OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT
This OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT ("Agreement") is
entered into as of the 1st day of January, 1997, by and between M.R.H.,
L.P., a Missouri limited partnership (the "Owner") and XXXX XXXXX HOME,
a Missouri not for profit corporation (the "Optionee").
RECITALS:
A. The Owner owns those certain improvements consisting of
forty-eight (48) residential units for low- and moderate-income tenants
located in St. Louis, Missouri, and the land on which the improvements
are situated, which is more particularly described on Exhibit A attached
hereto and made a part hereof by this reference (together, the
"Project").
B. The Optionee is the general partner (the "General Partner")
of the Owner under the Amended and Restated Agreement of Limited
Partnership of the Owner dated as of January 1, 1997 ("Partnership
Agreement").
C. The parties desire to set forth the terms of the option and
right of first refusal from the Owner to the Optionee to purchase the
Project.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
GRANT OF OPTION AND RIGHT OF FIRST REFUSAL
The Owner hereby grants to the Optionee an option and right of
first refusal to purchase the Project on the terms and conditions set
forth in this Agreement. The Optionee's right to exercise the option
and right of first refusal is subject to the Optionee having provided to
the Owner an opinion of counsel reasonably acceptable to the Owner and
to each of the Investment Limited Partner, the Special Limited Partner
and the Missouri Limited Partner of the Owner (collectively, the
"Limited Partners") that the exercise of the option or the right of
first refusal will not cause any recapture of tax credits ("Tax
Credits") to any partner of the Owner (a "Partner") allowable under
Section 42 of the Internal Revenue Code of 1986, as amended (the
"Code"), that there is no default of any of the obligations of the
Optionee under the Partnership Agreement, and that the Optionee is a
qualified nonprofit organization or governmental agency as required for
the purposes of Section 42(i)(7)(A) of the Code (an "Eligible
Purchaser"). If at any time during the term of this option and right of
first refusal, the Optionee is no longer the General Partner of the
Owner pursuant to the terms of the Partnership Agreement, the grant of
option and right of first refusal shall be null and void and shall be of
no further force or effect.
ARTICLE II
TERM OF OPTION AND
RIGHT OF FIRST REFUSAL
The term of the option and right of first refusal shall commence
one day after Owner completes its 15-year "compliance period" under
Section 42(i)(1) of the Code, so that the term of the option and right
of first refusal is expected to commence on January 1, 2012; and the
term of the option and right of first refusal shall expire on January 1,
2013.
ARTICLE III
MANNER OF EXERCISING OPTION AND RIGHT OF FIRST REFUSAL
3.1 The Optionee shall exercise its option by delivering to the
Owner, with a copy to the Limited Partners as required under
Article VII, during the option term, written notice of the exercise.
The notice of exercise shall state that the option is exercised without
condition or qualification.
3.2 If, during the term of its right of first refusal, 1) the
Owner receives a bona fide third party offer (an "Offer") to purchase
the Project at a price not less than the minimum purchase price under
Section 42(i)(7)(B) of the Code (the "Statutory Purchase Price"); 2) the
Owner determines that it is in the best interest of the Owner to sell
the Project upon the terms set forth in the Offer; and 3) the Owner
provides to the Optionee a notification in writing of the Offer (an
"Offer Notification"), and the Owner's determination to sell, the
Optionee shall then have the option, if the Optionee is then an Eligible
Purchaser, to thereupon exercise its right of first refusal within ten
(10) days of receiving the Offer Notification upon the precise terms set
forth in the Offer, except that the price to be paid by the Optionee
shall be the Statutory Purchase Price. If the Optionee does not so
exercise its right of first refusal, then the Owner may proceed to sell
the Project to the maker of the Offer pursuant to the terms set forth in
the Offer and this Agreement shall terminate.
3.3 At any time during the term of the right of first refusal,
the General Partner shall have the right to solicit bids for the sale of
the Project, and any bona fide bid from a third party in connection with
such solicitation can constitute an Offer which triggers the right of
first refusal.
