Exhibit 10.3

 

THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO ANY AND ALL
INDEBTEDNESS OF THE ISSUER TO THE PRIVATEBANK AND TRUST COMPANY (“THE
PRIVATEBANK”) IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN
SUBORDINATION AGREEMENT BETWEEN THE ISSUER AND THE PRIVATEBANK, DATED DECEMBER
15, 2009, TO WHICH REFERENCE IS HEREBY MADE FOR A MORE FULL STATEMENT THEREOF. 
THE HOLDER HAS AGREED THEREBY NOT TO SELL, ASSIGN, TRANSFER, PLEDGE OR
HYPOTHECATE THIS NOTE WITHOUT THE PRIVATEBANK’S WRITTEN CONSENT.

 

PROMISSORY NOTE

 

$53,500,000

 

December 18, 2009

 

 

Lake Forest, California

 

FOR VALUE RECEIVED, PRIMORIS SERVICES CORPORATION, a Delaware corporation
(“Issuer”), promises to pay to the order of each of the individuals set forth on
Exhibit A hereto (each a, “Holder” and collectively, the “Holders”), the
specific principal amounts next to each such Holder’s name as set forth on
Exhibit A hereto with an aggregate principal sum of Fifty-Three Million Five
Hundred Thousand Dollars ($53,500,000), together with interest as computed
below.

 

This Note is issued pursuant to the Membership Interest Purchase Agreement dated
as of November 18, 2009 (as amended, modified or supplemented, the “Purchase
Agreement”) by and between Issuer, the Holders, James Construction Group, L.L.C.
and Michael D. Killgore, as Sellers’ Representative.

 

The following is a statement of the rights of each Holder and the conditions to
which this Note is subject, and to which each Holder, by the acceptance of this
Note, agrees:

 

1.                                       CERTAIN DEFINITIONS.  THE FOLLOWING
TERMS, WHEN USED IN THIS NOTE, SHALL HAVE THE FOLLOWING MEANINGS.  ANY OF THESE
TERMS MAY, UNLESS THE CONTEXT OTHERWISE REQUIRES, BE USED IN THE SINGULAR OR
PLURAL DEPENDING ON THE REFERENCE.  CAPITALIZED TERMS USED BUT NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE PURCHASE
AGREEMENT.

 

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.

 

“Applicable Interest Rate” means the rate per annum equal to:

 

a.                                       five percent (5%) during the period
beginning on the Issuance Date and ending on the date nine (9) months after the
Issuance Date (the “First Period Termination Date”);

 

b.                                      seven percent (7%) during the period
beginning on the First Period Termination Date and ending on the date eighteen
(18) months after the Issuance Date; and

 

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c.                                       eight percent (8%) thereafter.

 

“Event of Default” shall have the meaning set forth in Section 5.

 

“Holder” means the Persons specified in the introductory paragraph of this Note
or any Person who shall at the time be the registered holder of this Note.

 

“Holders’ Representative” means Michael D. Killgore, or any individual appointed
as a successor Sellers’ Representative pursuant to Section 7 hereof.

 

“Issuance Date” means December 15, 2009.

 

“Issuer” includes Primoris Services Corporation, a Delaware corporation, and any
Person which shall succeed to or assume the obligations of Issuer under this
Note, provided, however, that Issuer shall not be released hereunder except
pursuant to a written release executed by Holders’ Representative or by payment
in full of all the Obligations.

 

“Maturity Date” means December 15, 2014.

 

“Net Equity” means the amount of cash proceeds received by Issuer in connection
with the offering of any capital equity of Issuer or any of its Affiliates minus
any expenses incurred in connection with such offering, including but not
limited to attorneys’ fees, underwriters’ fees and accountants’ fees.

 

“Note” means this Promissory Note.

 

“Obligations” means and includes all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by Issuer to the Holders of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), now existing or hereafter arising under or
pursuant to the terms of this Note, including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable
to and payable by Issuer hereunder.

 

“Person” means and includes an individual, an individual or entity serving in
the capacity as a trustee of a trust or the trust itself, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.

 

“Purchase Agreement” shall have the meaning set forth in the second introductory
paragraph of this Note.

