-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WLZVpha7EF/OgOrZUeIQm/Yx6V78xwN0F/VUp8LhEe0IxdAA0PiE1OKfP2L/fpw4 ZRA7u4J9FeKo6aJvUs3TPQ== 0000950131-01-502919.txt : 20010815 0000950131-01-502919.hdr.sgml : 20010815 ACCESSION NUMBER: 0000950131-01-502919 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEADOW VALLEY CORP CENTRAL INDEX KEY: 0000934749 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 880328443 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-25428 FILM NUMBER: 1710034 BUSINESS ADDRESS: STREET 1: 4411 S 40TH ST STREET 2: STE D-11 CITY: PHOENIX STATE: AZ ZIP: 85040 BUSINESS PHONE: 6024375400 MAIL ADDRESS: STREET 1: 4411 S 40TH ST STREET 2: STE D-11 CITY: PHOENIX STATE: AZ ZIP: 85040 10-Q 1 d10q.txt FOR THE PERIOD ENDED JUNE 30, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 Commission File No 0-25428 MEADOW VALLEY CORPORATION (Exact name of registrant as specified in its charter) Nevada 88-0328443 (State or other Jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 4411 South 40th Street, Suite D-11 Phoenix, Arizona 85040 (602) 437-5400 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. Yes [X] No [ ] Number of shares outstanding of each of the registrant's classes of common stock as of July 31, 2001: Common Stock, $.001 par value 3,559,938 shares MEADOW VALLEY CORPORATION INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2001 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations (Unaudited) - Six Months Ended June 30, 2001 and June 30, 2000 3 Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended June 30, 2001 and June 30, 2000 4 Condensed Consolidated Balance Sheets - As of June 30, 2001 (Unaudited) and December 31, 2000 5 Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2001 and June 30, 2000 6 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosure About Market Risk 15 PART II. OTHER INFORMATION Item 1. Legal Proceedings 15 Item 6. Exhibits and Reports on Form 8-K 17
2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended June 30, ---------------------------------------- 2001 2000 ------------ -------------- Revenue $ 80,830,204 $ 83,968,329 Cost of revenue 78,489,230 80,769,927 ------------ -------------- Gross Profit 2,340,974 3,198,402 General and administrative expenses 3,472,027 3,049,453 ------------ -------------- Income (loss) from operations (1,131,053) 148,949 ------------ -------------- Other income (expense): Interest income 126,543 299,930 Interest expense (224,707) (79,328) Other income 461,766 34,669 ------------ -------------- 363,602 255,271 ------------ -------------- Income (loss) before income taxes (767,451) 404,220 Income tax benefit (expense) 287,794 (161,690) ------------ -------------- Net income (loss) $ (479,657) $ 242,530 ============ ============== Basic net income (loss) per common share $ (0.14) $ 0.07 ============ ============== Diluted net income (loss) per common share $ (0.14) $ 0.07 ============ ============== Basic weighted average common shares outstanding 3,559,938 3,538,978 ============ ============== Diluted weighted average common shares outstanding 3,559,938 3,538,978 ============ ==============
3 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, ---------------------------------------- 2001 2000 ------------ -------------- Revenue $ 45,476,667 $ 45,378,857 Cost of revenue 43,326,297 43,965,285 ------------ -------------- Gross Profit 2,150,370 1,413,572 General and administrative expenses 1,733,346 1,474,909 ------------ -------------- Income (loss) from operations 417,024 (61,337) ------------ -------------- Other income (expense): Interest income 63,972 133,813 Interest expense (144,163) (33,794) Other income (expense) 523,492 (12,506) ------------ -------------- 443,301 87,513 ------------ -------------- Income before income taxes 860,325 26,176 Income tax expense (322,623) (10,810) ------------ -------------- Net income $ 537,702 $ 15,366 ============ ============== Basic net income per common share $ 0.15 $ 0.01 ============ ============== Diluted net income per common share $ 0.15 $ 0.01 ============ ============== Basic weighted average common shares outstanding 3,559,938 3,559,938 ============ ============== Diluted weighted average common shares outstanding 3,559,938 3,559,938 ============ ==============
4 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2001 2000 * ------------------- ------------------ (Unaudited) Assets: Current Assets: Cash and cash equivalents $ 2,572,926 $ 1,822,598 Restricted cash 2,075,974 1,783,005 Accounts receivable, net 22,407,063 14,297,564 Prepaid expenses and other 447,289 749,708 Inventory 5,380,834 5,242,148 Income tax receivable 472,055 774,000 Costs and estimated earnings in excess of billing on uncompleted contracts 11,261,658 9,828,009 ------------------- ------------------ Total Current Assets 44,617,799 34,497,032 Property and equipment, net 17,506,151 18,111,506 Deferred tax asset 873,441 873,441 Refundable deposits 134,834 176,565 Goodwill, net 1,460,718 1,500,733 Mineral rights 198,543 226,753 ------------------- ------------------ Total Assets $ 64,791,486 $ 55,386,030 =================== ================== Liabilities and Stockholders' Equity: Current Liabilities: Accounts payable $ 24,887,197 $ 17,606,113 Accrued liabilities 2,391,623 2,289,698 Notes payable 2,368,708 1,604,399 Obligations under capital leases 1,047,021 1,041,921 Billings in excess of costs and estimated earnings on uncompleted contracts 6,328,184 6,054,814 ------------------- ------------------ Total Current Liabilities 37,022,733 28,596,945 Deferred tax liability 2,272,700 2,272,700 Notes payable, less current portion 9,455,899 7,674,608 Obligations under capital leases, less current portion 3,281,574 3,603,540 ------------------- ------------------ Total Liabilities 52,032,906 42,147,793 ------------------- ------------------ Stockholders' Equity: Preferred stock - $.001 par value; 1,000,000 shares authorized, none issued and outstanding - - Common stock - $.001 par value; 15,000,000 shares authorized, 3,559,938 and 3,559,938 issued and outstanding 3,601 3,601 Additional paid-in capital 10,943,569 10,943,569 Capital adjustments (799,147) (799,147) Retained earnings 2,610,557 3,090,214 ------------------- ------------------ Total Stockholders' Equity 12,758,580 13,238,237 ------------------- ------------------ Total Liabilities and Stockholders' Equity $ 64,791,486 $ 55,386,030 =================== ================== *Derived from audited financial statements
5 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, ---------------------------------------- 2001 2000 ------------------ ------------------ Increase (Decrease) in Cash and Cash Equivalents: Cash flows from operating activities: Cash received from customers $ 72,008,288 $ 83,176,832 Cash paid to suppliers and employees (73,075,745) (86,026,016) Interest received 126,543 330,088 Interest paid (224,707) (79,328) Income taxes refunded (paid) 589,739 (291,314) ------------------ ------------------ Net cash used in operating activities (575,882) (2,889,738) ------------------ ------------------ Cash flows from investing activities: Increase in restricted cash (292,969) (353,076) Proceeds from sale of property and equipment 83,587 212,516 Purchase of property and equipment (387,885) (627,311) ------------------ ------------------ Net cash used in investing activities (597,267) (767,871) ------------------ ------------------ Cash flows from financing activities: Proceeds received from note payable 3,204,127 1,507,500 Repayment of notes payable (726,604) (718,842) Repayment of capital lease obligations (554,046) (609,561) ------------------ ------------------ Net cash provided by financing activities 1,923,477 179,097 ------------------ ------------------ Net increase (decrease) in cash and cash equivalents 750,328 (3,478,512) Cash and cash equivalents at beginning of period 1,822,598 6,177,489 ------------------ ------------------ Cash and cash equivalents at end of period $ 2,572,926 $ 2,698,977 ================== ==================
6 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Six Months Ended June 30, ------------------------------------------ 2001 2000 -------------------- ------------------ Increase (Decrease) in Cash and Cash Equivalents (Continued): Reconciliation of Net Income (Loss) to Net Cash Used in Operating Activities: Net Income (Loss) $ (479,657) $ 242,530 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 1,297,039 1,197,174 Gain on sale of property and equipment (13,904) (102,014) Changes in Operating Assets and Liabilities: Accounts receivable, net (8,109,499) (460,745) Prepaid expenses and other 302,419 262,466 Inventory (138,686) (834,454) Income tax receivable 301,945 (129,624) Costs and estimated earnings in excess of billings on uncompleted contracts (1,433,649) (732,783) Refundable deposits 41,731 (84,300) Accounts payable 7,281,084 (2,305,964) Accrued liabilities 101,925 (441,558) Billings in excess of costs and estimated earnings on uncompleted contracts 273,370 499,534 -------------------- ------------------ Net cash used in operating activities $ (575,882) $ (2,889,738) ==================== ==================
7 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of Corporation: Meadow Valley Corporation (the "Company") was organized under the laws of the State of Nevada on September 15, 1994. The principal business purpose of the Company is to operate as the holding Company of Meadow Valley Contractors, Inc. ("MVCI") and Ready Mix, Inc. ("RMI"). MVCI is a general contractor, primarily engaged in the construction of structural concrete highway bridges and overpasses, and the paving of highways and airport runways in the states of Nevada, Arizona, Utah and New Mexico. RMI manufactures and distributes ready mix concrete in the Las Vegas, NV and Phoenix, AZ metropolitan areas. Formed by the Company, RMI commenced operations in 1997. 2. Presentation of Interim Information: The amounts included in this report are unaudited; however, in the opinion of management, all adjustments necessary for a fair statement of results for the stated periods have been included. These adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as permitted by SEC rules and regulations. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K under the Securities Exchange Act of 1934 as filed with the Securities and Exchange Commission. The results of operations for the six months ended June 30, 2001 are not necessarily indicative of operating results for the entire year. 3. Revenue and Cost Recognition: Revenues and costs from fixed-price and modified fixed-price construction contracts are recognized for each contract on the percentage-of-completion method, measured by the percentage of costs incurred to date to the estimated total direct costs. Direct costs include, among other things, direct labor, field labor, equipment rent, subcontracting, direct materials, and direct overhead. General and administrative expenses are accounted for as period costs and are, therefore, not included in the calculation of the estimates to complete construction contracts in progress. Project losses are provided in the period in which such losses are determined, without reference to the percentage-of-completion. As contracts can extend over one or more accounting periods, revisions in costs and earnings estimated during the course of the work are reflected during the accounting period in which the facts that required such revision become known. Claims for additional contract revenue are recognized only to the extent that contract costs relating to the claim have been incurred and evidence provides a legal basis for the claim. During the six months ended June 30, 2001, revenue from anticipated claim proceeds increased by approximately $324,000. The estimated total claims that have been filed or will be filed were approximately $32,851,160 at June 30, 2001. The Company's portion of the total claims amount, excluding claims filed by other prime contractors or on behalf of the Company's subcontractors, total approximately $17,986,132. 4. Recent Accounting Pronouncements: In June 2001, the Financial Accounting Standards Board finalized FASB Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that the Company recognize acquired intangible assets apart from goodwill if the required intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the Company reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141. 8 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Recent Accounting Pronouncement (Continued): SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142. The Company's previous business combinations were accounted for using the purchase method. As of June 30, 2001, the net carrying amount of goodwill is $1,460,718. Amortization expense during the six-month period ended June 30, 2001 was $40,015. Currently, the Company is assessing but has not yet determined how the adoption of SFAS 141 and SFAS 142 will impact its financial position and results of operations. 5. Line of Credit: In July 2000, the Company entered into a revolving loan agreement ("line of credit"). Under the terms of the agreement, the Company may borrow up to $7,000,000 at Chase Manhattan Bank's prime, plus .25% through December 31, 2001 at which time the line of credit converts to a term agreement requiring monthly principal and interest payments through December 31, 2005. The line of credit is collateralized by all of MVCI's assets and guaranteed by the Company. Under the terms of the line of credit, the Company is required to maintain certain levels of tangible net worth. As of June 30, 2001, the Company was in compliance with all such covenants and had withdrawn $6,241,975 from the line of credit. As of August 14, 2001, the Company had made a principal payment in the amount of $220,382 on the line of credit. 6. Commitments: During the quarter ended June 30, 2001, the Company purchased equipment under capital lease agreements expiring in the year 2005. The assets and liabilities under a capital lease are initially recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. Each asset is depreciated over its expected useful life. Minimum future lease payments under the above mentioned capital leases as of June 30, 2001 for each of the next five years and in aggregate are: 2002 $ 69,653 2003 69,653 2004 69,653 2005 58,044 ------------ Total minimum lease payments 267,003 Less: amount representing interest (39,585) ------------ Present value of net minimum lease payment $ 227,418 ============ 9 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. Statement of Cash Flows: Non-Cash Investing and Financing Activities: The Company recognized investing and financing activities that affected assets, liabilities, and equity, but did not result in cash receipts or payments. These non-cash activities are as follows: During the six months ended June 30, 2001, the Company financed the purchase of equipment in the amount of $305,257. 8. Subsequent Events: In July 2001, the Company had made a principal payment in the amount of $220,382 on the line of credit. In July 2001, the Company financed the purchase of equipment in the amount of $1,072,086. The note payable obligation has an interest rate of 8.5%, with monthly payments of $23,603, and is due February 2006. 9. Segment Information: The Company manages and operates two segments, construction services and construction materials. The construction services segment provides construction services to a broad range of public and some private customers primarily in the western states of Arizona, Nevada, Utah and New Mexico. Through this segment, the Company performs heavy civil construction such as the construction of bridges and overpasses, channels, roadways, highways and airport runways. The construction materials segment manufactures and distributes ready mix concrete and sand and gravel products in the Las Vegas, NV and Phoenix, AZ markets. Material customers include concrete subcontractors, prime contractors, homebuilders, commercial and industrial property developers, pool builders and homeowners. The construction materials segment operates out of two locations in the Las Vegas, NV vicinity, one location in the Moapa, NV vicinity and two locations in the Phoenix, AZ vicinity.
