ex10-2_2.htm


    Exhibit
      10.2.2

    


    Execution
      Copy

    


    INSURANCE
      AGREEMENT

     

    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.

     

     

     2
      
        

      

    

    (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.

     

     3
      
        

      

    

     

    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.

     

    4

    
      
        

      



    (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.

     

     5
      
        

      

    

     

    (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.

     

    (b)           The
      Company also agrees to pay FGIC as follows:

     

    (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; 

     

     

     6
      
        

      

    

     

    (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

     

     

    7

    


    
      

    

    


    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


     

     

    8

    
      
        

      

    

     

    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.

     

     

    9

    


    
      

    

    


    


     

    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 EDGAR 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.

     

    


     10
      
        

      

    

    


    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

    1201
      Walnut

    Kansas
      City, Missouri 64106-2124

    Attention:  Treasurer

    Facsimile
      No: 816-556-2992

    


    If
      to
      FGIC:

    


    Financial
      Guaranty Insurance Company

    125
      Park
      Avenue

    New
      York,
      NY 10017

    Attention:  Paul
      Morrison

    Facsimile
      No.:  212-312-2707

     

    


    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/Michael
      W. Cline

       Michael
      Cline

       Treasurer
      and Chief Risk Officer

    


    


    


    


    FINANCIAL
      GUARANTY INSURANCE COMPANY

    


    


      By:       /s/Paul
      R. Morrison

          Paul
      R. Morrison

          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:

     

    
      	
               

            	
              (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;

            


    

     

    
      	
               

            	
              (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;

            


    

     

     

     
      
        

      

    

    
      	
               

            	
              (c)

            	
              Net
                obligations of such Person under any Swap Contract in an amount equal
                to
                the Swap Termination Value thereof;

            


    

     

    
      	
               

            	
              (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;

            


    

     

    
      	
               

            	
              (e)

            	
              Capitalized
                Lease Obligations and Synthetic Lease Obligations of such
                Person;

            


    

     

    
      	
               

            	
              (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 mark-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.