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SCHEDULE VII <br />RATE COVENANT <br />All capitalized terms used below in this Schedule VII have the meanings assigned to such terms <br />in the Master Resolution. <br />Part A <br />Set forth below is the first paragraph of Section 5.04 of the Master Resolution as of the Effective <br />Date. <br />Section 5.04. Rates. The Issuer shall fix, establish, maintain and collect such Rates and <br />revise the same from time to time, whenever necessary, as will always provide in each Fiscal Year <br />Net Revenues adequate at all times to pay in each Fiscal Year at least one hundred twenty percent <br />(120%) of the current annual Debt Service Requirement becoming due in such Fiscal Year on each <br />Series of Outstanding Bonds and at least one hundred percent (100%) of any amounts required by <br />the terms hereof to be deposited in the Reserve Fund, with any issuer of a Reserve Fund Letter of <br />Credit or Reserve Fund Insurance Policy, or to be deposited in the Renewal and Replacement Fund <br />or to be paid for debt service on Subordinated Indebtedness in such Fiscal Year. Such Rates shall <br />not be so reduced so as to be insufficient to provide Net Revenues fully adequate for the purposes <br />provided therefore by this Resolution. <br />Part B <br />Set forth below is the second paragraph of Section 5.04 of the Master Resolution as of the Effective <br />Date. <br />If, upon making such determination in any Fiscal Year, the Issuer shall determine that it <br />has failed to comply with the requirements contained in the above paragraph, it shall cause within <br />the following 45 days of such determination the Consulting Engineers to review its Rates, Gross <br />Revenues, Operating Expenses and methods of operation and to make written recommendations <br />and file such written report with such 45 days as to the methods by which the Issuer may promptly <br />seek to comply with the requirements set forth above. The Issuer shall forthwith commence to <br />implement such recommendations to the extent required so within the thirty day period following <br />the filing of the report, as to cause it to thereafter comply with said requirements. To the extent the <br />Issuer causes the Consulting Engineers to undertake such review and implements such <br />recommendations, the failure to comply with Section the paragraph above shall not constitute an <br />event of default hereunder. <br />SCHEDULE VII-1 <br /> <br />