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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, 1995
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 October
27, 1995 was 61,902,083 shares.
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
September 30 December 31
1995 1994
ASSETS
UTILITY PLANT, at original cost
Electric $3,364,246 $3,330,478
Less-accumulated depreciation 1,134,939 1,092,436
Net utility plant in service 2,229,307 2,238,042
Construction work in progress 63,944 57,294
Nuclear fuel, net of amortization of
$77,662 and $66,773 50,685 40,806
Total 2,343,936 2,336,142
REGULATORY ASSET - DEFERRED WOLF CREEK COSTS 11,101 18,752
REGULATORY ASSET - RECOVERABLE TAXES 120,000 120,000
INVESTMENTS AND NONUTILITY PROPERTY 144,187 98,429
CURRENT ASSETS
Cash and cash equivalents 46,263 20,217
Receivables
Customer accounts receivable 48,451 24,513
Other receivables 22,574 22,604
Fuel inventories, at average cost 20,059 16,570
Materials and supplies, at average cost 44,778 44,953
Prepayments 1,476 5,138
Deferred income taxes 5,444 1,444
Total 189,045 135,439
DEFERRED CHARGES
Regulatory assets
Settlement of fuel contracts 13,912 16,625
KCC Wolf Creek carrying costs 4,787 6,839
Other 22,911 27,909
Other deferred charges 16,705 10,262
Total 58,315 61,635
Total $2,866,584 $2,770,397
LIABILITIES
CAPITALIZATION
Common stock-authorized 150,000,000 shares
without par value-61,908,726 shares issued -
stated value $449,697 $449,697
Retained earnings 451,734 426,738
Capital stock premium and expense (1,725) (1,736)
Common stock equity 899,706 874,699
Cumulative preferred stock 89,000 89,000
Cumulative redeemable preferred stock 1,436 1,596
Long-term debt 835,533 798,470
Total 1,825,675 1,763,765
CURRENT LIABILITIES
Notes payable to banks 0 1,000
Commercial paper 0 31,000
Current maturities of long-term debt 53,762 33,419
Accounts payable 47,258 73,486
Dividends payable 423 423
Accrued taxes 105,285 24,684
Accrued interest 9,195 12,209
Accrued payroll and vacations 21,092 19,594
Accrued refueling outage costs 11,040 2,120
Other 7,837 7,221
Total 255,892 205,156
DEFERRED CREDITS
Deferred income taxes 633,000 644,139
Deferred investment tax credits 72,316 82,840
Other 79,701 74,497
Total 785,017 801,476
COMMITMENTS AND CONTINGENCIES
Total $2,866,584 $2,770,397
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
Exhibit 10
DEUTSCHE BANK LEASE FINANCING
LEASE AGREEMENT
between
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity
but solely as Owner Trustee,
as Lessor,
and
KANSAS CITY POWER & LIGHT COMPANY,
as Lessee
Dated as of October 18, 1995
SIEMENS TURBINE EQUIPMENT LEASE PROGRAM
This Lease Agreement is subject to a security interest in favor of
Deutsche Bank AG, New York Branch, as Agent (the "Agent") under a
Credit Agreement dated as of October 18, 1995, among First Security
Bank of Utah, N.A., not in its individual capacity except as
expressly stated therein, but solely as the Owner Trustee, the
Lenders referred to therein and the Agent, as amended or
supplemented. This Lease Agreement has been executed in several
counterparts. To the extent, if any, that this Lease Agreement
constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Agreement may be created through the
transfer or possession of any counterpart other than the original
counterpart containing the receipt therefor executed by the Owner
Trustee on the signature page hereof.
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. DESCRIPTION OF THE EQUIPMENT AND LEASE TERM. . . . . . . . 1
2.1. Equipment. . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Lease Term . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Title. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Equipment Schedules. . . . . . . . . . . . . . . . . . . . 2
SECTION 3. RENT AND RENT PAYMENT. . . . . . . . . . . . . . . . . . . 2
3.1. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. Supplemental Rent. . . . . . . . . . . . . . . . . . . . . 3
3.3. Performance on a Non-Business Day. . . . . . . . . . . . . 3
3.4. Rent Payment Provisions. . . . . . . . . . . . . . . . . . 3
SECTION 4. UTILITY CHARGES. . . . . . . . . . . . . . . . . . . . . . 3
SECTION 5. QUIET ENJOYMENT. . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. NET LEASE AND ABATEMENT. . . . . . . . . . . . . . . . . . 4
6.1. Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . 4
6.2. No Termination or Abatement. . . . . . . . . . . . . . . . 5
SECTION 7. RIGHTS IN AND TO THE EQUIPMENT . . . . . . . . . . . . . . 5
7.1. Ownership of the Equipment . . . . . . . . . . . . . . . . 5
7.2. Security Interest in the Equipment . . . . . . . . . . . . 6
SECTION 8. CONDITION AND USE OF THE EQUIPMENT . . . . . . . . . . . . 6
8.1. Condition of the Equipment . . . . . . . . . . . . . . . . 6
8.2. Possession and Use of the Equipment. . . . . . . . . . . . 7
SECTION 9. COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE
REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 10.MAINTENANCE AND ENVIRONMENTAL INSPECTION. . . . . . . . . . . . . 8
10.1. Maintenance and Repair; Return . . . . . . . . . . . . . . 8
10.2. Environmental Inspection . . . . . . . . . . . . . . . . . 9
SECTION 11.MODIFICATIONS, SUBSTITUTIONS AND REPLACEMENTS AN
FINANCING THEREOF . . . . . . . . . . . . . . . . . . . . . . . . .10
11.1. Modifications, Substitutions and Replacements. . . . . . . .10
11.2. Financing of Severable Optional Modifications. . . . . . . .10
SECTION 12.PROHIBITION AGAINST LIENS . . . . . . . . . . . . . . . . . . . .12
SECTION 13.PERMITTED CONTESTS OTHER THAN IN RESPECT OF
INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . . .12
SECTION 14.INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
14.1. Commercial General Liability and Workers' Compensation
Insurance. . . . . . . . . . . . . . . . . . . . . . . . .12
14.2. Hazard and Other Insurance . . . . . . . . . . . . . . . .13
14.3. Coverage . . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 15.EVENTS OF LOSS AND ENVIRONMENTAL MATTERS. . . . . . . . . . . . .15
15.1. Event of Loss. . . . . . . . . . . . . . . . . . . . . . .15
15.2. Environmental Matters. . . . . . . . . . . . . . . . . . .17
15.3. Notice of Environmental Matters. . . . . . . . . . . . . .18
SECTION 16.TERMINATION FOR EVENTS OF LOSS. . . . . . . . . . . . . . . . . .18
16.1. Termination Upon Certain Events. . . . . . . . . . . . . .18
16.2. Procedures . . . . . . . . . . . . . . . . . . . . . . . .18
SECTION 17.DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
17.1. Lease Events of Default. . . . . . . . . . . . . . . . . .18
17.2. Surrender of Possession. . . . . . . . . . . . . . . . . .21
17.3. Reletting. . . . . . . . . . . . . . . . . . . . . . . . .21
17.4. Damages. . . . . . . . . . . . . . . . . . . . . . . . . .21
17.5. Acceleration of Rent . . . . . . . . . . . . . . . . . . .22
17.6. Final Liquidated Damages . . . . . . . . . . . . . . . . .22
17.7. Waiver of Certain Rights . . . . . . . . . . . . . . . . .23
17.8. Assignment of Rights Under Contracts . . . . . . . . . . .23
17.9. Remedies Cumulative. . . . . . . . . . . . . . . . . . . .23
SECTION 18.LESSOR'S RIGHT TO CURE LESSEE'S LEASE DEFAULTS. . . . . . . . . .23
SECTION 19.PROVISIONS RELATING TO LESSEE'S TERMINATION OF THIS
LEASE OR EXERCISE OF PURCHASE OPTIONS . . . . . . . . . . . . . . .24
SECTION 20.PURCHASE OPTION . . . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 21.EXPIRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
21.1. Expiration Date Options. . . . . . . . . . . . . . . . . .24
21.2. Expiration Date Purchase Option. . . . . . . . . . . . . .25
SECTION 22.RENEWAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
22.1. Renewal Option . . . . . . . . . . . . . . . . . . . . . .25
22.2. Exercise of Renewal Option . . . . . . . . . . . . . . . .25
22.3. Terms and Conditions of Renewal Term . . . . . . . . . . .25
SECTION 23.SALE OR RETURN. . . . . . . . . . . . . . . . . . . . . . . . . .26
23.1. Sale and Return Procedures . . . . . . . . . . . . . . . .26
23.2. Application of Proceeds of Sale. . . . . . . . . . . . . .28
23.3. Indemnity for Excessive Wear . . . . . . . . . . . . . . .28
23.4. Appraisal Procedure. . . . . . . . . . . . . . . . . . . .28
23.5. Certain Obligations Continue . . . . . . . . . . . . . . .29
SECTION 24.HOLDING OVER. . . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 25.RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . . . . .29
SECTION 26.SUBLETTING. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
26.1. Subletting and Assignment. . . . . . . . . . . . . . . . .30
26.2. Subleases. . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 27.NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 28.ACCEPTANCE OF SURRENDER . . . . . . . . . . . . . . . . . . . . .30
SECTION 29.NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
SECTION 30.MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . .32
30.1. Survival and Severability. . . . . . . . . . . . . . . . .32
30.2. Amendments and Modifications . . . . . . . . . . . . . . .32
30.3. Successors and Assigns . . . . . . . . . . . . . . . . . .32
30.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . .32
30.5. Headings . . . . . . . . . . . . . . . . . . . . . . . . .32
30.6. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .33
30.7. Limitations on Recourse. . . . . . . . . . . . . . . . . .33
EXHIBITS
Exhibit A Form of Equipment Schedule
Exhibit B Other Names and Locations of Lessee
Exhibit C Purchase Agreement Assignment
Exhibit D Form of Bill of Sale
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease"), dated as of October
18, 1995, between FIRST SECURITY BANK OF UTAH, N.A., a national
banking association, having its principal office at 74 South Main
Street, Salt Lake City, Utah 84111, not in its individual capacity,
but solely as Owner Trustee, as lessor (the "Lessor"), and KANSAS
CITY POWER & LIGHT COMPANY, a Missouri corporation, having its
principal place of business at 1201 Walnut Street, Kansas City,
Missouri 64147, as lessee (the "Lessee").
W I T N E S S E T H:
WHEREAS, subject to the terms and conditions of this
Lease, Lessor will purchase the Equipment from Lessee or one or more
third parties designated by Lessee; and
WHEREAS, Lessor desires to lease to Lessee, and Lessee
desires to lease from Lessor, the Equipment;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained and of other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used but not otherwise defined in this
Lease have the respective meanings specified in Appendix A to the
Participation Agreement of even date herewith (the "Participation
Agreement") among the Lessee, First Security Bank of Utah, N.A., not
in its individual capacity except as expressly stated therein, as
Owner Trustee, the Agent and the Investor, the terms of which
Appendix A are incorporated herein by reference.
SECTION 2. DESCRIPTION OF THE EQUIPMENT AND LEASE
TERM.
2.1. Equipment. Subject to the terms and conditions
hereinafter set forth and contained in the Equipment Schedules
relating to the Equipment, Lessor hereby leases to Lessee, and
Lessee hereby leases from Lessor, the Equipment. It is the
intention of Lessor and Lessee that the Equipment constitute
personal property and not fixtures.
2.2. Lease Term. The term of this Lease with respect
to the Equipment (the "Basic Term") shall begin on the Lease
Commencement Date and shall end on the Basic Term Expiration Date,
unless extended or earlier terminated in accordance with the
provisions of this Lease.
2.3. Title. Each item of Equipment is leased to Lessee
without any representation or warranty, express or implied, by
Lessor and subject to Permitted Liens and all applicable Legal
Requirements. Lessee shall in no event have any recourse against
Lessor for any defect in title to any Equipment.
2.4. Equipment Schedules. Subject to Sections 6.4(e)
and 6.6(d) of the Participation Agreement and Section 4 of the
Installation Agency Agreement, on the Lease Commencement Date and
each other Acquisition Date, Lessee and Lessor shall each execute
and deliver an Equipment Schedule or Equipment Schedules for the
Equipment to be leased on such date in substantially the form of
Exhibit A hereto, and thereafter such Equipment shall be subject to
the terms of this Lease.
SECTION 3. RENT AND RENT PAYMENT.
