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allowance for estimated additional average annual Net System Revenues from any additions or connections to or improvements or extensions of the Water System which have occurred from the end of Fiscal Year preceding the date of execution of the Parity Obligations. (3) Notwithstanding the requirements described above, Parity Obligations may be issued or incurred to refund outstanding Parity Obligations if, after giving effect to the application of the proceeds thereof, total Debt Service will not be increased in any Fiscal Year in which Parity Obligations (outstanding on the date of issuance or incurrence of such refunding Parity Obligations, but excluding such refunding Parity Obligations) not being refunded are outstanding. (4) The City may but shall not be required to fund a reserve fund or obtain a reserve fund surety or instrument with respect to any Parity Obligations. I£ a reserve fund is funded for any Parity Obligations or a qualified reserve fund surety or instrument is obtained with respect to any Parity Obligations, such funded reserve fiord or qualified reserve fund surety or instrument shall secure only the related Parity Obligations and shall not support the Bonds or any other Parity Obligations. (5) Subordinate Obli ag_ lions. The City further covenants that it shall not issue or incur any Subordinate Obligations unless Net System Revenues or projected Net System Revenues, calculated in the same manner as described in paragraph (b) above, are equal to at least 100% of the sum of Debt Service on all Parity Obligations and Subordinate Obligations outstanding immediately subsequent to the incurring of such additional obligations. SECTION 5.04. Maintenance and Operation Obligations. Amounts to be paid by the City with respect to any Maintenance and Operation Obligation shall constitute Maintenance and Operation Costs only if at the time such Obligation is entered into the City shall deliver to each Trustee a Certificate of the City to the effect that (i) the making of payments on such Obligation as Maintenance and Operation Costs will not impair the City's ability to comply with the covenant set forth in Section 6.08(a) hereof during the next five Fiscal Years or five Fiscal Years beyond the commercial operation date of the project being financed with such Obligation, whichever is later, and (ii) the properties, services or commodities to be furnished pursuant to such Obligation can be economically and beneficially utilized by the City. If the amounts to be paid by the City for a Maintenance and Operation Obligation do not constitute Maintenance and Operation Costs, then such amounts shall be paid as Subordinate Obligations, in accordance with Section 5.02(b) hereof unless, at the time such Obligation is initially incurred, the City demonstrates compliance with Section 5,03(c), in which event such amounts may be paid as Parity Obligations, in accordance with Section 5.02(a) hereof. ARTICLE VI COVENANTS OF THE CITY SECTION 6.01. Compliance with Installment Purchase Agreement and Ancillary Agreements. The City will punctually pay Parity Obligations in strict conformity with the tetras 55394,00011 \8819608.3 is