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Exhibit 10.38
 (SAFECO LOGO)
    
    GENERAL AGREEMENT
OF INDEMNITY
FOR CONTRACTORS
    
    Safeco Insurance Companies
PO Box 34526
Seattle, WA 98124-1526
 Meadow Valley
Corporation; Meadow Valley Contractors, Inc.
 
  DEFINITIONS:
 Contractor:
 Bond:
 Surety:
 Contract:
 Default:
 (1)
    
    Is declared to be in default by the Obligee of any Bond;(2)
    
    Actually breaches or abandons any Contract;(3)
    
    Fails to pay, to the extent due in whole or in part, claims, bills or other indebtedness
incurred in connection with the performance of any Contract;(4)
    
    Becomes the subject of any agreement or proceeding of liquidation or receivership, or actually
becomes insolvent;(5)
    
    If an individual sole proprietor dies, is adjudged mentally incompetent, is
convicted of a felony or disappears and cannot be immediately found by
Surety by use of usual methods;(6)
    
    Breaches, fails to perform, or comply with, any provision of this agreement.
 INDEMNITY TO SURETY:
 1.
    
    All loss, costs and expenses of whatsoever kind and nature, including court costs,
reasonable attorney fees (whether Surety at its sole option elects to employ its own
attorney, or permits or requires Undersigned to make arrangements for Suretys legal
representation), consultant fees, investigative costs and any other losses, costs or
expenses incurred by Surety by reason of having executed any Bond, or incurred by it
on account of any Default under this agreement by any of the Undersigned, or by reason
of the refusal to execute any Bond. In addition the Undersigned agree to pay to Surety
interest on all disbursements made by Surety in connection with such loss, costs and
expenses incurred by Surety at the maximum rate permitted by law calculated from the
date of each disbursement;2.
    
    An amount sufficient to discharge any claim made against Surety on any Bond, whether
Surety will have made any payment or established any
reserve therefor. Such payment to be the minimum amount of any reserve set by Surety. This
sum may be used by Surety to pay such claim or
be held by Surety as collateral security against loss on any Bond. The Undersigned
acknowledge that their failure to pay, immediately on
demand, that sum demanded by Surety will cause irreparable harm for which Surety has no
adequate remedy at law. The Undersigned confirm and acknowledge that Surety is entitled to
injunctive relief for specific enforcement of the foregoing provision.3.
    
    Any original, additional or renewal premium due for any Bond.
  1.
    
    Surety shall have the exclusive right for itself and the Undersigned to determine in its
sole and absolute discretion whether any claim or suit upon
any Bond shall, on the basis of belief of liability, expediency or otherwise, be paid,
compromised, defended or appealed,2.
    
    Surety may incur such expenses, including reasonable attorneys fees, as deemed necessary
or advisable in the investigation, defense and
payment of such claims and completion of any Contract with respect to which Surety has
issued any Bond.3.
    
    Suretys determination in its sole and absolute discretion of the foregoing shall be final and
conclusive upon the Undersigned.4.
    
    An itemized statement of loss and expense incurred by Surety, sworn to by an officer of
Surety, shall be prima facie evidence of the fact and
extent of the liability of Undersigned to Surety in any claim or suit by Surety against
Undersigned.
 SURETYS REMEDIES IN EVENT OF DEFAULT:
 1.
    
    Take possession of the work under any and all Contracts and to arrange for its completion by
others or by the Obligee of any Bond;2.
    
    Take possession of Contractors or any of Undersigneds equipment, materials and supplies
at the site of the work, or elsewhere, if needed for
prosecution of the work, as well as Contractors office equipment, books and records,
computer hardware and software, and utilize the same in
completion of the work under the Contract without payment of any rental for such use;3.
    
    Loan or guarantee a loan to Contractor of such money as Surety shall see fit, for the
purpose of completing any Contract, or for discharging Contractors obligations for labor,
material, equipment, supplies and other charges, or discharging Suretys liability under any
Bond, incurred in connection with any contract;4.
    
    Take such other action as Surety shall deem necessary to fulfill its obligations under any Bond.
 S-0002/SA 4/04
    
    Safeco and the Safeco logo are registered trademarks of Safeco Corporation
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    FRP




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SECURITY TO SURETY:
 1.
    
    Assigns to Surety, as of the date of execution of any Bond, and grants a
security interest to Surety in all rights of the Contractor in, or in any manner growing
out of:
 a.
    
    Any Contract or modification thereof;b.
    
    Any subcontract or purchase order and against any legal entity and its surety
who has contracted with Contractor to furnish labor, materials,
equipment and supplies in connection with any Contract;c.
    
    Monies, Contract Balances due or to become due Contractor on any Contract,
including all monies earned or unearned which are unpaid at the time of
notification by Surety to the Obligee of Suretys rights hereunder;d.
    
