-----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, WH6IxKpwzXxhTzoxbl3on9e9rh6Rc9ancDzakeqjfEzJTZDvRSPpskcKJ93fMZa6 spV/VZ+KO6MHMK+wND/CPg== 0001021408-01-509999.txt : 20020410 0001021408-01-509999.hdr.sgml : 20020410 ACCESSION NUMBER: 0001021408-01-509999 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 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: 1785348 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 FORM 10-Q 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 September 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 October 31, 2001: Common Stock, $.001 par value 3,559,938 shares MEADOW VALLEY CORPORATION INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001 PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations (Unaudited) - Nine Months Ended September 30, 2001 and September 30, 2000 3 Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended September 30, 2001 and September 30, 2000 4 Condensed Consolidated Balance Sheets - As of September 30, 2001 (Unaudited) and December 31, 2000 5 Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2001 and September 30, 2000 6 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosure About Market Risk 17 PART II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 6. Exhibits and Reports on Form 8-K 19
2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Nine Months Ended September 30, ------------------------------------ 2001 2000 -------------- -------------- Revenue $ 133,449,734 $ 128,402,900 Cost of revenue 128,902,986 123,462,464 -------------- -------------- Gross Profit 4,546,748 4,940,436 General and administrative expenses 4,973,476 4,842,142 -------------- -------------- Income (loss) from operations (426,728) 98,294 -------------- -------------- Other income (expense): Interest income 175,455 462,816 Interest expense (353,676) (174,500) Other income 358,223 46,788 -------------- -------------- 180,002 335,104 -------------- -------------- Income (loss) before income taxes (246,726) 433,398 Income tax benefit (expense) 92,522 (173,353) -------------- -------------- Net income (loss) $ (154,204) $ 260,045 ============== ============== Basic net income (loss) per common share $ (0.04) $ 0.07 ============== ============== Diluted net income (loss) per common share $ (0.04) $ 0.07 ============== ============== Basic weighted average common shares outstanding 3,559,938 3,546,016 ============== ============== Diluted weighted average common shares outstanding 3,559,938 3,546,016 ============== ==============
3 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended September 30, ---------------------------------------- 2001 2000 ------------------ ------------------ Revenue $ 52,619,530 $ 44,434,571 Cost of revenue 50,413,756 42,692,537 ------------------ ------------------ Gross Profit 2,205,774 1,742,034 General and administrative expenses 1,501,449 1,792,689 ------------------ ------------------ Income (loss) from operations 704,325 (50,655) ------------------ ------------------ Other income (expense): Interest income 48,912 162,886 Interest expense (128,969) (95,172) Other income (expense) (103,543) 12,119 ------------------ ------------------ (183,600) 79,833 ------------------ ------------------ Income before income taxes 520,725 29,178 Income tax expense (195,272) (11,663) ------------------ ------------------ Net income $ 325,453 $ 17,515 ================== ================== Basic net income per common share $ 0.09 $ - ================== ================== Diluted net income per common share $ 0.09 $ - ================== ================== 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
September 30, December 31, 2001 2000 * ------------------ ------------------ Assets: (Unaudited) Current Assets: Cash and cash equivalents $ 1,092,002 $ 1,822,598 Restricted cash 2,353,998 1,783,005 Accounts receivable, net 26,765,779 14,297,564 Prepaid expenses and other 485,349 749,708 Inventory 5,857,434 5,242,148 Income tax receivable 268,077 774,000 Costs and estimated earnings in excess of billings on uncompleted contracts 11,623,682 9,828,009 ------------------ ------------------ Total Current Assets 48,446,321 34,497,032 Property and equipment, net 18,177,605 18,111,506 Deferred tax asset 873,441 873,441 Refundable deposits 134,834 176,565 Goodwill, net 1,440,711 1,500,733 Mineral rights 184,438 226,753 ------------------ ------------------ Total Assets $ 69,257,350 $ 55,386,030 ================== ================== Liabilities and Stockholders' Equity: Current Liabilities: Accounts payable $ 29,068,727 $ 17,606,113 Accrued liabilities 2,187,352 2,289,698 Notes payable 3,082,698 1,604,399 Obligations under capital leases 1,029,997 1,041,921 Billings in excess of costs and estimated earnings on uncompleted contracts 5,193,360 6,054,814 ------------------ ------------------ Total Current Liabilities 40,562,134 28,596,945 Deferred tax liability 2,272,700 2,272,700 Notes payable, less current portion 10,273,065 7,674,608 Obligations under capital leases, less current portion 3,065,418 3,603,540 ------------------ ------------------ Total Liabilities 56,173,317 42,147,793 ------------------ ------------------ Commitments and contingencies 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 2,936,010 3,090,214 ------------------ ------------------ Total Stockholders' Equity 13,084,033 13,238,237 ------------------ ------------------ Total Liabilities and Stockholders' Equity $ 69,257,350 $ 55,386,030 ================== ==================
*Derived from audited financial statements 5 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, ---------------------------------------- 2001 2000 ------------------ ------------------ Increase (Decrease) in Cash and Cash Equivalents: Cash flows from operating activities: Cash received from customers $ 118,681,534 $ 126,583,669 Cash paid to suppliers and employees (120,856,918) (129,938,998) Interest received 175,455 507,618 Interest paid (353,676) (174,500) Income taxes refunded (paid) 598,445 (71,911) ------------------ ------------------ Net cash used in operating activities (1,755,160) (3,094,122) ------------------ ------------------ Cash flows from investing activities: Increase in restricted cash (570,993) (143,224) Proceeds from sale of property and equipment 84,887 270,425 Purchase of property and equipment (420,989) (1,476,862) ------------------ ------------------ Net cash used in investing activities (907,095) (1,349,661) ------------------ ------------------ Cash flows from financing activities: Proceeds received from note payable 4,182,533 4,555,515 Repayment of notes payable (1,426,370) (4,132,814) Repayment of capital lease obligations (824,504) (898,401) ------------------ ------------------ Net cash provided by (used in) financing activities 1,931,659 (475,700) ------------------ ------------------ Net decrease in cash and cash equivalents (730,596) (4,919,483) Cash and cash equivalents at beginning of period 1,822,598 6,177,489 ------------------ ------------------ Cash and cash equivalents at end of period $ 1,092,002 $ 1,258,006 ================== ==================
6 MEADOW VALLEY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Nine Months Ended September 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) $ (154,204) $ 260,045 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 1,968,472 1,851,812 Gain on sale of property and equipment (1,081) (145,956) Changes in Operating Assets and Liabilities: Accounts receivable, net (12,468,215) (4,689,858) Prepaid expenses and other 264,359 (75,863) Inventory (615,286) (1,248,121) Income tax receivable 505,923 101,442 Costs and estimated earnings in excess of billings on uncompleted contracts (1,795,673) 1,007,635 Refundable deposits 41,731 (96,067) Accounts payable 11,462,614 (1,945,955) Accrued liabilities (102,346) (120,198) Billings in excess of costs and estimated earnings on uncompleted contracts (861,454) 2,006,962 ------------------ ------------------ Net cash used in operating activities $ (1,755,160) $ (3,094,122) ================== ==================
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 for the year ended December 31, 2000 under the Securities Exchange Act of 1934 as filed with the Securities and Exchange Commission. The results of operations for the nine months ended September 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 nine months ended September 30, 2001, revenue from anticipated claim proceeds increased by approximately $1,147,687. At September 30, 2001, claim revenue in the amount of approximately $6,968,591 has been recorded while the estimated total claims that have been filed or will be filed were approximately $52,781,913. Of the $52,781,913 in claims, approximately $24,443,296 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 $28,338,617 as MVCI costs. The Company must obtain at least $6,968,591 in proceeds from its $28,338,617 portion of the total claims or there would be a reduction in earnings. 8 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 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, 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 September 30, 2001, the net carrying amount of goodwill is $1,440,711. Amortization expense during the nine-month period ended September 30, 2001 was $60,022. 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. SFAS 143, Accounting for Asset Retirement Obligations, was issued in June 2001 and is effective for fiscal years beginning after June 15, 2002. SFAS 143 requires that any legal obligation related to the retirement of long-lived assets be quantified and recorded as a liability with the associated asset retirement cost capitalized on the balance sheet in the period it is incurred when a reasonable estimate of the fair value of the liability can be made. SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, was issued in August 2001 and is effective for fiscal years beginning after December 15, 2001. SFAS 144 provides a single, comprehensive accounting model for impairment and disposal of long-lived assets and discontinued operations. SFAS 143 and SFAS 144 will be adopted on their effective dates, and adoption is not expected to result in any material effects on the Company's financial statements. 9 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. Notes Payable: Summary of third quarter additions to notes payable and its balance at September 30, 2001: Note payable, interest rate at 8.5%, with monthly payments of $23,603, due 2/27/06, collateralized by equipment $ 1,039,953 Note payable, interest rate at 0%, with monthly payments of $5,012, due 9/28/04, collateralized by equipment 180,430 ------------- 1,220,383 Less: current portion (262,762) ------------- $ 957,621 =============
Following are maturities of the above long-term debt for each of the next 5 years: 2002 $ 262,762 2003 280,671 2004 280,164 2005 261,236 Subsequent to 2005 115,550 ----------- $ 1,200,383 ===========
6. Line of Credit: In July 2000, the Company entered into a revolving loan agreement ("line of credit"). In July 2001, the Company amended the line of credit agreement. 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. At September 30, 2001, the interest rate on the line of credit was at 6.25%. The line of credit is collateralized by all of MVCI's and RMI'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 September 30, 2001, the Company was in compliance with all such covenants and had withdrawn $7,000,000 from the line of credit. 10 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. Commitments: During the quarter ended September 30, 2001, the Company purchased equipment under a capital lease agreement expiring in the year 2004. 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 lease as of September 30, 2001 for each of the next four years and in aggregate are: 2002 $ 11,541 2003 11,541 2004 17,975 ---------- Total minimum lease payments 41,057 Less: amount representing interest (6,095) ---------- Present value of net minimum lease payment $ 34,962 ========== 8. Contingencies: Johnson Danley Construction Company ("JD") was the prime contractor on one of the contracts with the New Mexico State Highway and Transportation Department ("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. At the time the contract was bid and awarded, 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 has the obligation to complete the contract for the surety company. By virtue of JD's default and MVCI's role as the completing contractor, all rights to claims proceeds formerly belonging to JD are now the property of MVCI to the extent that MVCI incurs costs to perform work that would have otherwise belonged to JD. Accordingly, it is conceivable that cost overruns incurred by MVCI in completing JD's work may be offset, in whole or in part, by contract proceeds, whether those proceeds come from regular contractual payments or from payments on claims. At the time of JD's default, there remained approximately $2.5 million of JD work to be performed on the contract. Through the period ending September 30, 2001, MVCI completed approximately 99% of that amount and incurred costs in excess of revenue of approximately $1.3 million. The Company believes that there exist claims of sufficient merit and magnitude to recoup these cost overruns from future claim proceeds and, accordingly, has booked an amount of claim proceeds to offset those costs to date. The final costs to complete JD's work and resolve claims filed by JD's unpaid vendors, suppliers and subcontractors against the payment bond remain, as yet, not entirely determinable due to the insufficient and vague information being provided to MVCI by the payment bond claimants. As a result, the Company cannot predict with reasonable accuracy what the final costs will be and therefore has not yet booked possible losses or additional claim revenue until such time as they are ascertainable. The Company believes that this information will be known within the next quarter. 9. 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 nine months ended September 30, 2001, the Company financed the purchase of equipment in the amount of $1,595,051. 11 MEADOW VALLEY CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. Subsequent Events: In October 2001, the Company financed the purchase of equipment in the amount of $180,262. The capital lease obligation has an interest rate of 5.8%, with monthly payments of $4,217, and is due October 2005. 11. 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.
Nine Months Ended September 30, -------------------------------------------------------------------- (dollars in thousands) 2001 2000 ------------------------------- -------------------------------- Construction Construction Services Materials Services Materials ------------- ------------- ------------- -------------- Gross revenue $ 111,128 $ 23,793 $ 115,284 $ 14,024 Intercompany revenue - 1,471 - 905 Cost of revenue 107,607 22,767 111,178 13,189 Interest income 160 15 441 22 Interest expense (214) (140) (153) (21) Depreciation and amortization 1,364 605 1,389 463 Income (loss) before taxes 239 (485) 836 (403) Income tax benefit (expense) (90) 182 (334) 161 Net income (loss) 149 (303) 502 (242) Total assets 55,360 13,897 49,221 12,826
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. 12 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 $76.4 million at September 30, 2001, compared to approximately $72.9 million at September 30, 2000. At September 30, 2001, the Company's backlog included approximately $28.2 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 third quarter ended September 30, 2001, the Company obtained new projects totaling approximately $19.9 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 September 30, 2001, claim revenue in the amount of approximately $7.0 million has been recorded while the estimated total claims that have been filed or will be filed were approximately $52.8 million. Of the $52.8 million in claims, approximately $24.5 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 $28.3 million as MVCI costs. The Company must obtain at least $7.0 million in proceeds from its $28.3 million portion of the total claims or there would be a reduction in earnings. Results of Operations The following table sets forth, for the nine and the three months ended September 30, 2001 and 2000, certain items derived from the Company's Condensed Consolidated Statements of Operations expressed as a percentage of revenue.
Nine Months Ended Three Months Ended September 30, September 30, ------------------------------ ------------------------------ 2001 2000 2001 2000 ------------ ------------- ------------- ------------ Revenue 100.0% 100.0% 100.0% 100.0% Gross Profit 3.4% 3.8% 4.2% 3.9% General and administrative expenses 3.7% 3.8% 2.9% 4.0% Interest income 0.1% 0.4% 0.1% 0.4% Interest expense -0.3% -0.1% -0.2% -0.2% Other income 0.3% 0.0% -0.2% 0.0% Income (loss) before income taxes -0.2% 0.3% 1.0% 0.1% Income tax benefit (expense) 0.1% -0.1% -0.4% 0.0% Net income (loss) -0.1% 0.2% 0.6% 0.0%
13 Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30, 2000 Revenue and Backlog. Revenue for the nine months ended September 30, 2001 ("interim 2001") was $133.4 million compared to $128.4 million for the nine months ended September 30, 2000 ("interim 2000"). The increase in revenue was the result of a $9.2 million increase in revenue generated from construction materials production and manufacturing sold to non-affiliates offset by a $4.2 million decrease in construction services. Backlog increased 5% to approximately $76.4 million at September 30, 2001 from $72.9 million at September 30, 2000. Revenue may be impacted in any one period by the backlog at the beginning of the period. Gross Profit. Consolidated gross profit decreased from $4.9 million for interim 2000 to $4.5 million for interim 2001. The decrease in the construction services gross profit 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 September 30, 2001 and by recording, in advance of receipt, conservative estimates of revenue from claims. Gross profit is 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 services gross profit was offset by an increase in the construction materials gross profit. Gross profit from construction materials increased from $.8 million for interim 2000 to $1.0 million for interim 2001. While gross profit from construction materials increased, the gross margin, as a percent of gross revenue declined in interim 2001 to 4.3% from 6.0% in interim 2000. In comparing the gross profit margin during the interim period for 2000 and 2001, the first half of 2000 incurred few start up costs associated with last year's expansion of the construction materials segment, while the first half of 2001 reflect the improving, but not yet profitable, results of the expansion. General and Administrative Expenses. General and administrative expenses increased to $5.0 million for interim 2001 from $4.8 million for interim 2000. The increase resulted primarily from a $.3 million in general and administrative expenses attributed to expanding construction material operations, an increase of $.1 million in bad debt expense, an increase of $.1 million in employee benefits offset, in part, by a $.3 million reduction of general and administrative expenses related to various employee incentive plans. Interest Income and Expense. Interest income for interim 2001 decreased to $.2 million from $.5 million for interim 2000 resulting primarily from a decrease in invested cash reserves. Interest expense increased for interim 2001 to $.4 million from $.2 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 $(.2) million in interim 2001 as compared to $.3 million for interim 2000. Three Months Ended September 30, 2001 Compared to Three Months Ended September 30, 2000 Revenue and Backlog. Revenue for the three months ended September 30, 2001 ("interim 2001") was $52.6 million compared to $44.4 million for the three months ended September 30, 2000 ("interim 2000"). The increase in revenue was the result of a $3.1 million increase in revenue generated from construction materials production and manufacturing sold to non-affiliates and a $5.1 million increase in construction services. Backlog increased 5% to approximately $76.4 million at September 30, 2001 from $72.9 million at September 30, 2000. Revenue may be impacted in any one period by the backlog at the beginning of the period. Gross Profit. Consolidated gross profit increased to $2.2 million for interim 2001 from $1.7 million for interim 2000 and consolidated gross margin, as a percent of revenue, increased to 4.2% in interim 2001 from 3.9% in interim 2000. Gross profit from construction services dropped slightly to $1.8 million in interim 2001 from $1.9 million in interim 2000 and the gross profit margin dropped to 4.0% from 4.7% in the respective periods. The decrease in the construction services gross profit 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 September 30, 2001 and by recording, in advance of receipt, conservative estimates of revenue from claims. The increase in consolidated gross profit, then, was the result of improved profitability from the construction materials segment where gross profit improved to $.5 million in interim 2001 from a $.1 million loss in interim 2000. The gross margin, as a percent of gross revenue, on construction materials improved to 5.6% for interim 2001 from 14 (2.7%) in interim 2000. The improved performance for the construction materials segment during interim 2001 is the result of a 63% increase in revenue from interim 2000 that results from the expansion of construction materials operations implemented last year. General and Administrative Expenses. General and administrative expenses decreased to $1.5 million for interim 2001 from $1.8 million for interim 2000. The decrease resulted primarily from a $.1 million reduction of general and administrative expenses related to various employee incentive plans and an decrease in of $.1 million in legal expenses. The reduction of legal expenses was a result of the Company allocating legal expenses to direct job cost in the income statement. Interest Income and Expense. Interest income for interim 2001 decreased to $.05 million from $.2 million for interim 2000 resulting primarily from a decrease in invested cash reserves. Interest expense increased for interim 2001 to $.13 million from $.1 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 $.3 million in interim 2001 as compared to $.02 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 nine months ended September 30, 2001 and 2000, certain items from the condensed consolidated statements of cash flows. Nine Months Ended September 30, ------------------------ 2001 2000 ----------- ----------- Cash Flows Used in Operating Activities $(1,755,160) $(3,094,122) Cash Flows Used in Investing Activities (907,095) (1,349,661) Cash Flows Provided by (Used in) Financing Activities 1,931,659 (475,700) 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"). In July 2001, the Company amended the line of credit agreement. 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. At September 30, 2001, the interest rate on the line of credit was at 6.25%. The line of credit is collateralized by all of MVCI's and RMI's assets. Under the line of credit, the Company is required to maintain a certain level of tangible net worth. At September 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 September 30, 2001, the Company had withdrawn $7,000,000 from the line of credit. Cash used in operating activities during interim 2001 amounted to $1.8 million, primarily the result of an increase in accounts receivable, net of $12.5 million, an increase in net costs in excess of billings of $2.6 million, an 15 increase in inventory of $.6 million, a net loss of $.1 million, offset, in part, by an increase in accounts payable of $11.5 million, a decrease in income tax receivable of $.5 million and depreciation and amortization of $2.0 million. Cash used in operating activities during interim 2000 amounted to $3.1 million, primarily the result of a decrease in accounts payable of $1.9 million, a decrease in accrued liabilities of $.1 million, an increase in inventory of $1.2 million, an increase in accounts receivable, net of $4.7 million offset, in part, by net income of $.3 million, depreciation and amortization of $1.8 million and an increase in net billings in excess of costs of $3 million. Cash used in investing activities during interim 2001 amounted to $.9 million related primarily to the purchase of property and equipment of $.4 million and an increase in restricted cash of $.6 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 $1.3 million related primarily to the purchase of property and equipment of $1.5 million and an increase in restricted cash of $.1 million, offset by proceeds from the sale of property and equipment in the amount of $.3 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 $4.2 million, offset by the repayment of notes payable and capital lease obligations of $2.3 million. Cash used in financing activities during interim 2000 amounted to $.5 million related primarily to the repayment of notes payable and capital lease obligations of $5.0 million, offset by the proceeds received from a note payable of $4.5 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, 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 September 30, 2001, the net carrying amount of goodwill is $1,440,711. Amortization expense during the nine-month period ended September 30, 2001 was $60,022. 