INSURANCE AGREEMENT
Exhibit
10.2.2
Execution
Copy
THIS
INSURANCE AGREEMENT, dated September 19, 2007 (the
“Agreement”), is entered into by and between FINANCIAL
GUARANTY INSURANCE COMPANY, a New York stock insurance company (including its
successors and assigns, “FGIC”), KANSAS CITY POWER
& LIGHT COMPANY, a corporation duly organized under
the laws of the State of
Missouri (including its successors and assigns, the
“Company”).
WHEREAS,
pursuant to an Indenture, dated as of September 1, 2007 (the “Indenture”), by
and between the City of Burlington, Kansas (the “Issuer”) and The Bank of New
York, as trustee (the “Trustee”), the Issuer has issued $146,500,000 in
aggregate principal amount of its Environmental Improvement Revenue Refunding
Bonds (Kansas City Power & Light Company Project) Series 2007A and Series
2007B (the “Bonds”); and
WHEREAS,
the Company and the Issuer have entered into an Amended and
Restated Sublease Agreement dated as of September 1, 2007 (the “Sublease”),
pursuant to which the Company is obligated to make payments sufficient to pay,
among other items, debt service on the Bonds; and
WHEREAS,
the Company and the Issuer have entered into an Amended and
Restated Lease Agreement dated as of September 1, 2007 (the “Lease”), pursuant
to which the Company is obligated to make payments sufficient to pay, among
other items, debt service on the Bonds; and
WHEREAS,
Financial Guaranty has issued its Municipal Bond New Issue Insurance Policy
(the
“Policy”) which insures the scheduled payments of principal of and interest on
the Bonds and payment of principal of and interest on the Bonds upon a
determination of taxability as specified in the Policy; and
WHEREAS,
the Company understands that Financial Guaranty expressly requires the delivery
of this Agreement as part of the consideration for the delivery by Financial
Guaranty of the Policy;
NOW,
THEREFORE, in consideration of the premises and of the agreements
herein contained and of the execution and delivery of the Policy, the Company
and FGIC agree as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01. Definitions. Except
as otherwise expressly provided herein or unless the context otherwise requires,
the terms which are capitalized herein shall have the meanings specified in
Annex A hereto.
SECTION
1.02. Premium. In
consideration of Financial Guaranty agreeing to issue the Policy hereunder,
the
Company hereby agrees to pay Financial Guaranty upon delivery of the Policy,
a
Premium, at the times and in the amount specified in the Commitment
letter.
To
the
extent that any Future Premium Payment is not paid when due, interest shall
accrue on such unpaid amounts at a rate equal to the Effective Interest
Rate.
ARTICLE
II
REPRESENTATIONS,
WARRANTIES, COVENANTS
SECTION
2.01. Representations and Warranties of the
Company. In addition to the
representations and warranties of the Company in the Indenture, which are hereby
incorporated herein by reference for the benefit of FGIC, the Company represents
and warrants as of the date hereof as follows:
(a) The
Company is duly organized, validly existing and in good standing under the
laws
of Missouri and is duly qualified as a foreign corporation to do business in
the
State of Kansas. The Company has the power and authority to execute,
deliver and perform its obligations under this Agreement
(b) The
execution, delivery and performance of this Agreement, the Sublease and the
Lease by the Company has been duly authorized by all necessary corporate action
and do not require any additional approvals or consents or other action by
or
any notice to or filing with any Person except such as have been obtained and
are in full force and effect.
(c) Neither
the execution and delivery of this Agreement, the Sublease or the Lease by
the
Company nor the consummation of the transactions contemplated hereby and thereby
conflicts with or results in a breach of the terms, conditions or provisions
of
any constitutional provision, law or administrative regulation of the State
or
the United States applicable to the Company or any applicable judgment or decree
or any loan agreement, indenture, bond, note, resolution, agreement or other
instrument to which the Company is now a party or by which the Company or its
assets are or may be bound, or constitutes a default under any of the foregoing,
or results in the creation or imposition of any lien, charge, security interest
or encumbrance whatsoever on any of the assets of the Company under the terms
of
any instrument or agreement except as provided in this Agreement, the Sublease
or the Lease.
(d) No
event has occurred and no condition exists that would constitute an Event of
Default (as defined in the Indenture, referred to herein as an
“Indenture Default Event”) or that, with the passing
of time or with the giving of notice or both would become such an Indenture
Default Event.
