BNY WESTERN TRUST - DEPOSIT AND ESCROW AGMT 2000

herein as the "Rate Stabilization Fund") may be used directly for the acquisition, construction, and improvement of such Regional Facilities Expansion Projects, or to pay debt service on the DSRSD Bonds (defined below) (the "Expansion Debt Service"); and WHEREAS, the financing of the WTP Stage 4 Project has been provided by the issuance of bonds (the "DSRSD Bonds"); and WHEREAS, LAVWMA intends to issue the LAVWMA Bonds to finance the LAVWMA Expansion Project, which is a Regional Facilities Expansion Project under the Regional Agreement, which Bonds will be repaid, in part, from Regional Connection Fees; and WHEREAS, prior to the issuance of the LAVWMA Bonds, LAVWMA is obligated to pay certain expenses relating to the LAVWMA Expansion Project, which expenses, .when added to the obligation to pay Expansion Debt Service, may exceed the amount of funds the District is required to maintain on deposit in the Rate Stabilization Fund under the DSRSD Bond covenants and agreements; and WHEREAS, the City is willing to temporarily advance on a one time basis certain funds, including existing investments, it has on hand, in a principal amount calculated as set forth in Section 1 hereof (the "Deposit"), with the Escrow Agent to ensure payment of Expansion Debt Service when and if due, and to enable LAVWMA to proceed in a timely manner with development of the LAVWMA Expansion Project; and WHEREAS, the draw from the Deposit shall be repaid from proceeds of the LAVWMA Bonds or Regional Connection Fees, or a combination thereof, as provided herein; and WHEREAS, the City, the District and the Escrow Agent desire to set forth the terms and conditions under which the Deposit will be made with the Escrow Agent and held in escrow, and the terms for its disbursement and repayment. NOW, THEREFORE, in consideration of the premises and for other consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows: Section 1. Deposit and Escrow Account; Investment. The Deposit shall be the amount of $7,711,183 less the amount of Regional Connection Fees received by the District during the period of October 24, 2000 and December 8, 2000, inclusive, as established in writing by the District to the City and the Escrow Agent on December 8, 2000. Upon the later of the date of execution of this Agreement or December 15, 2000, the City shall deposit the Deposit with the Escrow Agent, who shall verify receipt thereof in writing to the City and the District. The Escrow Agent shall establish and hold in trust, separate and apart from other funds and accounts, a special account designated the "Escrow Account," into which it shall deposit the Deposit. The Escrow Agent shall administer such account as provided in this Agreement. Amounts in the Escrow Account shall be applied solely for the purposes set forth in this Agreement. The Escrow Account shall be maintained by the Escrow Agent until the earlier of EscrwPm.doc - 2 -