Exhibit 10.2
 
EMPLOYMENT AGREEMENT
 
THIS AGREEMENT is entered into as of the 23rd day of September, 2002 by and
between Westar Energy, Inc., a Kansas corporation (the “Company”), and Douglas
T. Lake (“Executive”). This Agreement amends and restates in its entirety the
Employment Agreement between the Company (then named Western Resources, Inc.)
and Executive, dated September 19, 2000, as amended.
 
W I T N E S S E T H
 
WHEREAS, the Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of the Company and its stockholders; and
 
WHEREAS, the Board (as defined in Section 1) has determined that it is in the
best interests of the Company and its stockholders to secure Executive’s
continued services; and
 
WHEREAS, the Company also recognizes that the possibility of a change in control
could arise which may result in the distraction of management to the detriment
of the Company and its shareholders. It is important that Executive be able to
advise the Board whether a proposed change in control would be in the best
interests of the Company and its shareholders and to take action regarding such
proposal as the Board directs, without being influenced by the uncertainties of
Executive’s own situation.
 
WHEREAS, the Board has authorized the Company to enter into this Agreement.
 
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
 
1.
 
Definitions.  As used in this Agreement, the following terms shall have the
respective meanings set forth below:

 
(a)  “Adjusted Base Salary” shall mean ninety percent (90%) of the annual salary
job value for the pay grade of Executive and other remuneration for current
services (but excluding all bonuses, stock based awards and other incentive
compensation) paid to or for the benefit of Executive.
 
(b)  “Base Salary” shall mean all salary, cash compensation and other
remuneration for current services (but excluding all bonuses, stock based awards
and other incentive compensation) paid to, for the benefit of or deferred by
Executive, together (without duplication) with the compensation that would have
been payable in cash to Executive if such compensation had not been converted
into Restricted Share Units pursuant to the Western Resources, Inc. Executive
Stock for Compensation Program.
 
(c)  “Board” means the Board of Directors of the Company.
 
(d)  “Bonus Amount” means the greater of (a) the highest annual incentive bonus
payable to or for the benefit of or deferred by Executive from the Company (or
its affiliates) for the

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last three (3) completed fiscal years of the Company immediately preceding
Executive’s Date of Termination (annualized in the event Executive was not
employed by the Company (or its affiliates) for the whole of any such fiscal
year), or (b) the Executive’s target bonus amount for the year of termination of
employment.
 
(e)  “Cause” means (i) the willful and continued failure of Executive to perform
substantially his duties with the Company (other than any such failure resulting
from Executive’s incapacity due to physical or mental illness or any such
failure subsequent to Executive being delivered a Notice of Termination without
Cause by the Company or delivering a Notice of Termination for Good Reason to
the Company) after a written demand for substantial performance is delivered to
Executive by the Chairman of the Board which specifically identifies the manner
in which Executive has not substantially performed Executive’s duties, or (ii)
the willful engaging by Executive in illegal conduct which is demonstrably and
materially injurious to the Company. For purposes of this paragraph (e), no act
or failure to act by Executive shall be considered “willful” unless done or
omitted to be done by Executive in bad faith and without reasonable belief that
Executive’s action or omission was in, or not opposed to, the best interests of
the Company. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board, based upon the advice of counsel for the
Company or upon the instructions of the Company’s chief executive officer or
another senior officer of the Company shall be conclusively presumed to be done,
or omitted to be done, by Executive in good faith and in the best interests of
the Company. Executive’s attention to matters not directly related to the
business of the Company shall not provide a basis for termination for Cause if
the Company has not objected to such activity in writing. Cause shall not exist
unless and until the Company has delivered to Executive a copy of a resolution
duly adopted by three-quarters (3/4) of the entire Board (excluding any Board
member who is an employee of the Company) at a meeting of the Board called and
held for such purpose (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the Board), finding
that in the good faith opinion of the Board an event set forth in clauses (i) or
(ii) has occurred and specifying the particulars thereof in detail.
 