3.1. Rent. (a) During the Basic Term, Lessee shall pay
Basic Rent in arrears on each Payment Date and on any date on which
this Lease shall terminate with respect to any or all of the
Equipment. Basic Rent shall be computed in accordance with the
definition thereof and the other defined terms used therein set
forth in Appendix A to the Participation Agreement and Sections
11.3, 11.4, 11.5 and 11.6 of the Participation Agreement which are
incorporated herein by reference.
(b) Basic Rent shall be due and payable in lawful
money of the United States and shall be paid by wire transfer of
immediately available funds prior to 3:00 p.m. New York City time on
the due date therefor to such account or accounts at the Agent or to
such other Person or in such other manner as the Agent shall from
time to time direct.
(c) Neither Lessee's inability or failure to take
possession of all or any portion of any Equipment when delivered by
Lessor, nor Lessor's inability or failure to deliver all or any
portion of any Equipment to Lessee on or before the applicable
Acquisition Date, whether or not attributable to any act or omission
of Lessee or any act or omission of Lessor, or for any other reason
whatsoever, shall delay or otherwise affect Lessee's obligation to
pay Rent for such Equipment in accordance with the terms of this
Lease.
(d) Notwithstanding the forgoing, during the
Installation Period, Basic Rent shall accrue and be compounded on a
monthly basis on each Payment Date until the Completion Date and
shall be included in the Equipment Cost funded by the Lenders and
the Investor pursuant to the Participation Agreement and the Credit
Agreement.
3.2. Supplemental Rent. Lessee shall pay to the Agent,
Lessor or the Person entitled thereto any and all Supplemental Rent
promptly as the same shall become due and payable, and if Lessee
fails to pay any Supplemental Rent, Lessor shall have all rights,
powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Basic Rent. Lessee shall pay
to Lessor, as Supplemental Rent, among other things, on demand, to
the extent permitted by applicable Legal Requirements, interest at
the applicable Overdue Rate on any installment of Basic Rent not
paid when due for the period for which the same shall be overdue and
on any payment of Supplemental Rent or other amount payable
hereunder not paid when due or demanded by Lessor for the period
from the due date or the date of any such demand, as the case may
be, until the same shall be paid. The expiration or other
termination of Lessee's obligations to pay Basic Rent hereunder
shall not limit or modify the obligations of Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this
Lease, in the event of any failure on the part of Lessee to pay and
discharge any Supplemental Rent as and when due, Lessee shall also
promptly pay and discharge any fine, penalty, interest or cost which
may be assessed or added for nonpayment or late payment of such
Supplemental Rent, all of which shall also constitute Supplemental
Rent.
3.3. Performance on a Non-Business Day. If any payment
is required hereunder on a day that is not a Business Day, then such
payment shall be due on the next succeeding Business Day, unless the
definition of the term "Rental Period" shall require payment on a
different day.
3.4. Rent Payment Provisions. Lessee shall make
payment of all Basic Rent and Supplemental Rent when due regardless
of whether any of the Operative Agreements pursuant to which same is
calculated and is owing shall have been rejected, avoided or
disavowed in any bankruptcy or insolvency proceeding involving any
of the parties to any of the Operative Agreements. Such provisions
of such Operative Agreements and their related definitions are
incorporated herein by reference and shall survive any termination,
amendment or rejection of any such Operative Agreements. Until such
time as the Loans and all other obligations of Lessor to the Agent
and the Lenders have been paid in full and the Commitments have been
terminated, each payment of Rent shall be made by Lessee to the
Agent.
SECTION 4. UTILITY CHARGES.
Lessee shall pay or cause to be paid all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or in connection
with the Equipment and related real property during the Basic Term.
Lessee shall be entitled to receive any credit or refund with
respect to any utility charge paid by Lessee and the amount of any
credit or refund received by Lessor on account of any utility
charges paid by Lessee, net of the costs and expenses incurred by
Lessor in obtaining such credit or refund, shall be promptly paid
over to Lessee. All charges for utilities imposed with respect to
an item of Equipment for a billing period during which this Lease
expires or terminates shall be adjusted and prorated on a daily
basis between Lessor and Lessee, and each party shall pay or
reimburse the other for such party's pro rata share thereof.
SECTION 5. QUIET ENJOYMENT.
Subject to the rights of Lessor contained in Sections
17.2 and 17.3 hereof and the other terms of this Lease and so long
as no Lease Event of Default shall have occurred and be continuing,
Lessee shall peaceably and quietly have, hold and enjoy the
Equipment for the Basic Term, free of any claim or other action by
Lessor or anyone rightfully claiming by, through or under Lessor
(other than Lessee) with respect to any matters arising from and
after the applicable Acquisition Date.
SECTION 6. NET LEASE AND ABATEMENT.
6.1. Net Lease. This Lease shall constitute a net
lease, and Basic Rent and Supplemental Rent shall be paid absolutely
net to Lessor, so that this Lease shall yield to Lessor the full
amount thereof, without setoff, deduction or reduction. Any present
or future law to the contrary notwithstanding, this Lease shall not
terminate, nor shall Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim, or defense
with respect to the Rent, nor shall the obligations of Lessee
hereunder be affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) by reason
of: (i) any damage to or destruction of any Equipment or any part
thereof; (ii) any taking of any Equipment or any part thereof or
interest therein by condemnation or otherwise; (iii) any
prohibition, limitation, restriction or prevention of Lessee's use,
occupancy or enjoyment of any Equipment or any part thereof, or any
interference with such use, occupancy or enjoyment by any Person or
for any other reason; (iv) any title defect, Lien or any matter
affecting title to any Equipment; (v) any default by Lessor
hereunder; (vi) any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding
relating to or affecting Lessor; (vii) the impossibility or
illegality of performance by Lessor, Lessee or both; (viii) any
action of any Governmental Authority; (ix) Lessee's acquisition of
ownership of all or part of any item of Equipment (except to the
extent this Lease is terminated with respect to such item of
Equipment pursuant to the terms of Section 16, 20 or 21 hereof); (x)
breach of any warranty or representation with respect to any
Equipment or any Operative Agreement; (xi) any defect in the
condition, quality or fitness for use of any Equipment or any part
thereof; or (xii) any other cause or circumstances whether similar
or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend
that the obligations of Lessee hereunder shall be covenants and
agreements that are separate and independent from any obligations of
Lessor hereunder and shall continue unaffected unless such
obligations shall have been modified or terminated in accordance
with an express provision of this Lease. Nothing contained in this
Section 6.1 shall be deemed to preclude the filing of an independent
claim by Lessee for the breach by Lessor of any covenant or
agreement contained herein.
6.2. No Termination or Abatement. Lessee shall remain
obligated under this Lease in accordance with its terms and shall
not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding
affecting Lessor, or any action with respect to this Lease or any
Operative Agreement which may be taken by any trustee, receiver or
liquidator of Lessor or by any court with respect to Lessor. Lessee
hereby waives all right (i) to terminate or surrender this Lease or
(ii) to avail itself of any abatement, suspension, deferment,
reduction, setoff, counterclaim or defense with respect to any Rent.
Lessee shall remain obligated under this Lease in accordance with
its terms and Lessee hereby waives any and all rights now or
hereafter conferred by statute or otherwise to modify or to avoid
strict compliance with its obligations under this Lease.
Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
SECTION 7. RIGHTS IN AND TO THE EQUIPMENT.
7.1. Ownership of the Equipment. (a) Lessor and Lessee
intend that (i) for financial accounting purposes with respect to
Lessee (A) this Lease will be treated as an "operating lease"
pursuant to Statement of Financial Accounting Standards No. 13, as
amended, (B) Lessor will be treated as the owner and lessor of the
Equipment and (C) Lessee will be treated as the lessee of the
Equipment, but (ii) for federal and all state and local income tax
purposes (A) this Lease will be treated as a financing arrangement,
(B) the Lenders and the Investor will be treated as lenders making
loans to Lessee in an amount equal to the Loans and the Investor
Contribution, respectively, which loans are secured by the Equipment
and (C) Lessee will be treated as the owner of the Equipment and
will be entitled to all tax benefits ordinarily available to owners
of property like the Equipment for such tax purposes. Lessee agrees
that neither it, any affiliate of Lessee, nor any permitted
sublessee or user of the Equipment will, directly or indirectly, at
any time during the term of the Lease take any action or fail to
take any action or file or fail to file any returns, certificates,
or other documents if such action, failure to act, filing or failure
to file would be inconsistent with the foregoing characterization of
the transaction, unless otherwise required by applicable law.
Lessee agrees further that it will file such returns, take such
action, execute such documents, and keep and make available to
Lessor such records as may be reasonable and necessary to facilitate
accomplishing the foregoing. Lessor agrees that neither it nor any
affiliate of Lessor will, directly or indirectly, at any time during
the Term of the Lease take any action or fail to take any action or
file or fail to file any returns, certificates or other documents if
such action, failure to act, filing or failure to file would be
inconsistent with the foregoing characterization of the transaction,
unless otherwise required by law.
(b) Specifically, without limiting the generality of
Section 7.1(a) above, Lessor and Lessee intend and agree that with
respect to the nature of the transactions evidenced by this Lease in
the context of the exercise of remedies under the Operative
Agreements, including, without limitation, in the case of any
insolvency or receivership proceedings or a petition under the
United States bankruptcy laws or any other applicable insolvency
laws or statute of the United States of America or any State or
Commonwealth thereof affecting Lessee, Lessor, the Investor or any
Lender or any enforcement or collection actions, the transactions
evidenced by this Lease are loans made by the Investor and the
Lenders as unrelated third party lenders to Lessee secured by the
Equipment (it being understood that Lessee hereby grants a security
interest in the Equipment to Lessor, on behalf of the Investor and
the Lenders, to secure such loans, effective on the Initial Closing
Date).
7.2. Security Interest in the Equipment. In the event
that this Lease shall be recharacterized under applicable law as a
lease intended for security or a secured financing, Lessor and
Lessee further intend and agree that, for the purpose of securing
Lessee's obligations for the repayment of its obligations hereunder,
(i) this Lease shall also be deemed to be a security agreement and
financing statement within the meaning of Article 9 of the Uniform
Commercial Code; (ii) the conveyance provided for in Section 2.1
hereof shall be deemed to be a grant by Lessee to Lessor of a lien
on and security interest in all of Lessee's right, title and
interest in and to the Equipment and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, investments,
securities or other property, whether in the form of cash,
investments, securities or other property; (iii) the possession by
Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to
Section 9-305 of the Uniform Commercial Code; and (iv) notifications
to Persons holding such property, and acknowledgements, receipts or
confirmations from financial intermediaries, bankers or agents (as
applicable) of Lessee shall be deemed to have been given for the
purpose of perfecting such security interest under applicable law.
Lessor and Lessee shall, to the extent consistent with this Lease,
take such actions as may be necessary (including the filing of
Uniform Commercial Code Financing Statements) to ensure that, if
this Lease were deemed to create a security interest in the
Equipment in accordance with this Section, such security interest
would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such
throughout the Basic Term and any Renewal Terms.
SECTION 8. CONDITION AND USE OF THE EQUIPMENT.
8.1. Condition of the Equipment. LESSEE ACKNOWLEDGES
AND AGREES THAT IT IS LEASING THE EQUIPMENT "AS IS" WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR.
NEITHER LESSOR, THE AGENT, ANY LENDER NOR THE INVESTOR HAS MADE OR
SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR
COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY
LIABILITY WHATSOEVER AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF ANY EQUIPMENT (OR
ANY PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY EQUIPMENT (OR
ANY PART THEREOF), AND NEITHER LESSOR, THE AGENT, ANY LENDER NOR THE
INVESTOR SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF ANY EQUIPMENT, OR ANY PART THEREOF, TO
COMPLY WITH ANY LEGAL REQUIREMENT. LESSEE HAS OR WILL HAVE BEEN
AFFORDED FULL OPPORTUNITY TO INSPECT THE EQUIPMENT, IS OR WILL BE
(INSOFAR AS THE LESSOR IS CONCERNED) SATISFIED WITH THE RESULTS OF
ITS INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY ON THE BASIS
OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL RISKS INCIDENT TO THE
MATTERS DESCRIBED IN THE PRECEDING SENTENCE, AS BETWEEN THE
INVESTOR, THE AGENT, THE LENDERS AND LESSOR, ON THE ONE HAND, AND
LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2. Possession and Use of the Equipment. (a) At all
times during the Basic Term, the Equipment shall be continuously
used by Lessee or a permitted sublessee in the ordinary course of
its business, subject to usual and customary downtime for repairs,
maintenance and the making of modifications. Lessee shall pay, or
cause to be paid, all charges and costs required in connection with
the use of the Equipment as contemplated by this Lease.