3.4 Notwithstanding the foregoing, it shall be a requirement
that upon any exercise of the option or the right of first refusal that,
in addition to the purchase price for the Property being paid, all
accrued but unpaid fees or other debts or obligations owed by the Owner
or the Optionee to any Limited Partner or Affiliate of a Limited Partner
be paid in full (whether through the proceeds of an additional Capital
Contribution by the Optionee to the Owner or otherwise); neither the
option nor the right of first refusal shall close without the payment in
full of all such amounts.
ARTICLE IV
OPTION PURCHASE PRICE
4.1 The purchase price for the Project under the option shall be
the greater of (a) the Fair Market Value, or (b) the Statutory Purchase
Price; provided, however, that if prior to exercise of the option
(1) the Internal Revenue Service (the "Service") shall have published an
applicable regulation or revenue ruling (the applicability of such a
regulation or ruling being determined in its judgment by tax counsel to
the Investment Limited Partner), (2) the Service shall have issued an
applicable private letter ruling to the Owner (the applicability of such
a ruling being determined in its judgment by tax counsel to the
Investment Limited Partner), or (3) tax counsel to the Investment
Limited Partner or counsel to the Optionee acceptable to the Investment
Limited Partner shall have issued an opinion letter, in the applicable
situation (clause (1), (2) or (3)) concluding that property of the
nature and use of the Project may be sold under the option described in
this Agreement at the Statutory Purchase Price, even though such a price
may be less than the fair market value of the Project, without adversely
affecting the Tax Credits or deductions that would otherwise be
available to the Limited Partners, then the option price shall be equal
to the Statutory Purchase Price.
4.2 The Fair Market Value of the Project shall refer to the fair
market value of the Project at the time of the exercise of the option
and shall be determined as follows: The Special Limited Partner, on
behalf of the Owner, and the Optionee shall select a mutually acceptable
appraiser who shall determine the fair market value of the Project. In
the event the parties are unable to agree upon an appraiser, the Special
Limited Partner, on behalf of the Owner, and the Optionee shall each
select an appraiser. If the difference between the two appraisals is
within ten per cent (10%) of the lower of the two appraisals, then the
Fair Market Value shall be the average of the two appraisals. If the
difference between the two appraisals is greater than ten per cent (10%)
of the lower of the two appraisals and at least one of the appraisals
exceeds the Statutory Purchase Price, then the two appraisers shall
jointly select a third appraiser. If the two appraisers are unable
jointly to select a third appraiser, then the appointment of the third
appraiser shall be made by the then President of the St. Louis,
Missouri, Chapter of the American Arbitration Association or his or her
designee. If the third appraisal is less than either of the first two,
then the Fair Market Value shall be the average of the two lowest
appraisals. If the third appraisal is greater than the first two, then
the Fair Market Value shall be the average of the two highest
appraisals. If the third appraisal falls between the previous two
appraisals, the Fair Market Value shall be the value established by the
third appraisal. The Owner and the Optionee shall share the cost
equally of any appraiser jointly selected or shall pay the costs of the
appraiser they each select and shall share the cost equally of any third
appraiser. Any appraiser selected pursuant to this section shall be an
MAI appraiser with at least five years of relevant experience. The
appraisals shall take into account any requirements that the Project
remain dedicated for the use of low-income households pursuant to any
restrictions under any loan agreements, regulatory agreements, or
otherwise and shall take into account any tax benefits or other subsidy
or financing benefits available to projects providing affordable housing
in a manner similar to the Project. Notwithstanding the foregoing,
however, in no event shall the Fair Market Value be less than $1,000.
4.3 The Optionee shall pay the purchase price in immediately
available funds at the closing. However, in lieu of paying the purchase
price in cash at closing, Optionee may assume any outstanding debts
secured by deeds of trust or mortgages on the Project and any other
obligations of Owner, provided that any holder of such underlying
obligation consents to the assumption, with the balance of the purchase
price, if any, being payable in immediately available funds.