 

“Qualified Debt” means the amount of cash proceeds received by Issuer or any of
its Affiliates in connection with the incurrence of any indebtedness except for
indebtedness under a bank line of credit (provided that with respect to
indebtedness under a line of credit to finance the acquisition of a business
whatever the structure, this exception shall be limited to an outstanding
balance of $10,000,000 in the aggregate at any time) or indebtedness incurred to
finance operating expenses, equipment and capital expenditures (but specifically
excluding any

 

2

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capital expenditures associated with the acquisition of a business whatever the
structure) incurred by Issuer or any of its Affiliates in the ordinary course of
business.

 

“Subordination Agreements” means the subordination agreements with The
PrivateBank and Trust Company and Liberty Mutual Insurance Company
subordinating, in accordance with their terms, the Note to Issuer’s senior
lender and bonding agency as attached hereto on Exhibit B.

 

2.                                       PAYMENTS OF PRINCIPAL AND INTEREST;
DEFAULT INTEREST RATE; LATE FEES.

 

2.1                                 PAYMENTS OF PRINCIPAL AND INTEREST. 
BEGINNING ON THE ISSUANCE DATE, THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE
SHALL BEAR INTEREST AT THE APPLICABLE INTEREST RATE AND SHALL BE COMPUTED ON THE
BASIS OF A 365-DAY YEAR AND THE ACTUAL NUMBER OF DAYS ELAPSED.  PAYMENTS OF
PRINCIPAL AND INTEREST SHALL BE PAYABLE IN CASH IN SIXTY (60) EQUAL AND FULLY
AMORTIZING MONTHLY PAYMENTS OF PRINCIPAL AND INTEREST COMMENCING JANUARY 15,
2010 AND ENDING ON THE MATURITY DATE; PROVIDED, HOWEVER, THAT IF ISSUER OR ANY
OF ITS AFFILIATES RAISE ADDITIONAL CAPITAL OR INCREASE THE BALANCE DUE UNDER ANY
QUALIFIED DEBT (WHETHER EQUITY OR DEBT), THEN ISSUER SHALL NOTIFY HOLDERS OF
SAME AND:

 

(A)                                  ISSUER SHALL PREPAY THIS NOTE IN AN AMOUNT
EQUAL TO (I) ONE HUNDRED PERCENT (100%) OF THE FIRST TEN MILLION DOLLARS
($10,000,000) OF NET EQUITY RAISED (EXCLUDING THE PROCEEDS RECEIVED FROM THE
EXERCISE OF ANY WARRANT OUTSTANDING ON THE DATE HEREOF, WITH RESPECT TO WHICH
ISSUER HEREBY REPRESENTS AND WARRANTS TO HOLDERS THAT SUCH OUTSTANDING WARRANTS
WILL NOT ALLOW THE HOLDERS THEREOF TO PURCHASE MORE THAN 5,605,956 SHARES OF
COMMON STOCK OF ISSUER) PLUS (II) SEVENTY-FIVE PERCENT (75%) OF NET EQUITY
RAISED IN EXCESS OF TEN MILLION DOLLARS ($10,000,000), IF ANY, PLUS
(III) THIRTY-THREE PERCENT (33%) OF QUALIFIED DEBT RAISED, IF ANY, AND

 

(B)                                 ANY PREPAYMENT OF THIS NOTE, WHETHER
REQUIRED OR DISCRETIONARY, SHALL BE APPLIED FIRST TO EXPENSES DUE THE HOLDERS
INCLUDING WITHOUT LIMITATION LATE FEES, SECOND TO ACCRUED INTEREST DUE, AND
THIRD TO PRINCIPAL APPLIED IN REVERSE ORDER OF WHEN SUCH PRINCIPAL IS SCHEDULED
TO BE PAID; AND

 

(C)                                  ANY PREPAYMENT REQUIRED BY THIS
SECTION SHALL BE DUE WITHIN TEN (10) BUSINESS DAYS OF THE RECEIPT OF CASH
PROCEEDS BY ISSUER.

 

2.2                                 DEFAULT INTEREST RATE.  IF ANY AMOUNT OF
PRINCIPAL OR INTEREST ON THIS NOTE IS NOT PAID WHEN DUE THE ENTIRE OUTSTANDING
PRINCIPAL BALANCE OF THE NOTE SHALL BEAR INTEREST AT A RATE TO THE APPLICABLE
INTEREST RATE PLUS TWO PERCENT (2%) FROM THE DUE DATE OF SUCH INSTALLMENT OF
SUCH PRINCIPAL OR INTEREST UNTIL SUCH DEFAULT IS CURED BY THE PAYMENT OF ALL
PRINCIPAL AND INTEREST AND LATE FEES THEN DUE (“DEFAULT INTEREST”).  THE
INCURRENCE OF DEFAULT INTEREST SHALL NOT EXCUSE LATE PAYMENT.