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(e) This
Agreement the Sublease and the Lease have been duly executed by the Company
and
are the legal, valid and binding obligations of the Company, enforceable against
the Company, in accordance with their terms, subject to the qualification that
the enforceability of the obligations of the Company, may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors’ rights
generally or by equitable principles relating to enforceability.
(f) Except
as disclosed in the Official Statement, dated September 10, 2007, delivered
in
connection with the issuance of the Bonds, (i) there is no action suit,
proceeding or investigation at law or in equity before or by any court or
governmental agency or body pending or, to the knowledge of the Company,
threatened against or affecting the Company that seeks to restrain or enjoin
the
issuance or delivery of the Bonds, or the collection of the payments to be
made
pursuant to the Sublease, the Lease or the resolutions of the Company relating
to this Agreement, the Sublease, the Lease or that contests or
affects the powers of the Company to enter into or perform its obligations
or
consummate the transactions contemplated under any of the foregoing; and (ii)
the Company is not in default with respect to any order or decree of any court
or any order regulation or demand of any federal state, municipal or other
governmental authority, which default might have consequences that would
materially and adversely affect the consummation of the transactions
contemplated by the Bonds, the Sublease, the Lease or the Indenture, or the
financial condition, assets, properties or operation of the
Company.
(g) The
financial statements of the Company and its consolidated subsidiaries contained
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2006, the Company’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2007, and the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007 (collectively, the “Reports”), present fairly in all material
respects the financial condition, results of operations and cash flows of the
Company for the periods presented therein, and have been prepared in conformity
with U.S. generally accepted accounting principles applied on a consistent
basis
throughout the periods involved (except as other wise noted
therein). Except as disclosed in the Company’s Reports, there has
been no material adverse change in the consolidated financial condition or
results of operation of the Company and its subsidiaries since December 31,
2006.
ARTICLE
III
COVENANTS
SECTION
3.01. Reorganization. The
Company hereby agrees that, in the event of a Reorganization, unless otherwise
consented to by Financial Guaranty, the obligations of the Company under, and
in
respect of, the Bonds, the Sublease, the Lease and this Agreement shall be
assumed by, and shall become direct and primary obligations of, a Regulated
Utility Company. The Company shall have delivered to Financial
Guaranty a certificate of the president, any vice president or the treasurer
and
an opinion of counsel acceptable to Financial Guaranty each stating that such
Reorganization complies with this Section 3.01.
SECTION
3.02. Assignment. The Company
hereby agrees that, the Company shall not assign the Sublease, the Lease or
this
Agreement, or any of its duties or obligations hereunder without the prior
written consent of FGIC.
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SECTION
3.03. Limitation on
Liens. The Company will not create, incur, or suffer to
exist any Lien in, of or on the property of the Company, except:
(i) Liens
for taxes, assessments or governmental charges or levies on its property if
the
same shall not at the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by appropriate proceedings
and
for which adequate reserves in accordance with GAAP shall have been set aside
on
its books.
(ii) Liens
imposed by law, such as carriers’, warehousemen’s, mechanics’ and landlords’
liens and other similar liens arising in the ordinary course of business which
secure payment of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
(iii) Liens
arising out of pledges or deposits in the ordinary course of business under
worker’s compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation, other than
any
Lien imposed under ERISA.
(iv) Liens
incidental to the normal conduct of the Company or the ownership or leasing
of
its property or the conduct of the ordinary course of its business, including
(a) zoning restrictions, easements, building restrictions, rights of way,
reservations, restrictions on the use of real property and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which are not
substantial in amount and do not in any material way affect the marketability
of
the same, (b) rights of lessees and lessors under leases, (c) rights of
collecting banks having rights of setoff, revocation, refund or chargeback
with
respect to money or instruments of the Company on deposit with or in the
possession of such banks, (d) Liens or deposits to secure the performance of
statutory obligations, tenders, bids, contracts, leases, progress payments,
performance or return-of-money bonds, surety and appeal bonds, performance
or
other similar bonds, letters of credit, or other obligations of a similar nature
incurred in the ordinary course of business, and (e) Liens required by any
contract or statute in order to permit the Company to perform any contract
or
subcontract made by it with or pursuant to the requirements of a governmental
entity, in each case which are not incurred in connection with the borrowing
of
money, the obtaining of advances of credit or the payment of the deferred
purchase price of property and which do not in the aggregate impair the use
of
property in the operation of the business of the Company taken as a
whole.
(v) Liens
on property of the Company existing on the date hereof and any renewal or
extension thereof; provided that the property covered thereby is not
increased and any renewal or extension of the obligations secured or benefited
thereby is permitted by this Agreement.
