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Exhibit 10.2

AGREEMENT

        This AGREEMENT (the "Agreement") is entered into as of the 1st day of
October, 2002 by and between Aquila, Inc., a Delaware corporation ("Aquila";
unless otherwise specifically indicated to the contrary, the term "Aquila" shall
be deemed to include each of Aquila's subsidiaries, other Affiliates (as the
term "Affiliates" is defined by Rule 12b-2 under the Securities Exchange Act of
1934, as amended, and any other entity in which Aquila has a direct or indirect
ownership interest); the execution of this Agreement by Aquila shall be deemed
to be legally binding upon Aquila and each of Aquila's subsidiaries and other
Affiliates)) and Robert K. Green ("You") (Aquila and You are sometimes referred
to herein individually as a "Party" and collectively as the "Parties").

Recitals

        WHEREAS, major changes have taken place in the operating environment in
which Aquila conducts its business that were not caused by Aquila or You but
which nevertheless required Aquila to exit the wholesale energy marketing and
trading business, sell significant assets and make other fundamental changes in
its business in order to enhance its liquidity, improve its access to capital
resources and stabilize and improve its results of operations through, among
other actions, taking steps to reduce costs, streamline the organizational
structure and obtain efficiencies in its operations generally;

        WHEREAS, You became Aquila's Chief Executive Officer on January 1, 2002,
and You have been willing to continue to be employed by Aquila as an officer
through the Resignation Date (as hereinafter defined) in order to guide Aquila
through these difficult changes and have been instrumental in preserving the
highest credit rating realistically available to Aquila while undergoing these
changes and conducting its business in the present highly challenging operating
environment;

        WHEREAS, there has been a mutual recognition by You and Aquila of the
need to reorganize and streamline Aquila's executive management structure to
address the changes to Aquila's business and achieve a significant reduction in
operating expenses and, in consideration of this Agreement, You will resign Your
positions with Aquila as provided in Section 1 hereof and forego your rights
under Your existing employment agreement with Aquila, dated November 6, 1996 and
amended on September 4, 1998 (the "Prior Agreement"), in order to assist Aquila
in realizing these goals;

        WHEREAS, Aquila desires to retain the benefit of Your knowledge of
Aquila's business and industry and Your management and other skills for a period
of eighteen months following the Resignation Date (as hereafter defined) by
establishing the arrangement set forth in this Agreement in order to facilitate
a successful transition to the new management structure, assist with various
initiatives, special projects and challenges, in each case, upon the terms and
conditions of this Agreement;

        WHEREAS, Section 9 of Your Employment Agreement provides for a
forfeiture of benefits thereunder if you engage in certain competitive
activities and you are willing to extend the length of your non-competition
covenant for an additional three years;

        WHEREAS, in consideration for the respective benefits to be received by
the Parties under this Agreement, (i) You desire to release Aquila from any and
all current or potential liability arising out of or in connection with Your
employment with Aquila and Your Prior Agreement and the termination of your
employment as provided herein, and (ii) Aquila desires to release You from any
and all current or potential liability to Aquila arising out of or in connection
with Your service as an officer and director of Aquila, Your ownership of Aquila
securities, Your employment with Aquila and the termination

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thereof and of Your Prior Employment Agreement, in each case upon the terms and
subject to the conditions set forth in this Agreement.

        NOW THEREFORE, in consideration of the foregoing premises and the
legally binding obligations hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties represent, warrant and agree as follows:

        1.    Resignation. You agree to resign as a director, member of board
committees, and officer of Aquila effective October 1, 2002 (the "Resignation
Date") and to resign your employment with Aquila effective April 1, 2004. You
further agree to execute all documents that are reasonably necessary to
implement Your resignations, provided that all such documents are consistent
with the terms and conditions of this Agreement and do not impose any greater
duties or obligations on You than those contemplated by this Agreement.

        2.    Consideration. As consideration for Your execution of this
Agreement, Aquila agrees to make the payments and provide the benefits set forth
in Exhibit A (whenever any reference to Exhibit A is made in this Agreement such
Exhibit A shall be deemed to have been incorporated by reference therein and
made a part of the provision in which such reference is made), provide the
release and waiver in Section 5 of this Agreement and the other rights and
obligations set forth in this Agreement.

