BNY WESTERN TRUST - DEPOSIT AND ESCROW AGMT 2000

the date of delivery of the proceeds of the sale of the LAVWMA Bonds to LAVWMA (as confirmed in writing by the District to the Escrow Agent and the City) or February 15, 2001 (the "Termination Date"). Amounts on deposit in the Escrow Account shall be invested by the Escrow Agent as directed by the City, in writing, which directions shall certify that the City is legally permitted to make such investments. In the absence of any such direction, the Escrow Agent shall invest any such moneys in money market funds whose investments are restricted to Federal Securities. Obligations purchased as an investment of moneys in the Escrow Account shall be deemed a part of the Escrow Account, and all interest or gain derived from the investment of amounts therein shall be transferred to the City. The Escrow Agent may act as principal or agent in the acquisition or disposition of any investment. The Escrow Agent shall incur no liability for losses arising from any investments made pursuant to this Section. Section 2. Disposition of Deposit. Amounts on deposit in the Escrow Account shall be disbursed as follows: (A) In the event that Expansion Debt Service payable at any time during the term of this Agreement is an amount which, if paid from the Rate Stabilization Fund would cause amounts on deposit therein to equal less than two (2) times maximum annual debt service on the DSRSD Bonds (the "Target Amount"), the District shall immediately notify the Escrow Agent in writing, with a copy to the City, of the amount of Expansion Debt Service which would reduce the Rate Stabilization Fund below the Target Amount. Upon receipt of such notice, the Escrow Agent shall, at such time as required to pay such Expansion Debt Service, withdraw amounts on deposit in the Escrow Account sufficient to allow the Rate Stabilization Fund to be maintained at the Target Amount, and pay such amounts as provided in the District's written directions to pay all or a portion of Expansion Debt Service. In the event of a deficiency in the funds and amounts in the Escrow Account for purposes of paying the Expansion Debt Service, the City shall be under no obligation to make up such deficiency. (B) If the District receives Regional Connection Fees during the period commencing December 9, 2000 until the Termination Date, it will, within seven (7) days, notify the City and the Escrow Agent in writing of the amount collected. Upon receipt of such notice, if such Regional Connection Fees are not needed to repay the City as described in Section 4(A) below, to the extent funds are on deposit in the Escrow Account the Escrow Agent shall as soon as possible transfer an equal amount from the Escrow Account to the City in immediately available funds; provided that in the event there are insufficient amounts on deposit in the Escrow Account to make such transfer, the Escrow Agent will transfer the balance of the Escrow Account to the City. (C) On the Termination Date, the Escrow Agent shall transfer all remaining amounts in the Escrow Account, if any, to the City in immediately available funds, and shall notify the District and the City in writing of the amount of such transfer. EscrwPtn.doc - 3 -