(vi) Judgment
Liens which secure payment of legal obligations not exceeding $25,000,000 and
that are bonded, stayed on appeal or otherwise being appropriately contested
in
good faith.
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(vii) Liens
on property acquired by the Company after the date hereof, existing on such
property at the time of acquisition thereof (and not created in anticipation
thereof); provided that in any such case no such Lien shall extend to or
cover any other property of the Company.
(viii) Liens
on property securing Indebtedness incurred or assumed at the time of, or within
12 months after, the acquisition of such property for the purpose of financing
all or any part of the cost of acquiring such property; provided that (a)
such Lien attaches to such property concurrently with or within 12 months after
the acquisition thereof, (b) such Lien attaches solely to the property so
acquired in such transaction and (c) the principal amount of the Indebtedness
secured thereby does not exceed the cost or fair market value determined at
the
date of incurrence, whichever is lower, of the property being acquired on the
date of acquisition.
(iviii) Liens
on any improvements to property securing Indebtedness incurred to provide funds
for all or part of the cost of such improvements in a principal amount not
exceeding the cost of construction of such improvements and incurred within
12
months after completion of such improvements or construction, provided that
such
Liens do not extend to or cover any property of the Company other than such
improvements.
(x) Liens
to government entities granted to secure pollution control or industrial revenue
bond financings, which Liens in each financing transaction cover only property
the acquisition or construction of which was financed by such financings and
property related thereto.
(ix) Liens
on or over gas, oil, coal, fissionable material, or other fuel or fuel products
as security for any obligations incurred by the Company for the sole purpose
of
financing the acquisition or storage of such fuel or fuel products or, with
respect to nuclear fuel, the processing, reprocessing, sorting, storage and
disposal thereof.
(x) Liens
on (including Liens arising out of the transfer or sale of, or financings
secured by) accounts receivable and/or contracts which will give rise to
accounts receivable of the Company.
(xiii) Liens
on property of the Company arising in connection with utility co-ownership,
co-operating and similar agreements that are consistent with the utilities
business and ancillary operations.
(xii) Liens
on assets held by entities which are required to be included in the Company’s
consolidated financial statements solely as a result of the application of
Financial Accounting Standards Board Interpretation No. 46R, as it may be
amended or supplemented.
(xiii) Liens
on cash and cash equivalent collateral securing Swap Contracts.
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(xiv) Liens
securing any extension, renewal, replacement or refinancing of Indebtedness
secured by any Lien referred to in the foregoing clauses (vii), (viii), (ix),
(x) and (xi); provided that (A) such new Lien shall be limited to all or part
of
the same property that secured the original Lien (plus improvements on such
property) and (B) the amount secured by such Lien at such time is not increased
to any amount greater than the amount outstanding at the time of such renewal,
replacement or refinancing.
(xv) Liens
which would otherwise not be permitted by clauses (i) through
(xvi) securing additional Indebtedness of the Company or a Significant
Subsidiary; provided that after giving effect thereto the aggregate
unpaid principal amount of Indebtedness (including Capitalized Lease
Obligations) of the Company (including prepayment premiums and penalties)
secured by Liens permitted by this clause (xvii) shall not exceed 10% of
Total Capitalization.
Provided,
however, that if subsequent to the date hereof, the Company issues debt secured
by Liens (other than those permitted in (i) through (xvii) above), the Company
shall issue and deliver to the Bond Insurer, as security for the Company’s
obligations hereunder, First Mortgage Bonds or similar security equal in
principal amount to the principal amount of the Bonds then outstanding and
maturing on the same dates and bearing interest at the same rates, as the Bonds;
provided however, that the obligation of the Company to make any payment of
the
principal of or any premium or interest on such First Mortgage Bonds shall
be
fully or partially, as the case may be, paid, deemed to have been paid or
otherwise satisfied and discharged to the extent that at the time any such
payment shall be due, the then due principal of and any premium or interest
on
the Bonds shall have been fully or partially paid, deemed to have been paid
or
otherwise satisfied and discharged, excluding, however, amounts paid by the
Bond
Insurer under the policy.
ARTICLE
IV
REIMBURSEMENT
OBLIGATION; OTHER PAYMENTS
SECTION
4.01. Reimbursement
Obligation.
(a) The
Company agrees to reimburse FGIC, immediately and unconditionally upon demand,
for all amounts advanced by FGIC under the Policy. To the extent that
any such payment due hereunder is not paid when due, interest shall accrue
on
such unpaid amounts at a rate equal to the Effective Interest Rate.
