25DPP01105 T3030 Revised Appendix 1 – State Master Equipment Lease Purchase Agreement

Table of Contents

STATE MASTER EQUIPMENT LEASE PURCHASE AGREEMENT

THIS STATE MASTER LEASE PURCHASE AGREEMENT ("Master Lease") dated as of this ___ of _____, ____, by and between _______________________, a corporation duly organized and existing under the laws of the State of _____________, as lessor ("Lessor"), whose principal business address is as shown on the execution page hereof; and the State of New Jersey ("State"), acting by and through its Department of Treasury, Division of Purchase and Property ("DPP or Division") and Office of Public Finance ("OPF” or “ Office of Public Finance, collectively with the State and DPP, the “Lessee”), as Lessee, whose address is shown on the execution page hereof;

WITNESSETH:

WHEREAS, Lessee has the exclusive authority and duty to acquire items of equipment needed and to be used by the State and its Using Agencies; and

WHEREAS, Lessee is authorized by law to acquire such items of equipment by entering into purchase agreements; and

WHEREAS, the State’s Using Agencies have requested that Lessee make arrangements for the lease and purchase of certain items of equipment described or to be described in Equipment Schedule(s) on as advantageous terms as possible; and

WHEREAS, pursuant to the Agreement (as hereinafter defined), Lessor has agreed to provide Lessee with a financing facility in an amount not to exceed $100 Million to be drawn down over a period of three (3) years; provided that Lessee is not obligated to utilize the full amount available under the facility and provided further that the Agreement may be extended for up to three (3) additional (1) year periods, upon mutual written consent of the Lessor and the Lessee, upon the same terms and conditions as set forth in the Agreement.

WHEREAS, Lessor is willing to acquire such items of equipment and to lease them to Lessee pursuant to this Master Lease, and Lessee is willing to lease such items of equipment from Lessor pursuant to this Master Lease;

NOW THEREFORE, in the joint and mutual exercise of their powers, and in consideration of the mutual covenants herein contained, the parties recite and agree as follows:

ARTICLE I: DEFINITIONS AND EXHIBITS

Section 1.1 Definitions.

Unless the context otherwise requires, the terms defined in this Section 1.1 shall, for all purposes of this Master Lease, have the meanings herein specified.

Agreement: This Master Lease and each Lease, as hereinafter defined, executed pursuant to this (1) Master Lease, inclusive of any Exhibits; (2) Amendments to the Agreement, if any; (3) Bid Amendments to the Bid Solicitation # 25DPP01105 (“Bid Solicitation”), if any; (4) the final Bid Solicitation, its appendices, and any addenda; (5) the Terms and Conditions for T3030 Equipment Master Lease (the "Terms and Conditions"); (6) the Division’s Notice of Award; (7) a Lessor’s Best and Final Offer, if any; (8) the Lessor’s Proposal submitted in response to the Bid Solicitation, as accepted by the Division; and (9) any additional agreements relating to specific regulatory agreements.

Bid Solicitation: is defined in the definition of "Agreement" above.

Equipment: An item or items of personal property which are or will be described in an Equipment Schedule and all replacements, repairs, restorations, modifications and improvements thereof or thereto made pursuant to Sections 6.2, 7.2 and 8.5 which are being or will be leased with option to prepay pursuant to a Lease. Whenever reference is made in a Lease to Equipment, such reference shall be deemed to include all such replacements, repairs, restorations, modifications and improvement of or to such Equipment.

Equipment Group: Equipment identified on any one Equipment Schedule.

Equipment Lease or Lease: With respect to each Equipment Group, the terms and provisions of this Master Lease incorporated into an Equipment Schedule by reference and the Equipment Schedule in which such Equipment Group is described, which shall constitute a separate contract relating to such Equipment Group.

Equipment Schedule: A schedule consisting of the separate but like numbered pages of Exhibits A and B which have been completed with respect to an Equipment Group and executed by Lessor and Lessee as indicated therein.

Event of Non-Appropriation: The failure of Lessee's legislature to appropriate or otherwise provide money for any Fiscal Year of Lessee sufficient for the continued performance of a Lease by Lessee with respect to any Equipment Group.

Fiscal Year: The 12-month fiscal period of Lessee which commences on July 1 in every year and ends on the following June 30.

Independent Counsel: An attorney duly admitted to the practice of law before the highest court of the State.

Interest or Interest Portion: The portion of any Rental Payment designated as and comprising interest as shown in any Equipment Schedule.

Lease Term: With respect to any Equipment Group, the period during which the related Lease is in effect as specified in Section 4.1.

Lessor: With respect to each Lease, (a) the entity referred to as Lessor in the first paragraph of this Master Lease or (b) after assignment of such Lease pursuant to Section 11.1, the Lease Servicer as provided in Section 11.1 acting for and on behalf of the assignees or transferees of any right, title or interest of the original Lessor in and to such Lease pursuant to Section 11.1.