(f)  “Change in Control” means the occurrence of any one of the following
events:
 
(i)  individuals who, on September 23, 2002, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to September
23, 2002, whose election or nomination for election was approved by a vote of at
least three-fourths of the Incumbent Directors then on the Board (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents, by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;
 
(ii)  any “person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of

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the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company’s then
outstanding securities eligible to vote for the election of the Board (the
“Company Voting Securities”); provided, however, that the event described in
this paragraph (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, (C) by any underwriter temporarily holding securities
pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying
Transaction (as defined in paragraph (iii)), (E) pursuant to any acquisition by
Executive or any group of persons including Executive (or any entity controlled
by Executive or any group of persons including Executive);
 
(iii)  the consummation of a merger, consolidation,. statutory share exchange or
similar form of corporate transaction involving the Company or any of its
Subsidiaries (a “Business Combination”), unless immediately following such
Business Combination: (A) more than 60% of the total voting power of (x) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation) is or becomes the beneficial owner, directly or indirectly,
of 20% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”); or
 
(iv)  the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or a sale of all or substantially all of the
Company’s assets other than the Company’s interests in Protection One, Inc. or
ONEOK, Inc.
 
(g)  “Date of Termination” means (i) if Executive’s employment is to be
terminated for Disability, 30 days after Notice of Termination is given
(provided that Executive shall not have returned to the performance of
Executive’s duties on a full-time basis during such 30 day period), (ii) if
Executive’s employment is to be terminated by the Company for Cause or by
Executive for Good Reason, the date specified in the Notice of Termination,
(iii) if Executive’s employment is to be terminated by the Company for any
reason other than Cause, the date specified in the Notice of

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Termination, which shall be 90 days after the Notice of Termination is given,
unless an earlier date has been expressly agreed to by Executive in writing,
(iv) if Executive’s employment terminates by reason of death, the date of death
of Executive; or (v) if Executive’s employment is terminated by Executive other
than for Good Reason, the date specified in Executive’s Notice of Termination,
but not more than 30 days after the Notice of Termination is given, unless
expressly agreed to by the Company in writing.
 
(h)  “Disability” means termination of Executive’s employment by the Company due
to Executive’s absence from Executive’s duties with the Company on a full-time
basis for at least one hundred eighty (180) consecutive days as a result of
Executive’s incapacity due to physical or mental illness, unless within 30 days
after Notice of Termination is given to Executive following such absence
Executive shall have returned to the full time performance of Executive’s
duties.
 
(i)  “Good Reason” shall mean termination based on any of the following events:
 
(i)  (A) any change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any material and adverse
respect with Executive’s position(s), duties, responsibilities or status with
the Company (including any adverse diminution of such duties or
responsibilities) or (B) the failure to reappoint or reelect Executive to any
position held by Executive without Executive’s consent; provided, however, that
Good Reason shall not be deemed to occur upon a change in duties or
responsibilities (other than reporting responsibilities) that is solely and
directly a result of the Company no longer being a publicly traded entity and
does not involve any other event set forth in this paragraph;
 
(ii)  a reduction by the Company in Executive’s Base Salary, annual target bonus
opportunity or targeted long-term incentive value (including any material and
adverse change in the formula for such annual bonus target or long-term
incentive target) as in effect immediately prior to the date hereof or as the
same may be increased from time to time thereafter;
 
(iii)  any requirement of the Company that Executive (A) be required to relocate
more than 100 miles from Executive’s present place of employment or (B) travel
on Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to the date hereof;
 
(iv)  the failure of the Company to (A) continue in effect any employee benefit
plan, welfare benefit plan or fringe benefit plan in which Executive is
participating immediately prior to the date hereof or, if more favorable, which
may be available from time to time hereafter to Executive or other executives of
the Company, or the taking of any action by the Company which would materially
and adversely affect Executive’s participation in or reduce Executive’s benefits
under any such plan, unless Executive is permitted to participate in other plans
providing Executive with substantially equivalent benefits (at no greater cost
to Executive with respect to welfare benefit plans), or (B) provide Executive
with paid vacation and sick leave in accordance with the most favorable policies
of the Company as in effect for Executive immediately prior to the date hereof
or, if more favorable, as may be available for Executive or other executives of
the Company after the date hereof; provided however, that

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prior to a Change in Control, changes in any such plans which constitute in the
aggregate less than 10% of Executive’s aggregate benefits under such plans and
which are applied to all employees of the Company shall not constitute “Good
Reason”;
 
(v)  any refusal by the Company to permit Executive to engage in activities not
directly related to the business of the Company which Executive was, or other
executives of the Company are, permitted to engage in;
 
(vi)  any purported termination of Executive’s employment which is not
effectuated pursuant to Section 17(b) (and which will not constitute a
termination hereunder);
 
(vii)  the failure of the Company to obtain the assumption (and, if applicable,
guarantee) agreement contemplated in Section 16(b); or
 
(viii)  the Company’s termination of this Agreement or the failure of the
Company to renew this Agreement as provided in Section 4 hereof.
 