        3.    Employee Benefits. Subject to the terms hereof, the benefits
provided under any Aquila-sponsored employee benefit plan (each an "Aquila
Benefit Plan") shall be in accordance with all terms and conditions set forth
therein. In the event of any inconsistency between any Aquila Benefit Plan and
this Agreement, then this Agreement shall control. No amendment shall be made to
any Aquila Benefit Plan after the date first set forth above ("Execution Date")
that shall have any material adverse effect on You unless, notwithstanding any
such amendment, You shall be entitled to receive at least the same benefits
either thereunder or pursuant to any other plan established to provide such
benefits.

        4.    Services and Cooperation.

(a)Services and Cooperation By You. For a period of eighteen months following
the Resignation Date (the "Services Period"), You agree to provide services to
Aquila that are consistent with the scope of services You have historically
provided to Aquila, which may include special projects and other management
initiatives, all as requested and determined by the Aquila Board of Directors or
a designated member thereof (collectively referred to herein as "Continued
Services"). You also agree to provide such reasonable cooperation and assistance
as may be requested in good faith from time to time during the Services Period
(collectively referred to herein as "Legal Support Services") by Aquila with
respect to the investigation and handling of any threatened, pending or future
litigation, regulatory proceeding, investigation, administrative or other
hearing, trial or proceeding, initiated by Aquila or any other person, entity or
governmental body against Aquila (collectively referred to herein as a "Legal
Proceeding"). The time devoted by You for Continued Services and Legal Support
Services shall not exceed an average of ten hours per week or forty hours in any
one week during the Services Period without Your written consent, which You may
withhold in Your sole discretion. Aquila will give You reasonable advance notice
under the applicable circumstances of the Continued Services or Legal Support
Services. Aquila will use its reasonable best efforts to enable You to provide
the Continued Services and Legal Support Services during Aquila's normal
business hours. Where practically feasible under the applicable circumstances,
You may provide the Continued Services and the Legal Support Services at any
location you desire, which may be outside of Kansas City, Missouri, and which
may be provided through telephone, e-mail or other means of remote
communications. Aquila agrees to reimburse You for all reasonable out-of-pocket
expenses incurred by You in connection with providing the Continued Services and
Legal Support Services, including, without limitation, reasonable

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attorney's fees incurred by you in connection with the Legal Support Services,
travel expenses (including food and lodging), phone bills, and delivery charges.

(b)Cooperation by Aquila. Subject to terms hereof, Aquila agrees to provide
reasonable cooperation to You in obtaining other employment, including, without
limitation, by providing any information within its possession that is not
confidential that You request regarding your past activities on behalf of Aquila
and various actions and transactions by Aquila while You were employed by
Aquila.

        5.    Release and Waiver of Claims. In exchange for this Agreement, You
(on behalf of You and anyone claiming through or on behalf of You), release
Aquila and each of Aquila's subsidiaries and other Affiliates (as the term
"Affiliates" is defined by Rule 12b-2 under the Securities Exchange Act of 1934,
as amended), its successors and assigns, and all of their past and present
employees, officers, directors, attorneys, stockholders, and agents from any and
all claims and potential claims, whether known or unknown and whether or not
matured or contingent, demands and causes of action You have or may have had
against any of them arising out of Your service or employment with, Aquila and
the termination thereof, as well as all future employment-related claims,
including claims not currently known to or contemplated by the Parties, to the
maximum extent permitted by law. This release includes, but is not limited to,
any and all claims, demands and causes of action which are related to or
concern: Your Prior Agreement; service as a director and officer of Aquila, Your
ownership of Aquila securities, Your employment and the termination thereof;
attorneys' fees or costs; the Aquila Workforce Transition Program;
discrimination under local, state or federal law; the Missouri Service Letter
Statute; the Age Discrimination in Employment Act; Title VII of the Civil Rights
Act of 1964; the Civil Rights Act of 1991; the Americans With Disabilities Act;
the Employee Retirement Income Security Act; the Family and Medical Leave Act;
severance pay; tort claims including invasion or privacy, defamation, fraud and
infliction of emotional distress; disputed wage claims; and all other claims,
demands, and causes of action, whether they arise in the United States of
America or elsewhere, to the maximum extent permitted by law. This Release does
not include (a) any rights or benefits as set forth in this Agreement (including
Exhibit A) or (b) any rights to indemnification under Aquila's Certificate of
Incorporation, Bylaws or any agreement relating to indemnification or any policy
of Directors and Officers Insurance. In exchange for this Agreement, Aquila, its
successors and assigns (on behalf of Aquila and Aquila's subsidiaries and other
Affiliates, their successors and assigns and anyone claiming through or on
behalf of Aquila or any of Aquila's subsidiaries or other Affiliates, their
successors and assigns), release You, Your heirs, executors, personal
representatives, attorneys, agents, successors and assigns, from any and all
claims and potential claims, known or unknown and whether or not matured or
contingent, demands and causes of action which they have or may have against You
or them, including claims, demands and causes of action not currently known or
contemplated by the parties, in each case, to the maximum extent permitted by
law. This release includes, but is not limited to, any and all claims, demands
and causes of action which are related to or concern: Your service as a director
or officer of Aquila, Your ownership of Aquila securities, Your Prior Agreement,
and Your employment and the termination thereof, except that this Release does
not release You of the obligation to perform the Continued Services and Legal
Support Services and to comply with Your other obligations under this Agreement.