Lessor’s Proposal: The Lessor’s proposal submitted in response to the Bid Solicitation, dated _____, 2025, as accepted by the Division.

Master Lease: This State Master Equipment Lease Purchase Agreement.

Net Proceeds: Any insurance proceeds or condemnation award, paid with respect to any Equipment, remaining after payment therefrom of all expenses incurred in the collection thereof.

Office of Public Finance: The Office of Public Finance, in the New Jersey Department of the Treasury.

Payment Date: The date upon which any Rental Payment is due and payable as provided in any Equipment Schedule.

Permitted Encumbrances: As of any particular time: (i) liens for taxes and assessments not then delinquent, or which Lessee may, pursuant to the terms of Section 7.3 of this Master Lease, permit to remain unpaid, (ii) a Lease and amendments thereto, (iii) Lessor's interest in the Equipment, (iv) any mechanic's, laborer's, material men's, supplier's or vendor's lien or right not filed or perfected in the manner prescribed by law, and (v) any lien arising through a Third-Party Supplier or which Lessee may, pursuant to Article VIII hereof, permit to remain unpaid.

Prepayment Price: With respect to any Equipment Group, as of the Payment Dates specified in the Equipment Schedule relating thereto, the amount so designated and set forth opposite each such date in such Equipment Schedule.

Principal or Principal Portion: The portion of any Rental Payment designated as the principal component in any Equipment Schedule.

Prior MLPA: A master lease purchase agreement between the Lessee and a Prior MLPA Lessor that is no longer in effect.

Prior MLPA Refinanced Lease: A Refinanced Lease that was entered into under a Prior MLPA.

Prior MLPA Lessor: The lessor under a Prior MLPA.

Refinanced Lease: As defined in Section 3A.1.

Refinancing Lease: As defined in Section 3A.1.

Rental Payment: With respect to any Equipment Group, the payment due from Lessee to Lessor on each Payment Date during the Lease Term, as shown in the Equipment Schedule relating thereto.

Specifications: The bid specifications and/or purchase order pursuant to which Lessee has ordered any Equipment from a Third-Party Supplier.

Special Tax Counsel: Any law firm nationally recognized in matters pertaining to municipal finance, serving as special tax counsel to the State in connection with this Master Lease.

State: The State of New Jersey.

State and Federal Law or Laws: The Constitution and any law of the State and any charter, ordinance, rule or regulation or any agency or political subdivision of the State; and any law of the United States, and any rule or regulation of any federal agency.

Taxable Rate: With respect to each Lease, the taxable rate identified in the related Equipment Schedule.

Terms and Conditions: is defined in the definition of "Agreement" above.

Third-Party Supplier(s): Each of the manufacturers or vendors, from whom Lessee has ordered or will order or with whom Lessee has contracted or will contract for the manufacture, acquisition, delivery, and/or installation, of the Equipment under the Lease.

Using Agency: Any agency of the State which has been authorized by the State Department of the Treasury, Division of Purchase and the Office of Public Finance to have possession and use of an Equipment Group as indicated on the Exhibit A relating to such Equipment Group.

Section 1.2 Exhibits.

The following Exhibits are attached to and by reference made a part of this Master Lease:

Exhibit A: The Equipment Schedule, which together with the terms and provisions of this Master Lease comprises the Lease, names the Using Agency and describes the Equipment Group being leased by Lessee pursuant to the Lease. The serial or other identifying numbers relating to the Equipment (if applicable) and the due date of each Rental Payment shall be inserted on each Equipment Schedule when available.

Exhibit B: A form of Certificate of Acceptance of Lessee and the Using Agency indicating that the Equipment Group described therein has been delivered and installed in accordance with the Specifications, and has been accepted by Lessee and the Using Agency, the date on which Rental Payments shown in the Equipment Schedule relating thereto shall commence, and that certain other requirements have been met by Lessee.

Exhibit C: Refinancing Lease Equipment Schedule

Schedule 1 to Exhibit C: Remaining Weighted Economic Useful Life of Equipment

Exhibit D-1: A form of opinion of the Attorney General of the State, counsel to Lessee, executed this date as to the nature and powers of Lessee; the validity, execution and delivery of this Master Lease and the Equipment Schedule(s) executed as of such date and the form of various related documents; the absence of litigation; and certain related matters.

Exhibit D-2: A form of opinion of Special Tax Counsel to the Lessee, executed as of this date that (i) the portion of the Rental Payments designated as Interest paid under this Master Lease (including Equipment Schedules) shall not be includible in gross income for federal income tax purposes and (ii) the portion of the Rental Payments designated as interest paid under this Master Lease (including Equipment Schedules) and any gain on the sale of this Master Lease shall not be includible as gross income under the New Jersey Gross Income Tax Act.

ARTICLE II: REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.1 Representations, Warranties and Covenants of Lessee.

