Common use of Limitations on Free Transferability Clause in Contracts

Limitations on Free Transferability. A Shareholder may Transfer any interest in the Company, in the Assets or outstanding loans (if any) only by and with a Transfer of Ownership Interest. Any Transfer of Ownership Interest shall be subject to the following terms and conditions: (a) If the Transfer is not to an Affiliate, the transferring Shareholder must secure the written consent of the non-transferring Shareholder and, if so secured, must then provide the transferee with a complete copy of this Agreement before the Transfer becomes effective. (b) No transferee , whether or not an Affiliate, shall have the rights of a Shareholder unless and until the transferring Shareholder has provided to the other Shareholder Notice of the Transfer, and the transferee, as of the effective date of the Transfer, has committed in writing to be bound by this Agreement to the same extent as the transferring Shareholder. (c) The transferring Shareholder and the transferee shall bear all Tax consequences of the Transfer. (d) If the Transfer involves the grant of a security interest by mortgage, deed of trust, pledge, lien or other encumbrance of any interest in the Ownership Interest to secure a loan or other indebtedness of a Shareholder in a bona fide transaction, the holder of such security interest shall have agreed in writing to be subordinate to the terms of any Default Loan and this Agreement, including the rights and interests of the other Shareholder hereunder. Upon any foreclosure or other enforcement of rights in the security interest the acquiring third party shall be deemed to have assumed the position of the encumbering Shareholder with respect to this Agreement and the other Shareholder, and it shall comply with and be bound by the terms and conditions of this Agreement. (e) If a Transfer is made of less than all of the Ownership Interest of a Shareholder, the transferring Shareholder, and its transferee shall act and be treated as one Shareholder; provided that the provisions of this Section 15.2(e) shall not apply to a transfer of an Ownership Interest made pursuant to Sections 10.6 or 11.1.