreement relating  to
the  Administrative  Agent  shall be  effective  without  the
written   consent   of   the   Administrative   Agent.    The
Administrative  Agent may waive payment of the  fee  required
under  Section  12.3.2 without obtaining the consent  of  any
other party to this Agreement.

       8.3.     Preservation of Rights.  No delay or omission
of  the  Lenders or the Administrative Agent to exercise  any
right under the Loan Documents shall impair such right or  be
construed  to  be a waiver of any Default or an  acquiescence
therein,  and  the  making  of  a  Loan  notwithstanding  the
existence  of a Default or the inability of the  Borrower  to
satisfy  the  conditions precedent to  such  Loan  shall  not
constitute any waiver or acquiescence.  Any single or partial
exercise  of  any  such  right shall not  preclude  other  or
further exercise thereof or the exercise of any other  right,
and  no  waiver, amendment or other variation of  the  terms,
conditions  or  provisions of the Loan  Documents  whatsoever
shall  be  valid  unless  in writing signed  by  the  Lenders
required pursuant to Section 8.2, and then only to the extent
in   such  writing  specifically  set  forth.   All  remedies
contained in the Loan Documents or by law 

                                Page 32

      

afforded shall be cumulative and all shall be available to the 
Administrative Agent and the Lenders until the Obligations have 
been paid in full.


                         ARTICLE IX

                     GENERAL PROVISIONS


         9.1.        Survival   of   Representations.     All
representations and warranties of the Borrower  contained  in
this  Agreement shall survive the making of the Loans  herein
contemplated.

       9.2.      Governmental Regulation.  Anything contained
in  this Agreement to the contrary notwithstanding, no Lender
shall  be  obligated  to extend credit  to  the  Borrower  in
violation  of any limitation or prohibition provided  by  any
applicable statute or regulation.

       9.3.      Headings.   Section  headings  in  the  Loan
Documents  are for convenience of reference only,  and  shall
not govern the interpretation of any of the provisions of the
Loan Documents.

       9.4.      Entire Agreement.  The Loan Documents embody
the  entire  agreement and understanding among the  Borrower,
the  Administrative Agent and the Lenders and  supersede  all
prior  agreements and understandings among the Borrower,  the
Administrative Agent and the Lenders relating to the  subject
matter thereof other than the fee letter described in Section
10.13.

        9.5.       Several  Obligations;  Benefits  of   this
Agreement.    The  respective  obligations  of  the   Lenders
hereunder  are several and not joint and no Lender  shall  be
the  partner or agent of any other (except to the  extent  to
which the Administrative Agent is authorized to act as such).
The  failure  of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of  its
obligations hereunder.  This Agreement shall not be construed
so  as  to confer any right or benefit upon any Person  other
than  the  parties  to  this Agreement and  their  respective
successors  and assigns, provided, however, that the  parties
hereto  expressly  agree that the Arranger  shall  enjoy  the
benefits of the provisions of Sections 9.6, 9.10 and 10.11 to
the  extent specifically set forth therein and shall have the
right to enforce such provisions on its own behalf and in its
own  name  to the same extent as if it were a party  to  this
Agreement.

       9.6.     Expenses; Indemnification.  (i)  The Borrower
shall reimburse the Administrative Agent and the Arranger for
any  reasonable  costs,  internal charges  and  out-of-pocket
expenses  (including  attorneys' fees  and  time  charges  of
attorneys  for the Administrative Agent, which attorneys  may
be employees of the Administrative Agent) paid or incurred by
the  Administrative Agent or the Arranger in connection  with
the    preparation,    

                                Page 33

      


negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Loan Documents.  The 
Borrower also agrees to reimburse the Administrative Agent, the 
Arranger and the Lenders for any costs, internal charges and
out-of-pocket  expenses (including attorneys' fees  and  time
charges  of  attorneys  for  the  Administrative  Agent,  the
Arranger and the Lenders, which attorneys may be employees of
the  Administrative Agent, the Arranger or the Lenders)  paid
or  incurred by the Administrative Agent, the Arranger or any
Lender  in connection with the collection and enforcement  of
the Loan Documents.

      (ii)   The  Borrower hereby further agrees to indemnify
the  Administrative Agent, the Arranger and each Lender,  its
directors, officers and employees against all losses, claims,
damages,   penalties,  judgments,  liabilities  and  expenses
(including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent,
the  Arranger or any Lender is a party thereto) which any  of
them  may  pay  or incur arising out of or relating  to  this
Agreement,   the  other  Loan  Documents,  the   transactions
contemplated hereby or the direct or indirect application  or
proposed  application of the proceeds of any  Loan  hereunder
except to the extent that they are determined in a final non-
appealable  judgment by a court of competent jurisdiction  to
have resulted from the gross negligence or willful misconduct
of  the  party seeking indemnification.   The obligations  of
the Borrower under this Section 9.6 shall survive the payment
of the Obligations and termination of this Agreement.

        9.7.       Numbers  of  Documents.   All  statements,
notices,  closing documents, and requests hereunder shall  be
furnished   to  the  Administrative  Agent  with   sufficient
counterparts so that the Administrative Agent may furnish one
to each of the Lenders.

        9.8.      Accounting.   Except  as  provided  to  the
contrary  herein, all accounting terms used herein  shall  be
interpreted and all accounting determinations hereunder shall
be made in accordance with GAAP.

      9.9. Severability of Provisions.  Any provision in  any
Loan  Document that is held to be inoperative, unenforceable,
or   invalid   in  any  jurisdiction  shall,   as   to   that
jurisdiction,  be  inoperative,  unenforceable,  or   invalid
without   affecting   the  remaining   provisions   in   that
jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the
provisions  of  all  Loan  Documents  are  declared   to   be
severable.

      9.10.      Nonliability of Lenders.   The  relationship
between the Borrower on the one hand and the Lenders and  the
Administrative Agent on the other hand shall be  solely  that
of  borrower  and lender.  Neither the Administrative  Agent,
the   Arranger  nor  any  Lender  shall  have  any  fiduciary
responsibilities to the Borrower.  Neither the Administrative
Agent,   the   Arranger   nor  any  Lender   undertakes   any
responsibility  to  the  Borrower to  review  or  inform  the
Borrower  of any matter in connection with any phase  of  the
Borrower's business or operations.  The Borrower agrees  that
neither the Administrative Agent, the Arranger nor 

                        Page 34

      


any Lender shall have liability to the Borrower (whether sounding
in  tort, contract or otherwise) for losses suffered  by  the
Borrower  in connection with, arising out of, or in  any  way
related   to,   the   transactions   contemplated   and   the
relationship established by the Loan Documents, or  any  act,
omission  or event occurring in connection therewith,  unless
it  is  determined in a final non-appealable  judgment  by  a
court  of  competent jurisdiction that such  losses  resulted
from  the gross negligence or willful misconduct of the party
from  which  recovery is sought.  Neither the  Administrative
Agent,  the Arranger nor any Lender shall have any  liability
with respect to, and the Borrower hereby waives, releases and
agrees not to sue for, any special, indirect or consequential
damages  suffered by the Borrower in connection with, arising
out  of, or in any way related to the Loan Documents  or  the
transactions contemplated thereby.

      9.11.     Confidentiality.  Each Lender agrees to  hold
any  confidential information which it may receive  from  the
Borrower pursuant to this Agreement in confidence, except for
disclosure  (i)  to its Affiliates and to other  Lenders  and
their   respective   Affiliates,  (ii)  to   legal   counsel,
accountants, and other professional advisors to  that  Lender
or  to  a Transferee, (iii) to regulatory officials, (iv)  to
any  Person as requested pursuant to or as required  by  law,
regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which that Lender is a party and
(vi) permitted by Section 12.4.

      9.12.      Nonreliance.  Each Lender hereby  represents
that it is not relying on or looking to any margin stock  (as
defined  in  Regulation U of the Board of  Governors  of  the
Federal  Reserve  System)  for the  repayment  of  the  Loans
provided for herein.



                          ARTICLE X

                         THE AGENTS


      10.1.      Appointment;  Nature of  Relationship.   The
First National Bank of Chicago is hereby appointed by each of
the   Lenders  as  its  contractual  representative   (herein
referred  to  as  the "Administrative Agent")  hereunder  and
under  each  other  Loan Document, and each  of  the  Lenders
irrevocably authorizes the Administrative Agent to act as the
contractual representative of such Lender with the rights and
duties  expressly  set forth herein and  in  the  other  Loan
Documents.   The Administrative Agent agrees to act  as  such
contractual   representative  upon  the  express   conditions
contained in this Article X.  Notwithstanding the use of  the
defined   term   "Administrative  Agent,"  it  is   expressly
understood and agreed that the Administrative Agent shall not
have  any fiduciary responsibilities to any Lender by  reason
of  this  Agreement or any other Loan Document and  that  the
Administrative  Agent  is merely acting  as  the  contractual
representative of the Lenders with only those duties  as  are
expressly  set  forth in this Agreement and  the  other  Loan
Documents.   In  its  capacity as  the  Lenders'  contractual
representative, the Administrative Agent (i) does not  hereby
assume any 

                        Page 35

      


fiduciary duties to any of the Lenders, (ii) is  a
"representative" of the Lenders within the meaning of Section
9-105  of the Uniform Commercial Code and (iii) is acting  as
an independent contractor, the rights and duties of which are
limited  to  those expressly set forth in this Agreement  and
the  other Loan Documents.  Each of the Lenders hereby agrees
to  assert no claim against the Administrative Agent  on  any
agency theory or any other theory of liability for breach  of
fiduciary  duty,  all  of  which claims  each  Lender  hereby
waives.   Each  Lender hereby appoints NationsBank,  N.A.  as
Documentation  Agent  for  the  Lenders.   The  Documentation
Agent,  in its capacity as such, shall have no rights, duties
or   responsibilities  hereunder  or  under  any  other  Loan
Document.

      10.2.     Powers.  The Administrative Agent shall  have
and  may exercise such powers under the Loan Documents as are
specifically  delegated to the Administrative  Agent  by  the
terms  of  each  thereof, together with such  powers  as  are
reasonably  incidental  thereto.   The  Administrative  Agent
shall  have  no  implied  duties  to  the  Lenders,  or   any
obligation  to  the  Lenders to take  any  action  thereunder
except any action specifically provided by the Loan Documents
to be taken by the Administrative Agent.

      10.3.     General Immunity.  Neither the Administrative
Agent nor any of its directors, officers, agents or employees
shall  be  liable to the Borrower, the Lenders or any  Lender
for  any  action taken or omitted to be taken by it  or  them
hereunder  or under any other Loan Document or in  connection
herewith  or  therewith except to the extent such  action  or
inaction is determined in a final non-appealable judgment  by
a  court  of competent jurisdiction to have arisen  from  the
gross negligence or willful misconduct of such Person.

      10.4.      No Responsibility for Loans, Recitals,  etc.
Neither  the  Administrative Agent nor any of its  directors,
officers,  agents  or employees shall be responsible  for  or
have  any duty to ascertain, inquire into, or verify (a)  any
statement, warranty or representation made in connection with
any  Loan  Document  or  any  borrowing  hereunder;  (b)  the
performance  or  observance  of  any  of  the  covenants   or
agreements of any obligor under any Loan Document, including,
without  limitation, any agreement by an obligor  to  furnish
information directly to each Lender; (c) the satisfaction  of
any  condition  specified in Article IV,  except  receipt  of
items  required  to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default
or  Unmatured  Default;  (e)  the  validity,  enforceability,
effectiveness,  sufficiency  or  genuineness  of   any   Loan
Document  or  any  other instrument or writing  furnished  in
connection  therewith; (f) the value, sufficiency,  creation,
perfection   or  priority  of  any  Lien  in  any  collateral
security;  or (g) the financial condition of the Borrower  or
any  guarantor  of any of the Obligations or of  any  of  the
Borrower's  or  any such guarantor's respective Subsidiaries.
The  Administrative Agent shall have no duty to  disclose  to
the  Lenders information that is not required to be furnished
by the Borrower to the Administrative Agent at such time, but
is   voluntarily   furnished   by   the   Borrower   to   the
Administrative   Agent   (either   in   its    capacity    as
Administrative Agent or in its individual capacity).

                        Page 36

      

      10.5.      Action  on  Instructions  of  Lenders.   The
Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and under any
other  Loan  Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any
action  taken  or  failure to act pursuant thereto  shall  be
binding   on   all  of  the  Lenders.   The  Lenders   hereby
acknowledge that the Administrative Agent shall be  under  no
duty  to take any discretionary action permitted to be  taken
by  it  pursuant to the provisions of this Agreement  or  any
other  Loan Document unless it shall be requested in  writing
to  do  so by the Required Lenders.  The Administrative Agent
shall  be fully justified in failing or refusing to take  any
action hereunder and under any other Loan Document unless  it
shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that
it  may  incur by reason of taking or continuing to take  any
such action.

       10.6.      Employment  of  Administrative  Agents  and
Counsel.   The Administrative Agent may execute  any  of  its
duties as Administrative Agent hereunder and under any  other
Loan   Document   by  or  through  employees,   agents,   and
attorneys-in-fact and shall not be answerable to the Lenders,
except  as  to  money or securities received  by  it  or  its
authorized agents, for the default or misconduct of any  such
agents  or  attorneys-in-fact selected by it with  reasonable
care.   The Administrative Agent shall be entitled to  advice
of counsel concerning the contractual arrangement between the
Administrative  Agent  and  the  Lenders  and   all   matters
pertaining to the Administrative Agent's duties hereunder and
under any other Loan Document.

       10.7.       Reliance  on  Documents;   Counsel.    The
Administrative Agent shall be entitled to rely upon any Note,
notice,  consent,  certificate, affidavit, letter,  telegram,
statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper  person
or  persons,  and,  in  respect to legal  matters,  upon  the
opinion  of  counsel  selected by the  Administrative  Agent,
which counsel may be employees of the Administrative Agent.

       10.8.      Administrative  Agent's  Reimbursement  and
Indemnification.    The  Lenders  agree  to   reimburse   and
indemnify  the Administrative Agent ratably in proportion  to
their  respective  Commitments (or, if the  Commitments  have
been   terminated,   in  proportion  to   their   Commitments
immediately  prior to such termination) (i) for  any  amounts
not  reimbursed  by the Borrower for which the Administrative
Agent is entitled to reimbursement by the Borrower under  the
Loan  Documents, (ii) for any other expenses incurred by  the
Administrative Agent on behalf of the Lenders, in  connection
with the preparation, execution, delivery, administration and
enforcement   of  the  Loan  Documents  (including,   without
limitation,  for any expenses incurred by the  Administrative
Agent   in   connection   with  any   dispute   between   the
Administrative Agent and any Lender or between two or more of
the  Lenders)  and  (iii)  for any liabilities,  obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses  or disbursements of any kind and nature  whatsoever
which may be imposed on, incurred by or asserted against  the
Administrative Agent in any way relating to or arising out of
the  Loan  Documents  or  any  other  document  delivered  in

                                Page 37

      

connection therewith or the transactions contemplated thereby
(including, without limitation, for any such amounts incurred
by or asserted against the Administrative Agent in connection
with  any  dispute between the Administrative Agent  and  any
Lender  or  between  two  or more of  the  Lenders),  or  the
enforcement of any of the terms of the Loan Documents  or  of
any  such  other documents, provided that no Lender shall  be
liable  for  any of the foregoing to the extent  any  of  the
foregoing  is found in a final non-appealable judgment  by  a
court  of  competent jurisdiction to have resulted  from  the
gross  negligence or willful misconduct of the Administrative
Agent.   The  obligations of the Lenders under  this  Section
10.8 shall survive payment of the Obligations and termination
of this Agreement.

      10.9.     Notice of Default.  The Administrative  Agent
shall  not  be  deemed to have knowledge  or  notice  of  the
occurrence  of  any  Default or Unmatured  Default  hereunder
unless  the Administrative Agent has received written  notice
from  a  Lender  or the Borrower referring to this  Agreement
describing such Default or Unmatured Default and stating that
such notice is a "notice of default".  In the event that  the
Administrative   Agent   receives   such   a   notice,    the
Administrative Agent shall give prompt notice thereof to  the
Lenders.

       10.10.   Rights  as  a  Lender.   In  the  event   the
Administrative  Agent  is a Lender, the Administrative  Agent
shall have the same rights and powers hereunder and under any
other  Loan Document with respect to its Commitment  and  its
Loans  as  any Lender and may exercise the same as though  it
were  not the Administrative Agent, and the term "Lender"  or
"Lenders" shall, at any time when the Administrative Agent is
a Lender, unless the context otherwise indicates, include the
Administrative  Agent  in  its  individual   capacity.    The
Administrative  Agent and its Affiliates may accept  deposits
from,  lend  money to, and generally engage in  any  kind  of
trust,  debt,  equity or other transaction,  in  addition  to
those  contemplated  by  this Agreement  or  any  other  Loan
Document,  with  the Borrower or any of its  Subsidiaries  in
which  the  Borrower  or such Subsidiary  is  not  restricted
hereby from engaging with any other Person.

       10.11.    Lender   Credit   Decision.    Each   Lender
acknowledges that it has, independently and without  reliance
upon  the  Administrative Agent, the Arranger  or  any  other
Lender and based on the financial statements prepared by  the
Borrower and such other documents and information as  it  has
deemed appropriate, made its own credit analysis and decision
to  enter  into this Agreement and the other Loan  Documents.
Each Lender also acknowledges that it will, independently and
without  reliance upon the Administrative Agent, the Arranger
or   any  other  Lender  and  based  on  such  documents  and
information  as  it  shall  deem  appropriate  at  the  time,
continue  to make its own credit decisions in taking  or  not
taking  action  under  this  Agreement  and  the  other  Loan
Documents.

        10.12.    Successor   Administrative   Agent.     The
Administrative Agent may resign at any time by giving written
notice  thereof  to  the  Lenders  and  the  Borrower,   such
resignation  to  be  effective  upon  the  appointment  of  a
successor   Administrative  Agent   or,   if   no   successor
Administrative  Agent  has  been appointed,  forty-five  days
after  the retiring Administrative Agent gives notice of  its
intention to resign. The Administrative Agent may be removed at  

                                Page 38

      

any time with or without cause by written notice received
by  the Administrative Agent from the Required Lenders,  such
removal to be effective on the date specified by the Required
Lenders.   Upon any such resignation or removal, the Required
Lenders  shall  have the right to appoint, on behalf  of  the
Borrower  and the Lenders, a successor Administrative  Agent.
If  no  successor  Administrative Agent shall  have  been  so
appointed  by the Required Lenders within thirty  days  after
the  resigning  Administrative Agent's giving notice  of  its
intention to resign, then the resigning Administrative  Agent
may  appoint,  on behalf of the Borrower and the  Lenders,  a
successor Administrative Agent.  Notwithstanding the previous
sentence,  the Administrative Agent may at any  time  without
the consent of the Borrower or any Lender, appoint any of its
Affiliates  which  is  a  commercial  bank  as  a   successor
Administrative Agent hereunder.  If the Administrative  Agent
has  resigned or been removed and no successor Administrative
Agent  has  been appointed, the Lenders may perform  all  the
duties of the Administrative Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to  the
applicable  Lender  and  for all other  purposes  shall  deal
directly with the Lenders.  No successor Administrative Agent
shall  be  deemed  to  be  appointed  hereunder  until   such
successor  Administrative Agent has accepted the appointment.
Any such successor Administrative Agent shall be a commercial
bank  having  capital  and  retained  earnings  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   resigning   or   removed
Administrative   Agent.   Upon  the  effectiveness   of   the
resignation  or  removal  of  the Administrative  Agent,  the
resigning or removed Administrative Agent shall be discharged
from  its duties and obligations hereunder and under the Loan
Documents.   After  the effectiveness of the  resignation  or
removal  of an Administrative Agent, the provisions  of  this
Article  X shall continue in effect for the benefit  of  such
Administrative  Agent  in respect of  any  actions  taken  or
omitted  to  be  taken  by it while  it  was  acting  as  the
Administrative  Agent  hereunder and  under  the  other  Loan
Documents.   In  the event that there is a successor  to  the
Administrative  Agent by merger, or the Administrative  Agent
assigns  its duties and obligations to an Affiliate  pursuant
to this Section 10.12, then the term "Corporate Base Rate" as
used  in this Agreement shall mean the prime rate, base  rate
or other analogous rate of the new Administrative Agent.