For purposes of this Agreement, any good faith determination of Good Reason by
Executive shall be conclusive, provided however, that an isolated, insubstantial
and inadvertent action taken in good faith and which is remedied by the Company
within ten (10) days after receipt of notice thereof given by Executive shall
not constitute Good Reason. Executive’s right to terminate employment for Good
Reason shall not be affected by Executive’s incapacities due to mental or
physical illness and Executive’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any event or condition
constituting Good Reason; provided, however, that Executive must provide notice
of termination of employment within one hundred eighty (180) days following
Executive’s knowledge of an event constituting Good Reason or such event shall
not constitute Good Reason under this Agreement.
 
(j)  “Notice of Termination” means a written notice of termination of employment
given by one party to the other party pursuant to Section 17(b).
 
(k)  “Qualifying Termination” means a termination of Executive’s employment (i)
by the Company other than for Cause; (ii) by Executive for Good Reason; or (iii)
by Executive during the 90 day period after a Change in Control. Termination of
Executive’s employment on account of death, Disability or Retirement shall not
be treated as a Qualifying Termination. In addition, in the event that Executive
(i) is offered employment with a publicly traded subsidiary of the Company, (ii)
accepts such offer, (iii) terminates employment with the Company, and (iv) such
publicly traded subsidiary does not provide Executive the benefits described in
this Agreement, Executive shall be deemed to have terminated employment with the
Company pursuant to a Qualifying Termination upon commencing such employment
with the subsidiary and shall be entitled to the benefits described in this
Agreement payable by reason of a Qualifying Termination.
 
(l)  “Retirement” means Executive’s termination on or after Executive’s normal
retirement date under the terms of the Westar Energy, Inc. Retirement Plan, as
in effect immediately prior to Executive’s termination or a Change in Control,
whichever is earlier, or in accordance with any retirement arrangement
established with respect to Executive with Executive’s written consent.

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(m)  “Subsidiary” means any corporation or other entity in which the Company has
a direct or indirect ownership interest of 50% or more of the total combined
voting power of the then outstanding securities or interests of such corporation
or other entity entitled to vote generally in the election of directors or in
which the Company has the right to receive 50% or more of the distribution of
profits or 50% of the assets upon liquidation or dissolution.
 
2.    Employment and Duties.
 
(a)  Term of Employment.    The Company agrees to continue to employ Executive,
and Executive agrees to remain in employment of the Company, in accordance with
the terms and provisions of this Agreement, for the Term of this Agreement,
unless such employment is sooner terminated by the Company or Executive.
 
(b)  Duties.    During the term of Executive’s employment under this Agreement,
Executive shall serve as Chief Executive Officer of the Company. Executive shall
devote Executive’s full business time and attention to the affairs of the
Company and his duties as its Chief Executive Officer. Executive shall have such
duties as are appropriate to Executive’s position as Chief Executive Officer,
and shall have such authority as required to enable Executive to perform these
duties. Consistent with the foregoing, Executive shall comply with all
reasonable instructions of the Board of Directors of the Company. Executive
shall be based at the headquarters of the Company in Topeka, Kansas and
Executive’s services shall be rendered there except insofar as travel may be
involved in connection with Executive’s regular duties. Executive shall report
directly to the Board of Directors.
 
3.    Obligation of Executive.    In the event of a tender or exchange offer,
proxy contest, or the execution of any agreement which, if consummated, would
constitute a Change in Control, Executive agrees not to voluntarily leave the
employ of the Company, other than as a result of Disability, Retirement or an
event which would constitute Good Reason, until the Change in Control occurs or,
if earlier, such tender or exchange offer, proxy contest, or agreement is
terminated or abandoned.
 
4.    Term of Agreement.    This Agreement shall continue for a period of three
(3) years from the date hereof provided that on each anniversary of the
Agreement, the term shall automatically be extended for one year, unless at
least 90 days prior to such date, the Company or Executive shall have given
notice to cancel this Agreement at the end of its then term.
 