 

2.3                                 LATE FEES.  SHOULD ANY PAYMENT UNDER THIS
NOTE NOT BE PAID WHEN DUE AND PAYABLE, IT IS RECOGNIZED BY ISSUER THAT THE
HOLDERS WILL INCUR EXTRA EXPENSES FOR HANDLING THE DELINQUENT PAYMENT.  THE
EXACT AMOUNT OF SAID EXTRA EXPENSES IS IMPOSSIBLE TO ASCERTAIN AT THIS TIME, BUT
A CHARGE OF TWO PERCENT (2%) OF THE AMOUNT OF THE DELINQUENT PAYMENT WOULD BE A
FAIR

 

3

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APPROXIMATION OF THE EXPENSE SO INCURRED BY THE HOLDERS.  THEREFORE, IN THE
EVENT A PAYMENT IS RECEIVED MORE THAN TEN (10) DAYS AFTER THE DATE ON WHICH IT
WAS DUE, ISSUER SHALL, WITHOUT NOTICE AND WITHOUT PREJUDICE TO THE RIGHT OF THE
HOLDERS TO DECLARE AN EVENT OF DEFAULT OR TO COLLECT ANY OTHER AMOUNTS DUE
HEREUNDER, PAY TO THE HOLDERS A “LATE CHARGE” EQUAL TO TWO PERCENT (2%) OF THE
AMOUNT OF THE DELINQUENT PAYMENT.  AT THE OPTION OF ISSUER, SAID LATE CHARGE MAY
BE ADDED TO THE PRINCIPAL UNDER THIS NOTE.

 

2.4                                 NO RIGHT OF OFFSET.  ISSUER SHALL HAVE NO
RIGHT TO SET OFF AGAINST PAYMENTS DUE UNDER THIS NOTE.

 

2.5                                 ALLOCATION AMONG HOLDERS. ALL PAYMENTS UNDER
THIS NOTE WHETHER PRINCIPAL, INTEREST, LATE FEES, AND EXPENSES SHALL BE PAID TO
THE HOLDERS PRO RATA BASED ON THE PRINCIPAL BALANCE DUE EACH HOLDER.

 

3.                                       PAYMENT ON NON-BUSINESS DAYS. WHENEVER
ANY PAYMENT TO BE MADE SHALL BE DUE ON A SATURDAY, SUNDAY OR A PUBLIC HOLIDAY
UNDER THE LAWS OF THE STATE OF CALIFORNIA, SUCH PAYMENT MAY BE DUE ON THE NEXT
SUCCEEDING BUSINESS DAY AND SUCH NEXT SUCCEEDING DAY SHALL BE INCLUDED IN THE
CALCULATION OF THE AMOUNT OF ACCRUED INTEREST PAYABLE ON SUCH DATE.

 

4.                                       PREPAYMENT.  UPON FIVE (5) DAYS PRIOR
WRITTEN NOTICE TO THE HOLDERS, ISSUER MAY PREPAY THIS NOTE IN WHOLE OR IN PART;
PROVIDED, HOWEVER, THAT ANY SUCH PREPAYMENT WILL BE APPLIED FIRST TO THE PAYMENT
OF EXPENSES DUE UNDER THIS NOTE, SECOND TO INTEREST ACCRUED ON THIS NOTE AND
THIRD, IF THE AMOUNT OF PREPAYMENT EXCEEDS THE AMOUNT OF ALL SUCH EXPENSES AND
ACCRUED INTEREST, TO THE PAYMENT OF PRINCIPAL OF THIS NOTE AS DESCRIBED IN
SECTION 2.1(B) AND SECTION 2.5.

 

5.                                       EVENTS OF DEFAULT.  THE OCCURRENCE OF
ANY OF THE FOLLOWING SHALL CONSTITUTE AN “EVENT OF DEFAULT” UNDER THIS NOTE:

 

5.1                                 FAILURE TO PAY.  ISSUER SHALL FAIL TO PAY
WHEN DUE ANY PAYMENT REQUIRED UNDER THE TERMS OF THIS NOTE BY THE END OF THE
TENTH DAY FOLLOWING THE DUE DATE.