(i) The
Company shall pay or reimburse FGIC for any and all charges, fees, costs, and
expenses that FGIC may reasonably pay or incur (including reasonable attorney’s
fees) in connection with the following: (i) the administration,
enforcement, defense, or preservation of any rights or security hereunder or
under any other transaction document; (ii) the pursuit of any remedies
hereunder, under any other transaction document, or otherwise afforded by law
or
equity, (iii) any amendment, waiver, or other action hereunder or under any
other transaction document; (iv) the violation by the Company of any law, rule,
or regulation or any judgment, order or decree applicable to it;
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(v)
any
advances or payments made by FGIC to cure defaults of the Company under the
transaction documents; or (vi) any litigation or other dispute in connection
with this Agreement, any other transaction document, or the transactions
contemplated hereby or thereby, other than amounts resulting from the failure
of
FGIC to honor its payment obligations under the Policy or from FGIC’s willful
misconduct or gross negligence. FGIC reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver, or consent
proposed in respect of this Agreement or any other transaction document;
and
(ii) interest
on any and all amounts described in this clause (b) from the date which is
five
Business Days from the date a statement for such amounts is received by the
Company until payment in full at the Effective Interest Rate.
(c) The
obligations of the Company to FGIC shall survive discharge and termination
of
this Agreement.
SECTION
4.02. Indemnification.
(a) In
addition to any other rights of indemnification that FGIC may
have, the Company, for itself and its successors,
agrees to indemnify and hold harmless FGIC, its officers, directors, employees
and agents (each an “Indemnified Party”) from and
against any and all claims, damages, losses, liabilities, actions, suits,
judgments, demands, reasonable costs or expenses (including without limitation,
reasonable fees and expenses of attorneys and consultants and reasonable costs
of investigations) by reason of: (i) any untrue statement or alleged
untrue statement of a material fact contained or incorporated by reference
in
any Official Statement or in any supplement or amendment thereof, prepared
with
respect to the Bonds, or the omission or alleged omission to state therein
a
material fact necessary to make such statements, in light of the circumstances
under which they are or were made, not misleading; provided, however, that
the
Company shall not be required to indemnify FGIC for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused
by
the material inaccuracy of any information included or incorporated by reference
in the Official Statement concerning FGIC or its affiliates under “The Policy
and the Insurer” (the “FGIC Information”); (ii) to the
extent not covered by clause (i) above, any willful or negligent act or omission
of the Company in connection with the offering, issuance, sale or delivery
of
the Bonds (other than by reason of false or misleading information provided
by
FGIC) or (iii) the misfeasance or malfeasance of any director, officer, employee
or agent of the Company.
(b) This
indemnity provision shall survive the termination of this Agreement and shall
survive until the statute of limitations has run on any causes of action that
arise from one of the foregoing reasons and until all suits filed with the
period of the statute of limitations shall have been finally
concluded. Any Indemnified Party who proposes to assert the right to
be indemnified under this Section 4.02 will promptly after receipt of notice
of
commencement of any action, suit or proceeding against such party in respect
of
which a claim is to be made against the Company under this Section 4.02, shall
notify the Indemnifying Party of the commencement of such action suit or
proceeding against such party in respect of which a claim for indemnification
is
to be made, enclosing a copy of all papers served. The Company (other
than the Company in a proceeding asserting a Policy Claim) shall be entitled
to
participate in and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the
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Indemnified
Party, and after notice from the Company to such indemnified party of its
election so to assume the defense thereof, the Company shall not be liable
to
such indemnified party for any legal expenses other than reasonable cost of
investigation subsequently incurred by such indemnified party in connection
with
the defense thereof. The indemnified party shall have the right to
employ its counsel in any such action the defense of which is assumed by the
Company in accordance with the terms of this subsection (b), but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless the employment of counsel by such indemnified party has been authorized
by the Company, or unless there is a conflict of interest. The
Company shall not under any circumstances be liable for any settlement of any
action or claim effected without its prior written consent, other than a Policy
Claim if settled in accordance with the provisions of Article VI
hereof.
(c) Nothing
in this Section 4.02 is intended to limit the obligations of the Company to
pay
its obligations hereunder and under the Related Documents.
