A. Grantor shall have the option and right to purchase, take over and acquire (the "Purchase Option"), on an as-is, where-is basis:
1. Grantee's system of pipes, pipelines, meters and connected apparatus that is located in, across, upon and under the public ways within the incorporated limits of the City, and that is used for the purposes of transporting, distributing and selling gas to the City and/or its inhabitants, and
2. non-exclusive rights to use all assignable private rights of way and easements in favor of Grantee to the extent such rights of way and easements are located within the incorporated limits of the City and are used for the purposes of transporting, distributing and selling gas to the City and/or its inhabitants (collectively the items in (1) and (2) are referred to herein as the "Purchase Option Assets"), provided that the Purchase Option Assets shall not include any of the following:
a. Grantee's office locations;
b. Office equipment (including without limitation computers, computer software, data), books and records, and office supplies;
c. Vehicles;
d. Intangible property,
e. Assets used for operations, maintenance, meter reading, monitoring, construction, customer service, recordkeeping, administrative functions, emergency identification and response, or personnel training;
f. Assets within the incorporated limits of the City that are used exclusively for the provision of gas service to areas outside such incorporated limits, and
g. Assets that contribute to or assist in the delivery of gas to or from systems outside the incorporated limits of the City.
B. The Purchase Option shall be subject to all the following terms and conditions:
1. In order to exercise the Purchase Option, the City must deliver the following (the "Purchase Option Notice") to Grantee, in writing, any time during the next to final year of this Franchise, but no later than December 1, 2038:
a. A written notice that the City intends to exercise the Purchase Option and the proposed closing date, and
b. A copy, certified by the chief administrative officer of the City, of resolution(s) of the City's governing body along with an opinion of counsel for the City, in form reasonably acceptable to Grantee, stating that, among other things, the City has taken all necessary measures and has all necessary authority to consummate the purchase of the Purchase Option Assets pursuant to the Purchase Option, reflecting the City's intent to take over, purchase and acquire the Purchase Option Assets (the "Purchase").
2. If the City fails to provide the Purchase Option Notice during the next to final year of the Franchise, then the Purchase Option shall automatically and immediately terminate without notice.
3. Any Purchase by the City shall be on the following terms:
a. The closing date of the Purchase shall not be later than the last day of the term of this Franchise.
b. At or before closing of the Purchase, the City must pay to Grantee the following:
(1) An amount equal to the Fair Market Value (as defined below, and determined in accordance with the Appraisal Procedure) of the Purchase Option Assets as they exist on the date (the "Appraisal Effective Date") of appointment of the third appraiser, as set forth in the Appraisal Procedure defined below,
(2) Plus the actual cost or expense of all necessary capital improvements made by Grantee to the Purchase Option Assets and all necessary additions to the Purchase Option Assets from and after the Appraisal Effective Date until the date of closing the Purchase,
(3) Plus comply with any and all requirements as may be ordered by any State or Federal regulatory agency including, but not limited to, the Oklahoma Corporation Commission pursuant to OAC 165:45-3-5 regarding the sale or disposal of jurisdictional facilities by utility which may include, but may not be limited to, any and all costs associated with isolating and separating Grantee's distribution system within the incorporated limits of the City that is used at the time to serve customers, current and future, outside the incorporated limits of the City (the "Separate Distribution Assets") so that (i) the Purchase can effectively take place without interfering with Grantee's rights and/or obligations to such customers and (ii) Grantee can serve such customers without the use of the Purchase Option Assets (collectively the "Additional Separation Costs"). The Additional Separation Costs shall be determined using the Appraisal Procedure.
c. The City shall Grant permits, licenses and/or easements to Grantee in a form acceptable to Grantee, at no cost to Grantee, for construction, operation and maintenance of existing facilities within the incorporated limits of the City that may be determined to be the most cost effective and/or reliable means of serving customers outside the incorporated limits of the City, in order to not unnecessarily add cost to the Grantee's other customers in Oklahoma.
d. "Fair Market Value" shall mean the fair market sales value of the Purchase Option Assets that would be obtained in an arm's length transaction between an informed and willing buyer (other than a buyer currently in possession) and an informed and willing seller, in each case under no compulsion to buy or sell, as determined in accordance with the Appraisal Procedure.
e. "Appraisal Procedure" shall mean the following procedure for determining the Fair Market Value of the Purchase Option Assets and the Additional Separation Costs (collectively the "Values").
After Grantee's receipt of a Purchase Option Notice, Grantor and Grantee shall consult for purposes of determining the Values by mutual agreement.
In the absence of such agreement on or before the 60th day after the Grantee's receipt of the Purchase Option Notice, then the Values shall be determined by a panel of three independent appraisers, one of whom shall be selected by each of the Grantor and Grantee on or before the 20th day following the expiration of such 60-day period, such selection to be made by a writing delivered by the selecting party to the other. If one party appoints an appraiser pursuant to the immediately preceding sentence, and if the other party fails to appoint a second appraiser within the applicable time limit, the appraisal shall be made by such appraiser. On or before the 10th day after appointment of the second appraiser, a third appraiser shall be selected by agreement of the first two appraisers, or if such two appraisers are unable to agree upon a third appraiser by such date, such appointment shall be made by the American Arbitration Association (or its successors).
Each appraiser appointed pursuant to the foregoing procedure shall (i) be experienced in rendering appraisals of gas distribution systems, (ii) be of recognized ability, and (iii) have no real or apparent conflict of interest with Grantor or Grantee (for example, and not by way of limitation, no appraiser shall be a resident or employee of the City nor an officer, employee, stockholder, or director of Grantee).