    Any actions, causes of action, claims or demands whatsoever which Contractor
may have or acquire against any party to the Contract, or
arising out of or in connection with any Contract including but not limited to those
against obligees and design professionals and any surety
or sureties of any obligee, and Surety shall have the full and exclusive right, in its
name or in the name of the Contractor, but not the
obligation, to prosecute, compromise, release or otherwise resolve such actions, causes
of action, claims or demands;e.
    
    Any and all rights, title, interest in, or use of any patent, copyright or
trade secret which is or may be necessary for the completion of any
bonded work:f.
    
    All monies due or to become due to Contractor on any policy of insurance
relating to any claims arising out of the performance of any
Contract or to premium refunds, including, but not limited to, builders risk, fire,
employee dishonesty or workers compensation policies.g.
    
    All supplies, tools, plants, material, inventory, and equipment (whether
completely manufactured or not), wherever located, which have been
or hereafter may be purchased, used, or acquired for use, entirely or partly, in
connection with or to be incorporated into the matter that is
the subject of any Contract; andh.
    
    All amounts that may be owing from time to time by Surety to Contractor or
any of the undersigned in any capacity including, without limitation, any balance
or share belonging to such Contractor or any of the undersigned or any deposit or
other account with Surety, which lien and security interest will be independent of
any right of setoff which Surety may have.
  2.
    
    Irrevocably nominate and appoint any officer of Surety as the true and lawful
attorney-in-fact of the Undersigned, with full right and authority in
event of Contractors default to:
 a.
    
    Sign the name of the Undersigned to any voucher, release, satisfaction, check,
bill of sale of property referred to herein, or any other paper
or contract necessary or desired to carry into effect the purposes of this agreement;b.
    
    Dispose of performance of any Contract by subletting it in Contractors name or otherwise;
 3.
    
    Authorize Surety to join any and all of the Undersigned as parties defendant in any
action, regardless of venue, against Surety on account of any
Bond, and to enforce the obligations hereunder directly against any of the Undersigned
without the necessity of first proceeding against the
Contractor;4.
    
    Agree that all monies earned by Contractor under any Contract are trust funds, whether in
the possession of Contractor or otherwise, for the benefit of, and for payment of
Contractors obligations for, labor, material, and supplies furnished to Contractor in
performance of such Contract for which Surety would be liable under any Bond on such
Contract, and the performance of Contractors or Suretys obligations to any Obligee on
such Contract;5.
    
    Agree that this agreement may at any time be completed and filed by Surety in such a
manner that it will qualify as a financing statement under the applicable provisions of
any statute of any state which has adopted The Uniform Commercial Code, and that Surety
may add such schedules to this agreement, describing specific items of security covered
hereunder as shall be necessary under such statutes.
 GENERAL PROVISIONS:
 1.
    
    Assent by Surety to changes in any Contract or Bond or refusal to assent shall not
release or affect the obligations of Undersigned to Surety even
though any such assent by the Surety does or might increase the liability of the
Undersigned.
 2.
    
    Surety has the right to decline to execute, provide or procure any bond requested by
Contractor. If Surety does execute, provide or procure the
execution of a bid bond or proposal bond, or agrees or consents to provide such contract of
suretyship, Surety retains the right to decline to
execute the final bond (including, but not limited to, performance, payment or maintenance
bonds) that may be required in connection with any
award that may be made under the bid proposal or tender to which the bid proposal bond or
agreement or consent to provide such contract of
suretyship is given.
 3.
    
    Surety shall have every right, defense or remedy which a personal surety without
compensation would have, including the right of exoneration and
the right of subrogation. The security interest, trust, and other rights granted herein will
not be deemed a waiver of Suretys equitable subrogation
rights or other rights, said security in rights being in addition to the rights of
exoneration, subrogation, and other rights to which Surety is entitled
to under law or in equity.
 4.
    
    Until Surety shall have been furnished with competent evidence of its discharge, without
loss from any Bonds, Surety shall have the right to free
access at reasonable times to the books, records and accounts of each of the Undersigned for
the purpose of examining, copying or reproducing
them. Each one of the Undersigned hereby authorizes any depositories in which funds of any
of the Undersigned may be deposited to furnish to
Surety the amount of such deposits as of any date requested, and any legal entity doing
business with the undersigned is authorized to furnish
any information requested by Surety concerning any transaction. Surety may furnish in
confidence copies of any information, which it now has or
may hereafter obtain concerning each of the Undersigned, to other persons or companies for
the purpose of procuring co-suretyship or
reinsurance or of advising interested persons or companies.5.
    
    The Undersigned will, on request of Surety, procure the discharge of Surety from any Bond
and all liability by reason thereof. If such discharge is
unattainable, the Undersigned will, if requested by Surety, either deposit collateral with
Surety, acceptable to Surety, sufficient to cover all
exposure under such bond or bonds, or make provisions acceptable to Surety for the funding
of the bonded obligation(s).6.
    