Lessee represents and warrants to and covenants with Lessor with respect to this Master Lease and each Lease, as follows:

(a) Lessee is the State, and is authorized under the Constitution and laws of the State to enter into this Master Lease, each Lease and the transactions contemplated hereby and thereby, and to perform all of its obligations hereunder and under each Lease. Notwithstanding that various Using Agencies have possession of the Equipment Groups, the State has the obligation to pay Rental Payments under each Lease and perform other obligations of Lessee.

(b) The execution and delivery of this Master Lease, Equipment Schedule(s), and the Certificate of Acceptance(s) by the officer of Lessee executing them have been duly authorized under State law. The execution and delivery of the Certificate(s) of Acceptance by the officer of the Using Agency executing it have been duly authorized under State law. Lessee has complied and/or will comply with all public bidding and other State and Federal Laws applicable to this Master Lease, each Lease and the acquisition and financing of the Equipment by Lessee.

(c) Lessee will ensure that each Using Agency will use the Equipment during the Lease Term only to perform essential governmental functions and none of the Equipment will be used in or for any private commercial activity.

(d) To the extent permitted by law, Lessee represents that it will do and perform all acts and things necessary or desirable in order to assure that under the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder (the “Regulations”), the interest portion of the Rental Payments will be excludable from gross income for purposes of federal income taxation.

(e) Lessee will submit to the U.S. Secretary of the Treasury information reporting statements and other information relating to each Lease at the times and in the forms required by the Code and the Regulations.

(f) Upon delivery and installation of any Equipment Group, the Lessee, and the Using Agency identified in the related Equipment Schedule will provide to Lessor a completed and executed copy of a Certificate of Acceptance relating thereto in the form attached hereto as Exhibit B.

(g) Lessee shall furnish Lessor with an Equipment Schedule for each Equipment Group to be leased under this Master Lease. Upon execution of this Master Lease, Lessee will provide to Lessor an opinion of the Attorney General of the State, its legal counsel, substantially in the form attached hereto as Exhibit D-1 and an opinion of its Special Tax Counsel in substantially the form attached hereto as Exhibit D-2.

Section 2.2 Representations, Warranties of Lessor.

Lessor represents and warrants to Lessee as follows:

(a) Lessor is a corporation duly organized, existing and in good standing under and by virtue of the laws of the state of ______________, and is duly qualified and in good standing as a foreign corporation authorized to transact business in the State; has the power to enter into this Master Lease and the Leases contemplated hereunder; is possessed of full power to own and hold real and personal property and to lease the same; and has duly authorized the execution and delivery of this Master Lease and the Leases contemplated hereunder.

(b) Neither the execution and delivery of this Master Lease and the Leases contemplated hereunder, nor the fulfillment of or compliance with the terms and conditions hereof and thereof, nor the consummation of the transactions contemplated hereby and thereby, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which Lessor is now a party or by which Lessor is bound, constitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of Lessor or upon the Equipment, except Permitted Encumbrances.

ARTICLE Ill: LEASE OF EQUIPMENT Section 3.1 Acquisition of Equipment.

Lessee shall advise Lessor of its desire to lease Equipment and of the desired lease terms. Upon written agreement by Lessor and Lessee as to the lease of the Equipment and such terms, Lessee shall order the Equipment Group from the appropriate Third-Party Supplier or Third-Party Suppliers. Upon receipt and acceptance of the Equipment, the Lessee shall furnish to Lessor an executed Equipment Schedule relating to the Equipment Group. Nothing herein shall obligate Lessor to lease any Equipment to Lessee until Lessor shall have so concurred in writing.

Section 3.2 Equipment Delivery; Documentation.

Upon delivery of any Equipment Group, the Using Agency and the Office of Public Finance on behalf of Lessee shall inspect such Equipment, and if such Equipment, meets Lessee's and Using Agency's Specifications, the Using Agency and Lessee shall provide to Lessor a completed and executed copy of a Certificate of Acceptance relating thereto; in the form attached hereto as Exhibit B, and a completed and executed copy of the related Equipment Schedule. Lessor and Lessee shall take all actions necessary to vest legal title to each Equipment Group in the party specified in Section 8.1 hereof, and to perfect a security interest therein in favor of Lessor or a person, firm or corporation designated by it.

Section 3.3 Lease; Enjoyment; Inspection.

Lessor hereby leases each Equipment Group made subject to a Lease under this Master Lease to Lessee, and Lessee hereby leases such Equipment Group from Lessor, upon the terms and conditions set forth in such Lease. Lessor hereby covenants to provide Lessee during the Lease Term with the quiet use and enjoyment of the Equipment Group, and Lessee shall during the Lease Term peaceably and quietly have and hold and enjoy the Equipment Group, without suit, trouble or hindrance from Lessor, except as expressly set forth in the Lease and Lessor will, at the request of Lessee and at Lessee's cost, join in any legal action in which Lessee asserts its right to such possession and enjoyment. Lessee further agrees that Lessor shall have such rights of access to examine and inspect, at reasonable times, the Equipment as may be reasonably necessary to cause the proper maintenance of the Equipment in the event of failure by Lessee to perform its obligations under the Lease.

