ex10-7.htm


    

      Exhibit
10.7

      GUARANTY

       

      THIS
GUARANTY, dated as of July 15, 2008 (the “Guaranty”), is made
by GREAT PLAINS ENERGY INCORPORATED, a Delaware limited liability company
(together with its successors and permitted assigns, the “Guarantor”), in favor
of Union Bank of California, N.A., acting in its capacity as successor trustee
under the Indenture (as defined below) and the holders of the Notes (as defined
below).

       

       

      Pursuant
to the Indenture, dated as of November 1, 1990 (as amended, modified or
supplemented from time to time, the “Indenture”) executed
by and between Aquila, Inc. (the “Issuer”) and Union
Bank of California, N.A., in its capacity as successor trustee (the “Trustee”), the Issuer
has issued its 7.625% Senior Notes due 2009 in the aggregate principal amount of
$200,000,000 (the “Notes”).  Pursuant
to an Agreement and Plan of Merger dated as of February 6, 2007, by and among
the Guarantor, Issuer, Black Hills Corporation and Gregory Acquisition Corp.
(the “Merger
Agreement”), the Issuer has agreed to be acquired by the
Guarantor.  The transaction will be consummated by merging Gregory
Acquisition Corp. with and into the Issuer (the “Merger”), with the
Issuer continuing as the surviving corporation.  Upon completion of
the Merger, the Issuer will become a wholly-owned subsidiary of the Guarantor,
and the Guarantor is willing to execute and deliver this
Agreement.  The Guarantor has agreed to execute and deliver this
Guaranty in order to guarantee the payment and performance of the obligations of
the Issuer under the Notes and the Indenture.

       

       

      


       

       

      ARTICLE
I

       

      DEFINITIONS

       

      SECTION
1.01.    Indenture.  Capitalized
terms used in this Agreement and not otherwise defined herein have the meanings
specified in the Indenture.

       

      SECTION
1.02.    Other Defined
Terms.  As used
in this Agreement, the following terms have the meanings specified
below:

       

       

      “Agreement” means this
Guaranty.

       

       

      “Guarantor” has the
meaning assigned to such term in the preliminary statement of this
Agreement.

       

       

      “Guaranty Parties”
means, collectively, the Issuer and the Guarantor.

       

       

      “Indenture” has the
meaning assigned to such term in the preliminary statement of this
Agreement.

       

       

      “Obligations”  has
the meaning set forth in Section 2.1.

       


      
        

      


       

      “Person” shall mean
any individual, corporation, partnership, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated
organization or any agency or political subdivision thereof or other
entity.

       

       

      ARTICLE
II

       

      GUARANTY

       

      SECTION
2.01.        Guaranty.  The
Guarantor hereby unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns (a) the due and punctual payment of the principal of, premium, if
any, and interest on the Notes, subject to any applicable grace period, whether
at Stated Maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on the overdue principal and premium, if any, and
to the extent permitted by law, interest, and the due and punctual performance
of all other obligations of the Issuer to the Holders or the Trustee under the
Indenture or any other agreement with or for the benefit of the Holder or the
Trustee, all in accordance with the terms hereof and thereof (collectively, the
“Obligations”); and (b) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same shall be promptly paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration pursuant to the terms of
the Indenture or the Notes, redemption or otherwise.  Failing payment
when due of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantor shall be obligated to pay the same
immediately.  The Guarantor waives presentment to, demand of payment
from and protest to the Issuer of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for
nonpayment.

       

      SECTION
2.02.        Guaranty of
Payment.  The Guarantor further agrees that its guarantee
hereunder constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Trustee or any other
Lender to any security held for the payment of the Obligations, or to any
balance of any deposit account or credit on the books of the Trustee in favor of
the Issuer or any other Person.

       

      SECTION
2.03.        No
Limitations.  (a)  Except for
termination of the Guarantor’s obligations hereunder as expressly provided in
Section 4.08, the obligations of the Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations, or otherwise.  Without limiting the generality of the
foregoing, the obligations of the Guarantor hereunder shall not be discharged or
impaired or otherwise affected by (i) the failure of the Trustee or any other
Person to assert any claim or demand or to enforce any right or remedy under the
provisions of the Indenture, the Notes or otherwise; (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, the Indenture, the Notes or any other agreement, including with
respect to any other Guarantor under this Agreement; (iii) the release of any
security from the Issuer or any other Person for the Obligations; (iv) any
default, failure or delay, willful or otherwise, in the performance of the
Obligations; or (v) any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor or

       

       

        
          

        

      

       

       

      otherwise
operate as a discharge of the Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of all the Obligations, including
pursuant to Sections 401 and 403 of the Indenture).

       

       

      (b)         To
the fullest extent permitted by applicable law, the Guarantor waives any defense
based on or arising out of any defense of the Issuer or the unenforceability of
the Obligations, or any part thereof from any cause, or the cessation from any
cause of the liability of the Issuer, other than the payment in full in cash of
all the Obligations.

