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owner’s gross income as a consequence of any act, omission or event whatsoever, including but <br />not limited to the matters described in the immediately succeeding sentence, and regardless of <br />whether the same was within or beyond the control of Lessee. An Event of Taxability shall be <br />presumed to have occurred upon (a) the receipt by Lessor or Lessee of an original or a copy of an <br />Internal Revenue Service Technical Advice Memorandum or Statutory Notice of Deficiency or <br />other written correspondence which legally holds that the interest component of any Rental <br />Payment is includable in the gross income of the owner thereof; (b) the issuance of any public or <br />private ruling of the Internal Revenue Service that the interest component of any Rental Payment <br />is includable in the gross income of the owner thereof; or (c) receipt by Lessor or Lessee of a <br />written opinion of a nationally recognized firm of attorneys experienced in matters pertaining to <br />the tax-exempt status of interest on obligations issued by states and their political subdivisions, <br />selected by Lessor and acceptable to Lessee, to the effect that the interest component of any <br />Rental Payment has become includable in the gross income of the owner thereof for federal <br />income tax purposes. For all purposes of this definition, an Event of Taxability shall be deemed <br />to occur on the date as of which the interest component of any Rental Payment is deemed <br />includable in the gross income of the owner thereof for federal income tax purposes. <br /> Section 4.07. Mandatory Prepayment. Any funds not applied to Equipment Costs and <br />remaining in the Escrow Account on the earlier of (a) the expiration of the Acquisition Period <br />and (b) the date on which Lessee delivers to the Escrow Agent the executed Disbursement <br />Request to effect the final disbursement to pay (or reimburse) Equipment Costs from the Escrow <br />Account shall be applied by Lessor on each successive Rental Payment Date thereafter to all or a <br />portion of the Rental Payment due and owing in the succeeding twelve (12) months. Any <br />remaining amounts (“Excess Proceeds”) shall be applied by Lessor as prepayment to the <br />remaining principal balance owing hereunder in the inverse order of Rental Payment Dates on <br />the following terms: <br />first, the portion of the Excess Proceeds that is 5% or less of the original aggregate <br />principal component of all Rental Payments under this Agreement shall be applied to prepay <br />principal components of Rental Payments at a price of 100% of such prepaid principal <br />components and accrued interest thereon; and <br />second, remaining Excess Proceeds, if any, shall be applied to further prepay principal <br />components of Rental Payments at a price of 102% of such prepaid principal components and <br />accrued interest thereon to the prepayment date. <br />Lessee shall give Lessor notice of any such prepayment not less than 30 days in advance <br />of the prepayment date. <br />In lieu of the foregoing prepayment, Lessee may apply Excess Proceeds to the acquisition <br />of other capital equipment that Lessee identifies and with Lessor’s prior written approval, given <br />in Lessor’s sole and absolute discretion, and subject to such conditions as Lessor may require, <br />including but not limited to execution of an appropriate amendment to the Equipment Schedule, <br />the filing of financing statements with respect to personal property and fixtures under Article 9 <br />of the California Commercial Code and Lessee’s delivery to Lessor of a written opinion of a <br />nationally recognized firm of attorneys experienced in matters pertaining to the tax-exempt status <br />166