Exhibit 10.1.3
 
NOTIFICATION, WAIVER, CONSENT & AMENDMENT
 
June 2, 2008
 
Ms. Susan Johnson
Union Bank of California, N.A.
445 South Figueroa Street, 15th Floor
Los Angeles, CA 90071

Dear Susan:

Reference is made to the Financing Agreement, dated as of April 22, 2005 (as
amended, modified or supplemented as of the date hereof, the “Financing
Agreement”), among Aquila, Inc. (the “Company”), the banks named therein, and
Union Bank of California, N.A., as Agent and as Lender.  Capitalized terms used
but not defined herein have the meanings given to them in the Financing
Agreement.
 
Section 1.                      Background.
 
Pursuant to an Agreement and Plan of Merger dated as of February 6, 2007, by and
among Great Plains Energy Incorporated (“GPE”), the Company, Black Hills
Corporation (“Black Hills”), and Gregory Acquisition Corp., the Company has
agreed to be acquired by GPE.  The transaction will be consummated by merging
Gregory Acquisition Corp. with and into Company (the “Merger”), with the Company
continuing as the surviving corporation.  Upon completion of the Merger, the
Company will become a wholly-owned subsidiary of GPE.

Immediately prior to closing the Merger, and as a condition precedent to the
completion of the Merger, the Company will sell certain of its utility
properties to Black Hills for a base purchase price of $940 million (the “Asset
Sale”).  The assets to be acquired by Black Hills include the Receivables
generated by the Company’s Colorado, Iowa, Nebraska, and Kansas operations
(collectively, the “Sale Receivables”), as well as the Related Security and
Collections related to those Receivables.  The net cash proceeds of the Asset
Sale will be used, in part, to fund the cash portion of the consideration to be
paid by GPE to the Company’s shareholders in the Merger.

Under the definitive transaction agreements, (i) neither the Asset Sale nor the
Merger will close unless both transactions close, and (ii) the Company is
required to complete the Asset Sale and Merger on the first business day
immediately after the business day on which all closing conditions are
satisfied, unless otherwise agreed to by the parties to the transaction
agreements.  The Company anticipates closing the transactions on or about July
1, 2008, but no later than August 6, 2008.

Section 2.                      Notification and Requests related to the Asset
Sale.
 
Subject to the satisfaction of the conditions set forth in Section 4 below, the
Company hereby requests that, effective as of the Effective Date (defined
below):
 

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(a)           pursuant to Section 6.8 of the Financing Agreement, the Sale
Receivables and the Related Security and Collections associated with the Sale
Receivables be released from the Collateral and, in this regard, that the
notation of the Agent as the lienholder be removed on any financing statement
with respect to such portion of the Collateral, provided, that (i) the Company
has delivered to the Agent the certificate attached hereto as Exhibit “A” prior
to the Effective Date, and (ii) the outstanding amount of all Obligations as of
the Effective Date does not exceed the Availability calculated after giving
effect to the omission of the Sale Receivables; and
 
 
(b)
pursuant to Section 6.8(b) of the Financing Agreement, the Agent either waive
the requirement of 30 days’ prior written notice, as described in Section
6.8(b)(v), or acknowledge that the delivery of this Letter Agreement (defined
below) satisfies the notice requirement contained in Section 6.8(b)(v) of the
Financing Agreement.

 
To permit the Company to timely close the Asset Sale, the Company further
requests that the Agent (i) consent to the prospective designation, upon
delivery at any time of a written designation by the Company, of the Sale
Receivables as Excluded Receivables under the Financing Agreement, (ii) consent
to such prospective designation, and (iii) waive the requirement set forth in
the definition of Excluded Receivable that such a designation take effective
only as of the next reporting period following delivery of the Monthly Report
for the current month; provided, as of the date on which the Company provides
such written designation the amount of all Obligations does not exceed the
Availability calculated after giving effect to the treatment of the Sale
Receivables as Excluded Receivables.
 
Section 3.                      Requests related to the Merger.
 
To ensure that certain provisions of the Financing Agreement are consistent with
the terms of GPE’s finance agreements and that, after the Merger, the Company
can make the representations and warranties required to be made in connection
with extensions of credit under the Financing Agreement, the Company hereby
requests that, subject to the satisfaction of the conditions set forth in
Section 4 below, the Required Lenders consent, effective as of the closing of
the Merger (the “Effective Date”), to the following:
 
 
(a)
amend the definition of Domestic Utility Business by deleting the words “and
natural gas” in the definition thereof;

 
 
(b)
add a new definition as follows:

 
“GPE Guaranty means that written guarantee (in a form reasonably acceptable to
the Agent) for the benefit of the Lenders, pursuant to which Great Plains Energy
Incorporated guarantees the payment and other obligations of the Company under
the Agreement.”