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. SFAS 143, Accounting for Asset Retirement Obligations, was issued in June 2001 and is effective for fiscal years beginning after June 15, 2002. SFAS 143 requires that any legal obligation related to the retirement of long-lived assets be quantified and recorded as a liability with the associated asset retirement cost capitalized on the balance sheet in the period it is incurred when a reasonable estimate of the fair value of the liability can be made. 16 SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, was issued in August 2001 and is effective for fiscal years beginning after December 15, 2001. SFAS 144 provides a single, comprehensive accounting model for impairment and disposal of long-lived assets and discontinued operations. SFAS 143 and SFAS 144 will be adopted on their effective dates, and adoption is not expected to result in any material effects on the Company's financial statements. 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 $33,646,516 of which approximately $22,088,485 is on behalf of MVCI and the balance of $11,558,031 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 largely because of the events giving 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. At the time the contract was bid and awarded, 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 has the obligation to complete the contract for the surety company. By virtue of JD's default and MVCI's role as the completing contractor, all rights to claims proceeds formerly belonging to JD are now the property of MVCI to the extent that MVCI incurs 17 costs to perform work that would have otherwise belonged to JD. Accordingly, it is conceivable that cost overruns incurred by MVCI in completing JD's work may be offset, in whole or in part, by contract proceeds, whether those proceeds come from regular contractual payments or from payments on claims. At the time of JD's default, there remained approximately $2.5 million of JD work to be performed on the contract. Through the period ending September 30, 2001, MVCI completed approximately 99% of that amount and incurred costs in excess of revenue of approximately $1.3 million. The Company believes that there exist claims of sufficient merit and magnitude to recoup these cost overruns from future claim proceeds and, accordingly, has booked an amount of claim proceeds to offset those costs to date. The final costs to complete JD's work and resolve claims filed by JD's unpaid vendors, suppliers and subcontractors against the payment bond remain, as yet, not entirely determinable due to the insufficient and vague information being provided to MVCI by the payment bond claimants. As a result, the Company cannot predict with reasonable accuracy what the final costs will be and therefore has not yet booked possible losses or additional claim revenue until such time as they are ascertainable. The Company believes that this information will be known within the next quarter. 2. Clark County, Nevada - The approximate total value of claims on this project is $19,135,397 of which approximately $6,250,132 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 $52,781,913. Of that total, MVCI's portion of the claims total approximately $28,338,617 and the balance of approximately $24,443,296 pertains to prime contractor or subcontractors' claims. Relative to the aforementioned claims, the Company has recorded approximately $6,968,591 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 $6,968,591 will result in a reduction of income. Conversely, any amount of claims proceeds in excess of $6,968,591 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 $4,000,000. MVCI's countersuit against AnA is for approximately $2,600,000. 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. 18 Item 6. Exhibits and Reports on Form 8-K a. Exhibits: 10.152 Security Agreement with FCC Equipment Financing, Inc. 10.153 Lease Agreement with CitiCapital 10.154 Amended and Restated Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. 10.155 Revolving Loan Agreement with The CIT Group/Equipment Financing, Inc. 10.156 Lease Agreement with Thomas Mining, LLC 10.157 Employment Agreement with Mr. Kiesel 10.158 Security Agreement with Volvo Commercial Finance LLC The Americas b. Reports on Form 8-K: The Company did not file any reports on Form 8-K during the three months ended September 30, 2001. 19 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 20 EX-10.152 3 dex10152.txt SECURITY AGREEMENT Exhibit 10.152 [10.152] FCC Equipment Security Agreement Financing, Inc. 1. Grant of Security Interest; Description of Collateral. Debtor grants to Secured Party a security interest in the property described below, along with all present and future attachments and accessories thereto and replacements and proceeds thereof, including amounts payable under any insurance policy, all hereinafter referred to collectively as "Collateral": (Describe Collateral fully including make, kind of unit, model and serial numbers and any other pertinent information.) See Schedule A Attached Hereto And Made A Part Hereof 2. What Obligations the Collateral Secures. The credit relationship between the Debtor and the Secured Party may be a continuing one and may include numerous types of extensions of credit, loans, or advances made directly or indirectly to the Debtor. Accordingly, this Security Agreement and the security interest created hereby secures payment of all obligations of any kind owing by the Debtor to the Secured Party (the "Indebtedness"). The Indebtedness includes, without limitation, those obligations of the Debtor which: (a) are now existing or hereafter incurred, including without limitation, those obligations set forth in paragraph 3 of this Agreement; (b) are direct or indirect; or (c) arise from loans, guaranties, endorsements or otherwise. The Indebtedness may be: (a) related or unrelated to the purpose of the original extension of credit; (b) of the same or a different class as the primary obligation; and (c) from time to time reduced or extinguished and thereafter increased or re-incurred. The Indebtedness specifically includes, without limitation, any sums advanced and any expenses or obligations incurred by the Secured Party pursuant to this Agreement or any other agreement concerning, evidencing or securing obligations of the Debtor to the Secured Party and any liabilities of the Debtor to the Secured Party arising from any sources whatsoever. 3. Promise to Pay; Terms and Place of Payment. Debtor promises to pay Secured Party the total sum of $1,298,189.20, which represents principal and interest precomputed over the term hereof, payable in 55 (total number) combined principal and interest payments as follows: Equal Successive Monthly Payments $23,603.44 beginning on August 27, 2001 and the same amount on the same date of each month thereafter until fully paid, provided, however, that the final payment shall be in the amount of the then unpaid balance of principal and interest. Other Than Equal Successive Monthly Payments Payment shall be made at the address of Secured Party shown herein or such other place as Secured Party may designate from time to time. 4. Use and Location of Collateral. Debtor warrants and agrees that the Collateral is to be used primarily for: [X] business or commercial purposes (other than agricultural), [_] agricultural purposes (see definition on final page), or [_] both agricultural and business or commercial purposes. Location 4411 S 40th Street, Suite D-11 Phoenix AZ 85040 ------------------------------------ ------------ ----------- ---------- Address County City State Zip Code
Page 1 of 6 4. Use and Location of Collateral. (Continued) Debtor and Secured Party agree that regardless of the manner of affixation, the Collateral shall remain personal property and not become part of the real estate. Debtor agrees to keep the Collateral at the location set forth above and will notify Secured Party promptly in writing of any change in the location of the Collateral within such State, but will not remove the Collateral from such State without the prior written consent of Secured Party (except that in the State of Pennsylvania, the Collateral will not be moved from the above location without such prior written consent). 5. Late Charges and Other Fees. Any payment not made when due shall, at the option of Secured Party, bear late charges thereon calculated at the rate of 1 1/2% per month, but in no event greater than the highest rate permitted by relevant law. Debtor shall be responsible for and pay to Secured Party a returned check fee, not to exceed the maximum permitted by law, which fee will be equal to the sum of (i) the actual bank charges incurred by Secured Party plus (ii) all other actual costs and expenses incurred by Secured Party. The returned check fee is payable upon demand as indebtedness secured by the Collateral under this Security Agreement. 6. Debtor's Warranties and Representations. Debtor warrants and represents: (a) that Debtor is justly indebted to Secured Party for the full amount of the indebtedness described in Paragraph 3; (b) that, except for the security interest granted hereby, the Collateral is free from and will be kept free from all liens, claims, security interests and encumbrances; (c) that no financing statement covering the Collateral or any proceeds thereof is on file in favor of anyone other than Secured Party, but if such other financing statement is on file, it will be terminated or subordinated; (d) that all information supplied and statements made by Debtor in any financial, credit or accounting statement or application for credit prior to, contemporaneously with or subsequent to the execution of this Security Agreement with respect to this transaction are and shall be true, correct, valid and genuine; and (e) that Debtor has full authority to enter into this Security Agreement and in so doing it is not violating its charter or by-laws, any law ??? regulation or agreement with third parties, and it has taken all such action as may be necessary or appropriate to make this Security Agreement binding upon it. 7. Debtor's Agreements. Debtor agrees: (a) to defend at Debtor's own cost any action, proceeding, or claim affecting the Collateral; (b) to pay reasonable attorneys' fees (at least 15% of the unpaid balance if not prohibited by law) and other expenses incurred by Secured Party in enforcing its rights against Debtor under this Security Agreement; (c) to pay promptly all taxes, assessments, license fees and other public or private charges when levied or assessed against the Collateral or this Security Agreement; and this obligation shall survive the termination of the Security Agreement; (d) that, if a certificate of title is required or permitted by law, Debtor shall obtain such certificate with respect to the Collateral showing the security interest of Secured Party thereon and in any event do everything necessary or expedient to preserve or perfect the security interest of Secured Party; (e) that Debtor will not misuse, fail to keep in good repair, secrete, or without the prior written consent of Secured Party, sell rent, lend, encumber or transfer any of the Collateral notwithstanding Secured Party's right to proceeds; (f) that Secured Party may enter upon Debtor's premises or wherever the Collateral may be located at any reasonable time to inspect the Collateral and Debtor's books and records pertaining to the Collateral, and Debtor shall assist Secured Party in making such inspection; and (g) that the security interest granted by Debtor to Secured Party shall continue effective irrespective of the payment of the amount in Paragraph 3, or in any promissory note executed in connection herewith, so long as there are any obligations of any kind, including obligations under guaranties or assignments, owed by Debtor to Secured Party, provided, however, upon any assignment of this Security Agreement the Assignee shall thereafter be deemed for the purpose of this Paragraph the Secured Party under this Security Agreement Page 2 of 6 8. Insurance and Risk of Loss All risk of loss, damage to or destruction of the Collateral shall at all times be on Debtor. Debtor will procure forthwith and maintain at Debtor's expense insurance against all risks of loss or physical damage to the Collateral for the full insurable value thereof for the life of this Security Agreement plus breach of warranty insurance and such other insurance thereon in amounts and against such risks as Secured Party may specify, and shall promptly deliver each policy to Secured Party with a standard long-form mortgagee endorsement attached thereto showing loss payable to Secured Party; and providing Secured Party with not less than 30 days written notice of cancellation; each such policy shall be in form, terms and amount and with insurance carriers satisfactory to Secured Party; Secured Party's acceptance of policies in lesser amounts or risks shall not be a waiver of Debtor's foregoing obligations. As to Secured Party's interest in such policy, no act or omission of Debtor or any of its officers, agents, employees or representatives shall affect the obligations of the insurer to pay the full amount of any loss. Debtor hereby assigns to Secured Party any monies which may become payable under any such policy of insurance and irrevocably constitutes and appoints Secured Party's Debtor's attorney in fact (a) to hold each original insurance policy, (b) to make, settle and adjust claims under each policy of insurance, (c) to make claims for any monies which may become payable under such and other insurance on the Collateral including returned or unearned premiums and (d) to endorse Debtor's name on any check, draft or other instruments received in payment of claims or returned or unearned premiums under each policy and to apply the funds to the payment of the indebtedness owing to Secured Party; provided, however, Secured Party is under no obligation to do any of the foregoing. Should debtor fail to furnish such insurance policy to Secured Party, or to maintain such policy in full force, or to pay any premium in whole or in part relating thereto, the Secured Party, without waiving or releasing any default or obligation by Debtor, may (but shall be under no obligation to) obtain and maintain insurance and pay the premium therefor on behalf of the Debtor and charge the premium to Debtor's indebtedness under this Security Agreement. The full amount of any such premium paid by Secured Party shall be payable by Debtor upon demand, and failure to pay same shall constitute an event of default under this Security Agreement. 9. Events of Default; Acceleration. A very important element of this Security Agreement is that Debtor make all its payments promptly as agreed and the Collateral continue to be in good condition and adequate security for the indebtedness. The following are events of default under this Security Agreement which will allow Secured Party to take such action under this Paragraph and under Paragraph 10 as it deems necessary. (a) any of Debtor's obligations to Secured Party under any agreement with Secured Party is not paid promptly when due; (b) Debtor breaches any warranty or provision hereof, or of any note or of any other instrument or agreement delivered by Debtor to Secured Party in connection with this or any other transaction; (c) Debtor dies, becomes insolvent or ceases to do business as a going concern; (d) it is determined that Debtor has given Secured Party materially misleading information regarding its financial conditions; (e) any of the Collateral is lost or destroyed; (f) a petition or complaint in bankruptcy or for arrangement or reorganization or for relief under any insolvency law is filed by or against Debtor or Debtor admit its inability to pay its debts as they mature; (g) property of Debtor is attached or a receiver is appointed for Debtor; (h) whenever Secured Party in good faith believes the prospect of payment or performance is impaired or in good faith believes the Collateral is insecure; (i) any guarantor, surety or endorser for Debtor dies or defaults in any obligation or liability to Secured Party or any guaranty obtained in connection with this transaction is terminated or breached. If Debtor shall be in default hereunder, the indebtedness herein described and all other indebtedness then owing by Debtor to Secured Party under this or any other present or future agreement (collectively, the "Indebtedness") shall, if Secured Party shall so select, become immediately due and payable and the unpaid principal balance of the indebtedness described in Paragraph 3, or in any promissory note executed in connection herewith, shall bear interest at the rate of 18% per annum (but in no event greater than the highest rate permitted by relevant law) until paid in full. In no event shall the Debtor, upon demand by the Secured Party for payment of the Indebtedness, by acceleration of the maturity thereof or otherwise, be obligated to pay any interest in excess of the amount permitted by law. Any acceleration of Indebtedness, if elected by Secured Party, shall be subject to all applicable laws, including laws relating to rebates and refunds of unearned charges. Page 3 of 6 10. Secured Party's Remedies After Default; Consent to Enter Premises. Upon Debtor's default and at any time thereafter, Secured Party shall have all the rights and remedies of a secured party under the Uniform Commercial Code and any other applicable laws, including the right to any deficiency remaining after disposition to the Collateral for which Debtor hereby agrees to remain fully liable. Debtor agrees that Secured Party, by itself or its agent, may without notice to any person and without judicial process of any kind, enter into any premises or upon any land owned, leased or otherwise under the real or apparent control of Debtor or any agent of Debtor where the Collateral may be or where Secured Party believes the Collateral may be, and disassemble, render unusable and/or repossess all or any item of the Collateral, disconnecting and separating all Collateral from any other property. Debtor expressly waives all further rights to possession of the Collateral after default and all claims for injuries suffered through or loss caused by such entering and/or repossession. Secure Party may require Debtor to assemble the Collateral and return it to Secured Party at a place to be designated by Secured Party which reasonably convenient to both parties. Secured Party may sell or lease the Collateral at a time and location of its choosing provided that the Secured Party acts in good faith and in a commercially reasonable manner. Secured Party will give Debtor reasonable notice of the time and place of any public sale of the Collateral or of the time after which any private sale or any other intended disposition of the Collateral is to be made. Unless otherwise provided by law, the requirement of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of Debtor shown herein at least ten days before the time of the sale or disposition. Expenses or retaking, holding, preparing for sale, selling and the like shall include reasonable attorneys' fees and other legal expenses. Debtor understands that Secured Party's rights are cumulative and not alternative. 11. Waiver of Defaults; Agreement inclusive. Secured Party may in its sole discretion waive a default, or cure, at Debtor's expense, a default. Any such waiver in a particular instance or of a particular default shall not be a waiver of other defaults or the same kind of default at another time. No modification or change in this Security Agreement or any related note, instrument or agreement shall bind Secured Party unless in writing signed by Secured Party. No oral agreement shall be binding. 12. Financing Statements; Certain Expenses. If permitted by law, Debtor authorizes Secured Party to file a financing statement with respect to the Collateral signed only by Secured Party and to file a carbon, photograph or other reproduction of this Security Agreement or of a financing statement. At the request of Secured Party, Debtor will execute any financing statements, agreements or documents, in form satisfactory to Secured Party which Secured Party may deem necessary or advisable to establish and maintain a perfected security interest in the Collateral, and will pay the cost of filing or recording the same in all public offices deemed necessary or advisable by Secured Party. Debtor also agrees to pay all costs and expenses incurred by Secured Party in conducting UCC, tax or other lien searches against the Debtor or the Collateral and such other fees as may be agreed. 13. Waiver of Defenses Acknowledgment. If Secured Party assigns this Security Agreement to a third party ("Assignee"), then after such assignment: (a) Debtor will make all payments directly to such Assignee at such place as Assignee may from time to time designate in writing; (b) Debtor agrees that it will settle all claims, defenses, setoffs and counterclaims it may have against Secured Party directly with Secured Party and will not set up any such claim, defense, setoff or counterclaim against Assignee, Secured Party hereby agreeing to remain responsible thereof; (c) Secured Party shall not be Assignee's agent for any purpose and shall have no authority to change or modify this Security Agreement or any related document or instrument; and (d) Assignee shall have all of the rights and remedies of Secured Party hereunder but none of secured Party's obligations. 14. Miscellaneous Debtor waives all exemptions. Secured Party may correct patent errors herein and fill in such blanks as serial numbers, date of first payment and the like. 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. Except as otherwise provided herein or by applicable law, the Debtor shall have no right to prepay the indebtedness described in Paragraph 3, or in any promissory note executed in connection with this Security Agreement. Debtor and Secured Party each hereby waive any right to a trial by jury in any action or proceeding with respect to, in connection with, or arising out of this Security Agreement, or any note or document delivered pursuant to the Security Agreement. Debtor acknowledges receipt of a true copy and waives acceptance hereof. If Debtor is a corporation, the Security Agreement is executed pursuant to authority of its Board of Directors. Except where the context otherwise requires, "Debtor" and "Secured Party" include the heirs, executors or administrators, successors or assigns of those parties but nothing herein shall authorize Debtor to assign this Security Agreement or its rights in and to the Collateral. If more than one Debtor executes this Security Agreement, their obligations under this Security Agreement shall be joint and several. Page 4 of 6 14. Miscellaneous (Continued) If at any time this transaction would be usurious under applicable law, then regardless of any provision contained in this Security Agreement or in any other agreement made in connection with this transaction, it is agreed that: (a) the total of all consideration which constitutes interest under applicable law that is contracted for, charged or received upon this Security Agreement or any such other agreement shall under no circumstances exceed the maximum rate of interest authorized by applicable law and any excess shall be credited to the Debtor, and (b) if Secured Party elects to accelerate the maturity of, or if Secured Party permits Debtor to prepay the indebtedness, any amounts which because of such action would constitute interest may never include more than the maximum rate of interest authorized by applicable law, and any excess interest, if any, provided for in this Security Agreement or otherwise, shall be credited to Debtor automatically as of the date of acceleration or prepayment. The Debtor authorizes the Secured Party at the Debtor's expense to file any financing statements relating to the Collateral (without the Debtor's signature thereon) which the Secured Party deems appropriate and the Debtor irrevocably appoints the Secured Party as the Debtor's attorney-in-fact to execute any such financing statements in the Debtor's name and to perform all other acts which the Secured Party deems appropriate to perfect and to continue perfection of the Security Interest. Upon the Debtor's failure to perform any of its duties hereunder, the Secured Party may, but it shall not be obligated to, perform any of the duties and the Debtor shall forthwith upon demand reimburse the Secured Party for any expenses incurred by the Secured Party in so doing. 