 

5.2                                 BREACHES OF COVENANTS.  ISSUER SHALL FAIL TO
OBSERVE OR PERFORM ANY COVENANT SET FORTH IN SECTION 8 AND SUCH FAILURE SHALL
CONTINUE FOR TWENTY (20) DAYS AFTER ISSUER’S RECEIPT OF HOLDER’S WRITTEN NOTICE
TO ISSUER OF SUCH BREACH.

 

5.3                                 VOLUNTARY BANKRUPTCY OR INSOLVENCY
PROCEEDINGS.  ISSUER SHALL (I) APPLY FOR OR CONSENT TO THE APPOINTMENT OF A
RECEIVER, TRUSTEE, LIQUIDATOR OR CUSTODIAN OF ITSELF OR OF ALL OR A SUBSTANTIAL
PART OF ITS PROPERTY, (II) BE UNABLE, OR ADMIT IN WRITING ITS INABILITY, TO PAY
ITS DEBTS GENERALLY AS THEY MATURE, (III) MAKE A GENERAL ASSIGNMENT FOR THE
BENEFIT OF ITS OR ANY OF ITS CREDITORS, (IV) BE DISSOLVED OR LIQUIDATED,
(V) BECOME INSOLVENT (AS SUCH TERM MAY BE DEFINED OR INTERPRETED UNDER ANY
APPLICABLE STATUTE), (VI) COMMENCE A VOLUNTARY CASE OR OTHER PROCEEDING SEEKING
LIQUIDATION, REORGANIZATION OR OTHER RELIEF WITH RESPECT TO ITSELF OR ITS DEBTS
UNDER ANY BANKRUPTCY, INSOLVENCY OR OTHER SIMILAR LAW NOW OR HEREAFTER IN EFFECT
OR CONSENT TO ANY SUCH RELIEF OR TO THE APPOINTMENT OF OR TAKING POSSESSION OF
ITS PROPERTY BY ANY OFFICIAL IN AN INVOLUNTARY CASE OR OTHER PROCEEDING
COMMENCED AGAINST IT, OR (VII) TAKE ANY ACTION FOR THE PURPOSE OF EFFECTING ANY
OF THE FOREGOING.

 

4

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5.4                                 INVOLUNTARY BANKRUPTCY OR INSOLVENCY
PROCEEDINGS.  PROCEEDINGS FOR THE APPOINTMENT OF A RECEIVER, TRUSTEE, LIQUIDATOR
OR CUSTODIAN OF ISSUER OR OF ALL OR A SUBSTANTIAL PART OF ITS PROPERTY, OR AN
INVOLUNTARY CASE OR OTHER PROCEEDINGS SEEKING LIQUIDATION, REORGANIZATION OR
OTHER RELIEF WITH RESPECT TO ISSUER OR ITS DEBTS UNDER ANY BANKRUPTCY,
INSOLVENCY OR OTHER SIMILAR LAW NOW OR HEREAFTER IN EFFECT SHALL BE COMMENCED
AND AN ORDER FOR RELIEF ENTERED OR SUCH PROCEEDING SHALL NOT BE DISMISSED OR
DISCHARGED WITHIN SIXTY (60) DAYS OF COMMENCEMENT.

 

5.5                                 CESSATION OF BUSINESS.  ISSUER DISSOLVES, IS
SUBJECT TO LIQUIDATION OR CEASES TO CONDUCT BUSINESS IN THE ORDINARY COURSE.

