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authority, (i) Lessee and Lessor will cause the Net Proceeds of any insurance claim or <br />condemnation award or sale under threat of condemnation to be applied to the prompt <br />replacement, repair, restoration, modification or improvement of the Equipment and any balance <br />of the Net Proceeds remaining after such work has been completed shall be paid to Lessee or <br />(ii) Lessee shall exercise its option to prepay the obligations hereunder in accordance with <br />Section 10.01(b). <br />If Lessee elects to replace any item of the Equipment (the “Replaced Equipment”) <br />pursuant to this Section, the replacement equipment (the “Replacement Equipment”) shall be <br />new or of a quality, type, utility and condition at least as good as the Replaced Equipment, shall <br />be of equal or greater value than the Replaced Equipment, shall provide at least the same level of <br />energy and/or operational savings expected in the aggregate from the Replaced Equipment prior <br />to such casualty, destruction or condemnation and shall have an expected remaining useful life at <br />least through the final Renewal Term. Lessee shall grant to Lessor a first priority security <br />interest in any such Replacement Equipment. Lessee shall represent, warrant and covenant to <br />Lessor that each item of Replacement Equipment is free and clear of all claims, liens, security <br />interests and encumbrances, excepting only those liens created by or through Lessor, and shall <br />provide to Lessor any and all documents as Lessor may reasonably request in connection with <br />the replacement, including, but not limited to, documentation in form and substance satisfactory <br />to Lessor evidencing Lessor’s security interest in the Replacement Equipment. Lessor and <br />Lessee hereby acknowledge and agree that any Replacement Equipment acquired pursuant to this <br />paragraph shall constitute “Equipment” for purposes of this Agreement. Lessee shall complete <br />the documentation of Replacement Equipment on or before the next Rental Payment Date after <br />the occurrence of a casualty event, or be required to exercise its option to prepay the obligations <br />hereunder with respect to the damaged equipment in accordance with Section 10.01(b). <br />For purposes of this Article, the term “Net Proceeds” shall mean the amount remaining <br />from the gross proceeds of any insurance claim or condemnation award or sale under threat of <br />condemnation after deducting all expenses, including attorneys’ fees, incurred in the collection <br />thereof. <br /> Section 8.02. Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in <br />full the cost of any repair, restoration, modification or improvement referred to in Section 8.01, <br />Lessee shall either (a) complete such replacement, repair, restoration, modification or <br />improvement and pay any costs thereof in excess of the amount of the Net Proceeds, or (b) pay <br />or cause to be paid to Lessor the amount of the then applicable Prepayment Price for the <br />Equipment, and, upon such payment, the Lease Term shall terminate and Lessor’s security <br />interest in the Equipment shall terminate as provided in Section 6.01 hereof. The amount of the <br />Net Proceeds, if any, remaining after completing such repair, restoration, modification or <br />improvement or after paying such Prepayment Price shall be retained by Lessee. If Lessee shall <br />make any payments pursuant to this Section, Lessee shall not be entitled to any reimbursement <br />therefor from Lessor nor shall Lessee be entitled to any diminution of the amounts payable under <br />Article IV. <br />172