15. Prepayment Provision: A prepayment premium will be assessed on the current unpaid principal balance if this loan is paid in full prior to maturity as stated below: Year 1 5% Year 4 2% Year 2 4% Year 5 1% Year 3 3% Dated: July 27, 2001 ------------- Debtor: Meadow Valley Contractors, Inc. ---------------------------------------------- By: /s/ Kenneth D. Nelson Title: Vice President ----------------------- -------------- If Corporation, have signed by President, Vice President or Treasurer, and give official title. P.O. Box 60726 Phoenix, AZ 85082 - ------------------------------------------------------- Mailing Address City State Zip Code Secured Party: FCC Equipment Financing, Inc. - ---------------------------------------------------- Name of individual, corporation or partnership By:_________________________Title___________________ if Corporation, give official title. If owner or partner, state which. P.O. Box 56347 - ---------------------------------------------------- Jacksonville, Florida 32241-6347 - ---------------------------------------------------- Page 5 of 6 If Debtor is partnership, enter: Partner's names Home Addresses - --------------- -------------- - -------------------------------------------------------------------------------- NOTICE: Do not use this form for transactions for personal, family or household purposes. For Agricultural and other transactions subject to Federal or State regulations, consult legal counsel to determine documentation requirements. Agricultural purposes generally means farming, including dairy farming, but it also includes transportation, harvesting, and processing of farm, dairy, or forest products if what is transported, harvested, or processed is farm, dairy, or forest products grown or bred by the user of the equipment itself. It does not apply, for instance, to a logger who harvests someone else's forest, or a contractor who prepares land or harvests products on someone else's farm. - -------------------------------------------------------------------------------- IN LOUISIANA, appropriate form must accompany this Agreement. Page 6 of 6 July 27, 2001 ------------- Date FCC Equipment Financing, Inc. Post Office Box 56347 Jacksonville, FL 32241-6347 Gentlemen: You are irrevocably instructed to disburse the proceeds of your loan to us, evidenced by our Security Agreement of even date, as follows: PAYEES NAMES AND ADDRESSES AMOUNT - -------------------------------------------------------------------------------- FCC Equipment Financing, Inc. Jacksonville FL 32241 to pay for collateral listed in Security Agreement $ 701,585.58 ------------- Bland Trucking, L.C. South Jordan, UT to pay for collateral listed in Security Agreement $ 370,000.00 ------------- FCC Equipment Financing, Inc. P.O. Box 56347, Jacksonville, FL 32241-6347 to pay UCC filing fees, lien searches and state documentary stamps (if applicable) $ 500.00 ------------- TOTAL PROCEEDS $ 1,072.085.58 -------------- Very Truly Yours, Meadow Valley Contractors, Inc. --------------------------------------------------------------- By: /s/ Kenneth D. Nelson Title: VICE PRESIDENT ---------------------------- -------------------------- EX-10.153 4 dex10153.txt LEASE AGREEMENT WITH CITICAPITAL Exhibit 10.153 [10.153] LEASE AGREEMENT Name and Address of Lessee ("Lessee") Name and Address of Lessor ("Lessor") Ready Mix, 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 $ 36,728.00 ----------- One (1) Cummins 275DFBF Diesel Genset SN: F010246176 Shipping & Handling Cost $ 0.00 ----------- Installation Cost $ 0.00 ----------- Other (Specify) 550.00 ----------- TOTAL COSTS $ 37,278.00 ----------- ==================================================================================================================================== LOCATION OF EQUIPMENT: 11500 W. Beardsley Rd Maricopa Sun City AZ 85040 ====================================================================================================================================
A. TERM: 36 Months following the first day of the month after delivery B. ADVANCE RENTAL PAYMENTS: FIRST RENTAL AND LAST 0 RENTAL(S) PLUS APPLICABLE TAXES. C. INTERIM RENTAL: Per day rental for the period from delivery to the first of the following month calculated as Monthly Rental divided by 30 times the number of days from the Delivery Date through the end of the month in which the Equipment is delivered plus applicable taxes. D. RENTAL PAYMENT: 36 Payments of $ 961.76 PLUS APPLICABLE TAXES E. SECURITY DEPOSIT: 0.00 Any Termination Value Table attached to this Lease is a part of and incorporated into the terms of this Lease. F. PAYMENT SCHEDULE: THE ADVANCE RENTAL PAYMENT IS PAYABLE UPON DELIVERY OF THE LEASE APPLICATION TO LESSOR. INTERIM RENTAL IS PAYABLE UPON DELIVERY OF THE EQUIPMENT. THE REMAINING RENTAL PAYMENTS ARE PAYABLE AS FOLLOWS: MONTHLY ON THE FIRST DAY OF EACH MONTH BEGINNING ON THE FIRST DAY OF September 2001 (MO/YR). G. PURCHASE OPTION PRICE AT END OF TERM: 9,319.50 Plus Applicable Taxes H. TAX LEASE STATUS: (check one and initial) _____ Tax Lease: If checked, this Lease is a Tax Oriented Lease and the provisions of Paragraph 13 of this Lease apply. X Non-Tax Lease: If checked, this Lease is not a Tax 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 or any portion thereof, Lessee agrees to pay the 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 a 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 depository 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 5 of Lease Agreement dated 08/01/2001 between Ready Mix, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: F010246176. Lessee's Initials ----------------- /s/ KDN ----------------- Original for CitiCapital 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 5.50%. ---- 7. INSURANCE: Lessee shall bear all risk of loss of, damage to, or destruction of the Equipment from the date of its delivery until it 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. LESSORS'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 expected. 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 WAIVES, RELINQUISHES, DISCLAIMS AND AGREES THAT IT WILL NOT ASSERT AGAINST ANY ASSIGNEE OF LESSOR ANY CLAIMS, COUNTERCLAIMS, CLAIMS IN RECOUPMENT, ABATEMENT, REDUCTION, DEFENSES, OR SET-OFFS FOR BREACH OF WARRANTY OR FOR ANY OTHER REASON INCLUDING THE RIGHT TO WITHHOLD PAYMENT OF ANY MONIES WHICH MAY BECOME DUE UNDER THIS LEASE EXCEPT DEFENSES THAT CANNOT BE WAIVED UNDER THE UNIFORM COMMERCIAL CODE. 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 5 of Lease Agreement dated 08/01/2001 between Ready Mix, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: F010246176 Lessee's Initials ------------------ Original for CitiCapital /s/ KDN ------------------ 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 Commercial 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. Lessor may sell the Equipment without giving any warranties as to the Equipment. Lessor may disclaim any warranties of title, possession, quiet enjoyment, or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Equipment. 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) Page 3 of 5 of Lease Agreement dated 08/01/2001 between Ready Mix, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: F010246176 Lessee's Initials ------------------ Original for CitiCapital /s/ KDN ------------------ 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 indeminities arising under this paragraph shall survive payment of all other obligations under this Lease and the termination of this Lease. 18. POWER OF ATTORNEY. LESSEE HEREBY APPOINTS LESSOR OR ANY OFFICER, EMPLOYEE OR DESIGNEE OF LESSOR OR OF ANY ASSIGNEE OF LESSOR (OR ANY DESIGNEE OF SUCH ASSIGNEE) AS LESSEE'S OR SUCH ASSIGNEE'S ATTORNEY-IN-FACT TO, IN LESSEE'S, ASSIGNEE'S OR LESSOR'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 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). This power is coupled with an interest and is irrevocable so long as any indebtedness hereunder remains unpaid. Lessee agrees to execute and deliver to Lessor, upon Lessor's request such documents and assurances as Lessor deems necessary or advisable for the confirmation or perfection of this Lease and Lessor's rights hereunder, including such documents as Lessor may require for filing or recording. 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 Centity 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. DEBIT 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 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: (A) It is the intention of the parties hereto that this contract constitutes a lease for tax and other purposes; however, if for purposes of perfection, this contract is interpreted by any court as a lease intended as security, Lessee hereby grants to Lessor a security interest in the Equipment and all proceeds thereof, and Lessee authorizes Lessor or any officer, employee or designee or Lessor of any assignee of Lessor (or any designee of such assignee) to file a financing statement describing the Equipment and all proceeds thereof as well as assets other than the Equipment. Further, it is the intention of the parties that Lessor will have a purchase money security interest ("PMSI") in the portion of the Equipment (such portion, together with any proceeds thereof, is referred to as the "PMSI Collateral") that was acquired by Lessee with funds advanced by Lessor for the PMSI Collateral (the "PMSI Debt"). The PMSI Collateral shall secure only the unpaid balance of monies advanced by Lessor for the acquisition of the PMSI Collateral. Only the PMSI Collateral and no other property of Lessee shall secure the PMSI Debt. All payments made by Lessee to Lessor with reference to the Lease shall be applied first to any indebtedness which is not secured, then 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 PMSI Collateral shall be applied only to the payment of PMSI Debt. Upon payment in full of the PMSI Debt, all security interest of Lessor in the PMSI Collateral shall be terminated. This provision controls over any conflicting provision or language in this Lease or in any other agreement between Lessor and Lessee unless the parties mutually agree in writing in a subsequent agreement to override this provision. (B) 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. (C) 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, agreement 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 authorized representative of the party to be bound. (D) 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 CitiCapital." (E) ANY ASSIGNMENT OR TRANSFER OF THIS LEASE TO ANY ASSIGNEE OR SECURED PARTY OTHER THAN ASSOCIATES LEASING, INC. OR ITS AFFILIATES ("CITICAPITAL") VIOLATES THE RIGHTS OF CITICAPITAL. 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 Equipment 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. 24. LOCATION OF LESSEE: (a) If Lessee is a corporation, limited liability company, limited partnership or other registered organization, its state of incorporation is in the state set forth on the last page of this Lease; (b) if Lessee is an individual, his/her principal place of residence is at the address set forth on the last page of this Lease; (C) if Lessee is an organization, its place of business or if it has more than one place of business, its chief executive office is located at the address set forth on the last page of this Lease. Lessee agrees that it will not, without the prior written consent of Lessor, change its state of organization if it is a corporation, limited liability company, limited partnership or other registered organization or the location of its chief executive office or its place of business if it is an organization. If Lessee is an individual, Lessee must notify Lessor in writing of a change in his/her principal place of residence 30 days prior to such change. Page 4 of 5 of Lease Agreement dated 08/01/2001 between Ready Mix, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: F010246176. Original for CitiCapital - -------------------------------------------------------------------------------- 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. [X] On 07/24/2001, 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 reading, as applicable, upon delivery of the Equipment was __________________________________. [_] 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. LESSEE: LESSOR: Ready Mix, Inc. Associates Leasing, Inc. By /s/ Kenneth D. Nelson By ____________________________________________ ------------------------------------------- Title Vice President Title _________________________________________ ---------------------------------------- Date: 08/01/2001 Federal Tax ID#: 86-0830443 Date: 08/01/2001 Federal Tax ID#: _____________ ---------- ------------ ---------- State of Organization: Nevada -----------------------
Page 5 of 5 of Lease Agreement dated 08/01/2001 between Ready Mix, Inc. (Lessee) and Associates Leasing, Inc. (Lessor) which includes, without limitation, an item of Equipment with the following serial number: F010246176 EX-10.154 5 dex10154.txt AMENDED LOAN AGREEMENT WITH THE CIT GROUP Exhibit 10.154 Amended and Restated Revolving Loan Agreement This Amended and Restated Revolving Loan Agreement ("Agreement") between the undersigned Meadow Valley Contractors, Inc. (the "Company") and The CIT Group/Equipment Financing, Inc. ("CIT") amends and restates the Revolving Loan Agreement dated July 17, 2000 between Company and CIT, as amended July 21, 2000. 1. Loans. CIT agrees, subject to the terms of this Agreement, to make loans to the Company (the "Loans") from time to time from the date hereof to and including December 31, 2001 (the "Termination Date"), up to but not exceeding, in the aggregate principal amount, at any one time outstanding, the sum of $7,000,000.00 (the "Line of Credit"). Except for the initial Loan made hereunder, each Loan shall be in the minimum amount of $25,000.00 or a multiple thereof. All Loans made hereunder will be repayable at CIT's address set forth herein or at such other address as CIT may from time to time direct. 2. Condition Precedent to All Loans. CIT shall not be obligated to make any Loan under this Agreement if, at the time of the making of the proposed Loan: (a) an Event of Default, as defined in Section 13, has occurred and is continuing; or (b) the aggregate principal amount of Loans outstanding exceeds the Available Line of Credit as defined in Section 8.1; or (c) there has been a material adverse change in the Company's financial condition from that shown in the Company's financial statement dated December 31, 2000. 3. Loan Account; Monthly Statements. All Loans will be charged, and payments received on account of such Loans credited, to an account maintained in the Company's name on CIT's books (the "Loan Account"). Each month CIT will render to the Company a statement of the Loan Account which shall constitute an account stated and shall be deemed to be correct, accepted by and binding upon the Company unless CIT shall receive a written statement of exceptions from the Company within 30 days after such statement has been rendered to the Company. In the event CIT should so request, the Company agrees to execute and deliver to CIT such promissory notes of the Company as CIT shall request in order to evidence the Loans, but unless and until CIT should so request, the Loan Account and the monthly statements thereof rendered by CIT to the Company shall constitute the primary evidence of the Loans. 4. Repayment of Loans. 4.1 At any time prior to Termination Date, the Company may make payments to CIT on account of the Loans, provided that the Company may not make any payment which results in the outstanding principal amount owing under the Loan Account to be less than $250,000.00. All such payments may, at CIT's option, be applied first to the payment of accrued interest and then to principal. 4.2 The Company promises to pay the outstanding principal amount owing under the Loan Account as of the Termination Date in 48 equal successive monthly installments, commencing on January 31, 2002 and on a like date of each month thereafter until such amount has been paid in full, provided, however, that the final installment shall be in the amount of the then unpaid principal amount. 4.3 At any time on or after the Termination Date, the Company may pay the then outstanding principal amount owing on the Loan Account in whole or in part, without penalty, provided that interest accrued to the date of such payment is paid with such payment. Each such partial principal payment shall be in an amount equal to the amount of a monthly installment determined under Section 4.2 or a multiple thereof. All such partial principal payments shall be applied to the monthly installments due under Section 4.2 in the inverse order of their maturities. 5. Interest. All Loans shall bear interest payable monthly at a rate per annum equal to the "governing rate" plus .25% on the average daily unpaid balance of principal outstanding on all such Loans during the month, but in no event greater than the highest rate permitted by applicable law, even if this Agreement shall state a minimum rate of interest. Interest shall be payable within 5 business days after the Company's receipt of CIT's interest statement. "Governing rate" shall mean a rate equal to the highest of (i) the Prime Rate of The Chase Manhattan Bank or its successors or (ii) "The Wall Street Journal Prime Rate" or (iii) the commercial paper rate in effect from time to time. Interest shall be computed on the basis of a year of 360 days. The Prime Rate of The Chase Manhattan Bank or its successors shall mean the rate of interest publicly announced by The Chase Manhattan Bank or its successors in New York from time to time as its Prime Rate. The Prime Rate of The Chase Manhattan Bank or its successors is not intended to be the lowest rate of interest charged by The Chase Manhattan Bank or its successors to its borrowers. "The Wall 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 1 of 9 Street Journal Prime Rate" shall mean the Prime Rate listed by the Wall Street Journal. If more than one Prime Rate is listed in the Wall Street Journal, then the highest rate shall apply. "Commercial paper rate" shall mean the average rate quoted by the Wall Street Journal or such other source as CIT may determine for 30-day dealer commercial paper. The Governing Rate on the date of this Agreement is 6.75% per annum. 6. Definitions; Standards of Eligibility. 6.1 "Receivables" shall mean accounts, contract rights, chattel paper, notes, drafts, rental receivables, conditional sale contracts, security agreements, installment paper, installment sales, revolving charge accounts, and other obligations for the payment of money, including inter-company accounts and notes receivable, and all documents, contracts, invoices and instruments evidencing or constituting the same and all security instruments and security agreements relating thereto, which are created or acquired by the Company, all property the sale or lease of which gives rise or purports to give rise to Receivables, and all cash and non-cash proceeds thereof, including any merchandise returned or rejected by, or repossessed from customers. 6.2 "Eligible Receivables" shall mean Receivables created or acquired by the Company in the regular course of its business as presently conducted, which are and at all time continue to be acceptable to CIT in all respects and which are payable within ninety (90) days of invoice date. In general, no Receivable shall be deemed eligible unless: the credit of the obligor on such Receivable is and continues to be acceptable to CIT; such Receivable represents an existing, valid and legally enforceable indebtedness based upon an actual and bona fide sale and delivery or lease of property or rendition of services to the named obligor, which has been finally accepted by the obligor and for which the obligor is unconditionally liable to make payment in the amount stated in each invoice, document or instrument evidencing, constituting or accompanying the Receivable in accordance with the terms thereof, without rights of rejection or return or offset, defense, counterclaim or claim of discount or dedication; all statements made and all unpaid balances appearing in the invoices, documents and instruments representing or constituting the Receivables, are true and correct and are in all respects what they purport to be, and all signatures and endorsements that appear thereon are genuine and all signatories and endorsers, if any, have full capacity to contract, and the obligor owing such Receivable is not affiliated with or employed by the Company; absolute title to each Receivable, free and clear of any liens and encumbrances or claims of others, including liens or encumbrances or claims of ownership on the property the sale or lease of which purports to give rise to such Receivable, is vested absolutely in the Company and no other assignment of or security interest or other interest in the Receivable in favor of others is then in effect; the transactions underlying or giving rise to any Receivable do not violate any applicable state or federal law or regulation and all documents relating to the Receivables are legally sufficient under such laws and regulations and are legally enforceable in accordance with their terms; and any contract under which any Receivable arises does not contain a prohibition against assignment or require the consent of or notice to the obligor with respect to any assignment of monies arising thereunder. A Receivable will not be deemed an Eligible Receivable if any of the following is the case: it is ninety (90) or more days past due; it represents a COD sale; it is a contra account; it is an employee/officer account; it is a retainage account; the obligor owing such Receivable resides outside of the United States. 6.3 "Inventory" shall have the same meaning as such term is defined under the Uniform Commercial Code, including all goods acquired or manufactured for sale or lease, and any parts, accessories, piece goods, raw materials, work in process and finished merchandise, and all proceeds thereof. 6.4 "Eligible Inventory" shall mean the portion, excluding work in process, of inventory consisting of saleable or leasable merchandise which has been acquired or manufactured by the Company in the regular course of business for sale or resale or lease to customers, which is owned by the Company free and clear of all liens, encumbrances or claims in favor of others, and which at all times continues to be acceptable to CIT for Eligible Inventory and Eligible Equipment purposes. 6.5 "Equipment" shall have the same meaning as such term is defined under the Uniform Commercial Code. 6.6 "Eligible Equipment" shall mean all of the Equipment which is owned by the Company free and clear of all liens, encumbrances or claims in trust of others, and which at all times continues to be acceptable to CIT for Eligible Inventory and Eligible Equipment purposes. 6.7 "Obligations" shall mean all loans and advances from time to time made by CIT to the Company hereunder and to others at the request of or for the account of or for the benefit of the Company, all other indebtedness and obligations which may be now or hereafter owing by the Company to CIT under this Agreement or any other agreement which may now or hereafter be entered into by CIT with the Company, howsoever arising, whether absolute or contingent, joint or several, matured or unmatured, direct or indirect, primary or secondary, including, but not limited to, CIT's interest or other charges hereunder or under any other agreement between the Company and CIT. The Company hereby agrees to pay on demand all costs and fees CIT may incur in the event of default by the Company hereunder, all costs and expenses (including, all out-of-pocket expenses and attorneys' fees actually paid by CIT) incurred by CIT, its employees or agents in protecting, maintaining, preserving, enforcing or foreclosing CIT's security interest in any Eligible Inventory and Eligible Equipment, including all efforts made to enforce collection of any Receivable, whether through judicial proceedings or otherwise, or in defending or prosecuting any action or proceeding arising out of or relating to CIT's transactions with the Company, all of which are hereby also included in the definition of "Obligations" and which may be charged at CIT's option to the Loan Accounts in the event the same are not promptly paid after demand. Standards of eligibility or acceptability for Eligible Inventory and Eligible Equipment purposes and determination of value shall be fixed and may be revised from time to time solely by CIT in its exclusive judgment, exercised reasonably and in good faith. Reliance by CIT from time to time on listings, reports and other information relating to any Eligible Inventory and Eligible Equipment furnished by or obtained from the Company shall not be deemed to limit CIT's right to revise standards of eligibility or acceptability and determination of value at any time and from time to time. 