Capital Commitment; Drawdowns; Defaulting Shareholders Sample Clauses
This clause defines the obligations of shareholders to provide capital to the company or fund as agreed, outlines the process by which the company can request (or "draw down") these capital contributions, and addresses the consequences if a shareholder fails to meet their funding commitments. In practice, it specifies the timing and method for issuing capital calls, the procedures for collecting funds, and the penalties or remedies available if a shareholder defaults, such as loss of rights or forced sale of their interest. The core function of this clause is to ensure the company or fund can reliably access committed capital and to protect against the risks posed by non-compliant investors.
Capital Commitment; Drawdowns; Defaulting Shareholders. (a) After the initial closing (the “Initial Closing”), the Trust may permit one or more additional closings (each, a “Closing”). Prior to the Initial Closing, unless otherwise determined by the Trustees, prospective Shareholders will make a commitment to purchase Shares (“Capital Commitment”) pursuant to a subscription agreement entered into with the Trust, pursuant to which Shareholders agree to contribute capital to the Trust in exchange for Shares. The subscription agreements provide that investors are required to fund capital contributions to purchase Shares (each a “Drawdown Purchase”), each time the Trust delivers a drawdown notice, which the Trust will deliver at least five business days prior to the date on which contributions will be due. Drawdown Purchases will generally be made pro rata, in accordance with unfunded Capital Commitments of all investors, unless otherwise determined by the Adviser (including as the Adviser determines necessary or desirable in order to comply with any applicable legal, regulatory, tax or similar regimes).
(b) In the event that the Trust enters into a subscription agreement with one or more investors after the initial Drawdown Purchase in which the proceeds are used to make investments, unless otherwise determined by the Trustees, each such investor will be required to make a purchase of Shares on a date to be determined by the Trust that occurs no later than the next succeeding Drawdown Purchase date so that Drawdown Purchases are pro rata in accordance with the unfunded Capital Commitments of all investors, unless otherwise determined by the Adviser (including as the Adviser determines necessary or desirable in order to comply with any applicable legal, regulatory, tax or similar regimes).
(c) Unless otherwise agreed by the Trustees or the Adviser with a Shareholder, if a Shareholder fails to fund a capital contribution in respect of its Capital Commitment when due, after a 10-business-day cure period the Trust may determine such Shareholder to be a defaulting Shareholder. A defaulting Shareholder will forfeit its right to participate in future capital calls and 50% of its Shares will be transferred to the non-defaulting Shareholders on a pro rata basis. In addition, the Adviser may, in its discretion and subject to applicable law, take any actions available under this Declaration or at law or in equity. Without limitation on the rights the Trust may have against the defaulting Shareholder, the Trust may call for a...