5.    Salary and Benefits.
 
(a)  Salary.    The Company shall pay Executive an annual salary at an initial
rate equal to Executive’s current Base Salary which shall be reviewed annually
by the Human Resources Committee of the Board for the purpose of considering
increases thereof. Executive’s salary shall be paid in accordance with the
standard practices for other senior corporate executives of the Company.
 
(b)    Bonuses.    Executive shall be eligible to receive annually or otherwise
any bonus awards, whether payable in cash, shares of common stock of the Company
or otherwise, which the Company, the Human Resources Committee of the Board or
such other authorized committee of the Board determines to award or grant.

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(c)  Benefit Programs.    Executive shall receive such benefits and awards,
including without limitation stock options and restricted share unit awards, as
the Human Resources committee of the Board shall determine and shall be eligible
to participate in all employee benefit plans and programs of the Company from
time to time in effect for the benefit of senior executives of the Company,
including, but not limited to, pension and other retirement plans, 401(k) plans,
group life insurance, hospitalization and surgical and major medical coverages,
sick leave, salary continuation arrangements, vacations and holidays, long-term
disability, and such other benefits as are or may be made available from time to
time to senior executives of the Company.
 
(d)  Business Expenses and Perquisites.    Executive shall be reimbursed for all
reasonable expenses incurred by Executive in connection with the conduct of the
business of the Company, provided Executive properly accounts therefor in
accordance with the Company’s policies. Executive shall also be entitled to such
other perquisites as are customary for senior executives of the Company.
 
(e)  Office and Services Furnished.    The company shall furnish Executive with
office space, secretarial assistance and such other facilities and services as
shall be suitable to Executive’s position and adequate for the performance of
Executive’s duties hereunder.
 
6.    Payments Upon Termination of Employment.
 
(a)  Qualifying Termination.    If during the Term of this Agreement the
employment of Executive shall terminate pursuant to a Qualifying Termination,
then the Company shall provide to Executive:
 
(i)  within 30 days following the Date of Termination a lump-sum cash amount
equal to the sum of (A) Executive’s Base Salary through the Date of Termination
and any bonus amounts which have become payable to the extent not theretofore
paid or deferred, (B) a pro rata portion of Executive’s annual bonus for the
fiscal year in which Executive’s Date of Termination occurs in an amount at
least equal to (1) Executive’s Bonus Amount, multiplied by (2) a fraction, the
numerator of which is the number of days in the fiscal year in which the Date of
Termination occurs through the Date of Termination and the denominator of which
is three hundred sixty-five (365), and reduced by (3) any amounts paid from the
Company’s annual incentive plan for the fiscal year in which Executive’s Date of
Termination occurs, (C) any accrued vacation pay, and (D) the cash equivalent of
any accumulated sick leave; in each case to the extent not theretofore paid;
 
(ii)  within 30 days following the Date of Termination, a lump-sum cash amount
equal to 2.99 times the lesser of (A) the sum of Executive’s average annual Base
Salary for the three-year period immediately prior to Executive’s Date of
Termination and Executive’s average annual incentive bonus earned for the three
calendar years immediately preceding the calendar year in which Executive’s Date
of Termination occurs, or (B) the sum of Executive’s Adjusted Base Salary and
target annual incentive bonus for the calendar year in which Executive’s Date of
Termination occurs (except that, if Executive’s target annual incentive bonus
has not been established at the time of termination of his employment,
Executive’s

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actual annual incentive bonus for the immediately preceding calendar year will
be substituted for such target annual incentive bonus);
 
(iii)  the Company shall continue to provide, for a period of three (3) years
following Executive’s Date of Termination, Executive (and Executive’s
dependents, if applicable) with the same level of medical, dental, accident,
disability and life insurance benefits and following such three year period
retiree medical and dental benefits for the life of Executive and eligible
dependents upon substantially the same terms and conditions (including
contributions required by Executive for such benefits) as existed on Executive’s
Date of Termination; provided, that, if Executive cannot continue to participate
in the Company plans providing such benefits or the Company shall modify or
terminate any such plans, the Company shall otherwise provide such benefits on
the same after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event Executive becomes reemployed with
another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described herein shall be secondary to such
benefits during the period of Executive’s eligibility, but only to the extent
that the Company reimburses Executive for any increased cost and provides any
additional benefits necessary to give Executive the benefits provided hereunder;
 
