Additional Capital Contributions and Dilution Clause Samples
The "Additional Capital Contributions and Dilution" clause defines how a company or partnership can require existing owners or members to contribute more capital and outlines the consequences if they do not. Typically, this clause specifies the process for requesting additional funds, the timeframe for contributions, and what happens if a member fails to participate—often resulting in a reduction of their ownership percentage (dilution) in favor of those who do contribute. Its core function is to ensure the entity can raise necessary funds while fairly adjusting ownership stakes, thereby addressing the risk of underfunding and clarifying the impact of non-participation.
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Additional Capital Contributions and Dilution. (a) At any time, the General Partner may determine that one or more Additional Capital Contributions are required to provide for the ongoing operation of the Partnership. The General Partner shall determine the gross amount of Additional Capital Contribution required and shall notify one or more of the Partners prior to the Capital Call Date of the amount of their share of the Additional Capital Contribution as well as provide the calculations that were used to determine such amount.
(b) Each notified Partner shall have the right (but not the obligation) to contribute such proportionate share of such Additional Capital Contribution.
(c) Subject to the Football Club Rules, in the event that the Partners, as a group, do not contribute to the Partnership one hundred percent (100%) of any Additional Capital Contribution called for by the General Partner, the General Partner may undertake any such actions as it may deem necessary to raise such additional capital, including (i) permitting one or more existing or new Limited Partners to fund the remaining portion of the Additional Capital Contribution by (A) paying to the Partnership an amount equal to the portion of the Additional Capital Contribution being acquired, and (B) otherwise complying with Section 2.07, with any such new Limited Partner becoming an additional Limited Partner and shown as such on the books and records of the Partnership, (ii) arranging for debt or other financing that may be senior in priority to the Units of the Partners, and (iii) obtaining the agreement of any other Person (which may, in the discretion of the General Partner, include any existing Limited Partner) to make an investment outside the Partnership. Except as required by the Football Club Rules, the General Partner shall not be restricted in any such actions by any other provision or restriction herein. In addition, if one or more new Limited Partners are admitted to the Partnership in accordance with clause (i) of this subsection (c), then it is the intent of the Partners that this subsection (c) be interpreted in a manner that dilutes a Limited Partner's Percentage Ownership.
(d) The General Partner shall have no obligation to contribute any portion of any Additional Capital Contributions.
(e) Under all circumstances, all ownership in the Partnership, direct or indirect, is subject to approval by the Football Authorities (pursuant to the applicable Football Club Rules) and the applicable Partner being able to satisfy all ...
Additional Capital Contributions and Dilution