ARTICLE V
COMPLETION OF SALE
5.1 The sale of the Project shall close no later than one
hundred twenty (120) days after the Owner's receipt of the Optionee's
written notice of exercise of the option, at which time the purchase
price shall be payable as set forth in Section 4.3. At or before the
closing, the Optionee shall obtain the consent to the sale from the
Missouri Housing Development Commission, or the successor thereto as the
Tax Credit allocating agency for the State or Missouri, and from the
holders of any mortgages or deeds of trust on the Project, if required.
5.2 The Owner shall convey the Project to the Optionee in an "as
is" condition without representation or warranty.
ARTICLE VI
QUITCLAIM DEED ON TERMINATION OF OPTION
AND RIGHT OF FIRST REFUSAL
Upon termination of its rights pursuant to Article I or Article II
of this Agreement, the Optionee agrees, upon the Owner's request, to
execute and deliver a quitclaim deed to the Owner within thirty (30)
days after said termination and to execute, acknowledge, and deliver any
other documents required by the Owner's title insurance company to
remove the cloud of this Agreement from the Owner's title to the
Project.
ARTICLE VII
NOTICES
Any notice or other communication required or permitted to be
given under this Agreement shall be in writing and shall be personally
delivered, including but not limited to overnight delivery, or deposited
in the U.S. mail, certified, return receipt requested, first class and
postage prepaid, addressed to each party at the following addresses or
such other address as may be designated by a notice pursuant to this
Article VII:
If intended for the Owner, shall be addressed to:
M.R.H., L.P.
0000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
with a copy to the Investment and the Special Limited Partners at the
following address:
c/o Boston Capital Partners, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000-0000
with a copy to the Missouri Limited Partner at the following address:
Midwest Capital Corporation
00000 Xxxxx Xxxxxxx Xxxxx
P.O. Box 7688
Building No. 1, South Wing
Xxxxxxxx, XX 00000
and, if intended for the Optionee, shall be addressed to:
Xxxx Xxxxx Home
0000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Any notice provided in accordance with this Article VII shall be
deemed to have been given on the delivery date or the date that delivery
is refused by the addressee, as shown on the return receipt.
ARTICLE VIII
ATTORNEY FEES
In the event of any action, arbitration, or proceeding at law or
in equity to enforce any provision of this Agreement or to protect or
establish any right or remedy of any party hereunder, the unsuccessful
party to the litigation shall pay to the prevailing party all costs and
expenses, including reasonable attorney fees incurred therein by the
prevailing party, and if the prevailing party recovers judgment in any
action, proceeding, or arbitration, the costs, expenses, and attorney
fees shall be included in and as a part of the judgment.
ARTICLE IX
ARBITRATION
Any party hereto that becomes involved in any controversy relating
to this Agreement may require that all disputes, claims, counterclaims,
and defenses ("Claims") relating in any way to this Agreement or any
transaction of which this Agreement is a part (the "Transaction") be
settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and Title 9 of
the U.S. Code; provided that such arbitration need not be conducted
under the jurisdiction of the American Arbitration Association. All
Claims will be subject to the statutes of limitations applicable if they
were litigated.
If arbitration occurs, one neutral arbitrator will decide all
issues unless any party's claim is $100,000 or more, in which case three
neutral arbitrators will decide all issues. In the event the parties
cannot mutually agree upon an arbitrator or arbitrators, then the rules
for selecting an arbitrator or arbitration service under the Commercial
Arbitration Rules of the American Arbitration Association and Title 9 of
the U.S. Code shall apply. All arbitrators will be active Missouri
State Bar members in good standing. All arbitration hearings will be
held in St. Louis, Missouri. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any
court with jurisdiction.
If any party institutes any judicial proceeding relating to the
Transaction, such action shall not be a waiver of the right to submit
any Claim to arbitration. In addition, all parties have the right
before, during, and after any arbitration to exercise any number of the
following remedies, in any order or concurrently: (i) setoff,
(ii) self-help repossession, (iii) judicial or nonjudicial foreclosure
against real or personal property collateral, or (iv) provisional
remedies, including injunction, appointment of receiver, attachment,
claim and delivery, and replevin.