(iv)  Executive shall be entitled to the provisions of the Executive Salary
Continuation Plan and, notwithstanding anything to the contrary in such Plan,
(i) shall be deemed to be sixty-five years of age as of the Date of Termination
for purposes of determining the Retirement Benefit and commencement of payment
thereof under Section 4.1 of the Plan (without regard to Executive’s actual age
or date of commencement of retirement benefit payments under the Westar Energy,
Inc. Retirement Plan) and Vesting under Section 4.3 of the Plan and (ii)
Compensation for purposes of calculating the Retirement Benefit thereunder shall
be deemed to be the lesser of (A) the sum of Executive’s average annual Base
Salary for the three-year period immediately prior to Executive’s Date of
Termination and Executive’s average annual incentive bonus earned for the three
calendar years immediately preceding the calendar year in which Executive’s Date
of Termination occurs, or (B) the sum of Executive’s Adjusted Base Salary and
target annual incentive bonus for the calendar year in which Executive’s Date of
Termination occurs (except that, if Executive’s target annual incentive bonus
has not been established at the time of termination of his employment,
Executive’s actual annual incentive bonus for the immediately preceding calendar
year will be substituted for such target annual incentive bonus);
 
(v)  continuation of participation in the Company’s matching gift program as in
effect on the date hereof or if more favorable to the Executive, as may be
available to Executive or other comparable executives of the Company thereafter,
as if Executive continued as a senior executive of the Company, for three (3)
years following Executive’s Date of Termination;
 
(vi)  each stock option (and related dividend equivalent) granted to Executive
by the Company and outstanding immediately prior to the Qualifying Termination
shall remain outstanding and shall continue to vest and become exercisable as if
Executive had remained in employment following his Date of Termination;

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(vii)  each restricted share granted to Executive by the Company and still
subject to restrictions immediately prior to the Qualifying Termination shall
remain outstanding and shall continue to vest as if Executive had remained in
employment following his Date of Termination;
 
(viii)  each restricted share unit granted to Executive by the Company which has
not vested prior to the Qualifying Termination shall remain outstanding and
shall continue to vest as if Executive had continued in employment following his
Date of Termination, provided, however, that each restricted share unit granted
to Executive in January 2002 shall vest on the tenth anniversary of the grant
date unless it has vested pursuant to its terms prior to that date; and
 
(ix)  each other stock or stock equivalent grant granted to Executive by the
Company which has not vested prior to the Qualifying Termination shall remain
outstanding and shall continue to vest as if Executive had remained in
employment following his Date of Termination.
 
(b)  If during the Term of this Agreement the employment of Executive shall
terminate other than by reason of a Qualifying Termination, then the Company
shall pay to Executive within ten (10) days following the Date of Termination, a
lump-sum cash amount equal to the sum of (1) Executive’s Base Salary through the
Date of Termination and any Bonus Amounts which have become payable, to the
extent not theretofore paid or deferred, and (2) any accrued vacation pay and
accumulated sick leave, in each case to the extent not theretofore paid. The
Company may make such additional payments, and provide such additional benefits,
to Executive as the Company and Executive may agree in writing.
 
7.    Gross-Up Provision.
 
(a)  Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a change in
ownership or control described in Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”) (or any of its affiliated entities) to or for the
benefit of Executive (whether pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 7) (the “Payments”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Company shall pay to Executive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by Executive of all
taxes (including any Excise Tax) imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax
imposed upon the Payments and (y) the product of any deductions disallowed
because of the inclusion of the Gross-up Payment in Executive’s adjusted gross
income and the highest applicable marginal rate of federal income taxation for
the calendar year in which the Gross-up Payment is to be made. For purposes of
determining the amount of the Gross-up Payment,

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the Executive shall be deemed to (i) pay federal income taxes at the highest
marginal rates of federal income taxation for the calendar year in which the
Gross-up Payment is to be made (ii) pay applicable state and local income taxes
at the highest marginal rate of taxation for the calendar year in which the
Gross-up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes and
(iii) have otherwise allowable deductions for federal income tax purposes at
least equal to those which could be disallowed because of the inclusion of the
Gross-up Payment in the Executive’s adjusted gross income. Executive and the
Company shall use their best efforts to mitigate the cost to the Company of
making a Gross-up Payment.
 