        6.    No Admission of Wrongdoing. This Agreement is not an admission of
wrongdoing or liability by You, Aquila, or any of the individuals or entities
referenced in Section 5, above and any and all such wrongdoing or liability is
expressly denied. Neither of the Parties nor any of the individuals or entities
referenced in Section 5 are currently aware of any wrongdoing in liability by
the other Party and, instead, this Agreement reflects current business and
industry conditions which are unrelated to Your performance prior to entering
into this Agreement.

        7.    Return of Company Property. Except as otherwise provided by a
specific agreement between you and Aquila, You represent that You will have
returned all of Aquila's and Aquila's affiliates' files,

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records, documents, plans, drawings, specifications, equipment, software,
pictures, videotapes, or any property or other items of Aquila or Aquila's
affiliates in Your possession or concerning the business of Aquila, whether
prepared by You or otherwise coming into Your possession or control as of the
date you sign this Agreement. This section does not apply to data or information
that is in the public domain, or to property, data or information that You and
Aquila agree is immaterial.

        8.    Proprietary Information. You agree that You shall not at any time,
except as authorized by the Chairman of Aquila or his authorized designee,
communicate, divulge or use, for Your own benefit or for the benefit of any
other person, firm, or corporation, any confidential or proprietary information
concerning Aquila's business, including but not limited to Aquila's operations,
services, materials, policies, and the manner in which they are developed,
marketed, priced or provided, and such other information regarded as trade
secrets or confidential or proprietary information under any applicable law,
including without limitation information that is attorney work product or
attorney-client privileged. These provisions do not apply to data or information
that are compelled to be released by law or judicial process, or to data or
information that are in the public domain other than as a result of a breach by
You of the terms hereof, or are subsequently released by Aquila to the public
domain.

        9.    Non-disparagement. Aquila (on behalf of itself and its
subsidiaries, other Affiliates and their respective officers, directors,
employees and agents) and You each agree not to disparage each other in any way.
Further, Aquila (on behalf of itself and its subsidiaries and other Affiliates,
officers, directors, employees and agents) and You each agree not to make nor
solicit any comments, statements, or the like to the media or to third parties
that may be considered defamatory, derogatory or detrimental to the good name or
business reputation of the other.