Six Months Ended June 30, -------------------------------------------------------------------- (dollars in thousands) 2001 2000 ------------------------------- -------------------------------- Construction Construction Services Materials Services Materials ------------- ------------- ------------- -------------- Gross revenue $ 66,419 $ 15,348 $ 75,705 $ 9,046 Intercompany revenue - 937 - 783 Cost of revenue 64,662 14,764 73,472 8,080 Interest income 115 11 286 13 Interest expense (137) (88) (79) - Depreciation and amortization 898 399 901 296 Income (loss) before taxes (319) (449) 212 192 Income tax benefit (expense) 120 168 (85) (77) Net income (loss) (199) (281) 127 115 Total assets 51,088 13,703 47,186 10,831
There are no differences in accounting principals between the segments. All centrally incurred costs are allocated to the construction services segment. Intercompany revenue is eliminated at cost to arrive at consolidated revenue and cost of revenue. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General The following is management's discussion and analysis of certain significant factors affecting the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Except for the historical information contained herein, the matters set forth in this report are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. The Company disclaims any intent or obligation to update these forward-looking statements. The Company's backlog (anticipated revenue from the uncompleted portions of awarded projects) was approximately $95.3 million at June 30, 2001, compared to approximately $88.4 million at June 30, 2000. At June 30, 2001, the Company's backlog included approximately $58 million of work that is scheduled for completion during 2001. Accordingly, revenue in the future will be significantly reduced if the Company is unable to obtain substantial new projects in 2001. During the second quarter ended June 30, 2001, the Company obtained new projects totaling approximately $43 million. Revenue on uncompleted fixed price contracts is recorded under the percentage-of-completion method of accounting. The Company begins to recognize revenue on its contracts when it first accrues direct costs. Contracts often involve work periods in excess of one year and revisions in cost and profit estimates during construction are reflected in the accounting period in which the facts that require the revisions become known. Losses on contracts, if any, are provided in total when determined, regardless of the percent complete. Claims for additional contract revenue are recognized only to the extent that contract costs relating to the claim have been incurred and evidence provides a legal basis for the claim. At June 30, 2001, claim revenue in the amount of approximately $6.1 million has been recorded while the estimated total claims that have been filed or will be filed exceed $32.8 million. Of the $32.8 million in claims, approximately $14.8 million represents costs incurred by other prime contractors or MVCI subcontractors for which claims are filed by MVCI on their behalf leaving the balance of approximately $18.0 million as MVCI costs. The Company must obtain at least $6.1 million in proceeds from its $18.0 million portion of the total claims or there would be a reduction in earnings. Results of Operations The following table sets forth, for the six and the three months ended June 30, 2001 and 2000, certain items derived from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of revenue.
Six Months Ended Three Months Ended June 30, June 30, ------------------------------ ------------------------------ 2001 2000 2001 2000 ------------ ------------- ------------- ------------ Revenue 100.0% 100.0% 100.0% 100.0% Gross Profit 2.9% 3.8% 4.7% 3.1% General and administrative expenses 4.3% 3.6% 3.8% 3.3% Interest income 0.2% 0.4% 0.1% 0.3% Interest expense -0.3% -0.1% -0.3% -0.1% Other income 0.6% 0.0% 1.2% 0.0% Income (loss) before income taxes -0.9% 0.5% 1.9% 0.1% Income tax benefit (expense) 0.3% -0.2% -0.7% 0.0% Net income (loss) -0.6% 0.3% 1.2% 0.1%
11 Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000 Revenue and Backlog. Revenue for the six months ended June 30, 2001 ("interim 2001") was $80.8 million compared to $83.9 million for the six months ended June 30, 2000 ("interim 2000"). The decrease in revenue was the result of a $9.3 million decrease in construction services offset by a $6.2 million increase in revenue generated from construction materials production and manufacturing sold to non-affiliates. Backlog increased 8% to approximately $95.3 million at June 30, 2001 from $88.4 million at June 30, 2000. Revenue may be impacted in any one period by the backlog at the beginning of the period. Gross Profit. As a percentage of revenue, consolidated gross margin decreased from 3.8% for interim 2000 to 2.9% for interim 2001. The decrease in the construction services gross profit margin was the result of costs related to claims and cost overruns on certain projects offset, in part, by increased profit recognition related to several projects nearing completion at June 30, 2001 and by recording, in advance of receipt, conservative estimates of revenue from claims. Gross profit margins are affected by a variety of factors including construction delays and difficulties due to weather conditions, availability of materials, and the timing of work performed by other subcontractors and the physical and geological condition of the construction site. The decrease in the construction materials gross profit margin was the result of continued costs, in the current interim period, of the Company's materials expansion strategy implemented in the second half of 2000. In comparing the gross profit margin during the interim period for 2000 and 2001, the first six months of 2000 incurred few start up costs associated with last year's expansion of the construction materials segment, while the first six months of 2001 reflect the improving, but not yet profitable, results of the expansion. General and Administrative Expenses. General and administrative expenses increased to $3.5 million for interim 2001 from $3.0 million for interim 2000. The increase resulted primarily from a $.2 million in general and administrative expenses attributed to expanding construction material operations, an increase of $.2 million in legal expenses, an increase of $.1 million in employee benefits offset, in part, by a $.09 million reduction of general and administrative expenses related to various employee incentive plans. Interest Income and Expense. Interest income for interim 2001 decreased to $.1 million from $.3 million for interim 2000 resulting primarily from a decrease in invested cash reserves. Interest expense increased for interim 2001 to $.2 million from $.1 million for interim 2000, due primarily to the Company borrowing on the line of credit. Net Income (Loss) After Income Taxes. Net income (loss) after income taxes was $(.5) million in interim 2001 as compared to $.2 million for interim 2000. Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000 Revenue and Backlog. Revenue for the three months ended June 30, 2001 ("interim 2001") was $45.5 million compared to $45.4 million for the three months ended June 30, 2000 ("interim 2000"). The increase in revenue was the result of a $3.8 million increase in revenue generated from construction materials production and manufacturing sold to non-affiliates offset by a $3.7 million decrease in construction services. Backlog increased 8% to approximately $95.3 million at June 30, 2001 from $88.4 million at June 30, 2000. Revenue may be impacted in any one period by the backlog at the beginning of the period. Gross Profit. As a percentage of revenue, consolidated gross margin increased from 3.1% for interim 2000 to 4.7% for interim 2001. The increase in the construction services gross profit margin was the result of improved profitability on a number of projects and the reduction of losses on previously problematic projects. Gross profit margins are affected by a variety of factors including construction delays and difficulties due to weather conditions, availability of materials, and the timing of work performed by other subcontractors and the physical and geological condition of the construction site. The increase in the construction services gross profit was offset by a decrease in the construction materials gross profit. The decrease in the construction materials gross profit margin resulted from increased costs for interim 2001 associated with the expansion of operations for construction materials. 12 General and Administrative Expenses. General and administrative expenses increased to $1.7 million for interim 2001 from $1.5 million for interim 2000. The increase resulted primarily from a $.1 million in general and administrative expenses attributed to expanding construction material operations, an increase of $.1 million in legal expenses offset, in part, by a $.04 million reduction of general and administrative expenses related to various employee incentive plans. Interest Income and Expense. Interest income for interim 2001 decreased to $.06 million from $.1 million for interim 2000 resulting primarily from a decrease in invested cash reserves. Interest expense increased for interim 2001 to $.1 million from $.03 million for interim 2000, due primarily to the Company borrowing on the line of credit. Net Income After Income Taxes. Net income after income taxes was $.5 million in interim 2001 as compared to $.01 million for interim 2000. Liquidity and Capital Resources The Company's primary need for capital has been to finance growth in its core business as a heavy construction contractor and its expansion into the other construction and construction related businesses previously discussed. Historically, the Company's primary source of cash has been from operations. The Company's expansion into construction materials has required capital to finance expanded receivables, increased inventories and capital expenditures as well as to address fluctuations in the work-in-progress billing cycle. The following table sets forth for the six months ended June 30, 2001 and 2000, certain items from the condensed consolidated statements of cash flows.
Six Months Ended June 30, ---------------------------------------- 2001 2000 ------------------- ------------------ Cash Flows Used in Operating Activities $ (575,882) $ (2,889,738) Cash Flows Used in Investing Activities (597,267) (767,871) Cash Flows Provided by Financing Activities 1,923,477 179,097
Although the Company may experience increased profitability as the Company expands its operations, particularly its aggregate, ready mix concrete and asphalt production, cash may be used to finance receivables, build inventories and for customer cash retention required under contracts subject to completion. It is not unusual for cash flows from construction projects nearing the final stages of completion to have negative cash flows. Claim-related costs expended on projects and the start-up costs of the business expansion have resulted in a significant decline in the Company's cash reserves. Accordingly, during the year ended December 31, 2000, the Company entered into a revolving loan agreement ("line of credit"). Under the terms of the agreement, the Company may borrow $7,000,000 at Chase Manhattan Bank's prime, plus .25% through December 31, 2001. The line of credit is collateralized by all of MVCI's assets. Under the line of credit, the Company is required to maintain a certain level of tangible net worth. At June 30, 2001, the Company is in compliance with all covenants under the line of credit. The line of credit expires December 31, 2001 at which time the line of credit converts to a term agreement requiring monthly principal and interest payments through December 31, 2005. The Company believes, but cannot assure, that the line of credit, together with the Company's historical ability to acquire new work may be sufficient to meet the Company's cash requirements for the next twelve months. As of June 30, 2001, the Company had withdrawn $6,241,975 from the line of credit. As of August 14, 2001, the Company had made a principal payment in the amount of $220,382 on the line of credit. Cash used in operating activities during interim 2001 amounted to $.6 million, primarily the result of an increase in accounts receivable, net of $8.1 million, an increase in net costs in excess of billings of $1.2 million, a net loss of $.5 million, offset, in part, by an increase in accounts payable of $7.3 million, a decrease in prepaid expenses and other of $.3 million, a decrease in income tax receivable of $.3 million and depreciation and amortization of $1.3 million. 13 Cash used in operating activities during interim 2000 amounted to $2.9 million, primarily the result of a decrease in accounts payable of $2.3 million, a decrease in accrued liabilities of $.4 million, an increase in inventory of $.8 million, an increase in accounts receivable, net of $.5 million, and an increase in net costs in excess of billings of $.2 million offset, in part, by net income of $.2 million, depreciation and amortization of $1.2 million and a decrease in prepaid expenses and other of $.2 million. Cash used in investing activities during interim 2001 amounted to $.6 million related primarily to the purchase of property and equipment of $.4 million and an increase in restricted cash of $.3 million, offset by proceeds from the sale of property and equipment in the amount of $.1 million. Cash used in investing activities during interim 2000 amounted to $.8 million related primarily to the purchase of property and equipment of $.6 million and an increase in restricted cash of $.4 million, offset by proceeds from the sale of property and equipment in the amount of $.2 million. Cash provided by financing activities during interim 2001 amounted to $1.9 million related primarily to the proceeds received from a note payable of $3.2 million, offset by the repayment of notes payable and capital lease obligations of $1.3 million. Cash provided by financing activities during interim 2000 amounted to $.2 million related primarily to the proceeds received from a note payable of $1.5 million, offset by the repayment of notes payable and capital lease obligations of $1.3 million. Recent Accounting Pronouncements In June 2001, the Financial Accounting Standards Board finalized FASB Statements No. 141, Business Combinations (SFAS 141), and No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the Company reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141. SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS 142 requires the Company to complete a transitional goodwill impairment test six months from the date of adoption. The Company is also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS 142. The Company's previous business combinations were accounted for using the purchase method. As of June 30, 2001, the net carrying amount of goodwill is $1,460,718. Amortization expense during the six-month period ended June 30, 2001 was $40,015. Currently, the Company is assessing but has not yet determined how the adoption of SFAS 141 and SFAS 142 will impact its financial position and results of operations. 