Exhibit 10.159
RMI Enterprises, LLC
North Las Vegas, NV 89030
Tel: 702-657-1500; Fax 702-657-1411
February 8, 2002
PRIVATE AND CONFIDENTIAL
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Bradley E. Larson, President and Chief Executive Officer
Meadow Valley Corporation
4411 South 40th St., Suite D-11
Phoenix, Arizona 85040
Dear Mr. Larson:
This letter will serve as a non-binding (except as set forth in paragraph
16 below) expression of intent to acquire all of the capital stock and business
of Ready Mix, Inc., a Nevada corporation ("Ready Mix"), and wholly-owned
subsidiary of Meadow Valley Corporation, a Nevada corporation ("Seller"), on the
following principal terms and conditions:
1. The purchaser will be RMI Enterprises, LLC, a Nevada limited
liability company or one of its affiliates ("Purchaser"). Purchaser and
such affiliate, if any, will be owned by Stuart R. Engs, Jr. or an entity
or entities wholly owned by Stuart R. Engs, Jr. ("Purchaser's Owner") and
are not, and at Closing will not be, directly or indirectly controlled by,
or under common control with any person or entity other than Purchaser's
Owner.
2. Purchaser will acquire all of the capital stock ("Stock") of Ready
Mix, free and clear of all claims and encumbrances of any kind as of the
"Closing" (defined below in paragraph 10), and Ready Mix shall own free and
clear of any claim by Seller following the Closing, without limitation, all
of the following: (a) all current assets listed on Ready Mix's balance
sheet as of November 30, 2001 as heretofore delived to Purchaser (the
"November Balance Sheet") consisting of cash, accounts receivable,
inventories of raw material, work in progress, finished goods and supplies,
prepaid expenses and other current assets; (b) all property and equipment
consisting of land and buildings; furniture; fixtures, trucks and other
equipment; construction in progress; and intellectual property rights owned
by Ready Mix (and by Seller relating solely to Ready Mix) and necessary for
the business of Ready Mix, all as listed on Ready Mix's November Balance
Sheet; (c) all business records including without limitation computer
files, software, customer records and telephone numbers; (d) all interests
as lessee in operating leases and assets covered thereby which are required
to be disclosed in connection with the November Balance Sheet in accordance
with generally accepted accounting principles; (e) all licenses, permits
and operating rights; (f) all refundable deposits; and (g) all contracts
and contract rights.
3. The consideration to be provided by Purchaser for Stock, and for
Seller's non-competition covenant referred to in paragraph 7, will be
Purchaser's undertaking to cause Ready Mix to repay to Seller in cash at
Closing an amount (the "Intercompany Prepayment Amount") in complete
discharge of all inter-company debt owing from Ready Mix to Seller. Subject
to adjustment as noted below in this paragraph
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 2
3, the Intercompany Prepayment Amount shall be Four Million One Hundred One
Thousand Four Hundred Thirty-Four Dollars ($4,101,434). The Intercompany
Prepayment Amount represents the amount agreed to by the parties working
off the November Balance Sheet after applying certain adjustments which
will be set forth specifically on an attachment to the definitive stock
purchase agreement referred to in paragraph 16. The Intercompany Prepayment
Amount shall be (a) increased by the amount, if any, that assets set forth
on the November Balance Sheet are less, and/or the liabilities are greater,
than the respective assets and liabilities set forth on Ready Mix's balance
sheet as of the Closing Date (which shall be prepared in accordance with
the same accounting principles as, and in a manner consistent with, those
of the November Balance Sheet)("Closing Balance Sheet"); and (b) decreased
by the amount, if any, that assets set forth on the November Balance Sheet
are greater, and/or the liabilities are less, than the respective assets
and liabilities set forth on the Closing Balance Sheet.
4. The Intercompany Prepayment Amount shall be paid by Ready Mix in
cash to Seller at Closing, out of funds provided by Purchaser, by cashier's
check or wire transfer of immediately available funds.
5. Purchaser's acquisition of the Stock notwithstanding, Seller will
indemnify and defend Purchaser from and against, and Ready Mix and
Purchaser shall not be obligated with respect to, any liabilities of Seller
and Ready Mix which are not reflected on the November Balance Sheet or in
the notes thereto or incurred prior to Closing in the ordinary course of
business (including, without limitation, liabilities for federal, state and
local taxes and any liabilities relating to environmental laws), all of
which shall be assumed by Seller. General real and personal property taxes
for the current year relating to Ready Mix shall be prorated as of the
Closing Date for purposes of the Closing Balance Sheet. If the Closing
occurs before the tax rate is fixed for the current year, the apportionment
of taxes shall be upon the basis of the tax rate for the immediately
preceding year applied to the latest assessed valuation of Ready Mix's
assets.