(b) The address of Lessee stated below or on the
applicable Equipment Schedule is the chief place of business and
chief executive office of Lessee (as such terms are used in Section
9-103(3) of the Uniform Commercial Code); and except for such names
and the names specified on Exhibit B hereto or on the applicable
Equipment Schedule, Lessee does not conduct business in a corporate
or divisional name at any location where the Equipment is or will be
located under any other name. Each Equipment Schedule correctly
identifies the location of each item of Equipment and whether any of
such locations are leased by Lessee or are subject to any real
property mortgage. Lessee has no other places of business where the
Equipment will be located other than those identified on the
applicable Equipment Schedule.
(c) With respect to the Equipment being purchased by
Lessor on the Lease Commencement Date or any other Acquisition Date,
subject to the terms and conditions of this Lease, the Participation
Agreement and the Installation Agency Agreement, Lessor and Lessee
shall execute and deliver one or more Equipment Schedules that have
a complete description of each item of Equipment to be leased
hereunder as of such date, a Purchase Agreement Assignment in the
form attached hereto as Exhibit C with respect to each item of
Equipment (other than the Siemens Turbine) having a value in excess
of $1,000,000 and a Siemens Purchase Agreement Assignment with
respect to the Siemens Purchase Agreement. Simultaneously
therewith, Lessor shall purchase such Equipment from the applicable
third party vendor or make, or reimburse Lessee for, a portion of
the installment payments required under the Siemens Purchase
Agreement subject to satisfaction of such terms and conditions by
paying to Lessee or such vendor an amount equal to the total
Equipment Cost or requested amount of advances specified on the
Equipment Schedules or in the Notice of Closing Date or Notice of
Advance Date for such Equipment, such purchase to be evidenced by a
Bill of Sale from such vendor to Lessor in the form attached hereto
as Exhibit D covering such Equipment; whereupon, as between Lessor
and Lessee, such Equipment shall be deemed to have been accepted by
Lessee for all purposes of this Lease and to be subject to this Lease.
SECTION 9. COMPLIANCE WITH LEGAL REQUIREMENTS AND
INSURANCE REQUIREMENTS.
Subject to the terms of Section 13 hereof relating to
permitted contests, Lessee, at its sole cost and expense, shall (i)
comply in all material respects with all Legal Requirements
(including all Environmental Laws) and all Insurance Requirements
relating to the Equipment, including the use, operation,
maintenance, repair and restoration thereof, whether or not
compliance therewith shall require structural or extraordinary
changes in the Equipment or interfere with the use and enjoyment of
the Equipment, and (ii) procure, maintain and comply in all material
respects with all licenses, permits, orders, approvals, consents and
other authorizations required for the use, operation, maintenance,
repair and restoration of the Equipment.
SECTION 10. MAINTENANCE AND ENVIRONMENTAL INSPECTION.
10.1. Maintenance and Repair; Return. (a) Lessee, at
its sole cost and expense, shall cause each item of Equipment to be
operated, serviced, maintained and repaired (i) so as to keep it in
good operable condition, ordinary wear and tear excepted; (ii) in
accordance with the terms of any vendor's or manufacturer's
warranties and specifications; (iii) in a manner consistent with
standard industry practice for similar equipment and Lessee's
maintenance practices applicable to its other similar equipment and
applicable Insurance Requirements; (iv) in accordance with all Legal
Requirements; and (v) so as to permit the continued operation as a
gas-fired combustion turbine capable of producing electricity.
Lessee shall make all necessary repairs thereto, of every kind and
nature whatsoever, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by
all Legal Requirements, Insurance Requirements, and manufacturer's
specifications and standards and on a basis consistent with the
operation and maintenance of properties or equipment comparable in
type and function to the applicable Equipment, subject, however, to
the provisions of Section 15.1 hereof with respect to Events of
Loss.
(b) Lessee shall not use or locate the Equipment
outside of the United States. Lessee shall not move or relocate the
Equipment to any location other than a location listed on the
applicable Equipment Schedule hereto unless Lessee shall provide
Lessor with written notice of such relocation not less than thirty
(30) days after such relocation or such lesser period as allowed by
law and Lessee shall file any Uniform Commercial Code financing
statements with respect to such Equipment in such filing offices, to
the extent required by law, and obtain such landlord waivers and/or
mortgagee waivers with respect to such Equipment, as Lessor shall
require.
(c) Upon reasonable advance notice, Lessor and its
agents shall have the right to inspect the Equipment and all
maintenance records with respect thereto at any reasonable time
during normal business hours but shall not, in the absence of a
Lease Event of Default, materially disrupt the business of Lessee.
Lessee shall cause an appraisal with respect to the Equipment in
form and substance satisfactory to Lessor to be provided to Lessor
at Lessee's sole expense (i) following Lessor's reasonable request,
in the absence of a Lease Default or Lease Event of Default, no more
than once a year following the Final Closing Date, and (ii) at such
other times as Lessor may request if a Lease Default or Lease Event
of Default shall have occurred and be continuing.
(d) Lessor shall under no circumstances be required to
make any repairs, replacements, alterations or modifications of any
nature or description to any Equipment, make any expenditure
whatsoever in connection with this Lease or maintain any Equipment
in any way. Lessor shall not be required to maintain, repair or
rebuild all or any part of any Equipment, and Lessee waives the
right to (i) require Lessor to maintain, repair, or rebuild all or
any part of any Equipment, or (ii) make repairs at the expense of
Lessor pursuant to any Legal Requirement, Insurance Requirement,
contract, agreement, covenant, condition or restriction at any time
in effect.
(e) Lessee shall, upon the expiration or earlier
termination of this Lease with respect to the Equipment, if Lessee
shall not have exercised its Purchase Option or Expiration Date
Purchase Option with respect to such Equipment, surrender such
Equipment to Lessor in its then-current, "AS IS" condition, subject
to Lessee's obligations under Sections 9, 10.l(a), 10.2, 11, 12, 17
and 23.1 hereof.
10.2. Environmental Inspection. If Lessee has not given
notice of exercise of its Expiration Date Purchase Option pursuant
to Section 21.2 hereof or Renewal Option pursuant to Section 22.1
hereof or if Lessee has given notice of exercise of its Renewal
Option, but Lessor has not consented to any proposed Renewal Term,
then not more than 120 days nor less than 30 days prior to the
Expiration Date, or, at any time during the occurrence and
continuance of a Lease Event of Default, Lessee shall, at its sole
cost and expense, provide to Lessor at its request a report by an
environmental consultant selected by Lessee, and satisfactory to
Lessor, certifying that, since the Lease Commencement Date,
Hazardous Substances have not at any time been generated, used,
treated or stored in, transported to or from, Released at, on or
from or deposited at or on such Equipment in violation of this
Lease, and no portion of such Equipment has been used for such
purposes other than (i) as necessary to use, operate, maintain,
repair and restore such Equipment in accordance with this Lease and
(ii) in full compliance with all Environmental Laws. If such is not
the case, the report shall set forth a remedial response plan (the
cost of which shall be borne by Lessee) relating to such Equipment
(which remedial response plan, if required by any Environmental Law
or Governmental Authority, shall be approved by the appropriate
Governmental Authority). Such remedial response plan shall include,
but shall not be limited to, plans for full response, remediation,
removal, or other corrective action, and the protection, or
mitigative action associated with the protection, of natural
resources, as required by all applicable Environmental Laws.
SECTION 11. MODIFICATIONS, SUBSTITUTIONS AND
REPLACEMENTS AND FINANCING THEREOF.
11.1. Modifications, Substitutions and Replacements.
If any parts of the Equipment become worn out, lost, destroyed,
damaged beyond repair or otherwise permanently rendered unfit for
use, Lessee, at its own expense, will within a reasonable time
replace such parts with replacement parts which are free and clear
of all Liens (other than Permitted Liens) and have a value, utility
and useful life at least equal to the parts replaced. Lessee, at
its sole cost and expense, may at any time and from time to time
make alterations, renovations, improvements and additions to the
Equipment or any part thereof and substitutions and replacements
therefor (collectively with such replacement parts referred to in
the preceding sentence, "Modifications"); provided, that: (i) no
Modification shall impair the value, utility or useful life of the
Equipment from that which existed immediately prior to such
Modification; (ii) Lessee shall make all Modifications required to
be made pursuant to a Legal Requirement or an Insurance Requirement
(each, a "Required Modification"); (iii) the Modification shall be
done expeditiously and in a good and workmanlike manner; (iv) Lessee
shall comply with all Legal Requirements (including all
Environmental Laws) and Insurance Requirements applicable to the
Modification; (v) subject to the terms of Section 13 hereof relating
to permitted contests, Lessee shall pay all costs and expenses and
discharge any Liens arising with respect to the Modification; and
(vi) such Modification shall comply with Sections 8.2 and 10.1
hereof. All Required Modifications and all other Modifications
(other than those that may be readily removed without impairing the
value, utility or remaining useful life of the applicable Equipment
("Severable Optional Modifications")) shall become property of
Lessor and shall be subject to this Lease, and title to any such
Modifications shall immediately vest in Lessor and be subject to the
terms of the Security Agreement. All Modifications to which Lessor
shall not have title may be removed at any time by Lessee. Any such
Modifications shall be removed by Lessee at its expense if Lessor
shall so request prior to the return of the Equipment to Lessor or
sale thereof to a third party in accordance with the provisions of
this Lease, and Lessee shall at its expense repair any damage to the
Equipment caused by the removal of such Modifications. Lessor shall
have the option to purchase all Severable Optional Modifications on
the Expiration Date for Fair Market Sales Value, determined as if
such Modifications were detached from the Equipment, and in "AS IS"
"WHERE IS" condition.
11.2. Financing of Severable Optional Modifications.
(a) Lessor agrees to consider in its sole discretion financing the
purchase of any Severable Optional Modifications proposed by Lessee
and not in violation of this Lease. If Lessor does not agree to
make such financing available for a particular Severable Optional
Modification, then Lessee shall have the right to arrange separate
financing thereof and shall retain all depreciation, interest
deductions and other tax benefits associated with the Severable
Optional Modification; provided, however, that in the event that
such separate financing shall be secured by such Severable Optional
Modification, then Lessee shall:
(i) provide Lessor with not less than ten (10) days'
prior written notice of Lessee's intent to secure any separate
financing arranged by it of any Severable Optional Modification with
a Lien on such Severable Optional Modification;
(ii) affix in a prominent place to any Equipment to
which such Severable Optional Modification is attached such labels,
name plates or other markings as Lessor may designate, clearly
indicating Lessor as the owner of such Equipment; and
(iii) upon the Expiration Date, at its expense, remove
such Severable Optional Modification from the Equipment to which it
is attached unless (A) Lessor purchases such Severable Optional
Modification pursuant to Section 11.1 hereof, or (B) Lessee
exercises one of its options on the Expiration Date pursuant to
Section 21.2 or 22.1 hereof.
(b) Any such financing by Lessor shall be subject to the
receipt of the documents referred to below (in form and substance
reasonably satisfactory to Lessor):
(i) a lease supplement, duly authorized, executed and
delivered by Lessee and Lessor, providing for adjustments in Rent,
Residual Value Guarantee Amount, Termination Value and Purchase
Option Price under the Lease, together with such instruments of
conveyance, assignment and transfer, if any, necessary to subject
such lease supplement to the Lien of the Credit Agreement and the
other Security Documents, and evidence as to the due recording or
filing of each thereof and of financing or similar statements with
respect thereto;
(ii) such instruments of conveyance, assignment and
transfer (including, without limitation, contractors' waivers) duly
executed and delivered by the respective parties thereto, and such
evidence of the due filing thereof or of financing statements with
respect thereto, as may be reasonably requested to convey to Lessor
all property included in such Severable Optional Modifications, if
any, and to subject such property to the Lien of the Credit
Agreement and the other Security Documents, subject to no Liens
except for Permitted Liens;
(iii) originals or certified copies of all corporate
actions and governmental approvals and permits necessary for the due
and valid authorization, execution, delivery and performance by
Lessee and Lessor of the lease supplement and the creation of the
Lien thereon referred to above, all of which corporate actions and
governmental approvals and permits shall have been duly obtained and
shall be in full force and effect; together with evidence as to the
due occurrence of such authorization, execution, delivery and
performance;
(iv) such other instruments, certificates, opinions of
counsel, as may be reasonably requested by Lessor; and
(v) such modifications, amendments, waivers or
supplements to the Operative Agreements as may be reasonably
requested by Lessor or Lessee in order to effectuate the financing
contemplated by this Section 11.2.
