Common use of Default Loans Clause in Contracts

Default Loans. If a Limited Partner fails to make a Capital Contribution to the Partnership as the same is due and payable hereunder (“Defaulting Partner”) in accordance with Sections 3.2, upon written notice to the Defaulting Partner from the General Partner or any Limited Partner who is not a Defaulting Partner (the Limited Partners who are not Defaulting Partners being referred to collectively as the “Non-Defaulting Partners”), the Non-Defaulting Partners may, but shall not be obligated to, make a loan (“Default Loan”) to the Defaulting Partner in the amount of such Capital Contribution, the proceeds of which are to be paid to the Partnership in satisfaction of the Defaulting Partner‟s Capital Contribution obligation. The Default Loan shall bear interest on the outstanding balance at the rate of the lesser of (i) fourteen percent (14%) per annum, or (ii) the maximum rate of interest permitted by applicable law. If more than one Non-Defaulting Partner elects to make a Default Loan, the Non-Defaulting Partners shall agree as to the proportions of the Default Loan to be made by each Non-Defaulting Partner; provided, however, in the absence of such agreement, the Default Loan shall be made pro rata in accordance with the relative Percentage Interests of the Non-Defaulting Partners electing to make such Default Loan. Notwithstanding the provisions of Sections 4.1 and 12.3, in the event a Partner has a Default Loan outstanding to another Partner, all distributions to the Partner owing the Default Loan shall be applied to the repayment of the Default Loan prior to any distributions or other payments to such Partner pursuant to this Agreement.