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-14- <br />income of the owner thereof; or (c) receipt by Lessor or Lessee of a written opinion of a <br />nationally recognized firm of attorneys experienced in matters pertaining to the tax-exempt status <br />of interest on obligations issued by states and their political subdivisions, selected by Lessor and <br />acceptable to Lessee, to the effect that the interest component of any Rental Payment has become <br />includable in the gross income of the owner thereof for Federal income tax purposes. For all <br />purposes of this definition, an Event of Taxability shall be deemed to occur on the date as of <br />which the interest component of any Rental Payment is deemed includable in the gross income <br />of the owner thereof for Federal income tax purposes. <br />Section 4.07. Mandatory Prepayment. (a) Any funds not applied to Equipment Costs and <br />remaining in the Escrow Account on the earliest of (i) the expiration of the Acquisition Period, <br />(ii) the date on which Lessee delivers to the Lessor the executed Disbursement Request to effect <br />the final disbursement to pay (or reimburse) Equipment Costs from the Escrow Account or (iii) a <br />termination of the Escrow Account as provided in the Escrow Agreement shall be applied by <br />Lessor on each successive Rental Payment Date thereafter to pay all or a portion of the Rental <br />Payment due and owing in the succeeding twelve (12) months. Any remaining amounts (“Excess <br />Proceeds”) shall be applied by Lessor as prepayment to the applicable unpaid Principal Portion <br />of Rental Payments owing hereunder in the inverse order of the Rental Payment Dates on the <br />following terms: <br />first, the portion of the Excess Proceeds that is equal to 5% or less of the original <br />aggregate principal component of all Rental Payments under this Agreement shall be applied to <br />prepay the applicable unpaid Principal Portion of Rental Payments at a price of 100% of the such <br />prepaid Principal Portion and accrued interest thereon; and <br />second, remaining Excess Proceeds, if any, shall be applied to further prepay the <br />applicable unpaid Principal Portion of Rental Payments at a price of 102% of such prepaid <br />Principal Portion and accrued interest thereon to the prepayment date. <br />(b) In connection with any prepayment pursuant to subsection (a) of this Section 4.07, <br />Lessee may pay the prepayment premium and interest portion of Rental Payments accrued to the <br />prepayment date on such principal portion to be prepaid from funds remaining in the Escrow <br />Account pursuant to subsection (a) of this Section 4.07, provided, that no portion of such funds <br />may be used to pay the prepayment premium if such payment would, together with any other <br />Private Business Use relating to this Agreement or the Equipment, result in more than 5% of the <br />Acquisition Amount, plus investment earnings corresponding to such 5% portion of the <br />Acquisition Amount, being used, directly or indirectly, in whole or in part, in any Private <br />Business Use; provided, further, that prior to applying any excess proceeds to pay premium, <br />Lessor must receive a certification from the Lessee that such application will comply with the <br />foregoing requirements. <br />(c) Lessee will give Lessor notice of any such prepayment in accordance with this <br />Section 4.07 not less than 30 days in advance of the prepayment date. <br />293