Common use of Purchaser’s Due Diligence Clause in Contracts

Purchaser’s Due Diligence. The obligation of Purchaser to close this Agreement is subject to the Seller providing the following disclosures and requirements and the Parties obtaining the following approvals and consents set forth in this Paragraph 4.1 conditioned as follows: 4.1.1 Document/Information Disclosure. Seller shall provide to Purchaser the following documents and information within thirty (30) days of the Effective Date of this Agreement ("Disclosure Deadline"): (A) Current Annual Report filed with Washington Secretary of State; (B) Minutes of all SMWA member annual meetings for the past three years; (C) A list of current officers and directors of SMWA; (D) Copies of the SMWA income and expense reports, balance sheets, audits and financial statements for the past three years; (E) All agreements affecting any real or personal property owned or leased by SMWA, including without limitation all management agreements, maintenance contracts, facilities agreements, and any instrument evidencing or purporting to grant a security interest in any such property; (F) All permits, licenses, authorizations or approvals held by SMWA required for or otherwise related to its current or planned operations; all information relating to expiration, termination, compliance or renewal of such permits or authorization; (G) All SMWA insurance policies for the past three years; (H) A list and legal descriptions of all easements, licenses, franchises, leases, deeds and all real or personal property held, owned or leased by SMWA together with copies of all such easements, licenses, franchises, deeds and lease agreements; (I) A list of all pending, threatened or potential litigation and/or administrative actions involving SMWA, identifying the parties to each litigation or matter, the nature of the claim or matter, the amount at issue, and provide all documents relating thereto; (J) Any operating permits and authorizations affecting SMWA; (K) A copy of SMWA’s Articles of Incorporation and Bylaws; (L) All environmental assessments, investigations, tests and reports relating to the Property; (M) All correspondence between SMWA and all governmental entities for the past three years; (N) All SMWA utility customer billing records for the past three years; (O) A copy of SMWA’s current utility service rate schedule; (P) All SMWA federal tax returns for the past three years; (Q) All maintenance and repair records with respect to the Water System for the past three years; and (R) All lending agreements and any other instrument evidencing a monetary debt, payment obligation or liability of SMWA. 4.1.2 Within thirty (30) days of the Disclosure Deadline, Purchaser may in its sole discretion terminate this Agreement without obligation by written notice to Seller. Without prejudice to the foregoing, if such documents or information are not disclosed or provided within the thirty (30) day deadline established by this Paragraph 4.1, Purchaser may, in its sole discretion, terminate this Agreement without obligation by written notice to Seller provided within thirty (30) days of the Disclosure Deadline. 4.1.3 If Seller does not possess or have knowledge of any of the above documents/information as set forth above, after a good faith search of records and reasonable inquiry, then Seller will acknowledge, in writing, when providing said documents/information that, upon its good faith knowledge, information and belief, it does not possess or have knowledge of said documents/information.