ARTICLE IIIA: REFINANCING LEASES

Section 3A.1 Refinancing of Existing Lease.

Subject to Lessor’s express written consent, which consent will not be unreasonably withheld or delayed, Lessee shall have the right to enter into a lease (a “Refinancing Lease”) to refinance in full the Principal portion of the Prepayment Price of an existing lease entered into and then in effect under this Master Lease or any Prior MLPA (a “Refinanced Lease”). Lessee shall advise Lessor of its desire to refinance an existing lease, the Payment Date of the proposed prepayment of the Refinanced Lease and of the desired Refinancing Lease terms as set forth in Section 3A.2.

Section 3A.2. Terms of Refinancing Lease.

(1) Principal Portion - The Principal Portion of a Refinancing Lease shall be the outstanding Principal Portion of the Prepayment Price of the Refinanced Lease as of the date of prepayment of the Refinanced Lease.

(2) Rate of Interest - The interest rate on a Refinanced Lease shall be determined as set forth in Appendix 3 - State-Supplied Price Sheet to the Lessor’s Proposal.

(3) Maximum Term - Five (5) years.

(4) Maximum Weighted Average Maturity - The weighted average maturity of a Refinancing Lease shall not exceed the greater of (i) 120% of the combined remaining weighted average useful lives of the equipment included in the applicable Equipment Group, or (ii) the remaining weighted average maturity of the Refinanced Lease.

Section 3A.3. Documentation.

Upon written agreement by Lessor and Lessee as to the terms of the Refinancing Lease, Lessee shall furnish to Lessor an executed Refinancing Lease Equipment Schedule relating to the applicable Equipment Group setting forth the terms of such Refinancing Lease in the form attached to this Master Lease as Exhibit C.

Section 3A.4. Discharge of Refinanced Lease.

In the case of a Refinanced Lease that is outstanding under this Master Lease, a Refinancing Lease for an Equipment Schedule delivered pursuant to Section 3A.3 shall be deemed an amendment and restatement of the Equipment Schedule for the Refinanced Lease, and upon such delivery, the Lessor shall deliver the Equipment Schedule for the Refinanced Lease to the Lessee marked “CANCELED.”

In the case of a Prior MLPA Refinanced Lease, the Lessor shall pay to or at the direction of the Prior MLPA Lessor an amount equal to the Principal Portion of the Prepayment Price of the Prior MLPA Refinanced Lease, and the Lessee shall pay to or at the direction of the Prior MLPA Lessor an amount equal to the Interest Portion of the Prepayment Price of the Prior MLPA Refinanced Lease. Upon receipt of such payments, the Prior MLPA Lessor shall (i) deliver to the Lessee the Equipment Schedule for the Prior MLPA Refinanced Lease marked “PAID” and (ii) cause to be extinguished any liens held by the Prior MLPA Lessor against the Equipment Group and deliver to the Lessor and Lessee evidence of such extinguishment, which may be a certification of the Prior MLPA Lessor.

ARTICLE IV: LEASE TERM

Section 4.1 Lease Term.

The Lease with respect to an Equipment Group shall be in effect for a Lease Term commencing upon the date of execution and delivery of the Equipment Schedule relating thereto and ending as provided in Section 4.6; provided; however, interest under the Lease shall not begin to accrue until Lessor has paid the Third-Party Supplier(s). The Lease Term shall not exceed five (5) years.

Section 4.2 Termination by Lessee.

Solely upon an Event of Non-appropriation relating to any particular Equipment Group, Lessee shall have the right to terminate the related Lease with respect to such Equipment Group, at the end of any Fiscal Year of Lessee, in the manner and subject to the terms specified in this Section 4.2 and Sections 4.4 and 4.5. Lessee may effect such termination by giving Lessor a written notice of termination with respect to such Equipment Group and by paying to Lessor any Rental Payments and other amounts with respect to such Equipment Group which are due and have not been paid at or before the end of its then current Fiscal Year. Lessee shall within ten (10) days after an Event of Nonappropriation for an Equipment Group, deliver to Lessor a written notice of such Event of Non-appropriation and shall notify Lessor of any anticipated termination. In the event of termination of a Lease with respect to any Equipment Group as provided in this Section 4.2, Lessee shall deliver possession of such Equipment Group to Lessor in accordance with Section 12.3, and, at the written instruction of Lessor, shall convey to Lessor or release its interest in such Equipment Group within fifteen (15) days after the termination of a Lease with respect to such Equipment Group.

Section 4.3 Intent to Continue Lease Term Appropriations.

Lessee presently intends to continue each Lease for its entire Lease Term with respect to each Equipment Group made subject thereto and to pay all Rental Payments relating thereto. The Office of Public Finance, as Lessee, will include in the budget request for each Fiscal Year the Rental Payments to become due in such Fiscal Year with respect to each Lease.

Section 4.4 Effect of Termination.

