Common use of Pledge of Interest Clause in Contracts

Pledge of Interest. (A) Except as contemplated by Section 10.5.(B) and Section 11.1., no Partner shall mortgage, pledge, encumber or create or suffer to exist any pledge, lien or encumbrance upon, or security interest in ("pledge"), all or any part of its Interest (such term, as used in this Section 10.5., including any Profits Interest). Any attempt by a Partner to pledge all or a portion of its Interest in violation of this Agreement shall be void ab initio and shall not be effective to pledge such Interest. (B) Any Affiliated Partner Group (the "pledging Partners") may pledge its Interest; provided, however, that (i) any such pledge, shall expressly be subject and fully subordinated, on terms reasonably acceptable to the other Affiliated Partner Group (the "nonpledging Partners"), to the encumbrance of the pledging Partners' Interests pursuant to this Agreement including Section 11.1. and (ii) no such pledge shall give any right to the pledgee as a Partner (as such term is used in the Act) with respect to the Partnership or the nonpledging Partners or create any duty to the pledgee on the part of the Partnership or the nonpledging Partners other than the payment to the extent pledged of distributions from the Partnership under Section 7. (C) Prior to any pledge under Section 10.5.(B), (i) the pledging Partners shall submit to the nonpledging Partners all documentation relating to the proposed pledge for the approval of the nonpledging Partners and shall not effect such pledge without the prior written approval of the nonpledging Partners (such approval not to be unreasonably withheld);

Pledge of Interest. (A1) Except as contemplated by Section 10.5.(B) and Section 11.1., no Partner shall mortgage, pledge, encumber or create or suffer to exist any pledge, lien or encumbrance upon, or security interest in ("pledge"), all or any part of its Interest (such term, as used in this Section 10.5., including any Profits Interest). Any attempt by a Partner to pledge all or a portion of its Interest in violation of this Agreement shall be void ab initio and shall not be effective to pledge such Interest. (B2) Any Affiliated Partner Group (the "pledging Partners") may pledge its Interest; provided, however, that (i) any such pledge, shall expressly be subject and fully subordinated, on terms reasonably acceptable to the other Affiliated Partner Group (the "nonpledging Partners"), to the encumbrance of the pledging Partners' Interests pursuant to this Agreement including Section 11.1. and (ii) no such pledge shall give any right to the pledgee as a Partner (as such term is used in the Act) with respect to the Partnership or the nonpledging Partners or create any duty to the pledgee on the part of the Partnership or the nonpledging Partners other than the payment to the extent pledged of distributions from the Partnership under Section 7. (C3) Prior to any pledge under Section 10.5.(B), (i) the pledging Partners shall submit to the nonpledging Partners all documentation relating to the proposed pledge for the approval of the nonpledging Partners and shall not effect such pledge without the prior written approval of the nonpledging Partners (such approval not to be unreasonably withheld);; (ii) the proposed pledgee shall deliver a written agreement of such pledgee (which shall be binding upon any of its successors or assigns) to the Partnership and the nonpledging Partners, providing that (a) the right to foreclose upon the pledging Partners' Interests pursuant to the pledge shall be conditioned upon delivery to the nonpledging Partners of an opinion of counsel satisfactory to the nonpledging Partners that such foreclosure would not cause the Partnership to be treated as an association taxable as a corporation and that any "termination" of the Partnership within the meaning of Section 708 of the Code caused by such foreclosure would not create any adverse consequences for the nonpledging Partners and (b) the pledgee's right to receive any distributions that are pledged is subject to being reduced pursuant to the provisions of this Agreement; and (iii) the proposed pledgee and the pledging Partners shall deliver to the nonpledging Partners a written agreement, in form reasonably satisfactory to the nonpledging Partners, providing that (a) the pledgee shall notify the nonpledging Partners in writing at least one hundred twenty (120) days prior to initiation of foreclosure proceedings, (b) the nonpledging Partners shall have the right during such 120-day period to purchase the debt owed by the pledging Partners to the pledgee, together with all rights of the pledgee in, to and with respect to the pledged Partners' Interests, for an amount equal to the outstanding principal amount of such debt plus the interest due and payable on and any cost of collection associated with such debt, (c) immediately upon the purchase of the debt, together with all rights of the pledgee in, to and with respect to the pledged Partners' Interests, by the nonpledging Partners pursuant to clause (iii)(b) of this Section 10.5.(C), the pledgee shall (1) deliver to the nonpledging Partners a written acknowledgment that its debt has been satisfied in full and (2) take any action necessary to transfer to the nonpledging Partners possession of a perfected first priority security interest in the pledging Partners' Interest and (d) the pledging Partners appoint the nonpledging Partners as its attorney-in-fact authorized to take on the pledging Partners' behalf all actions required to effect any purchase of the pledgee's debt and any transfer of the pledging Partners' Interest pursuant to this clause (iii) of this Section 10.5.(C).