SECTION 12. PROHIBITION AGAINST LIENS.
Lessee agrees that, except as otherwise provided herein
and subject to the terms of Section 13 hereof relating to permitted
contests, Lessee shall not directly or indirectly create or allow to
remain, and shall promptly discharge at its sole cost and expense,
any Lien, defect, attachment, levy, title retention agreement or
claim upon any Equipment or any Modifications or any Lien,
attachment, levy or claim with respect to the Rent or with respect
to any amounts held by the Agent pursuant to the Credit Agreement,
other than Permitted Liens and Lessor Liens. Lessee shall promptly
notify Lessor in the event of the existence of a Lien other than a
Permitted Lien or Lessor Lien with respect to an item of Equipment.
Lessee represents and warrants to, and covenants with, Lessor that
the Liens in favor of the Lessor created by the Operative Agreements
are first priority perfected liens subject only to Permitted Liens.
SECTION 13. PERMITTED CONTESTS OTHER THAN IN RESPECT
OF INDEMNITIES.
Except to the extent otherwise provided for in Section
13 of the Participation Agreement, Lessee, on its own or on Lessor's
behalf but at Lessee's sole cost and expense, may contest, by
appropriate administrative or judicial proceedings conducted in good
faith and with due diligence, the amount, validity or application,
in whole or in part, of any Legal Requirement, or utility charges
payable pursuant to Section 4 or any Lien, attachment, levy,
encumbrance or encroachment, and Lessor agrees not to pay, settle or
otherwise compromise any such item, provided that (a) the
commencement and continuation of such proceedings shall suspend the
collection thereof from, and suspend the enforcement thereof
against, the applicable Equipment, Lessor, the Investor, the Agent
and the Lenders; (b) there shall be no risk of the imposition of a
Lien (other than Permitted Liens) on any Equipment and no part of
any Equipment nor any Rent would be in any danger of being sold,
foreclosed, forfeited, lost or deferred; (c) at no time during the
permitted contest shall there be a risk of the imposition of
criminal liability or material civil liability on Lessor, the
Investor, the Agent or any Lender for failure to comply therewith;
and (d) there shall be no risk of the extension of the application
of such item beyond the end of the Basic Term or any Renewal Term;
provided, that Lessee shall deliver to Lessor an Officer's
Certificate certifying as to the matters set forth in clauses (a),
(b), (c) and (d) of this Section 13. Lessor, at Lessee's sole cost
and expense, shall execute and deliver to Lessee such authorizations
and other documents as may reasonably be required in connection with
any contest and, if reasonably requested by Lessee, shall join as a
party therein at Lessee's sole cost and expense.
SECTION 14. INSURANCE.
14.1. Commercial General Liability and Workers'
Compensation Insurance. During the Basic Term and any Renewal Term,
Lessee shall procure and carry commercial general liability
insurance for claims for injuries or death sustained by persons or
damage to property arising out of the ownership, operation or use of
the Equipment with limits of at least $5,000,000 per occurrence or
claim made and such other commercial general liability coverages as
are ordinarily procured by prudent Persons who own or operate
similar equipment in similar businesses. Such insurance shall be on
terms, in amounts and with deductibles that are no less favorable
than insurance maintained by Lessee with respect to similar
equipment that it owns or operates and that are in accordance with
normal industry practice. The policy shall also specifically
provide that the policy shall be considered primary insurance which
shall apply to any loss or claim before any contribution by any
insurance which Lessor, the Investor, the Agent or the Lenders may
have in force. Lessee shall, in the operation of the Equipment,
comply with the applicable workers' compensation laws and protect
Lessor against any liability from Lessee's employees under such
laws.
14.2. Hazard and Other Insurance. During the Basic Term
and any Renewal Term, Lessee shall keep, or cause to be kept, the
Equipment insured against loss or physical damage by fire and other
risks in an amount not less than the then applicable Termination
Value of the Equipment, on terms and with deductibles that are no
less favorable than insurance covering other similar properties
owned by Lessee and that are in accordance with normal industry
practice. During the Installation Period, Lessee shall cause
Siemens Power Corporation to maintain building risk insurance with
respect to the Siemens Turbine and, if Siemens Power Corporation
does not maintain such insurance, Lessee shall do so. Each policy
shall also specifically provide that the policy shall be considered
primary insurance which shall apply to any loss or claim before any
contribution by any insurance which Lessor, the Investor, the Agent
or the Lenders shall have in force. Any loss payable under the
insurance policy required by this Section will be paid to Lessor in
accordance with Section 14.3(g) hereof.
14.3. Coverage. (a) Lessee shall furnish Lessor with
certificates showing the insurance required under Sections 14.1 and
14.2 hereof to be in effect and (i) with respect to liability
insurance maintained pursuant to Section 14.1 hereof, naming Lessor,
the Investor, the Agent and the Lenders as an additional insured,
and (ii) with respect to insurance maintained by Lessee or Siemens
Power Corporation pursuant to Section 14.2, naming Lessor and the
Investor as an additional insured and the Agent as loss payee for so
long as any indebtedness is outstanding under the Credit Agreement,
and thereafter naming Lessor as loss payee. All insurers shall be
of recognized responsibility and standing and approved by the
Investor and the Agent and shall not be disqualified from insuring
risks in the jurisdiction where the Equipment is located. All such
insurance shall be at the cost and expense of Lessee. Such
certificates shall include a provision for thirty (30) days' advance
written notice by the insurer to Lessor, the Investor and the Agent
in the event of cancellation of such insurance. Lessee shall
deliver to Lessor, the Investor and the Agent copies of all
insurance policies required by Sections 14.1 and 14.2 hereof or
certificates evidencing such coverage.
(b) Lessee agrees that the insurance policy or
policies required by Section 14.2 hereof shall include an
appropriate clause pursuant to which such policy shall provide that
it will not be invalidated should Lessee waive, in writing, prior to
a loss, any or all rights of recovery against Lessor, the Investor,
the Agent or the Lenders for losses covered by such policy. Lessee
hereby waives any and all such rights against Lessor, the Investor,
the Agent and the Lenders to the extent of payments made to any such
Person under such policies.
(c) Neither Lessor, the Investor, the Agent nor Lessee
shall carry separate insurance concurrent in kind or form or
contributing in the event of loss with any insurance required under
this Section 14, except that Lessor, the Investor or the Agent may
carry separate insurance at their sole cost so long as (i) Lessee's
insurance is designated as primary and in no event excess or
contributory to any insurance Lessor may have in force which would
apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under
this Section 14 to be subject to a coinsurance exception of any
kind.
(d) Lessee shall pay as they become due all premiums
for the insurance required by Section 14.1 and Section 14.2 hereof,
shall renew or replace each policy prior to the expiration date
thereof or otherwise maintain the coverage required by such Sections
without any lapse in coverage and shall promptly deliver to Lessor,
the Investor and the Agent certificates for such policies.
(e) Any of the foregoing insurance coverages may be
carried as a part of excess insurance or blanket policies. Any
policies with respect to property insurance shall provide (i) that
if such insurance is canceled for any reason whatsoever, or any
substantial change is made in the coverage which affects the
interest of Lessor, the Agent or the Investor, or if such insurance
is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective for 30 days after receipt by
Lessor, the Agent or the Investor, respectively, of written notice
from any applicable insurers of such cancellation, change or lapse,
and (ii) that each of Lessor, the Agent or the Investor shall be
permitted to make payments to effect the continuation of such
insurance coverage upon notice of cancellation due to nonpayment of
premiums.
(f) In the event that Lessee shall fail to maintain
insurance as herein provided, Lessor, the Agent or the Investor may
at its option maintain insurance which is required to be maintained
by Lessee hereunder, and, in such event, Lessee shall reimburse such
party upon demand for the cost thereof, together with interest
thereon at the Overdue Rate, as Supplemental Rent.
(g) Subject to Section 15.1(f) hereof, all insurance
proceeds (except under insurance separately maintained by Lessor,
the Investor or the Agent) on account of any physical loss or damage
to the Equipment or any part thereof (less the actual costs, fees
and expenses incurred in the collection thereof) shall be paid to
Lessor, and all such proceeds shall be applied and dealt with as
follows:
(i) except as provided in clause (ii) below, prior to
the occurrence and continuance of a Lease Default or a Lease of
Event of Default, all such proceeds shall be paid over to Lessee or
as it may direct from time to time as restoration progresses, to pay
(or reimburse Lessee for) the cost of restoration, if the amount of
such proceeds received by the Agent or Lessor, together with such
additional amount, if any, theretofore expended by Lessee out of its
own funds for such restoration, are sufficient to pay the estimated
cost of completing such restoration upon a written application and
an Officer's Certificate of Lessee showing in reasonable detail the
nature of such restoration and the estimated cost to complete such
restoration and stating that no Lease Default or Lease Event of
Default has occurred and is continuing; and
(ii) all such proceeds in respect of an Event of Loss
for which an election has been made pursuant to the proviso of the
first sentence of Section 15.1(b) hereof shall be applied in
satisfaction of Lessee's obligation to pay Termination Value as
provided in Sections 15.1(b) and 15.1(d) hereof.
(h) Any insurance policy maintained by Lessee pursuant
to Section 14.1 or 14.2 hereof shall:
(i) include effective waivers by the insurer of all
claims for insurance premiums or commissions or (if such policies
provide for the payment thereof) additional premiums or assessments
against Lessor, the Agent, the Investor and the Lenders;
(ii) provide that in respect of the interests of
Lessor, the Agent, the Investor and the Lenders, such policies shall
not be invalidated by any action or inaction of Lessee or any other
Person and shall insure Lessor, the Agent, the Investor and the
Lenders regardless of, and any claims for losses shall be payable
notwithstanding, any act of negligence, including any breach of any
condition or warranty in any policy of insurance, of Lessee, Lessor,
the Agent, the Investor, the Lenders or any other Person; and
(iii) provide that all provisions thereof, except the
limits of liability (which shall be applicable to all insureds as a
group) and liability for premiums (which shall be solely a liability
of Lessee), shall operate in the same manner as if there were a
separate policy covering each insured.
SECTION 15. EVENTS OF LOSS AND ENVIRONMENTAL MATTERS.
15.1. Event of Loss. (a) In the event that the
Equipment shall suffer either (i) an Event of Loss or (ii) an event
which, in the reasonable opinion of Lessee, might constitute an
Event of Loss, such fact and the date of the occurrence thereof
shall promptly be reported by Lessee to Lessor. In the case of any
event described in clause (ii) of the preceding sentence, Lessee
shall determine, not later than sixty (60) days after the occurrence
of such event, whether such event constitutes an Event of Loss.
(b) Upon the occurrence of an Event of Loss, Lessee
shall purchase the Equipment by paying Termination Value therefor in
accordance with Section 16 hereof; provided that not later than
sixty (60) days prior to the next Payment Date, Lessee may, at its
expense, irrevocably elect to, and shall thereafter, replace the
Equipment with equipment with a value, utility and remaining useful
life at least equal to the Equipment replaced, assuming such
replaced Equipment was in the condition in which it was required to
be maintained at the time of such Event of Loss, in which case this
Lease shall continue in full force and effect. In connection with
any replacement of Equipment pursuant to this Section 15.1(b) and
within the sixty (60) day period referred to in the previous
sentence, Lessee will at its sole cost and expense:
(i) furnish Lessor with a bill of sale with respect to
such replacement Equipment;
(ii) cause an Equipment Schedule amendment covering
such replacement Equipment to be duly executed and delivered;
(iii) furnish Lessor with certificates showing the
insurance coverage required pursuant to Section 14 hereof with
respect to such replacement Equipment; and
(iv) furnish Lessor with an Officer's Certificate
certifying that such replacement Equipment has a value, utility and
remaining useful life at least equal to that of the Equipment
replaced, assuming no Event of Loss had occurred and that such
replaced Equipment was in the condition required by this Lease.
(c) In the event of damage to the Equipment which does
not constitute an Event of Loss, Lessee shall promptly restore the
Equipment to the condition to which it is required to be maintained
hereunder.
