Payment of PIK Sample Clauses
The Payment of PIK (Payment-in-Kind) clause defines how interest or dividends are paid not in cash, but in additional securities or debt instruments. In practice, this means that instead of receiving regular cash payments, the lender or investor receives more bonds, notes, or shares, which increases the principal amount owed or the number of shares held. This clause is commonly used in financing arrangements where the borrower wishes to conserve cash flow, such as in leveraged buyouts or distressed situations. Its core function is to provide financial flexibility to the borrower while still compensating the lender or investor, thereby addressing liquidity constraints and aligning payment obligations with the borrower's cash availability.
Payment of PIK. Not later than five (5) Business Days following any payment of dividends on the Collateral Shares into the Collateral Accounts, if the Net PIK Amount is greater than zero Dollars, Borrowers shall cause such Cash to be paid to Lenders, on a Pro Rata Basis, in an aggregate amount equal to the lesser of (x) the amount of such dividends and (y) the amount necessary to reduce the Net PIK Amount to zero Dollars; for the avoidance of doubt, the Net PIK Amount shall be reduced by the aggregate amount of any such payments.