Upon termination of a Lease with respect to any Equipment Group as provided in Section 4.2, Lessee shall not be responsible for the payment of any additional Rental Payments relating thereto scheduled to become due with respect to succeeding Fiscal Years, but shall be responsible to pay the Rental Payments then due under such Lease to the date of termination (which is the last day of the Fiscal Year for which funds were appropriated, and if Lessee has not delivered possession of such Equipment Group to Lessor in accordance with Section 12.3 and conveyed to Lessor or released its interest in the Equipment Group within fifteen (15) days after the termination of a Lease with respect thereto, the termination shall nevertheless be effective, but Lessee shall be responsible for the payment of damages in an amount equal to the amount of the Rental Payments thereafter coming due with respect to such Equipment Group which are attributable to the number of days after such fifteen (15) day period during which Lessee fails to take such actions.

Section 4.5 Non-substitution.

If a Lease is terminated by Lessee with respect to an Equipment Group in accordance with Section 4.2, to the extent permitted by State law, Lessee agrees not to purchase, lease or rent personal property to perform the same functions as, or functions taking the place of, those performed by such Equipment Group, for a period of ninety (90) days; provided, however, that these restrictions shall not be applicable in the event the Equipment Group shall be sold by Lessor and the amount received from such sale, less all costs of such sale, is sufficient to pay the then applicable Prepayment Price relating thereto as set forth in the Equipment Schedule; or if to the extent that the application of these restrictions is unlawful and would affect the validity of this Master Lease or the Lease.

Section 4.6 Termination of Lease Term.

The Lease Term of a Lease with respect to any Equipment Group will terminate upon the occurrence of the first of the following events: (a) the termination thereof by Lessee in accordance with Section 4.2; (b) the exercise by Lessee of its option to prepay pursuant to Article X; or (c) the payment by Lessee of all Rental Payments and all other amounts authorized or required to be paid by Lessee under the Lease with respect to the Equipment Group pursuant to Section 8.1(b) hereof. In the event of a default by Lessee with respect to the Equipment Group pursuant to Article XII, termination will not be automatic but rather will be at Lessor's option.

ARTICLE V: RENTAL PAYMENTS

Section 5.1 Rental Payments.

Lessee agrees to pay Rental Payments with respect to each Equipment Group during the related Lease Term, in the amounts and on the dates specified in the Equipment Schedule relating thereto. A portion of each Rental Payment is paid as and represents the payment of Interest. Each Equipment Schedule sets forth the Interest component of each Rental Payment. All Rental Payments shall be paid to Lessor; or to such other person(s) or entity(ies) to which Lessor has assigned such Rental Payments as specified in Article XI, at such place as Lessor or such assignee may from time to time designate by written notice to Lessee. Lessee shall pay the Rental Payments exclusively from moneys legally available therefor, in lawful money of the United States of America.

Section 5.2 Obligations Subject to Appropriations.

The obligations of Lessee under each Lease, including its obligations to pay the Rental Payments due with respect to any Equipment Group, in any Fiscal Year for which a Lease is in effect, shall not constitute an indebtedness of Lessee within the meaning of the Constitution and laws of the State. Nothing herein shall constitute a pledge by Lessee of its faith and credit or of any taxes or other moneys of the State, to the payment of any Rental Payment or other amount coming due hereunder. Such amounts shall be payable from moneys lawfully appropriated by the State Legislature, from time to time, for the benefit of the applicable Using Agency for this purpose and from the proceeds or Net Proceeds of the Equipment. The State Legislature is under no legal obligation to make any appropriation for such purpose.

Section 5.3 Rental Payments to be Unconditional.

Except as provided in Section 4.2, with respect to an Event of Non-appropriation, and except as provided in the Notice of Set Off for State taxes, L. 1995, c. 159, N.J.S.A. 54:49-19, the obligation of Lessee to make Rental Payments or any other payments required under a Lease shall be absolute and unconditional in all events. Notwithstanding any dispute between Lessee and Lessor or any other person (including, without limitation, any Third-Party Supplier), Lessee shall make all Rental Payments and other payments required under each Lease when due and shall not withhold any Rental Payment or other payment pending final resolution of such dispute nor shall Lessee assert any right to set-off or counterclaim against its obligation to make such Rental Payments or other payments required under the Lease. Lessee's obligation to make Rental Payments or other payments during the Lease Term for each Lease shall not be abated through accident or unforeseen circumstances. However, nothing herein shall be construed to release Lessor from the performance of its obligations hereunder; and if Lessor should fail to perform any such obligation, Lessee may institute such legal action against Lessor as Lessee may deem necessary to compel the performance of such obligation or to recover damages therefor.

Section 5.4 Event of Taxability.