 
(c)
amend the definition of Liquidity by deleting the word “and” immediately before
“(v)” and inserting the following at the end of the first sentence:

“, and (vi) the available unused amount under the GPE Guaranty.”

(d)           amend the definition of Liquidity Event to read as follow:

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              “Liquidity Event means GPE fails to maintain and honor the GPE
Guaranty and the Company has less than $25,000,000 of Liquidity.”

(e)           amend the definition of “Net Receivables Pool Balance” to read as
follows:

Net Receivables Pool Balance means as of any date of determination an amount
equal to (i) 85% of the aggregate Outstanding Balance of the Eligible
Receivables at such time, less (ii) the Applicable Reserve as of such date of
determination, less (iii) the aggregate amount of the portion of the Outstanding
Balance of each Eligible Receivable relating to sales or use taxes, and less
(iv) the amount of the Deposit Reserve at such time, less (v) the aggregate
amount of Finance Charges then due and owing with respect to all Eligible
Receivables.

 
(f)
amend Section 3.4(b)(C) by deleting “$40,000,000” and inserting in lieu thereof
“$30,000,000”.

(g)           amend Section 7.1(q) of the Financing Agreement to read as
follows:
 
“The Company is not, and after giving effect to the transactions contemplated
hereby, will not be required to register as an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.”;
 
 
(h)
amend Section 7.2(l) of the Financing Agreement by deleting the phrase “, and as
Receivables constituting a portion of the “Domestic Utilities” reporting segment
on the Company’s financial statements”;

 
 
(i)
with respect to transactions between the Company and one or more wholly-owned
subsidiaries of GPE, including Kansas City Power & Light Company, amend Section
7.2(m) of the Financing Agreement to read as follows:

 
“Enter into transactions with affiliates of the Company only upon standard terms
and conditions and fair and reasonable terms, no less favorable to the Company
than the Company could obtain in a comparable arms length transaction with an
unrelated third party; provided, the foregoing will not apply to affiliate
transactions (i) subject to the affiliate transaction rules and regulations of
the Missouri Public Service Commission or otherwise authorized by the applicable
state or federal regulatory authorities, or (ii) necessary to functionally
integrate and operate the utility operations of the Company and Kansas City
Power & Light Company.”;
 
 
(j)
consent, pursuant to Section 7.5(f) of the Financing Agreement, to the renaming
of the Company provided, that this consent is conditioned on the delivery by the
Company or GPE to the Agent of all financing statements, instruments and other
documents (including legal opinions) requested by the Agent in connection with
such renaming; and

 
 
(k)
consent to the use by the Company of the trade names “KCP&L Greater Missouri
Operations Company” and “KCP&L” and the relocation of the Company’s principal

 

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place of business and chief executive office to 1201 Walnut, Kansas City, MO
64106; provided, that this consent is conditioned upon the delivery by the
Company or GPE to the Agent of an updated Perfection Certificate prior to any
borrowing by the Company following the Merger to provide that (i) the principal
place of business and chief executive office of the Company will be 1201 Walnut,
Kansas City, MO 64106 and (ii) each of “KCP&L Greater Missouri Operations
Company” and “KCP&L” is a trade name pursuant to which the Company has conducted
or, if applicable, intends to conduct its business.
 
In connection with the foregoing, the Company also wishes to reduce the
aggregate amount of loans, advances and extensions of credit made available to
the Company under the Agreement following the Merger.  Accordingly, the Company
hereby (i) requests that, subject to the satisfaction of the conditions set
forth in Section 4 below, as of the Effective Date, the definition of “Revolving
Line of Credit” in Section 1.1 of the Agreement be amended by replacing with
“$150,000,000” with “$65,000,000”; and (ii) pursuant to Section 3.3 of the
Agreement, notifies the Agent that $85,000,000 of the Lenders’ Commitment should
be irrevocably and ratably terminated immediately following the completion of
the Merger on the Effective Date.
 
Section 4.                      Representations and Warranties; Conditions
Precedent.
 
The Company hereby represents and warrants to you that, as of the Effective Date
and after giving effect to this Notification, Waiver, Consent & Amendment (this
“Letter Agreement”), each of the representations and warranties made by the
Company in or pursuant to Section 7 of the Financing Agreement will be true and
correct in all material respects as if made on and as of the Effective Date, and
no Event of Default will have occurred and be continuing.  For purposes of this
Letter Agreement, references in Section 7 of the Financing Agreement to “this
Agreement’, “hereunder”, “hereof” and words of like import referring to the
Financing Agreement will be deemed to be a reference to this Letter Agreement
and the Financing Agreement, as modified hereby, and references to “date hereof”
will be deemed to be a reference to the date of this Letter Agreement.
 