14 Item 3. Quantitative and Qualitative Disclosure About Market Risk Market risk generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. The Company does not have foreign currency exchange rate and commodity price market risk. Interest Rate Risk - From time to time the Company temporarily invests its cash and restricted cash in interest-bearing securities issued by high-quality issuers. The Company's management monitors risk exposure to monies invested in securities of any one financial institution. Due to the short time the investments are outstanding and their general liquidity, these instruments are classified as cash equivalent in the consolidated balance sheet and do not represent a material interest rate risk to the Company. The Company's primary market risk to exposure for changes in interest rates relates to the Company's long-term debt obligations. The Company manages its exposure to changing interest rates principally through the use of a combination of fixed and floating rate debt. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is a party to legal proceedings in the ordinary course of its business. With the exception of those matters detailed below, the Company believes that the nature of these proceedings (which generally relate to disputes between the Company and its subcontractors, material suppliers or customers regarding payment for work performed or materials supplied) are typical for a construction firm of its size and scope, and no other pending proceedings are material to its financial condition. The following proceedings represent matters that may become material and have already been or may soon be referred to legal counsel for further action: Requests for Equitable Adjustment to Construction Contracts. The Company has or - ----------------------------------------------------------- will make claims as described below on the following contracts: 1. Five contracts with the New Mexico State Highway and Transportation Department ("NMSHTD") - The approximate value of claims on these projects is $19,050,000 of which approximately $14,150,000 is on behalf of MVCI and the balance of $4,900,000 is on behalf of the prime contractors or subcontractors. The primary issues are changed conditions, plan errors and omissions, contract modifications and associated delay costs. In addition, the projects were not completed within the adjusted contract time because of the events given rise to the claims. The prosecution of the claims will include the appropriate extensions of contract time to offset any potential liquidated damages that may be assessed on the contracts. Johnson Danley Construction Company ("JD") was the prime contractor on one of the aforementioned contracts with NMSHTD. In May, 2001, JD filed for protection under the bankruptcy laws and as a direct result was found in default on the NMSHTD contract. MVCI had assisted JD in obtaining surety credit to provide the payment and performance bonds required under the contract. In doing so, MVCI indemnified the surety company in the event JD failed to satisfactorily perform on the contract. Therefore MVCI is now performing the remainder of the work on the contract for the surety company, but due to the indemnification, MVCI is at risk for any cost overruns that may be incurred in completing the work. The remaining proceeds of the contract are approximately $2,460,000 and MVCI has yet to complete a thorough evaluation of the costs to complete. Appropriate adjustments will be made to costs and estimated costs as they become more certain. In addition, all rights to claim proceeds formerly belonging to JD are now the property of MVCI to the extent that MVCI incurs costs performing work that would have otherwise belonged to JD. Management believes that if the analysis of costs to complete exceeds the remaining contract proceeds, there will be sufficient valid contract claims to offset the costs and therefore, this issue may have no material affect on the Company. 15 2. Clark County, Nevada - The approximate total value of claims on this project is $13,801,160 of which approximately $3,836,132 is on behalf of MVCI. The primary issues are changed conditions, plan errors and omissions, contract modifications and associated delay costs. The above claims combined total approximately $32,851,160. Of that total, MVCI's portion of the claims total approximately $17,986,132 and the balance of approximately $14,865,028 pertains to prime contractor or subcontractors' claims. Relative to the aforementioned claims, the Company has recorded approximately $6,144,904 in claim revenue to offset portions of the costs incurred to-date on the claims. Although the Company believes this presents a reasonably conservative posture, any claims proceeds ultimately awarded to the Company less than $6,144,904 will result in a reduction of income. Conversely, any amount of claims proceeds in excess of $6,144,904 will be an increase in income. Lawsuits Filed Against Meadow Valley Contractors, Inc. - ------------------------------------------------------ 1. Innovative Construction Services, Inc. ("ICS"), District Court, Clark County, NV - ICS was a subcontractor to MVCI on several projects. ICS failed to make payments of payroll, pension fund contributions and other taxes for which the Internal Revenue Service garnished any future payments due ICS on MVCI projects. As a result, ICS failed to supply labor to perform its work and defaulted on its subcontracts. MVCI terminated the ICS subcontracts and performed the work with MVCI personnel. ICS alleges it was wrongfully terminated and is asserting numerous claims for damages. ICS claims against MVCI total approximately $15,000,000. The Company does not believe ICS' claims have merit and intends to vigorously defend against these claims and will eventually seek to recover the damages ICS has caused the Company through its failure to perform. 2. AnA Enterprises, LLC ("AnA"), District Court, Clark County, NV - AnA supplied equipment to MVCI on a project under terms of a variety of agreements. AnA is suing MVCI for non-payment. MVCI has counter-sued for costs overruns deemed to be the responsibility of AnA. AnA's suit against MVCI is approximately $3,000,000. MVCI's countersuit against AnA is for approximately $2,000,000. The Company does not believe AnA's claims have merit and intends to vigorously defend against these claims. 3. The Company is defending a claimed preference in connections with a payment made to it by an insurance company in the approximate amount of $100,000. The Company believes that the payment is not a preference, and is vigorously defending the action. 16 Item 6. Exhibits and Reports on Form 8-K a. Exhibits: 10.149 Lease Agreement with Associates Leasing, Inc. 10.150 Lease Agreement with M&I First National Leasing Corp. 10.151 Lease Agreement with Trinity Capital Corporation b. Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended June 30, 2001. 17 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act as of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEADOW VALLEY CORPORATION (Registrant) By /s/ Bradley E. Larson ------------------------------------------ Bradley E. Larson President and Chief Executive Officer By /s/ Nicole R. Smith ------------------------------------------ Nicole R. Smith Principal Accounting Officer 18 EX-10.149 3 dex10149.txt LEASE AGREEMENT WITH ASSOCIATES LEASING INC.
Exhibit 10.149 [LOGO OF THE ASSOCIATES] Lease Agreement Name and Address of Lessee ("Lessee") Name and Address of Lessor ("Lessor") Meadow Valley Contractors, Inc. Associates Leasing, Inc. 4411 S. 40th St., #D-11 PO Box 2340 Phoenix AZ 85040 Newport Beach CA 92658 ==================================================================================================================================== DESCRIBE EQUIPMENT FULLY LESSOR'S COST Equipment Total Cost $ 62,475.00 ------------------------------ (1) Valew Freightliner FL70 Lube Truck VIN# 1FVABTBV51HJ17394 Shipping&Handling Cost $ 0.00 ------------------------------ Installation Cost $ 0.00 ------------------------------ Other (Specify) $550.00 ------------------------------ TOTAL COST $ 63,025.00 ------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ LOCATION OF EQUIPMENT: 4411 S th 40th St. Maricopa Phoenix AZ 85040 ==================================================================================================================================== A. TERM: 48 Months following the first day of the F. PAYMENT SCHEDULE: THE ADVANCE RENTAL PAYMENT IS --------- PAYABLE UPON DELIVERY OF THE LEASE APPLICATION TO month after delivery LESSOR. INTERIM RENTAL IS PAYABLE UPON DELIVERY OF THE EQUIPMENT. B. ADVANCE RENTAL PAYMENTS: FIRST RENTAL AND LAST 0 RENTAL(S) PLUS APPLICABLE TAXES. THE REMAINING RENTAL PAYMENTS ARE PAYABLE AS FOLLOWS: -------- MONTHLY ON THE FIRST DAY OF EACH MONTH BEGINNING ON THE FIRST DAY OF June 2001 (MO/YR). C. INTERIM RENTAL: Per day rental for the period from -------------- delivery to the first of the following month calculated G. PURCHASE OPTION PRICE AT END OF TERM: $ 12,605.00 as Monthly Rental divided by 30 times the number of days Plus Applicable Taxes -------------- from the Delivery Date through the end of the month in which the Equipment is delivered plus applicable taxes. H. TAX LEASE STATUS: (check one and initial) D. RENTAL PAYMENT: 48 Payments of $ 1,319.39 Tax Lease: If checked, this Lease is a Tax Oriented -------- ----------------- ------- PLUS APPLICABLE FEES Lease and the provisions of Paragraph 13 of this Lease apply. E. SECURITY DEPOSIT: $ 0.00 --------------- X Non-Tax Lease: If checked, this Lease is not a Tax Any Termination Value Table attached to this Lease is a ------- part of and incorporated in the terms of this Lease. Oriented Lease and the provisions of Paragraph 13 of this Lease do not apply. I. 5 MACRS Class Life of Equipment. ------- - ------------------------------------------------------------------------------------------------------------------------------------ TERMS AND PROVISIONS OF LEASE 1. EFFECTIVE DATE: The terms and provisions of this lease Agreement ("this Lease") and the obligations and liabilities of Lessee under this Lease are effective on the date of Lessor's acceptance of this Lease ("Effective Date"), even though the Term and Lessee's obligation to pay the remaining Rental Payments may begin on a later date. 2. LEASE: Lessor hereby leases to Lessee, and Lessee hereby hires and takes from Lessor, under and subject to the terms and provisions hereof until the end of the Term specified above ("Term"), the personal property described above and on any supplemental schedule(s) identified as constituting a part of this lease (herein, with all present and future attachments, accessories, replacement parts, repairs, and additions, and all proceeds thereof, referred to as "Equipment"). This Lease is for the Term commencing on the date the Equipment is delivered to Lessee. For the term of any portion thereof, Lessee agrees to pay to Lessor aggregate rentals equal to the sum of all Rental Payments (including advance and interim rentals) in accordance with the Payment Schedule. 3. PLACE OF PAYMENT AND OBLIGATION TO PAY: All Rental Payments are payable without notice or demand. All amounts payable under this Lease to Lessor are payable at Lessor's address set forth herein or at such other address as Lessor may specify from time to time in writing. Except as otherwise specifically provided herein. Lessee's obligation to pay the Rental Payments and all other amounts due or to become due under this Lease shall be absolute and unconditional under all circumstances, regardless of any set-off, counterclaim, recoupment, defense or other claim whatsoever. Any Security Deposit is held as security for Lessor's obligations and will be refunded in full, without interest, upon payment in full of these obligations. 4. DELINQUENCY CHARGES: For each Rental Payment or other sum due under this Lease which is not paid when due, Lessee agrees to pay Lessor a delinquency charge calculated thereon at the rate of 1 1/2% per month for the period of delinquency or, at Lessor's option, 5% of such Rental Payment or other sum due under this Lease, provided that such a delinquency charge is not prohibited by law, otherwise the highest rate Lessee can legally obligate itself to pay and/or Lessor can legally collect. Lessee agrees to reimburse Lessor immediately upon demand for any amount charged to Lessor by any depositary institution because a check, draft or other order made or drawn by or for the benefit of Lessee is returned unpaid for any reason and, if allowed by law, to pay Lessor an additional handling charge in the amount of $25.00 or in the event applicable law limits or restricts the amount of such reimbursement and/or handling charge, the amounts chargeable under this provision will be limited and/or restricted in accordance with applicable law. Page 1 of 4 of Lease Agreement dated 05/01/01 between Meadow Valley Contractors, Inc. (Lessee) ------------- -------------------------------------------------------------- and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the --------------------------------------------------- following serial number: 1FVABTBV51HJ17394 ----------------------------- Original Lessee's Initials ----------------------------- /s/ KDN -----------------------------
5. NO WARRANTIES BY LESSOR, MAINTENANCE, AND COMPLIANCE WITH LAWS: Lessor makes no representations or warranties as to the character of this transaction for tax or other purposes. Lessee acknowledges and agrees that: the Equipment is of a size, design, capacity and manufacture selected by Lessee; Lessor is not the manufacturer of the Equipment or the manufacturer's agent: LESSEE LEASES THE EQUIPMENT "AS IS" AND LESSOR HAS NOT MADE, AND DOES NOT MAKE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, QUALITY, MATERIAL, WORKMANSHIP, DESIGN, CAPACITY, MERCHANTABILITY, DURABILITY, FITNESS OR SUITABILITY OF THE EQUIPMENT FOR ANY USE OR PURPOSE, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED. Lessee will not assert any claim whatsoever, regardless of cause, against Lessor. Lessee will not bring any suit or claim against or make any settlement with the manufacturer or seller to Lessor of the Equipment (both herein called "Seller") without Lessor's prior written consent; and the selection, servicing and maintaining of the Equipment shall be entirely at Lessee's risk and expense. Lessee agrees, at its own cost and expense: (a) to cause the Equipment to be operated with care and only by qualified personnel in the regular course of Lessee's business; (b) to comply with all applicable laws, rules and regulations relating to the Equipment, with any published instructions or specifications of the Seller and with all of the terms of any insurance policy covering the Equipment; (c) to obtain, or sign any documents Lessor deems necessary and any certificates of title required or permitted by law with respect to the Equipment; (d) to maintain the Equipment in good operating condition, repair and appearance; and (e) to furnish Lessor promptly with such financial statements and other information as Lessor may reasonably request from time to time. 6. TERMINATION VALUE: "Termination Value" of the Equipment is the value of the Equipment for purposes of insurance and casualty loss. If Lessor and Lessee have executed a Termination Value Table with respect to this Lease, the Termination Value as of any date will be the amount indicated on that table plus any accrued and unpaid Rentals or other amounts payable under this Lease as of that date. If Lessor and Lessee have not executed a Termination Value Table with respect to this Lease, the Termination Value as of any date shall mean an amount equal to the total of all accrued and unpaid Rental Payments and all other amounts then due and remaining unpaid plus the greater