SECTION
4.03. Unconditional
Obligation. The obligations of the Company hereunder
are absolute and unconditional and will be paid or performed strictly in
accordance with this Agreement, irrespective of:
(a) any
lack of validity or enforceability of, or any amendment or other modification
of, or waiver with respect to the Bonds or the Related Documents;
(b) any
exchange, release or nonperfection of any security interest in property securing
the Bonds, the Related Documents or this Agreement or any obligations
hereunder;
(c) any
circumstances which might otherwise constitute a defense available to, or
discharge of, the Company under the Related Documents or otherwise with respect
to the Bonds; and
(d) whether
or not the Company’s obligations under the Related Documents, or the obligations
represented by the Bonds, are contingent or matured, disputed or undisputed,
liquidated or unliquidated.
ARTICLE
V
EVENTS
OF DEFAULT; REMEDIES
SECTION
5.01. Events of
Default. The following events shall constitute Events
of Default hereunder:
(a) The
Company shall fail to pay to FGIC any amount payable under Section 1.02 or
Article IV hereof and such failure shall have continued for period in excess
of
ten (10) days after receipt by the Company of written notice
thereof;
(b) Any
representation or warranty made by the Company hereunder or any report,
certificate, financial statement or other instrument provided in connection
with
the Commitment, the Policy or herewith shall have been materially false at
the
time when made; provided, however, such misrepresentation or breached warranty
shall not constitute an Event of Default if such misrepresentation or
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breached
warranty is capable of being cured and is cured within 30 days after receipt
by
the Company of written notice of such event or, if such misrepresentation or
breached warranty cannot reasonably be cured within such 30-day period, then
within a longer period of time not to exceed 60 days if the Company diligently
pursues such cure;
(c) Any
Event of Default under the Indenture, the Agreement, the Sublease, the Lease
or
the Bonds has occurred;
(c) Except
as otherwise provided in this Section 5.01, the Company shall fail to perform
any of its other obligations under the Sublease, the Lease or this Agreement,
provided that such failure continues for more than 30 days after receipt by
the
Company of written notice of such failure to perform; and
(d) The
Company shall (i) voluntarily commence any proceeding or file any petition
seeking relief under the United States Bankruptcy Code or any other Federal,
state or foreign bankruptcy, insolvency or similar law, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
such proceeding or the filing of any such petition, (iii) apply for or consent
to the appointment of a receiver, paying agent, custodian, sequestrator or
similar official for the Company or for a substantial part of its property,
(iv)
file an answer admitting the material allegations of a petition filed against
in
any such proceeding, (v) make a general assignment for the benefit of creditors
or (vi) become unable, admit in writing its inability or fail generally to
pay
its debts as they become due; or
(e) An
involuntary proceeding shall be commenced or an involuntary petition shall
be
filed in a court of competent jurisdiction seeking (i) relief in respect of
the
Company, or of a substantial part of its property, under the United States
Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency
or
similar law or (ii) the appointment of a receiver, paying agent, custodian,
sequestrator or similar official for the Company or for a substantial part
of
its property; and such proceeding or petition shall continue undismissed, or
an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect, for more than 30 days.
SECTION
5.02. Remedies. If
an Event of Default hereunder shall occur and be continuing it shall also be
considered an Indenture Default Event. At such time, FGIC may declare all
amounts owed by the Company to FGIC to be immediately due and payable, and
take
whatever action at law or in equity may appear necessary or desirable,
including, without limitation, legal action for the specific performance of
any
covenant made by the Company herein and to collect the amounts then due and
thereafter to become due under this Agreement, or to enforce performance and
observance of any obligation, agreement or covenant of the Company under this
Agreement or the Sublease or the Lease. All rights and remedies of
FGIC under this Section 5.02 are cumulative and the exercise of any one remedy
does not preclude the exercise of one or more other remedies available under
this Agreement or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing under this Agreement,
the Bonds or the Related Documents or any other financing document, or
otherwise, upon the happening of any event set forth in Section 5.01, shall
impair any such right or power or shall be construed to be a waiver thereof,
but
any such right and power may be exercised from time to time and as often as
may
be deemed expedient. In order to entitle FGIC to exercise any remedy
reserved to FGIC in this Article, it shall not be necessary to give any notice,
other than such notice as may be required by this Article.
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SECTION
5.03. Control of Remedies by
FGIC.The Company acknowledges and agrees that pursuant to the
Indenture, upon the occurrence and continuation of an Indenture Default Event,
provided that FGIC is not in default of its obligations under the Policy, FGIC
shall be entitled to control and direct the enforcement of all rights and
remedies granted to Bondholders under the Indenture, including, without
limitation, (i) the right to accelerate the principal of the Bonds and (ii)
the
right to annul any declaration of acceleration, and that FGIC shall also be
entitled to approve all waivers of Indenture Default Events.
ARTICLE
VI
SETTLEMENT
SECTION
6.01. Settlement. FGIC
shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against FGIC on the Policy (a
“Policy Claim”) shall or shall not be paid,
compromised, resisted, defended, tried or appealed, and FGIC’s decision thereon,
if made in good faith, shall be final and binding on the Company. An
itemized statement of payments made by FGIC, certified by an officer of FGIC,
or
the voucher or vouchers for such payments, shall be prima facie evidence of
the
liability of the Company, absent manifest error.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.01. Certain Rights of
FGIC. While the Policy is in
effect:
(a) the
Company shall furnish to FGIC, as soon as practicable after the filing thereof
with the SEC, the copies of the Company’s periodic reports to the Securities and
Exchange Commission; provided, however, that the availability of such reports
on
the Commission’s XXXXX website shall be deemed to satisfy this
requirement.
(b) the
Company shall notify FGIC of the redemption of any of the Bonds or any advanced
refunding of the Bonds, including the principal amount, maturities and CUSIP
numbers thereof;
(c
) the Company
shall notify FGIC of the downgrading by any rating agency of the Company’s
underlying public rating; and
(d) the
Company shall provide FGIC with such additional information as FGIC shall
reasonably request.
SECTION
7.02. Amendment and
Waiver. Any provision of this
Agreement may be amended, waived, supplemented, discharged or terminated only
with the prior written consent of the Company and FGIC. The Company
hereby agrees that upon the written request of the Trustee, FGIC may make or
consent to issue any substitute for the Policy to cure any ambiguity or formal
defect or omission in the Policy which does not materially change the terms
of
the Policy nor adversely affect the rights of the owners of the Bonds, and
this
Agreement shall apply to such substituted Policy. FGIC agrees to
deliver to the Company and to the company or companies, if any, rating the
Bonds, a copy of such substituted Policy.
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SECTION
7.03. Successors and Assigns; Descriptive
Headings.
(a) This
Agreement shall bind, and the benefits thereof shall inure to, the Company
and
FGIC and their respective successors and assigns; provided, that no party hereto
may transfer or assign any or all of its rights and obligations hereunder
without the prior written consent of the other party hereto. Notwithstanding
the
foregoing provisions of this Section 7.03(a), FGIC shall have the right to
reinsure any portion of its exposure under the Policy to third party
reinsurers.
(b) The
descriptive headings of the various provisions of this Agreement are inserted
for convenience of reference only and shall not be deemed to affect the meaning
or construction of any of the provisions hereof.
SECTION
7.04. Counterparts. This
Agreement may be executed in any number of copies and by the different parties
hereto on the same or separate counterparts, each of which fully-executed
counterparts shall be deemed to be an original instrument, and all of which
shall constitute but one and the same instrument. Complete
counterparts of this Agreement shall be lodged with the Company, the Trustee
and
FGIC.
SECTION
7.05. Term. This
Agreement shall expire upon the later of (i) the expiration of the Policy in
accordance with the terms thereof or (ii) the repayment in full to FGIC of
any
amounts due and owing to it by the Company under this Agreement or the
Policy.
SECTION
7.06. Exercise of
Rights. No failure or delay on the part of FGIC to
exercise any right, power or privilege under this Agreement, the Indenture,
the
Sublease, the Lease or the Bonds, and no course of dealing between FGIC and
the
Company or any other party, shall operate as a waiver of or impair any such
right, power or privilege, nor shall any single or partial exercise of any
such
right, power or privilege preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which FGIC would otherwise have pursuant to law or
equity. No notice to or demand on any party in any case shall entitle
such party to any other or further notice or demand in similar or other
circumstances, or constitute a waiver of the right of the other party to any
other or further action in any circumstances without notice or
demand.
SECTION
7.07. Waiver. The
Company waives any defense that this Agreement was executed subsequent to the
date of the Commitment, admitting and covenanting that such Commitment was
delivered pursuant to the Company’s request and in reliance on the Company’s
promise to execute this Agreement.
SECTION
7.08. Entire
Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements and understandings of the parties
hereto with respect to the subject matter hereof, including but not limited
to
the Commitment.
Section
7.09. Severability. In the event any
provision of this Insurance Agreement shall be held invalid or unenforceable
by
any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
11
Section
7.10. Notices. All written notices to or upon the
respective parties hereto shall be deemed to have been given or made when
actually received, or in the case of telecopier machine owned or operated by
a
party hereto, when sent and confirmed in writing by such machine as having
been
received, addressed as specified below or at such other address as any of the
parties hereto may from time to time specify in writing to the
other:
If
to the
Company:
Kansas
City Power & Light Company
0000
Xxxxxx
Xxxxxx
Xxxx, Xxxxxxxx 00000-0000
Attention: Treasurer
Facsimile
No: 000-000-0000
If
to
FGIC:
Financial
Guaranty Insurance Company
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention: Xxxx
Xxxxxxxx
Facsimile
No.: 000-000-0000
Section
7.11. Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
New
York.
12
IN
WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
KANSAS
CITY POWER & LIGHT COMPANY
By: /s/Xxxxxxx
X. Xxxxx
Xxxxxxx
Xxxxx
Treasurer
and Chief Risk Officer
FINANCIAL
GUARANTY INSURANCE COMPANY
By: /s/Xxxx
X. Xxxxxxxx
Xxxx
X. Xxxxxxxx
Managing
Director – Global Utilities
S-1
ANNEX
A
DEFINITIONS
For
all
purposes of this Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires, all capitalized terms shall have the
meaning as set out below.
“Agreement”
means this Insurance Agreement.
“Attributable
Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease Obligation of any Person, the capitalized amount thereof
that
would appear on a balance sheet of such person prepared as of such date in
accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation,
the
capitalized amount of the remaining lease payments under the relevant lease
that
would appear on a balance sheet of such Person prepared as of such date in
accordance with GAAP if such lease were accounted for a Capital
Lease.
“Bonds”
shall mean the bonds issued by the Issuer pursuant to the
Indenture.
“Business
Day” means any day other than a Saturday or Sunday on which
commercial banking institutions in New York, New York are generally open for
banking business.
“Capital
Lease” means, as to any person, any lease of Property by such
person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
“Capitalized
Lease Obligation” means, as to any Person, the amount of the
obligations of such Person under Capital Leases which would be shown as a
liability on a balance sheet of such Person in accordance with
GAAP.
“Commitment”
means the commitment letter, dated September 7, 2007, from FGIC to the Company,
committing to issue the Policy in respect of the Bonds, subject to the terms
and
conditions thereof.
“Company”
has the meaning set forth in the recitals hereof.
“Consolidated
Subsidiaries” means, as to any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired” the financial
statements of which shall be (or should have been) consolidated with the
financial statements of such Person in accordance with GAAP.
“Debt”
shall mean any outstanding debt for money borrowed.
“Effective
Interest
Rate” means the lesser of (i) the prime rate of Citibank, N.A., in
effect from time to time plus 2% per annum and (ii) the maximum rate of interest
permitted by then applicable law.
“Event
of Default” means any of the events of default set forth in
Section 6.01 of this Agreement.
“First
Mortgage Bonds” means bonds or other evidences of indebtedness
issued under the Company Indenture.
“GAAP”
means generally accepted accounting principles set forth from time to time
in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements of the
Financial Accounting Standards Board.
“Guaranty
Obligations” means, as to any Person, (a) any obligation,
contingent or otherwise, of such Person guarantying or having the economic
effect of guarantying any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct
or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase
or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the oblige in
respected of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or their obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness
or
other obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligees in respect of such Indebtedness or other obligation of
the
payment of performance thereof or to protect such obligees against loss in
respect thereof (in whole or in part), or (b) any lien on any assets
of such Person, whether or not such Indebtedness or other obligations assumed
by
such Person; provided, however, that the term “Guaranty Obligation” shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guaranty Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guaranty
Obligations is made or, if not stated or determinable, the maximum reasonable
anticipated liability in respect thereof as determined by the guarantying Person
in good faith.
“Indebtedness”
means, as to any Person at a particular time, all of the following, without
duplication, to the extent recourse may be had to the assets or properties
of
such Person in respect thereof:
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|
(a)
|
All
obligations of such Person for borrowed money and all obligation
of such
Person evidenced by bonds, debentures, notes, loan agreements or
other
similar instruments;
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(b)
|
Any
direct or contingent obligations of such Person in the aggregate
in excess
of $2,000,000 arising under letters of credit (including standby
and
commercial), banker’s acceptances, bank guaranties, surety bonds and
similar instruments;
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(c)
|
Net
obligations of such Person under any Swap Contract in an amount equal
to
the Swap Termination Value thereof;
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(d)
|
All
obligations of such Person to pay the deferred purchase price of
property
or services (except trade accounts pay able arising, and accrued
expenses
incurred, in the ordinary course of business), and indebtedness (excluding
prepaid interest thereon) secured by a lien on property owned or
being
purchased by such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed
by
such person or is limited in
recourse;
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(e)
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Capitalized
Lease Obligations and Synthetic Lease Obligations of such
Person;
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(f)
|
All
Guaranty Obligations of such Person in respect of any other
foregoing.
|
For
all
purposes hereof, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture in which such Person is a general partner
or
a joint venture, unless such Indebtedness is non-recourse to such
Person. It is understood and agreed that Indebtedness (including
Guaranty Obligations) shall not include any obligations of the Company with
respect to subordinated, deferrable interest debt securities, and any related
securities issued by a trust or other special purpose entity in connection
therewith, as long as the maturity date of such debt is subsequent to the
maturity date of the Bonds; provided that the amount of mandatory
principal amortization of defeasance of such debt prior to the maturity date
of
the Bonds shall be Included in the definition of Indebtedness (such obligations,
“Trust Preferred Obligations”). The amount of any Capitalized Lease
Obligation or Synthetic Lease Obligations as of any date shall be deemed to
be
the amount of Attributable Indebtedness in respect thereof as of such
date.
“Indenture
Default Event” shall mean an Event of Default pursuant to Section
8.01 of the Indenture.
“Interest
Payment Date” has the meaning assigned thereto by the
Bonds.
“Lien”
means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including the interest of a vendor or lessor under any conditional sale,
Capitalized Lease or other title retention agreement).
“Person”
means an individual, joint stock company, trust, unincorporated association,
joint venture, corporation, business or owner trust, limited liability company,
partnership or other organization or entity (whether governmental or
private).
“Policy”
has the meaning set forth in the second “Whereas” clause hereof.
“Property”
of a Person means any and all property, whether real, personal, tangible,
intangible, or mixed, of such Person, or other assets owned, leased or operated
by such Person.
“Related
Documents” means the Indenture, the Sublease, the Lease this
Agreement and the Bonds.
“Reimbursement
Obligation” means the amounts payable by the Company to FGIC
pursuant to the provisions of Section 4.01 of this Agreement.
“Regulated
Utility
Company” means a corporation (or a limited liability company)
engaged in the distribution of electricity, and which is regulated by the Public
Service Commission of Missouri, or other applicable public utility commission
where its primary electricity distribution business is located.
“Reorganization”
means any reorganization, consolidation or merger of the Company or its
affiliates, or any transfer, sale or lease of a substantial portion of the
assets of the Company or its affiliates, as a result of which the Company ceases
to be a Regulated Utility Company.
“Shareholders’
Equity” means, as of any date of determination, shareholders’
equity of the Company on a consolidated basis as of that date
determined in
accordance with GAAP.
“Subsidiary”
means, with respect to any Person, (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more
of its Subsidiaries or by such Person and one of more of its Subsidiaries;
(b)
any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled;
or
(c) any other Person the operations and/or financial results of which are
required to be consolidated with those of such first Person in accordance with
GAAP.
“Swap
Contract” means (a) any and all rate swap transactions, basis
swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index
swaps or options, bond or bond price or bond index swaps or options or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transaction, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into
any of
the foregoing), whether or not any such transaction is governed by or subject
to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of,
or
governed by, any form of master agreement published by the International
Swaps
and Derivatives Association, Inc., and
International
Foreign Exchange Master Agreement, or any other master agreement (any such
master agreement, together with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Mater
Agreement.
“Swap
Termination
Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contracts, (a) for any date on or after the date such
Swap
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
reference in clause (a) the amount(s) determined as the xxxx-to-market value(s)
for such Swap Contracts, as determined based upon one or more mid-market
or
other readily available quotations provided by any recognized dealer in such
Swap Contracts, in each case as calculated by the Company in order to ensure
compliance with Financial Accounting Standards Board Statement No.
133.
“Synthetic
Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic or off-balance sheet tax retention lease or (b) an
agreement for the use or possession of property creating obligations that do
not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
“Total
Capitalization” means Indebtedness of the Company and its
Consolidated Subsidiaries plus the sum of (i) Shareholder’s Equity and (ii) to
the extent not otherwise included in Indebtedness or Shareholder’s Equity,
preferred and preference stock and securities of the Company and its
Subsidiaries included in a consolidated balance sheet of the Company and its
Subsidiaries in accordance with GAAP; provided, however, that with respect
to
any derivative entered into in the ordinary course of business to hedge bona
fide transactions and business risks and not for the purpose of speculation,
Shareholder’s Equity shall be calculated without giving effect to the
application of Financial Accounting Standards Board Statement No. 133 or
Financial Accounting Standards Board Statement No. 149.