Purchaser’s Due Diligence. The obligation 8.01 In consideration of the Purchaser simultaneously herewith depositing with the Escrow Agent the Due Diligence Fee (which shall be payable to close the Seller in accordance with Sections 3.02, 8.03, and 14.01), commencing on the date of this Agreement is and expiring on December 1, 2004 or such earlier date as the Purchaser shall have waived its rights to terminate this Agreement under Section 8.03 (which right shall conclusively be deemed to have been waived by making the Contract Deposit pursuant to paragraph (b) of Section 3.02) (the “Due Diligence Period”), the Purchaser (and the Purchaser’s accountants, engineers and other consultants) may, subject to the Seller providing terms and provisions of this Article 8 and upon at least two Business Days’ notice to the following disclosures Seller, (i) subject to the rights of tenants of the Premises, enter upon the Real Property for the purpose of making such inspections and requirements surveys thereof as the Purchaser may desire, (ii) review the Leases and (iii) inspect, during regular business hours at the offices of the managing agent of the Real Property, the Contracts and the Parties obtaining other books and records of such managing agent relating to the following approvals operation, leasing and consents maintenance of the Real Property. Nothing in this Section 8.01 shall be construed to permit the Purchaser or any other person on behalf of the Purchaser to inspect or review any (x) income tax returns or files relating to income taxes of the Seller or any partner, officer, member, agent or other principal of the Seller or (y) reports, correspondence, memoranda or compendia of information prepared by counsel for the Seller which may be the subject of any privilege or by any other persons in contemplation of litigation or any other official proceeding or hearing, except real estate tax certiorari (or equivalent) proceedings. The Seller reserves the right to have one or more representatives present at any such inspection, test, examination or walk-through of the Real Property and at any examination of the Leases, Contracts or books and records. No test or physical penetration of any portion of the Real Property may be conducted without the prior approval of the Seller, which approval shall not be unreasonably withheld. The Purchaser shall maintain and deliver to Seller certificates of comprehensive liability and property damage insurance in a coverage amount of not less than one million ($1,000,000) dollars per occurrence and underwritten by a carrier reasonably acceptable to the Seller, naming the Seller, its members and managing agent as insureds against any damage, injury, expenses and other liabilities which the undersigned may incur arising out of any negligence or misconduct by any of the Purchaser’s representatives while present at the Real Property to perform any activity permitted under this Section 8.01. The Purchaser shall promptly pay the Seller the Seller’s cost to repair any damage to any Buildings and other Improvements caused by or resulting from activities associated with such representatives (excluding, however, conditions merely discovered by the Purchaser) and restore the damaged property to its condition immediately prior to such activities and shall indemnify Seller against any related costs. During the Due Diligence Period, the Seller shall make available to the Purchaser and its representatives copies of the Leases, the Contracts, such Certificate(s) of Compliance or Occupancy and Residential Use Permits for the Buildings and other Improvements as are in the possession of the Seller and its managing agent, the most recent real estate tax bills for the Real Property, such plans and drawings of the Buildings and other Improvements as are in the possession of the Seller and its managing agent and, subject to the foregoing provisions of this Section 8.01, such other books and records of the Property, including, without limitation, the items set forth in Schedule K attached hereto, as are in the possession of the Seller and its managing agent. (a) All information respecting the Real Property obtained pursuant to Section 8.01 or other source not in the public domain prior to the Closing by the Purchaser or any other person acting on behalf of the Purchaser shall be held in the strictest confidence and shall not be revealed to any person (other than persons retained or employed by Purchaser, the Purchaser’s consultants and lenders, who have a need to know such information) except pursuant to subpoena or court or other competent authority’s order. If the Purchaser or any person acting on behalf of the Purchaser shall be made the subject of a subpoena or the order of any court or other competent authority’s directing the Purchaser or such other person to divulge any such information, the Purchaser shall notify the Seller of such subpoena or order promptly after being served with the same to permit the Seller to contest such subpoena or court order or to seek such other protective relief as the Seller may deem desirable. The Purchaser shall instruct each person to whom the Purchaser imparts any such information about the Real Property pursuant to this Paragraph 4.1 conditioned as follows:Article 8 to be bound by the terms and provisions of this Section 8.02. 