(a) If, for any reason, the Interest portion of any Rental Payment made under a Lease with respect to an Equipment Group (the "affected Lease") loses its exclusion from gross income under federal tax laws as a result of an Event of Taxability (as hereafter defined) following a Determination of Taxability (as hereafter defined) thereon, Lessee agrees to pay Lessor: (i) as a Rental Payment or a form of additional Interest, an additional amount which, together with the amount of Interest to be paid by Lessee under such affected Lease, puts Lessor in the same after-tax position that it would have had been in, had such payments been excluded from gross income under the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder (the "Code"), and (ii) all other amounts necessary to reimburse Lessor for all fees, fines, penalties, other amounts, and impositions resulting from the Event of Taxability, which (i) and (ii) shall not exceed the maximum non-usurious lawful rate of interest permitted by applicable law.

(b) Determination of Taxability:

(i) The delivery of written notice (the "Audit Notice") to Lessor by Lessee declaring that an examination of such affected Lease has been undertaken by the Internal Revenue Service (the "IRS"), such Audit Notice to be effective sixty (60) days after the giving of the same, unless prior thereto Lessee files written notice with Lessor that it intends to participate in the audit process, at its own expense, to obtain a written determination from the IRS affirming that the Interest portion of the Rental Payments on such affected Lease is excluded from gross income. If the final IRS determination is adverse, Lessee may appeal, as permitted by law, such IRS determination to a court of competent jurisdiction. The Audit Notice will be effective sixty (60) days after Lessee's receipt of a final non-appealable determination by the IRS or a court of competent jurisdiction, whichever is later; The delivery of written notice (the "Taxability Notice") to Lessor and Lessee declaring that the IRS has issued a proposed deficiency letter to Lessor (the "60-day letter"), the effect of which (in the reasonable opinion of Lessor) is to assert that the Interest portion of the Rental Payments on the affected Lease is included in the gross income of Lessor, such Taxability Notice to be effective sixty (60) days after the giving of the same, subject to a stay of such 60-day period for the period of litigation if prior thereto Lessee agrees in writing to participate in and defend a final judicial determination (including, at Lessee's discretion, any or all appeals) to affirm that the Interest portion of the Rental Payments on the affected Lease is excluded from gross income. If the final non-appealable judicial determination is adverse, the Taxability Notice will be effective sixty (60) days after the entry of such final, non-appealable judicial determination; or

(ii) The delivery of written notice (the "Event Notice") by Lessee to Lessor declaring that a violation of the provisions or procedures for compliance with the requirements of the Code stated in the tax regulatory agreement with respect to the affected Lease has occurred or will occur on a specified date (other than by reason of any of the events described in the foregoing subparagraphs (i) and (ii)), which Lessee has determined (with the assistance of counsel) cannot be cured by appropriate remedial action under Treasury Regulation 1.141-12 or other IRS remedial relief, and describing the violation, such Event Notice to become effective sixty (60) days after the giving of same.

(c) "Event of Taxability" shall mean a change in law or fact, or the occurrence or recognition of a fact, circumstance or situation or an act or omission of Lessee which causes Lessor to lose its exclusion from gross income provided under the Code of the Interest portion of the Rental Payments made under the affected Lease.

ARTICLE VI: INSURANCE AND NEGLIGENCE

Section 6.1 Liability and Property Insurance.

At its own expense, Lessee shall cause property damage insurance to be carried and maintained with respect to each Equipment Group, or shall demonstrate to the satisfaction of Lessor that adequate reserves to meet Lessee's obligation under a Lease will be provided with respect to each item of Equipment sufficient in each case to replace such item of Equipment or pay the applicable Prepayment Price, whichever is greater. Where Lessee maintains such property damage insurance Lessor agrees to accept evidence of blanket insurance coverage which applies automatically to all lease purchase agreements and which does not require Lessor to be specifically named by endorsement. Lessee will provide a copy of a blanket insurance policy or policies to Lessor as evidence of such coverage with respect to such items of Equipment.

Any insurance policy maintained pursuant to this Section 6.1 shall be so written or endorsed as to make losses, if any, payable to Lessee and Lessor as their respective interests may appear and shall provide that Lessor shall be given written notice by the Lessee at least thirty (30) days prior to cancellation or modification of such insurance policy. The Net Proceeds of the insurance required in this Section 6.1 shall be applied as provided below.

Section 6.2 Damage to or Destruction of Equipment.

Lessee assumes all risk of loss with respect to the Equipment itself, and if after delivery of any Equipment to Lessee all or any part of the Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall as soon as practicable after such event either: (a) replace the same at Lessee's sole cost and expense with equipment of equal or greater value to the Equipment immediately prior to the time of the loss occurrence, such replacement equipment to be subject to Lessor's reasonable approval, whereupon such replacement shall be substituted in the related Lease by appropriate endorsement; or (b) pay the applicable Prepayment Price of the Equipment Group to which such Equipment belongs as set forth in the particular Equipment Schedule. Lessee shall notify Lessor of which course of action it will take within fifteen (15) days after the loss occurrence. If Lessee fails or refuses to notify Lessor within the required period or if Lessee fails to complete the action within forty-five (45) days of the loss occurrence, Lessor may, at its option, declare the applicable Prepayment Price of the Equipment Group to which such Equipment belongs set forth in the particular Equipment Schedule immediately due and payable, and Lessee shall be obligated to pay the same. The Net Proceeds of all insurance payable with respect to the Equipment shall be available to Lessee and shall be used to discharge Lessee's obligation under this Section 6.2. On payment of the Prepayment Price with respect to any Equipment Group, the related Lease shall terminate with respect to such Equipment and Lessee thereupon shall become entitled to such Equipment AS IS, WITHOUT WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY LESSEE, except that such Equipment shall not be subject to any lien or encumbrance created by or arising through Lessor and Lessor shall release any security or other interest in such Equipment as provided in Section 8.1(b).

