NOTIFICATION, WAIVER, CONSENT & AMENDMENT
NOTIFICATION,
WAIVER, CONSENT & AMENDMENT
June 2,
2008
Ms. Xxxxx
Xxxxxxx
Union
Bank of California, N.A.
000 Xxxxx
Xxxxxxxx Xxxxxx, 00xx
Floor
Los
Angeles, CA 90071
Dear
Xxxxx:
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 Xxxxxxx Acquisition Corp., the Company has agreed to be
acquired by GPE. The transaction will be consummated by merging
Xxxxxxx 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
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(b)
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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.
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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:
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(a)
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amend
the definition of Domestic Utility Business by deleting the words “and
natural gas” in the definition
thereof;
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(b)
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add
a new definition as follows:
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“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.”
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(c)
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amend
the definition of Liquidity by deleting the word “and” immediately before
“(v)” and inserting the following at the end of the first
sentence:
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“, 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.
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(f)
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amend
Section 3.4(b)(C) by deleting “$40,000,000” and inserting in lieu thereof
“$30,000,000”.
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(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.”;
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(h)
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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”;
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(i)
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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:
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“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.”;
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(j)
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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
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(k)
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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 0000 Xxxxxx, Xxxxxx Xxxx, XX 00000;
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 0000 Xxxxxx, Xxxxxx
Xxxx, XX 00000 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., 000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxx, XX, Attention: Xxxxx X. Xxxxxxx (fax no. 000.000.0000) 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/
Xxxxxxx Xxxx
Xxxxxxx Xxxx
Vice President, Finance and
Treasurer
S-1
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/
Xxxxx X. Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
Vice President
S-2
ALLIED
IRISH BANKS, P.L.C.
as
Lender
By: /s/
Xxxxx Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title: Vice
President
By: /s/
Xxxxx X’Xxxxxxxx
Name:
Xxxxx X’Xxxxxxxx
Title: Assistant
Vice President
COMMERZBANK
AG, NEW YORK AND
GRAND
CAYMAN BRANCHES
as
Lender
By: /s/
Xxxx X. Xxxxxx
Name:
Xxxx X. Xxxxxx
Title:
Vice President
By: /s/
Xxxxxxxx Xxxxxxxx
Name:
Xxxxxxxx Xxxxxxxx
Title:
Assistant Treasurer
LASALLE
BUSINESS CREDIT, LLC
as
Lender
By: /s/
Xxxxxxxx X. Xxxxxx
Name:
Xxxxxxxx X. Xxxxxx
Title: First
Vice President
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:
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1.
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as
of the date hereof, no Event of Default or Sweep Event is
continuing;
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2.
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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
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3.
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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 XXXXX
website or the Company’s website, or
both.
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IN
WITNESS WHEREOF, this Certificate is given this ● day of ●,
2008.
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AQUILA, INC.
Per: ___________________________
Name: ●
Title: ●