(d) Unless Lessee elects to replace Equipment pursuant
to the proviso to Section 15.1(b) hereof, insurance and other
payments received by Lessor, the Agent or Lessee in respect of an
Event of Loss shall be applied against Lessee's obligation to pay
Termination Value in accordance with Section 15.1(b) hereof and
amounts in excess of Termination Value shall be paid to Lessee in
the absence of the occurrence and continuance of a Lease Default or
a Lease Event of Default. If Lessee elects to replace the Equipment
which suffered an Event of Loss pursuant to the proviso to Section
15.1(b) hereof or if an event of the type described in Section
15.1(e) hereof which does not constitute an Event of Loss has
occurred, insurance and other payments in excess of the amounts
required to repair, restore or replace the Equipment that has been
destroyed, damaged, lost, condemned, confiscated, stolen, seized or
requisitioned, as the case may be, shall be paid to Lessee in the
absence of the occurrence and continuance of a Lease Default or a
Lease Event of Default.
(e) Unless a Lease Default or Lease Event of Default
shall have occurred and be continuing, payments (except under
insurance separately maintained by Lessor, the Agent or the
Investor) received at any time by Lessor, the Agent or Lessee from
any Governmental Authority, insurer or other Person with respect to
any destruction, damage, loss, condemnation, confiscation, theft or
seizure of or requisition of title to or use of the Equipment or any
item thereof not constituting an Event of Loss shall be paid to
Lessor and first shall be applied in accordance with the provisions
of Section 14.3(g) hereof to restore or replace what has been
destroyed, damaged, lost, condemned, confiscated, stolen, seized or
requisitioned, and second in accordance with the provisions of
Section 15.1(d) hereof.
(f) Notwithstanding the foregoing provisions of this
Section 15.1, so long as a Lease Default or Lease Event of Default
shall have occurred and be continuing, any amount that would
otherwise be payable to or for the account of Lessee pursuant to
this Section 15.1 or Section 14 hereof shall be paid to the Agent
(or Lessor after the principal of, premium, if any, and interest on
any indebtedness under the Credit Agreement shall have been paid in
full and the Lien of the Security Documents shall have been
discharged) as security for the obligations of Lessee under this
Lease and, at such time thereafter as no Lease Default or Lease
Event of Default shall exist, such amount shall be applied in
accordance with the provisions of Section 14.3(g) hereof to restore
or replace what has been destroyed, damaged, lost, condemned,
confiscated, stolen, seized or requisitioned, and second in
accordance with the provisions of Section 15.1(d) hereof unless this
Lease shall theretofore have been declared to be in default pursuant
to Section 17.1 hereof, in which event such amount shall be disposed
of in accordance with the provisions hereof, of the Credit
Agreement, if any, and of the Trust Agreement.
(g) In no event shall an Event of Loss with respect
to which this Lease remains in full force and effect under this Section
15.1 affect Lessee's obligations to pay Rent pursuant to Section 3.1
hereof.
15.2. Environmental Matters. (a) In addition to and
without limitation of all other representations, warranties and
covenants made by Lessee under this Lease, Lessee further
represents, warrants and covenants that Lessee has not used and is
not using Hazardous Substances on, in, or affecting the Equipment in
any manner which constitutes an Environmental Violation. With
regard to and in any way affecting the Equipment, Lessee shall
comply with all Environmental Laws and shall not use, operate or
maintain the Equipment except as contemplated by this Lease.
(b) Promptly upon Lessee's actual knowledge of the
presence of Hazardous Substances on, in, or affecting any item of
Equipment in concentrations and conditions that constitute an
Environmental Violation, Lessee shall notify Lessor in writing of
such condition. In the event of any Environmental Violation
(regardless of whether notice thereof must be given), Lessee shall,
not later than thirty (30) days after Lessee has actual knowledge of
such Environmental Violation, at Lessee's sole cost and expense,
promptly and diligently undertake any response, clean up, remedial
or other action necessary to remove, clean up or remediate the
Environmental Violation in accordance with all Environmental Laws.
Lessee shall, in the case of any material Environmental Violation,
upon the request of Lessor, cause to be prepared by an environmental
consultant reasonably acceptable to Lessor a report describing the
Environmental Violation and the actions taken by Lessee (or its
agents) in response to such Environmental Violation, and a statement
by the consultant that the Environmental Violation has been remedied
in full compliance with applicable Environmental Law.
15.3. Notice of Environmental Matters. Promptly, but
in any event within ten (10) Business Days from the date that any
responsible corporate officer of Lessee has actual knowledge
thereof, Lessee shall provide to Lessor written notice of any
material pending claim, action or proceeding involving any
Environmental Law or any Release on, in, or affecting any Equipment.
All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and Lessee's proposed response
thereto. In addition, Lessee shall provide to Lessor, within
fifteen (15) Business Days of receipt, copies of all material
written communications with any Governmental Authority relating to
any Environmental Law in connection with or affecting any Equipment.
Lessee shall also promptly provide such detailed reports of any such
material environmental claims as may reasonably be requested by
Lessor.
SECTION 16. TERMINATION FOR EVENTS OF LOSS.
16.1. Termination Upon Certain Events. Unless Lessee
has delivered notice pursuant to Section 15.1(b) hereof that,
following the occurrence of an Event of Loss, this Lease shall not
terminate with respect to the Equipment, then Lessee shall be
obligated to deliver, not later than sixty (60) days prior to the
next Payment Date, a written notice to Lessor in the form described
in Section 16.2(a) hereof (a "Termination Notice") of the
termination of this Lease.
16.2. Procedures. (a) A Termination Notice shall
contain: (i) notice of termination of this Lease on the next
Payment Date occurring at least sixty (60) days following the
occurrence of such Event of Loss (the "Termination Date"); and (ii)
a binding and irrevocable agreement of Lessee to pay the Termination
Value for the Equipment and purchase the Equipment on the
Termination Date.
(b) On the Termination Date, Lessee shall pay to
Lessor the Termination Value for the Equipment, plus all amounts
owing in respect of Rent for the Equipment (including Supplemental
Rent) theretofore accruing, and Lessor shall convey the Equipment to
Lessee in accordance with Section 19 hereof.
SECTION 17. DEFAULT.
17.1. Lease Events of Default. If any one or more of
the following events (each a "Lease Event of Default") shall occur:
(a) Lessee shall fail to pay (i) any Basic Rent
(except as set forth in clause (ii)) within five (5) days
after the same has become due and payable or (ii) within one
(1) day after the same has become due and payable, any
Residual Value Guarantee Amount, or payment of Termination
Value or Purchase Option Price, or any payment of Basic Rent
or Supplemental Rent due on the due date of any such payment
of Residual Value Guarantee Amount, Termination Value or
Purchase Option Price, or any amount due on the Expiration
Date;
(b) Lessee shall fail to make payment of any
Supplemental Rent (other than Supplemental Rent referred to in
Section 17.1(a)(ii) hereof) due and payable within five (5)
days after receipt of notice thereof;
(c) Lessee shall fail to maintain insurance as
required by Section 14 of this Lease;
(d) Lessee shall fail to observe or perform any
term, covenant or condition of Lessee under this Lease, the
Participation Agreement or any other Operative Agreement to
which Lessee is a party other than those set forth in Section
17.1(a), (b), (c) or (i) hereof, or any representation or
warranty made by Lessee set forth in this Lease or in any
other Operative Agreement or in any document entered into in
connection herewith or therewith or in any document,
certificate or financial or other statement delivered in
connection herewith or therewith shall be false or inaccurate
in any material way, and such failure or misrepresentation or
breach of warranty is capable of being cured and shall remain
uncured for a period of thirty (30) days after receipt of
written notice from Lessor thereof;
(e) Lessee shall (i) admit in writing its inability
to pay its debts generally as they become due, (ii) file a
petition under the United States bankruptcy laws or any other
applicable insolvency law or statute of the United States of
America or any State or Commonwealth thereof, (iii) make a
general assignment for the benefit of its creditors, (iv)
consent to the appointment of a receiver of itself or the
whole or any substantial part of its property, (v) fail to
cause the discharge of any custodian, trustee or receiver
appointed for Lessee or the whole or a substantial part of its
property within sixty (60) days after such appointment, or
(vi) file a petition or answer seeking or consenting to
reorganization under the United States bankruptcy laws or any
other applicable insolvency law or statute of the United
States of America or any State or Commonwealth thereof;
(f) insolvency proceedings or a petition under the
United States bankruptcy laws or any other applicable
insolvency law or statute of the United States of America or
any State or Commonwealth thereof shall be filed against
Lessee and not dismissed within sixty (60) days from the date
of its filing, or a court of competent jurisdiction shall
enter an order or decree appointing, without the consent of
Lessee, a receiver of Lessee or the whole or a substantial
part of its property, and such order or decree shall not be
vacated or set aside within sixty (60) days from the date of
the entry thereof;
(g) in the event Lessee shall not have exercised its
Expiration Date Purchase Option, Lessee shall have failed to
remarket and consummate a sale of, or return, the Equipment in
accordance with Section 23 hereof and make the payments
provided for therein on the Expiration Date;
(h) Lessee shall (x) fail to make any payment, equal
to or exceeding $10,000,000 of any Obligation or to make any
payment, equal to or exceeding $5,000,000, of any interest or
premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to
such Obligation, or (y) fail to perform or observe any term,
covenant or condition on its part to be performed or observed
under any agreement or instrument relating to any Obligation
when required to be performed or observed, and such failure
shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of
such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of any Obligation,
the unpaid principal amount of which then equals or exceeds
$10,000,000; or
(i) any judgement or order for the payment of money
in excess of $10,000,000 shall be rendered against Lessee and
either (x) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order or (y) there shall
be any period of thirty (30) consecutive days during which a
stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(j) any Termination Event with respect to a Plan
shall have occurred, and, thirty (30) days after notice thereof
shall have been given to the Lessee by the Lessor, (i) such
Termination Event (if correctable) shall not have been
corrected and (ii) the then present value of such Plan's
vested benefits exceeds (when aggregated with the amount of
any such excess under all other Plans with respect to which a
Termination Event shall have occurred) the then current value
of assets accumulated in such Plan by more than the amount of
$15,000,000 (or in the case of a Termination Event involving
the withdrawal of a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA), the withdrawing employer's
proportionate share of such excess exceeds such amount); or
(k) the Completion Date shall not have occurred by
the Outside Completion Date, or if all of the Equipment intended
to be subject to the Lease on such date shall not be so
subject on such date and the Equipment shall not constitute an
integrated gas-fired combustion turbine capable of producing
electricity as contemplated by the Preliminary Appraisal; or
(l) the Lease shall cease to be enforceable against
Lessee; or
(m) an Installation Agency Agreement Event of
Default shall have occurred and be continuing;
then, in any such event, Lessor may, in addition to the other rights
and remedies provided for in this Section 17 and in Section 18
hereof, terminate this Lease by giving Lessee written notice of such
termination, and this Lease shall terminate, and all rights of
Lessee under this Lease shall cease. Lessee shall, to the fullest
extent permitted by law, pay as Supplemental Rent all costs and
expenses incurred by or on behalf of Lessor, the Agent, the Lenders
or the Investor, including fees and expenses of counsel, as a result
of any Lease Event of Default hereunder.
17.2. Surrender of Possession. If a Lease Event of
Default shall have occurred and be continuing, and whether or not
this Lease shall have been terminated pursuant to Section 17.1
hereof, Lessee shall upon written demand of Lessor surrender to
Lessor possession of the Equipment. Lessor may enter upon any
premises where the Equipment is located and repossess the Equipment
and may remove any and all of Lessee's equipment and personalty and
severable Modifications from the Equipment. Lessor shall have no
liability by reason of any such entry, repossession or removal
performed in accordance with applicable law. Upon the written
demand of Lessor, Lessee shall return the Equipment promptly to
Lessor at the location, in the manner and condition required by, and
otherwise in accordance with the provisions of, Section 23.1(c) and
(d) hereof. Prior to any such return of the Equipment on an in
place basis, upon the request of Lessor, Lessee shall, at Lessee's
expense, cause an environmental audit of the premises of Lessee
where the Equipment is located, including a Phase I environmental
survey, to be prepared by an independent environmental audit firm
reasonably acceptable to the Agent and the Investor. If such
environmental audit indicates any Environmental Violation, Lessee
shall also deliver to Lessor, the Investor and the Agent a Phase II
environmental survey by such independent environmental audit firm
prior to the return of the Equipment on an in place basis showing
the completion of the remedying of such Environmental Violation in
compliance with all Legal Requirements.
17.3. Reletting. If a Lease Event of Default shall
have occurred and be continuing, and whether or not this Lease shall have
been terminated pursuant to Section 17.1 hereof, Lessor may, but
shall be under no obligation to, relet any or all of the Equipment,
for the account of Lessee or otherwise, for such term or terms
(which may be greater or less than the period which would otherwise
have constituted the balance of the Term) and on such conditions
(which may include concessions or free rent) and for such purposes
as Lessor may determine, and Lessor may collect, receive and retain
the rents resulting from such reletting. Lessor shall not be liable
to Lessee for any failure to relet any Equipment or for any failure
to collect any rent due upon such reletting.