ARTICLE VII: OTHER OBLIGATIONS OF LESSEE

Section 7.1 Use Permits.

Lessee shall exercise due care in the installation, use, operation and maintenance of the Equipment, and shall not install, use, operate or maintain the Equipment improperly, carelessly, in violation of any State and Federal Law or for a purpose or in a manner contrary to that contemplated by the applicable Lease. Lessee shall obtain all permits and licenses necessary for the installation, operation, possession and use of the Equipment. Lessee shall comply with all State and Federal Laws applicable to the installation, use, possession and operation of the Equipment, and if compliance with any such State and Federal Law requires changes or additions to be made to the Equipment, such changes or additions shall be made by Lessee at its expense.

Section 7.2 Maintenance of Equipment by Lessee.

Lessee shall keep each Equipment Group at the address specified in the related Equipment Schedule and shall notify Lessor in writing prior to relocation of the Equipment. Lessee shall, at its own expense, maintain, preserve and keep the Equipment in good repair, working order and condition, and shall from time to time make all repairs and replacements necessary to keep the Equipment in such condition. Lessor shall have no responsibility for any of these repairs or replacements.

Section 7.3 Taxes, Other Governmental Charges and Utility Charges.

Except as expressly limited by this Section 7.3, Lessee shall pay all taxes and other charges of any kind which are at any time lawfully assessed or levied against or with respect to the Equipment, the Rental Payments or any part thereof, or which become due during a Lease Term, whether assessed against Lessee or Lessor. Lessee shall also pay when due all gas, water, steam, electricity, heat, power, telephone, and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Equipment, and all special assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Equipment; provided that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, Lessee shall be obligated to pay only such installments as are required to be paid during the Lease Term as and when the same become due. Lessee shall not be required to pay any federal, state or local income, inheritance, estate, succession, transfer, gift, franchise, gross receipts, profit, excess profit, capital stock, corporate tax, or other similar tax payable by Lessor, its successors or assigns, unless such tax is made in lieu of or as a substitute for any tax, assessment or charge which is the obligation of Lessee under this Section 7.3.

Section 7.4 Advances.

If Lessee shall fail to perform any of its obligations under this Article VII, Lessor may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money, and Lessee shall be obligated to repay all such advances on demand, with interest as provided by the New Jersey Prompt Payment Act, N.J.S.A. 52:32-32 et seq.

ARTICLE VIII: TITLE; SECURITY INTEREST; LIENS

Section 8.1 Title.

(a) During a Lease Term with respect to any Equipment Group, and so long as Lessee is not in default under Article XII, legal title to the Equipment Group and any and all repairs, replacements, substitutions and modifications to it shall be in Lessee. If so directed by Lessor in writing, upon termination of a Lease with respect to the related Equipment Group pursuant to Section 4.2 or Article XII hereof, full and unencumbered legal title to such Equipment Group shall pass to Lessor, and Lessee shall have no further interest therein. In either of such events, Lessee shall execute and deliver to Lessor such documents as Lessor may request to evidence the passage of legal title to such Equipment Group to Lessor and the termination of Lessee's interest therein, and upon request by Lessor shall deliver possession of the Equipment Group to Lessor in accordance with Section 12.3.

(b) Upon termination of a Lease with respect to the related Equipment Group through exercise of Lessee's option to prepay pursuant to Article X or through payment by Lessee of all Rental Payments and other amounts relating thereto, Lessor's security or other interest in such Equipment Group shall terminate, and Lessor shall execute and deliver to Lessee such documents as Lessee may request to evidence the termination of Lessor's security or other interest in such Equipment Group.

Section 8.2 Security Interest in the Tangible Property.

Lessee grants to Lessor a continuing, first priority security interest in all tangible property in each Equipment Group, the proceeds thereof and all repairs, replacements, substitutions and modifications thereto or thereof made pursuant to Sections 6.2, 7.2 and 8.5 subject to Permitted Encumbrances, in order to secure Lessee's payment of all Rental Payments due during the related Lease Term and the performance of all other obligations herein and therein to be performed by Lessee. While Article 9 of the Uniform Commercial Code, as enacted in the State, N.J.S.A. 12A:9-101 et. seq., does not apply to a transfer by a government or governmental unit, Lessee will join with Lessor in executing, such notices of Lessor’s security interest in the Equipment as Lessor may reasonably request and will perform such acts as Lessor may reasonably request to establish and maintain a valid first lien security interest in the Equipment and to provide notice of such security interest. If requested by Lessor, Lessee shall conspicuously mark the Equipment with appropriate lettering, labels or tags, and maintain such markings during the Lease Term, so as clearly to disclose Lessor's security interest in the Equipment.