If they so desire, the appraisers may jointly retain the services of one or more third-party consultants (the "Third-Party Appraiser Consultants") for the purposes of performing any engineering and technical work the appraisers desire in order to carry out their duties hereunder, including without limitation the determination of the components of the Fair Market Value of the Purchase Option Assets and/or the Additional Separation Costs.
The appraisers shall determine the Values and communicate such determination to the parties in writing (each such writing a "Return") on or before the 180th day after the appointment of the last of such appraisers to be appointed, and such determination shall be final, binding and conclusive upon the parties, subject to the provisions set forth below. If three appraisers shall be appointed, the Values shall be the applicable averages of the three appraisals rendered by the appraisers. In the event, however, that the lowest or the highest of the three appraisals, or both, in regard to any component of the Values (i.e. the Fair Market Value of the Purchase Option Assets or the Additional Separation Cost), varies by more than ten percent from the middle appraisal, the appraisal or appraisals so varying shall be disregarded in determining such component(s) of the Values.
Regardless of whether the Purchase is actually closed, (i) Grantor and Grantee shall share equally the fees and expenses of the Appraisal Procedure and (ii) Grantor shall pay the costs and expenses related to the Third-Party Appraiser Consultants, as incurred.
Within thirty (30) days of receiving the last Return to be received, Grantor and Grantee shall each serve written notification on one another regarding whether such party agrees or disagrees with the determination of the Values. Any such written notice of agreement or disagreement shall be served personally or by certified mail, return receipt requested, on the City Manager of the City and on the Senior Vice President, Commercial or other equivalent officer of Grantee, respectively. Failure of a party to serve such written notice of agreement or disagreement within thirty (30) days of receiving such Return shall constitute a waiver of the right of the party not serving the notice in a timely manner to disagree with the determination, and such determination shall thereupon become binding on that party. If both parties agree with the determination, then such determination shall be binding on both parties. If either party disagrees with the determination of the appraiser(s) and serves written notice of such disagreement on the other party within thirty (30) days of receipt of the last Return to be received, as provided above, then the parties shall forthwith proceed to district court by the filing of an appropriate civil action for a declaratory judgment by either party against the other party, with the determination of the Values to be decided by non-jury trial. The district judge making such determination shall use the same criteria for determining the Values as are to be used by the appraiser(s) under the Appraisal Procedure. After the judge renders a verdict and the district court enters judgment on such verdict, either party shall have such further right to appeal the verdict and judgment to an appellate court as may be provided by Oklahoma law. In any such judicial proceeding, the prevailing party, as determined by the court, shall be entitled to recover from the other party all legal fees and expenses that were incurred in connection with such judicial proceeding.
The decision of the appraisers (or the court, as applicable), and the Purchase, shall be subject to all applicable federal, state and local laws, or other applicable rules, regulations or orders.
f. After closing of the Purchase,
(1) Grantor shall be responsible for all aspects of licensing and operating the Purchase Option Assets and
(2) Grantor shall indemnify Grantee and hold Grantee harmless of and from all costs, expenses and liabilities relating to the ownership or operation of the Purchase Option Assets that arise or are incurred after the closing.
C. The closing of the Purchase shall occur on a date agreeable to the City and Grantee but in any event no later than one hundred twenty (120) days after the receipt of the last Return and, if any judicial proceeding is timely instituted under Subsection 8-7-12(B)(3)(e) above, the final determination and disposition of all appeals in regard to any such judicial proceeding (such date the "Closing Deadline"). The closing shall occur at a location agreed to by both the City and Grantee.
D. At the closing of the Purchase,
1. Grantor shall pay to Grantee, in cash or immediately available funds, the amounts set forth in Subsections 8-7-12(B)(3)(b) and B(3)(e) above,
2. Grantor shall execute and deliver to Grantee such documents and instruments as Grantee shall reasonably require to grant and transfer to Grantee the permits, licenses and/or easements described in Subsection 8-7-12(B)(3)(c) above,
3. Grantee shall execute and deliver to Grantor such documents and instruments as Grantor shall reasonably request to transfer the Purchase Option Assets to Grantor, as-is and where is, expressly disclaiming any and all express and implied warranties, and
4. Each of Grantor and Grantee shall execute and deliver such other documents and instruments as shall be necessary to carry out the intent of this Section.
E. If Grantor is unable or unwilling to close by the Closing Deadline, Grantee may, at Grantee's option, terminate the Purchase Option by written notice to Grantor. In any such case, Grantor and Grantee shall pay the fees, costs and expenses of the Appraisal Procedure as set forth in Subsection 8-7-12(B)(3)(e).
F. Any and all sales (including bulk sales), use, transfer, recording, value added, ad valorem, privilege, documentary, gross receipts, registration, conveyance, excise, license, stamp or similar taxes and fees arising out of, in connection with or attributable to the Purchase (the "Transfer Taxes") shall be paid by the City. City and Grantee shall:
1. cooperate in timely making all filings, returns, reports and forms as may be required in connection with the City's payment of the Transfer Taxes and
2. as appropriate, execute and deliver, or cause to be executed and delivered, all instruments and certificates necessary to enable the other to comply with any filing requirements relating to any Transfer Taxes.
G. The Purchase Option shall be non-assignable by the City.
H. Nothing contained in the Section shall be construed as denying the City the right of acquiring at any time, the properties and property rights of Grantee in such manner as may be otherwise provided or permitted by applicable laws of the State of Oklahoma. (Ord. 2014-29, 8-19-2014)