of: (a) the then Fair Market Value (as determined in accordance with Paragraph 12 of this Lease) of the Equipment as of that date in the same condition as when received by Lessee, reasonable wear and tear from the normal use thereof alone excepted, as well as in the condition required upon its return determined in accordance with Paragraph 21 of this Lease, and (b) an amount equal to all accrued and unpaid Rental Payments and all other amounts then due and remaining unpaid plus the then present worth of all unaccrued Rental Payments plus either (i) the Purchase Option Price, or (ii) if no purchase option is offered, the Fair Market Value (as determined in accordance with Paragraph 12 of this Lease) of the Equipment in the same condition as when received by Lessee, reasonable wear and tear from the normal use thereof alone excepted, as well as in the condition required upon its return determined in accordance with Paragraph 21 of this Lease. Present worth shall be determined by discounting such unaccrued Rental Payments from their respective due dates at the Rate of 0.00 %. ---- 7. INSURANCE: Lessee shall bear all risk of loss of, damage to, or destruction of the Equipment from the date of its delivery until its return. If, for any reason, any of the Equipment is lost, stolen, destroyed or damaged beyond repair, Lessee shall (a) immediately and fully inform Lessor with regard thereto, and (b) promptly pay to Lessor the Stipulated Loss Value calculated as of the date of payment thereof. Any amounts actually received by Lessor from insurance or otherwise on Lessee's behalf for such loss or damage shall be applied to reduce Lessee's obligation under this paragraph. Except as expressly provided herein, the total or partial destruction of the Equipment or the total or partial loss of use or possession thereof to Lessee, shall not release or relieve Lessee from its obligations and liabilities under this Lease. Lessee agrees to procure and maintain at all times on and after the Effective Date such liability, physical damage and other insurance as Lessor may require from time to time. Lessee agrees that all such insurance shall be in form and amount and with insurers satisfactory to Lessor, and that Lessee will deliver promptly to Lessor certificates or, upon request, policies satisfactory to Lessor evidencing such insurance. All liability policies shall name Lessor as an additional insured, and all physical damage policies shall provide that payment thereof shall be made to Lessor and Lessee as their interests may appear. Each policy shall provide that Lessor's interest therein shall not be invalidated by any acts, omissions or neglect of anyone other than Lessor, and shall contain the insurer's agreement to give Lessor at least 30 days prior written notice before cancellation or any material change in the policy shall be effective as to Lessor, whether such cancellation or change is at the direction of Lessee or the insurer. 8. TAXES: Lessee shall be liable for all taxes, levies, duties, assessments, and other governmental charges (including any penalties and interest, and any fees for titles or registration) levied or assessed against Lessee, Lessor or the Equipment, upon or with respect to the lease or the purchase, use, operation, leasing, ownership, value, return or other disposition of the Equipment, or the rent, earnings or receipts arising therefrom, exclusive, however, of any taxes based on Lessor's net income. Unless Lessor notifies Lessee in writing otherwise, Lessor will file all returns and remit all personal property taxes applicable to the Equipment. Lessee agrees to reimburse Lessor for all such personal property taxes immediately upon receipt of Lessor's invoice including without limitation such taxes assessed or arising during the term of this Lease but remitted by Lessor after the termination of this Lease. At Lessor's option, Lessee agrees to remit, along with Lessee's rental payments under this Lease, an amount equal to a percentage of Lessor's reasonable estimate of the personal property taxes that will be assessable against the Equipment during the succeeding tax year. Any such amounts remitted to Lessor will be credited by Lessor against Lessee's obligations under this paragraph. Lessee will remain obligated in the event that such amounts are insufficient to fully reimburse Lessor for the actual amount of such taxes and any surplus will be either credited to Lessee's other obligations to Lessor or returned to Lessee. If requested, Lessee agrees to file promptly on behalf of Lessor all requested tax returns and reports concerning the Equipment in form satisfactory to Lessor, with all appropriate governmental agencies and to mail a copy thereof to Lessor concurrently with the filing thereof. Lessee further agrees to keep or cause to be kept and made available to Lessor any and all necessary records relevant to the use of the Equipment and pertaining to the aforesaid taxes, assessments and other governmental charges. The obligations arising under this paragraph shall survive payment of all other obligations under this Lease and the termination of this Lease. 9. LESSOR'S TITLE, STORAGE AND IDENTIFICATION OF EQUIPMENT: Title to the Equipment will at all times remain in Lessor and Lessee will at all times, at its own cost and expense, protect and defend the title of Lessor from and against all claims, liens and legal processes of creditors of Lessee and keep the Equipment free and clear from all such claims, liens and processes. Lessee agrees not to alter or modify the Equipment without first obtaining in each instance the prior written approval of Lessor. Upon the expiration or termination of this Lease, Lessee, at Lessee's sole expense, shall return the Equipment unencumbered to Lessor at a place to be designated by Lessor, and in the same condition as when received by Lessee, reasonable wear and tear resulting from normal use thereof alone excepted. Lessee shall, upon Lessor's request, and at Lessee's own expense firmly affix to the Equipment, in a conspicuous place, such label, sign or other device as Lessor may supply to identify Lessor as the owner and lessor of the Equipment. If Lessee fails to perform duly and promptly any of its obligations under this Lease (including, without limitation, insuring the Equipment), Lessor may perform the same, but shall not be obligated to do so, for the account of Lessee to protect the interest of Lessor or Lessee or both, at Lessor's option. Any amount paid or expense (including reasonable attorney's fees), penalty or other liability incurred by Lessor in such performance shall be payable by Lessee upon demand as additional rent for the Equipment. 10. POSSESSION, LOCATION OF EQUIPMENT, RIGHT OF INSPECTION AND ASSIGNMENT: The Equipment will be kept by Lessee at the location indicated herein, and will not be removed from said location without the prior written consent of Lessor. Lessor shall have the right to inspect the Equipment at all reasonable times and from time to time as Lessor may require. Lessee will not sell, assign, transfer, pledge, encumber, secrete, sublet or otherwise dispose of any of the Equipment or any interest of Lessee in or under this Lease without Lessor's prior written consent. This Lease and all rights of Lessor under this Lease will be assignable by Lessor without Lessee's consent. LESSEE HEREBY WAIVES, RELINQUISHES AND DISCLAIMS AS TO ANY ASSIGNEE OF LESSOR ALL CLAIMS, RIGHTS OF SET-OFF AND DEFENSES LESSEE MAY HAVE AGAINST LESSOR, INCLUDING THE RIGHT TO WITHHOLD PAYMENT OF ANY MONIES WHICH MAY BECOME DUE UNDER THIS LEASE. After receiving notice of any assignment by Lessor, Lessee agrees that it will not, without the prior written consent of the assignee, purchaser or secured party, (i) prepay any amounts owing under this Lease; (ii) modify or amend this Lease; or (iii) exercise any rights which are exercisable only with the consent of the Lessor. 11. OPTIONS AVAILABLE TO LESSEE: PURCHASE OPTION: If the amount set forth as the Purchase Option Price is $-0- or is left blank, Lessee shall have no option whatsoever to purchase any of the Equipment. If "FMV" or a dollar amount other than $-0- is indicated as the Purchase Option Price, Lessee is not then in default and Lessee has paid all other amounts payable under the terms of this Lease, Lessee shall have the option to purchase all but not less than all of the Equipment subject to this Lease at the end of the Term of this Lease at the Purchase Option Price indicated. If "FMV" is designated as the Purchase Option Price, the purchase price shall be the Fair Market Value of the Equipment in the return condition required at the end of the Term Page 2 of 4 Lease Agreement dated 05/01/01 between Meadow Valley Contractors, -------- -------------------------- Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without - ---- ------------------------ limitation, an item of Equipment with the following serial number: 1FVABTBV51HJ17394 - ----------------- Lessee's Initials /s/ KDN Original Any sales or other applicable taxes and any personal property or other taxes (whether or not then payable) assessable against the Equipment shall be the responsibility of Lessee and will be payable to Lessor along with the Purchase Option Price. Lessee must notify Lessor in writing at least ninety (90) days prior to the expiration of the Term of Lessee's intention to return the Equipment or to exercise any option to purchase. Failure to give such notice or to pay the Purchase Option Price on or before the expiration of the Term will render Lessee's option to purchase null and void. Lessor is authorized and directed to apply the amount of any security deposit to the Purchase Option Price and the balance, if any, of the Purchase Option Price must be received by Lessor no later than ten (10) days after the last day of the Lease Term. Upon receipt of the total Purchase Option Price and all other amounts payable under this Lease, Lessor shall convey the Equipment to Lessee AS IS, WHERE IS, WITHOUT ANY WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. 12. FAIR MARKET VALUE: The term "Fair Market Value" as used herein shall be determined on the basis of, and shall be equal in amount to, the value which the Equipment would obtain in an arms length sale transaction between an informed and willing buyer-user (other than a buyer currently in possession) and an informed and willing seller under no compulsion to sell and assuming that the Equipment is then in the condition required under the terms of the Lease. If on or before 60 days prior to the expiration of the Term of the Lease, Lessor and Lessee are unable to agree upon a determination of the Fair Market Value of such Equipment, such value shall be determined in accordance with the foregoing definition by a qualified independent appraiser selected by lessor. The appraiser shall be instructed to make such determination within a period of 45 days following appointment, but in no event later than 10 days prior to the expiration of the Term of the Lease, and shall promptly communicate such determination in writing to Lessor and Lessee. The appraiser's determination of such Fair Market Value shall be conclusively binding upon both Lessor and Lessee. The expenses and fees of the appraiser shall be borne by Lessee. 13. TAX INDEMNITY: Lessee and Lessor agree that Lessor shall be entitled to modified accelerated cost recovery (or depreciation) deductions with respect to the Equipment, and should, under any circumstances whatsoever, except as specifically set forth below, either the United States government or any state tax authority disallow, eliminate, reduce, recapture, or disqualify, in whole or in part, any benefits consisting of accelerated cost recovery (or depreciation) deductions with respect to any Equipment, Lessee shall then indemnify Lessor by payment to Lessor, upon demand, of a sum which shall be equal to the amount necessary to permit Lessor to receive (on an after-tax basis over the full term of this Lease) the same after-tax cash flow and after-tax yield assumed by lessor in evaluating the transactions contemplated by this Lease (referred to hereafter as "Economic Return") that Lessor would have realized had there not been a loss or disallowance of such benefits, together with, on an after-tax basis, any interest or penalties which may be assessed by the governmental authority with respect to such loss or disallowance. In addition, if Lessee shall make any addition or improvement to any Equipment, and as a result thereof, Lessor is required to include an additional amount in its taxable income, Lessee shall also pay to Lessor, upon demand, an amount which shall be equal to the amount necessary to permit Lessor to receive (on an after-tax basis over the full term of this Lease) the same Economic Return that Lessor would have realized had such addition or improvement not been made. Lessor and Lessee agree that the Class Life of the Equipment for federal income tax purposes is as indicated on the front side of this Equipment Schedule. Lessee shall not be obligated to pay any sums required by this section with respect to any Equipment in the event the cause of the loss of the deductions results solely from one or more of the following events: (1) a failure of Lessor to timely modified accelerated cost recovery (or depreciation) deductions for the Equipment in Lessor's tax return, other than a failure resulting from the Lessor's determination, based upon opinion of counsel or otherwise, that no reasonable basis exists for claiming accelerated cost recovery (or depreciation) deductions, or (2) a failure of Lessor to have sufficient gross income to benefit from accelerated cost recovery (or depreciation) deductions. Lessor agrees to promptly notify Lessee of any claim made by any federal or state tax authority against the Lessor with respect to the disallowance of cost recovery (or depreciation) deductions. All amounts payable by Lessee pursuant to this section shall be payable directly to Lessor. All the indemnities contained in this section shall continue in full force and effect notwithstanding the expiration or other termination of the Lease in whole or in part and are expressly made for the benefit of, and shall be enforceable by, Lessor. Lessee's obligations under this section shall be that of primary obligor irrespective of whether Lessor shall also be indemnified with respect to the same matter under some other agreement by another party. The obligations of Lessee under this section are expressly made for the benefit of, and shall be enforceable by, Lessor without necessity of declaring the Lease in default and Lessor may initially proceed directly against Lessee under this section without first resorting to any other rights of indemnification it may have. 14. DEFAULT BY LESSEE: If Lessee at any time defaults in any of its obligations to Lessor, such default shall be considered an abandonment of all options herein and all options herein shall immediately expire and become null and void. 15. OPTIONS NOT ASSIGNABLE: It is agreed that Lessee's rights under this Lease are not assignable and that no modification of the provisions hereof shall be binding unless in writing and signed by an officer of the party to be charged. 