ARTICLE X
MISCELLANEOUS
(a) Each party hereby agrees to indemnify the other party from
and against any real estate brokerage commissions or similar obligations
incurred by the indemnifying party as a result of the negotiations or
exercise of this option.
(b) The rights and obligations of the Owner and the Optionee
under this Agreement shall inure to the benefit of, and bind, their
respective successors and assigns.
(c) The captions used herein are for convenience of reference
only and are not part of this Agreement and do not in any way limit or
amplify the terms and provisions hereof.
(d) Time is of the essence of each and all of the agreements,
covenants, and conditions of this Agreement.
(e) This Agreement shall be interpreted in accordance with and
governed by the laws of the State of Missouri.
(f) This Agreement constitutes the entire agreement between the
Owner and the Optionee with respect to the subject matter hereof and
supersedes all prior offers and negotiations, oral and written. This
Agreement may not be amended or modified in any respect whatsoever
except by an instrument in writing signed by Owner and Optionee, and
after receiving the prior written consent of the Special Limited
Partner.
(g) All capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Partnership
Agreement.
IN WITNESS WHEREOF, the Owner and the Optionee have executed this
Agreement as of the date first above written.
OWNER:
M.R.H., L.P.
By: Xxxx Xxxxx Home,
its general partner
By:/s/Xxxxxxxxx X. Xxxxx
Xxxxxxxxx X. Xxxxx,
Assistant Director
OPTIONEE:
XXXX XXXXX HOME
By: /s/ Xxxxxxxxx X. Xxxxx
Xxxxxxxxx X. Xxxxx,
Assistant Director
State of Missouri )
)SS.
City of St. Louis )
On this 31st day of January, 1997, before me, the undersigned, a
Notary Public in and for said state, personally appeared Xxxxxxxxx X.
Xxxxx, personally known to me or proved to me on the basis of
satisfactory evidence to be the duly authorized Assistant Director of
Xxxx Xxxxx Home, the general partner of M.R.H., L.P., and acknowledged
to me that said corporation executed the same as such partner and that
such limited partnership executed the within instrument.
WITNESS my hand and official seal.
___________________________________
Notary Public in and for said state
State of Missouri )
)SS.
City of St. Louis )
On this 31st day of January, 1997, before me, the undersigned, a
Notary Public in and for said state, personally appeared Xxxxxxxxx X.
Xxxxx, personally known to me or proved to me on the basis of
satisfactory evidence to be the duly authorized Assistant Director of
Xxxx Xxxxx Home and acknowledged to me that said corporation executed
the within instrument.
WITNESS my hand and official seal.
___________________________________
Notary Public in and for said state
EXHIBIT A
The land located at 0000 Xxxxx Xxxxxx in the City of St. Louis, State of
Missouri and which is legally described as follows:
A tract of land in Block 4582 of the City of St. Louis being the same
tract of land shown on the "LOT BOUNDARY ADJUSTMENT PLAT" recorded in
Plat Book 66 page 48 of the City of St. Louis Records and being more
particularly described as follows: Beginning at a point on the North
line of Olive Street, 60 feet wide, distant 117.00 feet East of its
intersection with the East line of Xxxxxxxx Xxxxxx, 00 feet wide; thence
along a line parallel to the East line of Newstead Avenue North 30
degrees 50 minutes 30 seconds East a distance of 152.50 feet to the
South line of an alley, 20 feet wide; thence along the South line of
said alley South 59 degrees 12 minutes East a distance of 344.13 feet to
a point distant 345.30 feet West of the West line of Xxxxxxxxx Xxxxxx,
00 feet wide; thence leaving said South line South 30 degrees 48 minutes
West a distance of 152.50 feet to the North line of Olive Street; thence
along the North line of Olive Street North 59 degrees 12 minutes West a
distance of 344.25 feet to the point of beginning, containing 1.205
acres more or less.
