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allowance for estimated additional average annual Net System Revenues from any <br />additions or connections to or improvernents or extensions of the Water System which <br />have occurred from the end of Fiscal Year preceding the date of execution of the Parity <br />Obligations. <br />(3) Notwithstanding the requirements described above, Parity Obligations <br />may be issued or incurred to refund outstanding Parity Obligations if, after giving effect <br />to the application of the proceeds thereof, total Debt Service will not be increased in any <br />Fiscal Year in which Parity Obligations (outstanding on the date of issuance or <br />incurrence of such refunding Parity Obligations, but excluding such refunding Parity <br />Obligations) not being refunded are outstanding. <br />(4) The City may but shall not be required to fund a reserve fund or obtain a <br />reserve fund surety or instrument with respect to any Parity Obligations. If a reserve fund <br />is funded for any Parity Obligations or a qualified reserve fund surety or instrument is <br />obtained with respect to any Parity Obligations, such funded reserve fiend or qualified <br />reserve fund surety or instrument shall secure only the related Parity Obligations and <br />shall not support the Bonds or any other Parity Obligations. <br />(5) Subordinate Obligations. The City further covenants that it shall not issue <br />or incur any Subordinate Obligations unless Net System Revenues or projected Net <br />System Revenues, calculated in the same manner as described in paragraph (b) above, are <br />equal to at least 100% of the sum of Debt Service on all Parity Obligations and <br />Subordinate Obligations outstanding immediately subsequent to the incurring of such <br />additional obligations. <br />SECTION 5.04. Maintenance and Operation Obligations. Amounts to be paid by the <br />City with respect to any Maintenance and Operation Obligation shall constitute Maintenance and <br />Operation Costs only if at the time such Obligation is entered into the City shall deliver to each <br />Trustee a Certificate of the City to the effect that (i) the malting of payments on such Obligation <br />as Maintenance and Operation Costs will not impair the City's ability to comply with the <br />covenant set forth in Section 6.08(a) hereof during the next five Fiscal Years or five Fiscal Years <br />beyond the commercial operation date of the project being financed with such Obligation, <br />whichever is later, and (ii) the properties, services or commodities to be furnished pursuant to <br />such Obligation can be economically and beneficially utilized by the City. If the amounts to be <br />paid by the City for a Maintenance and Operation Obligation do not constitute Maintenance and <br />Operation Costs, then such amounts shall be paid as Subordinate Obligations, in accordance with <br />Section 5.02(b) hereof unless, at the time such Obligation is initially incurred, the City <br />demonstrates compliance with Section 5,03(c), in which event such amounts may be paid as <br />Parity Obligations, in accordance with Section 5.02(a) hereof. <br />ARTICLE VI <br />COVENANTS OF THE CITY <br />SECTION 6.01. Compliance with Installment Purchase Agreement and Ancillary <br />Agreements. The City will punctually pay Parity Obligations in strict conformity with the tetras <br />55394.00011 \8819608.3 8M8 3 5 <br />