17.4. Damages. Neither (a) the termination of this
Lease as to all or any of the Equipment pursuant to Section 17.1
hereof; (b) the repossession of all or any of the Equipment; nor (c)
except to the extent required by applicable law, the failure of
Lessor to relet all or any of the Equipment, the reletting of all or
any portion thereof, nor the failure of Lessor to collect or receive
any rentals due upon any such reletting shall relieve Lessee of its
liability and obligations hereunder, all of which shall survive any
such termination, repossession or reletting. If any Lease Event of
Default shall have occurred and be continuing and notwithstanding
any termination of this Lease pursuant to Section 17.1 hereof,
Lessee shall forthwith pay to Lessor all Rent and other sums due and
payable hereunder to and including the date of such termination.
Thereafter, on the days on which Basic Rent or Supplemental Rent, as
applicable, are payable under this Lease or would have been payable
under this Lease if the same had not been terminated pursuant to
Section 17.1 hereof and until the end of the Basic Term or Renewal
Term hereof or what would have been the Basic Term or Renewal Term
in the absence of such termination, Lessee shall pay Lessor, as
current liquidated damages (it being agreed that it would be
impossible accurately to determine actual damages), an amount equal
to the Basic Rent and Supplemental Rent that are payable under this
Lease or would have been payable by Lessee hereunder if this Lease
had not been terminated pursuant to Section 17.1 hereof, less the
net proceeds, if any, which are actually received by Lessor with
respect to the period in question of any reletting of any Equipment
or any portion thereof; provided that Lessee's obligation to make
payments of Basic Rent and Supplemental Rent under this Section 17.4
shall continue only so long as Lessor shall not have received the
amounts specified in Section 17.5 or 17.6 hereof. In calculating the
amount of such net proceeds from reletting, there shall be deducted
all of Lessor's, the Investor's, the Agent's and any Lender's
reasonable expenses in connection therewith, including repossession
costs, brokerage or sales commissions, fees and expenses for counsel
and any necessary repair or alteration costs and expenses incurred
in preparation for such reletting. To the extent Lessor receives
any damages pursuant to this Section 17.4, such amounts shall be
regarded as amounts paid on account of Rent. If any statute or rule
of law shall limit the amount of such final liquidated damages to
less than the amount agreed upon, Lessor shall be entitled to the
maximum amount allowable under such statute or rule of law.
17.5. Acceleration of Rent. If a Lease Event of Default
shall have occurred and be continuing and this Lease shall not have
been terminated pursuant to Section 17.1 hereof, and whether or not
Lessor shall have collected any current liquidated damages pursuant
to Section 17.4 hereof, Lessor may upon written notice to Lessee
accelerate all payments of Basic Rent and the Residual Value
Guarantee Amount due hereunder and, upon such acceleration, Lessee
shall immediately pay Lessor, as and for final liquidated damages
and in lieu of all current liquidated damages on account of such
Lease Event of Default beyond the date of such acceleration (it
being agreed that it would be impossible accurately to determine
actual damages) an amount equal to the sum of (i) all Basic Rent
(assuming a Eurodollar Reserve Rate per annum equal to the then
applicable Overdue Rate) due from the date of such acceleration
until the end of the Basic Term or Renewal Term; plus (ii) the
Residual Value Guarantee Amount discounted to present value at a
rate per annum equal to the lesser of (A) the rate then being paid
on United States treasury securities with maturities corresponding
to the then remaining Basic Term or Renewal Term or (B) five percent
(5%); plus (iii) all other amounts owing in respect of Rent and
Supplemental Rent theretofore accruing under this Lease. If any
statute or rule of law shall limit the amount of such final
liquidated damages to less than the amount agreed upon, Lessor shall
be entitled to the maximum amount allowable under such statute or
rule of law.
17.6. Final Liquidated Damages. If a Lease Event of
Default shall have occurred and be continuing, whether or not this
Lease shall have been terminated pursuant to Section 17.1 hereof and
whether or not Lessor shall have collected any current liquidated
damages pursuant to Section 17.4 hereof, Lessor shall have the right
to recover, by demand to Lessee and at Lessor's election, and Lessee
shall pay to Lessor, as and for final liquidated damages, and in
lieu of all current liquidated damages beyond the date of such
demand (it being agreed that it would be impossible accurately to
determine actual damages) the sum of: (i) the Termination Value for
all Equipment remaining under this Lease; plus (ii) all other
amounts owing in respect of Rent and Supplemental Rent theretofore
accruing under this Lease; provided, that in the event of the
occurrence of a Lease Event of Default under Sections 17.1(e) or (f)
hereof such amount shall become immediately due and payable. If any
statute or rule of law shall limit the amount of such final
liquidated damages to less than the amount agreed upon, Lessor shall
be entitled to the maximum amount allowable under such statute or
rule of law.
17.7. Waiver of Certain Rights. If this Lease shall
be terminated pursuant to Section 17.1 hereof, Lessee waives, to the
fullest extent permitted by law, (a) any notice of re-entry or the
institution of legal proceedings to obtain re-entry or possession;
(b) any right of redemption, re-entry or repossession; (c) the
benefit of any laws now or hereafter in force exempting property
from liability for rent or for debt; and (d) any other rights which
might otherwise limit or modify any of Lessor's rights or remedies
under this Section 17.
17.8. Assignment of Rights Under Contracts. If a Lease
Event of Default shall have occurred and be continuing, and whether
or not this Lease shall have been terminated pursuant to Section
17.1 hereof, Lessee shall upon Lessor's demand (i) immediately
assign, transfer and set over to Lessor all of Lessee's right, title
and interest in and to (a) the Intellectual Property and each
agreement executed by Lessee in connection therewith and (b) each
agreement (other than those involving the Intellectual Property)
executed by Lessee in connection with the purchase, construction,
installation, use or operation of the Equipment (including, without
limitation, all right, title and interest of Lessee with respect to
all warranty, performance, service and indemnity provisions), as and
to the extent that the same relate to the purchase, construction,
installation, use or operation of the Equipment, and (ii) comply
with the provisions of Section 23.1(d) hereof.
17.9. Remedies Cumulative. The remedies herein provided
shall be cumulative and in addition to (and not in limitation of)
any other remedies available at law, equity or otherwise.
17.10. Lessee's Right to Cure. Notwithstanding any
provision contained in this Lease or any other Operative Agreement,
if a Lease Event of Default has occurred and is continuing, Lessee
shall have the right to cure such Lease Event of Default by
exercising its Purchase Option with respect to all (but not less
than all) of the Equipment at any time prior to such time as a
foreclosure upon or sale of any of the Equipment has been completed.
SECTION 18. LESSOR'S RIGHT TO CURE LESSEE'S LEASE
DEFAULTS.
Lessor, without waiving or releasing any obligation or
Lease Event of Default, may (but shall be under no obligation to)
remedy any Lease Event of Default for the account and at the sole
cost and expense of Lessee, including the failure by Lessee to
maintain the insurance required by Section 14 hereof, and may, to
the fullest extent permitted by law, and notwithstanding any right
of quiet enjoyment in favor of Lessee, enter upon any real property
owned or leased by Lessee where any Equipment is located for such
purpose and take all such action thereon as may be necessary or
appropriate therefor. No such entry shall be deemed an eviction of
Lessee. All out-of-pocket costs and expenses so incurred (including
fees and expenses of counsel), together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid
by Lessor, shall be paid by Lessee to Lessor on demand.
SECTION 19. PROVISIONS RELATING TO LESSEE'S TERMINATION
OF THIS LEASE OR EXERCISE OF PURCHASE OPTIONS.
In connection with any termination of this Lease with
respect to the Equipment pursuant to the terms of Section 16.2
hereof, or in connection with Lessee's exercise of its Purchase
Option pursuant to Section 20 hereof or its Expiration Date Purchase
Option, upon the date on which this Lease is to terminate with
respect to the Equipment or upon the Expiration Date with respect to
the Equipment, and upon tender by Lessee of the amounts set forth in
Sections 16.2(b), 20 or 21.2 hereof, as applicable, Lessor shall
execute and deliver to Lessee (or to Lessee's designee) at Lessee's
cost and expense a bill of sale transferring Lessor's entire
interest in the Equipment, in each case free and clear of the Lien
of the Lease and any Lessor Liens attributable to Lessor but without
any other warranties from Lessor. The Equipment shall be conveyed
to Lessee "AS IS" "WHERE IS" and in its then present physical
condition.
SECTION 20. PURCHASE OPTION.
Lessee shall have the option (the "Purchase Option")
(exercisable by giving Lessor irrevocable written notice (the
"Purchase Notice") of Lessee's election to exercise such option not
less than ten (10) days prior to the date of purchase pursuant to
such option) to purchase, or to designate a third party to purchase,
all of the Equipment on the date specified in such Purchase Notice
which date shall be a Payment Date, at a price equal to the
Termination Value (the "Purchase Option Price") (which the parties
do not intend to be a "bargain" purchase price) and, upon receipt of
such amount plus all Rent and other amounts then due and payable
under this Lease and any other Operative Agreement, Lessor shall
transfer to Lessee all of Lessor's right, title and interest in and
to the Equipment in accordance with Section 19 hereof.
SECTION 21. EXPIRATION.
21.1. Expiration Date Options. Lessee shall have the
following options upon the Expiration Date, exercisable with respect
to all, but not less than all, of the Equipment in accordance with
the following Sections hereof: (i) the Renewal Option pursuant to
Section 22 hereof; or (ii) the Expiration Date Purchase Option
pursuant to Section 21.2 hereof. Such options and the Purchase
Option are an integral part of this Agreement between Lessor and
Lessee, which, among other things, grants Lessee the right to use
the Equipment throughout the Basic Term and any Renewal Term of the
Lease, and are not intended to be construed as separate contracts
between Lessor and Lessee. If Lessee does not exercise either of
such options, then Lessee shall be obligated to remarket the
Equipment pursuant to Section 23 hereof.
21.2. Expiration Date Purchase Option. Not less than
one year prior to the Expiration Date, Lessee may give Lessor
irrevocable written notice (the "Expiration Date Election Notice")
that Lessee is electing to exercise the Expiration Date Purchase
Option. If Lessee shall elect to exercise the Expiration Date
Purchase Option, then on the Expiration Date Lessee shall pay to
Lessor an amount equal to the Termination Value for all of the
Equipment (which the parties do not intend to be a "bargain price")
and, upon receipt of such amount plus all Rent and other amounts
then due and payable under this Lease and any other Operative
Agreement, Lessor shall transfer to Lessee all of Lessor's right,
title and interest in and to the Equipment in accordance with
Section 19 hereof.
SECTION 22. RENEWAL.
22.1. Renewal Option. At the end of the Basic Term or
the then applicable Renewal Term, as the case may be, provided that
no Lease Default or Lease Event of Default shall have occurred and
be continuing, Lessee shall have the option (each a "Renewal
Option") to request that Lessor renew the term of this Lease for one
or more periods (each, a "Renewal Term") of not less than one year
or more than four years, less one day, provided, that Lessor shall
have the right, in its sole discretion, to refuse to consent to any
proposed Renewal Term.
22.2. Exercise of Renewal Option. If Lessee desires to
exercise its Renewal Option, it shall notify Lessor thereof not less
than one year prior to the expiration of the Basic Term or the then
current Renewal Term. Lessor shall notify Lessee of its consent to
or denial of such request within thirty (30) days of receipt of such
request. If Lessor shall have consented to such request, Lessee and
Lessor shall have thirty (30) days from the date of such consent to
agree upon the terms and conditions of the Renewal Term. Any such
exercise shall be irrevocable as to Lessee, but be binding on Lessor
only if Lessor shall have consented thereto, the parties shall have
agreed on such terms and conditions and on the effective date of the
Renewal Term no Lease Default or Lease Event of Default shall have
occurred and be continuing.
22.3. Terms and Conditions of Renewal Term. The terms
and conditions of any Renewal Term shall be on the same terms and
conditions as are set forth in this Lease for the Basic Term, with
such modifications thereto, if any, as the parties hereto and to the
other Operative Agreements may negotiate based upon the current
credit information regarding Lessee, interest rates, market
conditions and such other factors as the Investor, the Agent and the
Lenders may consider relevant.
SECTION 23. SALE OR RETURN.