16. DEFAULT AND REMEDIES: An event of default shall occur if: (a) any rental Payment or any other amount owed by Lessee to Lessor hereunder is not paid promptly when due; (b) Lessee breaches any warranty or provision hereof, (c) Lessee ceases to do business as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts as they become due, or takes advantage of any law for the relief of debtors; (d) any property of Lessee is attached; (e) a petition in bankruptcy or for an arrangement, reorganization, composition, liquidation, dissolution or similar relief is filed by or against Lessee under any present or future statute, law or regulation; (f) Lessee or its shareholders take any action looking to its dissolution or liquidation; (g) a trustee or receiver is appointed for Lessee or for any substantial part of its property; (h) if there shall occur an (i) appropriation, (ii) confiscation, (iii) retention, or (iv) seizure of control, custody or possession of the Equipment by any governmental authority including, without limitation, any municipal, state, federal or other governmental entity or any governmental agency or instrumentality (all such entities, agencies and instrumentalities shall hereinafter be collectively referred to as "Governmental Authority"); or (i) if anyone in the control, custody or possession of the Equipment or the Lessee is accused or alleged or charged (whether or not subsequently arraigned, indicted or convicted) by any Governmental Authority to have used the Equipment in connection with the commission of any crime (other than a misdemeanor moving violation). Upon the occurrence of an event of default Lessee shall be in default hereunder and Lessor may, at its option, with or without notice to Lessee (a) declare all sums due and to become due hereunder and all other sums then owing by Lessee to Lessor to be immediately due and payable; (b) proceed by appropriate court action or actions or other proceedings either at law or in equity to enforce performance by Lessee of any and all provisions of this Lease and to recover the damages for the breach thereof; (c) require Lessee to assemble the Equipment and deliver same forthwith to Lessor at Lessee's expense at such place as Lessor may designate which is reasonably convenient to both parties; (d) exercise one or more of the rights and remedies available to a secured party under the Uniform Commerical Code, whether or not this transaction is subject thereto; (e) enter, or its agents may enter, without notice or liability or legal process, into any premises where the Equipment may be, or is believed by Lessor to be, and repossess all or any part thereof, disconnecting and separating the same from any other property and using all force necessary and permitted by applicable law, Lessee hereby expressly waiving all further rights to possession of the Equipment after default and all claims for injuries suffered through or loss caused by such repossession; and/or (f) apply any security deposit or other amounts held by Lessor to any indebtedness of Lessee to Lessor. In addition, Lessee agrees to pay, to Lessor, as liquidated damages for loss of the bargain and not as a penalty, (1) the Stipulated Loss Value plus (2) all expenses of retaking, holding, preparing for sale, selling and the like, including reasonable attorneys' fees and other legal expenses, less (3) any amount actually received by Lessor from the re-lease, sale or other disposition of the Equipment. Lessee hereby waives any right to trial by jury in any proceeding arising out of this Lease. Nothing herein contained will require Lessor to re- lease, sell or otherwise dispose of the Equipment. No remedy of Lessor hereunder shall be exclusive of any other remedy herein or provide by law, but each shall be cumulative and in addition to every other remedy. A waiver of a default shall not be a waiver of any other or a subsequent default. If allowed by law, "the reasonable fees for attorneys" retained by Lessor shall include the amount of any flat fee, retainer, contingent fee or the hourly charges of any attorney retained by Lessor in enforcing any of Lessor's rights hereunder or in the prosecution or defense of any litigation related to this Agreement or the transactions contemplated by this Agreement. All notices to Lessee relating hereto will be considered received when delivered in person or mailed to Lessee at the address set forth in this Agreement, or at any later address designated in writing by Lessee. 17. INDEMNITY: Lessor (which term as used herein includes lessor's successors, assigns agents, and servants) shall have no responsibility or liability to Lessee, its successors or assigns or any other person with respect to any Liabilities (as "Liabilities" is herein defined), and Lessee hereby assumes liability for, and hereby agrees, at its sole cost and expense, to indemnify, defend, protect and save Lessor and keep it harmless from and against, any and all Liabilities. The term "Liabilities" as used herein shall include any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements of whatsoever kind and nature, including legal fees and expenses, (whether or not any transaction contemplated hereby is consummated) imposed on, incurred by or asserted against Lessor or the Equipment (whether by way of strict or absolute liability or otherwise) and in any way relating to or arising out of this Lease or the selection, manufacture, purchase, acceptance, ownership, delivery, non-delivery, lease, possession, use, operation, condition, servicing, maintenance, repair, improvement, alteration, replacement, storage, return or other disposition of the Equipment (including without limitation, (i) claims as a result of latent or patent defects, whether or not discoverable by Lessor or Lessee, (ii) claims for trademark, patent or copyright infringement, and (iii) tort claims of any kind (whether based on Lessor's alleged negligence or otherwise), including claims for injury or damage to property, or injury or death to any person (including Lessee's employees) or, for any claim or liability hereby, indemnified against. The indemnities arising under this paragraph shall survive payment of all other obligations under this Lease and the termination of this Lease. Page 3 of 4 of Lease Agreement dated 05/01/01 between Meadow Valley Contractors, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: 1FVABTBV51HJ17394 Lessee's Initials 702004 Rev 11:00 ----------------- se02004 woc Standard: FMV Tax Lease /s/ KDN 1 10 ----------------- Original 18. POWER OF ATTORNEY. LESSEE HEREBY APPOINTS LESSOR OR ANY OFFICER, EMPLOYEE OR DESIGNEE OF LESSOR OR OF ANY ASSIGNEE OF LESSOR AS LESSEE'S NAME, TO: (a) PREPARE, EXECUTE AND SUBMIT ANY NOTICE OR PROOF OF LOSS IN ORDER TO REALIZE THE BENEFITS OF ANY INSURANCE POLICY INSURING THE EQUIPMENT; (b) PREPARE, EXECUTE AND FILE ANY INSTRUMENT WHICH, IN LESSOR'S OPINION, IS NECESSARY TO PERFECT AND/OR GIVE PUBLIC NOTICE OF THE INTERESTS OR SUCH ASSIGNEE'S ATTORNEY-IN-FACT TO, IN LESSEE'S, ASSIGNEE'S OR LESSOR'S OF LESSOR IN THE EQUIPMENT; AND (c) ENDORSE LESSEE'S NAME ON ANY REMITTANCE REPRESENTING PROCEEDS OF ANY INSURANCE RELATING TO THE EQUIPMENT OR THE PROCEEDS OF THE SALE, LEASE OR OTHER DISPOSITION OF THE EQUIPMENT (WHETHER OR NOT THE SAME IS A DEFAULT HEREUNDER). 19. PRIVACY WAIVER: Lessor may receive from and disclose to any individual, corporation, business trust, association, company, partnership, joint venture, or other entity (herein collectively, the "Entity"), including, without limiting the generality of the foregoing, Lessor's parent or any affiliate or any subsidiary of Lessor and any credit reporting agency or other entity whether or not related to Lessor for any purpose, information about Lessee's accounts, credit application and credit experience with Lessor and Lessee authorizes any Entity to release to Lessor any information related to Lessee's accounts, credit experience and account information regarding the Lessee. This shall be continuing authorization for all present and future disclosures of Lessee's account information, credit application and credit experience on Lessee made by Lessor, or any Entity requested to release such information to Lessor. 20. DEBT TRANSACTIONS. Lessor may but shall not be required to offer Lessee the option of paying any of Lessee's obligations to Lessor through printed checks ("Debit Transactions") drawn pursuant to this authorization upon Lessee's checking account, using Lessee's checking account number, bank routing code and other information which Lessee provides to Lessor prior to the first Debit Transaction. Lessee authorizes Lessor to initiate Debit Transactions from Lessee's checking account in the amount necessary to pay the rental payments, delinquency charges, or such other amounts as may now or hereafter be due hereunder or under any other present or future agreement with or which is held by Lessor, plus a fee of ten dollars ($10.00) for each Debit Transaction initiated by Lessor. In the event applicable law prohibits or restricts the amount of such fee, the fee chargeable under this provision shall be limited and/or restricted in accordance with applicable law. Lessor may from time to time increase or decrease the Debit Transaction fee upon prior written notice addressed to Lessee's last known address as shown on the records of Lessor and such increase or decrease shall be effective as stated in the written notice. Unless prohibited by applicable law, Lessee's continued use of Debit Transactions after the effective date specified in such notice shall conclusively establish Lessee's agreement to pay the new Debit Transaction fee stated therein. Lessee authorizes Lessor or any officer, employee or designee of Lessor to endorse Lessee's name as drawer on any printed check drawn in accordance with this authorization. Until cancelled by Lessee, this authorization shall be valid for all Debit Transactions Lessor initiates in payment of Lessee's obligations hereunder or under any other present or future agreement with or which is held by Lessor. This authorization may be canceled at any time by Lessee giving at least three (3) business days prior written notice to Lessee's bank and Lessor. Payment by Debit Transactions is not required by Lessor nor is its use a factor in the approval of credit. 21. GENERAL PROVISIONS: To the extent that any court of law at any time deems Lessee to have an interest in any of the Equipment during the Term or any Renewal Term and following the purchase by Lessee of any item of the Equipment (whether pursuant to a purchase option or otherwise), it is the intention of the parties that Lessor have a security interest ("PMSI") in the portion of the Equipment (such portion, together with any proceeds thereof, is referred to as the "Collateral") that was acquired by Lessee with funds advanced by Lessor for the Collateral (the "PMSI Debt"). The collateral shall secure only the unpaid balance of monies advanced by the Lessor for the acquisition of the Collateral. The PMSI Debt shall be secured only by the Collateral and no other property of Lessee. All payments made by Lessee to Lessor with reference to this Lease shall be applied first to late charges, then to any other fees or other amounts payable hereunder other than the PMSI Debt, until all of such indebtedness is paid in full, and then to the PMSI Debt, and all proceeds of the Collateral shall be applied only to the payment of PMSI Debt. Upon payment in full of the PMSI Debt, all security interests of Lessor in the Collateral shall be terminated. This provision controls over any conflicting provision of language in this Agreement or in any other agreement between Lessor and Lessee unless the parties mutually agree in writing in a subsequent agreement to override this provision. Any provisions hereof contrary to, prohibited by or invalid under applicable laws or regulations shall be inapplicable and deemed omitted herefrom, but shall not invalidate the remaining provisions hereof. This Lease and any addenda referred to herein constitute the entire agreement of the parties hereto. No oral agreement, guaranty, promise, condition, representation or warranty shall be binding. All prior conversations, agreements or representations related hereto and/or to the Equipment are superseded hereby, and no modification hereof shall be binding unless in writing and signed by an officer of the party to be bound. The only copy of this Lease that will constitute "chattel paper" for purposes of the Uniform Commercial Code is the original of this Lease marked "Original For Associates". 22. RENEWAL. Unless Lessee notifies Lessor in writing at least ninety (90) days prior to the expiration of the Term of Lessee's intention to return the Equipment or to exercise any option to purchase, or Lessor notifies Lessee in writing at least ninety (90) days prior to the expiration of the Term of Lessor's intention to terminate this Lease, this Lease will automatically renew and continue on a month to month basis following the initial Term ("Renewal Term") until such time as either Lessor or Lessee provides the other party with at least ninety (90) days prior written notice of that party's intention to terminate this Lease. Rental Payments will continue to be due and owing until expiration of such notice period. All of the terms and provisions of this Lease shall govern during any Renewal Term, except that any option on the part of Lessee to purchase the Equipment shall automatically expire on the expiration of the Term and shall be inapplicable to any Renewal Term. 23. RETURN OF EQUIPMENT: If Lessee does not exercise, or is precluded from exercising, the option to purchase the Equipment at the expiration of the Term or any Renewal Term of this Lease, Lessee shall, at Lessee's sole cost and expense, return all, but not less than all, of the Equiptment to Lessor immediately upon the expiration of the Term or any Renewal Term of this Lease pursuant to the terms and conditions contained in Lessor's Standard Return Conditions for equipment similar to the Equipment subject to this Lease (a copy of which has been delivered to Lessee in conjunction with this lease). If Lessee does not surrender the Equipment to Lessor as herein provided, Lessee will be in default of this Lease as to such Equipment, and Lessee shall pay Lessor, as liquidated damages and not as penalty, an amount equal to one hundred ten percent (110%) of the Monthly Rental Payment applicable to such Equipment. Such payment shall commence with the month immediately following the end of the Term or any Renewal Term and shall continue thereafter monthly until the Equipment is returned to Lessor. Lessee agrees that such liquidated damages are a reasonable estimate and fair compensation for the costs, expenses, residual value exposure and other losses, which are incapable of an exact determination, incurred by Lessor as a result of Lessees retaining possession of the Equipment beyond the end of the Term or any Renewal Term. Notwithstanding the foregoing, Lessor shall have the right to obtain immediate possession of the Equipment at any time after the end of the Term or any Renewal Term for such Equipment. - -------------------------------------------------------------------------------- DELIVERY AND ACCEPTANCE OF EQUIPMENT (Check Appropriate Box) Lessee's obligations and liabilities under this Lease are absolute and unconditional under all circumstances and regardless of any failure of operation or loss of possession of any item of Equipment or the cessation or interruption of Lessee's business for any reason whatsoever. On 4-30-01 , the Equipment leased under this Lease was delivered to ------------ Lessee with all installation necessary for the proper use of the Equipment completed at a location agreed to by Lessee and the Equipment was inspected by Lessee and found to be in satisfactory condition in all respects and delivery thereof was unconditionally accepted by Lessee. The Equipment leased under this Lease has not yet been delivered to or accepted by Lessee and, upon delivery, Lessee agrees to execute such delivery and acceptance certificate as Lessor or Lessor's assignee requires. ================================================================================ THE UNDERSIGNED HEREBY AGREE TO ALL THE TERMS AND PROVISIONS SET FORTH ON ALL FOUR PAGES OF THIS LEASE AND ALL RIDERS EXECUTED IN CONNECTION HEREWITH. LESSEE ACKNOWLEDGES RECEIPT OF A COMPLETE COPY OF THIS LEASE TOGETHER WITH ALL RIDERS AND OF LESSOR'S STANDARD RETURN CONDITIONS. LESSEE: LESSOR: Meadow Valley Contractors, Inc. Associates Leasing, Inc. By /s/ Kenneth D. Nelson By /s/ Jennifer Wedzick ----------------------------------------------- ---------------------------------------------- Title Vice President Title Credit Manager -------------------------------------------- ------------------------------------------- Date: 05/01/01 Federal Tax ID #: 88-0171959 Date: 05/01/01 Federal Tax ID #: 351149729 ---------- ----------------- ---------- ---------------- Page 4 of 4 of Lease Agreement dated 05/01/01 between Meadow Valley Contractors, Inc. (Lessee) ---------- ----------------------------------- and Associates Leasing, Inc. (Lessor) which includes, without limitation, an ---------------------------------------------- item of Equipment with the following serial number: 1FVABTBV51HJ17394 ---------------------------
