Common use of DUE DILIGENCE AND RELATED Clause in Contracts

DUE DILIGENCE AND RELATED. 9.1 Commencing on the date hereof through the date which is the later of: (i) January 31, 2015, and (ii) ten days after receipt of the last third party report requested by SCOLP or any supplements, modifications or revisions resulting after receipt of any initial reports (“Report Review Date”), provided that such initial reports shall have been ordered on or before the tenth business day after the Effective Date and further provided that in no event shall the Report Review Date extend beyond the date which is 75 days after the Effective Date (the "Investigation Period"), SCOLP may inspect and investigate all aspects of the Project, the Owner and the Holding Company, including, without limitation, the physical condition of the Project, all items of income and expense arising from the ownership and operation of the Project, and all documents relating thereto. At any time prior to the expiration of the Investigation Period and for any reason whatsoever, SCOLP may, at its option and in its sole and absolute discretion, terminate this Agreement by delivery of written notice to the party designated to receive notices on behalf of the Xxxxxx Entities as set forth in this Agreement, in which event none of Contributor, the Owner, the Holding Company nor SCOLP shall have any further obligations to any other party except as expressly provided herein. 9.2 At all reasonable times from and after the date hereof, the Owner and Contributor shall afford SCOLP and its representatives full and free access to the Project, including, but not limited to, the right to conduct environmental, soil, engineering and other tests and to inspect the mechanical, plumbing and utility systems located at the Project, together with all other aspects of the Project and including the right to contact such parties as SCOLP might elect to obtain estoppel certificates and other evidence of compliance and full performance by the Owner, Holding Company or Contributor of the matters set forth in this Agreement. Upon the completion of such activities, SCOLP, at its sole expense, shall promptly restore the Project to its former condition in all substantial respects. At the request of Owner and Contributor, SCOLP shall disclose the results of any environmental testing and inspections, and shall deliver copies of all reports and test results to Owner and Contributor. The results of such testing and inspections shall be treated as strictly confidential by SCOLP and the same shall not be disclosed to any third party or governmental entity without the written consent of Owner; provided, however, that such reports and results may be disclosed to SCOLP’s consultants, attorneys, lenders (including the holder of the Existing Mortgage) and insurance companies. SCOLP shall defend, indemnify and hold Owner and Contributor harmless from and against any and all claims, demands, losses, costs and/or liabilities associated with damage or injury to any person, property or the Project caused by or attributable to the actions or negligence of SCOLP and/or its contractors, representatives or other agents while they are on the Project pursuant to this Section or otherwise. SCOLP’s obligations under this section shall expressly survive the termination of this Agreement. 9.3 SCOLP shall have the right to cause its accountant to prepare audited financial statements of the Owner and its operations at the Project for the calendar years ended December 31, 2013 and December 31, 2014, and for the period from January 1, 2015 through the calendar month preceding the Contribution Date. The Owner and Contributor shall cooperate and assist it in all respects with the preparation of the audited financial statements. Owner and Contributor shall furnish to SCOLP and its accountants all financial and other information in its possession or control to enable such accountants to prepare audited financial statements in conformity with Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and any registration statement, report or disclosure statement filed with, and any rule issued by, the SEC. Owner also shall provide a signed representation letter as prescribed by generally accepted auditing standards as promulgated by the Auditing Standards Divisions of the American Institute of Public Accountants which representation letter is required to enable an independent public accountant to render an opinion on such financial statements. The Contributor agrees that it shall, within forty-five (45) days after Closing, deliver to SCOLP trailing twelve month financial statements for the operation of the Project as of the Closing Date. 9.4 SCOLP and Contributor shall coordinate their contact and discussions with any lender regarding the Existing Mortgage. Within ten (10) days after the Effective Date, Contributor, the Holding Company, the Owner and SCOLP shall jointly notify the holder of the Existing Mortgage (the “Lender”) of