     10.13.  Administrative Agent's Fee.  The Borrower agrees
to  pay to the Administrative Agent, for its own account, the
fees  agreed to by the Borrower and the Administrative  Agent
pursuant to that certain letter agreement dated July 3, 1998,
or as otherwise agreed from time to time.

      10.14.  Delegation to Affiliates.  The Borrower and the
Lenders agree that the Administrative Agent may delegate  any
of  its duties under this Agreement to any of its Affiliates.
Any such Affiliate (and such Affiliate's directors, officers,
agents  and  employees) which performs duties  in  connection
with this Agreement shall be entitled to the same benefits of
the  indemnification, waiver and other protective  provisions
to  which the Administrative Agent is entitled under Articles
IX and X.

                                Page 39

      


                         ARTICLE XI

                  SETOFF; RATABLE PAYMENTS


       11.1.       Setoff.   In  addition  to,  and   without
limitation  of,  any rights of the Lenders  under  applicable
law, if the Borrower becomes insolvent, however evidenced, or
any  Default  occurs,  any  and all deposits  (including  all
account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any
time  held  or  owing by any Lender or any Affiliate  of  any
Lender to or for the credit or account of the Borrower may be
offset  and  applied  toward the payment of  the  Obligations
owing to such Lender, whether or not the Obligations, or  any
part hereof, shall then be due.

      11.2.     Ratable Payments.  If any Lender, whether  by
setoff  or  otherwise, has payment made to it upon its  Loans
(other  than payments received pursuant to Section 3.1,  3.2,
3.4 or 3.5) in a greater proportion than that received by any
other  Lender, such Lender agrees, promptly upon  demand,  to
purchase a portion of the Loans held by the other Lenders  so
that  after  such purchase each Lender will hold its  ratable
proportion  of  Loans.  If any Lender, whether in  connection
with  setoff or amounts which might be subject to  setoff  or
otherwise,  receives collateral or other protection  for  its
Obligations or such amounts which may be subject  to  setoff,
such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their Loans.  In case any
such  payment  is disturbed by legal process,  or  otherwise,
appropriate further adjustments shall be made.


                         ARTICLE XII

      BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS


       12.1.      Successors  and  Assigns.   The  terms  and
provisions  of the Loan Documents shall be binding  upon  and
inure  to  the  benefit of the Borrower and the  Lenders  and
their respective successors and assigns, except that (i)  the
Borrower  shall not have the right to assign  its  rights  or
obligations under the Loan Documents and (ii) any  assignment
by  any Lender must be made in compliance with Section  12.3.
Notwithstanding clause (ii) of this Section, any  Lender  may
at  any  time,  without the consent of the  Borrower  or  the
Administrative Agent, assign all or any portion of its rights
under  this Agreement and any Note to a Federal Reserve Bank;
provided,  however,  that  no such assignment  to  a  Federal
Reserve  Bank  shall release the transferor Lender  from  its
obligations  hereunder.  The Administrative Agent  may  treat
the Person which made any Loan or which holds any Note as the
owner  thereof for all purposes hereof unless and until  such
Person  complies  with  Section  12.3  in  the  case  of   an
assignment  thereof or, in the case of any other transfer,  a
written   notice   of  the  transfer  is   filed   with   the
Administrative  Agent.  Any assignee  or  transferee  of  

                        Page 40

      

the rights to any Loan or any Note agrees by acceptance of such
transfer  or  assignment to be bound by  all  the  terms  and
provisions of the Loan Documents.  Any request, authority  or
consent of any Person, who at the time of making such request
or  giving  such  authority or consent is the  owner  of  the
rights to any Loan (whether or not a Note has been issued  in
evidence  thereof), shall be conclusive and  binding  on  any
subsequent  holder, transferee or assignee of the  rights  to
such Loan.

     12.2.     Participations.

            12.2.1.   Permitted  Participants;  Effect.   Any
     Lender  may, in the ordinary course of its business  and
     in  accordance with applicable law, at any time sell  to
     one  or  more  banks or other entities  ("Participants")
     participating  interests  in  any  Loan  owing  to  such
     Lender, any Note held by such Lender, any Commitment  of
     such  Lender or any other interest of such Lender  under
     the Loan Documents.  In the event of any such sale by  a
     Lender of participating interests to a Participant, such
     Lender's  obligations  under the  Loan  Documents  shall
     remain   unchanged,  such  Lender  shall  remain  solely
     responsible  to  the  other  parties  hereto   for   the
     performance  of  such  obligations,  such  Lender  shall
     remain the owner of its Loans and the holder of any Note
     issued to it in evidence thereof for all purposes  under
     the  Loan Documents, all amounts payable by the Borrower
     under  this  Agreement shall be determined  as  if  such
     Lender  had  not sold such participating interests,  and
     the Borrower and the Administrative Agent shall continue
     to   deal  solely  and  directly  with  such  Lender  in
     connection  with  such Lender's rights  and  obligations
     under the Loan Documents.

           12.2.2.  Voting Rights.  Each Lender shall  retain
     the  sole right to approve, without the consent  of  any
     Participant,  any amendment, modification or  waiver  of
     any  provision  of  the Loan Documents  other  than  any
     amendment,  modification or waiver with respect  to  any
     Loan  or  Commitment  in which such Participant  has  an
     interest which forgives principal, interest or  fees  or
     reduces  the interest rate or fees payable with  respect
     to  any  such  Loan or Commitment, extends the  Facility
     Termination  Date or postpones any date  fixed  for  any
     regularly-scheduled payment of principal of, or interest
     or fees on, any such Loan or Commitment.

           12.2.3.   Benefit of Setoff.  The Borrower  agrees
     that  each Participant shall be deemed to have the right
     of  setoff  provided in Section 11.1 in respect  of  its
     participating interest in amounts owing under  the  Loan
     Documents  to  the same extent as if the amount  of  its
     participating interest were owing directly to  it  as  a
     Lender  under  the  Loan Documents, provided  that  each
     Lender  shall  retain the right of  setoff  provided  in
     Section 11.1 with respect to the amount of participating
     interests  sold to each Participant.  The Lenders  agree
     to share with each Participant, and each Participant, by
     exercising the right of setoff provided in Section 11.1,
     agrees  to  share with each Lender, any amount  received
     pursuant  to  the exercise of its right of setoff,  such
     amounts to be shared in accordance with Section 11.2  as
     if each Participant were a Lender.


                                Page 41

      


     12.3.     Assignments.

          12.3.1.  Permitted Assignments.  Any Lender may, in
     the  ordinary  course of its business and in  accordance
     with  applicable law, at any time assign to one or  more
     banks  or other entities ("Purchasers") all or any  part
     of  its rights and obligations under the Loan Documents.
     Such  assignment shall be substantially in the  form  of
     Exhibit C or in such other form as may be agreed  to  by
     the  parties  thereto.  The consent of the Borrower  and
     the  Administrative Agent shall be required prior to  an
     assignment   becoming  effective  with  respect   to   a
     Purchaser which is not a Lender or an Affiliate thereof;
     provided, however, that if a Default has occurred and is
     continuing,  the consent of the Borrower  shall  not  be
     required.    Such  consent  shall  not  be  unreasonably
     withheld or delayed.  Each such assignment shall (unless
     each  of  the  Borrower  and  the  Administrative  Agent
     otherwise  consents) be in an amount not less  than  the
     lesser  of (i) $10,000,000 or (ii) the remaining  amount
     of  the assigning Lender's Commitment (calculated as  at
     the date of such assignment).

          12.3.2.  Effect; Effective Date.  Upon (i) delivery
     to  the  Administrative Agent of a notice of assignment,
     substantially  in  the form attached  as  Exhibit  I  to
     Exhibit C (a "Notice of Assignment"), together with  any
     consents required by Section 12.3.1, and (ii) payment of
     a  $3,000 fee to the Administrative Agent for processing
     such  assignment, such assignment shall become effective
     on  the  effective  date specified  in  such  Notice  of
     Assignment.   The Notice of Assignment shall  contain  a
     representation by the Purchaser to the effect that  none
     of  the  consideration used to make the purchase of  the
     Commitment  and  Loans  under the applicable  assignment
     agreement  are "plan assets" as defined under ERISA  and
     that  the rights and interests of the Purchaser  in  and
     under the Loan Documents will not be "plan assets" under
     ERISA.   On  and  after  the  effective  date  of   such
     assignment, such Purchaser shall for all purposes  be  a
     Lender  party  to  this Agreement  and  any  other  Loan
     Document  executed by or on behalf of  the  Lenders  and
     shall  have all the rights and obligations of  a  Lender
     under  the Loan Documents, to the same extent as  if  it
     were an original party hereto, and no further consent or
     action   by   the   Borrower,   the   Lenders   or   the
     Administrative  Agent shall be required to  release  the
     transferor Lender with respect to the percentage of  the
     Aggregate   Commitment  and  Loans  assigned   to   such
     Purchaser.  Upon the consummation of any assignment to a
     Purchaser   pursuant   to  this  Section   12.3.2,   the
     transferor  Lender,  the Administrative  Agent  and  the
     Borrower  shall,  if  the  transferor  Lender   or   the
     Purchaser desires that its Loans be evidenced by  Notes,
     make  appropriate arrangements so that new Notes or,  as
     appropriate,  replacement  Notes  are  issued  to   such
     transferor  Lender  and new Notes  or,  as  appropriate,
     replacement Notes, are issued to such Purchaser, in each
     case  in  principal amounts reflecting their  respective
     Commitments, as adjusted pursuant to such assignment.

          12.3.3.  Substitution of Lenders.  In the event any
     Lender's long term unsecured debt rating falls below Aa3
     from Moody's or AA- from S&P, the Borrower may designate
     another financial institution which is acceptable to the
     Administrative
     
                                Page 42

      


     Agent in its sole discretion, to purchase, pursuant to 
     this Section 12.3, the Loans and Commitment of such 
     Lender and  such  Lender's  rights hereunder,  without  
     recourse  to  or  warranty  by,  or expense  to, such Lender 
     for a purchase price  equal  to the outstanding principal amount 
     of the Loans payable to such Lender plus any accrued but 
     unpaid interest on such Loans  and  accrued but unpaid 
     commitment fees  and  any other   amounts  payable  to  
     such  Lender  under   this Agreement,  and  to assume all the 
     obligations  of  such Lender hereunder.

      12.4.      Dissemination of Information.  The  Borrower
authorizes  each  Lender to disclose to  any  Participant  or
Purchaser  or any other Person acquiring an interest  in  the
Loan Documents by operation of law (each a "Transferee")  and
any  prospective Transferee any and all information  in  such
Lender's  possession concerning the creditworthiness  of  the
Borrower  and its Subsidiaries; provided that each Transferee
and prospective Transferee agrees to be bound by Section 9.11
of this Agreement.

      12.5.      Tax Treatment.  If any interest in any  Loan
Document  is transferred to any Transferee which is organized
under  the  laws  of any jurisdiction other than  the  United
States  or  any  State thereof, the transferor  Lender  shall
cause such Transferee, concurrently with the effectiveness of
such  transfer,  to  comply with the  provisions  of  Section
3.5(iv).


                        ARTICLE XIII

                           NOTICES


      13.1.      Notices.  Except as otherwise  permitted  by
Section  2.13 with respect to borrowing notices, all notices,
requests  and  other  communications to any  party  hereunder
shall  be  in  writing  (including  electronic  transmission,
facsimile transmission or similar writing) and shall be given
to  such  party:  (x)  in the case of  the  Borrower  or  the
Administrative Agent, at its address or facsimile number  set
forth  on the signature pages hereof, (y) in the case of  any
Lender,  at  its address or facsimile number set forth  below
its signature hereto or (z) in the case of any party, at such
other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Administrative Agent
and  the  Borrower in accordance with the provisions of  this
Section   13.1.    Each  such  notice,   request   or   other
communication  shall be effective (i) if given  by  facsimile
transmission,  when  transmitted  to  the  facsimile   number
specified  in  this Section and confirmation  of  receipt  is
received,  (ii)  if  given  by  mail,  72  hours  after  such
communication  is  deposited in the mails  with  first  class
postage prepaid, addressed as aforesaid, or (iii) if given by
any  other  means,  when  delivered  (or,  in  the  case   of
electronic  transmission, received) at the address  specified
in  this Section; provided that notices to the Administrative
Agent under Article II shall not be effective until received.

                        Page 43

      

       13.2.      Change  of  Address.   The  Borrower,   the
Administrative  Agent  and any Lender  may  each  change  the
address  for service of notice upon it by a notice in writing
to the other parties hereto.


                         ARTICLE XIV

                        COUNTERPARTS


      This  Agreement  may  be  executed  in  any  number  of
counterparts,  all of which taken together  shall  constitute
one agreement, and any of the parties hereto may execute this
Agreement  by  signing any such counterpart.  This  Agreement
shall be effective when it has been executed by the Borrower,
the  Administrative Agent and the Lenders and each party  has
notified  the  Administrative Agent by facsimile transmission
or telephone that it has taken such action.


                         ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL


     15.1.     CHOICE OF LAW.  THE LOAN DOCUMENTS (OTHER THAN
THOSE  CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION)
SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS  (AND
NOT  THE  LAW  OF  CONFLICTS) OF THE STATE OF  ILLINOIS,  BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

      15.2.     CONSENT TO JURISDICTION.  THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF  ANY
UNITED  STATES  FEDERAL OR ILLINOIS STATE  COURT  SITTING  IN
CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT  OF
OR  RELATING  TO  ANY LOAN DOCUMENTS AND THE BORROWER  HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH  ACTION
OR  PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH  COURT
AND  IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE  AS  TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT  OR
ANY  LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN  THE
COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY
THE BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE
OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY,
ANY  MATTER  IN  

                        Page 44

      


ANY  WAY  ARISING OUT  OF,  RELATED  TO,  OR CONNECTED WITH ANY 
LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, 
ILLINOIS.

     15.3.     WAIVER OF JURY TRIAL.  THE BORROWER, THE AGENT
AND  EACH  LENDER HEREBY WAIVE TRIAL BY JURY IN ANY  JUDICIAL
PROCEEDING  INVOLVING,  DIRECTLY OR  INDIRECTLY,  ANY  MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY  WAY
ARISING  OUT  OF,  RELATED  TO, OR CONNECTED  WITH  ANY  LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

                        Page 45

      


      IN  WITNESS WHEREOF, the Borrower, the Lenders and  the
Administrative Agent have executed this Agreement as  of  the
date first above written.
                              
                              KANSAS CITY POWER & LIGHT COMPANY

                              By:  /s/Andrea F. Bielsker
                              Title:  Treasurer
                                1200 Walnut
                                Kansas City, Missouri 64141

                                Attention:  Andrea F. Bielsker,
                                            Treasurer
                                Telephone:  (816) 556-2595
                                FAX:        (816) 556-2992

Commitments
- -----------

$22,000,000                     THE FIRST NATIONAL BANK OF CHICAGO,
                                Individually and as Administrative Agent

                                By:  /s/William N. Banks
                                Title:  First Vice President
                                  One First National Plaza
                                  Chicago, Illinois 60670

                                  Attention:  William N. Banks
                                  Telephone:  (312) 732-9781
                                  FAX:        (312) 732-3055


$22,000,000                     NATIONSBANK, N.A.,
                                Individually and as Documentation Agent

                                By: /s/Curtis L. Anderson
                                Title:  Senior Vice President
                                  901 Main Street
                                  Dallas, Texas 75202

                                  Attention: Curtis L. Anderson
                                  Telephone: (214) 508-1290
                                  FAX:       (214) 508-3943


$18,000,000                     ABN AMRO BANK, N.V.

                                By:  /s/Mark R. Lasek
                                Title:  Vice President

                                By: /s/Robert E. Lee IV
                                Title:  Assistant Vice President
                                  135 South LaSalle Street
                                  Chicago, Illinois 60603

                                  Attention:  Mark Lasek
                                  Telephone:  (312) 904-2074
                                  FAX:        (312) 904-1466


$18,000,000                     THE BANK OF NOVA SCOTIA, ATLANTA OFFICE

                                By:  /s/F. C. H. Ashby
                                Title:  Senior Manager Loan Operations
                                  600 Peachtree Street N.E., Suite 2700
                                  Atlanta, GA 30308

                                  Attention:   Vicki Gibson
                                  Telephone:   (404) 877-1557
                                  FAX:         (404) 888-8998


$15,000,000                     THE BANK OF NEW YORK

                                By:  /s/Ian K. Stewart
                                Title:  Senior Vice President
                                  One Wall Street, 19th Floor
                                  New York, NY 10286

                                  Attention:    Nate Howard
                                  Telephone:    (212) 635-7916
                                  FAX:          (212) 635-7923


$15,000,000                     WESTDEUTSCHE LANDESBANK GIROZENTRALE

                                By:  /s/Lisa Walker
                                Title:  Vice President


                                By:  /s/Elisabeth R. Wilds
                                Title:  Associate
                                  1211 Ave of the Americas 
                                  New York, NY 10036
                                  
                                  Attention:  Cheryl Y. Wilson
                                  Telephone:  (212) 852-6152
                                  FAX:        (212 302-7946


   $110,000,000        
   ============   


                                                        
                                                   Exhibit 10(b)

                                
                  EQUIPMENT LEASING AGREEMENT
                                
                 dated as of September 8, 1998
                                
                            between

                     CCG TRUST CORPORATION,
                         as the Lessor
                                
                              and

               KANSAS CITY POWER & LIGHT COMPANY,
                         as the Lessee


THIS IS COUNTERPART NO. 2 OF 5 SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS.  TO THE EXTENT, IF ANY, THAT THIS DOCUMENT CONSTITUTES
CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY
INTEREST IN THIS DOCUMENT MAY BE PERFECTED THROUGH THE POSSESSION
OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1.
                       


