Common use of Mandatory Prepayments and Interest Payments Clause in Contracts

Mandatory Prepayments and Interest Payments. (a) In the event that any cash dividend or distribution is paid by the Lender with respect to any Pledged Property relating to the Loan, the Borrower shall make a mandatory prepayment with respect to the Loan equal to the amount of such dividend or distribution, which shall be applied first to accrued but unpaid interest under the Loan, then to principal. Notwithstanding the foregoing, in the event that the Committee under the Plan determines that the Borrower would recognize a net increase in taxable income from the receipt of any such dividends or distributions after giving effect to any deduction for the related payment under the Loan, the Committee may in its discretion permit the Borrower to retain a portion of the dividends or distributions so as to be able to pay all or part of his related increase in taxes. (b) Interest shall be compounded quarterly during the term of a Loan; provided however, that the Borrower shall be entitled instead to pay such quarterly interest in cash to the Lender.