Original AMENDMENT TO LEASE AGREEMENT (PURCHASE AND RENEWAL OPTIONS) [LOGO OF THE ASSOCIATES] This Amendment To Lease Agreement (this "Amendment") is attached to and incorporated into the terms of that certain Lease Agreement (the "Lease") bet as Lessor, and Meadow Valley Contractors, Inc., as Lessee, dated 5/1/01. -------------------------------- ------ For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Lessor and Lessee hereby agree to amend the Lease as follows: 1. Paragraph 11 of the Lease is hereby deleted and the following inserted in lieu thereof: 11. OPTIONS AVAILABLE TO LESSEE: A. Option To Purchase During Term. Lessor hereby grants to Lessee the option to purchase all, but not less than all, of the Equipment described in the Lease on 5/15/04 (the "Option Date") upon the ------- following terms and conditions: (1) Lessee gives Lessor written notice of Lessee's intent to exercise this option to purchase at least 60 but not more than 90 days prior to the Option Date and (2) Lessee has paid all Rental Payments accruing prior to the Option Date on or before the Option Date. Failure to give such notice or to pay the Term Option Price on or before the Option Date will render the Lessee's option to purchase null and void. The purchase price for the Equipment on the Option Date will be the then Fair Market Value of the Equipment which, for purposes of the Option Date only, Lessor and Lessee agree will be $28,042.75 plus an amount equal to any applicable taxes on the above --------- sum (the "Term Option Price"). Lessor and Lessee agree that the Term Option Price is a reasonable prediction of the then Fair Market Value of the Equipment. The Term Option Price will be payable on the Option Date in cash or, at Lessee's option, as provided in Paragraph B. of this Amendment. Upon such payment, Lessor will execute a bill of sale conveying title to the Equipment to Lessee on an "AS IS, WHERE IS" BASIS, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND. B. Conversion Option During Term. In the event Lessee exercised Lessee's option to purchase the Equipment on the Option Date as provided in paragraph A above, Lessee may elect to pay the Term Option Price to Lessor upon the following terms and conditions: (1) Lessee agrees to pay the Term Option Price in 24 equal consecutive monthly installments -- of $1,287.57 each with the first such installment payable on the --------- Option Date and each succeeding installment payable on a like date of each month thereafter until fully paid and provided that the final installment will be in the amount of the then remaining unpaid balance. In addition to the payment provided above, Lessee promises and agrees to pay interest at the rate of 9.5% per annum payable --- monthly on the unpaid principal balance; (2) Lessee agrees to give Lessor written notice of Lessee's election pursuant to this Paragraph at least 60 but not more than 90 days prior to the Option Date (failure to give such notice on or before the Option Date will render the Lessee's "Conversion Option" null and void); (3) Lessee grants to Lessor, its successors and assigns, a security interest in the Equipment complete with all present and future attachments, accessories, replacement parts, repairs, additions, and all proceeds thereof, all herein referred to collectively as "Collateral" to secure payment and performance of the foregoing obligations and all absolute and all contingent obligations and liabilities of Lessee to Lessor, or to any assignee of Lessor; (4) Lessee will be a "debtor" and Lessor a "secured party" as those terms are used under the Uniform Commercial Code; (5) Lessee agrees, at its own cost and expense, to do everything necessary or expedient to perfect and preserve the security interest of Lessor granted hereunder; and (6) All of the terms and provisions of the Lease will be and remain in full force and effect except as indicated in this paragraph. C. Option to Purchase Upon Expiration of Term: Lessor hereby grants to Lessee the option to purchase all, but not less than all, of the Equipment described in the Lease at the expiration of the Term provided that Lessee is not then in default under the terms of the Lease and that Lessee gives Lessor written notice of Lessee's intent to exercise this option to purchase at least 90 but not more than 120 days prior to the expiration of the Term of the Lease. Failure to give such notice on or before the expiration of the Term of the Lease, will render the Lessee's option to purchase null and void. The purchase price will be payable on the expiration date of the Lease. The purchase price to be paid to Lessor for the Equipment will be the then Fair Market Value of the Equipment which Lessor and Lessee agree will be $12,605.00, plus an amount equal to the Rental Payments then ---------- unpaid under the terms of 1 the Lease, plus applicable taxes, if any, on the above sum, all payable in cash. Lessor and Lessee agree that the foregoing purchase price is a reasonable prediction of the Fair Market Value of the Equipment at the expiration of the Term. Upon such payment, Lessor will execute a bill of sale conveying title to the Equipment to Lessee on an "AS IS, WHERE IS" BASIS, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND. D. Renewal of Lease: In the event that Lessee does not exercise or is precluded from exercising Lessee's option specified in Paragraph C, the Lease will renew and continue with respect to all, but not less than all, of the Equipment described in the Lease, following the expiration of the Term of the Lease, for a period of 12 months (the "Renewal Term"), upon the following terms and conditions: (1) Lessee must pay to Lessor for the Renewal Term 12 Rental Payments in the amount of $1,105.25 each for each month of the Renewal Term, which will be due and payable on the first day of each month during the Renewal Term and (2) all of the terms and conditions of the Lease will continue to remain in full force and effect during the Renewal Term and, if this option to renew becomes effective, the word "Term" wherever the same appears in the Lease will include the Renewal Term. E. Option To Purchase On Expiration Of Renewal Term: Lessor hereby grants to Lessee the option to purchase all, but not less than all, of the Equipment described in the Lease at the expiration of the Renewal Term provided that Lessee is not then in default under the terms of the Lease and that Lessee gives Lessor written notice of Lessee's intent to exercise this option to purchase at least 90 but not more than 120 days prior to the expiration of the Renewal Term. Failure to give such notice on or before the expiration of the Renewal Term of the Lease, will render the Lessee's option to purchase null and void. The purchase price will be payable on the expiration of the Renewal Term. The purchase price to be paid to Lessor for the Equipment will be the then Fair Market Value (as defined in the Lease) of the Equipment plus an amount equal to the Rental Payments then unpaid under the terms of the Lease, plus applicable taxes, if any, payable in cash. Upon such payment, Lessor will execute a bill of sale conveying title to the Equipment to Lessee on an "AS IS, WHERE IS" BASIS, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND. 2. Paragraph 21 of the Lease is hereby deleted and the following inserted in lieu thereof: RETURN OF EQUIPMENT: If Lessee does not exercise, or is precluded from exercising, the option to purchase the Equipment at the expiration of the Renewal Term of this Lease, Lessee shall, at Lessee's sole cost and expense, return all, but not less than all, of the Equipment to Lessor immediately upon the expiration of the Renewal Term of this Lease pursuant to the terms and conditions contained in Lessor's Standard Return Conditions for equipment similar to the Equipment subject to this Lease (a copy of which has been delivered to Lessee in conjunction with this Lease). If Lessee does not surrender the Equipment to Lessor as herein provided, Lessee will be in default of this Lease as to such Equipment, and Lessee shall pay Lessor, as additional liquidated damages and not as penalty, an amount equal to one hundred ten percent (110%) of the Monthly Rental Payment applicable to such Equipment. Such payment shall commence with the month immediately following the end of the Renewal Term and shall continue thereafter monthly until the Equipment is returned to Lessor. Lessee agrees that such liquidated damages are a reasonable estimate and fair compensation for the costs, expenses, residual value exposure and other losses, which are incapable of an exact determination, incurred by Lessor as a result of Lessees retaining possession of the Equipment beyond the end of the Renewal Term. Notwithstanding the foregoing, Lessor shall have the right to obtain immediate possession of the Equipment at any time after the end of the Renewal Term for such Equipment. 3. DEFINED TERMS: The terms "Equipment", "Fair Market Value", "Rental Payments", and "Term" as used herein have the same meaning as defined in the Lease (and as modified in this Agreement). 4. DEFAULT BY LESSEE: If Lessee at any time defaults in any of its obligations to Lessor, such default will be considered an abandonment of the options contained in this Agreement and the options herein will immediately expire and become null and void. 5. OPTIONS NOT ASSIGNABLE: It is agreed that Lessee's rights under this Amendment are not assignable and that no modification of the provisions hereof will be binding unless in writing and signed by an officer of the party to be charged. 6. Except as expressly modified hereby, the Lease is and shall remain in full force and effect. Lessor Associates Leasing, Inc. Lessee Meadow Valley Contractors, Inc. ----------------------- ------------------------------- By /s/ Jennifer Wedzick By /s/ Kenneth D. Nelson Title CREDIT MANAGER Title VICE PRESIDENT 2 EX-10.150 4 dex10150.txt LEASE AGREEMENT WITH M & I FIRST NATIONAL LEASING Exhibit 10.150 LESSOR: Lease Agreement M&I FIRST NATIONAL LEASING CORP. 250 East Wisconsin Avenue, Suite 1400 Milwaukee, WI 53202 Lease No. 149176 ------- - -------------------------------------------------------------------------------- LESSEE (hereinafter also referred to as "You" or "Your") -------------------------------------------------------- Full Legal Name MEADOW VALLEY CONTRACTORS INC. - -------------------------------------------------------------------------------- Address City State Zip County P O BOX 60726 PHOENIX AZ 85040 - -------------------------------------------------------------------------------- VENDOR Name City State ------ TARMAC INC INDEPENDENCE MO - -------------------------------------------------------------------------------- TERMS AND CONDITIONS . PLEASE READ CAREFULLY BEFORE SIGNING - -------------------------------------------------------------------------------- Quantity Type, Make, Model Number of Equipment Rented Serial # - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [X] See attached schedule for addition equipment. - -------------------------------------------------------------------------------- EQUIPMENT LOCATION (if other than above) City State County ---------------------------------------- - -------------------------------------------------------------------------------- TERM AND RENT $1.00 BUYOUT ADVANCE RENTAL PAYMENTS $1907.05 (plus tax) ------------- To be applied against the first and last _____ rental payments due under this lease. 48 MONTHLY RENTAL PAYMENTS OF $1774.00 plus tax SECURITY DEPOSIT $________ - -- ------- - -------------------------------------------------------------------------------- 1. LEASE AGREEMENT. Subject to the terms of this Lease, Lessor (also referred to as "We", "Us" and "Our") agrees to lease to Lessee (also referred to as "You" and "Your"), and You agree to lease from Us, the equipment described above ("Equipment") or in any schedule ("Schedule") incorporating this Lease Agreement ("Lease") by reference that is signed by You and approved by Us. The lease of Equipment described in this Lease and the lease of Equipment described in each Schedule will constitute separate leasing transactions, each of which is referred to herein as a Lease. This Lease contains the entire arrangement between You and Us and no modifications of this Lease shall be effective unless in writing and signed by the parties. 2. DELIVERY AND ACCEPTANCE OF EQUIPMENT. Acceptance of the Equipment occurs upon delivery. When You receive the Equipment, You agree to inspect it and verify by telephone or in writing such information as We may require. You hereby authorize Us to either insert or correct the Lease number, serial numbers, model numbers, beginning date, signature date, and Your name. ONCE YOU SIGN THIS LEASE AND LESSOR ACCEPTS IT, THIS LEASE WILL BE NONCANCELLABLE FOR THE FULL LEASE TERM. 3. GOVERNING LAW, CONSENT TO JURISDICTION AND VENUE OF LITIGATION. This Lease and each Schedule shall be governed by the internal laws for the state in which Lessor's or Lessor's assignee's principal corporate offices are located. IF THIS LEASE IS ASSIGNED, YOU AGREE THAT ANY DISPUTE ARISING UNDER OR RELATED TO THIS LEASE WILL BE ADJUDICATED IN THE FEDERAL OR STATE COURT WHERE THE ASSIGNEE'S CORPORATE HEADQUARTERS IS LOCATED AND WILL BE GOVERNED BY THE LAW OF THAT STATE. YOU HEREBY CONSENT TO PERSONAL JURISDICTION AND VENUE IN THAT COURT AND WAIVE ANY RIGHT TO TRANSFER VENUE. EACH PARTY WAIVES ANY RIGHT TO A TRIAL BY JURY. 4. FACSIMILE SIGNATURES. You agree that a facsimile copy of this Lease bearing authorized signatures may be treated as an original. SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS - -------------------------------------------------------------------------------- THIS LEASE IS SUBJECT TO THE TERMS AND CONDITIONS PRINTED ON THIS SIDE AND ON THE REVERSE SIDE, ALL OF WHICH PERTAIN TO THIS LEASE AND WHICH YOU ACKNOWLEDGE HAVING READ. THIS LEASE IS NOT BINDING UNTIL ACCEPTED BY LESSOR. YOU CERTIFY ALL ACTIONS REQUIRED TO AUTHORIZE THE EXECUTION OF THIS LEASE, INCLUDING YOUR AUTHORITY, HAVE BEEN FULFILLED.