                        
                        TABLE OF CONTENTS


     1.   Definitions; Construction. . . . . . . . . . . . . . .1

     2.   Agreement for Purchase and Lease of Equipment. . . . 10
          (a)  Purchase. . . . . . . . . . . . . . . . . . . . 10
          (b)  Lease . . . . . . . . . . . . . . . . . . . . . 10

     3.   Conditions Precedent . . . . . . . . . . . . . . . . 10

     4.   Delivery, Acceptance and Leasing of Equipment;
          Funding  . . . . . . . . . . . . . . . . . . . . . . 11
          (a)  Delivery, Acceptance and Leasing. . . . . . . . 11
          (b)  Funding . . . . . . . . . . . . . . . . . . . . 12
          (c)  Characterization. . . . . . . . . . . . . . . . 12

     5.   Term . . . . . . . . . . . . . . . . . . . . . . . . 12

     6.   Return of Equipment. . . . . . . . . . . . . . . . . 12

     7.   Basic Rent and Other Payments. . . . . . . . . . . . 14
          (a)  Basic Rent. . . . . . . . . . . . . . . . . . . 14
          (b)  Supplemental Payments . . . . . . . . . . . . . 15
          (c)  Method of Payment . . . . . . . . . . . . . . . 15

     8.   Net Lease. . . . . . . . . . . . . . . . . . . . . . 15

     9.   Use of Equipment; Compliance with Laws . . . . . . . 16

     10.  Maintenance and Repair of Equipment. . . . . . . . . 17

     11.  Replacements; Alterations: Modifications . . . . . . 17

     12.  Identification Marks; Inspection . . . . . . . . . . 18

     13.  Assignment and Subleasing; Quiet Enjoyment . . . . . 19
          (a)  By the Lessee . . . . . . . . . . . . . . . . . 19
          (b)  By the Lessor . . . . . . . . . . . . . . . . . 19
          (c)  Quiet Enjoyment . . . . . . . . . . . . . . . . 20

     14.  Liens. . . . . . . . . . . . . . . . . . . . . . . . 21

     15.  Loss, Damage or Destruction. . . . . . . . . . . . . 21

                                ii



          (a)  Risk of Loss, Damage or Destruction . . . . . . 21
          (b)  Payment of Casualty Loss Value Upon an Event
               of Loss . . . . . . . . . . . . . . . . . . . . 21
          (c)  Substitution. . . . . . . . . . . . . . . . . . 22
          (d)  Application of Payments Not Relating to an
               Event of Loss . . . . . . . . . . . . . . . . . 23

     16.  Insurance. . . . . . . . . . . . . . . . . . . . . . 23

     17.  General Tax Indemnity. . . . . . . . . . . . . . . . 23

     18.  Indemnification. . . . . . . . . . . . . . . . . . . 27

     19.  No Warranties. . . . . . . . . . . . . . . . . . . . 29

     20.  Lessee's Representations and Warranties. . . . . . . 29

     21.  Events of Default. . . . . . . . . . . . . . . . . . 31

     22.  Remedies Upon Default. . . . . . . . . . . . . . . . 32

     23.  Lessor's Right to Perform for the Lessee . . . . . . 34

     24.  Late Charges . . . . . . . . . . . . . . . . . . . . 35

     25.  Further Assurances . . . . . . . . . . . . . . . . . 35

     26.  Notices. . . . . . . . . . . . . . . . . . . . . . . 35

     27.  Lessee's Renewal, Purchase and Sale Options. . . . . 35
          (a)  Lessee's Renewal Option . . . . . . . . . . . . 35
          (b)  Lessee's Purchase Option. . . . . . . . . . . . 36
          (c)  Third Party Sale of Equipment . . . . . . . . . 37
          (i)  Remarketing Obligations . . . . . . . . . . . . 37
          (ii) Sale of Equipment . . . . . . . . . . . . . . . 37

     28.  End-of-Term Rental Adjustment - Third Party Sale 
          of Equipment . . . . . . . . . . . . . . . . . . . . 38

     29.  Covenants of the Lessee. . . . . . . . . . . . . . . 38
          (a)  Financial Information . . . . . . . . . . . . . 38
          (b)  Mergers, etc. . . . . . . . . . . . . . . . . . 39
          (c)  ERISA . . . . . . . . . . . . . . . . . . . . . 39
          (d)  ERISA Information . . . . . . . . . . . . . . . 39
          (e)  ERISA Notice. . . . . . . . . . . . . . . . . . 40
          (f)  Litigation. . . . . . . . . . . . . . . . . . . 40

                                iii




     30.  Payment of Transaction Expenses. . . . . . . . . . . 40

     31.  Owner for Income Tax Purposes. . . . . . . . . . . . 40

     32.  Governing Law; Waiver of Jury Trial; Submission 
          to Jurisdiction  . . . . . . . . . . . . . . . . . . 40

     33.  Miscellaneous. . . . . . . . . . . . . . . . . . . . 41

     34.  Registered Instrument. . . . . . . . . . . . . . . . 41

     SCHEDULE I -   NOTICE OF INFORMATION

     SCHEDULE II -  PRINCIPAL COMPONENT, UNAMORTIZED LEASE
                    BALANCE AND BASIC RENT PAYMENT

     SCHEDULE III - FORM OF PURCHASE AGREEMENT ASSIGNMENT

     EXHIBIT A -         FORM OF LEASE SUPPLEMENT

     EXHIBIT B -         FORM OF FUNDING NOTICE
     
                                iv



                            EQUIPMENT LEASING AGREEMENT

          EQUIPMENT LEASING AGREEMENT dated as of September 8, 1998
     (herein, as amended and supplemented from time to time, called
     "this Lease"), between CCG Trust Corporation, a Barbados
     corporation (together with its successors and permitted assigns
     herein called the "Lessor"), having its principal place of
     business at #1 Chelston Park, Collymore Rock, St. Michael,
     Barbados, West Indies, and KANSAS CITY POWER & LIGHT COMPANY, a
     Missouri corporation (together with its successors and permitted
     assigns herein called the "Lessee"), having its principal place of
     business at 1201 Walnut Street, Kansas City, Missouri  64106.
     
          In consideration of the mutual covenants and agreements
     hereinafter set forth, the parties hereto agree as follows:
     
          1.   Definitions; Construction.
     
               (a)  Definitions.  Unless the context  otherwise
               requires, the following terms shall have the following
               meanings for all purposes of this Lease and shall be equally
               applicable to both the singular and the plural forms of the
               terms herein defined:
     
          "AAR" means the Association of American Railroads or any
     successor thereto.
     
          "Acceptance Date" for any Item of Equipment means the date
     on which the Lessee has unconditionally accepted such Item for
     lease hereunder, as evidenced by the Lessee's execution  and
     delivery of a Lease Supplement for such Item dated such date.
     
          "Acquisition Cost" of each Item of Equipment means an amount
     as reflected on Schedule II to the Lease Supplement equal to one-
     hundred one percent (101%) of the total cost paid by the Lessor to
     the Manufacturer for such Item.
     
          "Affected Party" means the Lessor or any of its successors
     and permitted assigns.
     
          "Affiliate" of any Person means any other Person directly or
     indirectly controlling, controlled by or under common control with
     such Person.  For purposes of this definition, "control"
     (including, with correlative meanings, the terms "controlled by"
     and "under common control with") shall mean the possession,
     directly or indirectly, of the power to direct or cause the
     direction of the management or policies of a Person, whether
     through the ownership of voting securities or by contract or
     otherwise.
     
          "After Tax Basis" means, with respect to any payment to be
     received, the amount of such payment increased so that, after
     deduction of the amount of all taxes required to be paid by the
     recipient (less any tax savings actually realized and the present
     value (discounted at the then-prevailing Applicable Rate) of any
     tax savings projected to be actually realized by the recipient as

                                1

     

     a result of, in the case of a cash basis taxpayer, the payment,
     or, in the case of an accrual taxpayer, the accrual of the amount
     in respect of which the indemnity payment is being made and in
     respect of the indemnity amount) with respect to the receipt or
     accrual by the recipient of such amounts, such increased payment
     (as so reduced) is equal to the payment otherwise required to be
     made.
     
          "Applicable Law" shall mean all applicable laws, statutes,
     treaties, rules, codes, ordinances, regulations, certificates,
     orders, interpretations, licenses and permits of any Governmental
     Authority (including the DOT, the FRA and the AAR Interchange
     Rules) and judgments, decrees, injunctions, writs, orders or like
     action of any court, arbitrator or other administrative, judicial
     or quasi-judicial tribunal or agency of competent jurisdiction.
     
          "Applicable Rate" means a per annum rate equal to 6.09% per
     annum (calculated on the basis of a 30-day month and a 360-day
     year). 
     
          "Appraisal" means, with respect to any Item, an appraisal of
     the Fair Market Sales Value of such Item.
     
          "Assignee" shall have the meaning given to such term in
     Section 13(b) hereof.
     
          "Basic Rent" means the rent payable for each Item of
     Equipment during (i) the Basic Term thereof pursuant to Section
     7(a) hereof and (ii) each Renewal Term thereof (if this Lease is
     renewed) pursuant to Section 27(a) hereof.
     
          "Basic Term" for each Item of Equipment means the period
     commencing on the Basic Term Commencement Date and ending on the
     first anniversary of such date unless extended by a Renewal Term
     or earlier terminated in accordance with the provisions hereof.
     
          "Basic Term Commencement Date" for each Item of Equipment
     means the Acceptance Date.
     
          "Business Day" means any day other than a day on which
     banking institutions in the State of New York, Barbados, West
     Indies, or the State of Missouri are authorized or required by law
     to close.
     
          "Casualty Loss Value" with respect to any Item of Equipment
     as of the Casualty Loss Value Payment Date with respect to such
     Item means an amount determined by multiplying the Acquisition
     Cost of such Item of Equipment by the percentage set forth
     opposite such Casualty Loss Value Payment Date on Schedule I
     attached to the Lease Supplement for such Item.
     
          "Casualty Loss Value Payment Date" with respect to any Item
     of Equipment shall mean the earlier of (i) the day that is 90 days
     after the date of the Event of Loss applicable to such Item or
     (ii) the Rent Payment Date next following the date of the Event of
     Loss applicable to such Item (or the last day of the Term, if
     sooner) and shall be as set forth in the Schedule of Casualty Loss

                                2



     Values attached to the Lease Supplement for such Item but in no
     event shall the Casualty Loss Value Payment date be sooner than
     the first to occur of (a) receipt of the insurance proceeds or (b)
     45 days after the date of the Event of Loss.
     
          "Change in Withholding Tax Law" means (A) the enactment of
     any amendment to the Code or the enactment of any other United
     States Federal statute relating to Federal income tax regarding
     withholding requirements for interest paid to non-United States
     entities, (B) the adoption of any regulation to the Code, or any
     amendment of any regulation to the Code, in temporary or final
     form (that is, in a form that is effective) regarding withholding
     requirements for interest paid to non-United States entities,
     (C) the entry into force of any new income tax convention to which
     the United States is a party or any amendment or supplement to, or
     revocation of, any income tax convention to which the United
     States is a party regarding withholding requirements for interest
     paid to non-United States entities.
     
          "Closing Date" means the date of the execution and delivery
     of this Lease by the parties hereto.
     
          "Code" means the Internal Revenue Code of 1986, as the same
     may be amended from time to time, or any comparable successor law.
     
          "Commitment Amount" means $12,710,071.20 plus the amounts
     described in the definition of Transaction Expenses in an
     aggregate maximum amount not to exceed that Maximum Acquisition
     Cost.
     
          "Default" means any condition or event that after notice or
     lapse of time or both would constitute an Event of Default.  
     
          "Disclosure Documents" means the Lessee's (i) Annual Report
     on Form 10-K for the year ended December 31, 1997, and
     (ii) Quarterly Report on Form 10-Q for the quarter ended June 30,
     1998.
     
          "DOT" means the U.S. Department of Transportation or any
     successor thereto.
     
          "Equipment" means the Freight Car Services, Inc. aluminum
     gondola railcars of the type(s) described on each consecutively
     numbered Lease Supplement and leased or to be leased by the Lessor
     to the Lessee hereunder, together with any and all accessions,
     additions, improvements, appliances, parts, instruments,
     appurtenances, accessories, furnishings, replacements and other
     equipment of whatever nature from time to time incorporated or
     installed therein which are or become the property of the Lessor
     pursuant to the terms of this Lease.
     
          "Equipment Documents" means the disclosure materials related
     to the description and specifications of the Equipment, as such
     documents may be amended or supplemented from time
                                
                                3
     


     to time provided to the Lessor by the Lessee, and identified as such
     by the parties hereto on the Closing Date.
     
          "Estimated Residual Value" for any Item of Equipment means
     the amount obtained by multiplying (a) the percentage set forth in
     the Lease Supplement for such Item under the caption "Estimated
     Residual Value Percentage" applicable to the Basic Term or Renewal
     Term then ending, by (b) the Acquisition Cost for such Item.
     
          "Event of Default" means any of the events referred to in
     Section 21 hereof.
     
          "Event of Loss" with respect to any Item of Equipment means
     (except as caused by the Lessor's gross negligence or willful
     misconduct, other than any such negligence or misconduct as may be
     imputed to Lessor solely by reason of its interest in the
     Equipment) (i) the permanent loss of such Item of Equipment,
     (ii) unless the Lessee has irrevocably exercised its purchase
     option as to that Item under Section 27(b) hereof or the Lessee
     has irrevocably exercised its sale option as to that Item under
     Section 27(c) hereof, the loss of the use of such Item of
     Equipment due to theft or disappearance for a period in excess of
     90 days or the remainder of the then applicable Term, whichever is
     less, (iii) the destruction, the determination that such Item of
     Equipment is damaged beyond repair, or rendition of such Item of
     Equipment permanently unfit for normal use for any reason
     whatsoever, (iv) the condemnation, confiscation, seizure, or
     requisition of title to such Item of Equipment by any Governmental
     Authority under the power of eminent domain or otherwise, (v) the
     confiscation, condemnation, seizure of or requisition of use of
     such Item of Equipment by any Governmental Authority other than
     the United States (which shall only be an Event of Loss if
     continuing at the end of the then-applicable Term) for a period in
     excess of 360 days (or the remainder of the then-applicable Term,
     whichever is less), (vi) the use of such Item of Equipment shall
     have been prohibited in interstate commerce for a continuous
     period in excess of the lesser of 360 days or the balance of the
     then-applicable Term as a result of any rule, regulation or order
     of, or other action by, the U.S. government or any agency or
     instrumentality thereof or (vii) damage to such Item or any part
     thereof or any other event that results in an insurance settlement
     on the basis of a total loss or constructive or compromised total
     loss.
     
          "Expenses" shall mean liabilities, obligations, losses
     (excluding loss of anticipated profits, provided that such
     exclusion shall not affect Lessor's right to any Make Whole Amount
     required to be paid under this Lease), damages, claims, actions,
     suits, judgments, fees, charges (including demurrage charges),
     penalties and costs, expenses and disbursements (including
     reasonable out-of-pocket legal fees and expenses) of any kind and
     nature whatsoever.
     
          "Fair Market Sales Value" means, with respect to any Item,
     the amount that would be paid in cash in an arm's-length
     transaction between an informed and willing purchaser and an
     informed and willing seller, neither of whom is under any
     compulsion to purchase or sell, respectively, for the ownership of
     such Item based on the actual condition of such Item.
     
          "FRA" means the Federal Railroad Administration or any
     successor thereto.  
     
                                4



          "Funding" means the payment of  the aggregate Acquisition
     Cost for all Items of Equipment covered by the initial Lease
     Supplement.
     
          "Funding Date" means the date on which the Funding occurs.
     
          "Funding Notice" is defined in Section 4(b) hereof.
     
          "Governmental Authority" shall mean any Federal, state,
     county, municipal or regional governmental authority, agency,
     board, body, instrumentality or court (including the DOT and 
     AAR).
     
          "[I]ncluding" means including, without limitation.
     
          "Indemnified Party" is defined in Section 18 hereof.
     
          "Internal Revenue Service" means the United States Internal
     Revenue Service or any Successor agency or regulatory authority.
     
          "Item of Equipment  or "Item" means one of the units of
     Equipment more specifically described in a Lease Supplement and
     leased to the Lessee hereunder, together with the related
     appurtenances, additions, improvements, equipment and replacements
     thereto.
     
          "Lease Supplement" means a Lease Supplement substantially in
     the form attached hereto as Exhibit A, to be executed by the
     Lessor and the Lessee with respect to the Items of Equipment
     covered thereby as provided in Section 4 hereof, evidencing that
     each such Item is leased hereunder.
     
          "Lessee" is defined in the preamble of this Lease.
     
          "Lessor" is defined in the preamble of this Lease.
     
          "Lien" means liens, mortgages, encumbrances, pledges,
     claims, leases, charges and security interests of any kind.
     
          "Make Whole Amount" means, as of the date of any purchase
     option pursuant to Section 27(b) hereof, the excess, if any, of
     (i) the present value, as of such date of purchase, of the
     remaining Principal Components and Interest Components with
     respect to such Item that, but for such purchase, would have been
     payable under this Lease on the Rent Payment Dates after such
     purchase over (ii) the purchase aggregate Unamortized Lease
     Balance remaining to be paid under this Lease with respect to such
     item.  Such present value shall be determined by discounting the
     amounts of such installments semi-annually from their respective
     payment dates to the date of purchase at a rate equal to the
     Treasury Rate (as defined below) plus 0.50% per annum.  "Treasury
     Rate" with respect to the Make Whole Amount means the weekly
     average of the yield 
     
                                5


     on a hypothetical United States Treasury
     security with a constant maturity matching the remaining average
     life to maturity of such Principal Component.  The hypothetical
     Treasury security is to be derived by referring to the most
     recently available information (by not more than ten (10) nor less
     than five (5) Business Days preceding the date of the purchase)
     contained in the Federal Reserve Board's Statistical Release
     H.15 (519) (or its successor publication).  If there is a Treasury
     constant maturity listed in said Federal Reserve Release H.
     15 (519) with a maturity equal to the then-remaining average life
     to maturity of such Principal Component then the yield on such
     Treasury security shall be the Treasury Rate.  If no such Treasury
     constant maturity exists, then the weekly average yield on such
     Treasury security shall be linearly interpolated from the weekly
     average yields on (a) the Treasury security with constant maturity
     closest to and greater than the then-remaining average life to
     maturity of such Principal Component and (b) the Treasury security
     with a constant maturity closest to and less than the
     then-remaining average life to maturity of such Principal
     Component.  If there shall be no Treasury security with a constant
     maturity less than the then-remaining average life to maturity on
     such Principal Component, then the Treasury Rate shall mean the
     weekly average yield on the Treasury security with the shortest
     Treasury constant maturity.  If said Federal Reserve Release
     H.15 (519) or a successor publication refers to no applicable
     yield on Treasury securities, then the Treasury Rate shall be
     determined in any manner mutually acceptable to the Lessor and the
     Lessee.
     
          "Manufacturer" means, with respect to each Item of
     Equipment, the manufacturer or supplier thereof specified in the
     Lease Supplement with respect to such Item.
     
          "Maximum Acquisition Cost" means $12,837,171.91.
     
          "Maximum Lessee Risk Amount" for any Item of Equipment shall
     mean the percentage set forth in the Lease Supplement for such
     Item under the caption "Maximum Lessee Risk Percentage" applicable
     to the Basic Term or any Renewal Term then ending, multiplied by
     the Acquisition Cost for such Item.
     
          "Maximum Lessor Risk Amount" for any Item of Equipment shall
     mean the percentage set forth in the Lease Supplement for such
     Item under the caption "Maximum Lessor Risk Percentage" applicable
     to the Basic Term or any Renewal Term then ending, multiplied by
     the Acquisition Cost for such Item.
     
          "Maximum Term" for each Item of Equipment shall mean the
     twentieth anniversary of the Closing Date.
     
          "Multiemployer Plan" shall have the meaning assigned to the
     term "multiemployer plan" in Section 3(37) of ERISA.
     
          "Net Proceeds of Sale" is defined in Section 28.
     
          "1935 Act" means the Public Utility Holding Company Act of
     1935, as amended.
               
                                6



               "Permitted Liens" shall mean:
     
               (a)(i)    any rights in favor of the Lessor or any
               Assignee under the Lease and the related documents and (ii)
               any rights of any Persons entitled to use of the Equipment
               in accordance with this Lease;
     
               (b)  any Lien on the Lessee's rights in this Lease
               and Lessee's interest in the Equipment contained in
               mortgages granted by the Lessee which cover after acquired
               property of the Lessee and which otherwise subject all or
               substantially all of the Lessee's assets to such mortgage,
               provided that any such Lien on the Equipment is subordinate
               to and does not adversely affect Lessor's interest in the
               Equipment under this Lease, and in connection therewith
               Lessee warrants that no one other than Lessor has made any
               filing with the Surface Transportation Board or the
               Interstate Commerce Commission covering any of the Equipment
               subject to this Lease (except for Freight Car Services, Inc.
               whose filing is being  terminated contemporaneously
               herewith), and in the event that the mortgagee under any of
               Lessee's mortgages claims that it has an interest in such
               Equipment which is superior to Lessor's interest therein,
               such claim shall constitute an Event of Default under
               Section 21(c) of this Lease;
     
               (c)  any Lien (including Liens of landlords,
               carriers, warehousemen, mechanics or materialmen) in favor
               of any Person securing payment of the price of goods or
               services provided in the ordinary course of business for
               amounts the payment of which is not overdue or is being
               contested in good faith by appropriate proceedings
               diligently prosecuted so long as such proceedings do not
               involve any material risk of the sale, forfeiture or loss of
               one or more Items of Equipment or any part thereof and such
               proceedings do not involve any material risk of civil
               lability to Lessor or any risk of criminal liability to
               Lessor (other than minor fines which do not adversely affect
               Lessor);
     
               (d)  any Lien arising out of any act of, or any
               failure to act by, or any claim (including any claim for
               taxes) against, the Lessor, any Assignee or any of their
               Affiliates which is either not required to be indemnified by
               Lessee under this Lease or unrelated to the transactions
               contemplated by this Lease or any Lien arising out of any
               breach by the Lessor, any Assignee or any of their
               Affiliates of their obligations under this Lease or any
               related documents;
     
               (e)  any Lien for taxes, assessments or other
               governmental charges which are not delinquent or the
               validity of which is being contested in good faith by
               appropriate proceedings diligently prosecuted so long as
               such proceedings do not involve any material risk of the
               sale, forfeiture or loss of one or more Items of Equipment
               or any part thereof and such proceedings do not involve any
               material risk of civil liability to Lessor or any risk of
               criminal liability to Lessor (other than minor fines which
               do not adversely affect Lessor); and
     
                                        7



               (f)  attachments, judgments and other similar Liens
               arising in connection with court proceedings, provided that
               within ninety (90) days of the attachment thereof (or
               fifteen (15) days prior to any execution or sale pursuant
               thereto), the execution or other enforcement of such Liens
               is effectively stayed and the claims secured thereby are
               being contested in good faith and by appropriate proceedings
               so long as such proceedings do not involve any material risk
               of the sale, forfeiture or loss of one or more Items of
               Equipment or any part thereof and such proceedings do not
               involve any material risk of civil liability to Lessor or
               any risk of criminal liability to Lessor (other than minor
               fines which do not adversely affect Lessor).
     