the pending transfer of the Membership Interest and request the application required to be submitted to the Lender in order for the Lender to consent to transfer of the Membership Interest to SCOLP (“Consent to Transfer”). As soon as reasonably practicable following its receipt of the Consent to Transfer application, SCOLP shall promptly submit written application for the Consent to Transfer to the Lender, together with all information required by the Lender to obtain their consent. SCOLP agrees to prosecute the Consent to Transfer with due diligence in order to obtain the Lenders’ approval of the transfer of the Membership Interests to SCOLP in accordance with the terms hereof and the Consent to Transfer (collectively, the “Consent to Transfer Approval”). Contributor, the Holding Company, and the Owner agree to cooperate in all reasonable respects with SCOLP and Lender in obtaining the Consent to Transfer Approval. In the event the Lender requires that the liability of any guarantor provided by SCOLP in connection with the Consent to Transfer Approval, includes liability for any matter arising out of or related to the time prior to Closing, the Xxxxxx Xxxxxx Entities (and Xxxxxx Xxxxxx and Xxxx Xxxxx individually as to the matters set forth in Section 15.2(c)) shall hold harmless, indemnify and advance, SCOLP and/or the guarantor provided by SCOLP for any costs, claims, causes of action or assertions relating to any matter arising out of or related to the period prior to Closing. The agreements of the immediately preceding sentence shall not be subject to any of the limits (Maximum Amount, Minimum Amount or Claim Periods) set forth in Sections 7.3 or 7.4. All costs, expenses and fees payable to the Lender with respect to the Consent to Transfer and to satisfy any requirements of the Lender in accordance with the applicable Mortgage Documents (the “Assumption Costs”), including, without limitation, the Transfer Fee under the Mortgage Documents, any non-refundable application fee, attorney fees, transfer and assumption fees, administration fees, and charges and premiums for all endorsements to the Lenders’ policies of title insurance shall be borne by the parties as set forth in Section 19. 9.5 Neither SCOLP nor any manager it might employ to operate the Project is obligated to offer employment to, or hire, any employee, independent contractor or consultant of Contributor or the Owner at any time prior to or on or after the Closing. However, the Contributor and Owner each agree, on their behalf and on behalf of the current manager of the Project, that SCOLP or its manager of the Project may, in either of their sole and absolute discretion, offer employment and hire the Owner’s employee(s) or the employees of Owner’s manager of the Project, provided such employment commences on or after the Closing. Contributor and Owner each agrees not to, and to cause the current manager of the Project not to, interfere with such employment offers, if any, and shall not induce, dissuade or discourage current employee(s) from considering or accepting employment on the terms and conditions which may be offered. 9.6 The Owner and Contributor shall be responsible for providing all applicable notices under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, to all terminated employees. To the extent applicable, the Owner and Contributor agree to provide any required notice under the WARN Act and/or or any other applicable state law and to otherwise comply with any such statute(s) with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act or any applicable state counterpart statute) affecting employees and occurring before or after the Closing Date. Unless otherwise directed to the contrary in writing by SCOLP during the Investigation Period, the Owner, the Owner’s manager, the Holding Company or the Contributor shall terminate all employees effective on the Closing Date. The Xxxxxx Entities shall indemnify and hold harmless SCOLP with respect to any liability under the WARN Act or other applicable law arising from the actions taken by Contributor, Holding Company, Owner or Owner’s manager before or after the Closing Date. 9.7 Notwithstanding SCOLP’s right to terminate this Agreement and to elect not to close, the parties agree that this Agreement constitutes a purchase agreement and is not an option to purchase. In conformation of this fact, the parties agree that SCOLP has extended significant consideration in the form of the Acquisition Loan and that SCOLP would not have extended such consideration absent the entry into this Agreement. Furthermore, SCOLP has expended significant consideration by pursuing the acquisition of the Membership Interests which has prevented it from pursuing other acquisitions and involved the expenditure of time and costs necessary to review due diligence and other matters. The Xxxxxx Entities waive any right to contest the characterization of this Agreement as an option rather than a purchase agreement.