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 2 of 9 7. Grant of Security Interest; Eligible Inventory and Eligible Equipment. 7.1 As security for the prompt payment in full of all present and future Obligations, the Company hereby grants to CIT a security interest in and hereby assigns and pledges to CIT, its successors and assigns (which grant, assignment and pledge shall continue until payment in full of all Obligations, whether or not this Agreement shall have sooner terminated), all right, title and interest of the Company in and to the following (which, together with any other security at any time pledged, assigned or delivered by the Company to CIT or received by CIT in connection with any Obligations are herein sometimes collectively called "Eligible Inventory and Eligible Equipment"): (a) All Receivables of the Company, whether or not the same be Eligible Receivables and whether or not specifically listed on any schedules, assignments or reports furnished to CIT from time to time, whether now existing or arising or created or acquired at any time hereafter, together with all rights to any and all sums due and to become due on Receivables, all proceeds of Receivables in whatever form, including cash, checks, notes, drafts and other instruments for the payment of money, and all right, title and interest in and to any merchandise the sale or lease of which gives rise to, or purports to create any Receivable or which secures any Receivable, all property allocable to unshipped orders and all merchandise returned by or reclaimed or repossessed form customers, all rights of stoppage in transit, replevin, repossession and reclamation and all other rights of any unpaid vendor or lienor. The continuing general assignment and pledge of and security interest in Receivables contained herein shall include all accounts, all documents, instruments, contracts, liens and security instruments, all credit insurance policies and other insurance and all guarantees relating to Receivables, all books and records evidencing, securing or relating to Receivables, all Eligible Inventory and Eligible Equipment, deposits, dealer reserves, or other security securing the obligations of any person under or relating to Receivables, all credit balances in favor of the Company on CIT's books, and all rights and remedies of whatever kind or nature the Company may hold or acquire for the purpose of securing or enforcing Receivables, and all general intangibles relating to or arising out of Receivables; and (b) All Inventory in which the Company now or at any time hereafter may have an interest, whether or not the same be Eligible Inventory and whether or not such inventory is specifically listed or described in this Agreement or in any inventory reports furnished to CIT from time to time, whether or not the same is in transit or in the constructive, actual or exclusive occupancy or possession of the Company or is held by the Company or by others for the Company's account, including, without limitation, all goods covered by purchase orders and contracts with suppliers and all goods billed and held by suppliers, all Inventory which may be located on premises of the Company or of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or third parties, and all general intangibles relating to or arising out of Inventory. This continuing general lien on and security interest in Inventory shall extend and attach to all Inventory through all stages of manufacture, production or processing, to all raw materials, goods in process and finished products, and to all additions thereto, and to all insurance policies and proceeds thereof covering Inventory, and shall automatically attach to all Receivables and all other cash and non-cash proceeds resulting from the sale, lease or disposition of Inventory, including any trade-ins. With respect to after-acquired Inventory, CIT's security interest shall be deemed to be a purchase money security interest; and (c) All equipment now or hereafter listed on Schedule A; and (d) All other personal property of the Company, now existing or hereafter arising or acquired, including without limitation all of the Company's accounts, goods, furniture, machinery, equipment, fixtures, investment property, general intangibles (including, without limitation, goodwill, inventions, designs, patents, patent applications, trademarks, trademark applications, service marks, trade names, licenses, leasehold interests in real and other security held by or granted to the Company to secure payment of the Company's accounts, investment property, general intangibles, instruments, and notes), tax refunds, chattel paper, contract rights, instruments, documents, notes, returned and repossessed goods, together with all accessions to, substitutions for, and all replacements, products and proceeds of the foregoing (including, without limitation, proceeds of insurance policies insuring any of the foregoing), all books and records (including, without limitation, customer lists, credit files, computer programs, printouts, and other computer materials and records) pertaining to any of the foregoing, and all insurance policies insuring any of the foregoing. The Obligations shall also be secured by any property in which the company may have granted, or may in the future grant, a security interest to CIT pursuant to any other agreement, including, but not limited to, any such agreement which CIT acquires by the way of purchase, assignment or otherwise. 8. Available Line of Credit. 8.1 The maximum principal amount of Loans that may, from time to time, be outstanding under this Agreement, and which in no event shall exceed the Line of Credit, is hereinafter referred to as the "Available Line of Credit." 8.2 The Available Line Credit, at any time and from time to time, shall be an amount equal to the following: (a) Sixty-five percent (65%) of the amount owing on Eligible Receivables as computed from monthly aging reports to be submitted to CIT by Company; and (b) Eighty-Three (83%) of the aggregate appraised value of the Eligible Equipment; and (c) Fifty percent (50%) of the Eligible Inventory as computed from monthly reports to be submitted to CIT, up to a maximum advance of $700,000.00. 8.3 The total of Eligible Receivables as of the date June 30, 2001 is $10,083,389.00. Sixty-five percent (65%) of the Eligible Receivables is $6,554,203.00. The aggregate appraised value of Eligible Equipment described in Schedule A as of this date is $2,524,727.56. Eighty- 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 3 of 9 three percent (83%) of the aggregate appraised value of the Eligible Equipment is $2,095,523.87. The total Eligible Inventory as of the date May 31, 2001, is $3,572,202.00. Fifty percent (50%) of the Eligible Inventory is $1,786,101.00.54; however, the maximum advance per 8.2(c) above is $700,000.00. The sum total of the above collateral components is $9,349,726.87. The Available Line of Credit as of the date hereof is $7,000,000.00. 8.4 The fair and correct appraised value of each item of Eligible Equipment shall be deemed to be the amount set forth opposite each such item in Schedule A attached hereto. 8.5 The Company may, from time to time, up to and including the Termination Date add additional items of Eligible Equipment to Schedule A, provided that each such item of Eligible Equipment must be acceptable to CIT in all respects. The appraised value of any such item of new Eligible Equipment shall be 90% of the cash price (exclusive of taxes and charges) paid by the Company for such equipment and the appraised value of any such item of used Eligible Equipment shall be 80% of cash price (exclusive of taxes & charges). 8.6 The appraised value of each item of Eligible Equipment shall be deemed to depreciate at the rate of 1.5% of the original appraised value of such item per month, effective the first day of each month, commencing August 1, 2001, or, in the event that Schedule A is subsequently amended to add other Eligible Equipment, commencing on the first day of the month following the month in which such Eligible Equipment was added to Schedule A. The Company may, subject to the following terms and conditions, elect to reappraise any or all of the individual items of Eligible Equipment on Schedule A and request that CIT use the reappraised values to replace the depreciated values in computing the value of the Eligible Equipment: (i) the Company will not have the right to request a reappraisal of any item of Eligible Equipment after any applicable Termination Date or is an Event of Default has occurred and is continuing: (ii) an item of Eligible Equipment may be reappraised only once during any calendar year; (iii) any reappraisal of an item of Eligible Equipment shall be made on the same basis as the last appraisal of such item or if no appraisal was previously made of such item, the appraisal shall be made on a mutually agreed upon basis; and (iv) the Company shall request the reappraisal in writing and shall pay all costs associated with the reappraisal and the appraiser shall be subject to approval by CIT and approval shall not be reasonably withheld. 8.7 Any Eligible Equipment which is subsequently sold or otherwise disposed of, lost or destroyed, or which in the opinion of CIT has for any other reason lost all Eligible Equipment value, shall be deemed to have an appraised value of zero. 8.8 Notwithstanding anything to the contrary contained in Section 4.2, if at any time the aggregate principal amount of all Loans outstanding exceeds the Available Line of Credit then in effect, the Company will, within 10 days after CIT's request therefor, either; (a) add such additional Eligible Equipment to Schedule A to increase the Available Line of Credit to an amount equal to or exceeding the aggregate principal amount of all loans then outstanding; or (b) pay CIT such amount so that the amount of the Loans outstanding does not exceed the Available Line of Credit. 9. Location of Eligible Equipment. The Company and CIT agree that regardless of the manner of affixation, the Eligible Equipment shall remain personal property and not become part of any real estate. The Company agrees that the Eligible Equipment will be kept at the location or locations specified on Schedule A or within the States of Arizona, California, Idaho, New Mexico, Nevada, Texas, Utah or Wyoming. 10. Representations and Warranties. The Company represents and warrants to CIT that: 10.1 except for the security interest granted hereby, the Eligible Inventory and Eligible Equipment is and will remain free from all liens, claims, security interests and encumbrances; 10.2 no financing statement covering the Eligible Inventory and Eligible Equipment or any proceeds thereof is on file in favor of anyone other than CIT, but is such other financing statement is on file, it will be terminated or subordinated in a manner satisfactory to CIT; 10.3 all information supplied and statements made by the Company in any financial, credit or accounting statement or application for credit prior to, contemporaneously with or subsequent to the execution of this Agreement, are and shall be true, correct, valid and genuine; 10.4 the Company has full authority to enter into and to perform under this Agreement and in so doing, it is not violating its charter or by-laws, any law or regulation or agreement with third parties, and it has taken all such action as may be necessary or appropriate to make this Agreement binding upon it; and 10.5 this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company that is enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy or other similar laws affecting the rights of creditors generally. 11. Company's Agreements. 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 4 of 9 The Company agrees: 11.1 to defend at Company's own cost any action, proceeding, or claim affecting the Eligible Inventory and Eligible Equipment; 11.2 to pay reasonable attorneys' fees and other expenses incurred by CIT in enforcing its rights and remedies under this Agreement; 11.3 to pay promptly all taxes, assessments, license fees and other public or private charges when levied or assessed against the Eligible Inventory and Eligible Equipment of this Agreement; 11.4 that, if any item of Eligible Inventory and Eligible Equipment is a motor vehicle or other property for which a certificate of title is required or permitted by law, Company shall obtain such certificate with respect to the Eligible Inventory and Eligible Equipment showing the security interest of CIT thereon and in any event shall do everything necessary or expedient to preserve or perfect the security interest of CIT; 11.5 that the Company will not misuse, fail to keep in good repair, secrete, or without the prior written consent of CIT, sell, rent, lend, encumber or transfer any of the Eligible Inventory and Eligible Equipment notwithstanding CIT's right to proceeds; 11.6 that CIT may, at any reasonable time, enter upon the Company's premises or wherever any of the Eligible Inventory and Eligible Equipment may be located, inspect the Eligible Inventory and Eligible Equipment and/or the Company's books and records pertaining to the Eligible Inventory and Eligible Equipment, and Company shall assist CIT in making such inspection; 11.7 that the security interest granted by the Company to CIT shall continue to be effective as long as there are any Obligations owed by the Company to CIT or this Agreement shall remain in effect 11.8 to preserve and maintain its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is required; and 12. Insurance and Risk of Loss. All risk of loss, damage to or destruction of the Eligible Inventory and Eligible Equipment shall at all times be on the Company. The Company will procure forthwith and maintain at the Company's expense insurance against all risks of loss or physical damage to the Eligible Equipment for the full insurable value thereof for the life of this Agreement plus breach of warranty insurance and such other insurance thereon in amounts and against such risks as CIT may specify, and shall promptly deliver each policy to CIT with a standard long-form mortgagee endorsement attached thereto showing loss payable to CIT; and providing CIT with not less than 30 days written notice of cancellation; each policy shall be in form, terms and amount and with insurance carriers satisfactory to CIT; CIT's acceptance of policies in lesser amounts or risks shall not be a waiver of the Company's foregoing obligations. As to CIT's interest in such policy, no act or omission of the Company or any of its officers, agents, employees or representatives shall affect the obligations of the insurer to pay the full amount of any loss. The Company hereby assigns to CIT any monies which may become payable under any such policy of insurance and irrevocably constitutes and appoints CIT as the Company's attorney in fact (a) to hold each original insurance policy, (b) to make, settle and adjust claims under each policy of insurance, (c) to make claims for any monies which may become payable under such and other insurance on the Eligible Equipment including returned or unearned premiums, and (d) to endorse the Company's name on any check draft or other instrument received in payment of claims or returned or unearned premiums under each policy and to apply the funds to the payment of the indebtedness owing to CIT; provided, however, CIT is under no obligation to do any of the foregoing. Should the Company fail to furnish such insurance policy to CIT, or to maintain such policy in full force, or to pay any premium in whole or in part relating thereto, then CIT, without waiving or releasing any default or obligation by the Company, may (but shall be under no obligation to) obtain and maintain insurance and pay the premium therefor on behalf of the Company and charge the premium to the Company's indebtedness under this Agreement. The full amount of any such premium paid by CIT shall be payable by the Company upon demand, and failure to pay same shall constitute an event of default under this Agreement. 13. Financial Reports. The Company agrees that, until the Loans have been paid in full, it will furnish CIT: (a) within 90 days after the end of each fiscal year of the Company, a balance sheet of the Company as at the end of such fiscal year and statements of profit and loss and surplus, all prepared in accordance with generally accepted principles and practices of accounting consistently applied, and certified by independent certified public accountants selected by the Company and satisfactory to CIT; (b) within 60 days after the end of each of the first three quarters of each fiscal year of the Company, a balance sheet of the Company as at the end of such quarter and statements of profit and loss and surplus for such period, all prepared in accordance with generally accepted principles and practices of accounting consistently applied and certified by the chief financial officer or the principal accounting officer of the Company; and (c) from time to time, such further information regarding the business affairs and financial condition of the Company as CIT may reasonably require. 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 5 of 9 14. Events of Default. The occurrence of any of the following events shall constitute an "Event of Default": 14.1 the Company fails to pay any Obligation when due and payable (whether due at scheduled maturity, required prepayment, acceleration or otherwise); 14.2 the Company fails or neglects to perform, keep or observe any term, provision, condition, covenant, representation or warranty contained in this Agreement or in any other present or future agreement between the Company and CIT; 14.3 the Company becomes insolvent or ceases to do business as a going concern; 14.4 the filing by or against the Company of any petition or complaint or the commencement of any case under any provision of the Federal bankruptcy laws or the Company admits its inability to pay or fails to pay its debts generally as they mature; 14.5 the Company makes an assignment for the benefit of creditors, its property is attached or a receiver is appointed for the Company or any other insolvency proceedings are instituted by or against the Company; 14.6 whenever CIT, in good faith, believes the prospect of payment or performance is impaired or in good faith believes that the Eligible Inventory and Eligible Equipment is not adequate security for the Obligations or in good faith otherwise deems itself to be insecure; 14.7 any information furnished by or on behalf of the Company relating to the Eligible Inventory and Eligible Equipment or the financial condition or business affairs of the Company is determined by CIT to be false or misleading in any material respect; 14.8 any guarantor dies or defaults in the payment or performance of any Obligation to CIT or any guaranty obtained in connection with this Agreement ceases to be in full force and effect; or 14.9 a surety, bonding company or guarantor takes over the Company's performance of any job contracted by the Company. The Company shall not be deemed in default pursuant to the preceding paragraphs 14.1, 14.2, 14.6, 14.7, 14.8 and 14.9 unless or until CIT has provided the Company with prior written notice of default and allowed the Company ten (10) days from the date of receipt of such notice to cure the alleged default. 15. Acceleration of Obligations and Remedies. 15.1 Upon the occurrence of an Event of Default and the lapse of the ten (10) day cure period if pertinent, the outstanding balance owing under this Agreement and all other Obligations shall, if CIT shall so elect, become immediately due and payable without notice to or demand upon the Company of any kind and the Loans shall bear interest at the same rate as before maturity until paid in full. In no event shall the Company, upon acceleration of the maturity of the Obligations by CIT, or otherwise, be required to pay any interest in excess of the maximum amount permitted by law. Any acceleration of the Obligations, if elected by CIT, shall be subject to all applicable laws, including laws as to rebates and refunds of unearned charges. 15.2 Upon the occurrence of an Event of Default and the lapse of the ten (10) day cure period if pertinent and at any time thereafter, CIT shall have all the rights and remedies of a secured party under the Uniform Commercial Code and any other applicable laws, including the right to any deficiency remaining after disposition of the Eligible Inventory and Eligible Equipment for which deficiency Company hereby agrees to remain fully liable. The Company agrees that CIT, by itself or its agent, may without notice to any person and without judicial process of any kind, enter into any premises or upon any land owned, leased or otherwise under the real or apparent control of the Company or any agent of the Company where the Eligible Inventory and Eligible Equipment may be or where CIT believes the Eligible Inventory and Eligible Equipment may be, and disassemble, render unusable and/or repossess all or any item of the Eligible Inventory and Eligible Equipment, and disconnect and separate all Eligible Inventory and Eligible Equipment from any other property. The Company expressly waives all further rights to possession of the Eligible Inventory and Eligible Equipment after default and all claims for injuries suffered through or loss caused by such entering and/or repossession. CIT may require the Company to assemble the Eligible Inventory and Eligible Equipment and return it to CIT at a place to be designated by CIT which is reasonably convenient to both parties. CIT will give the Company reasonable notice of the time and place of any public sale of the Eligible Inventory and Eligible Equipment or of the time after which any private sale or any other intended disposition of the Eligible Inventory and Eligible Equipment is to be made. Unless otherwise provided by law, the requirement of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of the Company shown herein at least 10 days before the time of the sale or disposition. The proceeds of any such sale or other disposition of the Eligible Inventory and Eligible Equipment shall be applied first to the payment of all expenses of retaking, holding, storing and preparing for sale, selling and the like, next to the payment of reasonable attorneys' fees and other legal expenses incurred by CIT in connection with enforcing any of its rights under this Agreement and then to the payment of the Obligations in such order as CIT, in its sole discretion, may elect. All of CIT's rights are cumulative and not alternative. 16. Waiver of Defaults; Agreement Inclusive. CIT may in its sole discretion waive a default, or cure, at the Company's expense, a default. Any such waiver in a particular instance or of a particular default shall not be a waiver of other defaults or the same kind of default at another time. No modification or change in this Agreement or any related note, instrument or agreement shall bind CIT unless such changes or modifications shall be in writing signed by CIT. No oral agreement shall be binding on either party. 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 6 of 9 17. Financing Statements; Certain Expenses. If permitted by law, the Company authorized CIT to file financing statement with respect to the Eligible Inventory and Eligible Equipment signed only by CIT and to file a carbon, photograph or other reproduction of this Agreement or of a financing statement. At the request of CIT, the Company will execute any financing statements, agreements or documents, in form satisfactory to CIT which CIT may deem necessary or advisable to establish and maintain a perfected security interest in the Eligible Inventory and Eligible Equipment, and will pay the cost of filing or recording the same in all public offices deemed necessary or advisable by CIT. The Company also agrees to pay all costs and expenses incurred by CIT in conducting UCC, tax or other lien searches against the Company or the Eligible Inventory and Eligible Equipment and such other fees as may be agreed. The Company will reimburse CIT for all out-of-pocket expenses incurred by CIT for any appraisals of equipment and charges made by anyone other than members of CIT's own staff in connection with the processing of the Company's Loan application. 