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FERREIRA CONSTRUCTION COMPANY INC., AND SUBSIDIARY
<br />NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<br />Surety - Many customers, particularly in connection with new construction, require the Company to
<br />post performance and payment bonds issued by a financial institution known as a surety. If the Company fails
<br />to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services
<br />under a contract, the customer may demand that the surety make payments or provide services under the bond.
<br />The Company must reimburse the surety for any expenses or outlays it incurs. To date, the Company is not
<br />aware of any losses to its sureties in connection with bonds the sureties have posted on its behalf, and does not
<br />expect such losses to be incurred in the foreseeable future.
<br />Note 13 - Long-term Debt:
<br />Company:
<br />Main street priority loan
<br />Mortgage note
<br />Equipment, truck and vehicle notes
<br />Subsidiary:
<br />Equipment, truck and vehicle notes
<br />Less: Current maturities
<br />Unamortized
<br />Debt Issuance
<br />Interest Rate Loan Balance Cost Net Debt
<br />Libor + 3.00% $ 35,450,677 $ 717,732 $ 34,732,945
<br />4.55% 1,973,791 - 1,973,791
<br />Weighted avg 3.94% 24,076,636 100,2032 3,976,433
<br />61,501,104 817,935 60,683,169
<br />Weighted avg 7.17% 1,478,908
<br />62,980,012
<br />7,398,785
<br />$ 55® 581,227
<br />- 1,478,908
<br />817,935 62,162,077
<br />181,092 7,217,693
<br />$ 636,843 $ 54,944,384
<br />Main Street Priority Loan - On August 11, 2020, the Company obtained a Main Street Priority Loan
<br />("Main Street loan") of $35,000,000. The Main Street loan bears interest at LIBOR plus 3.00% (3.209% as of
<br />December 31, 2020). Interest for year one is deferred until July 24, 2025 (end of year 5) and capitalized as a
<br />part of the loan. At December 31, 2020, deferred interest totaled $450,677 which was added to the original
<br />loan balance. The loan is interest only in year 2 which is due in July 2022. Balloon payments of $5,250,000
<br />along with accrued interest for the year is due at the end of year 3 (July 2023) and year 4 (July 2024). The
<br />remaining unpaid loan balance of $24,500,000 and accrued interest from year 1 of the loan and from year 5 is
<br />due in July 2025. The Company has pledged all assets of the Company as collateral for this loan. The sole
<br />shareholder and certain affiliates have guaranteed repayment of this loan. This loan is cross -collateralized and
<br />cross -defaulted with the line of credit with the same Bank (see Note 14). The loan is also subject to various
<br />debt covenants including financial covenants of a minimum debt service coverage and maximum liabilities to
<br />net worth ratios.
<br />Mortgage Note - The Company financed the purchase of a building. The mortgage note bears interest
<br />at a fixed rate of 4.55% per annum thio May 1, 2027. The mortgage note is payable in monthly installments
<br />of $29,606 including interest. The mortgage is collateralized by the land and building and is guaranteed by
<br />the sole shareholder.
<br />Equipment, Truck and Vehicle Notes - The Company has equipment notes for equipment, trucks and
<br />vehicles with various banks, equipment manufacturers and finance companies. These obligations are payable
<br />in varying monthly installments through October 2025 and bear interest at rates ranging up to 11.00%. The
<br />notes are collateralized by the related equipment.
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