Dilution protection

Dilution protection

Standard provision that changes the conversion ratio in the case of a stock dividend or extraordinary distribution to avoid dilution of a convertible bondholder's potential equity position. Adjustment usually requires a split or stock dividend in excess of 5% or issuance of stock below book value.

Antidilution Clause

1. In common and preferred stock, the right of a shareholder to maintain the same percentage of ownership in a company, should the company issue more stock. This protects the investor from devaluation of his/her shares if the company decides to hold a round of financing. In preferred stock, the anti-dilution clause also indicates the right of a shareholder to purchase more shares in a new round of financing at the offering price up to his/her previous percentage of ownership. Most U.S. states only recognize the anti-dilution clause if it is made explicit in the corporation's charter.

2. In convertible securities, the right of a holder to maintain the same conversion ratio in the event of a stock split. For example, if a convertible bond may be exchanged for 100 shares of common stock and there is a 2-for-1 stock split, the same convertible bond can be exchanged for 200 shares. This protects the investor from devaluation of the conversion option.
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Unlike ordinary trademark law, dilution protection extends to trademark uses that are not necessarily likely to confuse consumers regarding the manufacturer of the product.
Dilution Protection - Pursuant to the terms of the subscription agreement between the Company and Signet dated 15 May 2012 under which Polo subscribed for 2,857,143 Signet Shares at a price of US$3.50 per Signet Share (details of which are set out in the announcement by the Company dated 16 May 2012), Polo was granted dilution protection by Signet.
According to the company, the preferred stock purchase agreement provides NewMarket Technology with preferred stock that represents 60% ownership of Intercell with dilution protection. NewMarket China's revenues will be reflected in Intercell's 2007 revenue.
(219) Yet, some courts held that dilution protection is available only to inherently distinctive marks, which prevented descriptive marks with acquired secondary meaning from ever seeking protection from dilution, regardless of how famous they became over time.
418, 433 (2003) (interpreting the statutory language as requiring "actual dilution"); see also Avery Dennison Corp., 189 F.3d at 875 (noting the "famousness prong reinstate[es] the balance--by carefully limiting the class of trademarks eligible for dilution protection, Congress and state legislatures granted the most potent form of trademark protection in a manner designed to minimize undue impact on other uses.").
This limitation on dilution protection created by the narrow definition of famousness is critical.
(37) This lack of harmonization and the forum shopping it encouraged created calls to nationalize dilution protection and to provide judicial uniformity.
Because of dilution protection's alleged monopolistic tendencies, (236) whether generally real or only stemming from the "in-gross" fear brought by broad applicability, inserting a nationwide likelihood of dilution standard into the FTDA undermines the statute's aim because it exacerbates (or itself creates) the supposed anticompetitive effects of unrestrained dilution.
Ralph, of course, opposed federal dilution protection and testified against an earlier dilution proposal at congressional hearings in 1988.
(34.) The legislative history of the Federal Trademark Dilution Act, read in light of earlier attempts at federal dilution protection, supports this interpretation.
dilution protection on natural law and personality theory).