23.1. Sale and Return Procedures. (a) If Lessee shall
be required to remarket the Equipment for Lessor pursuant to Section
21.1 hereof, Lessee shall remarket the Equipment in accordance with
this Section 23.1 and make the payment to Lessor required by Section
23.1(b) hereof. During the Marketing Period, Lessee, as
nonexclusive broker for Lessor, shall obtain bids for the cash
purchase of the Equipment being sold to be consummated on the
Expiration Date for the highest price available, shall notify Lessor
promptly of the name and address of each prospective purchaser and
the cash price which each prospective purchaser shall have offered
to pay for such Equipment and shall provide Lessor with such
additional information about the bids and the bid solicitation
procedure as Lessor may reasonably request from time to time.
Lessor may reject any and all bids and may assume sole
responsibility for obtaining bids or may require Lessee to return
the Equipment to Lessor by giving Lessee written notice to that
effect at any time; provided, however, that notwithstanding the
foregoing, Lessor may not reject a bid if such bid is equal or
greater than the sum of the Limited Recourse Amount and all costs
and expenses referred to in clause FIRST of Section 23.2 hereof.
Upon receipt of such notice, Lessee shall surrender the Equipment to
Lessor pursuant to Sections 10.1 and 23.1(c) and (d) hereof. Unless
Lessor shall have given such notice, Lessee shall arrange for Lessor
to sell the Equipment on the Expiration Date free of any Lessor
Liens attributable to it, without recourse or warranty, for cash to
the purchaser or purchasers identified by Lessee or Lessor, as the
case may be. Lessee shall surrender the Equipment so sold to such
purchaser in the condition specified in Sections 10.1 and 23.1(c)
hereof. Lessee shall not take or fail to take any action which
would have the effect of discouraging bona fide third party bids for
the Equipment. During the Marketing Period, Lessee shall be
obligated to maintain at its expense the insurance coverages
required under Section 14 hereof and to pay for the costs of storing
the Equipment after the Expiration Date in a storage facility
reasonably acceptable to Lessor.
(b) On the Expiration Date, unless the Equipment is
purchased by Lessee pursuant to exercise of its Expiration Date
Purchase Option, Lessee shall pay to Lessor the Residual Value
Guarantee Amount for the Equipment (after taking into account the
application of the proceeds of any sale of the Equipment under
Section 23.1(a) hereof pursuant to the terms of this Lease, the
Credit Agreement and the Trust Agreement).
(c) If the Equipment is being sold on the Expiration
Date pursuant to a remarketing or is being returned to Lessor,
Lessee shall at its own risk and expense return the Equipment to
Lessor or deliver it to a third party purchaser in the same
condition as when delivered to Lessee hereunder, ordinary wear and
tear resulting from proper use thereof excepted, and in such
operating condition as is capable of performing its originally
intended use, free and clear of all Liens other than Lessor Liens
and otherwise in accordance with the terms of this Lease, by the
assembling, crating, insuring and delivering of such Equipment by
knowledgeable professionals in accordance with manufacturer's
standards and specifications, if available, and if not so available,
in accordance with industry standards for new equipment, with all
sumps and tanks clean and dry and no Hazardous Substances located in
or on the Equipment, and together with all maintenance and service
records and all software and software documentation necessary for
the operation of the Equipment, to such locations as Lessor or such
purchaser shall specify within continental North America. Upon such
delivery, Lessee shall, at its expense, reassemble the Equipment and
test it to manufacturer's specifications, confirming that the
Equipment is operational as a gas-fired combustion turbine capable
of producing electricity at the level of output and the quality
required under this Lease. Return or delivery shall be completed
within fifteen (15) days after the Expiration Date or earlier
termination of this Lease with respect to the Equipment. In
addition to Lessor's other rights and remedies hereunder, if any
item of the Equipment is not returned or delivered in a timely
fashion, or if repairs are necessary to place the Equipment in the
condition required in this Section 23.1(c), Lessee shall continue to
pay to Lessor Rent in respect of the Equipment at the higher of the
then Fair Market Rent Value for such Equipment and the last
prevailing lease rate hereunder for the period of delay in
redelivery, or for the period of time reasonably necessary to
accomplish such repairs, together with the cost of such repairs, as
applicable. Lessor's acceptance of such Rent on account of such
delay or repair does not constitute a renewal of the term of this
Lease or a waiver of Lessor's right to prompt return of the
Equipment in proper condition.
(d) If any Equipment is not purchased by Lessee on
the Expiration Date or if a Lease Event of Default shall have occurred
and be continuing, at the option of Lessor, Lessee shall continue to
provide Lessor (or a purchaser or lessee of the Equipment from
Lessor) with (i) (A) a royalty-free license or assignment of all
Intellectual Property, if any, and authorizations necessary to use
and operate in place the Equipment for its intended purposes, and
(B) an assignment of all permits, certificates of occupancy,
governmental licenses and authorizations necessary to use and
operate the Equipment for its intended purposes, (ii) such ground
leases, easements, licenses, rights-of-way and other rights and
privileges in the nature of an easement as are reasonably necessary
or desirable in connection with the use, repair, access to or
maintenance in place of the Equipment as Lessor shall request (at
arm's-length fair market rates), and (iii) such facility support and
services agreements covering such services (including access and
utilities) as Lessor may request in order to use and operate the
Equipment in place for its intended purposes at such rates (not in
excess of arm's-length fair market rates) as shall be acceptable to
Lessor and Lessee. All assignments, licenses, easements, agreements
and other deliveries required by clauses (i), (ii) and (iii) of this
paragraph (d) shall be in form satisfactory to Lessor and shall be
fully assignable (including both primary assignments and assignments
given in the nature of security) without payment of any fee, cost or
other charge. Prior to any such return of the Equipment on an in
place basis, upon the request of Lessor, Lessee shall, at Lessee's
expense, cause an environmental audit of the premises of Lessee
where the Equipment is located, including a Phase I environmental
survey, to be prepared by an independent environmental audit firm
reasonably acceptable to the Agent and the Investor. If such
environmental audit indicates any Environmental Violation, Lessee
shall also deliver to Lessor, the Investor and the Agent a Phase II
environmental survey by such independent environmental audit firm
prior to the return of the Equipment on an in place basis showing
the completion of the remedying of such Environmental Violations in
compliance with all Legal Requirements.
23.2. Application of Proceeds of Sale. Lessor shall
apply the proceeds of sale of items of Equipment in the following
order of priority:
(i) FIRST, to pay or to reimburse Lessor for the
payment of all reasonable costs and expenses incurred by
Lessor in connection with the sale;
(ii) SECOND, so long as the Credit Agreement is in
effect, to the Agent to be applied pursuant to the provisions
of the Credit Agreement;
(iii) THIRD, to the Owner Trustee to be applied
pursuant to the provisions of the Trust Agreement; and
(iv) FOURTH, to Lessee.
23.3. Indemnity for Excessive Wear. If the proceeds
of the sale described in Section 23.1 with respect to the Equipment,
less all expenses incurred by Lessor in connection with such sale,
shall be less than the Limited Recourse Amount with respect to the
Equipment, and at the time of such sale it shall have been
determined (pursuant to the Appraisal Procedure) that the Fair
Market Sales Value of the Equipment shall have been impaired by
greater than expected wear and tear during the term of the Lease,
Lessee shall pay to Lessor within ten (10) days after receipt of
Lessor's written statement (i) the amount of such excess wear and
tear determined by the Appraisal Procedure or (ii) the amount of the
Net Sale Proceeds Shortfall, whichever amount is less.
23.4. Appraisal Procedure. For determining the Fair
Market Sales Value of the Equipment or any other amount which may,
pursuant to any provision of any Operative Agreement, be determined
by an appraisal procedure, Lessor and Lessee shall use the following
procedure (the "Appraisal Procedure"). Lessor and Lessee shall
endeavor to reach a mutual agreement as to such amount for a period
of ten (10) days from commencement of the Appraisal Procedure under
the applicable section of the Lease, and if they cannot agree within
ten (10) days, then two qualified appraisers, one chosen by Lessee
and one chosen by Lessor, shall mutually agree thereupon, but if
either party shall fail to choose an appraiser within twenty (20)
days after notice from the other party of the selection of its
appraiser, then the appraisal by such appointed appraiser shall be
binding on Lessee and Lessor. If the two appraisers cannot agree
within twenty (20) days after both shall have been appointed, then
a third appraiser shall be selected by the two appraisers or,
failing agreement as to such third appraiser within thirty (30) days
after both shall have been appointed, by the American Arbitration
Association. The decisions of the three appraisers shall be given
within twenty (20) days of the appointment of the third appraiser
and the decision of the appraiser most different from the average of
the other two shall be discarded and such average shall be binding
on Lessor and Lessee; provided that if the highest appraisal and the
lowest appraisal are equidistant from the third appraisal, the third
appraisal shall be binding on Lessor and Lessee. The fees and
expenses of the appraiser appointed by Lessee shall be paid by
Lessee; the fees and expenses of the appraiser appointed by Lessor
shall be paid by Lessor (such fees and expenses not being
indemnifiable pursuant to Section 13 of the Participation
Agreement); and the fees and expenses of the third appraiser shall
be divided equally between Lessee and Lessor.
23.5. Certain Obligations Continue. During the
Marketing Period, the obligation of Lessee to pay Rent with respect
to the Equipment (including the installment of Basic Rent due on the
expiration date of the Basic Term or Renewal Term, as the case may
be) shall continue undiminished until payment in full to Lessor of
the sale proceeds, if any, the Residual Value Guarantee Amount, the
amount due under Section 23.3, if any, and all other amounts due to
Lessor with respect to such Equipment. Lessor shall have the right,
but shall be under no duty, to solicit bids, to inquire into the
efforts of Lessee to obtain bids or otherwise to take action in
connection with any such sale, other than as expressly provided in
this Section 23.
SECTION 24. HOLDING OVER.
If Lessee shall for any reason remain in possession of
the Equipment after the expiration or earlier termination of this
Lease as to the Equipment (unless the Equipment is conveyed to
Lessee), such possession shall be as a tenancy at sufferance during
which time Lessee shall continue to pay Supplemental Rent that would
be payable by Lessee hereunder were the Lease then in full force and
effect with respect to the Equipment and Lessee shall pay Basic Rent
at an annual rate equal to one hundred ten percent (110%) of the
higher of the then Fair Market Rent Value for such Equipment and the
annual Basic Rent payable hereunder immediately preceding such
expiration or earlier termination. Such Basic Rent shall be payable
from time to time upon demand by Lessor. During any period of
tenancy at sufferance, Lessee shall, subject to the second preceding
sentence, be obligated to perform and observe all of the terms,
covenants and conditions of this Lease, but shall have no rights
hereunder. Nothing contained in this Section 24 shall constitute
the consent, express or implied, of Lessor to the holding over of
Lessee after the expiration or earlier termination of this Lease as
to the Equipment (unless the Equipment is conveyed to Lessee) and
nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of such Equipment or
exercising any other remedy available to Lessor at law or in equity.
SECTION 25. RISK OF LOSS.
During the Basic Term and any Renewal Term, unless
Lessee shall not be in actual possession of the Equipment in
question solely by reason of Lessor's exercise of its remedies of
dispossession under Section 17 hereof, the risk of loss of or
decrease in the enjoyment and beneficial use of the Equipment as a
result of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by Lessee,
and Lessor shall in no event be answerable or accountable therefor.
SECTION 26. SUBLETTING.
26.1. Subletting and Assignment. Lessee may not assign
this Lease or any of its rights or obligations hereunder in whole or
in part; provided, that Lessee may sublease or assign this Lease to
an Affiliate of Lessee so long as Lessee remains directly and
primarily liable for all obligations of Lessee under this Lease and
the other Operative Agreements. No sublease or other relinquishment
of possession of any Equipment shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder and Lessee
shall remain directly and primarily liable under this Lease as to
the Equipment so sublet. Any sublease of any Equipment shall be
made expressly subject to and subordinated to this Lease and to the
rights of Lessor hereunder, and shall expressly provide for the
surrender of the Equipment after a Lease Event of Default hereunder.
All such subleases shall expressly provide for termination at or
prior to the earlier of the Expiration Date or the termination of
this Lease pursuant to Section 17 hereof.
26.2. Subleases. Promptly following the execution and
delivery of any sublease permitted by this Section 26, Lessee shall
deliver a copy of such executed sublease to Lessor.
SECTION 27. NO WAIVER.
No failure by Lessor or Lessee to insist upon the strict
performance of any term hereof or to exercise any right, power or
remedy upon a default hereunder, and no acceptance of full or
partial payment of Rent during the continuance of any such default,
shall constitute a waiver of any such default or of any such term.