Notwithstanding anything herein, in no event will the waivers, consents, and
amendments set forth in this Letter Agreement become effective unless and until
the following condition precedents have been satisfied: (i) GPE has delivered to
the Agent a written guarantee (in a form reasonably acceptable to the Agent) for
the benefit of the Lenders, pursuant to which GPE guarantees the payment and
other obligations of the Company under the Financing Agreement; and (ii) GPE has
paid, or caused to be paid, to the Agent a fee to be agreed upon GPE and the
Agent after the date hereof, for the benefit of the Lenders that timely execute
this Letter Agreement.
 
Section 5.                      Execution and Delivery.
 
If you consent to the requests described above, please evidence such consent by
executing and returning at least four counterparts of this Letter Agreement to
Union Bank of California, N.A., 445 South Figueroa Street, 15th Floor, Los
Angeles, CA, Attention: Susan K. Johnson (fax no. 213.236.4096) no later than 10
a.m. (Pacific time) on Tuesday, June 10, 2008.
 
Section 6.                      Miscellaneous.
 
The execution, delivery and effectiveness of this Letter Agreement will not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender under the
 

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Financing Agreement, nor constitute a waiver of any other provision of the
Financing Agreement.
 
This Letter Agreement is subject to the provisions of Section 12.2 of the
Financing Agreement.  This Letter Agreement will be binding on the parties
hereto and their respective successors and permitted assigns under the Financing
Agreement.
 
This Letter Agreement may be executed in any number of counterparts and by any
combination of the parties hereto in separate counterparts, each of which
counterparts shall constitute an original and all of which taken together shall
constitute one and the same instrument.  This Letter Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
 
Very truly yours,

AQUILA, INC.

By: /s/ Michael Cole
Michael Cole
Vice President, Finance and Treasurer

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The undersigned parties to the Financing Agreement
hereby consent to the requests described above:

UNION BANK OF CALIFORNIA, N.A.
as Agent and Lender

By: /s/ Susan K. Johnson
       Name: Susan K. Johnson
       Title: Vice President

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ALLIED IRISH BANKS, P.L.C.
as Lender

By: /s/ Aidan Lanigan
       Name: Aidan Lanigan
       Title:  Vice President

By: /s/ David O’Driscoll
       Name: David O’Driscoll
       Title:  Assistant Vice President

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COMMERZBANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
as Lender

By: /s/ Hans J. Scholz
       Name: Hans J. Scholz
       Title: Vice President

By: /s/ Svetlana Parilova
       Name: Svetlana Parilova
       Title: Assistant Treasurer

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LASALLE BUSINESS CREDIT, LLC
as Lender

By: /s/ Mitchell J. Tarvid
       Name: Mitchell J. Tarvid
       Title:  First Vice President

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 EXHIBIT “A”

Certificate

I, ___________________, ● of Aquila, Inc., a Delaware corporation (the
“Company”), do hereby certify, pursuant to Section 6.8 of the Financing
Agreement, dated as of April 22, 2005, among the Company, the banks named
therein, and Union Bank of California, N.A., as Agent and as Lender (as amended,
modified or supplemented as of the date hereof, the “Financing Agreement”, and
terms capitalized but not defined herein have the meanings ascribed to them in
the Financing Agreement), that:
 
 
1.
as of the date hereof, no Event of Default or Sweep Event is continuing;

 
 
2.
the Asset Sale (as defined in the Letter Agreement dated June 2, 2008) is in
accordance with the terms and conditions of the Financing Agreement, including
(a) the Asset Sale shall be made for fair value on an arm’s length basis and (b)
at least seventy-five percent (75%) of the purchase price of the Asset Sale
shall be paid in cash and such cash portion of the purchase price shall be
payable at (or prior to) the closing of the Asset Sale; and

 
 
3.
the material terms and conditions of the Asset Sale are described in the press
release and agreements attached as exhibits 99.1, 10.1 and 10.2 to the Form 8-K
filed with the Securities and Exchange Commission by the Company on February 7,
2007.  Copies of these documents are available for review online at either the
Securities and Exchange Commission’s EDGAR website or the Company’s website, or
both.

 
 
IN WITNESS WHEREOF, this Certificate is given this ● day of ●, 2008.

 

 
AQUILA, INC.
 

Per:           ___________________________
Name:                      ●
Title:                      ●