18. Guaranties. At, or prior to the making of the initial loan hereunder, the Company will furnish or cause to be furnished to CIT, an unconditional guaranty of the payment and performance of the Company's Obligations, in form and substance satisfactory to CIT, from Meadow Valley Corporation - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 19. Approval of Documentation. All documentation and other matters relating to the transactions contemplated by this Agreement, including but not limited to the validity and enforceability of the guaranties, the first priority security interest in CIT's favor on the property described in Schedule A, and any releases or subordinations covering such property, shall be satisfactory and acceptable to CIT and its counsel prior to disbursements of any and all Loans hereunder. 20. Late Charges. Any payment not made when due shall, at the option of CIT, bear late charges thereon calculated at the rate of 1 1/2% per month, but in no event greater than the highest rate permitted by relevant law. 21. Inventory Reports; Assignments of Receivables. In furtherance of the continuing assignment and security interest herein contained, the Company will execute and make available to CIT from time to time in such form and manner and with such frequency as may be required by CIT, solely for CIT's convenience in maintaining a record of the Eligible Inventory and Eligible Equipment, such confirmatory inventory reports and confirmatory assignments of Receivables, designating, identifying or describing the Eligible Inventory and Eligible Equipment and copies of invoices to customers, agreements of any kind with its customers, copies of suppliers' invoices, evidence of shipment and delivery and such further documentation and information relating to the Eligible Inventory and Eligible Equipment as CIT may require, provided, however, that if the Company should fail to execute and deliver such reports or assignments, such failure shall not affect, diminish, modify or otherwise limit CIT's security interest in all present and future Inventory and Receivables of the Company and the proceeds thereof. The Company will furnish to CIT within thirty (30) days after the end of each month, an aging report of the Company's customers and amounts owing, prepared as at the end of such month end. The Company agrees to advise CIT promptly of any substantial change relating to the type, quantity or quality of Eligible Inventory and Eligible Equipment or of any event which would have a material effect on the value of the Eligible Inventory and Eligible Equipment or on the security interested granted to CIT therein. 22. Conditions Precedent The making of any Loan hereunder at any time by CIT in its sole discretion is subject, among other things, to compliance in full by the Company with all of the terms and provisions of this Agreement, as at any time amended, and to the further condition that at the time of the proposed making of any such Loan there shall have been no material adverse change in the financial condition or business of the Company, and that no Event of Default, and no event which with the lapse of time or the notice and lapse of time specified for the purpose of constituting such an Event of Default, has occurred and is continuing at the time of such proposed Loan. 23. Additional Covenants of the Company. See attached Financial Report Covenant Rider consisting of one (1) page attached hereto and made a part hereof. 24. Notices. Any notice or request required or permitted to be given under this Agreement shall be sufficient if in writing and sent by hand or by Certified Mail, in either case return receipt requested, to the parties at the following addresses, or at such other address as to which either party shall notify the other in writing: The CIT Group/Equipment Financing, Inc. 1540 West Fountainhead Pkwy. Tempe, AZ 85282 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 7 of 9 Attn: Gerald Rickman Meadow Valley Contractors, Inc. 4411 South 40th Street Phoenix, AZ 85040 Attn: Ken Nelson 25. Miscellaneous. Any provisions hereof contrary to, prohibited by or invalid under applicable laws or regulations shall be inapplicable and deemed omitted here from, but shall not invalidate the remaining provisions hereof. If the Company is a corporation, the Company represents that this Agreement is executed pursuant to the authority of its Board of Directors. The Company and CIT each hereby waive any right to a trial by jury in any action or proceeding with respect to, in connection with, or arising out of this Agreement, or any note or document delivered pursuant to this Agreement. This agreement shall be binding upon and inure to the benefit of the Company and CIT and their respective successors and assigns, except that the Company may not assign or transfer any of its rights under this Agreement without the prior written consent of CIT. Section headings are included in this Agreement for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. If at any time this transaction would be usurious under applicable law, then regardless of any provision contained in this Agreement or in any other agreement made in connection with this transaction, it is agreed that: (a) the total of all consideration which constitutes interest under applicable law that is contracted for, charged or received upon this Agreement or any such other agreement shall under no circumstances exceed the maximum rate of interest authorized by applicable law and any excess shall be credited to the Company; and (b) if CIT elects to accelerate the maturity of, or if CIT permits the Company to prepay the indebtedness, any amounts which because of such action would constitute interest may never include more than the maximum rate of interest authorized by applicable law, and any excess interest, if any, provided for in this Agreement or otherwise, shall be credited to the Company automatically as of the date of acceleration or prepayment. 26. Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Arizona. 27. Special Provisions. (See Special Provisions Instructions below.) See Exhibit "A" consisting of one (1) page attached hereto and made a part hereof. See Rider "A" consisting of one (1) page attached hereto and made a part hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date shown below. Dated: July 27, 2001 THE CIT GROUP/EQUIPMENT FINANCING, INC. By /s/ ILLEGIBLE Title V.P. ----------------------- --------------------------- P.O. Box 27248 - --------------------------------------------------------------------------- Address Tempe AZ 85285-7248 - --------------------------------------------------------------------------- City State Zip Code Meadow Valley Contractors, Inc. - --------------------------------------------------------------------------- Company 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 8 of 9 By /s/ Bradley C. Larson Title President ----------------------- ---------------------------------- 4411 South 40th Street - --------------------------------------------------------------------------- Principal Place of Business Phoenix AZ 85040 - --------------------------------------------------------------------------- City State Zip Code - -------------------------------------------------------------------------------- SPECIAL PROVISIONS INSTRUCTIONS - The notations to be entered in the Special Provisions section of this document for use in ALABAMA, FLORIDA, GEORGIA, IDAHO, NEVADA, NEW HAMPSHIRE, OREGON, SOUTH DAKOTA, and WISCONSIN are shown in the applicable State pages of the Loans and Motor Vehicles Manual - -------------------------------------------------------------------------------- 2101 (8/99) Non Standard Revolving Loan Agreement- Single Advance Rate Page 9 of 9 EXHIBIT "A" TO AMENDED AND RESTATED REVOLVING LOAN AGREEMENT DEBTOR: SECURED PARTY: Meadow Valley Contractors, Inc. The CIT Group/Equipment Financing, Inc. 4411 South 40th Street P.O. Box 27248 Phoenix, AZ 85040 Tempe, AZ 85285-7248 Description of Collateral: All of the Debtor's property, or interests in property, whether now owned or existing or hereafter acquired or arising and wheresoever located, whether tangible or intangible, including without limitation, all of Debtor's accounts, inventory, goods, furniture, machinery, equipment, fixtures, investment property, general intangibles (including, without limitation, goodwill, inventions, designs, patents, patent applications, trademarks, trademark applications, service marks, trade names, licenses, leasehold interests in real and personal property, franchises, tax refund claims, and guarantee claims, security interests or other security held by or granted to Debtor to secure payment of Debtor's accounts, investment property, general intangibles, instruments, and notes), tax refunds, chattel paper, contract rights, instruments, documents, notes, returned and repossessed goods, together with all accessions to, substitutions for, and all replacements, products and proceeds of the foregoing (including, without limitation, proceeds of insurance policies insuring any of the foregoing), all books and records (including, without limitation, customer lists, credit files, computer programs, printouts and other computer materials and records) pertaining to any of the foregoing, and all insurance policies insuring any of the foregoing. Date: July 27, 2001 ---------------------------------- Meadow Valley Contractors, Inc. By: /s/ Bradley E. Larson Title: President ---------------------------------- ----------- Name: FINANCIAL COVENANT RIDER ------------------------ Attached to and by this reference made a part of the Amended and Resisted Revolving Loan Agreement between Meadow Valley Contractors, Inc. (the "Company"), and The CIT Group/Equipment, Inc. ("CIT") Company covenants and agrees that, at all times during the Company's fiscal year 2001, the Company's Tangible Net Worth will not be less than $6,500,000.00. For each fiscal year thereafter, the Company's Tangible Net Worth shall not be less than the minimum Tangible Net Worth required to be maintained in the previous fiscal year plus 50% of the Company's net income after taxes for the previous fiscal year. The minimum Tangible Net Worth required to be maintained pursuant to this section shall not be decreased if in any fiscal year the Company has a deficit net income after taxes. Meadow Valley Contractors, Inc. By /s/ Bradley E. Larson ---------------------------- Title President -------------------------- FINANCIAL COVENANT RIDER ------------------------ Attached to and by this reference made a part of the Guaranty of Meadow Valley Contractors, Inc. dated July 27, 2001, wherein Meadow Valley Corporation is the Guarantor. Guarantor covenants and agrees that: (1) during the term of this agreement, it will provide to The CIT Group/Equipment Financing, Inc. ("CIT"), within 45 days of each semi-annual period and within 90 days of each fiscal year end, a balance sheet and income statement of Guarantor, prepared in accordance with generally accepted accounting principles consistently applied, prepared by it's independent certified public accountants. (2) at all times during the Guarantor's fiscal year 2001, the Guarantor's Tangible Net Worth will not be less than $11,600,000.00. For each fiscal year thereafter, the Guarantor's Tangible Net Worth shall not be less that the minimum Tangible Net Worth required to be maintained in the previous fiscal year plus 50% of the Guarantor's net income after taxes for the previous fiscal year. The minimum Tangible Net Worth required to be maintained pursuant to this section shall not be decreased if in any fiscal year the Guarantor has a deficit net income after taxes. (3) At all times during the term of this agreement, it will maintain a ratio of Total Debt to Tangible Net Worth of no more that 5.0:1. Meadow Valley Corporation By /s/ Bradley E. Larson ---------------------------- Title President -------------------------- EX-10.155 6 dex10155.txt REVOLVING LOAN AGREEMENT WITH THE CIT GROUP Exhibit 10.155 REVOLVING LOAN AGREEMENT This Revolving Loan Agreement ("Agreement") is between the undersigned Ready Mix, Inc. (the "Company") and The CIT Group/Equipment Financing, Inc. ("CIT") 1. LOANS. CIT agrees, subject to the terms of this Agreement to make loans to the Company (the "Loans") from time to time from the date hereof to including December 31, 2001 (the "Termination Date"), up to but not exceeding, in the aggregate principal amount, at any one time outstanding, the sum of $7,000,000.00 (the "Line of Credit"). Except for the initial Loan made hereunder, each Loan shall be in the minimum amount of $25,000.00 or a multiple thereof. All Loans made hereunder will be repayable at CIT's address set forth herein or at such other address as CIT may from time to time direct. 2. CONDITION PRECEDENT TO ALL LOANS. CIT shall not be obligated to make any Loan under this Agreement if, at the time of the making of the proposed Loan: (a) an Event of Default, as defined in Section 13, has occurred and is continuing; or (b) the aggregate principal amount of Loans outstanding exceeds the Available Line of Credit as defined in Section 8.1; or (c) there has been a material adverse change in the Company's financial condition from that shown in the Company's financial statement dated December 31, 2000. 3. LOAN ACCOUNT; MONTHLY STATEMENTS. All Loans will be charged, and payments received on account of such Loans credited, to an account maintained in the Company's name on CIT's books (the "Loan Account"). Each month CIT will render to the Company a statement of the Loan Account which shall constitute an account stated and shall be deemed to be correct, accepted by and binding upon the Company unless CIT shall receive a written statement of exceptions from the Company within 30 days after such statement has been rendered to the Company. In the event CIT should so request, the Company agrees to execute and deliver to CIT such promissory notes of the Company as CIT shall request in order to evidence the Loans, but unless and until CIT should so request, the Loan Account and the monthly statements thereof rendered by CIT to the Company shall constitute the primary evidence of the Loans. 4. REPAYMENT OF LOANS. 4.1 At any time prior to Termination Date, the Company may make payments to CIT on account of the Loans, provided that the Company may not make any payment which results in the outstanding principal amount owing under the Loan Account to be less than $250,000.00. All such payments may, at CIT's option, be applied first to the payment of accrued interest and then to principal. 4.2 The Company promises to pay the outstanding principal amount owing under the Loan Account as of the Termination Date in 48 equal successive monthly installments, commencing on, January 31, 2002 and on a like date of each month thereafter until such amount has been paid in full, provided, however, that the final installment shall be in the amount of the then unpaid principal amount. 4.3 At any time on or after the Termination Date, the Company may pay the then outstanding principal amount owing on the Loan Account in whole or in part, without penalty, provided that interest accrued to the date of such payment is paid with such payment. Each such partial principal payment shall be in an amount equal to the amount of a monthly installment determined under Section 4.2 or a multiple thereof. All such partial principal payments shall be applied to the monthly installments due under Section 4.2 in the inverse order of their maturities. 5. INTEREST. All Loans shall bear interest payable monthly at a rate per annum equal to the "governing rate" plus .25% on the average daily unpaid balance of principal outstanding on all such Loans during the month, but in no event greater than the highest rate permitted by applicable law, even if this Agreement shall state a minimum rate of interest. Interest shall be payable within 5 business days after the Company's receipt of CIT's interest statement. "Governing Rate" shall mean a rate equal to the highest of (i) the Prime Rate of The Chase Manhattan Bank or its successors or (ii) "The Wall Street Journal Prime Rate" or (iii) the commercial paper rate in effect from time to time. Interest shall be computed on the basis of a year of 360 days. The Prime Rate of The Chase Manhattan Bank or its successors shall mean the rate of interest publicly announced by The Chase Manhattan Bank or its successors in New York from time to time as its Prime Rate. The Prime Rate of The Chase Manhattan Bank or its successors is not intended to be the lowest rate of Interest charged by The Chase Manhattan Bank or its successors to its borrowers. "The Wall 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 1 of 9 Street Journal Prime Rate" shall mean the Prime Rate listed by the Wall Street Journal. If more than one Prime Rate is listed in the Wall Street Journal, then the highest rate shall apply. "Commercial paper rate" shall mean the average rate quoted by the Wall Street Journal or such other source as CIT may determine for 30-day dealer commercial paper. The Governing Rate on the date of the Agreement is 6.75% per annum. 6. DEFINITIONS; STANDARDS OF ELIGIBILITY. 6.1 "Receivables" shall mean accounts, contract rights, chattel paper, notes, drafts, rental receivables, conditional sale contracts, security agreements, installment paper, installment sales, revolving charge accounts, and other obligations for the payment of money, including inter- company accounts and notes receivable, and all documents, contracts, invoices and instruments evidencing or constituting the same and all security instruments and security agreements relating thereto, which are created or acquired by the Company, all property the sale or lease of which gives rise or purports to give rise to Receivables, and all cash and non-cash proceeds thereof, including any merchandise returned or rejected by, or repossessed from customers. 6.2 "Eligible Receivables" shall mean Receivables created or acquired by the Company in the regular course of its business as presently conducted, which are and at all times continue to be acceptable to CIT in all respects and which are payable within ninety (90) days of invoice date. In general, no Receivable shall be deemed eligible unless: the credit of the obligor on such Receivable is and continues to be acceptable to CIT, such Receivable represents an existing, valid and legally enforceable indebtedness based upon an actual and bona fide sale and delivery or lease of property or rendition of services to the named obligor, which has been finally accepted by the obligor and for which the obligor is unconditionally liable to make payment in the amount stated in each invoice, document or instrument evidencing, constituting or accompanying the Receivable in accordance with the terms thereof, without rights of rejection or return or offset, defense, counterclaim or claim of discount or dedication; all statements made and all unpaid balances appearing in the invoices, documents and instruments representing or constituting the Receivables, are true and correct and are in all respects what they purport to be, and all signatures and endorsements that appear thereon are genuine and all signatories and endorsers, if any, have full capacity to contract, and the obligor owing such Receivable is not affiliated with or employed by the Company; absolute title to each Receivable, free and clear of liens and encumbrances or claims of others, including liens or encumbrances or claims of ownership on the property the sale or lease of which purports to give rise to such Receivable, is vested absolutely in the Company and no other assignment of or security interest or other interest in the Receivable in favor of others is then in effect: the transactions underlying or giving rise to any Receivable do not violate any applicable state or federal law or regulation and all documents relating to the Receivables are legally sufficient under such laws and regulations and are legally enforceable in accordance with their terms; and any contract under which any Receivable arises does not contain a prohibition against assignment or require the consent of or notice to the obligor with respect to any assignment of monies arising thereunder. A Receivable will not be deemed an Eligible Receivable if any of the following is the case: it is ninety (90) or more days past due; it represents a COD sale; it is a contra account; it is an employee/officer account; it is a retainage account; the obligor owning such Receivable resides outside of the United States. 6.3 "Inventory" shall have the same meaning as such term is defined under the Uniform Commercial Code, including all goods acquired or manufactured for sale or lease, and any parts, accessories, piece goods, new materials, work in process and finished merchandise, and all proceeds thereof. 6.4 "Eligible Inventory" shall mean the portion, excluding work in process, of Inventory consisting of saleable or leasable merchandise which has been acquired or manufactured by the Company in the regular course of business for sale or resale or lease to customers, which is owned by the Company free and clear of all liens, encumbrances or claims in favor of others, and which at all times continues to be acceptable to CIT for Eligible Inventory and Eligible Equipment purposes. 6.5 "Equipment" shall have the same meaning as such term is defined under the Uniform Commercial Code. 6.6 "Eligible Equipment" shall mean all of the Equipment which is owned by the Company free and clear of all liens, encumbrances or claims in trust of others, and which at all times continues to be acceptable to CIT for Eligible Inventory and Eligible Equipment purposes. 6.7 "Obligations" shall mean all loans and advances from time to time made by CIT to the Company hereunder and to others at the request of or for the account of or for the benefit of the Company, all other indebtedness and obligations which may be now or hereafter owing by the Company to CIT under this Agreement or any other agreement which may now or hereafter be entered into by CIT with the Company, howsoever arising, whether absolute or contingent, joint or several, matured or unmatured, direct or indirect, primary or secondary, including, but not limited to, CIT's interest or other charges hereunder or under any other agreement between the Company and CIT. The Company hereby agrees to pay on demand all costs and fees CIT may incur in the event of default by the Company hereunder, all costs and expenses (including, all out-of-pocket expenses and attorneys' fees actually paid by CIT) incurred by CIT, its employees or agents in protecting, maintaining, preserving, enforcing or foreclosing CIT's security interest in any Eligible Inventory and Eligible Equipment, including all efforts made to enforce collection of any Receivable, whether through judicial proceedings or otherwise or in defending or prosecuting any action or proceeding arising out of or relating to CIT's transactions with the Company, all of which are hereby also included in the definition of "Obligations" and which may be charged at CIT's option to the Loan Accounts in the event the same are not promptly paid after demand. Standards of eligibility or acceptability for Eligible Inventory and Eligible Equipment purposes and determination of value shall be fixed and may be revised from time to time solely by CIT in its exclusive judgement, exercised reasonably and in good faith. Reliance by CIT from time to time on listings, reports and other information relating to any Eligible Inventory and Eligible Equipment furnished by or obtained from the Company shall not be deemed to limit CIT's right to revise standards of eligibility or acceptability and determination of value at any time and from time to time. 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 2 of 9 7. GRANT OF SECURITY INTEREST; ELIGIBLE INVENTORY AND ELIGIBLE EQUIPMENT. 