          "Person" means any individual, corporation, limited
     liability company, partnership, joint venture, association, joint
     stock company, trust, trustee(s) of a trust, unincorporated
     organization, or Governmental Authority.
     
          "Plan" shall mean (a) with respect to the Lessee, any plan
     described in Section 3(3) of ERISA under which the Lessee or any
     ERISA Affiliate of the Lessee has any liability, and (b) with
     respect to any other person, any employee benefit plan or other
     plan established or maintained by such person for the benefit of
     such person's employees and to which Title IV of ERISA applies.
     
          "Remarketing Period" shall have the meaning given to such
     term in Section 27(c) hereof.
     
          "Renewal Term" for any Item of  Equipment, means each one
     year period (not to exceed nineteen consecutive one year periods)
     following the end of the Basic Term for such Item with respect to
     which the Lessee has the option to renew this Lease pursuant to
     Section 27(a) hereof.  Notwithstanding anything to the contrary
     which may be contained in this Lease, the Basic Term of this Lease
     with respect to any Item of Equipment shall in no event exceed the
     Maximum Term.  
     
          "Rent Payment Date" shall mean March 8, 1999, and each
     six-month anniversary of such date through the Term of the Lease.  
     
          "Rental Period" for each Item of Equipment means
     (i) initially, the period commencing on the Funding Date for the
     applicable Lease Supplement and ending on the immediately
     succeeding Rent Payment Date and (ii) thereafter, each period
     beginning on the first day after the last day of the preceding
     Rental Period and ending on the next succeeding Rent Payment Date. 

          "Responsible Officer" means, with respect to the subject
     matter of  any covenant, agreement or obligation of any Person
     contained herein in the related transaction documents, the
     President, any Vice President, the Chief Financial Officer or the
     Treasurer who, in the normal performance of such person's
     operational responsibility, would have knowledge of such matter
     and the requirements with respect thereto.  
     
          "SEC" means the United States Securities and Exchange
     Commission or any successor agency or regulatory authority.  
     
                                8



          "Supplemental Payments" means without duplication all
     amounts, liabilities and obligations which the Lessee assumes or
     agrees to pay hereunder to the Lessor or others, including
     payments of Casualty Loss Value and any indemnities that may
     become payable by the Lessee hereunder, but excluding Basic Rent.  
     
          "Tax Indemnitee" is defined in Section 17 hereof.
     
          "Term" means the full term of this Lease with respect to any
     Item of Equipment, including the Basic Term and each Renewal Term
     (if any).
     
          "Termination Date" for any Item of Equipment, means the last
     day of the Basic Term of such  Item, or if  the Term of such Item
     has been renewed pursuant to Section 27(a) or 27(d), the last day
     of the Renewal Term of such Item.  
     
          "Transaction Expenses" means all costs and expenses incurred
     in connection with the preparation, execution and delivery of this
     Lease and the transaction documents and the transactions
     contemplated thereby including: 
     
               (a)  the reasonable fees, out-of-pocket expenses and
               disbursements of any law firm or other external counsel of
               the Lessor in connection with the negotiation and
               documentation of this Lease and the transactions
               contemplated hereby; and
     
               (b)  any and all taxes and fees incurred in
               recording, registering or filing this Lease, any Lease
               Supplement or any other transaction document, any deed,
               declaration, mortgage, security agreement, notice or
               financing statement with any public office, registry or
               governmental agency in connection with the transactions
               contemplated by the transaction documents.
     
          "Unamortized Lease Balance" means the sum reflected on
     Schedule II to this Lease for the relevant date of determination.  
     
          "Western Resources Merger Transaction" means, collectively,
     the mergers and related transactions contemplated by the Amended
     and Restated Plan of Merger, dated as of March 18, 1998, by and
     among Western Resources, Inc., Kansas Gas & Electric Company, NKC,
     Inc. and the Borrower.
     
               (b)  Construction.  The words "this Lease", "herein",
               "hereunder", "hereof" or other like words mean this
               Equipment Leasing Agreement (including each schedule,
               exhibit, and other attachment), as from time to time
               supplemented and amended.  
     
                                9



          2.   Agreement for Purchase and Lease of Equipment.
     
               (a)  Purchase.  Subject to the terms and conditions
               of this Lease, on the Funding Date the Lessor shall purchase
               the Items of Equipment listed on the initial Lease
               Supplement for the aggregate Acquisition Cost specified in
               such Lease Supplement.  The Lessor will pay the invoiced
               cost of the Equipment to the Manufacturer and the remainder
               of the Acquisition Cost to the Persons entitled to such
               payments as part of Transaction Expenses by wire transfer of
               immediately available funds to such account in the United
               States as designated in writing to the Lessor at least two
               Business Days prior to the Funding Date.  
     
               (b)  Lease.  Subject to, and upon all of the terms
               and conditions of this Lease, the Lessor hereby agrees to
               lease to the Lessee and the Lessee hereby agrees to lease
               from the Lessor each Item of Equipment listed on a Lease
               Supplement for the Term with respect to such Item.  Provided
               that no Event of Default has occurred and is continuing
               hereunder, neither the Lessor or any Assignee, nor anyone
               claiming through or under the Lessor or any Assignee, shall
               cause or allow any Lien attributable to it to exist or arise
               against any of the Equipment (except for Permitted Liens
               (other than those described in (d) of the definition of
               Permitted Liens) and Liens which are required to be removed
               by Lessee under the terms of this Lease) or interfere with
               the Lessee's quiet enjoyment and use of any Item of
               Equipment by the Lessee (or any permitted transferee from
               the Lessee) during the Term therefor, except as otherwise
               expressly permitted hereunder.  
     
          3.   Conditions Precedent.  The Lessor shall have no
     obligation to purchase any Item of Equipment nor to lease the same
     to the Lessee unless each of the following conditions are
     fulfilled to the satisfaction of the Lessor on or prior to the
     Funding Date: 
     
               (a)  this Lease shall have been executed and
               delivered by the parties hereto, and no Default or Event of
               Default shall have occurred and be continuing; 
     
               (b)  no material adverse change in the financial
               condition of  the Lessee which, in the Lessor's reasonable
               opinion, would impair the ability of the Lessee to pay and
               perform its obligations under this Lease has occurred,
               except as expressly contemplated and disclosed under the
               Disclosure Documents, since the date of the Disclosure
               Documents; 
     
               (c)  such Item of Equipment shall be free from all
               damage and be acceptable to the Lessor, and free and clear
               of all Liens, other than any Permitted Lien; 
     
               (d)  [Intentionally Omitted];
     
               (e)  after giving effect to such purchase, the
               aggregate Acquisition Cost of all Equipment subject to this
               Lease shall not exceed the Maximum Acquisition Cost;
     
                                10



               (f)  the Lessor shall have received an invoice or a
               bill of sale for such Item of Equipment from the
               Manufacturer thereof, approved for payment by the Lessee,
               showing the Lessor as the purchaser of such Item; 
     
               (g)  the Lessor shall have received a Lease
               Supplement for such Item, duly executed by the Lessee, and
               dated the Acceptance Date for such Item; 
     
               (h)  a memorandum of this Lease and the Lease
               Supplement covering such Item, shall have been duly filed
               with the Surface Transportation Board of the DOT and Uniform
               Commercial Code financing statements covering such Item in
               form and substance satisfactory to Lessor shall have been
               filed in such jurisdictions as may be necessary or
               appropriate; 
     
               (i)  the Lessor shall have received a copy of
               resolutions of the Lessee's board of directors authorizing
               the execution, delivery and performance by the Lessee of
               this Lease; 
     
               (j)  the Lessor shall have received a fully executed
               Funding Notice with respect to the initial Lease Supplement;
               
     
               (k)  if the Funding Date does not occur on the date
               hereof, the Lessor shall have received a certificate from
               the Lessee (executed on its behalf by a Responsible Officer
               of the Lessee) to the effect that the representations and
               warranties of the Lessee contained herein shall be true and
               correct on and as of the Funding Date with the same effect
               as though made on and as of the Funding Date; 
     
               (l)  the Lessor shall have received certificates of
               insurance, loss payable endorsements and other evidence that
               the Lessee has complied with the provisions of Section 16;
               and
     
               (m)  the Lessee and the Lessor shall have executed
               and delivered the Purchase Agreement Assignment in
               substantially the form of Schedule III hereto.
     
          4.   Delivery, Acceptance and Leasing of Equipment;
     Funding.
     
               (a)  Delivery, Acceptance and Leasing.  The Lessor
               shall not be liable to the Lessee for any failure or delay
               in obtaining any Item of Equipment or making delivery
               thereof.  Forthwith upon delivery of each Item of Equipment
               to the Lessee, the Lessee or its agents will promptly
               inspect such Item, and unless the Lessee gives the Lessor
               prompt written notice of any defect in or other proper
               objection to such Item, the Lessee shall promptly upon
               completion of such inspection execute and deliver to the
               Lessor a Lease Supplement for such Item, dated the
               Acceptance Date of such Item.  The execution by the
               
                                        11



               Lessor and the Lessee of a Lease Supplement for an Item of
               Equipment shall (a) evidence that such Item is leased under,
               and is subject to all of the terms, provisions and
               conditions of, this Lease, and (b) constitute the Lessee's
               unconditional acceptance of such Item for all purposes of
               this Lease.
     
               (b)  Funding.  The Funding shall be made on notice
               from the Lessee to the Lessor received by the Lessor not
               later than two Business Days prior to the proposed Funding
               Date; provided, however, that (i) the Funding shall be for
               an aggregate Acquisition Cost equal to the Commitment Amount
               with respect to the initial Lease Supplement or such lesser
               amount which shall be acceptable to the Lessee and the
               Lessor, and (ii) the aggregate of all Acquisition Costs paid
               for by the Lessor, after giving effect to the Funding, shall
               not exceed the Maximum Acquisition Cost.  The notice of
               Funding shall be in the form of Exhibit B (each a "Funding
               Notice"), and shall specify the date of the proposed
               Funding, the aggregate Acquisition Cost for the Items
               covered by the initial Lease Supplement (including
               Transaction Expenses) to be funded on such date and the list
               of Equipment to be funded by the Lessor on such date, and
               shall be accompanied by the Manufacturer's invoices and/or
               bills of sale for the Equipment to be funded.  
     
               (c)  Characterization.  As further described herein,
               the Lessee and the Lessor hereby agree to treat the
               arrangement created pursuant to this Lease as a financing or
               conditional sale for Federal income tax purposes.  
     
          5.   Term.  The Basic Term for each Item of Equipment shall
     commence on the Basic Term Commencement Date thereof and, unless
     this Lease is sooner terminated with respect to such Item (or all
     Equipment) pursuant to the provisions hereof, shall end on the
     last day of the Basic Term thereof, as specified in the applicable
     Lease Supplement, or if this Lease is renewed with respect to such
     Item pursuant to Section 27(a) hereof, on the last day of the last
     Renewal Term thereof or if this Lease is extended with respect to
     such Item pursuant to Section 27(d) hereof, for one or more
     Additional Terms as specified therein.  
     
          6.   Return of Equipment.  Upon the expiration or earlier
     termination of the Term with respect to each Item of Equipment
     (unless the Lessee has exercised its purchase option with respect
     thereto pursuant to Section 27(b) hereof or a third party sale
     thereof has been consummated on the Termination Date with respect
     thereto pursuant to Section 27(c) hereof), the Lessee will, at its
     expense, surrender and deliver possession of each Item of
     Equipment to the Lessor or the Lessor's agent on the Termination
     Date at such location(s) in the continental United States, no
     greater than fifty (50) miles from Kansas City, Missouri or in
     route between Lessee's facilities and the Powder River Basin in
     Wyoming as shall be designated by the Lessor (not to exceed two
     (2) locations) in writing at least sixty (60) days prior to the
     termination or expiration of the applicable Term or in the absence
     of such designation, at the then location of each such Item.  At
     the time of such return to the Lessor, each Item of Equipment (and
     each part or component thereof) shall:
     
                                12



               (a)  be in as good condition, state of repair, and
               appearance as when delivered to the Lessee hereunder,
               ordinary wear and tear excepted, and not in immediate need
               of any further repair or reconditioning, 
     
               (b)  comply with all laws and rules referred to  in
               Sections 9 and 10 hereof, shall have been maintained in
               accordance with the terms of this Lease (and all
               modifications or alterations of such Equipment that were
               undertaken prior to the Termination Date shall have been
               fully accomplished and completed), and no Default or Event
               of Default shall have occurred and be continuing hereunder, 
     
               (c)  conform to and comply with all applicable
               Governmental Authority (including DOT and FRA) safety rules
               and regulations (without exemption, waiver or deferment), 
     
               (d)  be suitable for interchange under the rules and
               regulations of the AAR and FRA, to the extent the Equipment
               was originally designed and approved, provided that the
               Lessee shall not be required to make any modifications which
               would not be required of the Lessee if the Lessee were to
               continue to operate the Equipment, 
     
               (e)(i)     have attached or  affixed thereto any
               addition, modification or improvement considered an
               accession thereto as provided in Section 11 hereof,
               (ii) have removed therefrom in a workmanlike manner if so
               requested by the Lessor or any Assignee at the Lessee's
               expense any addition, modification or improvement which, as
               provided in Section 11 hereof, is owned by the Lessee, and
               (iii) have removed therefrom, or painted over, in either
               case in a workmanlike manner, any insignia or marking
               permitted pursuant to Section 12 hereof, 
     
               (f)  be suitable for hauling coal, 
     
               (g)  be free from all material accumulations or
               deposits from commodities transported in or on it while in
               the service of the Lessee and be free of corrosion, ordinary
               wear and tear excepted, 
     
               (h)  shall not have any missing or damaged parts or
               any structural or mechanical damage on any surface or
               device, ordinary wear and tear excepted, and 
     
               (i)  be free and clear of all Liens, other than the
               Permitted Liens specified in clause (a)(i) or clause (d) of
               the definition thereof.  
     
          The Lessee shall pay for any repairs necessary to restore
     any Item of Equipment to the condition required by this Lease.  
     
                                13



          For the purpose of delivering possession of any Items of
     Equipment as above required, the Lessee shall at its own cost,
     expense and risk: 
     
                    (i)  forthwith and in the usual manner (including, to
                         the extent legally required by Applicable Law,
                         to protect the Lessor's or any Assignee's
                         interest in the Items of Equipment) give prompt
                         electronic and written notice to all railroads
                         to which any Items of Equipment have been
                         interchanged or which may have possession
                         thereof to return the Items of Equipment and
                         place such Items of Equipment upon such storage
                         tracks along the rail routes then used by the
                         Lessee in the ordinary usage of the Equipment as
                         the Lessor reasonably may designate; 
     
                    (ii) if requested by Lessor, cause such Items of
                         Equipment to be stored on such tracks at the
                         risk of the Lessee without charge to the Lessor
                         or any Assignee for insurance, rent or storage
                         until all such Items of Equipment have been
                         sold, leased or otherwise disposed of by the
                         Lessor for a period not to exceed thirty (30)
                         days after the Termination Date; and 
     
                  (iii)  deliver to the Lessor, if requested, all manuals
                         and inspection, modification, overhaul and
                         maintenance records applicable to such Items of
                         Equipment (which records may exclude the cost of
                         repairs, maintenance, modifications and
                         overhauls).  
     
          During any storage period, the Lessee will maintain and keep
     the Items of Equipment in the manner set forth in Section 10
     hereof and permit the Lessor or any Person designated by it,
     including the authorized representative or representatives of any
     prospective purchaser, lessee or other user of  any Items of
     Equipment, to inspect the same during normal business hours at
     such inspector's own risk, cost and expense.  
     
          Until the Equipment has been returned to the Lessor in the
     condition and as otherwise provided in this Section 6 hereof,
     purchased under Section 27(b) hereof or sold under Section 27(c)
     hereof, the Lessee shall continue to pay the Lessor rent at a per
     diem rate equal to the daily equivalent of the Basic Rent that was
     payable on the last Rent Payment Date until such Items of
     Equipment are returned to the Lessor; provided that during such
     holdover period, the Lessee shall use its best efforts to secure
     the return of the Equipment as required under this Section 6. 
     Lessee shall pay all rent payable pursuant to this Section 6 on a
     monthly basis, with all amounts being paid within thirty (30) days
     after all Items of Equipment have been returned to Lessor in
     accordance with this Section 6, in each case after Lessee has
     received from Lessor an invoice for such amount.  The provision
     for payment pursuant to this Section 6 shall not be in abrogation
     of the Lessor's right under this Section 6 to have such Equipment
     returned to it hereunder.  
     
                                14



          7.   Basic Rent and Other Payments.
     
               (a)  Basic Rent.  The Lessee hereby agrees to pay to
               the Lessor Basic Rent semi-annually, in arrears, for each
               Item of Equipment during the Basic Term thereof on each Rent
               Payment Date during the Basic Term in the respective amounts
               set forth opposite such Rent Payment Date on Schedule II
               hereto.
     
               (b)  Supplemental Payments.  The Lessee also agrees
               to pay to the Lessor, or to whomsoever shall be entitled
               thereto as expressly provided herein, all Supplemental
               Payments, promptly as the same shall become due and owing,
               and in the event of any failure on the part of the Lessee so
               to pay any such Supplemental Payment hereunder, the Lessor
               shall (except as otherwise specified herein) have all
               rights, powers and remedies provided for herein or by law or
               equity or otherwise in the case of nonpayment of Basic Rent. 
               
               (c)  Method of Payment.  All payments of  Basic Rent
               and Supplemental Payments required to be made by the Lessee
               to the Lessor shall be made by wire transfer of immediately
               available funds no later than 12:00 noon, New York time, to
               such account of the Lessor as specified on Schedule I hereto
               (or such other account as Lessor may hereafter designate in
               writing to Lessee).  If the date that any payment of Basic
               Rent is due is other than a Business Day, the payment of
               Basic Rent otherwise payable on such date shall be payable
               on the next succeeding Business Day with no adjustment to
               the payment amount.  In the event of any assignment to an
               Assignee pursuant to Section 13(b) hereof in accordance with
               Section 34, all payments which are assigned to such
               Assignee, whether Basic Rent, Supplemental Payments or
               otherwise, shall be paid by wire transfer of immediately
               available funds to an account designated by the Person
               entitled to receipt thereof.  
     
          8.   Net Lease.  This Lease is a net lease.  Except as may
     otherwise be provided for in this Lease, the Lessee acknowledges
     and agrees that the Lessee's obligations to pay Basic Rent for all
     Equipment leased hereunder, and to pay all Supplemental Payments
     payable hereunder shall be unconditional and irrevocable under any
     and all circumstances, shall not be subject to cancellation,
     termination, modification or repudiation by the Lessee, and shall
     be paid and performed by the Lessee without notice or demand and
     without any abatement, reduction, diminution, setoff, or
     recoupment whatsoever, including any abatement, reduction,
     diminution, setoff, or recoupment due or alleged to be due to, or
     by reason of, any past, present or future claims which the Lessee
     may have against the Lessor, any Assignee, any Manufacturer of the
     Equipment or any Item thereof, or any other Person for any reason
     whatsoever, or any defect in the Equipment or any Item thereof, or
     the condition, design, operation or fitness for use thereof, any
     damage to, or any loss or destruction of, the Equipment or any
     Item thereof, or any Liens or rights of others with respect to the
     Equipment or any Item thereof, or any prohibition or interruption
     of or other restriction against the Lessee's use, operation or
     possession of the Equipment or any Item thereof, for any reason
     whatsoever, or any interference with such use, 
     
                                15



     operation or possession by any Person or entity, or any default by the
     Lessor in the performance of any of its obligations herein contained,
     or any other indebtedness or liability, howsoever and whenever
     arising, of the Lessor, or of any Assignee, or of the Lessee to
     any other Person, or by reason of insolvency, bankruptcy or
     similar proceedings by or against the Lessor, any Assignee or the
     Lessee, or for any other reason whatsoever, whether similar or
     dissimilar to any of the foregoing, any present or future law to
     the contrary notwithstanding; it being the intention of the
     parties hereto that all Basic Rent and Supplemental Payments
     payable by the Lessee hereunder shall continue to be payable in
     all events and in the manner and at the times herein provided,
     without notice or demand, unless the obligation to pay the same
     shall be terminated pursuant to the express provisions of this
     Lease.  However, nothing in this Section 8 shall prevent the
     Lessee from separately pursuing any rights it might have against
     the Lessor or any other Person.  Notwithstanding the foregoing,
     this Lease is intended to and shall be construed as an operating
     lease for financial accounting purposes.  If this Lease is
     determined not to be a true lease for purposes of the Uniform
     Commercial Code, Lessee's interest in the Equipment shall serve as
     security for the obligations of  the Lessee hereunder.
     