4.1.1 Document/Information Disclosure(b) All duly authorized representatives of the Purchaser who may participate in the Purchaser’s inspections and other due diligence shall be instructed by the Purchaser to be bound by the terms and provisions of this Section 8.02. (c) Provided that the Seller is not in material breach of this Agreement and the Purchaser has terminated this Agreement in accord with Section 8.03, the Purchaser shall deliver to the Seller, promptly after receipt by the Purchaser, copies of all title abstracts and reports, surveys, inspection and test reports and environmental and engineering reports with respect to the Real Property that may be prepared for the Purchaser by third-party engineers, providers, consultants or contractors. All such copies shall be delivered without representation or warranty and may not be relied upon by the Seller. (d) The Purchaser shall not request any governmental authority to inspect any portion of the Real Property but the Purchaser may request from appropriate agencies information concerning zoning, compliance with codes or other ordinances and certificates of occupancy. 8.03 The Purchaser may terminate this Agreement for any reason on or before the expiration of the Due Diligence Period, time being of the essence, by giving the Seller notice of such termination, time being of the essence. If the Purchaser shall so terminate this Agreement pursuant to this Section 8.03 and the Seller shall provide not have made an untrue or incomplete representation (as defined in Section 7.04) or other breach or default hereunder which shall have formed the basis of such termination, then the Purchaser shall direct the Escrow Agent to Purchaser disburse the following documents Due Diligence Fee of seventy-five thousand and information within thirty no/100 (30$75,000.00) days dollars to the Seller in consideration of the Effective Date Seller’s having removed the Property from the market for the duration of the Due Diligence Period and the balance of the Escrow Fund to the Purchaser (without the requirement of obtaining consent of the Seller and notwithstanding contrary instruction from the Seller) and neither party shall have any further obligation or claim against the other arising out of this Agreement ("Disclosure Deadline"): (A) Current Annual Report filed with Washington Secretary of State; (B) Minutes of all SMWA member annual meetings except for such claims as the past three years; (C) A list of current officers and directors of SMWA; (D) Copies of the SMWA income and expense reports, balance sheets, audits and financial statements for the past three years; (E) All agreements affecting any real or personal property owned or leased Seller may have by SMWA, including without limitation all management agreements, maintenance contracts, facilities agreements, and any instrument evidencing or purporting to grant a security interest in any such property; (F) All permits, licenses, authorizations or approvals held by SMWA required for or otherwise related to its current or planned operations; all information relating to expiration, termination, compliance or renewal of such permits or authorization; (G) All SMWA insurance policies for the past three years; (H) A list and legal descriptions of all easements, licenses, franchises, leases, deeds and all real or personal property held, owned or leased by SMWA together with copies of all such easements, licenses, franchises, deeds and lease agreements; (I) A list of all pending, threatened or potential litigation and/or administrative actions involving SMWA, identifying the parties to each litigation or matter, the nature of the claim or matter, the amount at issue, and provide all documents relating thereto; (J) Any operating permits and authorizations affecting SMWA; (K) A copy of SMWA’s Articles of Incorporation and Bylaws; (L) All environmental assessments, investigations, tests and reports relating to the Property; (M) All correspondence between SMWA and all governmental entities for the past three years; (N) All SMWA utility customer billing records for the past three years; (O) A copy of SMWA’s current utility service rate schedule; (P) All SMWA federal tax returns for the past three years; (Q) All maintenance and repair records with respect to the Water System for the past three years; and (R) All lending agreements and any other instrument evidencing a monetary debt, payment obligation or liability of SMWA. 4.1.2 Within thirty (30) days of the Disclosure Deadline, Purchaser may in its sole discretion terminate this Agreement without obligation by written notice to Seller. Without prejudice to the foregoing, if such documents or information are not disclosed or provided within the thirty (30) day deadline established by this Paragraph 4.1, Purchaser may, in its sole discretion, terminate this Agreement without obligation by written notice to Seller provided within thirty (30) days of the Disclosure Deadline. 4.1.3 If Seller does not possess or have knowledge reason of any of the above documents/information as covenant or condition set forth above, after a good faith search of records and reasonable inquiry, then Seller will acknowledge, in writing, when providing said documents/information that, upon its good faith knowledge, information and belief, it does not possess Sections 8.01 or have knowledge of said documents/information8.