(b)  Subject to the provisions of Section 7(a), all determinations required to
be made under this Section 7, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the change in ownership or control (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the Company or
the Executive that there has been a Payment, or such earlier time as is
requested by the Company (collectively, the “Determination”). In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the change in ownership or control, Executive may
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company and the Company shall enter into any
agreement requested by the Accounting Firm in connection with the performance of
the services hereunder. The Gross-up Payment under this Section 7 with respect
to any Payments shall be made no later than thirty (30) days following such
Payment. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall furnish Executive with a written opinion to such effect, and
to the effect that failure to report the Excise Tax, if any, on Executive’s
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”) or Gross-up Payments are made by the
Company which should not have been made (“Overpayment”), consistent with the
calculations required to be made hereunder. In the event that the Executive
thereafter is required to make payment of any Excise Tax or additional Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment (together with interest at the rate provided
in Section 1274(b) (2) (B) of the Code and any penalties payable by Executive)
shall be promptly paid by the Company to or for the benefit of Executive. In the
event the amount of the Gross-up Payment exceeds the amount necessary to
reimburse the Executive for his Excise Tax, the Accounting Firm shall determine
the amount of the Overpayment that has been made and any such Overpayment
(together with interest at the rate provided in Section 1274 (b) (2) of the
Code) shall be promptly paid by Executive (to the extent he has received a
refund if the applicable Excise Tax has been paid to the Internal Revenue
Service) to or for the benefit of the Company. Executive shall cooperate, to the
extent his expenses are reimbursed by the Company, with any reasonable requests
by the Company in connection with any contests or disputes with the Internal
Revenue Service in connection with the Excise Tax.

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8.     Confidential Information.  Executive acknowledges that: (i) the business
of the Company and its subsidiaries and affiliates is intensely competitive and
that Executive’s engagement by the Company requires that Executive have access
to and knowledge of confidential information of the Company and its subsidiaries
and affiliates, including, but not limited to, the identity of customers, the
identity of the representatives of customers with whom the Company and its
subsidiaries and affiliates have dealt, the kinds of services provided by the
Company and its subsidiaries and affiliates to customers and offered to be
performed for potential customers, the manner in which such services are
performed or offered to be performed, the service needs of actual or prospective
customers, pricing information, information concerning the creation, acquisition
or disposition of products and services, customer maintenance listings, computer
software applications and other programs, personnel information and other trade
secrets ‘ (the “Confidential Information”); (ii) the direct and indirect
disclosure of such Confidential Information to existing or potential competitors
of the Company and its subsidiaries and affiliates would place the Company and
its subsidiaries and affiliates at a competitive disadvantage and would do
damage, monetary or otherwise, to the business of the Company and its
subsidiaries and affiliates; and (iii) the engaging by Executive in any of the
activities prohibited by this Section 8 may constitute improper appropriation
and/or use of such information and trade secrets. Notwithstanding the foregoing,
Confidential Information shall not include information which (x) is or becomes
part of the public domain through a source other than Executive, (y) is or
becomes available to Executive from a source independent of the Company and its
subsidiaries and affiliates, or (z) constitutes general industry knowledge
possessed by Executive by virtue of Executive’s employment with the Company.
Executive expressly acknowledges the trade secret status of the Confidential
Information and that the Confidential Information constitutes a protectable
business interest of the Company and its subsidiaries and affiliates.
Accordingly, the Company and Executive agree as follows:
 
(a)  During the Term of this Agreement and for three years following Executive’s
Date of Termination, Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, principal or
agent of any business, or in any other capacity, make known, disclose, furnish,
make available or use any of the Confidential Information, other than in the
proper performance of the duties contemplated herein or as required by law or by
a court of competent jurisdiction or other administrative or legislative body;
provided, however, that prior to disclosing any of the Confidential Information
to a court or other administrative or legislative body, Executive shall promptly
notify the Company so that the Company may seek a protective order or other
appropriate remedy.
 
(b)  Executive agrees to return all Confidential Information, including all
photocopies, extracts and summaries thereof, and any such information stored
electronically on tapes, computer disks or in any other manner to the Company at
anytime upon request of the Company and upon the termination of Executive’s
employment for any reason.
 