          9.   Use of Equipment; Compliance with Laws.  The Lessee
     agrees that the Equipment will be used and operated solely in the
     conduct of its business or as otherwise provided by Section 13(a)
     hereof and in compliance with any and all applicable insurance
     policy terms, conditions, and provisions for the insurance
     required by Section 16 hereof and with all Applicable Laws of any
     Governmental Authority applicable to the use and operation of the
     Equipment, including the AAR Interchange Rules, the rules and
     regulations of the FRA, the DOT and the Surface Transportation
     Board, and environmental, noise and pollution laws (including
     notifications and reports); provided, however, that the Lessee
     shall not be obligated to so comply with laws, rules or
     regulations (i) whose application or validity is being contested
     diligently and in good faith by appropriate proceedings, so long
     as such proceedings do not involve any material risk of the sale,
     forfeiture or loss of one or more Items of Equipment or any part
     thereof and such proceedings do not involve any material risk of
     civil liability to Lessor or any risk of criminal liability to
     Lessor (other than minor fines which do not adversely affect
     Lessor and which are indemnified for by Lessee), (ii) compliance
     with which shall have been excused or exempted (subject to
     Section 6(c)) by a nonconforming use permit, waiver, extension or
     forbearance exempting it from such laws, rules or regulations,
     (iii) if failure to comply shall impose no material risk of civil
     liability or any risk of criminal lability on the Lessor (other
     than minor fines which do not adversely affect Lessor and which
     are indemnified for by Lessee), or (iv) if failure of compliance
     would impose no additional liability on the Lessor or adverse
     consequences of the Lessor's rights under this Lease or its
     interest in the Equipment.  The Equipment shall in no event be
     used or located outside of the continental limits of the United
     States, Canada, Mexico and Alaska unless at least thirty (30)
     days' prior written notice of such use or location is provided to
     Lessor, Lessor shall have consented thereto and all filings,
     recordings, deposits, or giving of notice necessary to protect the
     rights of the Lessor in or to the Lease and the Equipment shall
     have been made, such consent not to be unreasonably withheld;
     provided, however, Lessee shall give Lessor thirty (30) days'
     notice prior to first operating the Equipment in Canada and, in
     connection therewith, Lessee shall execute and deliver to Lessor
     all documents Lessor may 
     
                                16


     reasonably request to protect the rights of Lessor in or to this 
     Lease and the Equipment.  The Lessee shall not use any Item of 
     Equipment, or permit any Item of Equipment to be used, for the 
     transportation or storage of any substance which is any substance 
     which is specifically listed or designated as "oil" under Section 
     1001 of the Oil Pollution Act of 1990 and which is subject to the 
     provisions of that Act or which is categorized as, or required to 
     be labeled as, "poison" or "poisonous", "explosive" or "radioactive" 
     (or any categories or labels substituted for such categories or 
     labels as in effect on the day hereof) under 49 CFR 171 or other 
     applicable Federal rules in effect from time to time regulating 
     the transportation of hazardous or toxic materials, including 
     nuclear fuels, radioactive products, asbestos, PCB's or nuclear 
     wastes, nor will the Lessee permit the Equipment to engage in any 
     unlawful trade or violate any law or carry any unlawful cargo that 
     will expose the Equipment to penalty, forfeiture or capture.  
     
          10.  Maintenance and Repair of Equipment.  The Lessee
     agrees, at its own cost and expense, to keep, repair, maintain and
     preserve the Equipment in good order and operating condition, and
     in compliance with such maintenance and repair standards, ordinary
     wear and tear excepted, as set forth in the applicable AAR and FRA
     rules and regulations and as otherwise may be required to enforce
     warranty claims against each Manufacturer of each Item of
     Equipment, and except as otherwise permitted by Section 9 hereof
     but subject to Section 6 hereof) in compliance with all Applicable
     Laws relating to the maintenance and condition of the Equipment,
     including environmental, noise and pollution laws and regulations
     (including notifications and reports), and suitable for
     interchange under the rules of the AAR, to the extent the
     Equipment was originally designed and approved and with all lawful
     rules of the DOT, the Surface Transportation Board and any other
     legislative, executive, administrative or judicial body exercising
     any power or jurisdiction over the Equipment, to the extent that
     such laws and rules affect the title, operation, maintenance or
     use of the Equipment, and in the event that such laws or rules
     require any alteration, replacement or addition of or to any part
     on any Equipment the Lessee will conform therewith at its own
     expense.  The Lessee agrees to prepare and deliver to the Lessor
     and any Assignee within a reasonable time prior to the required
     date of filing (or, to the extent permissible, file on behalf of
     the Lessor and any Assignee) any and all reports (other than
     income and franchise tax returns and those required under banking
     and similar laws) to be filed by the Lessor or any Assignee with
     any Federal or state regulatory authority by reason of the
     ownership by the Lessor or any Assignee of the Items of Equipment
     or the leasing thereof to the Lessee.  The Lessee agrees to
     maintain all records, logs and other materials required by the AAR
     or DOT, or any other Governmental Authority having jurisdiction
     over the Items of Equipment or the Lessee, to be maintained in
     respect of each Item of Equipment.  The Lessee shall, at its own
     cost and expense, supply the necessary power and other items
     required in the operation of the Equipment.  The Lessee hereby
     waives any right now or hereafter conferred by law to make repairs
     on the Equipment at the expense of the Lessor.  
     
                                17



          11.  Replacements; Alterations: Modifications.  ln case any
     Item of Equipment (or any equipment, part or appliance therein) is
     required to be altered, added to, replaced or modified in order to
     comply with any Applicable Laws or pursuant to Section 9 or 10
     hereof (each, a "Required Alteration"), the Lessee agrees to make
     such Required Alteration at its own expense and the same shall
     immediately become subject to the terms of this Lease.  The Lessee
     or any permitted sublessee may make any optional alteration to any
     Item of Equipment (each, an "Optional Alteration") provided such
     Optional Alteration does not impair the condition, value, use or
     remaining useful life of such Item of Equipment.  In the event
     such Optional Alteration (i) is readily removable without causing
     material damage to the Item of Equipment, (ii) is not a part, item
     of equipment or appliance which replaces any part, item of
     equipment or appliance originally incorporated or installed in or
     attached to such Item of Equipment on the Acceptance Date therefor
     or any part, item of equipment or appliance in replacement of or
     substitution for any such original part, item of equipment or
     appliance, and (iii) is not a Required Alteration, so long as no
     Default or Event of Default shall have occurred and be continuing,
     the Lessee may, as its sole cost and expense, remove such Optional
     Alteration.  Upon the removal thereof as provided above, such
     Optional Alteration shall no longer be deemed subject to this
     Lease or part of the Equipment from which it was removed.  Any
     Optional Alteration not removed as above provided prior to the
     return of the Equipment to the Lessor hereunder shall remain the
     property of the Lessor.  The Lessee agrees that, within thirty
     days after the Lessor so requests (but not more frequently than
     once per year), the Lessee will give written notice to the Lessor
     describing, in reasonable detail, the Required Alterations and
     specifying the cost thereof with respect to each Item of Equipment
     and the date or dates when made.  Any parts installed or
     replacements made by the Lessee upon any Item of Equipment
     pursuant to its obligation to maintain and keep the Equipment in
     good order, operating condition and repair under Section 10 hereof
     shall be considered accessions to such Item of Equipment and a
     security interest therein shall be immediately vested in the
     Lessor.  Except as required or permitted by the provisions of this
     Section 11, the Lessee shall not modify an Item of Equipment
     without the prior written authority and approval of the Lessor.  
     
          12.  Identification Marks; Inspection.  The Lessee will
     cause each Item to be kept numbered with the identification number
     as shall be set forth on the Lease Supplement therefor, and the
     Lessee will keep and maintain, plainly, distinctly, durably, and
     conspicuously marked on each side of each Item, in letters not
     less than one inch in height, the words "Subject to Lease or
     security interest filed with the U.S. Surface Transportation
     Board", with appropriate changes thereof and additions thereto as
     from time to time may be required by law in order to protect the
     Lessor's title to and interests in such Item and the rights of the
     Lessor and of any Assignee.  The Lessee will replace promptly any
     such words which may be removed, defaced, obliterated or
     destroyed.  The Lessee will not change the identification number
     of any Item unless and until a statement of new number or numbers
     to be substituted therefor shall have been deposited by the Lessee
     in all public offices where this Lease shall have been filed,
     recorded and deposited.  As promptly as practicable after any
     change in identification number, Lessee shall notify Lessor of
     such change.  The Items of Equipment may be lettered with the
     names or initials or other insignia customarily used by the Lessee
     or any permitted sublessee.  The Lessee shall not allow the name
     
                                        18



     of any Person to be placed upon any Item of Equipment as a
     designation that might reasonably be interpreted as indicating a
     claim of ownership thereto or a security interest therein by any
     Person other than the Lessor or any Assignee.  The Lessor shall
     have the right (at its risk and expense, or at the Lessee's
     expense if a Default or Event of Default exists) to inspect the
     Equipment and the Lessee's records pertaining to the Equipment no
     more frequently than once in any twelve consecutive months, so
     long as no Default or Event of Default shall have occurred and be
     continuing, at such reasonable times as it shall request during
     the Term, not to interfere with Lessee's operations.  
     
          13.  Assignment and Subleasing; Quiet Enjoyment.
     
               (a)  By the Lessee.  The Lessee may, without any
               consent of the Lessor, so long as no Default or Event of
               Default shall have occurred and be continuing, sublease any
               Item of Equipment to any U.S.-based operator, provided,
               however, that the following conditions shall apply thereto: 
               (i) any sublease shall be expressly subject to and
               subordinate to the terms and conditions of this Lease;
               (ii) THE LESSEE'S OBLIGATIONS (FINANCIAL OR OTHERWISE) UNDER
               THIS LEASE SHALL CONTINUE IN THEIR ENTIRETY IN FULL FORCE
               AND EFFECT AS THE OBLIGATIONS OF A PRINCIPAL AND NOT OF A
               SURETY; (iii) the sublessee shall not engage in activities
               with the Equipment substantially different from the Lessee's
               activities without prior consent from the Lessor, which
               consent shall not be unreasonably withheld; (iv) the
               sublease does not adversely affect the Lessor's interest and
               rights in this Lease nor the Lessor's interest and rights in
               the Equipment; (v) the Lessee shall provide the Lessor
               prompt written notice, not to exceed ten (10) Business Days
               after execution of such sublease, of any such sublease of
               any Item of Equipment, which notice shall describe the
               parties, term and applicable Items of Equipment subject to
               any such agreement or arrangement; and (vi) the term of such
               sublease (including all available renewal terms) shall not
               extend beyond the termination date of the last Renewal Term
               for which Lessee has exercised its renewal option.  THE
               LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
               LESSOR, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD,
               ASSIGN, TRANSFER OR ENCUMBER (EXCEPT FOR PERMITTED LIENS AND
               AS MAY OTHERWISE BE PERMITTED HEREBY) ITS RIGHTS, INTERESTS
               OR OBLIGATIONS UNDER THIS LEASE AND ANY SUCH ASSIGNMENT,
               TRANSFER OR ENCUMBERING (EXCEPT FOR THE  PERMITTED LIENS AND
               AS MAY OTHERWISE BE PERMITTED HEREBY) BY THE LESSEE SHALL BE
               NULL AND VOID.  Lessee may enter into a joint venture or
               pooling arrangement or create a special purpose subsidiary
               to operate such railcars, and, so long as Lessee remains
               bound to pay and perform all of the obligations of Lessee
               under this Lease, any such arrangements will not be deemed
               to have relinquished control or violated this Section 13(a)
               of the Lease.
     
               (b)  By the Lessor.  The Lessor may, at any time,
               without the consent of the Lessee, sell, assign or transfer
               to any Person all or any part of the Lessor's rights,

                                        19



               obligations, or interest in, to and under the Equipment or
               any Item(s) thereof, this Lease, any Lease Supplement and/or
               any Basic Rent and Supplemental Payments payable under this
               Lease or any Lease Supplement so long as (a) such Person is
               an institutional investor (organized under the laws of the
               United States or any state thereof) and, at the time of
               transfer, shall not be the subject of any bankruptcy,
               insolvency or other similar proceedings; (b) such Person (or
               a guarantor acceptable to Lessee) shall have a tangible net
               worth in excess of $50 million; (c) the transfer shall not
               result in a violation of any Applicable Law; (d) 30 days
               prior written notice shall be given to Lessee by Lessor of
               any proposed transfer; (e) Lessor (or such Person) shall pay
               all expenses of Lessee; and (f) Lessor must transfer not
               less than all of the Equipment then remaining under the
               Lease.  The Lessor shall obtain the approval of the Lessee,
               which such approval shall not be unreasonably withheld or
               delayed, prior to the time the Lessor sells, assigns or
               transfers all or any part of the Lessor's rights,
               obligations, title or interest in, to and under the
               Equipment or any Item(s) thereof, this Lease, any Lease
               Supplement and/or any Basic Rent and Supplemental Payments
               payable under this Lease or any Lease Supplement to any
               Person other than as provided in the immediately preceding
               sentence.  Any Person to whom any such sale, assignment or
               transfer is made in accordance with the terms of this Lease
               is herein called an "Assignee" and any such sale, assignment
               or transfer is herein called an "assignment".  The Lessee
               agrees to execute any and all related acknowledgments,
               consents, amendments (necessary or appropriate to reflect
               such assignment) and other documents, and to make any and
               all registrations and filings (including filings under the
               Uniform Commercial Code) that may be reasonably requested by
               the Lessor or an Assignee, all at the Lessor's expense, in
               connection with any such assignment.  Each Assignee shall
               have and may enforce all of the rights and benefits of the
               Lessor hereunder with respect to the Item(s) of Equipment
               and related Lease Supplement(s) covered by the assignment. 
               Each such assignment shall be subject to the Lessee's rights
               hereunder.  Notwithstanding anything to the contrary in this
               Lease, the Lessee shall be under no obligation to any
               Assignee except upon written notice of such assignment from
               the Lessor and compliance with the terms of Section 34
               below; provided, however, that until such notice and
               compliance with Section 34, Lessee shall deem and treat
               Lessor as the Party entitled to the rights and benefits of
               "Lessor" hereunder.  Upon written notice to the Lessee of an
               assignment and compliance with the terms of Section 34
               below, the Lessee agrees to pay the Basic Rent and
               Supplemental Payments with respect to the Item(s) of
               Equipment covered by such assignment to such Assignee to a
               United States bank account in accordance with the
               instructions specified in such notice without any abatement,
               setoff, or recoupment whatsoever, and to otherwise comply
               with all notices, directions and demands which shall be
               properly given by the Lessor or such Assignee with respect
               to such Item(s), in accordance with the provisions of this
               Lease.  Notwithstanding any such assignment, all obligations
               of the Lessor to the Lessee under this Lease shall be and
               remain enforceable by the Lessee against the Lessor (unless
               and until Lessee has notice of such assignment and such
               assignment has been made in accordance with the terms of
               this Section 13 and Section 34 below and thereafter against
               any Assignee to whom an assignment has been made).

                                        20



               (c)  Quiet Enjoyment.  So long as no Default or Event
               of Default shall have occurred and be continuing hereunder,
               the Lessee and its Affiliates (to the extent permitted by
               the terms hereof) shall be entitled to the possession and
               use of the Items of Equipment upon lines of railroad over
               which the Lessee or its Affiliates has or have trackage or
               other operating rights or over which railroad equipment of
               the Lessee or its Affiliates is operated pursuant to
               contract and shall be entitled to permit the use of the
               Items of Equipment by connecting and other carriers in the
               usual interchange of traffic or pursuant to run-through or
               trip-lease agreements, provided, however, that the LESSEE'S
               OBLIGATIONS (FINANCIAL OR OTHERWISE) UNDER THIS LEASE SHALL
               CONTINUE IN THEIR ENTIRETY IN FULL FORCE AND EFFECT AS THE
               OBLIGATIONS OF A PRINCIPAL AND NOT OF A  SURETY.  The Lessee
               may receive and retain compensation for the use of any of
               the Items of  Equipment from railroads or other entities so
               using such Items of Equipment.  
     
          14.  Liens.  The Lessee will not directly or indirectly
     create, incur, assume or suffer to exist any Lien on or with
     respect to (i) the Equipment or any Item thereof, or the Lessor's
     interest therein, or (ii) this Lease or any of the Lessor's
     interests hereunder, except in the case of either clause (i) or
     (ii), Permitted Liens.  The Lessee, at its own expense, will
     promptly pay, satisfy and otherwise take such actions as may be
     necessary to keep this Lease and the Equipment free and clear of,
     and to duly discharge or eliminate or bond in a manner
     satisfactory to the Lessor and each Assignee, if any, any such
     Lien not excepted above if the same shall arise at any time.  The
     Lessee will notify the Lessor and each Assignee, if any, in
     writing promptly upon becoming aware of any tax or other Lien
     (other than any Permitted Lien excepted above) that shall attach
     to the Equipment or any Item of Equipment, in reasonable detail.  
     
          15.  Loss, Damage or Destruction.  
     
               (a)  Risk of Loss, Damage or Destruction.  The Lessee
               hereby assumes all risk of loss, damage, theft, taking,
               destruction, confiscation, requisition or commandeering,
               partial or complete, of or to each Item of Equipment,
               however caused or occasioned (except as caused or occasioned
               by the Lessor's or any Assignee's gross negligence or
               willful misconduct), such risk to be borne by the Lessee
               with respect to each Item of Equipment from the date of this
               Lease, and continuing until such Item of Equipment has been
               returned to the Lessor in accordance with the provisions of
               Section 6 hereof or has been purchased by the Lessee or sold
               in accordance with the provisions of Section 27 hereof.  The
               Lessee agrees that no occurrence specified in the  preceding
               sentence shall impair, in whole or in part, any obligation
               of the Lessee under this Lease, including the obligation to
               pay Basic Rent, until such obligation is terminated in
               accordance with the terms of this Lease.  
     
               (b)  Payment of Casualty Loss Value Upon an Event of
               Loss.  Subject to Section 15(c), if an Event of Loss occurs
               with respect to an Item of Equipment during the 
               
                                        21               



               Term, the Lessee shall, within thirty (30) days after such
               Event of Loss, give the Lessor written notice thereof and shall
               pay to the Lessor on the applicable Casualty Loss Value Payment
               Date the sum of (i) all unpaid Basic Rent payable for such
               Item of Equipment for any Rental Period in which the Event
               of Loss has occurred, plus (ii) the Casualty Loss Value of
               such Item of Equipment determined as of the immediately
               preceding Rent Payment Date plus interest thereon at the
               Applicable Rate from such preceding Rent Payment Date
               through the Applicable Casualty Loss Value Payment Date,
               plus (iii) all other Supplemental Payments due for such Item
               of Equipment as of the date of payment of the amounts
               specified in the foregoing clauses (i) and (ii).  Any
               payments received at any time by the Lessor or by the Lessee
               from any insurer or other party as a result of the
               occurrence of such Event of Loss will be applied in
               reduction of the Lessee's obligation to pay the foregoing
               amounts, if not already paid by the Lessee, or, if already
               paid by the Lessee, will be applied to reimburse the Lessee
               for its payment of such amount (unless a Default or Event of
               Default exists, in which case the Lessor may first apply any
               such payments in reduction of the Lessee's obligation to pay
               any other amounts due from the Lessee).  Upon payment in
               full of such Casualty Loss Value and Basic Rent, (A) the
               obligation of the Lessee to pay Basic Rent hereunder with
               respect to such Item of Equipment shall terminate and the
               Term of this Lease with respect to such Item shall
               terminate, and (B) the Lessor shall transfer to the Lessee,
               "as is, where is" without recourse or warranty except as to
               the absence of Liens described in clause (d) of the
               definition of Permitted Liens, all right, title and interest
               conveyed to the Lessor in and to such Item of Equipment.
     
