Common use of Assignment of Units Clause in Contracts

Assignment of Units. Subject to any restrictions on transferability under applicable law or in this Agreement or any separate agreement as may be entered into by or among the Members, a Member may sell, transfer or assign its Units, in whole or in part, or pledge, grant a security interest, lien, or other encumbrance in or against any or all of the Members’ Units. A sale, transfer or assignment of a Unit does not entitle the assignee to participate in the management and affairs of the Company or to become a Substitute Member or to otherwise exercise any rights of a Member (including, without limitation, the right to vote and to receive notice of meetings), but rather shall only be treated as the transfer of the Transferrable Interest with respect to such Unit and the assignee thereof shall be treated as a Transferee (but only after notice of such assignment is provided to the Company), unless and until the assignee also complies with Section 9.2 of this Agreement. The Member assigning the Unit retains the rights of the Member other than the Transferrable Interest and retains all duties and obligations of the Member. Notwithstanding the foregoing or any other term or condition of this Agreement: (a) No transfer of any Units shall be made if such transfer would (i) violate the then applicable federal or state securities laws or rules and regulations of the Securities Exchange Commission, any state securities commission or any other governmental authority with jurisdiction over such transfer, (ii) terminate the existence or qualification of the Company under the laws of the jurisdiction of its formation, or (iii) cause the Company to be treated as an association taxable as a corporation or otherwise to be taxed as an entity and not as a partnership for federal income tax purposes. (b) The Managers may prohibit or otherwise impose restrictions on the transfer of Units if they determine that (i) such prohibition or restrictions are necessary to avoid a significant risk of the Company being treated as an association taxable as a corporation or otherwise being taxed as an entity and not as a partnership for federal income tax purposes or (ii) the transfer would or potentially would result in an increase in the number of record holders of the Company. (c) No Member shall in any event sell, transfer or assign or have the right to sell, transfer or assign a Unit, or any portion thereof, through an established securities market, a secondary market or the substantial equivalent thereof within the meaning of Code Section 7704(b) or Treasury Regulation Section 1.7704-1. In accordance with Treasury Regulation Section 1.7704-1(d)(2), the purchaser, transferee or assignee of any Unit, or any portion thereof, sold, transferred or assigned through the use of a secondary market or the substantial equivalent thereof within the meaning of Code Section 7704(b) or Treasury Regulation Section 1.7704-1, shall not be admitted as a Substitute Member or otherwise accorded any membership rights, including, but not limited to, the right to receive distributions (directly or indirectly) or to acquire an interest in the capital or profits of the Company. No Member shall establish or attempt to establish in the Units an established securities market, a secondary market or the substantial equivalent thereof within the meaning of Code Section 7704(b) or Treasury Regulation Section 1.7704- (d) No Person shall hold any Units, directly or indirectly, as a nominee on behalf of another Person.