LESSOR: (As Stated Above) LESSEE: (As Stated Above) By: Date Accepted: X /s/ Kenneth D. Nelson Date Accepted: 5-15-01 --------------------- -------------------- --------------------- ----------- Signature Title: Title: VICE PRESIDENT ------------------ -----------------
- -------------------------------------------------------------------------------- UNCONDITIONAL GUARANTY TO LESSOR In consideration of Lessor entering into the above Lease in reliance of this guarantee, the undersigned, jointly and severally, unconditionally and irrevocably guarantee to Lessor and to any assignee of Lessor, the prompt payment and performance of all obligations under this Lease and all existing and future Leases with Lessor. The undersigned agree: (a) that this is a guarantee of payment and not of collection and that Lessor may proceed directly against the undersigned without disposing of any security or seeking to collect from Lessee; (b) to waive all defenses and notices, including those of protest, presentment and demand; (c) that Lessor may extend or otherwise change the terms of the Lease without notice to the undersigned; and (d) to pay all of Lessor's costs of enforcement and collection. This guarantee survives the bankruptcy of the Lessee and binds the undersigned's administrators, successors and assigns and WILL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 3 OF THIS LEASE. x , Individually X , Individually ------------------------ -------------------- - -------------------------------------------------------------------------------- LeaseAgreement-TwoPage-M&I(0300) 6. NET LEASE. YOU AGREE THAT YOU ARE UNCONDITIONALLY OBLIGATED TO PAY ALL RENT AND OTHER AMOUNTS DUE FOR THE ENTIRE LEASE TERM NO MATTER WHAT HAPPENS, EVEN IF THE EQUIPMENT IS DAMAGED OR DESTROYED, IF IT IS DEFECTIVE OR IF YOU NO LONGER CAN USE IT. YOU ARE NOT ENTITLED TO REDUCE OR SET-OFF AGAINST RENT OR OTHER AMOUNTS DUE TO US OR TO ANYONE TO WHOM WE TRANSFER THIS LEASE, WHETHER YOUR CLAIM ARISES OUT OF THE LEASE, ANY STATEMENT BY THE VENDOR, OR ANY MANUFACTURER'S OR VENDOR'S LIABILITY, STRICT LIABILITY OR NEGLIGENCE OR OTHERWISE. THIS LEASE IS A "FINANCE LEASE" AS DEFINED IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE. 7. DISCLAIMER OF WARRANTIES. THE EQUIPMENT IS BEING LEASED TO YOU IN "AS-IS" CONDITION. NO INDIVIDUAL IS AUTHORIZED TO CHANGE ANY PROVISION OF THIS LEASE. YOU AGREE THAT WE HAVE NOT MANUFACTURED THE EQUIPMENT AND THAT YOU HAVE SELECTED THE EQUIPMENT BASED UPON YOUR OWN JUDGMENT. YOU HAVE NOT RELIED ON ANY STATEMENTS WE OR OUR EMPLOYEES HAVE MADE. WE HAVE NOT MADE AND DO NOT MAKE ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WHATSOEVER, INCLUDING WITHOUT LIMITATION, ANY CLAIM THAT YOU MAY HAVE OR ASSERT AGAINST THE VENDOR OR EQUIPMENT MANUFACTURER, THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY, DESIGN, CONDITION, DURABILITY, OPERATION, QUALITY OF MATERIALS OR WORKMANSHIP, OR COMPLIANCE WITH SPECIFICATIONS OR APPLICABLE LAW. You are aware of the Equipment manufacturer and You will contact the manufacturer for a description of Your warranty rights, if any. Provided You are not in default under this Lease, You may enforce all warranty rights directly against the manufacturer of the Equipment. You agree to settle any dispute You may have regarding performance or maintenance of the Equipment directly with the manufacturer or Vendor of the Equipment. 8. TERM, RENT AND SECURITY DEPOSIT. Payments are due monthly, beginning the date Equipment is delivered to You, or any later date designated by Us and continuing on the same day of each following month until fully paid. We may charge You a reasonable fee to cover documentation and investigation costs. Security deposits and rental payments may be commingled and do not earn interest. You may not payoff this Lease in full and return the Equipment prior to the end of the lease term without our consent and We may charge You, in addition to the other amounts owed under this Lease, an early termination fee equal to five percent (5%) of the total amount We paid for the Equipment. 9. USE AND MAINTENANCE. You agree that the Equipment will be used for business purpose only. You will keep the Equipment in good repair, condition and working order, except ordinary wear and tear, and will furnish all parts and servicing required. Equipment supplies and maintenance are not part of this Lease. You may modify the Equipment only with Our prior written consent. 10. LOCATION, INSPECTION AND RETURN OF EQUIPMENT. You will not move the Equipment from its location noted in the Lease without Our prior written consent. We will have the right to enter the premises where the Equipment is located, in order to confirm the existence, condition and proper maintenance of the Equipment. At the expiration of the Lease term or other termination, You will immediately return Equipment at Your expense in Average Saleable Condition, to such place as is designated by Us. "Average Saleable Condition" means the Equipment is immediately available for use by another lessee without the need of any repair or refurbishment. Should You fail to return the Equipment at the end of the Lease term, renewal of the Lease will be automatic on a monthly basis, despite written notification from You to the contrary. 11. LOSS OR DAMAGE. You assume and bear the risk of loss or damage to the Equipment. If the Equipment is lost or damaged, You agree to replace or repair the Equipment and to continue to pay rent. 12. INSURANCE. You will keep the Equipment fully insured against loss, for not less than the replacement cost of the Equipment, and will obtain a general public liability insurance policy, covering the Equipment and its use. You will name Us as an additional named insured and any loss payee on any such policy and will provide Us with certificates or other evidence of insurance acceptable to Us, before this Lease term begins. In the event You fail to procure the insurance required, We may obtain such insurance and charge you an insurance fee. Any insurance proceeds received with respect to the Equipment will be applied, at Our option, (i) to repair, restore or replace the Equipment, or (ii) to pay to Us the remaining balance of the Lease plus Our estimated residual value, both discounted at 6% per year, whereupon this Lease will terminate. 13. INDEMNITY.We are not responsible for any losses or injuries caused by the installation or use of the Equipment, and You agree to indemnify Us with respect to all claims for losses imposed on, incurred by or asserted against Us including attorney's fees and costs of defense, plus interest, where such claims in any way relate to the Equipment. Furthermore, You agree, if requested by Lessor, to defend Us against any claims for losses or injuries caused by the Equipment. 14. TAXES. You agree that You will pay when due either directly or by reimbursing Us, all taxes relating to this Lease and the Equipment. 15. DELINQUENT AMOUNTS AND ADVANCES. If any rent or additional amounts required to be paid by You under this Lease are not paid when due, such overdue amount will accrue interest, from the due date until paid, at the lower one and one-half percent (1.5%) per month or the highest rate allowed by applicable law. In addition, You will pay Us a "late charge" equal to the greater of ten (10) cents for each dollar overdue of twenty-five dollars ($25.00), or if less, the highest lawful charge. This late charge will be due and payable with the next monthly rental payment due. In the event that We have to make advance payments of any kind to preserve the leased property, or to discharge any tax, the amount advanced by Us will be repayable by You to Us, together with interest until paid. 16. DEFAULT AND REMEDIES. Any of the following events or conditions will constitute default hereunder: (a) You fail to pay any sum due Us on or before the due date thereof; (b) You fail to observe or perform any other term, covenant or condition of this Lease and such failure continues for ten (10) days following the receipt of written notice from Us; (c) the filing by or against You of a petition under the Bankruptcy Code or under any other insolvency law providing for the relief of debtors; (d) the voluntary or involuntary making of an assignment or sale of a substantial portion of your assets, appointment of a receiver of trustee for You or for Your assets, commencement of any formal or informal proceeding for dissolution, liquidation, settlement of claims against or winding up of Your affairs, or You cease doing business as a going concern; (e) any representation or warranty made by You herein or in any document delivered by You in connection here will prove to have been misleading in any material respect when made; or (f) You are in default under any other contract with Us. Upon the occurrence of an event of default, We may, at Our option, require You pay 1) all past due amounts under this Lease, and 2) all future amounts owed for the unexpired term, discounted at the rate or 6% per annum. Upon a default, We may also choose to repossess the Equipment. If We do not choose to repossess the Equipment, You will also pay to Us our estimated residual value for the Equipment. We may also use any other remedies available to Us under applicable law. Although You agree that We have no obligation to sell the Equipment, if We do sell the Equipment, We will reduce the amount You owe by what We receive less applicable expenses. These remedies will be applied, to the extent allowed by law, cumulatively. In addition, You agree to pay Us all costs and expenses, including attorney's fees, incurred by Us, in exercising or attempting to exercise any of its rights or remedies. If this Lease is deemed to create a security interest, remedies will include those available under Article 9 of the UCC. A waiver of default shall not be construed as a waiver of any other or subsequent default. 17. ASSIGNMENT AND PURCHASE ORDER. YOU HAVE NO RIGHT TO SELL, TRANSFER, ASSIGN OR SUBLEASE THE EQUIPMENT OR THIS LEASE. We may sell, assign or transfer this Lease or Our rights in the Equipment. You agree that if We sell, assign or transfer this Lease, the new owner will have Our rights, but it will not be subject to any claim, defense or set-off that You assert against Us or any other party. 18. MISCELLANEOUS. If a court finds any provision of this Lease to be unenforceable, the remaining terms of this Lease shall remain in effect. All of Your written notices to Us must be sent by certified mail. You agree that this Lease is the entire agreement between You and Us regarding the lease of the Equipment and supersedes the terms and conditions contained in any purchase order relating to the Equipment. 19. OPTION TO PURCHASE AND RENEW. Provided You are not in default, We grant You the option to purchase all (not part) of the Equipment at the expiration of the term of this Lease for its then fair market value, payable in cash to Us or Our Assignee, AS-IS, WHERE IS, WITH NO EXPRESS OR IMPLIED WARRANTY. Renewal of this Lease will be automatic, on a monthly basis, unless You deliver to Us written notice at least sixty (60) days prior to the expiration of the term or the renewal term. 20. CUSTOMER WAIVERS. You waive notices of Our intent to accelerate the rent, the acceleration of the rent and of the enforcement of Our rights. To the extent You are permitted by law, You waive all rights and remedies You have by Article 2A (Sections 508-522) of the Uniform Commercial Code, including but not limited to Your rights to: (i) cancel or repudiate the Lease; (ii) reject or revoke acceptance of the Equipment; (iii) recover damages from Us for any breach of warranty or for any other reason; and (iv) grant a security interest in any Equipment in Your possession. To the extent You are permitted to by law, You also waive any rights You now or later may have under any statute or otherwise which require Us to sell, lease or otherwise use any Equipment to reduce Our damages or which may otherwise limit or modify any of Our rights or remedies. Any action You take against Us for any default, including breach of warranty or indemnity, must be started within one (1) year after the event which caused it. We will not be liable for specific performance of this Lease or for any losses, damages, delay or failure to deliver the Equipment. You authorize Us to sign on Your behalf and file at any time any documents in connection with the UCC. SCHEDULE A ---------- LEASE # 149176 MEADOW VALLEY CONTRACTORS INC 1-USED MF BIN 1-FILL VALVE WITH AIR RAM SOLENOID 1-AIR VENT & PIPE INTO MF BIN 2-FLEX BOOTS PKG-LOAD CELLS, RODS, CHAINS, WIRED TO SUMMING J BOX 1-ROTARY VALVE 1 HP DC MOTOR 1-ROTARY VALVE SCR DC CONTROLLER, BRONCO 1-USED DIGI CONTROLLER AUTOMATIC CONTROLS USING CUSTOMER SUPPLED WEIGH BRIDGE SIGNAL 1-SAND BLAST & PAINT PRIMER AND TOP COAT GREY 1-20' TUBULAR AUGER 15HP DRIVE, REDUCER DRIVE GUARD SIGNATURE X /s/ Kenneth D. Nelson ----------------------------- DATE X 5-15-01 -------------------------- EX-10.151 5 dex10151.txt LEASE AGREEMENT WITH TRINITY CAPITAL Exhibit 10.151 Trinity Capital Corporation 475 Sansome Street, 19th Floor, San Francisco, California 94111 (415) 956-3095 Fax: (415) 956-5187 LESSEE: MEADOW VALLEY CONTRACTORS, INC. SUPPLIER: TRIMBLE PRODUCTS 4411 S 40th STREET #D-11 5475 KELLENBURGER ROAD PHOENIX, AZ 85040 DAYTON, OH 45424 PHONE: 602-437-5400 PHONE: 800-876-7800 EQUIPMENT: See Exhibit A attached hereto and made a part of this Schedule EQUIPMENT SCHEDULE LEASE TERMS: Commencement Date of Lease: 6-1-01 (To be filled in pursuant to Paragraph 1 below) ------- Lease Term (number of months): 48, plus any extension and renewal periods -- Number of Monthly Rentals paid in advance:1(First and Last 0) - - End of Term: Purchase Option: $1.00 ----- Monthly Rental Amount: $2,711.02, plus applicable taxes, if any --------- Security Deposit, if any: N/A ---