To the fullest extent permitted by law, no waiver of any default
shall affect or alter this Lease, and this Lease shall continue in
full force and effect with respect to any other then existing or
subsequent default.
SECTION 28. ACCEPTANCE OF SURRENDER.
No surrender to Lessor of this Lease or of all or any
item of any Equipment or of any interest therein (other than as
specifically permitted herein) shall be valid or effective unless
agreed to and accepted in writing by Lessor, and no act by Lessor or
any representative or agent of Lessor, other than a written
acceptance, shall constitute an acceptance of any such surrender.
SECTION 29. NOTICES.
All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and delivered
personally or by a nationally recognized overnight courier service
or mailed (by registered or certified mail, return receipt
requested, postage prepaid), addressed to the respective parties, as
follows:
If to Lessee:
Kansas City Power & Light Company
1201 Walnut Street
Kansas City, Missouri 64106
Attention: Chief Financial Officer
Telephone No.: (816) 556-2555
Telecopy No.: (816) 556-2992
If to Lessor:
First Security Bank of Utah, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone No.: (801) 246-5630
Telecopy No.: (801) 246-5053
In each case, with a copy to the Investor and the Agent
as follows:
Investor:
Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019
Attention: John L. Quinn
Corporate Finance Operations
Telephone No.: (212) 474-8229
Telecopy No.: (212) 474-7880
with a copy to: Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019
Attention: Sarah K. Pennington,
Contracts Administrator,
International Leasing Group
Telephone No.: (212) 474-7393
Telecopy No.: (212) 474-7398
Agent: Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019
Attention: John L. Quinn
Corporate Finance Operations
Telephone No.: (212) 474-8229
Telecopy No.: (212) 474-7880
with a copy to: Deutsche Bank AG, New York Branch
31 West 52nd Street
New York, New York 10019
Attention: Sarah K. Pennington,
Contracts Administrator,
International Leasing Group
Telephone No.: (212) 474-7393
Telecopy No.: (212) 474-7398
or such additional parties and/or other address as such party may
hereafter designate , and shall be effective upon receipt or refusal
thereof.
SECTION 30. MISCELLANEOUS.
30.1. Survival and Severability. Anything contained in
this Lease to the contrary notwithstanding, all claims against and
liabilities of Lessee or Lessor arising from events commencing prior
to the expiration or earlier termination of this Lease shall survive
such expiration or earlier termination. If any provision of this
Lease shall be held to be unenforceable in any jurisdiction, such
unenforceability shall not affect the enforceability of any other
provision of this Lease in such jurisdiction or of such provision or
of any other provision hereof in any other jurisdiction.
30.2. Amendments and Modifications. Neither this Lease
nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing signed by Lessor and
Lessee.
30.3. Successors and Assigns. All the terms and
provisions of this Lease shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
30.4. Counterparts. This Lease may be executed in any
number of counterparts, each of which shall be an original, but all
of which shall together constitute one and the same instrument.
30.5. Headings. The Table of Contents and headings of
the various Sections of this Lease are for convenience of reference
only and shall not modify, define, expand or limit any of the terms
or provisions hereof.
30.6. GOVERNING LAW. THIS LEASE SHALL IN ALL RESPECTS
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ANY
OTHER CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE
APPLICATION OF THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
30.7. Limitations on Recourse. Notwithstanding anything
contained in this Lease to the contrary, Lessee agrees to look
solely to Lessor's interest in the Trust Estate for the collection
of any judgment requiring the payment of money by Lessor or Investor
in the event of liability by Lessor or Investor, and no other
property or assets of Lessor or Investor or any shareholder, owner
or partner (direct or indirect) in or of Lessor or Investor, or any
director, officer, employee, beneficiary, or Affiliate of any of the
foregoing shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Lessee's remedies under or with
respect to this Lease, the relationship of Lessor or Investor and
Lessee hereunder or Lessee's use of the Equipment or any other
liability of Lessor or Investor to Lessee. Nothing in this Section
shall be interpreted so as to limit the terms of Sections 6.1 or
6.2.
[signature page follows]
IN WITNESS WHEREOF, the parties have caused this Lease
to be duly executed and delivered as of the date first above
written.
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, but
solely as Owner Trustee, as Lessor
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
KANSAS CITY POWER & LIGHT COMPANY,
as Lessee
By: /s/ J. DeStefano
Name: J. DeStefano
Title: Vice President-Finance and
Treasurer
[Receipt of this original counterpart
of the foregoing Lease is hereby
acknowledged as the date hereof.]
FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, but
solely as Owner Trustee
By: /s/ Val T. Orton
Name: Val T. Orton
Title: Vice President
c:\docs\tjo\deutsche\kcp&l\lease.3
EXHIBIT A TO THE LEASE
[FORM OF EQUIPMENT SCHEDULE]
EQUIPMENT SCHEDULE NO.
Forming a part of Lease Agreement dated as of October ___,
1995 (the "Lease"), between First Security Bank of Utah, N.A., not
in its individual capacity, but solely as Owner Trustee, as Lessor
(the "Lessor"), and Kansas City Power & Light Company, as Lessee
(the "Lessee").
1. EQUIPMENT. The Equipment leased hereunder shall be as
set forth in the schedule attached hereto as Annex A.
TOTAL EQUIPMENT COST: $____________
2. TERM. Upon and after the date of execution hereof, the
Equipment shall be subject to the terms and conditions provided
herein and in the Lease (which is incorporated herein by reference).
3. RENT. From and after the date hereof, the Basic Rent
for said Equipment during the Basic Lease Term shall be payable on
the dates and in the amounts set forth in Section 3 of the Lease
which is incorporated herein by reference.
4. LESSEE CONFIRMATION. Lessee hereby confirms and
warrants to Lessor that the Equipment: (a) was duly delivered to
Lessee on or prior to the date hereof at the locations specified in
Section 5 hereof; (b) has been received, inspected and determined to
be in compliance with all applicable specifications and that the
Equipment is hereby accepted for all purposes of the Lease; and (c)
is a part of the "Equipment" referred to in the Lease and is taken
subject to all terms and conditions therein and herein provided.
5. LOCATION OF EQUIPMENT. The locations of the Equipment
are specified on the Schedule of Equipment attached hereto as Annex
A.
6. FINANCING STATEMENTS. Annex B attached hereto specifies
the location of all UCC financing statements or other similar
documents under applicable law covering the Equipment.
Date of Execution: ____________, ____
FIRST SECURITY BANK OF KANSAS CITY POWER & LIGHT COMPANY
UTAH, N.A., not in individual
capacity, but solely as Owner Trustee
By: By:
Name: Name:
Title: Title:
ANNEX A TO
EQUIPMENT SCHEDULE
EQUIPMENT
Approved by _____________________________ Page No. ___ of ___ total pages
(Lessee to initial each
page)
Attached Bill of Sale dated Equipment located at:
_______________, ____ ________________________________
and Street No.
________________________________
Equipment Schedule No. ___. City County State Zip
This location is x owned, leased,
mortgaged.
Manufacturer and/or
Vendor Name &
Invoice No. Description Equipment Cost
See Schedule 1 Attached
ANNEX B TO
EQUIPMENT SCHEDULE
FINANCING STATEMENTS COVERING
EQUIPMENT
Secured Party Statement No. Filing Date Filing Location
EXHIBIT B TO THE LEASE
OTHER NAMES AND LOCATIONS OF LESSEE
None.
EXHIBIT C TO THE LEASE
[FORM OF
PURCHASE AGREEMENT ASSIGNMENT]
This Purchase Agreement Assignment, dated ________ ___, ____, is between
Kansas City Power & Light Company, a Missouri corporation ("Assignor"), and
First Security Bank of Utah, N.A., a national banking association, not in its
individual capacity, but solely as Owner Trustee ("Assignee").
WHEREAS, Assignor has entered into purchase agreements or purchase
orders (collectively the "Purchase Agreement") between Assignor and
("Vendor"), providing for the sale to Assignor of various equipment, as more
fully described on Equipment Schedule No. (the "Equipment Schedule")
attached as Exhibit A hereto and made a part hereof (the "Equipment"); and
WHEREAS, Assignor desires that Assignee acquire the Equipment from
Vendor and lease the Equipment to Assignor pursuant to the terms of the Lease
Agreement dated as of October ___, 1995, as supplemented by the Equipment
Schedule (the "Lease").
NOW, THEREFORE, the parties hereto agree as follows:
1. Assignor does hereby sell, assign, transfer and set unto
Assignee all of Assignor's right, title and interest in, under and to the
Purchase Agreement and in and to the Equipment and all product support,
warranty and indemnification provisions and software and software licenses
related thereto. Assignee hereby accepts such assignment.
2. Assignor may not amend, modify, rescind or terminate the
Purchase Agreement in any manner which would have an adverse effect on
Assignee without the prior written consent of Assignee, which consent
shall not be unreasonably withheld.
3. It is agreed that, anything herein contained to the
contrary notwithstanding: (a) Assignor shall at all times remain liable to
Vendor under the Purchase Agreement to perform all the duties and obligations
of the purchaser thereunder to the same extent as if this Agreement had not
been executed, and Assignee does not assume and shall not be obligated to
perform any of these duties and obligations, and (b) the exercise by
Assignee of any of the rights assigned hereunder shall not release Assignor
from its duties or obligations to Vendor under the Purchase Agreement.
4. Assignor agrees at any time and from time to time and at
its own expense upon written request of Assignee to promptly and duly execute
and deliver any and all such further instruments and documents and take such
further actions as Assignee may reasonably request in order to obtain the full
benefits of this Agreement and of the rights and powers granted herein.
5. Assignor does hereby represent and warrant that: (a) the
Purchase Agreement is in full force and effect and enforceable in accordance
with its terms and Assignor is not in default thereunder, (b) Assignor has the
legal right to enter into this Agreement, and (c) the Purchase Agreement is
free from all claims, security interests, liens and encumbrances, except for
the interest being conveyed hereunder and the interest of Assignor therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on or as of the day and year first above written.
KANSAS CITY POWER & LIGHT COMPANY,
Assignor
By:
Title:
FIRST SECURITY BANK OF UTAH, N.A., not in its
individual capacity, but solely as Owner Trustee,
Assignee
By:
Title:
CONSENT AND ACKNOWLEDGMENT OF
PURCHASE AGREEMENT ASSIGNMENT
The undersigned hereby consents to the attached Purchase Agreement
Assignment between Assignor and Assignee and consents to and accepts said
Assignment on and subject to the terms and conditions therein set forth.
[VENDOR]
By:
Title:
Date:
EXHIBIT D TO THE LEASE
[FORM OF BILL OF SALE]
KNOW ALL MEN BY THESE PRESENTS THAT _______________________
("Seller"), for and in consideration of the sum of $10.00 and other good and
valuable consideration, in hand paid by First Security Bank of Utah, N.A.,
not in its individual capacity, but solely as Owner Trustee under that
certain Trust Agreement dated as of October __, 1995 (the "Trust Agreement"),
and First Security Bank of New Mexico, N.A., not in its individual capacity,
but solely as Co-Trustee under the Trust Agreement (collectively, "Purchaser"),
the receipt of which is hereby acknowledged, grants, bargains, sells, conveys,
transfers and delivers all right, title and interest unto Purchaser, its
successors and assigns forever to the equipment described on Schedule A
attached hereto and made a part hereof (the "Equipment"), free and clear of
any and all liens, claims, charges and encumbrances.
Seller does hereby agree to and with Purchaser, its successors
and assigns, to warrant and defend title to the aforesaid Equipment hereby
sold unto Purchaser, its successors and assigns against all and every person
and persons whomsoever.
Seller hereby represents and warrants to Purchaser that Seller
is the record and beneficial owner of such Equipment and that Seller has full
right, power and authority to sell the Equipment and to make this Bill of
Sale.
Seller, for itself and its successors and assigns further
covenants and agrees to do, execute and deliver, or to cause to be done,
executed or delivered, all such further acts, transfers and assurances, for
the better assuring, conveying and confirming unto Purchaser and its
successors and assigns the rights and interests in the Equipment hereby
bargained, sold, assigned, transferred, set over and conveyed, as Purchaser
and its successors and assigns shall reasonably request.
This Bill of Sale and the representations, warranties and
covenants herein contained shall inure to the benefit of Purchaser and its
successors and assigns, shall be binding upon Seller and its successors,
assigns and transferees, and shall survive the execution and delivery hereof.
IN WITNESS WHEREOF, Seller has hereunto set its hand by an
officer as of this _____ day of _____________, ____.
[VENDOR]
By:
Title: