Exhibit c-46
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT ("Master Lease"),
dated as of June 18, 2001, between The Equipment
Funding Group, a Division of Provident Commercial
Group, Inc., an Ohio corporation having a principal
place of business and address for purposes of notice
hereunder at 0000 Xxxx Xxxxxx Xxxxx. Xxxxxx Xxxxx,
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000, hereinafter, together
with its successors and assigns, if any, as Lessor, and
Kansas City Power & Light Company, a Missouri
corporation having a principal place of business and
address for purposes of notice hereunder at 0000
Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000-0000, Attention:
Treasurer, as Lessee.
1. MASTER LEASE. RENTAL SCHEDULES.
This Master Lease sets forth the general
terms and conditions that govern the lease by Lessor to
Lessee of items of Equipment specified on rental
schedules ("Rental Schedules") and acceptance
certificates ("Acceptance Certificates") executed and
delivered by the parties from time to time. Each Rental
Schedule will reference this Master Lease and thereby
incorporate by reference this Master Lease (this Master
Lease and each Rental Schedule being together referred
to as the "Lease") and will specify the Basic Lease
Term, the amount of Basic Lease Term Rent, the Rent
Payment Dates on which such Rent is due, and such other
information and provisions as Lessor and Lessee may
agree. Each Rental Schedule constitutes a separate and
independent Lease. Only one executed Rental Schedule
will be marked as an original and be considered chattel
paper for purposes of Article 9 of the Uniform
Commercial Code. All other copies, whether executed,
will be considered copies and not chattel paper. This
Master Lease will not be considered chattel paper.
Terms defined in a Rental Schedule and not otherwise
defined herein shall have the meanings ascribed to them
in such Rental Schedule. In the event of a conflict
between the terms of a Rental Schedule and this Master
Lease, the terms of the Rental Schedule shall govern.
The obligation of Lessor to purchase
Equipment from a manufacturer or supplier thereof (the
"Supplier") and to lease the same to Lessee under any
Lease shall be subject to receipt by Lessor, prior to
the commencement of the Basic Lease Term ("Basic Lease
Term Commencement Date") (with respect to such
Equipment), of each of the following documents executed
by Lessee in form and substance satisfactory to Lessor:
(i) a Rental Schedule relating to the Equipment to be
leased thereunder, (ii) an Acceptance Certificate for
such Equipment. (iii) a Railcar Manufacturing Agreement
Assignment relating to the Equipment leased pursuant to
such Rental Schedule, unless Lessor shall have
delivered its purchase order for such Equipment
directly to Supplier, (iv) evidence of insurance which
compiles with the requirements of Section 7 hereof, (v)
a certificate of incumbency authorizing the individuals
executing such documents to do so on behalf of Lessee,
(vi) if the Equipment consists of over-the-road
vehicles, each original Certificate of Title reflecting
Lessor as owner, or a copy of the Manufacturer's
Statement of Origin evidencing the transfer of
ownership to the Lessor, (vii) an opinion of Lessee's
counsel, in substantially the form attached hereto as
Exhibit 1, (viii) financing statements for filing in
the jurisdictions where the principal business office
of the Lessee is located and such other documents,
including governmental filings, as Lessor may
reasonably request. Upon execution by Lessee of any
Rental Schedule and an Acceptance Certificate, the
Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee
AS IS, WHERE IS and except as set forth in the related
Lease WITHOUT WARRANTY EXPRESSED OR IMPLIED for lease
under the Lease for such equipment.
2. BASIC LEASE TERM. LESSEE'S RIGHT TO QUIET
ENJOYMENT.
Each Lease is for a non-cancelable Basic
Lease Term commencing on the date of acceptance of the
Equipment for lease and ending on the Lease Expiration
Date specified on such Rental Schedule. If any Basic
Lease Term is extended by written agreement of the
Lessor or by exercise of any option to extend contained
in such Rental Schedule, the Basic Lease Term shall be
deemed to refer to all extended terms, and all
provisions of this Master Lease shall apply during such
Basic Lease Term, as extended, except as may be
otherwise specifically provided in writing. Lessee
cannot, except as expressly set forth in this Master
Lease, terminate the Lease or suspend payment or
performance of any of its obligations thereunder.
Provided no Event of Default, as defined in Section 13
hereof, has occurred that is continuing under the
Lease, Lessee will have quiet possession and use of the
Equipment throughout the Basic Lease Term, and Lessor
shall defend and protect such quiet possession and use
against all persons claiming by, through or under
Lessor.
3. BASIC RENT. NET LEASE; LESSEE'S
INDEMNITIES. NO WARRANTIBS BY LESSOR.
Rent is payable in the amount specified
on the Rental Schedule. All payments of Rent shall be
made to Lessor in good funds on or before the Payment
Dates specified in the Rental Schedule. Lessor will
exercise its best efforts to invoice Lessee thirty (30)
days prior to each Payment Date, but failure to provide
timely invoices will not relieve Lessee of its
obligation to pay Rent on the Payment Date. Rent is net
of, and Lessee agrees to pay, and will indemnify and
hold Lessor and any assignee of Lessor harmless, on an
after-tax basis, from and against, all costs
(including, without limitation, maintenance, repair and
insurance cost), claims (including, without limitation,
those claims of product liability, strict liability in
tort, patent infringement and to like), losses or
liabilities relating to the Equipment or its use that
are incurred by or asserted against Lessee, any
sublessee of Lessee or any person authorized by Lessee
to use and maintain the Equipment, Lessor or any
assignee of Lessor and arise out of matters occurring
prior to the return of the Equipment. Lessee's
obligation to indemnify Lessor and its assigns shall
include the obligation to hold Lessor and its assigns
harmless from all legal fees and expenses. Lessee
shall be entitled to control the defense of all costs
and claims indemnified so long as no Event of Default
has occurred hereunder, and thereafter Lessor shall be
entitled to control such defense at Lessee's cost;
provided, however that Lessor shall have the right to
appear in such proceedings through separate counsel of
Lessor's choosing at Lessor's sole cost and expense of
such separate counsel. Lessee's indemnities shall
survive termination of this Lease.
Each Lease is an irrevocable, absolute,
net lease, and Lessee's obligations are not subject to
defense, counterclaim, set-off, diminution, abatement
or recoupment, and Lessee waives all rights to
terminate or surrender the Lease for any reason except
as expressly set fort in this Master Lease, including,
without limitation, defect in the Equipment or non-
performance by Lessor; provided, however, that Lessee
specifically retains the right to seek recourse against
Lessor by way of separate action either at law or in
equity in the event of breach or non-performance by
Lessor under the Lease. LESSEE ACKNOWLEDGES THAT IT
HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM
LESSOR AND HAS BEEN GIVEN THE OPPORTUNITY TO INSPECT
AND TEST THE EQUIPMENT. THE EQUIPMENT IS BEING LEASED
TO THE LESSEE BY THE LESSOR AS IS, WHERE IS. LESSOR
DOES NOT MAKE, HAS NOT MADE, SHALL NOT BE DEEMED TO
MAKE OR HAVE MADE, AND EXPRESSLY DISCLAIMS TO LESSEE
ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT
LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN,
COMPLIANCE WITH ANY LAW, RULE, SPECIFICATION, OR
CONTRACT PERTAINING THERETO, QUALITY OF MATERIALS OR
WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE.
USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR
COPYRIGHT INFRINGEMENT, OR TITLE, IT BEING AGREED THAT
ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE
BORNE BY LESSEE. Lessor hereby assigns to Lessee for
the Basic Lease Term any assignable manufacturer or
vendor warranties with respect to the Equipment and
will cooperate with Lessee, at Lessee's expense, in
asserting any claims under such warranties.
Lessee acknowledges that each Lease shall
be entered into on the basis that Lessor shall be
entitled for federal and state income tax purposes (i)
to claim the deductions for depreciation on the total
original cost of the Equipment, except as specified in
the Rental Schedule, as new equipment first placed in
service on the date of the Acceptance Certificate,
pursuant to the Modified Accelerated Cost Recovery
System (MACRS) under Section 168 of the Internal
Revenue Code of 1986. as amended ("Code" ) or any other
depreciation method which may be permitted under the
Code and for state income tax purposes, any other
depreciation deduction method that is permitted by
applicable state law; and (ii) to claim under Section
163 of the Code a tax deduction for the full amount of
any interest paid by Lessor or accrued under Lessor's
method of tax accounting on any indebtedness secured by
the Equipment (hereinafter referred to collectively as
the "Tax Benefits"). If Lessor shall lose or shall not
have the right to claim, or if there shall be
disallowed or recaptured, any or all of such Tax
Benefits as a result of any act, omission,
misrepresentation or failure to act by Lessee, any
sublessee, or any other person authorized by the Lessee
to use or maintain the Equipment, which is directly or
indirectly causative of the loss of such Tax Benefits,
Lessee shall pay to Lessor as additional Rent (a) an
amount equal to the value, determined at the Lessor's
highest marginal tax rate for the applicable
jurisdiction(s), on a present value basis discounted at
the Lessor's then current cost of funds, of the Tax
Benefits so disallowed or made unavailable plus (b) all
interest, penalties, or additions to tax resulting from
such loss, disallowance, unavailability or recapture of
any of the foregoing plus (c) all taxes required to by
paid by the Lessor or its assigns under any federal,
state and local law upon receipt of any of the
foregoing amounts. If Lessor shall lose or shall not
have the right to claim, or if there shall be
disallowed or recaptured, any or all of such Tax
Benefits because of a change in applicable law, which
is directly causative of the loss of such Tax Benefits.
Lessee shall, at its sole discretion, either (i)
terminate the Lease upon payment to Lessor of the
Casualty Value of the Equipment and all other amounts
due hereunder, or (ii) pay to Lessor as additional rent
(a) an amount equal to the value, determined at the
Lessor's highest marginal tax rate, for the applicable
jurisdiction(s), on a present value basis discounted at
the Lessor's then current cost of funds, of the Tax
Benefits so disallowed or made unavailable, plus (b)
all taxes required to be paid by the Lessor or its
assigns under any federal, state or local law upon
receipt of any of the foregoing amounts. Lessor shall
make available to Lessee copies of Lessor's
calculations to determine the amount of the additional
rent attributable to Tax Benefits that are so
disallowed or made unavailable and indemnity payments
provided for in this Section 3 and Section 6. Lessee
shall not be required to make payment of additional
rent as provided in this paragraph with regard to any
Equipment after the date upon which Lessor has been
paid its Casualty Value as required under Sections 5
and 13 of this Master Lease.
4. USE AND LOCATION OF EQUIPMENT. MAINTENANCE
AND REPAIRS. NO LIENS: NO ASSIGNMENT BY LESSEE.
SUBLEASE OF EQUIPMENT.
The Equipment is to be used exclusively
by Lessee in the conduct of its business, only for the
purposes for which it was designed and in compliance
with all applicable laws, rules and regulations,
manufacturers' or vendors' warranties and applicable
policies of insurance. Lessee will, at Lessee's sole
expense, obtain and maintain all necessary licenses,
permits and approvals. The Equipment shall remain
exclusively within the boundaries of the United States
(exclusive of Alaska and Hawaii) and Lessee agrees not
to make, suffer or allow any transfer or assignment of
this Lease, or of the Equipment to service outside the
continental United States, by operation of law or
otherwise, without Lessor's prior written consent.
Lessee will, at Lessee's sole expense,
effect all maintenance, service and repairs necessary
to maintain the Equipment in accordance with (i) the
Interchange Rules or similar successor guidelines of
the American Association Railroad ("AAR") (the
"Interchange Rules"); (ii) regulations of the Federal
Railway Administration ("FRA"); and (iii) at least
equal to the maintenance standards which Lessee applies
to similar equipment owned or leased by Lessee, without
discriminating in any way between equipment of similar
type that is owned or leased by Lessee, but not less
than the maintenance standards, as applied and changed
from time to time, as attached to the applicable Rental
Schedule. Lessor and Lessee agree that such
maintenance standards are subject to change from to
time during the term of the Lease provided such changes
do not have a significant adverse effect on the value.
utility or useful life of the Equipment based upon its
condition upon its return to Lessor hereunder. Such
repairs shall (a) comply with all requirements of law
applicable to the maintenance and condition of the
Equipment, (b) maintain the Equipment in good operating
condition commercially suitable for carrying the
commodities for which such Equipment was designed; and
(c) will not violate any applicable manufacturers' or
vendors' warranties. All additions and replacements to
or attached to the Equipment shall immediately become
the property of Lessor and shall be deemed incorporated
in the Equipment and subject to the terms of the Lease
as if originally leased thereunder. Lessee will keep
the Equipment and its interest therein free and clear
of all liens and encumbrances other than those created
by Lessor or arising out of claims against Lessor and
not related to the lease of the Equipment to Lessee.
Lessee will defend, at its own expense, Lessor's title
to the Equipment from all such liens and encumbrances.
If a tax or other lien shall attach to any item of
Equipment, Lessee will provide written notification to
Lessor within ten (10) days after any such attachment
stating the full particulars thereof and the location
of such Equipment on the date of such notification.
THE LESSEE MAY NOT, EXCEPT TO ANY WHOLLY-
OWNED SUBSIDIARY OR AFFILIATE OF LESSEE, ASSIGN OR IN
ANY WAY TRANSFER OR DISPOSE OF ALL OR ANY PART OF ITS
RIGHTS OR OBLIGATIONS UNDER THE LEASE OR ENTER INTO ANY
SUBLEASE, WITH A TERM OF MORE THAN SIX (6) MONTHS, OF
ALL OR ANY PART OF THE LEASE WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD. IF, WHEN REQUIRED, CONSENT TO A
TRANSFER OR AN ASSIGNMENT IS MADE BY LESSOR, OR IF AN
ASSIGNMENT OR TRANSFER IS MADE TO A WHOLLY-OWNED
SUBSIDIARY OR AFFILIATE OF LESSEE, WHICH HAS
INDEPENDENT CREDITWORTHINESS SUBSTANTIALLY EQUAL TO OR
GREATER THAN THAT OF LESSEE AT THE TIME OF SUCH
ASSIGNMENT OR TRANSFER AND SUCH TRANSFEREE EXECUTES AN
AGREEMENT TO BE BOUND BY AND ASSUMES ALL OF THE TERMS
AND OBLIGATIONS OF LESSEE UNDER THE LEASE, SUCH
TRANSFER OR ASSIGNMENT SHALL ACT AS A NOVATION, AND
LESSEE SHALL HAVE NO FURTHER RIGHTS AGAINST OR
OBLIGATIONS TO LESSOR OTHER THAN THE RIGHTS AND
OBLIGATIONS WHICH HAD ACCRUED PRIOR TO SUCH TRANSFER OR
ASSIGNMENT PROVIDED LESSEE SHALL NOT INTENTIONALLY
AUTHORIZE OR PERFORM ANY ACT OR OMISSION WHICH REDUCES
THE CREDITWORTHINESS OF ANY SUBSIDIARY OR AFFILIATE
SUBSEQUENT TO SUCH TRANSFER OR ASSIGNMENT. Lessor may
under all circumstances withhold consent to, but such
withholding of consent shall not be limited to, the
following (i) any sublease the term of which exceeds
the Basic Lease Term; (ii) any sublease or assignment
made to a tax-exempt entity or governmental agency;
(iii) any sublease or assignment which is not
specifically made subject to the prior rights of Lessor
and its assignees under the Lease; and (iv) any
sublease which creates an obligation on the part of
Lessor in favor of such sublessee or relieves Lessee of
any of its obligations under the Lease including,
without limitation, Lessee's obligations with respect
to (a) the payment of Rent and other sums due or to
become due, (b) use and maintenance of the Equipment
and (c) provisions for the return of the Equipment at
the expiration of the Basic Lease Term. Any reasonable
cost incurred by Lessor in connection with entering
into such sublease or assignment shall be payable by
Lessee immediately upon notice to Lessee from Lessor.
5. LOSS, DAMAGE OR DESTRUCTION OF EQUIPMENT.
AMENDMENT. MODIFICATION. ATTACHMENT TO THE EQUIPMENT.
Lessee will bear all risk of direct and
consequential loss and damage with respect to the
Equipment during the Basic Lease Term and until the
Equipment is returned to Lessor. Lessee will notify
Lessor promptly in writing upon receipt of knowledge
that any item of Equipment is lost, stolen,
requisitioned by a governmental authority or damaged
beyond repair (each, a "Casualty"), describing the
Casualty in reasonable detail, and will file a claim
under appropriate policies of insurance promptly upon
receipt of knowledge of such Casualty. Lessee will pay
to Lessor on the next Payment Date following the
Casualty, in addition to Rent and other sums due on
that date, an amount equal to the Casualty Value
thereof specified on the Rental Schedule. The Lease,
solely as it relates to the Equipment suffering the
Casualty, will terminate and ownership of the Equipment
suffering the Casualty, including all claims for
insurance proceeds or condemnation awards, will pass to
Lessee upon receipt of such payment by Lessor. In the
event of loss or damage to any item of Equipment which
does not constitute a Casualty, Lessee shall promptly,
at its sole cost and expense, repair and restore such
Equipment to the condition required by this Lease.
Except as provided in this Section upon
payment of Casualty Value, no loss or damage to the
Equipment or any part thereof shall release or impair
any obligations of Lessee under this Lease, which shall
continue in full force and effect and shall be absolute
during the Basic Lease Term.
At its sole option, Lessee may make any
alteration, modification or attachment to the Equipment
deemed appropriate by Lessee, provided that such
alteration, modification or attachment does not
decrease the Fair Market Value (as defined herein) of
the Equipment, reduce its useful life or cause such
Equipment to become limited use property, a fixture, or
real property or affect the insurability or impair any
manufacturer's warranty with respect to the Equipment.
All alterations, modifications and attachments of
whatsoever kind or nature made to any item of Equipment
that cannot be removed without damaging the functional
capability, economic value or insurability of the item
of Equipment or impairing any manufacturer's warranty
shall be deemed to be part of the Equipment. Under no
circumstance shall any alteration, modification or
attachment be subjected by Lessee to any encumbrance
other than this Lease.
6. TAXES AND FEES.
Lessee shall assume responsibility for
and pay, and agree to indemnify and hold Lessor
harmless from, the following (which shall be referred
to as "imposts" under this provision): (i) all taxes,
assessments, levies, fees and all other governmental
charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, which are at
any time imposed or levied upon or assessed against (A)
the Equipment, (B) any Rent or other sum payable
hereunder, or (C) the Lease or the leasehold interest
created herein, or which arise in respect of the
acquisition, ownership, delivery; return, operation,
possession or use of the Equipment; (ii) all gross
receipts or similar taxes imposed or levied upon,
assessed against or measured by any Rent or other sum
payable hereunder; (iii) all sales, use or other taxes
at any time levied, assessed or payable on account of
the acquisition, shipment, registration, titling,
transportation, delivery, leasing, use or operation of
the Equipment, which Lessee represents it is exempt
from; and (iv) all penalties, interest, and reasonable
expenses of special tax counsel (including local
counsel and counsel's reasonable out-of-pocket
disbursements and costs), to Lessor with respect to any
of the foregoing. The Lessee shall not have
responsibility for the following, which are not
imposts: (i) any franchise, net worth, capital, estate
or inheritance tax and (ii) any Federal, State, local
or foreign net income taxes or any tax on gross
receipts or gross revenues which is in the nature of an
income tax. Lessee shall be entitled to control the
defense of imposts indemnified so long as no Event of
Default has occurred hereunder, and thereafter, Lessor
shall be entitled to control such defense at Lessee's
cost; provided, however, that Lessor shall have the
right to appear in such proceedings through separate
counsel of Lessor's choosing at Lessor's sole cost and
expense of such separate counsel.
Lessee shall prepare and submit all
necessary filings to the applicable taxing authorities
whether the incidence of such imposts and/or its
related filing obligation shall be the legal
responsibility of Lessor or Lessee. For that purpose,
Lessor hereby appoints Lessee its agent and attorney-in-
fact to make filings and/or payments on behalf of
Lessor where the incidence thereof falls on Lessor.
Lessor agrees to cooperate fully with Lessee by
executing any documents prepared by Lessee for filing
(where the taxing authority will not accept Lessee's
appointment as agent for Lessor or accept payment or
filings by Lessee on behalf of Lessor) and by
forwarding promptly to Lessee any assessments, tax
bills or other correspondence received in connection
therewith. For situations in which the good faith
effort on the part of the Lessee fails to cause it to
be in compliance with the laws of a particular
jurisdiction, a request for assistance notice will be
made in writing to the Lessor to enable the Lessee to
timely fulfill its responsibilities under the Lease
without imposition of penalties or interest. Lessee
shall indemnify and hold harmless Lessor from any loss,
claim or damage arising out of tax filings made or
failed to be made by Lessee with respect to the
Equipment and the payment of any tax required in
connection therewith.
Upon reasonable request, Lessee will
furnish to Lessor proof of payment of all imposts. If
any impost may legally be paid in installments, Lessee
may pay same in installments: provided, any impost
assessed, levied or imposed during the Basic Lease Term
shall be paid in full by Lessee prior to the expiration
of the Basic Lease Term. The Lessee shall not be
required to pay or discharge any claim or demand
referred to in this Section 6 so long as the validity
or the amount thereof shall be contested in good faith
and by appropriate legal proceedings in any reasonable
manner, as determined by Lessee and Lessor, which will
not result in the forfeiture, seizure, confiscation or
sale of the Equipment. Lessee shall comply with and
cause the Equipment to comply wit all legal
requirements applicable thereto or to the use thereof
and with all contracts (including insurance policies),
agreements and restrictions applicable thereto or to
the ownership or use thereof.
In the event Lessee pays any personal
property, use or other tax payable by Lessee pursuant
to this Section 6 and any amount so paid is itself
deemed to be taxable income to Lessor because such tax
payments constitute additional rent payable to Lessor
hereunder without a comparable offsetting deduction,
Lessee shall reimburse Lessor on an after-tax basis for
any such tax liability. The indemnifications and
obligations of Lessee provided in this Section 6 shall
survive termination or expiration of this Lease.
7. INSURANCE.
So long as Lessee maintains a debt
rating, as published in Standard and Poors or any
successor publication, at or above BBB-, Lessee may
self-insure for all liabilities, indemnities and
obligations under this Lease. Upon written request,
Lessee will provide to Lessor, its assigns or any
Lender, an acknowledgment of self-insurance reasonably
satisfactory to such requesting party. If Lessee's debt
rating, as published in Standard and Poors or any
successor publication, falls below BBB-, the Lessee may
no longer self-insure and the following provisions will
apply to insurance which must be maintained at Lessee's
cost during the remaining term of this Lease:
(a) Insurance against the loss, theft,
damage, or destruction of the Equipment, in an amount
not less than the greater of the full replacement value
thereof or the Casualty Value payable to Lessor so long
as Lessee is obligated to pay the Casualty Value to
Lessor hereunder, and upon payment of the Casualty
Value to Lessor, to Lessee, and joint loss payees for
any damage to the Equipment which is not a Casualty
and, as requested by Lessor, with any Lessor's Lender
being named as the mortgagee under a "standard"
mortgagee clause; and,
(b) Commercial general liability
insurance with respect to the use or operation of the
Equipment, in an amount at least equal to $10,000,000
with Lessor and the appropriate Lessor's Lender, if
any, being listed as additional insurers thereunder.
All of such insurance will be with
companies having a rating of B+ or better with A.M.
Best and shall be in form and with coverages of the
type under which Lessee insures its own rail cars. It
is agreed that Lessee's current commercial general
liability insurer, Associated Electric & Gas Insurance
Services Limited is specifically designated as an
approved insurer by Lessor and Lessor's Lender.
On or before the Basic Lease Term
Commencement Date, thereafter on or prior to each
renewal or replacement of the insurance required
hereby, and otherwise upon written request by Lessor or
any Lessor's Lender (but not more frequently than once
a year), Lessee will deliver to Lessor and the
requesting Lessor's Lender certificates by the carriers
issuing such insurance certifying as to the coverages
provided by such insurance and agreeing that such
insurance will not be terminated, canceled or
materially modified for any reason without giving
Lessor and the requesting Lessor's Lender at least
thirty (30) days' prior written notice. Upon the
request of Lessor or the requesting Lessor's Lender,
Lessee will provide it with a copy of the policies for
such insurance.
From the net proceeds (if any) of the
insurance maintained by Lessee pursuant to Paragraph
(a) herein that are received by Lessor or any Lessor's
Lender with respect to an item of Equipment, Lessor or
Lessor's Lender (as is applicable) will reimburse
Lessee for its reasonable, documented, out-of-pocket
costs to repair or replace such item of Equipment
pursuant to Section 5, to the extent that such repairs
or replacements were necessitated by the occurrence of
the risk of loss for which such proceeds were paid;
provided, no such reimbursement will be payable if a
Casualty Value is paid or payable with respect to such
item of Equipment and such loss. Lessee may offset the
payment of the Casualty Value pursuant to Section 5
herein against the net proceeds received by Lessor or
Lessor's Lender under insurance maintained by Lessee
pursuant to Paragraph (a) insuring against the event
giving rise to the payment of the Casualty Value. Net
proceeds means the gross proceeds paid less all
reasonable costs of collection, including court costs
and attorney fees.
8. FINANCIAL STATEMENTS. INSPECTION.
REPORTS.
Provided that Lessor has executed the
confidentiality agreement provided by Lessee, Lessee,
at the request of Lessor, shall within one-hundred and
twenty (120) days of the end of each fiscal year,
provide to Lessor copies of Lessee's annual audited
balance sheet, profit and loss statement and statement
of cash flows, and, if generally available to Lessee's
Lenders, quarterly unaudited balance sheet and profit
and loss statement, all prepared in accordance with
generally accepted accounting principles, consistently
applied. Provided however, that the financial
statements required to be furnished by Lessee pursuant
to this Section 8 shall be deemed furnished for such
purpose upon becoming publicly available on the
Securities and Exchange Commission's XXXXX web page.
Lessor may from time to time. but in no event
more often than once per year (except during the last
twelve (12) months of the Basic Lease Term as
reasonably necessary to remarket the Equipment which
shall not interfere with Lessee's operations), upon
reasonable notice and during Lessee's normal business
hours, inspect the Equipment and Lessee's records with
respect thereto at Lessor's sole expense. Lessee will,
if requested, provide a report on the condition of the
Equipment, a record of its maintenance and repair, a
summary of all items suffering a Casualty, a
certificate of no default or such other information or
evidence of compliance with Lessee's obligations under
the Lease as Lessor may reasonably request.
9. TITLE. AGREEMENT FOR LEASE ONLY.
IDENTIFICATION MARKS. FINANCING STATEMENTS. FURTHER
ASSURANCES.
Title to the Equipment shall at all times
remain in Lessor, and Lessee shall acquire no
ownership, title, property, right, equity or interest
in the Equipment other than its leasehold interest
solely as Lessee subject to all the terms and
conditions hereof. Each Lease is intended to be a true
lease and not a lease in the nature of a security
agreement; each Lease is intended to be a lease as
described in Article 2A, Section 2A-103(7) of the
Uniform Commercial Code solely for the purposes of such
Article 2A of the Uniform Commercial Code. Lessee will,
if requested by Lessor, affix to the Equipment all
notices of Lessor's ownership of the Equipment
furnished to Lessee by Lessor. Lessee will promptly
execute and deliver, and Lessor may file, solely at the
expense of Lessee, Uniform Commercial Code financing
statements or other similar documents notifying the
public of Lessor's ownership of the Equipment. Lessee
agrees promptly to execute and deliver to Lessor such
further documents or other assurances, and to take such
further action, including obtaining landlord and
mortgagee waivers, as Lessor may from time to time
reasonably request.
10. LATE PAYMENT CHARGES. LESSOR'S RIGHT TO
PERFORM FOR LESSEE.
A late payment charge equal to the lesser
of two percent (2%) per annum above the Prime Rate of
interest specified in The Wall Street Journal, or any
successor publication, adjusted for any change in such
Prime Rate or the maximum rate permitted by applicable
law will accrue on any unpaid sum due under this Lease
from its due date to the date of payment ("Late Payment
Charge"). If Lessee fails to duly and promptly pay or
perform any of its obligations hereunder. Lessor shall
have the right, but shall not be obligated, to pay or
perform such obligations for the account of Lessee
without thereby waiving any default and Lessee will pay
to Lessor, on demand and in addition to Rent. an amount
equal to all sums so paid or expenses so incurred, plus
a Late Payment Charge accruing from the date such sums
were paid or expenses incurred by Lessor.
11. LESSEE'S OPTIONS UPON LEASE EXPIRATION.
Lessee has the option at the expiration
of the Basic Lease Term, exercisable with respect to
all but not less than all items of Equipment leased
pursuant to a Rental Schedule. i) to return the
Equipment to Lessor, (ii) so long as no default exists
under the Lease, to renew the Lease at Fair Rental
Value for a renewal term the length of which shall be
determined by agreement of Lessee and Lessor, but which
will not be in excess of 75% of the useful life of the
Equipment or (iii) so long as no default exists under
the Lease, to purchase the Equipment on an "AS-IS",
"WHERE-IS" basis for cash at its then Fair Market Value
(plus all applicable sales taxes, if any). Lessee
agrees to provide Lessor written notice of its election
to purchase or return the Equipment or renew the Lease
not less tan one hundred eighty (180) days prior to the
Lease Expiration Date. If Lessee fails to give Lessor
written notice, the Basic Lease Term may, at Lessor's
option, be extended and continue until one hundred
eighty (180) days from the date Lessor receives written
notice of election to purchase or return the Equipment
or renew the Lease. If Lessee purchases the Equipment,
Lessor shall convey title to the Equipment (together
with manufacturer or vendor warranties, if any) to
Lessee, as is, where is and with all faults, without
recourse or warranty, excepting liens and encumbrances
created by Lessor. Fair Market Value and Fair Rental
Value shall mean an amount which would be obtained in
an arms length transaction between an informed and
willing buyer-user or lessee and an informed and
willing seller or lessor under no compulsion to sell or
lease provided, however, that in such determination:
(i) the Equipment shall be assumed to be in the
condition in which it is required to be maintained and
returned under the Lease; (ii) in the case of any
installed Equipment, that Equipment shall be valued on
an installed and fully operational basis; and (iii)
costs of removal from its current location shall not be
a deduction from such valuation Fair Market Value and
Fair Rental Value will be determined by agreement of
Lessor and Lessee. or if the parties cannot agree at
least ninety (90) days prior to the expiration of the
Basic Lease Term, the Fair Market Value and Fair Rental
Value shall be determined by an independent equipment
appraiser of nationally recognized standing,
experienced in evaluating equipment of the same type as
the Equipment, selected by Lessor and reasonably
acceptable to Lessee. Such appraiser shall be engaged
by Lessor and the cost of the appraisal shall be shared
equally by Lessor and Lessee.
At the expiration of the Basic Lease
Term, unless Lessee has elected to purchase the
Equipment, Lessee shall promptly, at its own cost and
expense deliver possession of each item of Equipment to
Lessor at a location specified by Lessor, to a
destination enroute between Lessee's facilities and the
Powder River Basin in Wyoming, or at such other
mutually agreed to location. The location where each
such item of Equipment shall be returned shall be
specified in a written notice given by Lessor to Lessee
at least sixty (60) days prior to such redelivery
("Redelivery Location"). Any item of Equipment
delivered to the Redelivery Location shall be deemed to
be redelivered hereunder on the date on which the
Equipment shall have been delivered to the Redelivery
Location subject to Sections 11(a) and 11(b) hereof.
Provided that Lessee will pay the cost of storage of
the Equipment at the Redelivery Location for a period
of time equal to the greater of thirty (30) days or the
date upon which payment is made by the Lessee in
accordance with subparagraph 11(b) below.
(a) Lessee, shall return each item of
Equipment to Lessor (i) in condition complying with the
Interchange Rules, regulations of the FRA; and all
requirements of law applicable to the maintenance and
condition of the Equipment, (ii) in good operating
condition commercially suitable for carrying the
commodities for which such Equipment was designed, free
of AAR Interchange Rule 95 damage: (iii) in a condition
which does not violate any applicable manufacturers' or
vendors' warranties: (iv) free of debris with coal and
other commodity residue properly removed: and (v) free
of all Lessee's decals and markings and free of all
liens and encumbrances other than those created by
Lessor (hereinafter, together with any specific return
conditions set forth in the Rental Schedule, the
"Minimum Return Conditions").
(b) Lessor may inspect any item of
Equipment which is delivered to it at the Redelivery
Location for up to fifteen (15) days after the
expiration of the Basic Lease Term. Lessor shall give
advance notice to Lessee of the inspection date and
time and promptly provide Lessee with a written report
of the results of Lessor's inspection. Lessee shall be
entitled to participate in any such inspection,
provided that Lessee shall not interfere with the
conduct of such inspection. Unless Lessee shall notify
Lessor within seven (7) days of receipt of the results
of Lessor's inspection of any item of Equipment then
Lessee shall be deemed to be in agreement with the
results of Lessor's inspection. Lessee agrees to pay
Lessor within thirty (30) days of receipt of an invoice
for repairs for which Lessee is responsible.
(c) Lessor may refuse to accept
redelivery of any item of Equipment that Lessor
reasonably suspects is contaminated with hazardous or
other corrosive material (excluding from the definition
of hazardous and corrosive materials for purposes of
this subparagraph (c) coal and coal dust). in which
event such item of Equipment shall remain subject to
Rent under this Lease until Lessee shall (i) deliver
evidence reasonably satisfactory to Lessor that such
item of Equipment is not contaminated (in which event
any Rent charged from the date of Lessor's refusal to
accept redelivery shall be credited back to Lessee), or
(ii) take such action as may be reasonably necessary to
decontaminate such item of Equipment and redeliver such
item of Equipment to Lessor, or (iii) elect to treat
such item of Equipment as a casualtied item of
Equipment, in which event Lessee shall pay Lessor the
Casualty Loss Value of such item of Equipment and take
title to such item of Equipment.
If the Equipment does not conform to the
Minimum Return Conditions, Lessor will promptly notify
Lessee of such determination specifying the repairs or
refurbishments needed to place the Equipment in the
Minimum Return Conditions. Lessor may, at its option,
either require Lessee to effect such repairs or itself
effect such repairs. In either case, all reasonable
costs associated with any repairs and inspections will
be paid by Lessee. Until Lessee has returned the
Equipment in full compliance with the requirements of
this Section 11, the Lease shall continue in full force
and effect and Lessee shall continue to pay Rent
notwithstanding any expiration or termination of the
Basic Lease Term through and including the date on
which the Equipment is accepted for return by Lessor as
conforming with the Minimum Return Conditions.
12. LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents, warrants and certifies
as of the date of execution and delivery of this Master
Lease and each Rental Schedule as follows:
(a) Lessee is a duly organized, validly
existing Missouri Corporation with full power to enter
into and to pay and perform its obligations under the
Rental Schedule and this Master Lease as incorporated
therein by reference, and is duly qualified in all
other jurisdictions where its failure to so qualify
would adversely affect the conduct of its business or
the performance of its obligations under or the
enforceability of the Lease;
(b) the Rental Schedule, this Master
Lease and all related documents have been duly
authorized, executed and delivered by Lessee, are
valid, legal and binding obligations of Lessee, are
enforceable against Lessee in accordance with their
terms and do not and will not contravene any provisions
of or constitute a default under Lessee's
organizational documents, any agreement to which it is
a party or by which it or its property is bound, or any
law, regulation or order of any governmental authority;
(c) Lessor's right, title and interest
in and to the Rental Schedule, this Master Lease and
the Equipment and the rentals therefrom will vest in
Lessor upon Lessee's acceptance of the Equipment for
lease hereunder and will not be affected or impaired by
the terms of any agreement or instrument by which
Lessee or its property is bound;
(d) no approval of, or filing with, any
governmental authority or other person is required in
connection with Lessee's entering into, or the payment
or performance of its obligations under, the Lease;
(e) other than as disclosed in Lessee's
most recent 10K and lOQ, there are no suits or
proceedings pending or, to the knowledge of Lessee,
threatened, before any court or governmental agency
against or affecting Lessee which, if decided adversely
to Lessee, would materially adversely affect Lessee's
business or financial condition or its ability to
perform any of its obligations under the Lease;
(f) there has been no material adverse
change to Lessee's financial condition since the date
of its most recent audited financial statements
delivered to Lessor;
(g) the address stated in the preamble
to this Master Lease as Lessee's principal place of
business is the principal place of business and chief
executive office of Lessee; Lessee does not conduct
business under a trade, assumed or fictitious name;
Lessee will not change its name or the location of its
principal place of business without giving to Lessor at
least thirty (30) days prior written notice thereof;
and
(h) the Equipment will always be used for
business or commercial and not personal purposes.
Lessee's representations and warranties
shall survive termination or expiration of the Lease.
13. EVENTS OF DEFAULT. LESSOR'S REMEDIES ON
DEFAULT.
Each of the following events constitutes
an Event of Default hereunder:
(a) Lessee's failure to make any
payment of Rent when due under the Lease continuing for
a period of ten (10) days and any failure to make any
payment of any other amount when due under the Lease
continuing for a period of ten (10) days after receipt
of written notice of non payment;
(b) Lessee's failure to observe or
perform any of its obligations contained in Section 7
hereof continuing for a period of ten (10) days after
receipt of written notice of such failure;
(c) any material representation or
warranty made by Lessee in the Lease or in any document
or certificate furnished in connection herewith shall
at any time prove to have been incorrect when made;
(d) any attempt by Lessee, without
Lessor's prior written consent, as required pursuant to
Section 4 hereof, to assign the Lease, to make any
unauthorized sublease of the Equipment, move the
Equipment outside the continental United States, or to
transfer possession of the Equipment;
(e) Lessee or, if Lessee's obligations
are guaranteed by any other party, any Guarantor (A)
ceases doing business as a going concern; (B) makes an
assignment for the benefit of creditors or admits in
writing its inability to pay its debts as they mature
or generally fails to pay its debts as they become due;
(C) initiates any voluntary bankruptcy or insolvency
proceeding; (D) fails to obtain the discharge of any
bankruptcy or insolvency proceeding initiated against
it by others within thirty (30) days of the date such
proceedings were initiated; (E) requests or consents to
the appointment of a trustee, custodian or receiver or
other officer with similar powers for itself or a
substantial part of its property; or (F) a trustee,
custodian or receiver or other officer with similar
powers is appointed for itself or for a substantial
part of its property;
(f) Lessee shall not return the
Equipment or shall not return the Equipment in the
required condition at the expiration of the Lease or
any extension or renewal thereof; or
(g) Lessee voluntarily or
involuntarily permits the Equipment to become subject
to a lien other than a lien created by Lessor or
arising out of claims against Lessor and not related to
the lease of the Equipment to Lessee; (i) unless Lessee
is diligently contesting in good faith by appropriate
proceedings such lien, which proceedings do not include
any material danger of the sale, or forfeiture, loss or
diminution in value of the Equipment and (ii) such
liens are removed prior to the Lease Expiration Date.
(h) Except for transfers to/or mergers
with Lessee's partners or affiliates, Lessee, without
Lessor's prior written consent, (i) sells or transfers,
singly or in a series of related transactions, all or
substantially all of its assets other than its rights
and obligations under the Lease, or (ii) is a non-
surviving party to a merger, consolidation or
reorganization, and (iii) Lessee's or the surviving
party in a merger, consolidation or reorganization's
debt rating, as published by Standard and Poors or any
successor publication, falls below BBB- as a result of
any of the foregoing transactions; or
(i) Lessee's failure to observe or
perform any other material covenant, condition or
agreement to be observed or performed by Lessee under
the Lease, continuing for more than thirty (30) days
after written notice thereof.
Upon the occurrence of an Event of
Default, if such Event of Default is not cured within
any cure period specified herein, or if a petition in
bankruptcy or for reorganization or similar proceeding
is filed by or against Lessee (and, in the case of an
involuntary filing, such petition is not dismissed
within thirty (30) days of filing), then Lessor may
exercise any one or more of the following remedies and
any additional rights and remedies permitted by law
(none of which shall be exclusive) and shall be
entitled to recover all its costs and expenses
including attorneys' fees in enforcing its rights and
remedies:
(a) Terminate this Lease and recover
damages: and/or
(b) Proceed by any lawful means to
enforce performance by Lessee of this Lease; and/or
(c) By notice in writing to Lessee,
terminate Lessee's right to possession and use of the
Equipment, whereupon all right and interest of Lessee
in such Equipment shall terminate; thereupon Lessee
shall at its expense promptly return such Equipment to
Lessor at such place as Lessor shall designate and in
the condition required as provided in Section 11 of the
Master Lease; or if Lessee does not so promptly return
the Equipment on demand, Lessor may enter upon any
premises where the Equipment may be located and take
possession of such Equipment free from any right of
Lessee; and/or
(d) Proceed to recover from Lessee any
and all amounts which under the terms of this Lease may
be then due or which may have accrued prior to the date
of termination and also to recover forthwith from
Lessee (i) as representing actual loss incurred by
Lessor, damages for loss of the bargain and not as a
penalty, a sum, with respect to each item of Equipment
which represents the then present value of all Rent for
such Equipment which would otherwise have accrued
hereunder from the date of such termination to the end
of the Basic Lease Term of this Lease as to such
Equipment, such present value basis to be discounted at
the Lessor's then current cost of funds, from the
respective dates upon which Rents would have been
payable hereunder had this Lease not been terminated,
and (ii) any damages and expenses, in additions thereto
which Lessor shall have sustained by reason of breach
of any covenant or covenants of this Lease.
(e) Lease, sell or otherwise dispose of
the Equipment to such persons, at such price, rental or
other consideration and in for such period as Lessor
shall elect. Lessor shall apply the proceeds from such
leasing, sale or other disposition, less all costs and
expenses incurred in the recovery, repair, storage.
renting, sale or disposition of such Equipment
(including costs and expenses in connection with any
bankruptcy proceeding involving Lessee and/or the
Equipment, including relief from stay motions, cash
collateral disputes. assumption/rejection motions and
disputes concerning any proposed disclosure statement
and plan proposed during any such bankruptcy
proceeding) toward the payment of Lessee's obligations
hereunder. Lessee shall remain liable for any
deficiency.
Lessor's failure to exercise or delay in
exercising any right, power or remedy available to
Lessor shall not constitute a waiver or otherwise
affect or impair its rights to the future exercise of
any such right, power or remedy. Waiver of any Event of
Default shall not be a waiver of any other or
subsequent Events of Default.
14. ASSIGNMENT BY LESSOR.
Lessor may at any time and from time to
time sell, transfer or grant liens on the Equipment,
and assign, as collateral security or otherwise, its
rights in the Lease, in each case subject and
subordinate to Lessee's rights thereunder. Lessee
acknowledges that Lessor may assign the Lease to a
lender in connection with the financing of Lessor's
purchase of the Equipment and Lessee agrees, in the
event of such assignment, to execute and deliver an
acknowledgment letter confirming that Lessor's Lender
has (and may exercise either in its own name or in the
name of Lessor) all of the rights, privileges and
remedies, but none of the obligations, of Lessor under
the Lease; waiving for the benefit of the lender any
defense, counterclaim, set-off, abatement, reduction or
recoupment that Lessee may have against Lessor; and
agreeing to make all payments of Rent and other sums
due under the Lease to the lender or as it may direct,
confirming the status of the Lease and confirming such
other factual matters concerning the Lease as Lessor
may request. Lessee acknowledges that any such
transaction will not materially change its duty. Lessee
also agrees to deliver to lender or other assignee only
those documents required to be provided to Lessor under
this Master Lease, provided, however, that prior to the
delivery of any financial information, the lender or
assignee has executed a confidentiality agreement
provided by Lessee.
15. ARBITRATION.
In the event that any dispute arises
under this Lease, including, without limitation, any
claim of default or breach of a covenant or
representation hereunder, either party in the case of a
dispute, or the claiming party in the case of a claim
of default or breach, shall submit the matter for
arbitration in Cincinnati, Ohio, by and pursuant to the
rules of the American Arbitration Association ("AAA").
The arbitrator who hears the case will be selected by
AAA and AAA shall be advised that the parties have
agreed in advance that any matter submitted to AAA for
resolution shall be heard in a reasonably expeditious
manner. The powers of the arbitrator shall expressly
include both the right to issue injunctive orders and
to order the payment of money damages. The resolution
of the matter by arbitration shall be binding upon the
parties and judgment upon the award of the arbitrator
may be entered in any court of competent jurisdiction.
Costs of arbitration and legal fees shall be awarded to
a prevailing party; provided, however, that the
arbitrator shall have the power to make a different
allocation of costs and legal fees whenever it is fair
or reasonable to do so as determined by the arbitrator.
Notwithstanding anything contained herein to the
contrary, this Section shall not be binding upon any
lender.
16. MISCELLANEOUS.
Lessor's or Lessee's failure at any time
to require strict performance by the other party of any
of the provisions or obligations hereof shall not waive
or diminish Lessor's or Lessees right thereafter to
demand strict compliance therewith. All notices
required hereunder shall be effective upon receipt in
writing delivered by hand or by other receipt-
acknowledged method of delivery at the address first
above written. Lessee will notify Lessor at least
thirty (30) days before changing its principal place of
business or chief executive office and will, at its
expense, promptly sign and deliver to Lessor such
documents and assurances (including financing
statements) and take such further action as Lessor may
reasonably request. Lessor shall not be required to
mitigate its damages or modify any rights or remedies
stated herein, notwithstanding any rights of Lessee
hereunder or under any law, state, rule, regulation or
order applicable to Lessor or Lessee. This Lease shall
be governed by and construed in accordance with the
laws of the state of Ohio as contracts to be fully
performed within the state of Ohio, without giving
effect to conflicts of law provisions. This Master
Lease and each Rental Schedule may be executed in,
multiple counterparts which when executed by the
parties thereto will be binding upon each of the
executing parties. Any provision of this Master Lease
or the Rental Schedule that is unenforceable in any
jurisdiction shall, as to such jurisdiction only, be
ineffective to the extent of such unenforceability
without invalidating or diminishing Lessor's rights
under the remaining provisions hereof. No term or
provision of this Master Lease or the Rental Schedule
may be amended, altered, modified, rescinded or waived
orally, but only by a separate instrument in writing
signed by a duly authorized officer of the party
against which enforcement of such amendment,
alteration, modification, rescission or waiver is
sought. This Master Lease, the Rental Schedule; and
each instrument, document, agreement and certificate
furnished in connection therewith collectively
constitute the complete and exclusive statement of the
terms of the agreement between Lessor and Lessee with
respect to the, leasing of the Equipment, and cancel
and supercede any and all oral or written prior
understandings with respect thereto.
[The remainder of this page has been
intentionally left blank.]
IN WITNESS WHEREOF, Lessor and Lessee have
caused this Master Lease to be executed and delivered
by their duly authorized representatives as of the date
first above written.
LESSOR:
THE EQUIPMENT FUNDING GROUP
A division of Provident Commercial Group, Inc.
By:
Title:
Date:
LESSEE:
KANSAS CITY POWER & LIGHT COMPANY
By:/s/F. L. Branca
Title: President - Power Division
Date: June 18, 2001
Reviewed By Counsel
/s/Xxxxxxx X. Xxxxxx