7.1 As security for the prompt payment in full of all present and future Obligations, the Company hereby grants to CIT a security interest in and hereby assigns and pledges to CIT, its successors and assigns (which grant, assignment and pledge shall continue until payment in full of all Obligations, whether or not this Agreement shall have sooner terminated), all right, title and interest of the Company in and to the following (which, together with any other security at any time pledged, assigned or delivered by the Company to CIT or received by CIT in connection with any Obligations are herein sometimes collectively called "Eligible Inventory and Eligible Equipment"); (a) All Receivables of the Company, whether or not the same be Eligible Receivables and whether or not specifically listed on any schedules, assignments or reports furnished to CIT from time to time, whether now existing or arising or created or acquired at any time hereafter, together with all rights to any and all sums due and to become due on Receivables, all proceeds of Receivables in whatever form, including cash, checks, notes, drafts and other instruments for the payment of money, and all right, title and interest in and to any merchandise the sale or lease of which gives rise to, or purports to create any Receivable or which secures any Receivable, all property allocable to unshipped orders and all merchandise returned by or reclaimed or repossessed from customers, all rights of stoppage in transit, replevin, repossession and reclamation and all other rights or any unpaid vendor or lienor. The continuing general assignment and pledge of the security interest in Receivables contained herein shall include all accounts, all documents, instruments, contracts, liens and security instruments, all credit insurance policies and other insurance and all guarantees relating to Receivables, all books and records evidencing, securing or relating to Receivables all Eligible Inventory and Eligible Equipment, deposits, dealer reserves, or other security securing the obligations of any person under or relating to Receivables, all credit balances in favor of the Company on CIT's books, and all rights and remedies of whatever kind or nature the Company may hold or acquire for the purpose of securing or enforcing Receivables, and all general intangibles relating to or arising out of Receivables; and (b) All Inventory in which the Company now or at any time hereafter may have an interest, whether or not the same be Eligible Inventory and whether or not such Inventory is specifically listed or described in this Agreement or in any Inventory reports furnished to CIT from time to time, whether or not the same is in transit or in the constructive, actual or executive occupancy or possession of the Company or is held by the Company or by others for the Company's account, including, without limitation, all goods covered by purchase orders and contracts with suppliers and all goods billed and held by suppliers, all Inventory which may be located on premises of the Company or of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or third parties, and all general intangibles relating to or arising out of Inventory. This continuing general lien on and security Interest in Inventory through all states of manufacture, production or processing, to all raw materials, goods in process and finished products, and to all additions thereto, and to all insurance policies and proceeds thereof covering Inventory, and shall automatically attach to all Receivables and all other cash and non-cash proceeds resulting from the sale, lease or disposition of Inventory, including any trade-ins. With respect to after-acquired Inventory, CIT's security interest shall be deemed to be a purchase money security interest; and (c) All equipment now or hereafter listed on Schedule A; and (d) All other personal property of the Company, now existing or hereafter arising or acquired, including without limitation all of the Company's accounts, goods, furniture, machinery, equipment, fixtures, investment property, general intangibles (including, without limitation, goodwill, inventions, designs, patents, patent applications, trademarks, trademark applications, service marks, trade names, licenses, leasehold interests in real and other security held by or granted to the Company to secure payment of the Company's accounts, investment property, general intangibles, instruments, and notes), tax refunds, chattel paper, contract rights, instruments, documents, notes, returned and repossessed goods, together with all accessions to, substitutions for, and all replacements, products and proceeds of the foregoing (including, without limitation, proceeds of insurance policies insuring any of the foregoing), all books and records (including, without limitation, customer lists, credit files, computer programs, printouts, and other computer materials and records) pertaining to any of the foregoing, and all insurance policies insuring any of the foregoing. The Obligations shall also be secured by any property in which the company may have granted, or may in the future grant, a security Interest to CIT pursuant to any other agreement, including, but not limited to, any such agreement with CIT acquires by the way of purchase, assignment or otherwise. 8. AVAILABLE LINE OF CREDIT. 8.1 The maximum principal amount of Loans that may, from time to time, be outstanding under this Agreement and which in no event shall exceed the Line of Credit, is hereinafter referred to as the "Available Line of Credit". 8.2 The Available Line of Credit, at any time and from time to time, shall be an amount equal to the following: (a) Sixty-five percent (65%) of the amount owing on Eligible Receivables as computed from monthly aging reports to be submitted to CIT by Company; and (b) Eighty-Three (83%) of the aggregate appraised value of the Eligible Equipment; and (c) Fifty percent (50%) of the Eligible Inventory as computed from monthly reports to be submitted to CIT, up to a maximum advance of $700,000.00. 8.3 The total of Eligible Receivables as of the date June 30, 2001 is $4,799,636.09. Sixty-five percent (65%) of the Eligible Receivables is $3,119,763.46. The aggregate appraised value of Eligible Equipment described in Schedule A as of this date is $64,500.00. Eighty-three 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 3 of 9 percent (83%) of the aggregate appraised value of the Eligible Equipment is $53,535.00. The total Eligible Inventory as of the date May 31, 2001 is $910,078.10. Fifty percent (50%) of the Eligible Inventory is $455,039.05; however, the maximum advance per 8.2(c) above is $700,000.00 The sum total of the above collateral components is $3,628,337.51 The Available Line of Credit as of the date hereof is $3,628,337.51. 8.4 The fair and correct appraised value of each item of Eligible Equipment shall be deemed to be the amount set forth opposite each such item in Schedule A attached hereto. 8.5 The Company may, from time to time, up to and including the Termination Date add additional items of Eligible Equipment to Schedule A, provided that each such item of Eligible Equipment must be acceptable to CIT in all respects. The appraised value of any such item of new Eligible Equipment shall be 90% of the cash price (exclusive of taxes and charges) paid by the Company for such equipment and the appraised value of any such item of used Eligible Equipment shall be 80% of cash price (exclusive of taxes & charges). 8.6 The appraised value of each item of Eligible Equipment shall be deemed to depreciate at the rate of 1.5% of the original appraised value of such item per month, effective the first day of each month, commencing August 1, 2001, or, in the event that Schedule A is subsequently amended to add other Eligible Equipment, commencing on the first day of the month following the month in which such Eligible Equipment was added to Schedule A. The Company may, subject to the following terms and conditions, elect to reappraise any or all of the individual items of Eligible Equipment on Schedule A and request that CIT use the reappraised values to replace the depreciated values in computing the value of the Eligible Equipment: (i) the Company will not have the right to request a reappraisal of any item of Eligible Equipment after any applicable Termination Date or if an Event of Default has occurred and is continuing; (ii) an item of Eligible Equipment may be reappraised only once during any calendar year; (iii) any reappraisal of an item of Eligible Equipment shall be made on the same basis as the last appraisal of such item or if no appraisal was previously made of such item, the appraisal shall be made a mutually agreed upon basis; and (iv) the Company shall request the reappraisal in writing and shall pay all costs associated with the reappraisal and the appraiser shall be subject to approval by CIT and approval shall not be reasonably withheld. 8.7 Any Eligible Equipment which is subsequently sold or otherwise disposed of, lost or destroyed, or which in the opinion of CIT has for any other reason lost all Eligible Equipment value, shall be deemed to have an appraised value of zero. 8.8 Notwithstanding anything to the contrary contained in Section 4.2 if at any time the aggregate principal amount of all Loans outstanding exceeds the Available Line of Credit then in effect, the Company will, within 10 days after CIT's request therefor, either: (a) add such additional Eligible Equipment to Schedule A to increase the Available Line of Credit to an amount equal to or exceeding the aggregate principal amount of all loans then outstanding; or (b) pay CIT such amount so that the amount of the Loans outstanding does not exceed the Available Line of Credit. 9. LOCATION OF ELIGIBLE EQUIPMENT. The Company and CIT agree that regardless of the manner of affixation, the Eligible Equipment shall remain personal property and not become part of any real estate. The Company agrees that the Eligible Equipment will be kept at the location or locations specified on Schedule A or within the States of Arizona, California, Idaho, New Mexico, Nevada, Texas, Utah or Wyoming. 10. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to CIT that: 10.1 except for the security interest granted hereby, the Eligible Inventory and Eligible Equipment is and will remain free from all liens, claims, security interests and encumbrances; 10.2 no financing statement covering the Eligible Inventory and Eligible Equipment or any proceeds thereof is on file in favor of anyone other than CIT, but if such other financing statement is on file, it will be terminated or subordinated in a manner satisfactory to CIT; 10.3 all information supplied and statements made by the Company in any financial, credit or accounting statement or application for credit prior to, contemporaneously with or subsequent to the execution of this Agreement, are and shall be true, correct, valid and genuine; 10.4 the Company has full authority to enter into and to perform under this Agreement and in so doing, it is not violating its charter or by-laws, any law or regulation or agreement with third parties, and it has taken all such action as may be necessary or appropriate to make this Agreement binding upon it; and 10.5 this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company that is enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy or other similar laws affecting the rights of creditors generally. 11. COMPANY'S AGREEMENTS. 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 4 of 9 The Company agrees: 11.1 to defend at Company's own cost any action, proceeding, or claim affecting the Eligible Inventory and Eligible Equipment; 11.2 to pay reasonable attorneys' fees and other expenses incurred by CIT in enforcing its rights and remedies under this Agreement; 11.3 to pay promptly all taxes, assessments, license fees and other public or private charges when levied or assessed against the Eligible Inventory and Eligible Equipment of this Agreement; 11.4 that, if any item of Eligible Inventory and Eligible Equipment is a motor vehicle or other property for which a certificate of title is required or permitted by law, Company shall obtain such certificate with respect to the Eligible Inventory and Eligible Equipment showing the security interest of CIT thereon and in any event shall do everything necessary or expedient to preserve or perfect the security interest of CIT; 11.5 that the Company will not misuse, fail to keep in good repair, secrete, or without the prior written consent of CIT, sell, rent, lend, encumber or transfer any of the Eligible Inventory and Eligible Equipment notwithstanding CIT's right to proceeds; 11.6 that CIT may, at any reasonable time, enter upon the Company's premises or wherever any of the Eligible Inventory and Eligible Equipment may be located, inspect the Eligible Inventory and Eligible Equipment and/or the Company's books and records pertaining to the Eligible Inventory and Eligible Equipment, and Company shall assist CIT in making such inspection; 11.7 that the security interest granted by the Company to CIT shall continue to be effective as long as there are any Obligations owned by the Company to CIT or this Agreement shall remain in effect. 11.8 to preserve and maintain its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is required; and 12. INSURANCE AND RISK OF LOSS. All risk of loss, damage to or destruction of the Eligible Inventory and Eligible Equipment shall at all times be on the Company. The Company will procure forthwith and maintain at the Company's expense insurance against all risks of loss or physical damage to the Eligible Equipment for the full insurable value thereof for the like of this Agreement plus breach of warranty insurance and such other insurance thereon in amounts and against such risks as CIT may specify, and shall promptly deliver each policy to CIT with a standard long-form mortgagee endorsement attached thereto showing loss payable to CIT; and providing CIT with not less than 30 days written notice of cancellation; each policy shall be in form, terms and amount and with insurance carriers satisfactory to CIT; CIT's acceptance of policies in lesser amounts or risks shall not be a waiver of the Company's foregoing obligations. As to CIT's interest in such policy, no act or omission of the Company or any of its officers, agents, employees or representatives shall affect the obligations of the insurer to pay the full amount of any loss. The Company hereby assigns to CIT any monies which may become payable under any such policy of insurance and irrevocably constitutes and appoints CIT as the Company's attorney in fact (a) to hold each original insurance policy, (b) to make, settle and adjust claims under each policy of insurance, (c) to make claims for any monies which may become payable under such and other insurance on the Eligible Equipment including returned or unearned premiums, and (d) to endorse the Company's name on any check draft or other instrument received in payment of claims or returned or unearned premiums under each policy and to apply the funds to the payment of the indebtedness owning to CIT; provided, however, CIT is under no obligation to do any of the foregoing. Should the Company fail to furnish such insurance policy to CIT, or to maintain such policy in full force, or to pay any premium in whole or in part relating thereto, then CIT, without waiving or raising any default or obligation by the Company, may (but shall be under no obligation to) obtain and maintain insurance and pay the premium therefor on behalf of the Company and charge the premium to the Company's indebtedness under this Agreement. The full amount of any such premium paid by CIT shall be payable by the Company upon demand, and failure to pay same shall constitute an event of default under this Agreement. 13. FINANCIAL REPORTS. The Company agrees that, until the Loans have been paid in full, it will furnish CIT: (a) within 90 days after the end of each fiscal year of the Company, a balance sheet of the Company as at the end of such fiscal year and statements of profit and loss and surplus, all prepared in accordance with generally accepted principles and practices of accounting consistently applied, and certified by independent certified public accountants selected by the Company and satisfactory to CIT; (b) within 60 days after the end of each of the first three quarters of each fiscal year of the Company, a balance sheet of the Company as at the end of such quarter and statements of profit and loss and surplus for such period, all prepared in accordance with generally accepted principles and practices of accounting consistently applied and certified by the chief financial officer or the principal accounting officer of the Company; and (c) form time to time, such further information regarding the business affairs and financial condition of the Company as CIT may reasonably require. 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 5 of 9 14. EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an "Event of Default": 14.1 the Company fails to pay any Obligation when due and payable (whether due at scheduled maturity, required prepayment, acceleration or otherwise); 14.2 the Company fails or neglects to perform, keep or observe any term, provision, condition, covenant, representation or warranty contained in this Agreement or in any other present or future agreement between the Company and CIT; 14.3 the Company becomes insolvent or ceases to do business as a going concern; 14.4 the filing by or against the Company of any petition or complaint or the commencement of any case under any provision of the Federal bankruptcy laws or the Company admits its inability to pay or fails to pay its debts generally as they mature; 14.5 the Company makes an assignment for the benefit of creditors, its property is attached or a receiver is appointed for the Company or any other insolvency proceedings as instituted by or against the Company; 14.6 whenever CIT, in good faith, believes the prospect of payment or performance is impaired or in good faith believes that the Eligible Inventory and Eligible equipment is not adequate security for the Obligations or in good faith otherwise deems itself to be insecure; 14.7 any information furnished by or on behalf of the Company relating to the Eligible Inventory and Eligible Equipment or the financial condition or business affairs of the Company is determined by CIT to be false or misleading in any material respect; 14.8 any guarantor dies or defaults in the payment or performance of any Obligation to CIT or any guaranty obtained in connection with this Agreement ceases to be in full force and effect; or 14.9 a surety, bonding company or guarantor takes over the Company's performance of any job contracted by the Company. The Company shall not be deemed in default pursuant to the preceding paragraphs 14.1, 14.2, 14.6, 14.7, 14.8 and 14.9 unless or until CIT has provided the Company with prior written notice of default and allowed the Company ten (10) days from the date of receipt of such notice to cure the alleged default. 15. ACCELERATION OF OBLIGATIONS AND REMEDIES. 15.1 Upon the occurrence of an Event of Default and the lapse of the ten (10) day cure period if pertinent, the outstanding balance owing under this Agreement and all other Obligations shall, if CIT shall so elect, become immediately due and payable without notice to or demand upon the Company of any kind and the Loans shall bear interest at the same rate as before maturity until paid in full. In no event shall the Company, upon acceleration of the maturity of the Obligations by CIT, or otherwise, be required to pay any interest in excess of the maximum amount permitted by law. Any acceleration of the Obligations, if elected by CIT, shall be subject to all applicable laws, including laws as to rebates and refunds of unearned charges. 15.2 Upon the occurrence of an Event of Default and the lapse of the ten (10) days cure period if pertinent and at any time thereafter, CIT shall have all the rights and remedies of a secured party under the Uniform Commercial Code and any other applicable laws, including the right to any deficiency remaining after disposition of the Eligible Inventory and Eligible Equipment for which deficiency Company hereby agrees to remain fully liable. The Company agrees that CIT, by itself or its agent, may without notice to any person and without judicial process of any kind, enter into any premises or upon any land owned, leased or otherwise under the real or apparent control of the Company or any agent of the Company where the Eligible Inventory and Eligible Equipment may be or where CIT believes the Eligible Inventory and Eligible Equipment may be, and disassemble, render unusable and/or repossess all or any item of the Eligible Inventory and Eligible Equipment, and disconnect and separate all Eligible Inventory and Eligible Equipment from any other property. The Company expressly waives all further rights to possession of the Eligible Inventory and Eligible Equipment after default and all claims for injuries suffered through the loss caused by such entering and/or repossession. CIT may require the Company to assemble the Eligible Inventory and Eligible Equipment and return it to CIT at a place to be designated by CIT which is reasonably convenient to both parties. CIT will give the Company reasonable notice of the time and place of any public sale of the Eligible Inventory and Eligible Equipment or of the time after which any private sale or any other intended disposition of the Eligible Inventory and Eligible Equipment is to be made. Unless otherwise provided by law, the requirement of reasonable notice shall be met if such notice is mailed, postage prepaid, to the address of the Company shown herein at least 10 days before the time of the sale or disposition. The proceeds of any such sale or other disposition of the Eligible Inventory and Eligible Equipment shall be applied first to the payment of all expenses of retaking, holding, storing and preparing for sale, selling and the like, next to the payment of reasonable attorneys' fees and other legal expenses incurred by CIT in connection with enforcing any of its rights under this Agreement and then to the payment of the Obligations in such order as CIT, in its sole discretion, may elect. All of CIT's rights are cumulative and not alternative. 16. WAIVER OF DEFAULTS; AGREEMENT INCLUSIVE. CIT may in its sole discretion waive a default, or cure, at the Company's expense, a default. Any such waiver in a particular instance or of an particular default shall not be a waiver of other defaults or the same kind of default at another time. No modification or change in this Agreement or any related note, instrument or agreement shall bind CIT unless such changes or modifications shall be in writing signed by CIT. No oral agreement shall be binding on either party. 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 6 of 9 17. FINANCING STATEMENTS; CERTAIN EXPENSES. If permitted by law, the Company authorizes CIT to file financing statement with respect to the Eligible Inventory and Eligible Equipment signed only by CIT and to file a carbon, photograph or other reproduction of this Agreement or of financing statement. At the request of CIT, the Company will execute any financing statements, agreements or documents, in the form satisfactory to CIT which CIT may deem necessary or advisable to establish and maintain a perfected security interest in the Eligible Inventory and Eligible Equipment, and will pay the cost of filing or recording the same in all public offices deemed necessary or advisable by CIT. The Company also agrees to pay all costs and expenses incurred by CIT in conducting UCC, tax or other lien searches against the Company or the Eligible Inventory and Eligible Equipment and such other fees as may be agreed. The Company will reimburse CIT for all out-of-pocket expenses incurred by CIT for any appraisals of equipment and changes made by anyone other than members of CIT's own staff in connection with the processing of the Company's Loan application. 18. GUARANTIES. At, or prior to the making of the initial loan hereunder, the Company will furnish or cause to be furnished to CIT, an unconditional guaranty of the payment and performance of the Company's Obligations, in form and substance satisfactory to CIT, from Meadow Valley Corporation - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 19. APPROVAL OF DOCUMENTATION. All documentation and other matters relating to the transactions contemplated by this Agreement, including but not limited to the validity and enforceability of the guaranties, the first priority security interest in CIT's favor on the property described in Schedule A, and any releases or subordinations covering such property, shall be satisfactory and acceptable to CIT and its counsel prior to disbursements of any and all Loans hereunder. 