DUE DILIGENCE AND RELATED. 9.1 Commencing on the date hereof through the date which is the later of: (i) January 31, 2015, and ; (ii) ten days after receipt of the last third party report requested by SCOLP or any supplements, modifications or revisions resulting after receipt of any initial reports (“Report Review Date”), provided that such initial reports shall have been ordered on or before the tenth business day after the Effective Date and further provided that in no event shall the Report Review Date extend beyond the date which is 75 days after the Effective Date Date; and (iii) 5 business days after the expiration of the period provided any homeowners’ association (or waiver by such homeowners’ association of its right) to purchase the Project or any project subject to any of the Other Contribution Agreements (the "Investigation Period"), SCOLP may inspect and investigate all aspects of the Project, the Owner Project and the Holding CompanyOwner, including, without limitation, the physical condition of the Project, all items of income and expense arising from the ownership and operation of the Project, and all documents relating thereto. At any time prior to the expiration of the Investigation Period and for any reason whatsoever, SCOLP may, at its option and in its sole and absolute discretion, terminate this Agreement by delivery of written notice to the party designated to receive notices on behalf of the Xxxxxx Entities as set forth in this Agreement, in which event none of ContributorAssociates, the Owner, the Holding Company nor Limited Partners or SCOLP shall have any further obligations to any other party except as expressly provided herein. 9.2 At all reasonable times from and after the date hereof, the Owner and Contributor Associates shall afford SCOLP and its representatives full and free access to the Project, including, but not limited to, the right to conduct environmental, soil, engineering and other tests and to inspect the mechanical, plumbing and utility systems located at the Project, together with all other aspects of the Project and including the right to contact such parties as SCOLP might elect to obtain estoppel certificates and other evidence of compliance and full performance by the Owner, Holding Company the Limited Partners or Contributor Associates of the matters set forth in this Agreement. Upon the completion of such activities, SCOLP, at its sole expense, shall promptly restore the Project to its former condition in all substantial respects. At the request of Owner and ContributorAssociates, SCOLP shall disclose the results of any environmental testing and inspections, and shall deliver copies of all reports and test results to Owner and ContributorAssociates. The results of such testing and inspections shall be treated as strictly confidential by SCOLP and the same shall not be disclosed to any third party or governmental entity without the written consent of Owner; provided, however, that such reports and results may be disclosed to SCOLP’s consultants, attorneys, lenders (including the holder of the Existing Mortgage) and insurance companies. SCOLP shall defend, indemnify and hold Owner and Contributor Associates harmless from and against any and all claims, demands, losses, costs and/or liabilities associated with damage or injury to any person, property or the Project caused by or attributable to the actions or negligence of SCOLP and/or its contractors, representatives or other agents while they are on the Project pursuant to this Section or otherwise. SCOLP’s obligations under this section shall expressly survive the termination of this Agreement. 9.3 SCOLP shall have the right to cause its accountant to prepare audited financial statements of the Owner and its operations at the Project for the calendar years ended December 31, 2013 and December 31, 2014, and for the period from January 1, 2015 through the calendar month preceding the Contribution Date. The Owner and Contributor Associates shall cooperate and assist it in all respects with the preparation of the audited financial statements. Owner and Contributor Associates shall furnish to SCOLP and its accountants all financial and other information in its possession or control to enable such accountants to prepare audited financial statements in conformity with Regulation S-X promulgated by the Securities and Exchange Commission ("SEC") and any registration statement, report or disclosure statement filed with, and any rule issued by, the SEC. Owner also shall provide a signed representation letter as prescribed by generally accepted auditing standards as promulgated by the Auditing Standards Divisions of the American Institute of Public Accountants which representation letter is required to enable an independent public accountant to render an opinion on such financial statements. The Contributor Associates agrees that it shall, within forty-five (45) days after Closing, deliver to SCOLP trailing twelve month financial statements for the operation of the Project as of the Closing Date. 9.4 SCOLP and Contributor Associates shall coordinate their contact and discussions with any lender regarding the Existing Mortgage. Within ten (10) days after the Effective Date, Contributor, the