 

5.6                                 CHANGE OF CONTROL.  NOTWITHSTANDING THE
FOREGOING, THIS NOTE, PLUS ALL ACCRUED INTEREST, SHALL BE PAID IN FULL WITHIN 30
DAYS AFTER A CHANGE OF CONTROL. A “CHANGE OF CONTROL” SHALL BE DEEMED TO HAVE
OCCURRED IF, AT ANY TIME, (A) BUYER CEASES TO CONTROL TARGET OR TO BE ENTITLED
TO ELECT ALL OF THE MEMBERS OF THE BOARD OF DIRECTORS OR MANAGERS OF TARGET; OR
(B) ALL OR SUBSTANTIALLY ALL OF ANY OF THE ASSETS OF BUYER OR TARGET ARE SOLD IN
ONE TRANSACTION OR A SERIES OF TRANSACTIONS TO ANY PERSON OR RELATED GROUP OF
PERSONS; OR (C) BUYER OR TARGET ARE MERGED WITH OR INTO ANOTHER PERSON EXCEPT
FOR A MERGER IN WHICH THE STOCKHOLDERS OF ISSUER IMMEDIATELY PRIOR TO THE MERGER
CONTINUE TO BENEFICIALLY OWN AT LEAST A MAJORITY OF THE EQUITY IN THE COMBINED
ENTITY IMMEDIATELY AFTER THE MERGER; OR (D) THE FILING OF A CERTIFICATE OF
DISSOLUTION OR THE EQUIVALENT FOR BUYER OR TARGET, OR (E) THE LAPSE OF NINETY
(90) DAYS AFTER THE NOTICE TO BUYER OF REVOCATION WITHOUT A REINSTATEMENT OF
BUYER’S CHARTER WITHIN THIRTY (30) DAYS AFTER RECEIPT OF NOTICE OF THIS
REVOCATION IS RECEIVED BY BUYER.

 

5.7                                 LEVY OR SEIZURE.  THE ATTACHMENT, SEIZURE OR
LEVY UNDER LEGAL PROCESS, WHICH IS NOT REMOVED WITHIN FORTY-FIVE DAYS, UPON
ASSETS OF ISSUER OR ANY OF ITS AFFILIATES THAT ARE MATERIAL TO THE OPERATION OF
THE BUSINESS OF BUYER AND ITS SUBSIDIARIES WHEN TAKEN AS A WHOLE.

 

6.                                       RIGHTS OF HOLDER UPON DEFAULT.  UPON
THE OCCURRENCE OR EXISTENCE OF ANY EVENT OF DEFAULT (OTHER THAN AN EVENT OF
DEFAULT REFERRED TO IN SECTIONS 5.3 AND 5.4) AND AT ANY TIME THEREAFTER DURING
THE CONTINUANCE OF SUCH EVENT OF DEFAULT, HOLDER MAY DECLARE ALL OUTSTANDING
OBLIGATIONS PAYABLE BY ISSUER HEREUNDER TO BE IMMEDIATELY DUE AND PAYABLE
WITHOUT PRESENTMENT, DEMAND, PROTEST OR ANY OTHER NOTICE OF ANY KIND, ALL OF
WHICH ARE HEREBY EXPRESSLY WAIVED; PROVIDED, HOWEVER, IF THE EVENT OF DEFAULT IS
THE FAILURE TO PAY AS SET FORTH IN SECTION 5.1 AND THE REASON FOR ISSUER’S
FAILURE TO PAY IS THAT ISSUER IS CONTRACTUALLY PROHIBITED FROM MAKING A PAYMENT
DUE TO THE TERMS OF THE SUBORDINATION AGREEMENTS, THEN THE HOLDERS SHALL NOT BE
ENTITLED TO DECLARE ALL OUTSTANDING OBLIGATIONS PAYABLE BY ISSUER UNTIL THE
EARLIER OF (A) THE DATE THAT IS 180 DAYS AFTER THE DATE THAT THE EVENT OF
DEFAULT WAS TRIGGERED, OR (II) THE DATE 10 DAYS AFTER THE CONTRACTUAL
PROHIBITION TO PAYMENT HAS BEEN REMOVED.  UPON THE OCCURRENCE OR EXISTENCE OF
ANY EVENT OF DEFAULT DESCRIBED IN SECTIONS 5.3 AND 5.4, IMMEDIATELY AND WITHOUT
NOTICE, ALL OUTSTANDING OBLIGATIONS PAYABLE BY ISSUER HEREUNDER SHALL
AUTOMATICALLY BECOME IMMEDIATELY DUE AND PAYABLE, WITHOUT PRESENTMENT, DEMAND,
PROTEST OR ANY OTHER NOTICE OF ANY KIND, ALL OF WHICH ARE HEREBY EXPRESSLY
WAIVED.  IN ADDITION TO THE FOREGOING REMEDIES, UPON THE OCCURRENCE OR EXISTENCE
OF ANY EVENT OF DEFAULT, HOLDER MAY EXERCISE ANY OTHER RIGHT POWER OR REMEDY
PERMITTED BY LAW, EITHER BY SUIT IN EQUITY OR BY ACTION AT LAW, OR BOTH.