TERM AND CONDITIONS This Commercial Lease Agreement (the "Agreement") has been written in plain English. The words "you" and "your" herein refer to the Lessee listed above. The words "we", "us" and "our" refer to the Lessor, Trinity Capital Corporation. 1. Term and Rent. We agree to lease to you and you agree to lease from us the personal property listed in any attached exhibit, plus any replacements, additions and accessories attached to the property (the "Equipment") for the full number of consecutive months stated above (the "Lease Term"). You agree to pay to us the Monthly Rental payment ("Rental") for the full Lease Term and any renewals and extensions. This Equipment and the supplier referenced above have been selected by you and if you have entered into any purchase or supply contracts for the Equipment, you assign to us your rights under such supply contracts. By executing this Lease, you request us to order the Equipment, arrange for its delivery to you and pay for the Equipment upon your acceptance of it. This Lease will begin on the date when the Equipment is accepted by you and the Equipment will be deemed irrevocably accepted by you upon the earlier of: a) the delivery to us of a signed Acceptance Certificate (if requested by us); or b) 10 days after delivery of the Equipment to you if previously you have not given written notice to us of your non-acceptance. Rentals are due monthly beginning in advance of the date you accept the Equipment and on the first day of each month thereafter for Equipment accepted on the 1st through the 14th day of the month or on the fifteenth day of each month thereafter for Equipment accepted on the 15th through the 24th day of the month or on the 25th day of each month thereafter for Equipment accepted from the 25th through the last day of the month. 2. Disclaimer of Warranties. We are leasing the Equipment to you "AS IS". WE MAKE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE MERCHANTABILITY AND PERFORMANCE OF THE EQUIPMENT OR THE EQUIPMENT'S FITNESS FOR A PARTICULAR PURPOSE OR ITS COMPLIANCE WITH APPLICABLE LAW. WE MAKE NO WARRANTY OF TITLE TO ANY PORTION OF THE EQUIPMENT WHICH CONSISTS OF SOFTWARE, SOFTWARE LICENSES AND/OR THE RIGHT TO USE ANY SOFTWARE. You acknowledge that we do not manufacture, deliver or install the Equipment, we do not represent the supplier(s) of the Equipment and you have selected the Equipment and the supplier(s) based on your own judgment. You agree not to make any claim for any reason against us for consequential damages. You acknowledge you have been advised that you may have rights against the supplier(s) of the Equipment and that you should contact each supplier for a description of any such rights. So long as this Agreement is not in default, we assign to you any warranties received by us in connection with the Equipment. 3. Noncancelable Lease. This Agreement cannot be canceled and you agree that all your obligations are unconditional. Upon your acceptance of the Equipment and to the extent permitted by law, you agree to waive any rights to reject the Equipment and repudiate this Agreement pursuant to Sections 10401 through 10522 of the California Commercial Code. 4. Governing Law. You agree that this Agreement shall be governed by the laws of the State of California. You agree that any litigation, related to or arising from this agreement, may be brought only in the City and County of San Francisco, California and you consent to personal jurisdiction in either state or federal court. - -------------------------------------------------------------------------------- THE UNDERSIGNED AGREE TO ALL OF THE TERMS AND CONDITIONS ABOVE AND ON PAGE 2 OF THIS AGREEMENT AND ANY ATTACHED EXHIBITS AND SCHEDULES MADE A PART OF THIS AGREEMENT. THIS IS A NON-CANCELABLE AGREEMENT. LESSOR: TRINITY CAPITAL CORPORATION This Schedule shall not be binding on us until it has been accepted and executed by the Lessor at its San Francisco, CA. office. Signature: /s/ Brad Forman ---------------------- Title: SCO -------------------------- Date: 6-11-01 --------------------------- LESSEE: MEADOW VALLEY CONTRACTORS, INC. The undersigned affirms that he/she is a duly authorized corporate officer, partner or proprietor of the above-named Lessee. Signature: X /s/ Kenneth D. Nelson ------------------------------ Title: X VICE PRESIDENT --------------------------------- Date: X 5-10-01 ---------------------------------- The original of this Agreement has the Lessor's original signature. Any purchaser of this paper is hereby notified that a security interest has been granted to the party holding the copy of this Agreement with the original Lessor's signature. COMMERCIAL LEASE AGREEMENT NO.: 0025150-002 ----------- Page 2 of 2 5. Agency. You agree that no salesperson or representative of any supplier is acting on behalf of us or can bind us in any way. 6. Late Charges. Time is of the essence. If any Rental or other amount due under this Agreement is not paid within 10 days after its due date, you agree to promptly pay a late charge of 10% of the past due amount, subject to a $25 minimum, for those amounts under 30 days past due, plus interest on any amounts over 30 days past due at the rate of 1.5% per month. However, in no event shall these late charges exceed the maximum lawful charges. 7. Ownership and Use of Equipment. We are the owners of the Equipment and you have no rights to the Equipment except as provided for in this Agreement. You agree to keep the Equipment clear of all liens, claims and encumbrances. You agree that the Equipment will remain our personal property regardless of its attachment to realty. You agree to use the Equipment only for business purposes and in compliance with its intended use, any applicable laws and any license agreement pertaining to the Equipment. You agree to keep the Equipment at an appropriate and safe location, and you agree to promptly inform us of such location in advance. Subject to Sections 13 and 14 of this Agreement, you agree, at your expense, to return the Equipment to us at the end of the Lease Term (or any renewal term) to our address above, or to such address as we may designate in writing, in the same condition as it was delivered to you except for ordinary wear and tear. You agree that we are not responsible for any losses or injuries caused in connection with the Equipment. You agree to indemnify us for and, at our option and your expense, defend us against any claims, suits and actions, including negligence and strict liability, whenever made for losses or injuries related to the Equipment. 8. Equipment Maintenance. You are responsible, at your expense, to maintain the Equipment in good working order. If any Equipment is damaged, missing or does not work satisfactorily for any reason, you agree to continue to pay all Rentals and other amounts under this Agreement when they become due You shall not make any alterations to the Equipment without our advance written consent You agree that we may inspect the Equipment at any reasonable time. 9. Taxes and Fees. You agree to pay when due, either directly or to us upon our demand, all taxes, filing fees, license fees, interest and penalties relating to this Agreement and the Equipment. If we pay any of these amounts you agree to reimburse us upon demand and to pay to us a $25.00 service charge. You agree to pay to us a documentation fee of $75.00 to cover our costs of preparing this Agreement. You shall pay to us a fee of $20.00 for every check that is returned to us as unpaid by your bank. 10. Risk of Loss and Insurance. You are responsible for any loss or damage to the Equipment and/or caused by the Equipment until all of your obligations under this Agreement have been fulfilled. You agree to immediately notify us of any such losses or damages and of any insurance claims pertaining to the Equipment. If the Equipment or any portion of the Equipment is missing, stolen or damaged, you will, at our option and at your expense, promptly repair the Equipment to our satisfaction, replace the Equipment with comparable equipment of equal value or pay to us any default remedies described under Section 12 of this Agreement. At your expense you agree to keep the Equipment fully insured against loss until your obligations under this Agreement are paid in full, with any loss payable to us. You will maintain public liability coverage that is acceptable to us and include us as an insured on that policy. You agree to provide us with satisfactory evidence of the required insurance. You agree that we may sign, endorse and/or negotiate on your behalf as attorney-in-fact for you any instrument representing proceeds from any insurance policy covering the Equipment. If we obtain any of the required insurance for you, you agree to pay to us on demand the cost of that insurance. You acknowledge that we are not required to maintain any insurance and we will not be liable to you if we terminate or modify any insurance coverage that we may arrange. 11. Assignment. You may not sell, transfer, assign or sublease the Equipment or this Agreement without our advance written consent and payment to us of an assignment processing fee. You agree that we may sell or assign this Agreement and any security interest without notice to you, and that our assignee shall have all of our rights under this Agreement. You agree that the rights of our assignee will not be subject to any claims, defenses or setoffs that you may have against us. 12. Default and Remedies. You are in default if you a) fail to pay any Rental when due; b) fail to comply with any requirement of this Agreement and/or any other obligation to us and/or any license agreement, system support agreement, mandatory maintenance agreement or installation agreement, pertaining to the Equipment; c) any representation made to us by or on behalf of you and/or any guarantor of your obligations hereunder is found to have been false when made. Upon such default, we may, at our option, do one or more of the following: a) require you to immediately pay the remaining amounts due under this Agreement including but not limited to the balance of unpaid Rentals discounted to its present value at a rate of 5% per year; b) terminate this Agreement and/or any other agreements we have entered into with you; c) require you to immediately pay us the value of the Equipment or promptly return the Equipment to us in good condition; d) peacefully enter onto your premises and take possession of the Equipment without liability to you for trespass or damages; e) deactivate the Equipment; and f) use any other remedies available to us at law or in equity. You agree that any delay or failure by us to enforce this Agreement does not prevent us from enforcing our rights at a later time. You agree to pay all of our costs to enforce this Agreement including reasonable attorney's fees and the costs of repossessing, refurbishing, storing and selling the Equipment. If we take possession of the Equipment, we may sell or otherwise dispose of it at a public or private sale, and apply the proceeds (after deducting our disposition costs) to the amounts that are due to us. Our acceptance of any amount due hereunder which is less than payment in full of all amounts due and owing at that time shall not constitute a waiver of our right to receive payment in full. 13. Renewal. Unless you have returned the Equipment to us by the end of the original Lease Term, this Agreement will be automatically renewed and the Lease Term extended on a continuing month-to-month basis at the same Monthly Rental amount as that of the final Rental of the original Lease Term. You can terminate this automatic renewal by sending advance written notice to us. Such termination shall be effective 30 days after our receipt of such notice, provided that you have returned the Equipment to us in good condition or purchased the Equipment from us by that termination date. 14. Purchase Option. If it is indicated above that you have been given an end of Lease Term purchase option and if you are not in default under this Agreement, you may purchase all of the Equipment at the end of the Lease Term for the stated price plus any applicable taxes and remaining amounts due hereunder. Such purchase of the Equipment shall be "AS IS, WHERE IS" and we make no warranties of any kind. If the purchase price is "Fair Market Value" and we and you cannot agree on such value, you may, at your expense, retain an independent appraiser acceptable to us and such appraisal shall be binding. 15. Miscellaneous. You agree that this Agreement is the entire agreement you have with us pertaining to this Equipment and it cannot be changed except as agreed by you and us in writing. You agree, however, that we are authorized, without notice to you, to supply missing information or correct obvious errors in this Agreement. You agree that the Rental amount may be adjusted to reflect any change in the Equipment cost as a result of any Equipment change orders, add-ons, returns, errors or other similar events verbally agreed to by you. In the event of any such adjustment, we will furnish you a written notice thereof. You agree that a signed faxed version of this Agreement and Acceptance Certificate shall be deemed to be of the same force and effect as an original of a manually signed Agreement and Acceptance Certificate. You agree that we can sign any applicable UCC financing statement as attorney-in-fact for you until such time as all of your obligations to us have been fulfilled. You hereby authorize any employee of yours to accept the Equipment and sign on your behalf any Acceptance Certificate pertaining to the Equipment. This Agreement is binding upon the successors and assigns of you and us. If there is more than one Lessee, your obligations shall be joint and several. You agree that all of our rights under this Agreement (including indemnity rights) shall survive any expiration or termination of this agreement. -----END PRIVACY-ENHANCED MESSAGE-----