Holding CompanyAssociates, the Owner and SCOLP shall jointly notify the holder of the Existing Mortgage (the “Lender”) of the pending transfer of the Membership Partnership Interest and request the application required to be submitted to the Lender in order for the Lender to consent to transfer of the Membership Partnership Interest to SCOLP (“Consent to Transfer”). As soon as reasonably practicable following its receipt of the Consent to Transfer application, SCOLP shall promptly submit written application for the Consent to Transfer to the Lender, together with all information required by the Lender to obtain their consent. SCOLP agrees to prosecute the Consent to Transfer with due diligence in order to obtain the Lenders’ approval of the transfer of the Membership Partnership Interests to SCOLP in accordance with the terms hereof and the Consent to Transfer (collectively, the “Consent to Transfer Approval”). Contributor, the Holding Company, Associates and the Owner agree to cooperate in all reasonable respects with SCOLP and Lender in obtaining the Consent to Transfer Approval. In the event the Lender requires that the liability of any guarantor provided by SCOLP in connection with the Consent to Transfer Approval, includes liability for any matter arising out of or related to the time prior to Closing, the Xxxxxx Xxxxxx Entities (and Xxxxxx Xxxxxx and Xxxx Xxxxx individually as to the matters set forth in Section 15.2(c)) shall hold harmless, indemnify and advance, SCOLP and/or the guarantor provided by SCOLP for any costs, claims, causes of action or assertions relating to any matter arising out of or related to the period prior to Closing. The agreements of the immediately preceding sentence shall not be subject to any of the limits (Maximum Amount, Minimum Amount or Claim Periods) set forth in Sections 7.3 or 7.4. All costs, expenses and fees payable to the Lender with respect to the Consent to Transfer and to satisfy any requirements of the Lender in accordance with the applicable Mortgage Documents (the “Assumption Costs”), including, without limitation, the Transfer Fee under the Mortgage Documents, any non-refundable application fee, attorney fees, transfer and assumption fees, administration fees, and charges and premiums for all endorsements to the Lenders’ policies of title insurance shall be borne by the parties as set forth in Section 19. 9.5 Neither SCOLP nor any manager it might employ to operate the Project is obligated to offer employment to, or hire, any employee, independent contractor or consultant of Contributor Associates or the Owner at any time prior to or on or after the Closing. However, the Contributor Associates and Owner each agree, on their behalf and on behalf of the current manager of the Project, that SCOLP or its manager of the Project may, in either of their sole and absolute discretion, offer employment and hire the Owner’s employee(s) or the employees of Owner’s manager of the Project, provided such employment commences on or after the Closing. Contributor Associates and Owner each agrees not to, and to cause the current manager of the Project not to, interfere with such employment offers, if any, and shall not induce, dissuade or discourage current employee(s) from considering or accepting employment on the terms and conditions which may be offered. 9.6 The Owner and Contributor Associates shall be responsible for providing all applicable notices under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, to all terminated employees. To the extent applicable, the Owner and Contributor Associates agree to provide any required notice under the WARN Act and/or or any other applicable state law and to otherwise comply with any such statute(s) with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act or any applicable state counterpart statute) affecting employees and occurring before or after the Closing Date. Unless otherwise directed to the contrary in writing by SCOLP during the Investigation Period, the Owner, the Owner’s manager, the Holding Company or the Contributor Associates shall terminate all employees effective on the Closing Date. The Xxxxxx Entities shall indemnify and hold harmless SCOLP with respect to any liability under the WARN Act or other applicable law arising from the actions taken by Contributor, Holding CompanyAssociates, Owner or Owner’s manager before or after the Closing Date. 9.7 Notwithstanding SCOLP’s right to terminate this Agreement and to elect not to close, the parties agree that this Agreement constitutes a purchase agreement and is not an option to purchase. In conformation of this fact, the parties agree that SCOLP has extended significant consideration in the form of the Acquisition Loan and that SCOLP would not have extended such consideration absent the entry into this Agreement. Furthermore, SCOLP has expended significant consideration by pursuing the acquisition of the Membership Partnership Interests which has prevented it from pursuing other acquisitions and involved the expenditure of time and costs necessary to review due diligence and other matters. The Xxxxxx Entities waive any right to contest the characterization of this Agreement as an option rather than a purchase agreement.