        10.    Indemnification. Aquila agrees, to the maximum extent permitted
by applicable law, to defend and indemnify You (including Your heirs, executors,
personal representatives, successors and assigns) and pay all costs and expenses
as they become due (including, without limitation, any reasonable attorneys'
fees and other legal costs) in any action, suit or proceeding threatened or
pending against You as of the Resignation Date or asserted thereafter, and to
further defend and indemnify You and pay all costs and expenses as they become
due (including, without limitation, any reasonable attorneys' fees and other
legal costs) in any action, suit or proceeding threatened or pending in the
future, so long as in each case Your actions which are or may be the subject of
such action, suit or proceeding were taken: (i) within the course and scope of
Your employment with Aquila or as a director, member of board committees, or
officer of Aquila (or pursuant to this Agreement, including, but not limited to,
the Continued Services and Legal Support Services); (ii) in good faith and in a
manner You reasonably believed to be in or not opposed to the best interests of
Aquila; and (iii) with respect to any criminal action or proceeding, without any
reasonable cause by You to believe Your actions were unlawful; provided,
however, that the standard referenced in clause (ii) or (iii) of this provision
shall be deemed to have been satisfied if you shall have acted or refrained from
acting in accordance with advice provided to You by inside or outside legal
counsel to Aquila, or any other employee or agent of Aquila reasonably believed
by You to be competent to give such advice. As a condition to the foregoing, You
agree to notify Aquila of any written claims made against You within fifteen
(15) calendar days after You receive personal service by hand delivery of such
claims and agree to otherwise reasonably cooperate and assist Aquila and its
agents in any defense. In accordance with Section 145(e) of the Delaware
Corporation Law, You agree to promptly repay to Aquila any expenses advanced by
Aquila in connection with all indemnified matters if it shall ultimately be
determined that You are not entitled to be indemnified against such expenses. In
addition, to the same extent provided to other officers and directors, Aquila
shall maintain, at its cost and expense, officers' and directors' liability
insurance covering You with respect to the time period that you served as an
officer or director of Aquila or any subsidiary or other Affiliate of Aquila,
(i) with a scope of coverage (including any exclusions of coverage) at least
equivalent to that in effect on the date of this Agreement, and (ii) with a
dollar

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amount of coverage at least equivalent to that in effect on the date of this
Agreement (including no greater deductibles or retention amounts).

        11.    Confidentiality. The content of this Agreement, and Your
discussions with Aquila pertaining to it, are confidential. Until such time as
Aquila files this Agreement with the Securities and Exchange Commission, You
agree not to communicate or allow communication in any manner with respect to
the content of this Agreement, and the discussions pertaining to it, except that
this Agreement, and the discussions pertaining to it, may be disclosed by You to
Your immediate family members, to Your attorneys and accountants, tax
consultants, financial planners, governmental taxing authorities or regulatory
agencies, and in any litigation, arbitration, or other proceeding relating to
this Agreement or any of the provisions hereof, or as may otherwise be required
by law or judicial process or arbitration. Aquila (on behalf of itself and its
Affiliates), agrees that the contents of this Agreement will not be disclosed to
anyone other than those persons and entities with a need to know for legitimate
business purposes, unless otherwise required by a regulatory agency or by law.
Any publication or disclosure by You, or by Aquila or its Affiliates, officers,
directors, employees or agents, of this Agreement, other than as allowed by this
Section, shall be considered a material breach of this Agreement.

        12.    Remedies for Breach of this Agreement. If either You or Aquila
believes that the other Party to this Agreement has breached its obligations
under this Agreement, then the Party claiming a breach will provide notice to
the other Party, in writing, including a statement of the specific manner in
which the Party believes that this Agreement has been breached. If the breach is
not cured, or cannot reasonably be cured, within thirty (30) days following
notice, then the Parties, subject to Section 15, and at their respective
options, will be entitled to proceed as follows:

(a)If Aquila materially breaches any provision of this Agreement, payment of any
remaining compensation or other benefits described in Exhibit A may at Your
option be accelerated and not be recoverable by Aquila as long as You have not
also materially breached this Agreement. You may also pursue any other available
remedies for such breach, including but not limited to recovery of Your
reasonable costs and attorneys' fees.

(b)If You materially breach any provision of this Agreement, and Aquila has not
also materially breached this Agreement, then Aquila will be entitled to
immediately cease all remaining payments and benefits under this Agreement and,
in the event of Your breach of Section 8, 9 or 16 of this Agreement, any actual
damages (excluding consequential, incidental or punitive damages) suffered by
Aquila as a result thereof. Aquila may also pursue any other available remedies
for such breach, including but not limited to recovery of its reasonable costs
and attorneys' fees.