20. LATE CHARGES. Any payment not made when due shall, at the option of CIT, bear late charges thereon calculated at the rate of 1 1/2 % per month, but in no event greater than the highest rate permitted by relevant law. 21. INVENTORY REPORTS; ASSIGNMENTS OF RECEIVABLES. In furtherance of the continuing assignment and security interest herein contained, the Company will execute and make available to CIT from time to time in such form and manner and with such frequency as may be required by CIT, solely for CIT's convenience in maintaining a record of Eligible Inventory and Eligible Equipment, such confirmatory inventory reports and confirmatory assignments of Receivables, designating, identifying or describing the Eligible Inventory and Eligible Equipment and copies of invoices to customers, agreements of any kind with its customers, copies of suppliers' invoices, evidence of shipment and delivery and such further documentation and information relating to the Eligible Inventory and Eligible Equipment as CIT may require, provided, however, that if the Company should fail to execute and deliver such reports or assignments, such failure shall not affect, diminish, modify or otherwise limit CIT's security interest in all present and future inventory and Receivables of the Company and the proceeds thereof. The Company will furnish to Company within thirty (30) days after the end of each month, an aging report of the Company's customers and amounts owing, prepared as at the end of such month end. The Company agrees to advise CIT promptly of any substantial change relating to the type, quantity or quality of Eligible Inventory and Eligible Equipment or of any event which would have a material effect on the value of the Eligible Inventory and Eligible Equipment or on the security interest granted to CIT therein. 22. CONDITIONS PRECEDENT The making of any Loan hereunder at any time by CIT in its sole discretion is subject, among other things, to compliance in full by the Company with all of the terms and provisions of this Agreement, as at any time amended, and to the further condition that at the time of the proposed making of any such Loan there shall have been no material adverse changes in the financial condition or business of the Company, and that no Event of Default, and no event which with the lapse of time or the notice and lapse of time specified for the purpose of constituting such an Event of Default, has occurred and is continuing at the time of such proposed Loan. 23. ADDITIONAL COVENANTS OF THE COMPANY. See attached Financial Report Covenant Rider consisting of one (1) page attached hereto and made a part hereof. 24. NOTICES. Any notice or request required or permitted to be given under this Agreement shall be sufficient if in writing and sent by hand or by Certified Mail, in either case return receipt requested, to the parties at the following addresses, or at such other address as to which either party shall notify the other in writing: The CIT Group/Equipment Financing, Inc. 1540 West Fountainhead Pkwy. Tempe, AZ 85282 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 7 of 9 Attn: Gerald Rickman Ready Mix, Inc. 3430 E. Flamingo Rd. #100 Las Vegas, NV 89121-5018 Attn: Ken Nelson 25. MISCELLANEOUS. Any provisions hereof contrary to, prohibited by or invalid under applicable laws or regulations shall be inapplicable and deemed omitted here from, but shall not invalidate the remaining provisions hereof. If the Company is a corporation, the Company represents that this Agreement is executed pursuant to the authority of its Board of Directors. The Company and CIT each hereby waive any right to a trial by jury in any action or proceeding with respect to, in connection with, or arising out of this Agreement shall be binding upon and inure to the benefit of the Company and CIT and their respective successors and assigns, except that the Company may not assign or transfer any of its rights under this Agreement without the prior written consent of CIT. Section headings are included in this Agreement for convenience of reference only and shall not constitute a part of the Agreement for any other purpose. If at any time this transaction would be usurious under applicable law, then regardless of any provision contained in this Agreement or in any other agreement made in connection with this transaction, it is agreed that: (a) the total of all consideration which constitutes interest under applicable law that is contracted for, charged or received upon this Agreement or any such other agreement shall under no circumstances exceed the maximum rate of interest authorized by applicable law and any excess shall be credited to the Company; and (b) if CIT elects to accelerate the maturity of, or if CIT permits the Company to prepay the indebtedness, any amounts which because of such action would constitute interest may never include more than the maximum rate of interest authorized by applicable law, and any excess interest, if any, provided for in this Agreement or otherwise, shall be credited to the Company automatically as of the date of acceleration or prepayment. 26. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the law of the State of Arizona. 27. SPECIAL PROVISIONS. (SEE SPECIAL PROVISIONS INSTRUCTIONS BELOW.) See Exhibit "A" consisting of one (1) page attached hereto and made a part hereof. See Rider "A" consisting of one (1) page attached hereto and made a part hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date shown below. DATED: 7/27/01 THE CIT GROUP/EQUIPMENT FINANCING, INC. By [ILLEGIBLE] Title V.P. ----------------------- --------------------- P.O. Box 27248 - --------------------------------------------------------------------- Address Tempe AZ 85285-7248 - --------------------------------------------------------------------- City State Zip Code Ready Mix, Inc. - ---------------------------------------------------------------------- Company 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 8 of 9 By /s/ Kenneth D. Nelson Title Vice President ----------------------- --------------------- Kenneth D. Nelson 3430 E. Flamingo Rd #100 - --------------------------------------------------------------------------- Principal Place of Business Las Vegas NV 89121-5018 - --------------------------------------------------------------------------- City State Zip Code - -------------------------------------------------------------------------------- SPECIAL PROVISIONS INSTRUCTIONS - The notations to be entered in the Special Provisions section of this document for use in ALABAMA, FLORIDA, GEORGIA, IDAHO, NEVADA, NEW HAMPSHIRE, OREGON, SOUTH DAKOTA and WISCONSIN are shown in the applicable State pages of the Loans and Motor Vehicles Manual - -------------------------------------------------------------------------------- 2101 (8/99) Non Standard Revolving Loan Agreement - Single Advance Rate Page 9 of 9 EXHIBIT "A" TO REVOLVING LOAN AGREEMENT DEBTOR: SECURED PARTY: Ready Mix, Inc. The CIT Group/Equipment Financing, Inc. 3430 E Flamingo Rd #100 P.O. Box 27248 Las Vegas, NV 89121-5018 Tempe, AZ 85285-7248 Description of Collateral: - ------------------------- All of the Debtor's property, or interests in property, whether now owned or existing or hereafter acquired or arising and wheresoever located, whether tangible or intangible, including without limitation, all of Debtor's accounts, inventory, goods, furniture, machinery, equipment, fixtures, investment property, general intangibles (including, without limitation, goodwill, inventions, designs, patents, patent applications, trademarks, trademark applications, service marks, trade names, licenses, leasehold interests in real and personal property, franchises, tax refund claims, and guarantee claims, security interests or other security held by or granted to Debtor to secure payment of Debtor's accounts, investment property, general intangibles, instruments, and notes), tax refunds, chattel paper, contract rights, instruments, documents, notes, returned and repossessed goods, together with all accessions to, substitutions for, and all replacements, products and proceeds of the foregoing (including, without limitation, proceeds of insurance policies insuring any of the foregoing), all books and records (including, without limitation, customers lists, credit files, computer programs, printouts and other computer materials and records) pertaining to any of the foregoing, and all insurance policies insuring any of the foregoing. Date: July 27, 2001 --------------- Ready Mix, Inc. By: /s/ Kenneth D. Nelson Title: Vice President ------------------------ --------------- Name: Kenneth D. Nelson FINANCIAL COVENANT RIDER Attached to and by this reference made a part of the Guaranty of Ready Mix, Inc. dated July 27, 2001, wherein Meadow Valley Corporation is the Guarantor. Guarantor covenants and agrees that: (1) during the term of this agreement, it will provide to The CIT Group/Equipment Financing, Inc. ("CIT"), within 45 days of each semi-annual period and within 90 days of each fiscal year end, a balance sheet and income statement of Guarantor, prepared in accordance with generally accepted accounting principles consistently applied, prepared by its independent certified public accountants. (2) at all times during the Guarantor's fiscal year 2001, the Guarantor's Tangible Net Worth will not be less than $11,600,000.00. For each fiscal year thereafter, the Guarantor's Tangible Net Worth shall not be less than the minimum Tangible Net Worth required to be maintained in the previous fiscal year plus 50% of the Guarantor's net income after taxes for the previous fiscal year. The minimum Tangible Net Worth required to be maintained pursuant to this section shall not be decreased if in any fiscal year the Guarantor has a deficit net income after taxes. (3) At all times during the term of this agreement, it will maintain a ratio of Total Debt to Tangible Net Worth of no more than 5.0:1. Meadow Valley Corporation By /s/ Bradley E. Larson ------------------------------ Bradley E. Larson Title President -------------------------- EX-10.156 7 dex10156.txt LEASE AGREEMENT WITH THOMAS MINING Exhibit 10.156 July 30, 2001 1. This contract between Meadow Valley and Thomas Mining, LLC will be for a term of five (5) years, beginning September 1, 2001 and ending August 31, 2006. There is an Option term that would be for a two (2) year period beginning September 1, 2006 and ending on August 31, 2008. 2. Meadow Valley will do all the crushing out of Thomas Mining pit for any job where they may need material in the Yuma area. 3. There is to be a fifty cents ($0.50) per ton royalty charge for the first 100,000 tons of material used by Meadow Valley for Meadow Valley projects. 4. After the first 100,000 tons, the next 100,000 tons will be at a royalty charge of sixty-five cents ($0.65) per ton. 5. After the first 200,000 tons and through the balance of the five-year contract, the royalty price will be eighty-five cents ($0.85) per ton. During the two-year (2) option term the royalty price will be ninety-five ($0.95) per ton, with the right to negotiate on large jobs. 6. Thomas Mining, LLC has the right to sell ABC, rock, sand etc. to any other contractors. 7. In the event another contractor got a job and material was required, Meadow Valley will do all the crushing for Thomas Mining, LLC and the price for the particular material will be negotiated between Meadow Valley and Thomas Mining, LLC before bid time. Thomas Mining, LLC will then sell the material to the other contractor at whatever price Thomas Mining, LLC and the other contractor work out. 1 8. Thomas Mining, LLC will provide a well that will discharge 300 gallons per minute. When Meadow Valley uses the well, Meadow Valley will pay for the power to run the well. 9. Meadow Valley agrees to do all crushing for Thomas Mining, LLC and the fees for that will be negotiated. In the event Meadow Valley can not perform on crushing demands or negotiate the fees, Thomas Mining, LLC, reserves the option to hire another firm or bring in their own equipment to do crushing. 10. Meadow Valley will maintain all insurance necessary for their operation at the pit and name Thomas Mining, LLC as additional insured. 11. At the expiration of this contract, Meadow Valley has six (6) months to remove equipment and clean site or complete any incomplete projects. 12. 988F loader to be supplied by BLT Companies at an agreed rate of $80.00 per hour with an increase each year, after the first year, of 3% per year, without operator and maintained by Meadow Valley unless both parties agree otherwise. Any damage caused by Meadow Valley will be paid by Meadow Valley. 13. Scales will be provided by Thomas Mining, LLC at a charge to Meadow Valley of twenty cents ($0.20) per ton. Scales will be operated by BLT Companies. 14. If Material is taken from BLM land Meadow Valley will pay a willage fee of forty cents ($0.40) per ton to Thomas Mining LLC plus the royalty prices that BLM sets. Thomas Mining, LLC Meadow Valley /s/ BRIAN LEE THOMAS /s/ Samuel J. Grasmick - --------------------------- ------------------------ By: Brian Lee Thomas dated By: Samuel J. Grasmick dated 8/10/01 -------------------- Its: Manager Its: Area Manager ------------------- 2 EX-10.157 8 dex10157.txt EMPLOYMENT AGREEMENT WITH MR. KIESEL Exhibit 10.157 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is entered into as of the 15th day of September 2001, by and between Meadow Valley Corporation, a Nevada corporation (the "Employer"), and Steven L. Kiesel (the "Employee"). The Employer hereby employs the Employee on a full-time basis, and the Employee hereby accepts such full-time employment on the terms and conditions hereinafter set forth. 1. EMPLOYMENT. Employee is employed as the Area Manager - Utah Area for the Employer. Employee shall perform all duties as outlined herein and as may be assigned by the Employer and shall devote full time, attention and loyalty to the affairs of the Employer. The duties of the Employee shall specifically be: A) Complete responsibility for the operational and financial aspects of the Utah Area, including profit and loss responsibility. B) To select, hire and maintain qualified management personnel and to administer and review annually the performance of each person within his direct supervision and adjust compensation in accordance with Company guidelines and subject to the prior approval of the Corporate Chief Operating Officer. C) To oversee the selection, preparation and submission of construction contract estimates and materials sales quotes and proposals and to determine margins in order to maximize Company profitability. D) To oversee the preparation of annual or periodic revisions of project and material plant budgets for submissions to the Corporate Chief Operating Officer for approval, to insure that cost controls are in place and utilized to accurately track production and delivery costs, to monitor customer and project schedules to insure timely and accurate delivery of products and to provide decision-making and problem-solving assistance in all aspects of the Utah Area. To oversee the negotiation, preparation and execution of all subcontracts, purchase agreements, credit policies and other agreements within the Utah Area and as may be required by the Corporate Chief Administrative Officer. E) To maintain and promote relationships with customers and owners with whom the Company contracts. F) To insure that periodic reporting such as monthly production reports, project Fcosts and ECAC's and other cost and revenue reports as required by management are prepared and submitted correctly and on a timely basis. G) Prepares annual operating budgets and capital expenditure budgets and periodic forecasts as required. H) Resolve complaints and/or claims relating to the Utah Area, or to provide assistance in preparing for and presenting the Company's position in claims hearings. I) To provide input and counsel to strategic and business plans for the entire Company. J) To assist in any other projects or duties as may be assigned by the Chief Operating Officer. K) To see that all Company policies are enforced and adhered to. 2. TERM. Subject to the provisions of termination provided in paragraph 11, the initial term of this Agreement shall commence on September 15, ------- 2001 and terminate on September 15, 2006. This Agreement may be extended by the mutual written agreement of the Employee and the Employer. 3. COMPENSATION. Employee shall receive a base salary of Ninety-four thousand dollars ($94,000.00) per year, payable in accordance with the regular payroll practices of Employer, and subject to applicable deductions of withholding taxes and other customary employment taxes. The Chief Operating Officer shall review Employee's salary at a minimum annually and may adjust Employee's salary upward to recognize improvement, achievement or expansion of Employee's responsibilities subject to approval of the Board Compensation Committee. Employee shall participate in cash incentive plans as currently existing or as amended or adopted in the future by the Compensation Committee of Employer's Board of Directors. Cash bonus plans are subject to annual review and/or change as recommended by the Compensation Committee and approved by the Board of Directors. 4. OPTIONS TO ACQUIRE COMMON STOCK. Employee is eligible to participate in the Meadow Valley Corporation 1994 Stock Option Plan. Future grants of stock options shall be subject to the discretion of Meadow Valley Corporation's board of directors. 5. EMPLOYEE BENEFITS. Employer shall provide to Employee, and to Employee's dependents, a comprehensive major medical, health, and dental insurance program comparable to the programs normally provided by other employers in the same industry and marketplace, and the Employer shall pay the cost of the Employee's portion of the premium. Insurance coverage may be subject to pre-existing condition limitations. Should, at any time, the Employee opt to maintain a personal major medical and health insurance policy for himself and for his dependents and not participate in the Employer's group plan, then Employer shall reimburse Employee the lesser of the amount Employee pays for said personal policy, as evidenced by adequate documentation, or what Employer would otherwise be paying were Employee participating in the Employer's group plan. Should the Employee opt to maintain his own coverage, neither he nor his dependents shall be precluded from later participating in the Employer's group plan so long as they otherwise qualify for enrollment. At Employer's cost and subject to verification of insurability, Employer will maintain a life insurance policy covering Employee, with at least $250,000 of death benefits being payable, in a manner that is free of income tax, to Employee's estate or other beneficiaries designated by Employee. Employer agrees to provide Employee with an automobile for business-related use. In additional to the cost of the vehicle itself, Employer shall pay, directly or by 2 reimbursement to Employee, for all maintenance, fuel, repairs, insurance, operating and other costs incidental thereto. Employer shall pay for, or reimburse Employee for, dues for his membership in industry related associations perceived as beneficial to Employer and as approved by the Chief Executive Officer of the Chief Operating Officer. So long as it is within the guidelines of the respective plan, Employee shall be given the opportunity to participate in the Employer's 401(k). 6. MOVING EXPENSES AND SUBSISTENCE. Employer shall pay for all moving costs of reasonable and normal household effects from Las Vegas to a single location in Utah as designated by the Employee, including up to six months storage of such household effects in Las Vegas or Utah, whichever is more economical and practical, while Employee and his spouse obtain a permanent residence in Utah. Employee shall obtain two moving and storage quotes from reputable movers and Employer shall pay the most competitive rate. Employer shall provide Employee a subsistence allowance of One Thousand Dollars ($1,000.00) per month for the lesser of three months from September 1, 2001 or until such time as the relocation of the Employee and his spouse to Utah is complete. 7. HOLIDAYS AND VACATION. A) Employee shall be paid for the following seven (7) holidays: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and the day after Thanksgiving, and Christmas Day and all other holidays for Employees of the Company as approved by the Chief Executive Officer or Board of Directors. B) Employee is entitled to three weeks vacation during the first year of employment and for each year thereafter. Unused vacation in any given year shall accrue to following years up to a maximum of eight weeks in any one year. All other conditions with respect to vacations shall be consistent with the Company's vacation and holiday policy. 8. RESPONSIBILITIES OF EMPLOYEE. The Employee shall devote such reasonable time as is necessary or is deemed reasonably necessary by the Employer to carry out all required duties and will devote full time to the Employer during normal business hours. The Employee shall at all times faithfully, with diligence and to the Employee's best good faith ability, experience and talents, perform all the duties that may be required pursuant to the express terms hereof to the reasonable satisfaction of the Employer, in accordance with customary professional standards. 9. WORKING FACILITIES. The Employee shall be furnished with all facilities and services suitable to Employee's position and adequate for the performance of Employee's duties. 3 10. EXPENSES. The Employee is authorized to incur reasonable expenses for promoting business of the Employer, including expenses for entertainment, travel, and similar items. The Employer shall reimburse the Employee for all such expenses on the presentation by the Employee of itemized and adequately documented accounts of such expenditures. 11. TERMINATION. This Employment Agreement may be terminated under the following circumstances: A) WITHOUT CAUSE. Employer may terminate this Agreement at any time upon thirty (30) days written notice to Employee, but Employer shall be obligated to pay to Employee compensation in a lump sum for the balance of the term of this Agreement within 30 days of termination, unless Employee agrees to other payment terms. B) VOLUNTARY TERMINATION BY EMPLOYEE WITHOUT CAUSE. Employee may terminate this Agreement at any time upon thirty (30) days written notice to Employer and Employer shall be obligated, in that event, to pay Employee compensation up to the date of the termination only. All accrued but unpaid compensation shall be paid in cash within 30 days of termination, unless Employee agrees to other payment terms. C) TERMINATION BY EMPLOYER FOR REASONABLE CAUSE. The Employer may terminate this Agreement for reasonable cause upon thirty (30) days written notice to the Employee and Employer shall be obligated, in that event, to pay Employee compensation up to the date of termination only. For purposes hereof, "cause" shall be defined as meaning (i) such conduct by the Employee which constitutes material breach of this Agreement which is not cured within ninety (90) days of written notice to the Employee of said alleged breach or (ii) a material failure to competently perform Employee's duties as stated in paragraph 1 in accordance with applicable professional standards as stated in paragraphs 1 and 8 hereof provided that Employer has previously given Employee written notice and a reasonable opportunity to remedy such failure and such failure has materially adverse effect on the business or financial condition of Employer or (iii) material breach of Employee's fiduciary duty and such breach has a material adverse effect on the business or financial condition of Employer or (iv) egregiously improper or illegal conduct of the Employee which, in the Employer' sole discretion, has a material adverse effect on Employer. 4 D) TERMINATION BY EMPLOYEE FOR REASONABLE CAUSE. Employee may terminate this Agreement for cause. In such event, Employer shall be obligated to pay Employee compensation in lump sum for the balance of the term of this Agreement within 30 days of termination or as Employee shall agree, plus damages suffered and expenses incurred by reason thereof. For this purpose "cause" shall mean (i) a material breach of this Agreement by Employer or (ii) failure of Employer to pay any amount owed Employee hereunder at the time and in the amount due or (iii) failure of Employer to follow applicable law or (iv) egregiously improper conduct with respect to dealing with Employee or in a manner which brings discredit to Employee. 12. CONFIDENTIALITY. Employee agrees not to disclose any confidential, proprietary competitively sensitive information to persons who are not employees, directors, lenders, bonding agents, insurance companies or advisors of the Employer, except as required by law, without prior consent of the Employer; provided however, any disclosure involving this paragraph shall not result in a breach of this Agreement unless the disclosure has a materially adverse effect on the Employer. 13. NOTICES. All notices, demands, and communications given under this Agreement ("Notice") shall be in writing and delivered personally or sent by registered or certified mail, return receipt requested, in the United States mail, postage prepaid, addressed as follows: If to Employer: Meadow Valley Corporation P.O. Box 60726 Phoenix, AZ 85082-0726 If to Employee: ----------------------------------- ----------------------------------- ----------------------------------- or at such other address as a party may from time to time designate by Notice hereunder. Notice shall be effective upon delivery in person, or if mailed, at midnight on the third business day after the date of mailing. 