Purchaser’s Due Diligence. The obligation (a) Purchaser acknowledges that as of the date hereof, except for the condition of title, including matters of survey (which is governed by Section 4), Purchaser has had the opportunity to close investigate all physical and economic aspects of the Property and to make all inspections and investigations of the Property which Purchaser deems necessary or desirable to protect its interests in acquiring the Property, including, without limitation, the environmental condition of the Property, review of the Leases (and the rights of the Tenants thereunder), building permits, certificates of occupancy, investigation of land use and development rights, development restrictions and conditions that are or may be imposed by governmental agencies, agreements with associations affecting or concerning the Property, engineering and structural tests, insurance contracts, contracts for work in progress, marketing studies, cost-to-complete studies, governmental agreements and approvals, architectural plans and site plans. Purchaser has approved the results of the foregoing due diligence matters and, therefore, shall have no right to terminate this Agreement is subject with respect to the Seller providing the following disclosures and requirements and the Parties obtaining the following approvals and consents any due diligence matters, except as expressly set forth in this Paragraph 4.1 conditioned as follows: 4.1.1 Document/Information Disclosure. Seller shall provide to Purchaser the following documents and information within thirty (30) days of the Effective Date of this Agreement ("Disclosure Deadline"):Section 4. (Ai) Current Annual Report filed with Washington Secretary copies of Stateall outstanding labor, service, equipment, supply, management, maintenance, concession, utility and operating contracts, and any amendments thereto, to which Seller is a party (collectively, the "SERVICE CONTRACTS"); (Bii) Minutes of all SMWA member annual meetings for the past three yearsengineering and physical inspection reports including hazardous materials and asbestos reports, if any; (Ciii) A list a copy of current officers and directors of SMWAthe tax bill ▇▇▇ued for the most recent year for real estate taxes; (Div) Copies copies of all Leases; (v) a list of all tenant security deposits and prepayments (if any) related to the Leases held by or on behalf of Seller; (vi) copies of all REAs; (vii) copies of the SMWA agreements relating to the Repurchase Right; (viii) a copy of the Development Agreement; and (ix) monthly income and expense reportsstatements, balance sheetssheets and any other financial information (excluding, audits and however, any of Seller's financial statements information analyzing the value of the Property) reflecting the operations of the Property for the past three years; prior twelve (E12) All agreements affecting any real or personal property owned or leased month period. The foregoing deliveries were made by SMWA, including without limitation all management agreements, maintenance contracts, facilities agreements, Seller to accommodate and any instrument evidencing or purporting to grant a security interest in any such property; (F) All permits, licenses, authorizations or approvals held by SMWA required for or otherwise related to its current or planned operations; all information relating to expiration, termination, compliance or renewal of such permits or authorization; (G) All SMWA insurance policies for the past three years; (H) A list and legal descriptions of all easements, licenses, franchises, leases, deeds and all real or personal property held, owned or leased by SMWA together with copies of all such easements, licenses, franchises, deeds and lease agreements; (I) A list of all pending, threatened or potential litigation and/or administrative actions involving SMWA, identifying the parties to each litigation or matter, the nature of the claim or matter, the amount at issue, and provide all documents relating thereto; (J) Any operating permits and authorizations affecting SMWA; (K) A copy of SMWA’s Articles of Incorporation and Bylaws; (L) All environmental assessments, investigations, tests and reports facilitate Purchaser's investigations relating to the Property; (M) All correspondence between SMWA , and, except as expressly set forth herein, Seller has not made, and all governmental entities for does not make any representations or warranties of any kind regarding the past three years; (N) All SMWA utility customer billing records for the past three years; (O) A copy of SMWA’s current utility service rate schedule; (P) All SMWA federal tax returns for the past three years; (Q) All maintenance and repair records with respect to the Water System for the past three years; and (R) All lending agreements and any other instrument evidencing a monetary debt, payment obligation accuracy or liability of SMWA. 4.1.2 Within thirty (30) days thoroughness of the Disclosure Deadlineinformation contained in the materials delivered to Purchaser. Notwithstanding the foregoing provisions of this Section 5(b), Purchaser may in its sole discretion terminate this Agreement without obligation by written notice to Seller. Without prejudice to the foregoing, if such documents or information are not disclosed or provided within the thirty (30) day deadline established by this Paragraph 4.1, Purchaser may, in its sole discretion, terminate this Agreement without obligation by written notice to Seller provided within thirty (30) days of the Disclosure Deadline. 4.1.3 If Seller does not possess or have knowledge of any of the delivery items described above documents/information that are in files located at the on-site management office at the Property, or are otherwise in the possession of Manager (as set forth abovehereinafter defined), after a good faith search of records and reasonable inquiry, then Seller will acknowledge, in writing, when providing said documents/information that, upon its good faith knowledge, information and belief, it does not possess or shall be deemed to have knowledge of said documents/informationbeen delivered to Purchaser.