               (c)  Substitution.  Provided no Default or Event of
               Default shall have occurred and be continuing, Lessee may,
               in lieu of payment of the Casualty Loss Value for any Item
               of Equipment due and owing as provided in Section 15(b),
               convey or cause to be conveyed to Lessor within 180 days of
               the occurrence of the applicable Event of Loss (or such
               longer period as Lessor may reasonably agree), as
               replacement for any lost or destroyed Item of Equipment,
               title to a replacement Item of Equipment of the same or
               similar type, free and clear of all liens and having a
               value, utility, remaining useful life and estimated residual
               value at least equal to, and being in good operating
               condition as, such Item of Equipment, assuming such Item of
               Equipment was in the condition and repair required by the
               terms hereof immediately prior to the loss or destruction
               (such replacement car being hereinafter referred to as a
               "Replacement Car").  Prior to or at the time of any such
               conveyance, the Lessee, at its own expense, will furnish
               Lessor with (i) a warranty bill of sale in form and
               substance satisfactory to Lessor, with respect to such
               Replacement Car, (ii) a Lease Supplement and an Acceptance
               Certificate, subjecting such Replacement Car to this Lease,
               duly executed by Lessee, suitable for execution by Lessor
               and, upon such execution, for filing for recordation in the
               same manner as provided for herein (and Lessee shall
               promptly file the same for recordation and furnish to Lessor
               satisfactory evidence thereof), (iii) an opinion of counsel
               to the effect that (x) the bill of sale referred to in
               clause (i) above constitutes a legal, valid, binding and
               enforceable obligation of the seller, (y) such Replacement
               Car has been subjected to this Lease free
               
                                        22               
                                       



               and clear of all liens,  and (z) all filings, recordings and
               other action necessary or appropriate to perfect and protect
               the Lessor's interests in the Replacement Car have been 
               accomplished, (iv) an acknowledgment by Lessee to Lessor, in 
               form and substance reasonably satisfactory to Lessor, that
               Lessee  will indemnify  Lessor for any loss or deferral of
               depreciation or other adverse tax consequences resulting
               from such replacement, (v) an officer's certificate
               addressed to Lessor certifying that as of said date, and
               upon consummation of the replacement, no Default exists, and
               (vi) such other documents and evidence as Lessor may
               reasonably request in order to establish the consummation of
               the transactions contemplated by this Section 15(c).  For
               all purposes hereof, upon passage of title thereto to
               Lessor, the Replacement Car shall be deemed part of the
               property leased hereunder and the Replacement Car shall be
               deemed an "Item of Equipment" as defined herein.  Upon full
               compliance by Lessee with the terms of this Section 15(c) as
               determined by Lessor in good faith, Lessor will transfer to
               Lessee or its designee, without recourse or warranty (except
               as to the absence of Lessor's Liens) all of Lessor's right,
               title and interest in and to such destroyed Item of
               Equipment.
     
               (d)  Application of Payments Not Relating to an Event
               of Loss.  Any payments (including insurance proceeds)
               received at any time by the Lessor or the Lessee from any
               party with respect to any loss or damage to any Item or
               Items of Equipment not constituting an Event of Loss will be
               paid to or retained by the Lessee (unless an Event of
               Default exists, in which case the Lessor may first apply any
               such payments in reduction of the Lessee's obligation to pay
               any other amounts due from the Lessee).  
     
          16.  Insurance.  The Lessee will at its sole expense and at
     all times during the Term or, if applicable, until the pertinent
     Items of Equipment are returned to the Lessor or the Lessor's
     agent pursuant to Section 6 hereof, whichever is longer, cause to
     be carried and maintained (i) public liability insurance with
     respect to third party personal injury and property damage in an
     amount per occurrence of not less than $10,000,000 and
     (ii) property insurance in respect of all Items of Equipment in an
     amount not less than the Casualty Loss Value for such Item of
     Equipment (subject, in the case of clause (ii), to such per
     occurrence limits as may be specified in the applicable policies
     of insurance).  The Lessee will carry such insurance as is
     required hereunder in such amounts and for such risks consistent
     with prudent industry practice (which industry means major
     creditworthy U.S. electric utilities and which own or use railcars
     for the transportation of coal) and at least comparable in amounts
     and against risks customarily insured against by the Lessee in
     respect of equipment owned or leased by it similar in nature to
     the Equipment; provided that the Lessee may in any event
     self-insure or carry deductibles for up to $5,000,000 per
     occurrence for public liability and $5,000,000 per occurrence for
     property insurance (or such higher amounts as shall be consistent
     with prudent industry practice at the time).  The proceeds of any
     such property insurance as is required hereunder shall be payable
     to the Lessor, each Assignee and the Lessee, as their respective
     interests may appear.  Each policy required hereunder (i) shall
     provide thirty days' prior notice of cancellation or material
     change and (ii) shall include the Lessor and each Assignee, if
     any, as loss payee and/or additional insured as their respective
     interests may appear, and the Lessee shall endeavor to obtain a
     waiver by such 
     
                                23



     insurance company of any right to claim any
     premiums or commissions against the Lessor and each Assignee. 
     Prior  to the  Funding Date and thereafter on the expiration dates
     of the expiring policies theretofore delivered, the Lessee shall
     deliver to the Lessor and each Assignee, if any, certificates of
     insurance issued by the insurer(s) for the insurance required to
     be maintained hereunder.  If the Lessee shall fail to cause the
     insurance required under this Section to be carried and
     maintained, the Lessor or any Assignee may, after prior written
     notice to the Lessee, provide such insurance, and the Lessee shall
     reimburse the Lessor or such Assignee, as the case may be, upon
     demand for the cost thereof as a Supplemental Payment hereunder.  
     
          17.  General Tax Indemnity.  
     
               (a)  The Lessee agrees to pay, defend and indemnify
               and hold the Lessor and each Assignee and Affected Party
               (each, a "Tax Indemnitee") harmless on an After-Tax Basis
               from any and all U.S.  Federal, U.S. state and local taxes,
               including sales, use, ad valorem and property taxes,
               together with any penalties, fines or interest thereon
               (herein called "taxes or other impositions") howsoever
               imposed, whether levied or imposed upon or asserted against
               the Lessor, Tax Indemnitee, the Lessee, the Equipment, any
               Item of Equipment, or any part thereof, by any Federal,
               state or local government or taxing authority in the United
               States, upon or with respect to (i) the Equipment, or any
               Item of Equipment or any part thereof, or (ii) the ownership
               and operation of the Equipment, or any Item of Equipment or
               any part thereof; provided, however, that the foregoing
               indemnity shall not apply to
     
                         (i)  any tax or other imposition based on or measured
                         by net income or in the nature of a net income
                         tax or imposed in lieu of a net income tax,
                         including any franchise tax and any such similar
                         tax based on capital, receipts, net worth or
                         comparable basis of measurement, unless such
                         taxes or other impositions are (i) imposed
                         solely by reason of the use, location, or
                         presence of the Equipment in, or the presence or
                         activities of the Lessee in, or the making of
                         payments by the Lessee from, the jurisdiction
                         imposing such taxes or impositions or (ii) are
                         in the nature of sales, use, property, ad
                         valorem or value added taxes, provided the
                         foregoing indemnity shall not apply if such
                         taxes would not have been required to be paid if
                         Lessor had not assigned any interest under or
                         related to the Lease; 
     
                         (ii) other than as expressly provided in Section
                         27(b) hereof, any taxes or other impositions in
                         respect of this Lease of any Item of Equipment
                         that results from any act, event or omission
                         that occurs after the termination of this Lease
                         in  respect of such Item of Equipment and the
                         payment in full of all amounts due under this
                         Lease; 
     
                                        24



                         (iii) any taxes or other impositions that are imposed
                         on any Tax Indemnitee as a result of the gross
                         negligence or willful misconduct of such Tax
                         Indemnitee or its Affiliate;
     
                         (iv) any taxes or other impositions that are imposed
                         on any Tax  Indemnitee that are a result of such
                         Tax Indemnitee not being a resident of, or not
                         being organized under the laws of, the United
                         States or any political subdivision thereof;
                         provided, however, that proviso (v) and not this
                         proviso (iv) shall govern U.S. Federal income
                         taxes imposed by withholding; 
     
                         (v)  U.S. Federal income taxes imposed by
                         withholding; provided, however, that this
                         exclusion shall not apply if the tax required to
                         be deducted and withheld would not have been
                         required to be so deducted and withheld but for
                         a Change in Withholding Tax Law that occurs
                         after the date on which the Tax Indemnitee
                         acquires its interest in the Lease; 
     
                         (vi) any taxes or other impositions that have not
                         been paid and that are being contested in
                         accordance with clause (b) below; provided that
                         this exclusion shall apply only during the
                         conduct of such contest; 
     
                         (vii) any taxes or other impositions that result from
                         any transfer by any Tax Indemnitee of any
                         interest in an Item of Equipment or any interest
                         arising under this Lease (other than as set
                         forth in Section 11, Section 27(b) and
                         Section 27(c) hereof, or in connection with the
                         occurrence of an Event of Default, or an Event
                         of Loss or as otherwise required by this Lease);
                            
                         (viii) any tax that is enacted or adopted as a
                         substitute for or in lieu of any tax that
                         would not have been indemnified against
                         pursuant to Section 17(a);
     
                         (ix) taxes on any items of tax preference or any
                         minimum tax of such Tax Indemnitee; 
     
                         (x)  taxes which are gross income or gross receipts
                         taxes, unless (i) such taxes are imposed solely
                         by reason of the use, location, or presence of
                         the Equipment in, or the presence or activities
                         of the Lessee in, or the making of payments by
                         the Lessee from, the jurisdiction imposing such
                         taxes or (ii) such taxes are in the nature of
                         sales, use, property, ad valorem or value added
                         taxes; provided, the immediately foregoing
                         indemnity shall not apply if such taxes would
                         not have been required to be paid if Lessor had
                         not assigned any interest under or related to
                         the Lease; and 
     
                                        25



                         (xi) taxes or other impositions imposed on any Tax 
                         Indemnitee as a result of, or in connection
                         with, any "prohibited transaction" within the
                         meaning or the provisions of the Code or
                         regulations thereunder or as set forth in
                         Section 406 of ERISA or the regulations
                         implementing ERISA, engaged in by any Tax
                         Indemnitee.
     
          Notwithstanding the foregoing provisos (i) through (xi), the
     Lessee shall indemnify each Tax Indemnitee for any taxes
     identified in provisos (i), (iv) or (vii) (or any increase in such
     taxes) imposed on such Tax Indemnitee net of any decrease in such
     taxes actually realized by such Tax Indemnitee, to the extent that
     such tax or tax increase would not have occurred if on each
     Funding Date the Lessor had advanced funds to the Lessee in the
     form of a loan secured by the Equipment in an amount equal to the
     amount funded on such Funding Date, with debt service for such
     loan equal to the Basic Rent payable on each Rent Payment Date and
     a principal balance at the maturity of such loan in an amount
     equal to the amount of the Acquisition Cost then outstanding at
     the end of the term of this Lease.
     
          The Lessee will prepare and file any reports or returns
     required to be made with respect to any tax or other imposition
     for which the Lessee is responsible, directly or indirectly, if
     permitted by applicable law to file the same, and if not so
     permitted, the Lessee shall, at its sole cost, prepare such
     reports or returns for signature by the Tax Indemnitee or, upon
     request of the Tax Indemnitee, will promptly provide the Tax
     Indemnitee with all information necessary for the making and
     timely filing of such reports or returns by the Tax Indemnitee,
     and shall forward the same, together with immediately available
     funds for payment of any tax or other imposition due, to the Tax
     Indemnitee, at least ten days in advance of the date such payment
     is to be made.  Upon written request, the Lessee shall furnish the
     Tax Indemnitee with copies of all paid receipts or other
     appropriate evidence of payment for all taxes or other impositions
     paid by the Lessee pursuant to this Section 17.  All of the
     indemnities contained in this Section 17 in respect of (i) any
     act, event, omission or tax period that occurs on or prior to
     termination of this Lease and (ii) any sale described in
     Section 27(b) hereof shall continue in full force and effect
     notwithstanding the expiration or earlier termination of this
     Lease in whole or in part, including the expiration or termination
     of the Term with respect to any Item (or all) of the Equipment,
     and are expressly made for the benefit of, and shall be
     enforceable by, the Lessor and each Assignee.
     
          The Lessee shall have no obligation to pay any amount under
     this Section 17 to any Lessor other than CCG Trust Corporation
     that is greater than the amount that would have been payable to
     CCG Trust Corporation if it were the Lessor (the Lessee being
     obligated only to pay to such Lessor the amount it would have paid
     to CCG Trust Corporation).
     
               (b)  In the event any claim, action, proceeding or
               suit is brought against any Tax Indemnitee with respect to
               which the Lessee would be required to indemnify such Tax
               Indemnitee, such Tax Indemnitee shall promptly give written
               notice of any such claim, action, proceeding or suit to the
               Lessee.  The Lessee may, and upon the Lessee's request any
               such Tax Indemnitee will, at the Lessee's expense, resist
               and defend such action, suit
               
                                        26


               or proceeding, or cause the same to be resisted or defended
               by counsel selected by the Lessee and reasonably satisfactory
               to such Tax Indemnitee, and the Lessee shall pay all costs
               and expenses (including attorney's fees and expenses) 
               reasonably incurred by such Tax Indemnitee in connection 
               with such action, suit or proceeding; provided that no Tax 
               Indemnitee shall compromise or settle any such actions for 
               which it has assumed the responsibility of defense without 
               consent of the Lessee (not unreasonably to be withheld), 
               and provided further, that the failure of any Tax Indemnitee 
               to give such notice to the Lessee shall not relieve the 
               Lessee from any of its obligations to provide indemnification 
               to any Tax Indemnitee under this Section 17, except to the 
               extent that the Lessee's right to contest or defend is 
               adversely affected by such Tax Indemnitee's failure to give 
               notice; provided further, that the Lessee shall be relieved 
               of its obligations to provide indemnification under this 
               Section 17 with respect to any Tax Indemnitee, to the extent 
               that such Tax Indemnitee shall deliver to the Lessee a written 
               notice waiving the benefits of the indemnification of such Tax
               Indemnitee provided by this Section 17 in connection with
               such claim, action, proceeding or suit.  In such event the
               Tax Indemnitee shall reimburse the Lessee for all amounts
               paid by the Lessee with respect to such non-contested claim,
               action, proceeding, or suit.  If any Tax Indemnitee actually
               obtains a refund (or would have actually received such a
               refund but for offset by matters not indemnifiable by the
               Lessee under Section 17(a)) of all or any part of any tax
               paid or reimbursed by the Lessee, such Tax Indemnitee shall
               promptly pay to the Lessee the amount of such refund (or the
               amount of such offset) plus any interest thereon (less any
               taxes imposed on such Tax Indemnitee with respect to such
               interest) received from the relevant taxing authority (or
               which would have been received with respect to the amount of
               such an offset) plus the amount of any tax benefits realized
               by such Tax Indemnitee as a result of such payment (net of
               any net tax detriment resulting from the receipt of the
               refund and interest on the refund (after giving effect to
               such Tax Indemnitee's obligations to make payments to the
               Lessee under this sentence)).  
     
               (c)  On the Funding Date but in any event at least
               five Business Days prior to the first date on which any
               payment is due hereunder for the account of any Affected
               Party not incorporated under the laws of the United States
               or a state thereof, such Affected Party agrees that it will
               have delivered to each of the Lessee and the Lessor two duly
               completed copies of United States Internal Revenue Service
               Form 1001, W-8 or 4224, certifying that such Affected Party
               is entitled to receive payments of interest and/or yield and
               a return of the principal amount of the Acquisition Cost
               under the transaction documents without deduction or
               withholding of any United States Federal income taxes.  Each
               Affected Party which so delivers a Form 1001, W-8 or 4224
               further undertakes to deliver to each of the Lessee and the
               Lessor two additional copies of such form (or a successor
               form) on or before the date that such form expires
               (currently, three successive calendar years for Forms 1001
               and W-8 and one calendar year for Form 4224) or becomes
               obsolete or after the occurrence of any event requiring a
               change in the most recent forms so delivered by it, and such
               amendments thereto or extensions or renewals thereof as may
               be reasonably requested by the Lessee or the Lessor, in each
               case certifying that such 
               
                                        27


               
               Affected Party is entitled to receive payments under the 
               transaction documents without deduction or withholding of 
               any United States Federal income taxes, unless any change 
               in treaty, law or regulation has occurred prior to the date 
               on which any delivery of such additional forms would 
               otherwise be required which changes such Affected Party's 
               entitlement to receive any payments without withholding and 
               such Affected Party advises the Lessee that it is no longer 
               entitled to receive payments without any withholding of 
               United States Federal income tax. 

          18.  Indemnification.  The Lessee hereby assumes liability
     for, and does hereby agree to indemnify, protect, save, defend,
     and hold harmless the Lessor, each Assignee and their respective
     officers, directors, employees, successors, permitted assigns, and
     agents (each such party being herein, for purposes of this
     Section 18, called an "Indemnified Party") on an After-Tax Basis
     for, from and against any and all Expenses of every kind and
     nature whatsoever, imposed on, incurred by, or asserted against
     any Indemnified Party, in any way relating to or arising out of
     (a) the manufacture, construction, ordering, purchase, acceptance
     or rejection, ownership, titling or retitling, registration or
     reregistration, delivery, leasing, subleasing, releasing,
     possession, use, operation, storage, removal, return,
     repossession, sale or other disposition of the Equipment or any
     Item of Equipment, or any part thereof as may arise from (i) the
     transactions contemplated by this Lease, (ii) the loss or damage
     to any property or death or injury to any persons, (iii) patent or
     latent defects in any Item of Equipment (whether or not
     discoverable by the Lessee or any Indemnified Party), (iv)  any
     claims based on strict liability in tort, (v) any claims based on
     patent, trademark, tradename or copyright infringement, (vi) any
     claims based upon any non-compliance with or violation of any
     environmental control, noise or pollution laws or requirements,
     including fines and penalties arising from violations of or
     noncompliance with such requirements or failure to report
     discharges, and costs of clean-up of any discharge, and (vii) any
     loss or damage to any commodities loaded or shipped in the
     Equipment; or (b) any failure on the part of the Lessee to perform
     or comply with any of the terms of this Lease; or (c) any power of
     attorney issued to the Lessee in connection with this Lease (all
     the foregoing being "Liabilities").  The Lessee shall give each
     Indemnified Party prompt notice of any occurrence, event or
     condition known to the Lessee as a consequence of which any
     Indemnified Party may be entitled to indemnification hereunder. 
     The Lessee shall forthwith upon demand of any such Indemnified
     Party reimburse such Indemnified Party for amounts reasonably
     expended by it in connection with any of the foregoing or pay such
     amounts directly; provided, however, that the Lessee's Liability
     for taxes, imposts and similar matters (other than taxes arising
     against the Lessee under Section 4975 of the Code) are expressly
     limited to the terms of Section 17 hereof and Lessee shall not be
     liable to such Indemnified Party under this Section 18 for any of
     the Liabilities to the extent they arise from the gross
     negligence, willful misconduct, or breach of such Indemnified
     Party's obligations under this Lease, or to the extent that they
     arise from or after any transfer of the Lessor's interest in any
     Item or this Lease (other than arising directly in connection with
     a transfer resulting from an Event of Default, an Event of Loss,
     or a sale made under Section 27 hereof, or any transfer made at
     the Lessee's request or direction).  The Lessee shall be
     subrogated to an Indemnified Party's rights in any matter with
     respect to which the Lessee has actually reimbursed such
     Indemnified Party for amounts expended by it or has actually paid
     such amounts directly.  If any claim for a 
     
                                28



     Liability is made against the Lessee or any Indemnified Party and 
     such party has received notice thereof, such party receiving notice of 
     such Liability shall promptly notify the Lessee; provided that the
     failure to provide such notice promptly shall not release the
     Lessee from any of its obligations to indemnify hereunder, except
     to the extent that such failure adversely affects any applicable
     defense or counterclaim, or otherwise increases the amount the
     Lessee would have been liable for in the absence of such failure. 
     Subject to the rights of any insurer under any policy of insurance
     maintained pursuant to this Lease, and if no Default or Event of
     Default shall exist, the Lessee shall have the right to
     investigate and defend or compromise any Liability for which it
     may be required to indemnify, and each Indemnified Party agrees to
     cooperate with all responsible requests of the Lessee in
     connection therewith.  Notwithstanding any of the foregoing to the
     contrary, the Lessee shall not be entitled to assume
     responsibility for and control of any such judicial or
     administrative proceedings if (i) any Event of Default shall
     exist, (ii) such proceedings will involve a material risk of the
     sale, forfeiture, or loss of, or the creation of any Lien (other
     than a Permitted Lien) on, any Item, unless the Lessee posts a
     bond or other security satisfactory to the relevant Indemnified
     Party in respect to such risk, or (iii) such proceedings would
     involve the imposition of criminal liability (other than minor
     fines which have no adverse effect on any Indemnified Party which
     are indemnified for by Lessee) on an Indemnified Party or if such
     contest will, in the reasonable opinion of such Indemnified Party,
     be inappropriate under applicable standards of professional
     conduct.  An Indemnified Party may participate at its own expense
     and with its own counsel in any judicial proceeding controlled by
     the Lessee pursuant to the preceding provisions.  In the case of
     any Liability covered by any policy of insurance maintained
     pursuant to this Lease, each Indemnified Party shall cooperate
     with all reasonable requests of the insurers in the exercise of
     their rights to investigate, defend, or compromise such claim as
     may be required by such policy to maintain the insurance coverage
     provided to the parties thereunder.  The provisions of this
     Section 18, and the obligations of the Lessee under this Section
     18, shall apply from the date of the execution of this Lease
     notwithstanding that the Term may not have commenced with respect
     to any Item of Equipment, and shall survive and continue in full
     force and effect (as to any event occurring or condition existing
     during the Term) notwithstanding the expiration or earlier
     termination of this Lease or the Termination Date.
     