9.     Nonsolicitation.  During the Term of this Agreement and for a period of
two years after the Date of Termination Executive shall not, directly or
indirectly, solicit, interfere with, hire, offer to hire or induce any person
who is an employee of the Company or any of its subsidiaries or affiliates and
whose total compensation is in excess of $100,000 to discontinue his or her
relationship with the Company or any of its subsidiaries or affiliates and
accept employment by, or enter into a business relationship with, Executive or
any other person or entity.

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10.
 
Antidisparagement.

 
(a)  Unless otherwise required by a court of competent jurisdiction or pursuant
to any recognized subpoena power, Executive agrees and promises that Executive
shall not make any oral or written statements or reveal any information to any
person, company or agency which (i) is negative, disparaging or damaging to the
name, reputation or business of the Company or any of its subsidiaries or
affiliates, or any of their shareholders, directors, officers or employees, or
(ii) has or would have a negative financial impact, whether directly or
indirectly, on the Company or any of its subsidiaries and affiliates, or any of
their shareholders, directors, officers or employees.
 
(b)  Unless otherwise required by a court of competent jurisdiction or pursuant
to any recognized subpoena power, the Company agrees and promises that neither
it nor any of its subsidiaries and affiliates shall make any oral or written
statements or reveal any information to any person, company or agency which (i)
is negative, disparaging or damaging to the name, reputation or business of
Executive or (ii) has or would have a negative financial impact, whether
directly or indirectly, on Executive.
 

 
11.
 
Injunctive Relief.

 
(a)  Executive acknowledges that a breach of the undertakings in Sections 8, 9
or 10(a) of this Agreement would cause irreparable damage to the Company and its
subsidiaries and affiliates, the exact amount of which shall be difficult to
ascertain, and that remedies at law for any such breach would be inadequate.
Executive agrees that, if Executive breaches or attempts or threatens to breach
any of the undertakings in Sections 8, 9 or 10(a) of this Agreement, then the
Company shall be entitled to injunctive relief without posting bond or other
security, in addition to any other remedy or remedies available to the Company
at law or in equity.
 
(b)  The Company acknowledges that a breach of the undertakings in Section 10(b)
of this Agreement would cause irreparable damage to Executive, the exact amount
of which shall be difficult to ascertain, and that remedies at law for any such
breach would be inadequate. The Company agrees that, if the Company or any of
its subsidiaries or affiliates breaches or attempts or threatens to breach any
of the undertakings in Section 10(b) of this Agreement, then Executive shall be
entitled to injunctive relief, without posting bond or other security, in
addition to any other remedy or remedies available to Executive at law or in
equity.
 
12.     Withholding Taxes.  The Company may withhold from all payments due to
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
 
13.     Indemnity.  The Company shall hold harmless and indemnify Executive
against any and all expenses (including attorneys’ fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending, or completed action, suit, or
proceeding whether civil, criminal, administrative, or investigative (including
an action by or in the right of the corporation) to which Executive is, was, or
at anytime becomes a party, or is threatened to be made a party, by reason of
the fact that Executive is, was, or at anytime becomes a director, officer,
employee, or agent of Company, or is, or was serving, or at anytime serves at
the

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request of Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise; or
otherwise to the fullest extent as may be provided to Executive by Company under
the nonexclusivity provisions of Article XVIII of The Articles of Incorporation
of Company and Kansas law.
 
14.     Reimbursement of Expenses; Mitigation.  (a) If any contest or dispute
shall arise under this Agreement involving termination of Executive’s employment
with the Company or involving the failure or refusal of the Company to perform
fully in accordance with the terms hereof, the Company shall reimburse
Executive, on a current basis, for all legal fees and expenses, if any, incurred
by Executive in connection with such contest or dispute or incurred by Executive
in seeking advice with respect to any such matters (regardless of the result
thereof), together with interest in an amount equal to the prime rate of
JPMorgan Chase Bank from time to time in effect, but in no event higher than the
maximum legal rate permissible under applicable law, such interest to accrue
from the date the Company receives Executive’s statement for such fees and
expenses through the date of payment thereof, regardless of whether or not
Executive’s claim is upheld by an arbitration panel or court.
 
(b)  Executive shall not be required to mitigate any payment the Company becomes
obligated to make to Executive under this Agreement.
 
