<PAGE>
 
                              CONTRACT AGREEMENT

THIS AGREEMENT, made and entered into this 6th day of September, 1996, by and 
between the STATE OF ARIZONA, acting by and through its State Engineer duly 
authorized by the Director, Arizona Department of Transportation to enter into 
such agreement, party of the first part, and MEADOW VALLEY CONTRACTORS, INC.
                                             -----------------------------------
hereinafter called the Contractor, party of the second part.
WITNESSETH: That the said Contractor, for in consideration of the sum to be paid
him by said State Arizona in the manner and at the time hereinafter provided, 
and of the other covenants and agreements herein contained, hereby agrees, for 
himself, heirs, administrators, successors and assigns as follows:
     ARTICLE I - SCOPE OF WORK: The Contractor shall perform in a workmanlike 
and substantial manner and to the satisfaction of the State Engineer, all the 
work specified under TRACS/Project No.

                                        51 MA 009 H205901C RAM 600-2-514
                                        SHEA BLV. TO THUNDERBIRD ROAD
                                        (PHOENIX URBANIZED AREA)
                                        (SR 51 - Squaw Peak Highway)

and furnish at his own cost and expense all necessary machinery, tools, 
apparatus, materials and labor to complete the work in the most substantial and 
workmanlike manner according to the Plans and Specifications therefor on 
file with the State Engineer and such modifications of the same and other 
directions that may be made by the State Engineer as provided herein.
     ARTICLE II - CONTRACT DOCUMENTS: It is further agreed that the Proposal,
Plans, Standard Specifications, Special Provisions, Contract Bond(s) and any and
all Supplementary Agreements, and any and all requirements necessary to complete
the work in a substantial and acceptable manner, and any and all equipment and
progress statements required, are hereby referred to and made a part of this
contract, and shall have the same force and effect as though all of the same
were fully inserted herein.
     ARTICLE III - WARRANTY: The Contractor expressly warrants that he is free 
from obligation of any other person or persons for services rendered, or 
supposed to have rendered, in the procurement of this contract. He further 
agrees that any breach of the Warranty shall constitute adequate cause for the 
annulment of the Contract by the State of Arizona and that the State of Arizona 
may retain to its own use from any sums of money due or become due thereunder, 
an amount thereof equal to any brokerage, commission, or percentage so paid, or 
agreed to be paid.
     ARTICLE IV - TIME OF COMPLETION: The Contractor further covenants and 
agrees that all of the said materials shall be furnished and delivered and all 
of the said labor shall be done and performed in every respect to the 
satisfaction and approval of the State Engineer and that the said work shall be 
turned over to the State Engineer, complete and ready for use, on or before the 
specified time herein. The work shall be free and discharged of all claims and 
demands whatsoever for, or on account of any and all labor and materials used or
furnished to be used in said work. 
     It is expressly understood and agreed that in case of failure on the part 
of the Contractor, for any reason, except with the written consent of the State 
Engineer, to complete the entire work to the satisfaction of the State Engineer,
and within the aforesaid time limit, the party of the first part shall deduct 
from any money due, or which may become due the Contractor, as liquidated 
damages, an amount in accordance with Subsection 108.09 of the Contract 
Specifications.
     If no money shall be due the Contractor, the State shall have a cause of 
action to recover against the Contractor in a court of competent jurisdiction, 
liquidated damages, in accordance with Subsection 108.09 of the Contract 
Specifications, said deduction to be made, or said sum to be recovered, not as a
penalty, but as liquidated damages; provided, however, that upon receipt of 
written notice from the Contractor, of the existence of causes, as herein 
provided, over which said Contractor has no control and which must delay the 
completion of said work or any delay occasioned by the Arizona Department of 
Transportation, the State Engineer may extend the period hereinbefore specified 
for the completion of said work in accordance with the Specifications and in 
such case, the Contractor shall become liable for said liquidated damages for 
delays commencing from date said extension period shall expire.
     After the date as set up in Contract plus any extension granted, no further
payments shall be made the Contractor until all work is completed and accepted 
by the State engineer. It is also agreed that the date of completion shall be 
that upon which the work is accepted by the State Engineer.
     ARTICLE V - CLAIMS FOR EXTRA WORK: It is distinctly understood and agreed 
that no claim for extra work or materials, not specifically herein provided, 
done or furnished by the Contractor, will be allowed by the State Engineer, nor
shall the Contractor do any work or furnish any materials not covered by these
Specifications and Contract, unless such work is ordered in writing by the State
Engineer. In no event shall the Contractor incur any liability by reason of any
oral direction or instruction that he may be given by the State Engineer, or his
authorized representatives. It is the intent and meaning of this Article that
all orders, directions, instructions, not contained in the Plans,
Specifications, and Special Provisions, pertaining to the work shall be in
writing, and the Contractor hereby waives any claims for compensation for work
done, or materials furnished in violation thereof.
     ARTICLE VI - MISUNDERSTANDING OR DECEPTION: The party of the second part 
agrees that he has investigated the site of the work and all parts and 
appurtenances thereto and hereby waives any right to plead misunderstanding or 
deception as to location, character of work or materials, estimates of 
quantities or other conditions surrounding or being a part of the work and 
understands that the quantities given in the Bidding Schedule are approximate 
only, and hereby agrees to accept the quantities as actually placed and finally 
determined upon the completion of the work, in accordance with the Contract 
Documents.
     ARTICLE VII - PAYMENTS: For and in consideration of the faithful 
performance of the work herein embraced, as set forth in the Contract Agreement,
Specifications, Special Provisions, Bidding Schedule and all general and 
detailed Specifications and Plans, which are a part hereof, and in accordance 
with the directions of the State Engineer and to his satisfaction or his 
authorized agents, the said State of Arizona agrees to pay to said contractor 
the amount earned, computed from the actual quantities of work performed, as 
shown by the estimates of the State Engineer, and the unit prices named in the 
attached Bidding Schedule and Supplementary Agreements made a part hereof, and 
to make such payments in the manner and at the time provided in the 
specifications hereto appended.