6. Seller shall make reasonable efforts to assist Purchaser and
Ready Mix in collecting for the account of Ready Mix and Purchaser the
accounts receivable of Ready Mix which arose prior to the Closing Date and
shall promptly remit to Purchaser any such amounts received by Seller in a
manner to be negotiated. Any amounts received by Ready Mix and Purchaser
from parties that owe accounts receivable to Seller or Ready Mix with
respect to the period prior to the Closing and accounts receivable to
Purchaser concerning the period after the Closing shall be applied to the
invoice specified by the paying party, but if no invoice is specified such
amounts will be applied on a first-in, first-out basis based on the date of
the invoice.
7. The definitive stock purchase agreement referred to in paragraph
16 below, will be entered into between Purchaser and Seller governing the
transaction contemplated hereby ("Transaction") and will contain customary
representations and warranties, covenants (including a non-competition
covenant by Seller
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 3
covering the business of Ready Mix, throughout the geographic region
currently covered by Seller and Ready Mix for a period of five years
following the Closing), indemnities and conditions, and a post-Closing
price adjustment, mechanism, all on terms to be acceptable to the parties.
Seller's faithful performance of its indemnification covenants shall be
partially secured by a hold-back of a $300,000 portion of the Intercompany
Prepayment Amount to be placed into a mutually agreed-upon interest-bearing
escrow at Closing. The holdback will be released automatically to Seller on
December 31, 2002 to the extent that the escrow has not been encumbered by
properly noticed claims, if any, asserted by Purchaser in accordance with
the terms of the stock purchase agreement. The stock purchase agreement
shall set forth the allocation of the Intercompany Prepayment Amount
between (a) satisfaction of intercompany debt and (b) Seller's non-
competition covenant.
8. Seller and Ready Mix will give Purchaser and its attorneys,
accountants, consultants, and other authorized representatives, an
opportunity to examine all of the properties and records of Ready Mix and
properties and records of Seller attributable primarily to Ready Mix (for
inspection and copying) for the period ending 30 days after the execution
of this letter by Purchaser or ending on any earlier date when the
definitive stock purchase agreement is executed. Additional due diligence
investigation may be necessary only on a basis, and for a period, to be
mutually agreed upon between Purchaser and Seller. In addition, promptly
upon the execution of this letter, Purchaser may, upon Purchaser's request,
retain an acceptable environmental consultant to conduct an environmental
audit of the real property owned or occupied, or both, by Ready Mix. The
fees and expenses of such consultant shall be borne by Purchaser.
9. From the date of this letter through the earlier of (i) the date
on which Purchaser notifies Seller in writing that Purchaser has elected
not to proceed with the Transaction, which Purchaser or Seller may
determine to do in its respective sole and absolute discretion, and (ii)
the period specified above in paragraph 8, Seller shall not, and shall not
permit any of its representatives, officers or directors or other
authorized representatives or agents to, directly or indirectly, encourage,
solicit, initiate, conduct or continue discussions or negotiations with, or
provide any information to, any other entity or person concerning a sale of
Ready Mix, whether through a sale of stock, assets or business or a merger,
consolidation or other business combination (collectively, an "Acquisition
Transaction"); provided, however, that, in response to a wholly unsolicited
request from a third party with respect to an Acquisition Transaction,
Seller may furnish information concerning its business, properties or
assets to such third party if (a) in such case outside counsel to Seller or
to Seller's board of directors advises Seller's board of directors that in
the exercise of the fiduciary responsibilities of the members of Seller's
board of directors such information should be provided to such third party;
and (b) Seller promptly informs Purchaser of any inquiry (including the
terms thereof) which Seller may receive in respect of an Acquisition
Transaction.
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 4
10. The Closing of the Transaction under the definitive stock purchase
agreement ("Closing") shall take place as soon as practicable after the
completion of the due diligence investigation referred to in paragraph 8.
11. (a) Purchaser's obligations under the definitive stock purchase
agreement to consummate the Closing will be subject to customary conditions
including, without limitation, the conditions that:
(i) Bob Morris shall have entered into a two-year non-competition
agreement in favor of Purchaser and its successors and assigns preventing
Mr. Morris from engaging in the business of manufacturing or sales of
concrete or aggregates other than in connection with Seller's operation of
(a) its existing Prescott pit aggregate operations only to the extent
consistent with past practices, and (b) its own site-specific batch plants
located on Seller's or its subsidiaries' construction job sites solely for
the purpose of providing concrete to Seller and its subcontractors for use
on its own job sites. In consideration of the execution and delivery of the
non-competition agreement by Mr. Morris, Purchaser shall pay consideration
to Mr. Morris on terms to be specified therein.