        13.    Tax Considerations. You acknowledge that no representations have
been made to You by Aquila, Aquila's Affiliates, or other agents or legal
counsel regarding the tax implications of any payments made pursuant to this
Agreement. All liability for the employee's share of federal, state, and local
taxes (including FICA) remains with You, unless otherwise agreed to in writing
by Aquila, and Aquila shall deduct withholdings in the minimum amount required
under applicable tax laws, rules or regulations from the consideration payable
under this Agreement.

        14.    Choice of Law. This Agreement shall be construed in accordance
with the laws of the State of Missouri without regard to the choice of law
principles thereof.

        15.    Knowing Execution/Binding Arbitration. You acknowledge that You
knowingly and voluntarily executed this Agreement. You have had the opportunity
to review the Agreement and consult with an attorney. Aquila has made no other
promise, inducement or agreement not expressed in this Agreement. You and Aquila
agree that if a dispute arises out of or is related to this Agreement or Your
employment by Aquila, other than a dispute regarding the obligations under
Sections 8, 9 or 11, such dispute shall, if not earlier resolved by negotiations
of the parties or in accordance with

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Paragraph 12, be submitted to binding arbitration under the Employment Section
Rules of the American Arbitration Association, or the mutually agreed
equivalent. Following the 30-day period described in Section 12, above, either
party may provide written notice to the other party that the dispute is not able
to be resolved by negotiation and such notifying party shall then contact the
American Arbitration Association for appointment of an arbitrator to resolve
such dispute. Any arbitration hearing shall take place in Kansas City, Missouri.
In addition to all other remedies otherwise available to Aquila or to You,
Aquila and You shall have the right to injunctive relief to restrain and enjoin
any actual or threatened breach by the other party of any provisions of Sections
8, 9 or 16.

        16.    Non-Competition. You agree to forfeit all rights to compensation
and benefits payable under Sections 2 and 3 of this Agreement if, during the
period commencing on the Resignation Date and ending five years thereafter
("Non-Compete Period"), You directly or indirectly, own, manage, operate,
control, become employed by, perform services for, consult with, solicit
business for, participate in, or become connected with the ownership,
management, operation, or control of any business that is either directly or
indirectly competitive with the products or services of Aquila.

        17.    Entire Agreement. This Agreement, including Exhibit A, contains
the entire agreement of the parties with respect to the matters contemplated by
this Agreement, and supersedes, cancels and replaces the Prior Agreement.

        18.    Authorship. This Agreement will not be construed against either
party due to authorship.

        19.    Severability. If any provision of this Agreement or the
application thereof to any party or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.

        20.    Successors and Assigns. This Agreement is binding on and inures
to the benefit of Aquila and its subsidiaries and other Affiliates and their
successors and assigns and You and Your heirs, executors, personal
representatives, and assigns, except that any services to be provided by You
under this Agreement shall only be performed by You.

        21.  Notice. Any notice required by this Agreement shall be duly given
if delivered, in writing, in person or by certified, first-class mail (a) if to
Aquila, Inc., to the Chief Administrative Officer at 20 West 9th Street, Kansas
City, Missouri 64105, and (b) if to You, at Your current residence address.
Either party shall give notice to the other party of any change of address for
purposes of notices to such party under this Agreement.

        22.    Amendment and Waivers. Except as otherwise expressly set forth in
this Agreement, (a) any term of this Agreement may be amended only with the
written consent of each Party, and (b) a Party's observance of any term of this
Agreement may be waived (either generally or in a particular instance and
whether retroactively or prospectively) only by written consent of all the other
parties. No waivers of or exceptions to any term, condition, or provision of
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition, or
provision.

        23.    Press Releases and Other Public Disclosures. Aquila agrees to
provide you with a draft of any press release, report or other disclosure to be
filed or furnished to the Securities and Exchange Commission or any other
governmental authority, or any other public disclosure to be made by Aquila, any
subsidiary or other Affiliate of Aquila or any of their respective directors,
officers, employees or agents which addresses, directly or directly, this
Agreement, the subject matter thereof, the background leading thereto and any
matter related to any of the foregoing Public Disclosure in order to enable You
to review and comment on the form and content thereof.