Section 8.3 Liens.

During each Lease Term, Lessee shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with respect to the Equipment, other than the respective rights of Lessor and Lessee as herein provided and Permitted Encumbrances. Except as expressly provided in Section 7.3 and this Article VIII, Lessee shall promptly, at its own expense, take such action as may be necessary duly to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim if the same shall arise at any time, which is not a Permitted Encumbrance. Lessee shall reimburse Lessor for any expense incurred by Lessor in order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or claim, which is not a Permitted Encumbrance. Lessee may in good faith contest any lien filed or established against any Equipment and in such event may permit the items so contested and any appeal therefrom, unless Lessor shall notify Lessee that, in the opinion of Independent Counsel, by nonpayment of any such item the interest of Lessor in the Equipment will be materially endangered or the Equipment or any part thereof will be subject to loss or forfeiture, in which event Lessee shall promptly pay and cause to be satisfied and discharged all such unpaid items or provide Lessor with full security against any such loss or forfeiture, in form satisfactory to Lessor. Lessor will cooperate fully with Lessee in any such contest, upon the request and at the expense of Lessee.

Section 8.4 Installation of Lessee's Equipment.

Lessee may at any time and from time to time, in its sole discretion and at its own expense, install other items of equipment in or upon the Equipment, which items shall be identified by tags or other symbols affixed thereto as property of Lessee, shall remain the sole property of Lessee, and may be modified or removed by Lessee at any time provided that Lessee shall repair and restore any and all damage to the Equipment resulting from the installation, modification or removal of any such items.

Section 8.5 Modifications of Equipment.

Lessee shall, at its own expense, have the right to make repairs, replacements, substitutions and modifications to all or any of the parts of the Equipment. All such work and any part or component used or installed to make a repair or as a replacement, substitution or modification, shall thereafter comprise part of the Equipment and be subject to the provisions of the related Lease. Such work shall not in any way damage the Equipment or cause it to be used for purposes other than those authorized under the provisions of State and Federal Law or those contemplated by the related Lease; and the Equipment, upon completion of any such work, shall be of a value which is not less than the value of the Equipment immediately prior to the commencement of such work. Any property for which a replacement or substitution is made pursuant to this Section 8.5 may be disposed of by Lessee in such manner and on such terms as are determined by Lessee.

Section 8.6 Personal Property.

The Equipment is and shall at all times be and remain personal property notwithstanding that the Equipment or any part thereof may be or hereafter become in any manner affixed or attached to or embedded in or permanently rested upon real property or any building thereon or attached in any manner to what is permanent by means of cement, plaster, nails, bolts, screws or otherwise.

ARTICLE IX: WARRANTIES

Section 9.1 Selection of Equipment.

The Equipment and the Third-Party Supplier{s) have been selected by Lessee, and Lessor shall have no responsibility in connection with the selection of the Equipment, its suitability for the use intended by Lessee, the acceptance by the Third-Party Supplier(s) or its sales representatives of the order submitted, or any delay or failure by the Third-Party Supplier(s) or its sales representative to manufacture, deliver or install the Equipment for use by Lessee. Lessee authorizes Lessor to add the serial number of the Equipment to the particular Equipment Schedule when available.

Section 9.2 Installation and Maintenance of Equipment.

Lessor shall have no obligation to install, erect, test, inspect service or maintain the Equipment under any circumstances, but such actions shall be the obligation of Lessee or the Third-Party Suppliers.

Section 9.3 Third-Party Supplier's(s') Warranties.

Lessor hereby assigns to Lessee, for and during each Lease Term, all of its interest, if any, in all Third-Party Supplier's warranties and guarantees, express or implied, issued on or applicable to the Equipment, and Lessor hereby authorizes Lessee to obtain the customary services furnished in connection with such warranties and guarantees at Lessee's expense.

Section 9.4 Patent Infringement.

Lessor hereby assigns to Lessee for and during each Lease Term, all of its interest, if any, in patent indemnity protection provided by any Third-Party Supplier with respect to the Equipment. Such assignment of patent indemnity protection by Lessor to Lessee shall constitute the entire liability of Lessor for any patent infringement by Equipment furnished pursuant to a Lease.

ARTICLE X: OPTION TO PREPAY

Section 10.1 When Available.

Lessee shall have the option to prepay its obligations under any Lease with respect to the Equipment Group subject thereto on any Payment Date relating thereto for the then applicable Prepayment Price set forth in the Equipment Schedule relating thereto, but only if Lessee is not in…