14. ASSIGNMENT OF AGREEMENT. Neither party may assign or otherwise transfer this Agreement or any of its rights or obligations hereunder without the prior written consent to such assignment or transfer by the other party hereto; and all the provisions of this Agreement shall be binding upon the respective employees, successors, heirs and assigns of the parties; provided, however, the benefits payable to Employee hereunder in the event of disability or death or incapacity are payable to Employee's spouse or personal representative. 5 15. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. This Agreement and the representations, warranties, covenants and other agreements (however characterized or described) by both parties and contained herein or made pursuant to the provisions hereof shall survive the execution and delivery of this Agreement. 16. FURTHER INSTRUMENTS. The parties shall execute and deliver any and all such other instruments in reasonable mutually acceptable form and substance and shall take any and all such other actions as may be reasonably necessary to carry the intent of the Agreement into full force and effect. 17. SEVERABILITY. If any provision of this Agreement shall be held, declared or pronounced void, voidable, invalid, unenforceable or inoperative for any reason by any court of competent jurisdiction, governmental authority or otherwise, such holding, declaration or pronouncement shall not affect adversely any other provision of this Agreement, which shall otherwise remain in full force and effect and be enforced in accordance with its terms, and the effect of such holding, declaration or pronouncement shall be limited to the territory of jurisdiction in which made. 18. WAIVER. All the rights and remedies of either party under this Agreement are cumulative and not exclusive of any other rights and remedies provided by law. No delay or failure on the part of either party in the exercise of any right or remedy arising from a breach of this Agreement shall operate as a waiver of any subsequent right or remedy arising from a subsequent breach of this Agreement. The consent of any party where required hereunder to any act or occurrence shall not be deemed to be a consent to any other act or occurrence. 19. GENERAL PROVISIONS. This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the state of Arizona. Except as otherwise expressly stated herein, time is of the essence in performing under this Agreement. This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter of this Agreement as it relates to the parties' duties and obligations from and after September 15, 2001, and this Agreement may not be modified or amended or any term or provision hereof waived or discharged except in writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced. The headings of this Agreement are for convenience in reference only and shall not limit or otherwise affect the meaning thereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument. 6 20. SPECIAL RIGHT OF EMPLOYEE UNDER CERTAIN CIRCUMSTANCES. During the term of this Agreement, if the Employer is involved in a merger, consolidation or other business combination in which the Employer is not the surviving and controlling entity and the Employee is required to relocate outside the State of Utah in a manner not mutually acceptable to Employee and Employer, then Employee shall have the following rights: A) To terminate this Agreement with 30 days prior notice, in which event Employer shall pay Employee an amount equal to one year's salary at the Employee's current rate and B) All options granted shall, to the extent not specifically prohibited by the stock option plan then in effect, vest immediately and be exercisable within one year of the termination notice provided in A above. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. Meadow Valley Corporation /s/ STEVEN L. KIESEL By /s/ BRADLEY E. LARSON - --------------------- ---------------------- Employee President/CEO 7 EX-10.158 9 dex10158.txt SECURITY AGREEMENT WITH VOLVO COMMERCIAL FINANCE Exhibit 10.158
================================================================================================================================= SELLER'S NAME AND ADDRESS BUYER'S NAME AND ADDRESS ================================================================================================================================= Name: Arnold Machinery Legal Name(s): Ready Mix, Inc. Street Address: 4136 Donovan Way Street Address: 3430 E. Flamingo Road, Suite 100 (Place of Business) (Place of Business) Mailing Address: Same as above Mailing Address: Same as above City: N. Las Vegas State: NV Zip: 89030 City: Las Vegas County: Clark State: NV Zip: 89121 Telephone: 702-642-9000 Fax 702-642-8808 Telephone: 702-433-2090 Fax 702-433-0189 Distributor Code: C05856 Fed. ID No. 86-0830443 State of Formation: Nevada ================================================================================================================================= Arnold Machinery Company Ready Mix Inc. Seller: Buyer: /s/ KENNETH D. NELSON - ----------------------------------------- ----------------------------------------- Signature Signature KENNETH D. NELSON, VICE PRESIDENT - ----------------------------------------- ----------------------------------------- Title Printed Name and Title(s) 09/__/0l 09/28/0l Date Date
NOTICE TO BUYER: l. Liability Insurance coverage for bodily injury and property damage is not included in this Contract. 2. Do not sign this Contract before reading or if the Contract is not complete. 3. You are entitled to an exact and completely filled in copy of the contract you sign. 4. Keep this Contract to protect your legal rights. 5. Additional terms are set forth below, ADDITIONAL TERMS OF CREDIT SALES CONTRACT Assignment and Waiver of Defenses: Buyer acknowledges receipt of notice that Seller is assigning this Contract immediately upon execution to Volvo Commercial Finance LLC The Americas, whose primary place of business is located in North Carolina ("Assignee") and that: (a) Assignee has all of Seller's rights and remedies, and all of Buyer's agreements. representations and warranties shall be deemed to have been made to Assignee as if Assignee were a party to this Contract; (b) Seller is not Assignee's agent for any purposes; (c) Seller will not have any power or authority to modify any term of this Contract: (d) Buyer will not assert any claims or defenses Buyer may have against Seller or any other party and will settle all claims, defenses, set-offs; and counterclaims it may have against Seller or the manufacturer of the Units (the "Manufacturer"), including, but not limited to, defects in the Units, directly and solely with Seller or the Manufacturer; (e) Assignee any compensate Seller in excess of the Amount Financed in exchange for assignment of this Contract; (f) Assignee's decision to purchase this Contract from Seller relies, in part, upon the warranties and agreements made by Buyer: and (g) All references to "Seller" in this Agreement (other than Seller's obligation to sell the Units to Buyer) shall be deemed to refer to Assignee and its successors and assigns. No Warranties: THERE ARE NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OTHER THAN THOSE MADE BY THE MANUFACTURER OF THE COLLATERAL. Buyer acknowledges that it is not relying on any representations from Seller (or any other party) relating to financing made under this Contract. Buyer's Representations: Buyer warrants and represents that: (a) Buyer is indebted for the Total Obligation shown on line 14; (b) except for the security interest granted to Seller, Units will remain free from all liens and security interests; (c) all information supplied by Buyer in any financial, credit or accounting statement to Seller are and will be true, correct and genuine, and Buyer consents to the ongoing review of Buyers credit reports during the term of this Contract; (d) Units are to be used only for business purposes; (e) Buyer has full authority to enter into this Contract and in so doing it is not violating any law, regulation or agreement and has taken all necessary and appropriate actions to make this Contract binding and enforceable against Buyer in accordance with its terns; and (f) my Units traded in are owned by Buyer and free of all security interests and liens except as stated. Buyer's Agreements: Buyer agrees: (a) to defend at its own cost any action, proceeding or claim affecting the Units; (b) to maintain the Units in good operating condition, repair, and appearance, all in conformity, with all governmental regulations, insurance policies, and Manufacturer's warranties; (c) to promptly pay all taxes, assessments, license fees and other public private charges when levied against the Units or this Contract; (d) to obtain a UCC, or a certificate of title if applicable, on each of the Units showing Seller's first priority security interest and to preserve and perfect that security interest; (e) to not misuse, secrete, sell, rent, lend, encumber or transfer any of the Units nor permit them to be operated by or he in the possession of any other party; (f) that Seller any enter any premises at my reasonable times to inspect the Units; (g) to not assign or encumber my of its rights or obligations under this Contract; (h) to provide Seller with quarterly and annual financial statements within 30 and 90 days, respectively, of the end of the applicable period; (i) to reimburse Seller immediately after written notice for any expenses incurred by Seller to perform any of the Obligations of Buyer, and (j) that the Units will not be used to dig, load, haul or transport environmentally hazardous materials, contaminants, or waste products. Insurance and Risk of Loss: All risk of loss, damage or destruction of the Units will at all times be on Buyer. Buyer will keep the Units insured at Buyers expense against (i) liability for not less than $1,000,000 per occurrence, and (ii) loss or damage by fire, theft and other customary risks for the greater of the Units' full insurable value or the Indebtedness. with a deductible not to exceed $2,500 per Unit. Coverage and insurer will be subject to Seller's reasonable approval (with the insurer being rated not less than B+ by A. M. Best. with a financial class size of at least VIII, with Seller being named an additional insured and/or loss payee on the policies, as applicable. Each policy will further provide that Seller's interest can not be invalidated by any act, omissions or neglect of any party other than Seller and that the insurer will give Seller thirty days advance written notice of any policy cancellation or non-renewal, whether such cancellation or non-renewal is at the direction of Buyer or insurer. Buyer will promptly deliver a copy of each policy or insurance certificate to Seller and proof of renewal at least 30 days prior to expiration or cancellation. If Buyer fails to so insure the Units, Seller may purchase such insurance at Buyer's expense. purchase of which need not include liability or protection of Buyer's interest. Buyer hereby irrevocably appoints Seller as Buyer's attorney-in-fact to execute and endorse all documents, checks, or drafts in Buyer's name and to submit any proof of loss to collect such insurance. Duty to Pay: Any warranty, service contract, insurance policy or other service financed through this Contract is separate and independent of this Contract and is the sole obligation of the issuer of such warranty, service contract, insurance policy or other service. Buyer shall pay each Installment on time regardless of any claimed defect in the Units or any other entity's breach of any warranty, service contract or insurance policy. Each Installment is due monthly without notice beginning on the "Starting Date" and continuing on the same day of each month thereafter. CONSTRUCTION 6.01 -2(3) Late Charge: A late charge of 5% of any overdue amount on any Installment will be charged for each Installment not received in full in immediately good funds within ten (10) days of its due date. All other Indebtedness due from Buyer to Seller not paid by its respective due date and, after acceleration, the entire unpaid balance of the Total Obligation, will bear interest at the rate of 18% per annum or such lesser rate as is required under applicable law. All payments may at the option of the Seller be applied first to late charges, then to other charges, and then to accrued and unpaid interest and last to the unpaid principal balance. Events of Default: Each of the following is an "Event of Default" under this Contract: (a) Buyer fails to pay any Installment to Seller in full when due or fails to make any other payment of the Indebtedness; (b) Buyer breaches any provision, representation, or warranty of this Contract, or any other contract held by or agreement with Seller, and fails to cure such breach after ten (l0) days' written notice; (c) any of the Units arc lost, severely damaged, destroyed or seized: (d) Buyer or any guarantor dies, becomes insolvent, or ceases to do business in the ordinary course. or has a material adverse change in its management; (e) a petition in bankruptcy is filed by or against Buyer or any guarantor; (f) Buyer admits its inability to pay its debts as they come due or a receiver is appointed for Buyer or any guarantor, and (g) any guarantor, surety or endorser for Buyer defaults in any obligation or liability to Seller. Whenever an Event of Default exists under this Contract or any other agreement hell by Seller, all debts and contracts, if Seller so elects, will become immediately due and payable. Remedies: Upon the occurrence of an Event of Default, and in addition to all other rights and remedies available under applicable law, Seller may (i) at its option, declare all of the Indebtedness immediately due and payable; (ii) without notice or demand or legal process, take possession of the Collateral wherever located and, for this purpose, may enter upon the property occupied or under the control of Buyer; (iii) require Buyer to assemble the Collateral and make it available to Seller at a place to be designated by Seller; (iv) at the expense of Buyer, make repairs to the Units deemed necessary by Seller; and (v) with or without obtaining possession of the Collateral or any part thereof sell the same at a public or private sale(s). The proceeds of any sale(s), after deducting all expenses and costs (including reasonable attorneys' fees and expenses), shall be applied to the Indebtedness or any other indebtedness of Buyer to Seller, and any surplus remaining shall be paid to Buyer or to any other party who may be legally entitled to such surplus. At any sale or disposition, and as permitted by law, Seller may purchase any or all of the Collateral and/or accept a trade of property for all or any portion of the purchase price. Seller shall have all of the rights and remedies afforded a secured party under the Uniform Commercial Code as adopted in the State of North Carolina. All rights and remedies are cumulative, not alternative, and shall inure to the benefit of Seller and its successors and assigns. No liability shall be asserted or enforced against Seller under this Section except for Seller's intentional wrongful acts. Seller may in its sole discretion waive an Event of Default or allow a cure of an Event of Default. Any waiver will not constitute a waiver of any other Event of Default. Consents and Waivers: To the extent permitted under applicable law, Buyer expressly consents to and authorizes a court with jurisdiction to issue, by hearing without notice, such orders as may be necessary to enforce the terms of this Contract, granting to Seller such powers as Seller shall need to enforce this Contract. Any such court is directed to not require a bond of Seller, the parties agreeing that time is of the essence to protect Seller. To the extent permitted under applicable law, Buyer expressly waives any notice of sale or other disposition of the Collateral and of any other exercise of any right or remedy of Seller existing after the occurrence of an Event of Default and, that to the extent that such notices cannot be waived, notices shall be in writing, given to Buyer at the address set forth on page 1 (or m such other address as provided in writing by Buyer) by registered or certified mail at least five (5) days before the date of sale. Notices given in accordance with the preceding sentence shall be deemed reasonable and to fully satisfy the requirement for the giving of notice to Buyer. Governing Law: This Contract is effective when accepted by Assignee at its principal place of business in North Carolina and is governed by the substantive (not conflicts) laws of the State of North Carolina. Miscellaneous: To the extent permitted under applicable law, Buyer waives all exemptions, acceptances, presentment, demand for payment, notice of non-payment, protest, notice of protest, notice of dishonor, and all notices in connection with this Contract. filing of suit, and diligence in collecting the Indebtedness or enforcing any provision of this Contract. To the extent any provision of this Contract shall be determined unenforceable under applicable law, such provisions shall be revised to the minimum extent necessary to make such provision enforceable and all of the other provisions shall be enforceable in accordance with their terms. Buyer agrees to pay on demand. all attorneys' fees and all other costs and expenses which may be incurred by Seller in the enforcement of this Contract or in any way arising out of, the protection, assertion or enforcement of this Contract, whether or not suit is brought. Said fees are recoverable whether incurred in any bankruptcy, insolvency or receivership proceedings. Buyer shall be further liable for all costs and expenses of any nature whatsoever incurred by Seller in any repossession, recovery, storage, repair, sale, release or other disposition of the property, plus interest on each of the foregoing at the rate of 18% per annum from the date said costs and expenses are incurred. Buyer hereby appoints Seller as agent for the benefit of Buyer and grants Seller an irrevocable power of attorney to (i) correct obvious errors and fill in such blanks as serial numbers, date of first payment and similar provisions: (ii) take any and all actions and to execute and file all documents necessary to establish, maintain, and continue the perfected security interest of Seller in the Units, in the name of and on behalf of Seller, at Buyer's sole cost and expense; and (iii) to endorse Buyer's name to any title application, registration, licensing, and related documents for the purpose of securing certificates of title, registrations, and licenses, if any, issued showing Buyer's interests in and/or ownership of Units and other equipment. This power of attorney is coupled with an interest and is irrevocable during the term of this Contract. Buyer shall take all actions and execute and file all documents reasonably requested by Seller to establish, maintain, and continue the perfected security interest of Seller. Buyer shall, within ten (10) days after receipt of notice from Seller, pay all costs and expenses of filing and recording (including the costs of all searches deemed necessary by Seller) to establish, maintain, and determine the validity and priority of Sellers security interest. Any documentation fee may reimburse and/or compensate Seller or Assignee for documenting the transactions contemplated in this Contract and may result in profit to Seller and/or Assignee. The terms "Buyer;" "Seller," "Assignee," and guarantors shall include heirs, executors, administrators, successors or assigns of those parties. The headings at the beginning of each section of this Contract are solely for convenience and do not modify any section. Time is of the essence of this Contract. Entire Agreement: This Contract which Buyer acknowledges reading it in its entirety, together parties with any written riders executed by both Buyer and Seller, constitutes the entire agreement between the panics concerning the financing of the Units. No modification of this Contract shall be enforceable unless included in a written document duly executed by both Buyer and an officer of Seller. Sellers Initials: Buyers Initials: /s/ --------- --------- CONSTRUCTION 6.01 -3(3)
VOLVO Credit Sales Contract - E (Corporation or Other Entity) Volvo Commercial Finance LLC The Americas (Security Agreement -------------------------- Customer No. Schedule No. 066-502354 001 -------------------------- ================================================================================================================================= DESCRIPTION OF UNITS PURCHASED AND FINANCED (The "Units") - --------------------------------------------------------------------------------------------------------------------------------- Make Model Description Serial No. Attachments Amt. Financed - --------------------------------------------------------------------------------------------------------------------------------- Volvo A30C Articulated Hauler A30CV60032 180,430.00 Address(es) where Units will be located: 3430 E. Flamingo Road, Suite 100 Las Vegas, Nevada 89121 ================================================================================================================================= TRADE-IN DESCRIPTION 1. Unit Cash Sales Price 168,000,00 - -------------------------------------------------------------- N/A 2. Net Trade-in Allowance 0.00 (Net Value minus Total liens) 3. Subtotal(1 minus 2) 168,000,00 4. Sales Tax 12,180.00 - -------------------------------------------------------------- 5. Unit Insurance 0.00 Total Value: N/A Total Liens: N/A ============================================================== 6. Other Insurance 0.00 Interest Rate: 0.00% - -------------------------------------------------------------- 7. Documentation Fees 250.00 Buyer Agrees to pay the "Total Obligation" (Item 14) In accordance with the following 8. Registration/Title Fees 0.00 schedule (and any additional page(s) of such schedule attached hereto). 9. Other Charges (Describe) 0.00 No. of Installments Start/Due Date Payment Amt. Total --------------------------- 0.00 1 10/2001 5,012.10 5,012.10 --------------------------- 0.00 35 11/2001 5,011.94 175,417,90 --------------------------- 0.00 --------------------------- 0.00 Total No. Payments 36 Total Amount: 180,430.00 ============================================================== --------------------------- 0.00 If shown in this box, Buyer has elected to finance certain 10. Total itemized Charges insurance and other services through this Contract. The terms of tech service are contained in separate agreement(s), Buyer (4 through 9) 12,430.00 has received copies of such agreements, and Buyer agrees ----------- that such agreements are not part of this Contract. Policy Total Charge 11. Cash Down Payment 0.00 term (Item 5) Unit Insurance: N/A N/A 12. Amount Financed (3+10-11) 180,430.00 (Item 6) Other Insurance: N/A N/A 13. Finance Charge 0.00 (Item 9) Other Charges: N/A N/A 14. Total Obligation (12+13) 180.430.00 =================================================================================================================================
Credit Sale: The undersigned buyer (the "Buyer") has chosen to purchase and hereby purchases on credit the Units from the undersigned seller (the "Seller") and agrees to pay in full the Total Obligation set forth In Item 14 above, in addition to the Total Obligation, Buyer agrees to pay all other amounts owed to Seller under this Contract (collectively, the "Indebtedness") when due. Buyer may prepay the Total Obligation in whole or in part on any Installment Due Onto by (i) giving Seller at least thirty (30) days' prior written notice of such prepayment and (ii) paying to Seller the amount of the unpaid balance of the Amount Financed being prepaid on such Installment Due Date, the Installment due on such Installment Due Date, and all other amounts of the Indebtedness then due and remaining unpaid under this Contract. Security Interest: In order to secure payment of the Indebtedness and all other debts and obligations at any time owing from Buyer to Seller. Buyer hereby grants to Seller a security interest in and to the Units, together with all present and future attachments, accessions, replacements, parts, substitutions, chattel paper, and proceeds, including amounts payable under any Insurance policies (the "Collateral"). Buyer agrees that a photocopy or other reproduction of this Contract or of any financing statement may be filed as a financing statement. Seller's Initials: Buyer's Initials: /s/ ----------------- --------- CONSTRUCTION 6.01 -1(3) -----END PRIVACY-ENHANCED MESSAGE-----