15.     Scope of Agreement.  Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its Subsidiaries;
provided, however, that any termination of Executive’s employment during the
Term of this Agreement shall be subject to all of the provisions of this
Agreement.
 
16.     Successors; Binding Agreement.  (a) This Agreement shall not be
terminated by any sale, merger or other business combination. In the event of
any such sale, merger or other business combination, the provisions of this
Agreement shall be binding upon the surviving corporation, and such surviving
corporation shall be treated as the Company hereunder.
 
(b)  The Company agrees that in connection with the sale, merger or other
business combination, it will cause any successor entity to the Company
unconditionally to assume (and for any Parent Corporation in such business
combination to guarantee), by written instrument delivered to Executive (or his
beneficiary or estate), all of the obligations of the Company hereunder.
 
(c)  This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive’s estate.
 
17.     Notice.  (a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

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If to the Executive:
 
Douglas T. Lake
3742 SW Clarion Park Drive
Topeka, KS 66610
 
If to the Company:
 
Westar Energy, Inc.
818 S. Kansas Avenue
Topeka, KS 66612
Attention: Corporate Secretary
 
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
 
(b)  A written notice of Executive’s Date of Termination by the Company or
Executive, as the case may be, to the other, shall (i) indicate the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment under the provision
so indicated, and (iii) specify the Date of Termination. The failure by
Executive or the Company to set forth in such notice any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right
of Executive or the Company hereunder or preclude Executive or the Company from
asserting such fact or circumstance in enforcing Executive’s or the Company’s
rights hereunder.
 
18.     Full Settlement; Resolution of Disputes.  The Company’s obligation to
make any payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall be in lieu and in full settlement of all other
severance payments to Executive under any other severance or employment
agreement between Executive and the Company, and any severance plan of the
Company. The Company’s obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against Executive or others. In no event shall Executive be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to Executive under any of the provisions of this Agreement
and except as otherwise provided in Section 6(a)(iii), such amounts shall not be
reduced whether or not Executive obtains other employment. Any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Topeka, Kansas by three arbitrators in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrators’ award in any court having jurisdiction. The
Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section.
 
19.     Employment with Subsidiaries.  Employment with the Company for purposes
of this Agreement shall include employment with any Subsidiary.
 
20.     Survival.  The respective obligations and benefits afforded to the
Company and Executive as provided in Sections 6 (to the extent that payment or
benefits are owed as a result of a

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termination of employment that occurs during the term of this Agreement), 7, 8,
9, 10, 11, 12, 13, 14, 16, 18, and 21 shall survive the termination of this
Agreement.
 
21.     GOVERNING LAW; VALIDITY.  THE INTERPRETATION, CONSTRUCTION AND
PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF KANSAS WITHOUT REGARD TO THE
PRINCIPLE OF CONFLICTS OF LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY
PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF
ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.
 
22.     Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
 
23.     Miscellaneous.  No provision of this Agreement may be modified or waived
unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at anytime of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder,
including without limitation, the right of Executive to terminate employment for
Good Reason, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement. Except as otherwise specifically
provided herein, the rights of, and benefits payable to, Executive, his estate
or his beneficiaries pursuant to this Agreement are in addition to any rights
of, or benefits payable to, Executive, his estate or his beneficiaries under any
other employee benefit plan or compensation program of the Company.
 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer of the Company and Executive has executed this Agreement
as of the day and year first above written.
 
WESTAR ENERGY, INC.
By:
 
/S/    BRUCE A. AKIN

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Name: Bruce A. Akin
Title: Vice President, Business Services

 
By:
 
/S/    DOUGLAS T. LAKE

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Douglas T. Lake
Executive Vice President,
Chief Strategic Officer

 
 
The following non-employee members of the Board of Directors are executing this
Agreement to evidence their approval thereof pursuant to a duly adopted
resolution of the Company’s Board of Directors.
 

             
/S/    FRANK J. BECKER        

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/S/    JOHN C. DICUS         

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Frank J. Becker
         
John C. Dicus

             
/S/    GENE A. BUDIG

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/S/    R.A. EDWARDS

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Gene A. Budig
         
R.A. Edwards

             
 

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/S/    JOHN C. NETTELS, JR.

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Charles Q. Chandler, IV
         
John C. Nettels, Jr.

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