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Escrow #105-20820 ESCROW AGREEMENT FOR SECURITY DEPOSITS IN LIEU OF RETENTION This Escrow Agreement is made and entered into by and between the City of Redwood City, whose address is 1017 Middlefield Road, Redwood City, CA 94604, hereinafter referred to as "Owner", McGuire and Hester, whose address is 9009 Railroad Avenue, Oakland, CA 94603, hereinafter referred to as "Contractor", and Union Bank of California, whose address is 1980 Saturn Street, Monterey Park, CA 91755, hereinafter referred to as "Escrow Agent". For the consideration hereinafter set forth, the Owner, Contractor and Escrow Agent agree as follows: (1) Pursuant to section 22300 of the Public Contract Code of the State of California, Contractor has the option to deposit securities with Escrow Agent as a substitute for retention earnings required to be withheld by Owner pursuant to the Construction Contract entered into between Owner and Contractor for Project: Redwood City - Friendly Acres Area Storm Drain Improvements Phase II in the amount of $1,139,510.00, dated June 12, 2001, (hereinafter referred to as the "Contract"). Alternatively, on written request of the Contractor, the Owner shall make payments of the retention earnings directly to the Escrow Agent. When Contractor deposits the securities as a substitute for Contract earnings, the Escrow Agent shall notify the Owner within ten days of the deposit. The market value of the securities at the time of the substitution shall be at least equal to the cash amount then required to be withheld as retention under the terms of the Contract between the Owner and Contractor. Securities shall be held in the name of City of Redwood City as Agent, and shall designate the Contractor as the beneficial owner. (2) The Owner shall make progress payments to the Contractor for those funds which otherwise would be withheld from progress payments pursuant to the Contract provisions, provided that the Escrow Agent hold securities in the form and amount specified above. (3) When the Owner makes payment of retentions earned directly to the Escrow Agent, the Escrow Agent shall hold them for the benefit of the Contractor until the time that the escrow created under this Contract is terminated. The Contractor may direct the investment of the payments into securities. All terms and conditions of this agreement and the rights and responsibilities of the parties shall be equally applicable and binding when the Owner pays the Escrow Agent directly. (4) Contractor shall be responsible for paying all fees for the expenses incurred by Escrow Agent in administering the Escrow Account and all expenses of the Owner. These expenses and payment terms shall be determined by the Owner, Contractor and Escrow Agent. (5) The interest earned on the securities or the money market accounts held in escrow and all interest earned on that interest shall be for the sole account of Contractor and shall be subject to withdrawal by Contractor at any time and from time to time without notice to Owner. (6) Contractor shall have the right to withdraw all or any part of the principal in the Escrow Account only by written notice to Escrow Agent accompanied by written authorization from the Owner to the Escrow Agent that Owner consents to the withdrawal of the amount sought to be withdrawn by Contractor.