    Undersigned warrant that each of them is specifically and beneficially interested in the
obtaining of each Bond.7.
    
    In case the execution hereof by any of the Undersigned may be defective or invalid for any
reason, such defect or invalidity shall not in
any manner affect the validity of this obligation or the liability hereunder of any other of the
Undersigned. Invalidity of any provision of this agreement by  reason of the laws of any
state or for any other reason shall not render the other provisions hereof invalid.8.
    
    Execution by Contractor or any of the Undersigned of any application for any Bond or of any
other agreement of indemnity in behalf of Contractor, or the taking of indemnity of any other
person by Surety with respect to any Bond of Contractor, shall in no way be deemed to waive,
diminish or abrogate any rights of Surety under this agreement.9.
    
    The Undersigned waive
and subordinate all rights of indemnity, subrogation and contribution each against the other
until all obligations to the Surety under this agreement, at law or in
equity, have been satisfied in full.
 S-0002/SA 4/04
    
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10.
    
    The rights and remedies afforded to the Surety by the terms of this agreement and the
terms themselves may not be waived or modified orally
and no written change or modification shall be effective until signed by an employee of
the Surety.11.
    
    This agreement is to be liberally construed so as to protect, exonerate and indemnify the
Surety.12.
    
    All parties agree that any microfilmed, scanned or electronically digitized copy of
this document made by Surety as part of its record storage and
retention program shall be as effective as the original for all purposes.13.
    
    The Undersigned has relied upon its own due diligence in making its own independent
appraisal of Contractor and its business and financial condition, will continue to be
responsible for making its own independent appraisal of such matters, and has not relied upon
and will not hereafter
rely upon Surety for information. Surety has no duty to inform any of the undersigned
Indemnitors of the financial condition or other affairs related
to Contractor.14.
    
    The Undersigned shall remain responsible to Surety under this
Agreement regardless of any changes in the relationship of the Undersigned with
Contractor.
 TERMINATION:
 1.
    
    Give written notice to Surety at P.O. BOX 34526 Seattle, WA 98124-1526, by certified or
registered mail, of such termination;2.
    
    State in such notice the effective date (not less than thirty days after the receipt
of notice by Surety) of termination of such Undersigneds liability
for future Bonds.3.
    
    It is understood and agreed that oral notice to or constructive notice to any agent
or employee of Surety shall not constitute effective notice of
termination under this agreement.
  1.
    
    Bonds executed or authorized prior to such date, and renewals and extensions thereof;2.
    
    Bonds executed pursuant to a bid or proposal bond executed or authorized prior to such date,
and renewals and extensions thereof.
  EXECUTED this
 Attest:
    
    
    
    
    
    Meadow Valley Corporation
    
    (seal)By:
    
    /s/ David Doty
    
    
    
    
    
    
    
    
    
    By:
    
    /s/ Bradley E. LarsonDavid Doty,
    
    Secretary
    
    
    
    
    
    
    
    
    
    Bradley E. Larson,
    
    PresidentAttest:
    
    
    
    
    
    Meadow Valley Contractors, Inc.
    
    (seal)By:
    
    /s/ David Doty
    
    
    
    
    
    
    
    
    
    By:
    
    /s/ Bradley E. LarsonDavid Doty,
    
    Secretary
    
    
    
    
    
    
    
    
    
    Bradley E. Larson,
    
    President
 ALL SIGNATURES MUST BE ACKNOWLEDGED.
 S-0002/SA 4/04
    
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INDIVIDUAL ACKNOWLEDGMENT
 STATE OF
    
    
    
    } ss.COUNTY OF
   (SEAL)Notary Public, resident at(Commission expires
    
    )
 INDIVIDUAL ACKNOWLEDGMENT
 STATE OF
    
    
    
    } ss.COUNTY OF
   (SEAL)Notary Public, resident at(Commission expires
    
    )
 LIMITED LIABILITY COMPANY ACKNOWLEDGMENT
 STATE OF
    
    
    
    } ss.COUNTY OF
   (SEAL)Notary Public, resident at(Commission expires
    
    )
 CORPORATE ACKNOWLEDGMENT
 STATE OF ARIZONA ___________________________________________
    
    } ss.COUNTY OF
    
    Maricopa ___________________________________________
   (SEAL)
    
    /s/ TORTINA M. BUNTONNotary Public, resident at
    
    Phoenix, AZ(Commission expires
    
    May 30, 2008)
 
 IF ADDITIONAL ACKNOWLEDGMENTS ARE NEEDEDUSE S-802 (INDIVIDUAL) OR S-803 (CORPORATE)
 S-0002/SA 4/04
    
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