(ii) Purchaser shall have completed (with results acceptable to
Purchaser in its sole discretion) its financial and other due diligence
investigations (including (i) an examination verifying Ready Mix's November
Balance Sheet and Closing Balance Sheet, (ii) inspection of the condition
of Ready Mix's plant, machinery and equipment, and (iii) an environmental
inspection, including the audit referred to in paragraph 8); and
(iii) Purchaser shall have received a qualified opinion of Seller's
Nevada counsel to the effect that no legal impediment exists to, or
required consents or approvals which have not been obtained are required
for, Seller's and Ready Mix's consummation of the Transaction.
(b) Seller's obligations under the definitive stock purchase agreement to
consummate the Closing shall be subject to customary conditions including,
without limitation, the conditions that:
(i) a reputable recognized investment banking firm selected by
Seller shall have rendered an opinion to the board of directors of Seller
as to the fairness of the Transaction to Seller and its shareholders from a
financial point of view;
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 5
(ii) all pending litigation against Seller and its
directors brought by Silver State Materials Corp. ("SSMC") and
Cyrus W. Spurlino shall have been dismissed with prejudice; and
(iii) at Closing, all shares of common stock, par value
$0.001 per share, in Seller ("Shares"), beneficially owned by
SSMC (consisting of 512,300 Shares) and all Shares beneficially
owned by Mr. Spurlino (consisting of 47,800 Shares) shall have
been surrendered to Seller.
(c) Seller's, Ready Mix's and Purchaser's obligations under the
definitive stock purchase agreement to consummate the Closing shall be
subject to other customary conditions, including, without limitation,
the following:
(i) Seller and Purchaser shall be satisfied with the
results of the environmental inspection, if any, performed by the
consultant referred to in paragraph 8;
(ii) The respective boards of directors of Seller and
Purchaser shall have approved the Transaction; and
(iii) No litigation shall be pending seeking to enjoin
the Transaction.
12. Each party agrees to consult with the other before issuing
any press releases or otherwise making any public statement with
respect to the Transaction and no party shall issue any press release
or make any such public statement without the prior consent of the
other except to the extent Seller is required by law to do so.
13. Except as expressly contemplated by this letter, Seller will
operate its business and that of Ready Mix prior to the Closing in the
normal and ordinary course consistent with past practices.
14. Except as otherwise provided by this letter, Purchaser and
Seller shall each pay its own fees and expenses incurred in connection
with the Transaction.
15. Purchaser shall maintain confidentiality of all information
received from Seller and/or Ready Mix in connection with the
Transaction except (i) information in the public domain or
independently received from a third party with a right to disclose
this information or (ii) to the extent that disclosure is required by
law. If the Transaction is not consummated, Purchaser shall promptly
return to Seller and/or Ready Mix all documents and other written
material received by Purchaser in connection with the Transaction and
shall not retain any copies or summaries thereof.
16. Except as set forth in paragraphs 8, 9, 12, 14, 15 and this
16, this letter represents an expression of intent only. Accordingly,
neither Purchaser, Seller nor Ready Mix will be bound by any terms of
this letter other than paragraphs 8, 9, 12, 14, 15 and
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 6
this 16. Instead, a definitive stock purchase agreement between the parties
will be prepared by Purchaser for the Transaction in form approved by the
parties. Such definitive agreement will be the definitive agreement between
the parties. Unless the definitive agreement is entered into (regardless of
the reason for it not so having been entered into), neither Purchaser,
Seller nor Ready Mix shall be under any obligation to the others
irrespective of any negotiations, agreements or undertakings between, or
actions taken by, such parties, except for paragraphs 8, 9, 12, 14, 15, and
this 16.
If this letter correctly sets forth our mutual intent, please so indicate
by signing this letter and the enclosed copy and returning the copy to the
undersigned.
Letter of Intent - Sale of Ready Mix, Inc.
February 8, 2002
Page 7
Very truly yours,
RMI Enterprises, LLC
By: /s/ Stuart R. Engs
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Stuart R. Engs, Jr., Manager
ACCEPTED AND AGREED TO
AS OF FEBRUARY 14, 2002:
SELLER:
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MEADOW VALLEY CORPORATION
By: /s/ Bradley E. Larson
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Bradley E. Larson
President and Chief Executive Officer
APPROVED:
Ready Mix:
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READY MIX, INC.
By: /s/ Bradley E. Larson
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Bradley E. Larson
Executive Vice President