          19.  No Warranties.  THE LESSOR LEASES AND THE LESSEE TAKES
     THE EQUIPMENT "AS-IS, WHERE-IS." THE LESSEE ACKNOWLEDGES AND
     AGREES THAT AS BETWEEN THE LESSOR AND THE LESSEE (A) THE EQUIPMENT
     IS OF DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND ACCEPTABLE
     TO THE LESSEE, (B) THE LESSEE IS SATISFIED THAT THE EQUIPMENT IS
     SUITABLE FOR ITS PURPOSES, (C) THE LESSOR IS NOT A MANUFACTURER OR
     A DEALER IN PROPERTY OF SUCH KIND, AND (D) THE LESSOR HAS NOT
     MADE, OR DEEMED TO HAVE MADE, AND THE LESSOR EXPRESSLY DISCLAIMS
     AND MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESSED OR
     IMPLIED, AS TO THE DESIGN, CONDITION, QUALITY, CAPACITY,
     MERCHANTABILITY, DURABILITY, SUITABILITY OR FITNESS FOR ANY
     PARTICULAR PURPOSE OF THE EQUIPMENT, AS TO THE ABSENCE OF LATENT
     OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE
     OF ANY INFRINGEMENT OF ANY PATENT, 
     
                                29


     
     TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON 
     STRICT LIABILITY IN TORT, OR ANY OTHER IMPLIED REPRESENTATION OR 
     WARRANTY CONCERNING THE EQUIPMENT. 
     
          20.  Lessee's Representations and Warranties.  The Lessee
     hereby represents and warrants, as of the date hereof and on the
     Funding Date, that: 
     
               (a)  the Lessee is a corporation duly organized,
               validly existing and in good standing under the laws of the
               State of Missouri, and is qualified to do business in, and
               is in good standing in, each state or other jurisdiction in
               which the nature of its business makes such qualification
               necessary; 
     
               (b)  the Lessee has the corporate power and authority
               to execute and perform this Lease and to lease the Equipment
               hereunder, and has duly authorized the execution, delivery
               and performance of this Lease; 
     
               (c)  the  leasing of the Equipment from the Lessor by
               the Lessee, the Lessee's execution and delivery of this
               Lease, each Lease Supplement, the Purchase Agreement
               Assignment and other related instruments, documents and
               agreements, and the compliance by the Lessee with the terms
               hereof and thereof, and the payments and performance by the
               Lessee of all of its obligations hereunder and thereunder
               (i) have been duly and legally authorized by appropriate
               corporate action taken by the Lessee, (ii) are not in
               contravention of, and will not result in a violation or
               breach of, any of the terms of the Lessee's Articles of
               Incorporation, its By-Laws, or of any provisions relating to
               shares of the capital stock of the Lessee, and (iii) will
               not violate or constitute a breach of any provision of law,
               any order of any court or other Governmental Authority, or
               any indenture, agreement or other instrument to which the
               Lessee is a party, or by or under which the Lessee or any of
               the Lessee's property is bound, or be in conflict with,
               result in a breach of, or constitute (with due notice and/or
               lapse of time) a default under any such indenture, agreement
               or instrument, or result in the creation or imposition of
               any Lien upon any of the Lessee's property or assets other
               than the Liens contemplated hereby and the Permitted Liens; 
     
               (d)  this Lease has been executed by the duly
               authorized officer or officers of the Lessee and delivered
               to the Lessor and constitutes, when executed by the duly
               authorized officer or officers of the Lessee and delivered
               to the Lessor, each Lease Supplement and related
               instruments, documents and agreements with respect to each
               Item of Equipment will constitute, the legal, valid and
               binding obligations of the Lessee, enforceable against the
               Lessee in accordance with their terms (subject to such
               bankruptcy and similar laws affecting the rights of
               creditors generally); 
     
                                        30



               (e)  the Lessee holds all material licenses,
               certificates and permits from Governmental Authorities
               necessary to use and operate the Equipment in accordance
               with the provisions of this Lease; 
     
               (f)  there is no litigation or other proceeding now
               pending or, to the best of the Lessee's knowledge,
               threatened against or affecting the Lessee, in any court or
               before any regulatory commission, board or other
               administrative Governmental Authority (i) which would
               directly or indirectly adversely affect or impair the title
               of the Lessor to the Equipment, or (ii) which, except as may
               be contemplated and disclosed under the Disclosure
               Documents, would materially adversely affect the financial
               condition of the Lessee; 
     
               (g)  all balance sheets, statements or profit and
               loss and other financial statements set forth in the
               Disclosure Documents fairly present the financial condition
               of the Lessee on the dates for which, and the results of its
               operations for the periods for which, the same have been
               furnished, and have been prepared in accordance with
               generally accepted accounting principles consistently
               followed throughout the periods covered thereby (except as
               noted therein); and there has been no material adverse
               change in the financial condition of the Lessee, since the
               date of the Disclosure Documents, except as may be disclosed
               under the Disclosure Documents; 
     
               (h)  no approval that has not been obtained by the
               Lessee as of the date of this representation and warranty is
               required from any regulatory body, board, authority or
               commission, nor from any other administrative or
               governmental agency, nor from any other Person, with respect
               to the Lessee's execution, delivery and performance of this
               Lease; 
     
               (i)  the Disclosure Documents and the Equipment
               Documents are true and correct in all material respects and
               do not omit any information necessary to make the
               information provided, in light of the circumstances under
               which such information was provided, not materially
               misleading; 
     
               (j)  the Lessee is not an "investment company" or a
               company "controlled" by an "investment company", within the
               meaning of the Investment Company Act of 1940, as amended;
               and 
     
               (k)  any Lien on the Lessee's interest in the
               Equipment contained in mortgages granted by the Lessee which
               cover after acquired property of the Lessee and which
               otherwise subject all or substantially all of the Lessee's
               assets to such mortgage, is subordinate to and does not
               adversely affect Lessor's interest in the Equipment under
               this Lease, and no one other than Lessor has made any filing
               with the Surface Transportation
               
                                        31



               Board or the Interstate Commerce Commission covering any of 
               the Equipment subject to this Lease. 
     
          21.  Events of Default.  Any of the following events shall
     constitute an Event of Default 
     
               (a)  the Lessee shall fail to make any payment of 
               Basic Rent or any Supplemental Payment on the date due, and
               that failure shall continue for at least ten (10) Business
               Days after the due date for such payment in the case of
               Basic Rent or thirty (30) days after receipt of written
               notice from Lessor, in the case of any other amount,
               including Supplemental Payments; or 
     
               (b)  the Lessee shall fail to perform or observe any
               other covenant, condition, or agreement to be performed or
               observed by it under this Lease, or in any agreement or
               certificate furnished to the Lessor or any Assignee in
               connection herewith, and such failure shall continue
               unremedied for ten (10) days (if not capable of being cured)
               or thirty (30) days (if capable of being cured) after the
               first to occur of (i) an officer of Lessee with express
               authority to make decisions regarding this Lease has actual
               specific knowledge thereof or (ii) Lessor provides written
               notice to the Lessee specifying such failure and demanding
               the same to be remedied; or
     
               (c)  any representation or warranty made by the
               Lessee under this Lease or in any Lease Supplement or in any
               document or certificate furnished to the Lessor or any
               Assignee in connection herewith or pursuant hereto, shall
               prove to be untrue or incorrect in any material respect when
               made; provided that if the effect of such misrepresentation
               or warranty is reasonably curable, the Lessee shall have
               thirty (30) days after notice from the Lessor to effect a
               cure; or 
     
               (d)  the Lessee shall (i) generally fail to pay, or
               admit in  writing its inability to pay, its debts as they
               become due, or shall voluntarily commence any case or
               proceeding or file any petition under any bankruptcy,
               insolvency or similar law or seeking dissolution,
               liquidation or reorganization or the appointment of a
               receiver, trustee, custodian or liquidator for itself or a
               substantial portion of its property, assets or business or
               to effect a plan or other arrangement with its creditors, or
               shall file any answer admitting the jurisdiction of the
               court and the material allegations of any involuntary
               petition filed against it in any bankruptcy, insolvency or
               similar case or proceeding, or shall be adjudicated
               bankrupt, or shall make a general assignment for the benefit
               of creditors, or shall consent to, or acquiesce in the
               appointment of, a receiver, trustee, custodian or liquidator
               for itself or substantially all of its property, assets or
               business; or 
     
               (e)  involuntary proceedings or an involuntary
               petition shall be commenced or  filed against the Lessee
               under any bankruptcy, insolvency or similar law or seeking
               the dissolution, liquidation or reorganization of the Lessee
               or the appointment of a receiver, 
               
                                        32



               trustee, custodian or liquidator for the Lessee or of 
               substantially all of the property, assets or business of 
               the Lessee, or any writ, judgment, warrant of attachment, 
               execution or similar process shall be issued or levied 
               against substantially all of the property, assets or 
               business of the Lessee, and such proceedings or petition 
               shall not be dismissed, or such writ, judgment, warrant of 
               attachment, execution or similar process shall not be stayed, 
               released, vacated or fully bonded, within ninety (90) 
               consecutive days after commencement, filing or levy, as 
               the case may be.
     
          22.  Remedies Upon Default.  
     
               (a)  Upon the occurrence of any Event of Default and
               at any time thereafter so long as the same shall be
               continuing, the Lessor may exercise one or more of the
               following remedies as the Lessor in its sole discretion may
               elect: 
     
                         (i)  the Lessor may terminate or cancel this Lease,
                         without prejudice to  any other remedies of the
                         Lessor hereunder, with respect to all or any
                         Item of Equipment, and whether or not this Lease
                         has been so terminated, may enter the premises
                         of the Lessee or any other party to take
                         immediate possession of the Equipment and remove
                         all or any Item of Equipment by summary
                         proceedings or otherwise, or may cause the
                         Lessee, to store, maintain, surrender and
                         deliver possession of the Equipment or such Item
                         in the same manner as provided in Section 6
                         hereof; 
     
                         (ii) the Lessor may lease to others the Equipment or
                         any Item of Equipment, as the Lessor in its sole
                         discretion may determine, free and clear of any
                         rights of the Lessee and without any duty to
                         account to the Lessee with respect to such
                         action or inaction or for any proceeds with
                         respect thereto, except as required by this
                         Lease or by law; 
     
                         (iii) the Lessor may sell the Equipment or any Item 
                         of Equipment at public or private sale as the
                         Lessor may determine, free and clear of any
                         rights of the Lessee (except as required by
                         law), and the Lessee shall pay to the Lessor, as
                         liquidated damages for loss of a bargain and not
                         as a penalty (in lieu of the Basic Rent due for
                         the Equipment or Item(s) so sold for any Rental
                         Period commencing after the date on which such
                         sale occurs), the difference, if any of (A) the
                         sum of (x) all unpaid Basic Rent payable for
                         each Item of Equipment for all Rental Periods
                         through the date on which such sale occurs, plus
                         (y) the Casualty Loss Value of the Item(s) of
                         Equipment so sold, computed as of the Rent
                         Payment Date coincident with (or, if the sale is
                         not on a Rent Payment Date, next preceding) the
                         date of such sale, plus (z) all unpaid
                         Supplemental Payments (including Make Whole
                         Amount, if any) due with respect to each Item of
                         Equipment so sold 
                         
                                        33



                         minus (B) the net proceeds of such sale (exclusive 
                         of any costs, fees and expenses incurred in 
                         connection with such sale);

                         (iv) whether or not the Lessor shall have exercised,
                         or shall thereafter at any time exercise, any of
                         its rights under clause (i) or (ii) above with
                         respect to any Item(s) of Equipment, the Lessor,
                         by written notice to the Lessee specifying a
                         payment date, may demand that the Lessee pay to
                         the Lessor, and the Lessee  shall pay to the
                         Lessor, on the payment date specified in such
                         notice, as liquidated damages for loss of a
                         bargain and not as a penalty (in lieu of the
                         Basic Rent due for any Item(s) of Equipment for
                         any Rental Period commencing after the payment
                         date specified in such notice and in lieu of the
                         exercise by the Lessor of its remedies under
                         clause (ii) above in the case of a re-lease of
                         such Item(s) or under clause (iii) above with
                         respect to a sale of such Item(s)), the sum of
                         (i) all unpaid Basic Rent payable for such
                         Item(s) for all Rental Periods through the
                         payment date specified in such notice, plus
                         (ii) all unpaid Supplemental Payments (including
                         Make Whole Amount, if any) due with respect to
                         such Item(s) as of the payment date specified in
                         such notice, plus (iii) an amount, with respect
                         to each such Item, equal to the Casualty Loss
                         Value of such Item(s) computed as of the Rent
                         Payment Date coincident with (or, if the payment
                         date specified is not a Rent Payment Date, next
                         preceding) the payment date specified in such
                         notice; provided, however, that with respect to
                         any such Item(s) returned to or repossessed by
                         the Lessor, the amount recoverable by the Lessor
                         pursuant to the foregoing shall be reduced (but
                         not below zero) by an amount equal to the Fair
                         Market Sales Value of such Item(s) as of the
                         date on which the Lessor has obtained possession
                         of such Item(s) and shall not exceed the Maximum
                         Lessee Risk Amount plus the Make Whole Amount
                         due to Lessor, if any, for such date; 
     
                         (v)  unless the Equipment has been sold in its
                         entirety, the Lessor may, whether or not the
                         Lessor shall have exercised or shall thereafter
                         at any time exercise any of its rights under
                         clause (ii), (iii) or (iv) of this Section 22
                         with respect to the Equipment or portions
                         thereof, demand, by written notice to the Lessee
                         specifying a date not earlier than ten days
                         after the date of such notice, that the Lessee
                         purchase, on such date, the Equipment (or the
                         remaining portion thereof) in accordance with
                         the provisions of Section 27(b)(i); provided,
                         however that no such written notice shall be
                         required upon the occurrence of any Event of
                         Default described in clause (d) or (e) of
                         Section 21; and 
     
                         (vi) the Lessor may exercise any other right or
                         remedy which may be available to it under
                         Applicable Law or proceed by appropriate court
                         action to 
                         
                                                34


                         
                         enforce the terms hereof or to recover
                         damages for the breach hereof or to rescind this
                         Lease.
     
          In addition, the Lessee shall be liable for all Expenses,
     including attorneys' fees and Appraisal costs and expenses,
     reasonably incurred by the Lessor or any Assignee by reason of the
     occurrence of any Event of Default or the exercise of the Lessor's
     remedies with respect thereto, including all Expenses incurred in
     connection with the return of the Equipment in accordance with
     Section 6 hereof or in placing the Equipment in the condition
     required by Section 6.  For the purpose of clause (iv) above, the
     "Fair Market Sales Value" of any Item of Equipment shall mean such
     value as has been determined by averaging the valuations of an
     independent qualified appraiser selected by each of the Lessor and
     the Lessee.  The exercise or beginning of exercise by the Lessor
     of any one or more of its remedies shall not constitute the
     exclusive election of such remedies.  No express or implied waiver
     by the Lessor of any Event of Default shall in any way be, or be
     construed to be, a waiver of any future or subsequent Event of
     Default.  
     
               (b)  After the sale of all of the Equipment pursuant
               to the exercise of the Lessor's remedies under this Lease,
               any amounts collected by the Lessor in such sale or sales
               which exceed the sum of (i) the applicable Casualty Loss
               Values for all Items of Equipment subject to this Lease,
               plus but without duplication (ii) any amounts owed by the
               Lessee to the Lessor under this Lease, plus but without
               duplication (iii) the costs incurred by the Lessor in
               consummating such sale, shall be paid to the Lessee by the
               Lessor.  
     
          23.  Lessor's Right to Perform for the Lessee.  If the
     Lessee fails to make any Supplemental Payment required to be made
     by it hereunder or fails to perform or comply with any of its
     agreements contained herein, the Lessor may itself, after at least
     five (5) Business Days' prior written notice to the Lessee, make
     such payment or perform or comply with such agreement, and the
     amount of such payment and the amount of the reasonable Expenses
     of the Lessor incurred in connection with such payment or the
     performance of or compliance with such agreement, as the case may
     be, together with interest thereon at the rate specified in
     Section 24 hereof, shall, if not paid by the Lessee to the Lessor
     on demand, be deemed a Supplemental Payment hereunder.
     
          24.  Late Charges.  The Lessee shall pay to the Lessor,
     upon demand, to the extent permitted by applicable law, interest
     on any installment of Basic Rent not paid when due, and on any
     Supplemental Payment or other amount payable under this Lease
     which is not paid when due, for any period for which any of the
     same is overdue (without regard to any grace period) at a rate
     equal to the lesser of (a) the Applicable Rate plus two percent
     per annum, or (b) the maximum rate of interest permitted by law.  
     

                                35



          25.  Further Assurances.  The Lessee will promptly and duly
     execute and deliver to the Lessor and any Assignee such other
     documents and assurances and filings (including with the Surface
     Transportation Board and under the Uniform Commercial Code), and
     will take such further action as the Lessor or any Assignee may
     from time to time reasonably request in order to carry out more
     effectively the intent and purposes of this Lease and to establish
     and protect the rights and remedies created or intended to be
     created in favor of the Lessor and of any Assignee and their
     respective rights, title and interests in and to the Equipment.  
     
          26.  Notices.  All notices provided for or required under
     the terms and provisions hereof shall be in writing (including
     facsimile) and addressed, delivered or transmitted to the
     appropriate party at its address or facsimile number as set forth
     on Schedule I hereto, or in the case of any Assignee, to the
     address or facsimile number as such Assignee shall designate in
     writing to the Lessor and the Lessee, or in each case at such
     other address or facsimile number as an addressee shall designate
     in writing to the other parties.  Any notice, if mailed or sent by
     courier service, shall be deemed given when delivered; any notice,
     if transmitted by facsimile, shall be deemed given when
     transmitted and electronically confirmed.
     
          27.  Lessee's Renewal, Purchase and Sale Options.  
     
               (a)  Lessee's Renewal Option.  With respect to each
               Lease Supplement, the Lessee shall be entitled, at its
               option, to renew this Lease for a Renewal Term with respect
               to all or any portion of the Items of Equipment then subject
               to such Lease Supplement (provided that the balance of the
               Equipment not so renewed is purchased), unless (i) an Event
               of Default exists, or (ii) this Lease shall have been
               earlier terminated.  The first Renewal Term with respect to
               each such Item of Equipment will commence at the expiration
               of the Basic Term of such Item, and each succeeding Renewal
               Term will commence at the expiration of the next preceding
               Renewal Term.  All of the provisions of this Lease,
               including Basic Rent, Casualty Loss Value and the Applicable
               Rate, shall be applicable during each Renewal Term for each
               such Item of Equipment.  If the Lessee intends not to
               exercise said renewal option with respect to all of such
               Items of Equipment for the next following Renewal Term with
               respect thereto, the Lessee shall give written notice to the
               Lessor to such effect at least 180 days prior to the
               expiration of the Basic Term, in the case of the first
               Renewal Term, and at least 180 days prior to the expiration
               of the then current Renewal Term of said Item(s) of
               Equipment, in the case of the then next succeeding Renewal
               Term.  If the Lessee fails to give such written notice to
               the Lessor with respect to all of the Items of Equipment
               covered by any Lease Supplement, it shall be conclusively
               presumed that the Lessee has elected to exercise said
               renewal option with respect to all of such Items of
               Equipment for said Renewal Term.  In the event the Lessee
               elects not to exercise said renewal option, the Lessee shall
               be deemed to have exercised its purchase option under
               Section 27(b) hereof (unless Lessee elects to sell such Item
               to a third party in accordance with Section 27(c) hereof).  
     