                                                                    Sheet 1 of 2
<PAGE>
 
     ARTICLE VIII - IT IS EXPRESSLY UNDERSTOOD AND AGREED that no work shall be 
done nor any obligations incurred under this contract during any fiscal year 
which are in excess of the funds programmed and budgeted for this project for 
that fiscal year.

     ARTICLE IX - THE CONTRACTOR SHALL INDEMNIFY AND SAVE HARMLESS THE STATE, 
its officers and employees, from all suits, actions or claims of any character 
brought because of any injuries or damage received or sustained by any person, 
persons or property on account of the operations of the said contractor or an 
account of or in consequence of any neglect in safeguarding the work; or through
use of acceptable materials in constructing the work; or because of any act or 
omission, neglect or misconduct of said contractor; or because of any claims or 
amounts recovered from any infringements of patent, trademark or copyright; or 
from any claims or amounts arising or recovered under the Workmen's Compensation
Act or any other law, ordinace, order or decree.
 
     The contractor shall indemnify and save harmless any county or incorporated
city, its officers and employees, within the limits of which county or 
incorporated city work is being performed, all in the same manner and to the 
same extent as provided in the above paragraph.

     IT IS FURTHER UNDERSTOOD AND AGREED that all work required to be done under
this contract in excess of the funds now appropriated and budgeted for this
project shall not be done nor any obligation incurred therefor until such time
as the Legislature appropriates the additional funds and the same are budgeted
for this project by the Arizona Department of Transportation and in that event
the parties hereto are bound to continue performance of this contract to the
extent permitted by the funds so appropriated and budgeted.

     In the event that no funds are appropriated or budgeted for this project
for the succeeding fiscal year, then this contract shall be null and void,
except as to that portion for which funds have now been appropriated and
budgeted, therefore, and no right of action or damages shall accrue to the
benefit of the parties hereto as to that portion of the contract that may so
become null and void.

     All parties are hereby put on notice that this contract (agreement) is 
subject to cancellation by the Governor pursuant to Arizona Revised Statutes 
Section 38-511.

     IT IS ALSO UNDERSTOOD AND AGREED that this contract is subject to A.R.S. 
28-1824, 28-1825, 28-1826, together with all other limitations pursuant to the 
applicable laws of the State of Arizona relating to public contracts and 
expenditures.


051 MA 009 H205901C RAM 600-2-514
SHEA BLV. TO THUNDERBIRD ROAD (PHOENIX URBANIZED AREA)
(SR 51 - Squaw Peak Highway)


Witness our hands and seals this 6th day of September 1996

                                      STATE OF ARIZONA



                                      By:  [SIGNATURE APPEARS HERE]
                                         -----------------------------------
                                         for State Engineer
EVIDENCE OF AUTHORITY TO SIGN
THE CONTRACT MUST BE ON FILE
WITH THE DEPARTMENT, OTHERWISE
IT MUST BE FURNISHED WITH THE
PROPOSAL.
                                      PARTY OF THE FIRST PART
                                       Meadow Valley Contractors, Inc.
                                      --------------------------------------


                                      By: /s/ Bradley E. Larson
                                         -----------------------------------
                                         Contractor

Attest: [SIGNATURE APPEARS HERE]      PARTY OF THE SECOND PART
       ---------------------------
                  Seal

Article IX                                                        12-0912 R8/88
Sept. 1969                                                   Contract Agreement
July 1969                                                          Sheet 2 of 2
July 1, 1974