       

      SECTION
2.04.    Reinstatement.  The
Guarantor agrees that its guarantee hereunder shall continue to be effective or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any Obligation, is rescinded or must otherwise be restored by the Trustee or
any Holder upon the bankruptcy or reorganization of the Issuer or
otherwise.

       

      SECTION
2.05.    Agreement To Pay;
Subrogation.  In furtherance of the foregoing and not in
limitation of any other right that the Trustee or any Holder has at law or in
equity against the Guarantor by virtue hereof, upon the failure of the Issuer to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid in cash the amount of
such unpaid Obligation.  Upon payment by the Guarantor of any sums as
provided above, all rights of the Guarantor against the Issuer arising as a
result thereof by way of right of subrogation, contribution, indemnity or
otherwise shall in all respects be subject to Article III.

       

      


       

       

      ARTICLE
III

       

      INDEMNITY, SUBROGATION AND
SUBORDINATION

       

      SECTION
3.01.    Indemnity and
Subrogation.  In addition to all such rights of indemnity and
subrogation as the Guarantor may have under applicable law (but subject to Section 3.02), the Issuer agrees that
in the event a payment of an obligation shall be made by the Guarantor under
this Agreement, the Issuer shall indemnify the Guarantor for the full amount of
such payment and the Guarantor shall be subrogated to the rights of the Person
to whom such payment shall have been made to the extent of such
payment.

       

      SECTION
3.02.    Subordination.  Notwithstanding
any provision of this Agreement to the contrary, all rights of the Guarantor
under Section 3.01 and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations.  No failure on the part of the Issuer or the
Guarantor to make the payments required by Section 3.01 (or any other payments
required under applicable law or otherwise) shall in any respect limit the
obligations and liabilities of the Guarantor with respect to its obligations
hereunder, and the Guarantor shall remain liable for the full amount of the
obligations of the Guarantor hereunder.

       

       

        
          

        

      

      ARTICLE IV

       

      MISCELLANEOUS

       

       

       

      SECTION
4.01.    Notices.  All
communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in the
Indenture.  All communications and notices hereunder to the Guarantor
shall be given to it in care of the Issuer as provided in the
Indenture.

       

      SECTION
4.02.    Waivers;
Amendment.  (a)  No failure
or delay by the Trustee or any Holder in exercising any right or power hereunder
or under the Indenture or the Notes shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or
power.  The rights and remedies of the Trustee and the Holders
hereunder and under the Indenture or the Notes are cumulative and are not
exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of this Agreement or consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 4.02, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.  No notice or demand on any Guaranty Party in any
case shall entitle any Guaranty Party to any other or further notice or demand
in similar or other circumstances.

       

       

      (b)         Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Trustee and the Guaranty Party or Guaranty Parties with respect to which such
waiver, amendment or modification is to apply, subject to any consent required
in accordance with the Indenture.

       

      SECTION
4.03.   Successors and
Assigns.  Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Guarantor that are contained in this Agreement shall bind
and inure to the benefit of its successors and assigns.

       

      SECTION
4.04.   Counterparts; Several
Agreement.  This Agreement may be executed in counterparts,
each of which shall constitute an original but all of which when taken together
shall constitute a single contract.  Delivery of an executed signature
page to this Agreement by facsimile transmission or other electronic
communication shall be as effective as delivery of a manually signed counterpart
of this Agreement.  This Agreement shall inure to the benefit of the
Guarantor, the Trustee and the Holders and their respective successors and
assigns.

       

      SECTION
4.05.   Severability.  Any
provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.  The

       

       

        
          

        

      

       

      parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

       

      SECTION
4.06.    Governing Law.
 This Agreement shall be governed by and construed in accordance with the
law of the State of New York.

       

      SECTION
4.07.    Headings.  Article
and Section headings used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.

       

      SECTION
4.08.    Termination or
Release.  (a)  This
Agreement and the guaranty made herein shall terminate with respect to all
Obligations when all the outstanding Obligations have been indefeasibly paid in
full (including pursuant to Sections 401 and 403 of the Indenture).

       

       

      (b)         In
the event of a sale or other disposition of all or substantially all of the
assets of the Issuer, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of the Issuer, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Subsidiary or a parent of the Guarantor, then, unless otherwise expressly agreed
to in writing by the Guarantor, the Guarantor automatically shall be
released and relieved of any obligations under this Agreement.

       


      
        

      


      


       

      IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.

       

      GREAT
PLAINS ENERGY INCORPORATED

      


      


      
        	
                By:

              	
                /s/ Michael W. Cline

              
	 
      	
                Name:

              	
                Michael
      W. Cline

              
	 
      	
                Title:

              	
                Vice
      President - Investor

              
	 
      	 
      	
                Relations
      and Treasurer

              


      

      


      



      
        
          
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      IN
WITNESS WHEREOF, for the purposes of Section 3.01 and 4.02 only, the Issuer has
executed this Agreement as of the date first written above.

       

       

      AQUILA,
INC.

       

      


      
        	
                By:

              	
                /s/ Michael W. Cline

              
	 
      	
                Name:

              	
                Michael
      W. Cline

              
	 
      	
                Title:

              	
                Treasurer

              


      

       

      


       

       

      


       


      
        
          
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