                                36



               (b)  Lessee's Purchase Option.  (I)  With respect to
               each Lease Supplement, the Lessee shall be entitled, at its
               option at the end of the Basic Term and any Renewal Term
               (notwithstanding that Lessee may have previously agreed to
               renew this Lease for subsequent Renewal Terms), upon written
               notice to the Lessor as hereinafter provided, to purchase
               all, but not less than all, Items of Equipment then subject
               to such Lease Supplement for which Lessee has not opted to
               renew this Lease, unless (i) a Default or  Event of Default
               exists, or (ii) this Lease shall have been earlier
               terminated.  Such purchase shall be consummated, and the
               Lessee shall pay the purchase price therefor to the Lessor
               in immediately available funds, on the Rent Payment Date
               specified in the Lessee's notice to the Lessor.  The date of
               purchase shall be no earlier than the first anniversary of
               the Funding Date with respect to such Items of Equipment. 
               The purchase price for each such Item shall be an amount
               (each, an "EBO Purchase Option Amount") equal to the
               Unamortized Lease Balance for such Items of Equipment.  In
               addition, the Lessee shall pay to the Lessor on the early
               buyout date, in immediately available funds, (x) any
               applicable sales, excise or other taxes imposed as a result
               of such sale (other than gross or net income or similar
               taxes attributable to such sale), plus (y) the Make Whole
               Amount, if any, required to be paid under the terms of this
               Lease and any other Supplemental Payments then due and owing
               to the Lessor hereunder.  The Lessor's sale of each Item of
               Equipment shall be on an "as-is, where-is" basis, without
               any representation or warranty by, or recourse to, the
               Lessor except that the Lessor shall warrant that each such
               Item of Equipment shall be returned free and clear of all
               Liens of the sort described in clause (d) of the definition
               of Permitted Liens.  If the Lessee intends to exercise said
               early buyout option, the Lessee shall provide the Lessor
               with 180 days' prior written notice thereof. 
     
               (II)  In addition to Lessee's purchase option under
               clause (I) above, if either (x) this Lease is not construed
               as an operating lease for financial accounting purposes by
               Lessee's independent accountants or (y) any Required
               Alteration under Section 11 is reasonably determined by
               Lessee to be economically impractical, then, with respect to
               each Lease Supplement, the Lessee shall be entitled, upon
               not less than ninety (90) days prior written notice to the
               Lessor as hereinafter provided, to purchase all, but not
               less than all, Items of Equipment then subject to such Lease
               Supplement, unless (i) a Default or Event of Default exists,
               or (ii) this Lease shall have been earlier terminated.  Such
               purchase shall be consummated, and the Lessee shall pay the
               purchase price therefor to the Lessor in immediately
               available funds, on the Business Day (the "Payment Date")
               specified in the Lessee's notice to the Lessor.  The
               purchase price for each such Item shall be an amount (each,
               an "EBO Purchase Option Amount") equal to the Unamortized
               Lease Balance for such Items of Equipment as of the
               immediately preceding Rent Payment Date plus interest
               accrued thereon at the Applicable Rate from such preceding
               Rent Payment Date through such Payment Date.  In addition,
               the Lessee shall pay to the Lessor on the Payment Date, in
               immediately available funds, (x) any applicable sales,
               excise or other taxes imposed as a result of such sale
               (other than gross or net income or similar taxes
               attributable to such sale), plus (y) the Make Whole Amount,
               if any, required to be paid under the terms of this Lease
               and any other Supplemental Payments then due and owing to

                                        37



               the Lessor hereunder.  The Lessor's sale of each Item of
               Equipment shall be on an "as-is", "where-is" basis, without
               any representation or warranty by, or recourse to, the
               Lessor except that the Lessor shall warrant that each such
               Item of Equipment shall be returned free and clear of all
               Liens of the sort described in clause (d) of the definition
               of Permitted Liens.
     
               (c)  Third Party Sale of Equipment. 
     
                         (i)  Remarketing Obligations.  In the event the
                         Lessee (x) delivers notice to the Lessor that it
                         has elected not to renew this Lease with respect
                         to all Items of Equipment then subject to this
                         Lease in accordance with Section 27(a) hereof
                         and (y) has not exercised its option to purchase
                         all of the Items of Equipment then subject to
                         this Lease pursuant to Section 27(b), then the
                         Lessee shall have the obligation during the last
                         180 days of the Basic Term (after exercise of
                         the maximum number of Renewal Terms permitted
                         hereby) (the "Remarketing Period"), to obtain
                         (at the cost of the Lessee) bona fide bids for
                         not less than all Items of Equipment then
                         subject to this Lease from prospective
                         purchasers (who are not, and are not acting on
                         behalf of, Lessee or any Affiliate of Lessee)
                         who are financially capable of purchasing such
                         Items of Equipment for cash.  Any such sale
                         shall be on an "as-is, where-is" basis, without
                         recourse or warranty except that the Lessor
                         shall warrant that each such Item of Equipment
                         shall be returned free and clear of all Liens of
                         the sort described in clause (d) of the
                         definition of Permitted Liens.  All such bids
                         received by the Lessee during such Remarketing
                         Period of such Items of Equipment shall be
                         immediately certified to the Lessor in writing,
                         setting forth the amount of such bid and the
                         name and address of the person or entity
                         submitting such bid.  Notwithstanding the
                         foregoing, the Lessor shall have the right, but
                         not the obligation, to seek bids for the
                         Equipment during the Remarketing Period.  
     
                    (ii) Sale of Equipment.  On the  Termination Date,
                         provided that all the conditions hereof have
                         been met, the Lessor shall sell (or cause to be
                         sold) all Items of Equipment then subject to
                         this Lease, for cash to the bidder, if any,
                         selected by the Lessee on an "as-is, where-is"
                         basis and without recourse or warranty except
                         that the Lessor shall warrant that each such
                         Item of Equipment shall be returned free and
                         clear of all Liens of the sort described in
                         clause (d) of the definition of Permitted Liens,
                         and upon receipt by the Lessor of the sales
                         price, the Lessor shall instruct the Lessee to
                         deliver and the Lessee shall deliver such
                         Item(s) of Equipment to such bidder; provided
                         that (x) any such sale shall be consummated, and
                         the sales price for such Item (and any amounts
                         payable by Lessee pursuant to Section 28) shall
                         be paid to the Lessor in immediately available
                         funds, on or before the Termination Date, and
                         (y) the Lessor shall not be obligated 
                         
                                        38


                         
                         to sell such Equipment if (i) the Net Proceeds of 
                         Sale of such Items are less than the aggregate
                         Maximum Lessor Risk Amount applicable to such
                         Items as of the Termination Date, and (ii) the
                         Lessor has not received the amounts, if any,
                         payable by the Lessee pursuant to Section  28;
                         provided further that if such sale shall not be
                         consummated on such date and the Term shall not
                         have been extended or renewed, Lessee shall be
                         deemed to have exercised its purchase option
                         pursuant to Section 27(b)(i) and shall pay
                         Lessor the amounts specified therein on the
                         Termination Date.  Except as expressly set forth
                         herein, the Lessee shall have no right, power or
                         authority to bind the Lessor in connection with
                         any proposed sale of the Equipment.  
     
          28.  End-of-Term Rental Adjustment - Third Party Sale of
     Equipment.  If the aggregate proceeds of sale of the Equipment
     pursuant to Section 27(c) after deducting therefrom the aggregate
     amount of all costs (other than sales commissions or similar
     third-party fees, unless approved in writing by the Lessee)
     incurred by the Lessor in connection with such sale (such net
     amount being hereinafter referred to as "Net Proceeds of Sale")
     are less than the aggregate Estimated Residual Value of the
     Equipment as of such Termination Date, the Lessee shall, on the
     Termination Date, pay to the Lessor, in immediately available
     funds, to the Lessor's account specified pursuant to Section 7(c)
     hereof, (x) an amount equal to such deficiency (a "Deficiency")
     plus (y) the Basic Rent due and payable for such Items of
     Equipment on the Termination Date plus (z) any other Supplemental
     Payments then due and owing to the Lessor hereunder; provided,
     however, that if no Default or Event of Default shall exist, the
     amount of the Deficiency payable by the Lessee with respect to the
     Items covered by such Lease Supplement shall not exceed the
     Maximum Lessee Risk Amount as set forth in such Lease Supplement
     for such Termination Date.  If the Net Proceeds of Sale of such
     Items of Equipment exceed the aggregate Estimated Residual Value
     of such Items, then the Lessor shall apply that excess to any
     amounts that the Lessee then owes to the Lessor hereunder with
     respect to such Items (or, if an Event of Default exists, to any
     other amount that the Lessee then owes to the Lessor), and shall
     pay to the Lessee the remainder of such excess as an adjustment to
     the Basic Rent payable under this Lease for such Items.  
     
          29.  Covenants of the Lessee.  The Lessee agrees, for the
     benefit of the Lessor and each Assignee, as follows: 
     
               (a)  Financial Information.  During the Term, the
               Lessee will furnish or cause to be furnished to the Lessor
               (a) within one hundred twenty (120) days after the end of
               each of its fiscal years, its consolidated balance sheet and
               related consolidated statements of income and cash flows, in
               each case certified by independent certified public
               accountants of nationally recognized standing, showing its
               financial position at the close of such year and the results
               of its operations and cash flows for such year; (b) within
               sixty (60) days after the end of each of the first three (3)
               quarters in each of its fiscal years, its unaudited
               condensed consolidated balance sheet and related condensed
               consolidated statements of income and cash flows, such
               balance sheets to be as of the end of such quarter and such
               
                                        39



               statements of income and cash flows to be for the period
               from the beginning of the fiscal year to the end of such
               quarter, in each case in the forms included in its Quarterly
               Report on Form 10-Q for such quarter filed with the SEC
               pursuant to the Securities Exchange Act of 1934, as amended,
               and subject to audit and year-end adjustments; and (c) such
               other information respecting the Lessee's business,
               properties or its condition or operations, financial or
               otherwise, as the Lessor may from time to time reasonably
               request.  
     
               In the event the Lessee is no longer obligated to file
               Forms 10-K and 10-Q with the SEC, the Lessee shall furnish
               to the Lessor the financial statements required to be filed
               under such Forms on or prior to the dates specified in the
               preceding sentence.  
     
               (b)  Mergers, etc.  The Lessee shall not merge with
               or into or consolidate with or into any other Person (other
               than the Western Resources Merger Transaction, which merger
               Lessor and Lessee agree complies with clauses (1) and (2)
               below) or sell, transfer, or otherwise dispose of
               substantially all the Lessee's assets unless, immediately
               after giving effect thereto, (1) the Lessee is the surviving
               corporation, or the surviving (if not the Lessee) or
               resulting corporation shall have assumed, in writing, the
               obligations of the Lessee under this Lease pursuant to
               documentation reasonably satisfactory to the Lessor and each
               Assignee (if any), and (2) the surviving entity or resulting
               entity or transferee, as applicable, will have a credit
               rating from Standard & Poor's Rating Group for its senior
               unsecured debt of BBB or better (or an equivalent rating
               from Moody's Investors Service).  
     
               (c)  ERISA.  As soon as possible and in any event
               (A) within the time notice to the PBGC is required as to any
               ERISA Event described in clause (i) of the definition of
               ERISA Event with respect to any Plan of the Lessee or any
               ERISA Affiliate of the Lessee has occurred and (B) within
               ten days after any other ERISA Event with respect to any
               Plan of the Lessee or any ERISA Affiliate of the Lessee has
               occurred, the Lessee shall deliver to the Lessor a statement
               if the Lessee (signed on its behalf by a Responsible Officer
               of the Lessee) describing such ERISA Event and the action,
               if any, which the Lessee or such ERISA Affiliate proposes to
               take with respect thereto.  
     
               (d)  ERISA Information.  Promptly after receipt
               thereof' by the Lessee or any of its ERISA Affiliates from
               the PBGC, the Lessee shall deliver to the Lessor copies of
               each notice received by the Lessee or such ERISA Affiliate
               of the PBGC's intention to terminate any Plan if the Lessee
               or such ERISA Affiliate or to have a trustee appointed to
               administer any such Plan.
     
               (e)  ERISA Notice.  Promptly after receipt thereof by
               the Lessee or any ERISA Affiliate of the Lessee from a
               Multiemployer Plan sponsor, the Lessee shall deliver to the
               Lessor copy of each notice received by the Lessee or such
               ERISA Affiliate concerning the imposition or amount of
               withdrawal liability in an aggregate principal amount of at
               least 
               
                                        40               
                                        


               $10 million pursuant to Section 4202 of ERISA in
               respect of which the Lessee or such ERISA Affiliate is
               reasonably expected to be liable.  
     
               (f)  Litigation.  The Lessee shall deliver to the
               Lessor, promptly after the Lessee becomes aware of the
               occurrence thereof, notice of all actions, suits,
               proceedings or other events for which the Lessor will be
               entitled to indemnity hereunder.  
     
          30.  Payment of Transaction Expenses.  The Lessor shall be
     responsible for the reasonable fees and expenses of its counsel
     and special Surface Transportation Board counsel incurred in
     connection with the negotiation and initial documentation of this
     transaction.  The Lessee shall be responsible for the reasonable
     fees and expenses of its counsel. 
     
          31.  Owner for Income Tax Purposes.  The Lessor agrees that
     the Lessee shall be deemed the owner of the Equipment for Federal,
     state and local income tax purposes and that, so long as no Event
     of Default shall have occurred and be continuing, the Lessor shall
     take no action inconsistent with such ownership for income tax
     purposes.  
     
          32.  Governing Law; Waiver of Jury Trial; Submission to
     Jurisdiction.  This Lease shall in all respects be governed by,
     and construed in accordance with, the laws of the State of
     Illinois, including all matters of construction, validity and
     performance.  The Lessee and the Lessor hereby waive any right to
     a trial by jury in any dispute arising under or in any way
     relating to the transactions contemplated by this Lease.  Each of
     the Lessor and the Lessee (a) irrevocably submits itself to the
     non-exclusive jurisdiction of the Courts of the State of Illinois,
     Cook County and the United States District Court for the Northern
     District of Illinois for the purposes of any suit, action or other
     proceeding arising out of this Lease, or the subject matter hereof
     or the transaction contemplated hereby, (b) irrevocably agrees
     that all claims in respect of such action or proceeding may be
     heard and determined in such Illinois State or United States
     Federal court and (c) agrees not to assert, by way of motion, as a
     defense or otherwise, in any such suit, action or proceeding any
     claim that is not personally subject to the jurisdiction of the
     above-named Illinois State or United States Federal courts, that
     the suit, action or proceeding is brought in an inconvenient
     forum, that the venue of the suit, action or proceeding is
     improper, or that this Lease or the subject matter hereof may not
     be enforced in or by such courts under any applicable law.  The
     Lessee agrees that its submission to jurisdiction is made for the
     express benefit of the Lessor and its successors and permitted
     assigns.  Lessee hereby agrees that service of process may be made
     upon Lessee by written notice.  Nothing in this Section 32 shall
     affect the right of the Lessor or its successors or assigns to
     serve legal process in any other manner permitted by law or affect
     the right of the Lessor or its successors or permitted assigns to
     bring any action or proceeding against the Lessee or its property
     in the courts of other jurisdictions.  
     
                                        41



          33.  Miscellaneous.  Any provision of this Lease which is
     prohibited or unenforceable in any jurisdiction shall, as to such
     jurisdiction, be ineffective to the extent of such prohibition or
     unenforceability without invalidating or diminishing any party's
     rights under the remaining provisions hereof, and any such
     prohibition or unenforceability in any jurisdiction shall not
     invalidate or render unenforceable such provision in any other
     jurisdiction.  To the extent permitted by applicable law, the
     Lessee and the Lessor hereby waive any provision of law which
     renders any provision of this Lease prohibited or unenforceable in
     any respect.  No term or provision of this Lease may be amended,
     altered, waived, discharged or terminated orally, but may be
     amended, altered, waived, discharged or terminated only by an
     instrument in writing signed by a duly authorized officer of the
     party against which the enforcement of the amendment, alteration,
     waiver, discharge or termination is sought.  A waiver on any one
     occasion shall not be construed as a waiver on a future occasion. 
     All of the covenants, conditions and obligations contained in this
     Lease shall be binding upon and shall inure to the benefit of the
     respective successors and permitted assigns of the Lessor and the
     Lessee (subject to the restrictions of Section 13 above and
     Section 34 below).  This Lease, each Lease Supplement and each
     related instrument, document, agreement and certificate,
     collectively constitute the complete and exclusive statement of
     the terms of the agreement between the Lessor and the Lessee with
     respect to the acquisition and leasing of the Equipment, and
     cancel and supersede any and all prior oral or written
     understandings with respect thereto.  This Lease and each Lease
     Supplement may be executed in counterparts, each of which shall
     constitute an original document but all of which together shall
     constitute a single instrument.
     
          34.  Registered Instrument.  This Lease is a registered
     instrument.  A manually signed copy of this Lease shall be
     evidence only of Lessor's and Lessee's rights and is not a bearer
     instrument.  The Lessor agrees with the Lessee that the Lessee
     shall keep books of registry by which Lessee will register by book
     entry, and register by book entry any transfer of, Lessor's
     interest in this Lease and in the right to receive any payments
     under this Lease.  Prior to the due presentment for registration
     of any transfer of Lessor's interest in this Lease, the Lessee and
     the Lessor shall deem and treat the Person in whose name this
     Lease is registered in the books of registry as the absolute owner
     of this Lease and the holder of this Lease for the purpose of
     receiving payment of all amounts payable with respect to this
     Lease.  Lessor's interest in this Lease and in the rights to
     receive any payments under the Lease may be transferred only
     pursuant to and in compliance with the provisions of this Lease,
     which transfers shall be registered by book entry made by the
     Lessee in its books of registry.  No transfer by Lessor (whether
     or not with Lessee's consent) of any interest in this Lease or in
     the right to receive any payments hereunder shall be permitted
     unless a book entry of such transfer is made upon such registry
     and such transfer is otherwise in accordance with the terms of
     this Lease.
     
          IN WITNESS WHEREOF, the parties hereto have caused this
     Equipment Leasing Agreement to be duly executed by their duly
     authorized representatives as of the date first above written.  
     
                   [SIGNATURES ARE ON ATTACHED PAGES]
                                
                                42


                                               [Equipment Leasing Agreement]

     Attest:                            Lessee:
     
                                        KANSAS CITY POWER & LIGHT COMPANY
     
     
     By:  /s/Jeanie Sell Latz           By:  /s/Andrea F. Bielsker
          Name: Jeanie Sell Latz             Name: Andrea F. Bielsker
          Title:                             Title:    
          Senior Vice President-             Treasurer
          Corporate Services, Corporate
          Secretary & Chief Legal Officer
     
     (Corporate Seal)
     
     
                                        Lessor:
     
                                        CCG TRUST CORPORATION
     
     Attest:
     
     
     
     By: /s/M. Hafiz Khan               By:  /s/John R. Walker
         Name: M. Hafiz Khan                 Name: John R. Walker
         Title:                              Title:
         Attorney at Law                     Managing Director     
         
     (Corporate Seal)
     

     THIS IS COUNTERPART NO. __ OF ____ SERIALLY NUMBERED MANUALLY
     EXECUTED COUNTERPARTS.  TO THE EXTENT, IF ANY, THAT THIS DOCUMENT
     CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO
     SECURITY INTEREST IN THIS DOCUMENT MAY BE PERFECTED THROUGH THE
     POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO.  1.  


                                        43





 

UT 1,000 9-MOS Dec-31-1997 Sep-30-1998 PER-BOOK 2,308,405 331,623 248,444 180,934 0 3,069,406 449,697 (1,674) 461,430 910,150 62 89,000 859,575 6,741 0 0 36,287 0 0 0 1,168,288 3,069,406 748,599 70,854 519,476 590,330 158,269 7,908 166,177 54,370 111,807 2,930 108,877 75,807 43,426 261,447 1.76 1.76