AN ORDINANCE, granting to Kansas Gas and Electric Company, a Kansas corporation and wholly owned subsidiary of Western Resources, Inc., a Kansas corporation, doing business as Westar Energy, its successors and assigns, an electric franchise, prescribing the terms thereof and relating thereto, and repealing all ordinances or parts of ordinances inconsistent with or in conflict with the terms hereof.

BE IT ORDAINED BY THE GOVERNING BODY OF CANEY,KANSAS

SECTION 1. That in consideration of the benefits to be derived by the City of Caney. Kansas, and its inhabitants, there is hereby granted to Kansas Gas and Electric Company, a Kansas corporation and wholly owned subsidiary of Western Resources, Inc., a Kansas corporation, doing business as Westar Energy, hereinafter sometimes designated as “Company,” said Company being a corporation operating a system for the transmission of electric current between two or more incorporated cities in the State of Kansas, into and through which it has built transmission lines, the right, privilege, and authority for a period of ten (10) years from the effective date of this ordinance, to occupy and use the several streets, avenues, alleys, bridges, parks, parkings, and public places of said City, for the placing and maintaining of equipment and property necessary to carry on the business of selling and distributing electricity for all purposes to the City of Caney. Kansas, and its inhabitants, and through said City and beyond the limits thereof; to obtain said electricity from any source available; and to do all things necessary or proper to carry on said business in the City of Caney, Kansas

SECTION 2. As further consideration for the granting of this franchise, and in lieu of any city occupation, license, or revenue taxes, the Company shall pay to the City during the term of this franchise five percent (5%) of its gross cash receipts from the sale of electric energy within the corporate limits of said City, such payment to be made monthly for the preceding monthly period. At the option of either the City or the Company, the rate of compensation provided herein may be renegotiated by written notice given to the other party within ninety days (90) prior to the fifth anniversary of this franchise. Any change of the rate of compensation agreed upon by the parties shall be effective for the remainder of the term. Gross cash receipts shall not include other operating revenues received by the Company, which are not related to the “sale of electric energy”. Other operating revenues include, but are not limited to, delayed payment charges, connection fees, disconnection and reconnection fees, collection fees and return check charges.

SECTION 3. In the event the Company’s customers served within the area covered by this Agreement are granted the right to purchase electricity from a provider other than the Company, either party may, upon 30 days’ written notice to the other party, but no later than six (6) months after such grant is effective, request that the franchise fee rate provided for herein be adjusted to reflect the modifications and resolutions of franchise fee issues adopted in the legislation which created the right of customers to obtain electricity from providers other than the Company. The parties agree that, upon the giving and receipt of such notice, they will meet in good faith to negotiate any necessary changes to this Agreement. However, if the parties are unable to reach an agreement within ninety (90) days after the receipt of notice by the receiving party, either party may terminate this franchise. The Company may terminate by giving written notice to the City; the City may exercise its option to terminate the franchise granted to the Grantee by action of the governing body repealing this Ordinance.

SECTION 4. That Company, its successors and assigns, in the construction, maintenance, and operation of its electric transmission, distribution and street lighting system, shall use all reasonable and proper precaution to avoid damage or injury to persons and property, and shall hold and save harmless the City of Caney, Kansas, its council members, representatives, employees and agents, and their successors and assigns, which such City or persons may be liable to pay on account of Company’s activities authorized by this Ordinance, and from any and all damage, injury and expense caused by the negligence of said Company, its successors and assigns, or its or their agents or servants.

SECTION 5. The Company shall maintain its electric transmission, distribution and street lighting system in good and proper working condition and shall leave all work areas in the same or better condition as when repairs began. All work perform by the Company may be observed by a representative of the City. The Company shall promptly reimburse City for City’s actual costs to repair or replace any public facilities damaged in Company’s construction, maintenance and operation of its electric transmission, distribution and street lighting system.

SECTION 6. In the event the City shall lawfully decide to make any public improvement to streets or alleys, excluding relocation of sidewalks, which affects Company’s equipment within the road-right-of-way the City will provide Company one-hundred and twenty days (120) written notice of the commencement of such improvement project and provide a complete set of construction plans for said public improvement. With regard to any such project which benefits the entire City of Caney and for which the City of Caney is not reimbursed in whole or in part by any private entity, the Company shall, at the Company’s cost, relocate its electric distribution facilities, located on/or within public right-of-way, to the new public right-of-way provided by the City. However, with regard to any such project for which the City of Caney is reimbursed in whole or in part by any private entity, such private entity shall be required to pay to the Company its estimated cost to relocate the affected electric distribution facilities prior to the Company commencing any work related to such relocation. Once the relocation is completed, the Company shall refund or bill the affected private entity for any difference between the Company’s estimated costs and its actual costs of relocation. In any such project, the City shall provide new right-of-way to the Company at no cost to the Company.

SECTION 7. After the approval of this ordinance by the City, Company shall file with the City Clerk of the City of Caney. Kansas, its unconditional written acceptance of this ordinance. Said ordinance shall become effective and be in force and shall be and become a binding contract between the parties hereto, their successors and assigns, from and after the expiration of 60 days from its final passage, approval and publication as required by law, and acceptance by said Company.

SECTION 8. That this ordinance, when accepted as above provided, shall constitute the entire agreement between the City and Company relating to this franchise and the same shall supersede and cancel any prior understandings, agreements, or representations regarding the subject matter hereof, or involved in negotiations pertaining thereto, whether oral or written.

SECTION 9. This franchise is granted pursuant to the provisions of K.S.A. 12-2001.

SECTION 10. That any and all ordinances or parts of ordinances in conflict with the terms hereof are hereby repealed.

SECTION 11. The Company will file this ordinance with the State Corporation Commission of Kansas. Should the State Corporation Commission take any action with respect to this franchise ordinance, which would or may preclude Kansas Gas and Electric Company, a Kansas corporation and wholly owned subsidiary of Western Resources, Inc., a Kansas corporation, doing business as Westar Energy, from recovering from its customers any cost provided for hereunder, the parties hereto shall renegotiate this ordinance in accordance with the State Corporation Commission’s ruling.

SECTION 12. A franchise shall be assignable only in accordance with the laws of the State of Kansas, as the same may exist at the time when any assignment is made, provided, however, that the franchise may be assigned by Company without action by the City to any creditworthy entity which succeeds to all or substantially all of the electric utility business of the Company. In the event of such assignment to a successor, Company shall be released from all obligations which are assumed in writing by such successor and the assignee shall have executed an assumption of the franchise being assigned.

(07-01-2002)