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        24.    No Mitigation. You shall not be required to mitigate the amount
of any payment provided for pursuant to this Agreement by seeking or obtaining
other employment, consulting work or other work of any type, and You shall not
be required to pay Aquila any amounts You may receive from such alternative
employment, consulting or other work.

        25.    Due Authorization. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action. This
agreement has been duly executed and delivered by Aquila and its subsidiaries
and other Affiliates and constitutes a binding obligation of Aquila and its
subsidiaries and other Affiliates enforceable against Aquila and its
subsidiaries and other Affiliates in accordance with its terms.

        THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION THAT MAY BE
ENFORCED BY THE PARTIES.

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Remainder of Page Left Intentionally Blank

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first above written.

Robert K. Green   Aquila, Inc. (for itself and on behalf of its subsidiaries and
other Affiliates)
Signature:
/s/  ROBERT K. GREEN      

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By:
/s/  HERMAN CAIN      

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Name: Herman Cain
Title: Chairman of Compensation
Date:
October 1, 2002
 
Date:
October 1, 2002

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EXHIBIT A

Comp. / Benefit

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Compensation   A lump sum payment of $6,639,869 shall be paid in cash to You on
the eighth day following the Resignation Date, provided that you have not
revoked this Agreement as provided in Section 25. In addition, an amount equal
to $25,952.08 shall be paid to You on a biweekly basis for a period of 18 months
following the Resignation Date, with the first such payment due on October 25,
2002 (includes 39 pay periods).
Stock Options
 
Vest all unvested options for the purchase of a total of 303,154 shares of
Aquila common stock. All options, regardless of their terms under the individual
award agreements or relevant plan documents, shall remain exercisable and not
expire until the sixth (6th) anniversary of Your Resignation Date, as defined in
this Agreement. You may choose to exercise options at any time prior to such
options' expiration date.
Restricted Stock
 
Restrictions lifted. Full Release of all shares of Restricted stock granted
pursuant to Award Numbers: R00040, R00153, R00183, R01313 and R01351. A total of
356,734 shares.
Capital Accumulation Plan
 
Plan provisions apply, subject to the provisions of Sections 3 of this
Agreement.
Pension
 
Plan provisions apply, subject to the provisions of Sections 3 of this
Agreement.
SERP
 
Plan provisions apply, subject to the provisions of Sections 3 of this
Agreement. Three years age and service added to coincide with the above three
years of compensation. SERP payment of $24,681.35/month commencing 1/1/2024
401(k)/ESCP
 
Plan provisions apply, subject to the provisions of Sections 3 of this
Agreement. May maintain account until age 701/2 or rollover to IRA.
ESPP
 
Plan provisions apply, subject to the provisions of Sections 3 of this
Agreement.
Medical, Dental and Vision
 
Aquila will provide continuing coverage for five years or until covered by a
plan with at least equivalent benefits provided by another employer for which
You are a Full-Time Employee. The term "Full-Time Employee" means that You are
an employee, and not an "independent contractor," of an employer other than
Aquila, are working for that same employer at least 40 hours per week, and have
been so working for that same employer for a period of at least 12 consecutive
months. Coverage will be equivalent to the current plan.
Accidental Death and Dismemberment Insurance
 
Continued coverage for five years or until covered by a policy with at least
equivalent benefits provided by another employer for which you are a Full-Time
Employee (as defined above).
Long Term Disability
 
Continued coverage for five years or until covered by another employer of a plan
with a least equivalent benefits provided by another employer for which You are
a Full-Time Employee (as defined above).
 
 
 

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Annual Detailed Health Examination
 
Continued support by Aquila (including one annual physical examination at
Aquila's expense) for five years or until covered by a policy with at least
equivalent benefits provided by another employer for which You are a Full-Time
Employee (as defined above).
Life Insurance Policy
 
Aquila will take the steps necessary to fully pay and release outright to You a
universal life insurance policy with the same amount of death benefit at the
time of release that You currently have (i.e. $2 Million).
Office Space and Support
 
Aquila will make available to You office space and support through October 1,
2005 or until provided by another employer for which You are a Full-Time
Employee (as defined above).

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QuickLinks

Exhibit 10.2

EXHIBIT A