 

5

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7.                                       HOLDERS REPRESENTATIVE.  EACH HOLDER
CONSTITUTED AND APPOINTED MICHAEL D. KILLGORE AS HOLDERS’ REPRESENTATIVE
PURSUANT TO THE TERMS AND PROVISIONS OF SECTION 9.19 OF THE PURCHASE AGREEMENT.

 

8.                                       CERTAIN COVENANTS.  WHILE ANY AMOUNT IS
OUTSTANDING UNDER THIS NOTE, WITHOUT THE PRIOR WRITTEN CONSENT OF THE HOLDERS’
REPRESENTATIVE, ISSUER SHALL NOT:

 

8.1                                 INCUR ANY OBLIGATIONS FOR SELLER FINANCING
ASSOCIATED WITH THE ACQUISITION OF A BUSINESS (WHATEVER THE STRUCTURE) WITHOUT
MAKING IT CONTRACTUALLY SUBORDINATED IN RIGHT OF PAYMENT TO THE PAYMENT OF THIS
NOTE; OR

 

8.2                                 MAKE ANY PAYMENT ON ACCOUNT OF INDEBTEDNESS
OF ISSUER THAT HAS BEEN CONTRACTUALLY SUBORDINATED IN RIGHT OF PAYMENT TO THIS
NOTE; OR

 

8.3                                 EXCEPT FOR REGULAR, IN TERMS OF PURPOSE,
QUARTERLY DIVIDENDS, MAKE ANY DISTRIBUTION OR DECLARE OR PAY ANY DIVIDENDS (IN
CASH OR OTHER PROPERTY, OTHER THAN COMMON STOCK); OR

 

8.4                                 IF ISSUER IS NOT PERMITTED BY THE SENIOR
LENDER AND/OR SURETY COMPANY THAT ARE PARTIES TO THE SUBORDINATION AGREEMENTS TO
MAKE THE PREPAYMENTS REQUIRED UNDER SECTION 2.1(A), ISSUER SHALL NOT CONSUMMATE
THE TRANSACTION THAT WOULD HAVE REQUIRED THE PREPAYMENT; OR

 

8.5                                 PURCHASE, ACQUIRE, REDEEM, OR RETIRE ANY OF
ANY COMMON STOCK OF ISSUER, WHETHER NOW OR HEREAFTER OUTSTANDING, UNLESS THE
PRINCIPAL BALANCE OF THIS NOTE IS LESS THAN TEN MILLION DOLLARS ($10,000,000).

 

9.                                       SUCCESSORS AND ASSIGNS.  SUBJECT TO THE
RESTRICTIONS ON TRANSFER DESCRIBED IN SECTIONS 11 AND 12, THE RIGHTS AND
OBLIGATIONS OF ISSUER AND HOLDERS OF THIS NOTE SHALL BE BINDING UPON AND BENEFIT
THE SUCCESSORS, ASSIGNS, HEIRS, ADMINISTRATORS AND TRANSFEREES OF THE PARTIES.

 

10.                                 WAIVER AND AMENDMENT.  ANY PROVISION OF THIS
NOTE MAY BE AMENDED, WAIVED OR MODIFIED UPON THE WRITTEN CONSENT OF ISSUER AND
THE HOLDERS’ REPRESENTATIVE.

 

11.                                 TRANSFER OF THIS NOTE.  WITH RESPECT TO ANY
OFFER, SALE, ASSIGNMENT OR OTHER DISPOSITION OF THIS NOTE, ANY HOLDER WILL GIVE
WRITTEN NOTICE TO ISSUER PRIOR THERETO, DESCRIBING THE IDENTITY OF THE ASSIGNEE
THEREOF, AND SUCH TRANSFER SHALL BE EFFECTIVELY FOLLOWING THE WRITTEN CONSENT OF
ISSUER WHICH SHALL NOT BE UNREASONABLY WITHHELD.

 

12.                                 ASSIGNMENT BY ISSUER.  NEITHER THIS NOTE NOR
ANY OF THE RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER MAY BE ASSIGNED, BY
OPERATION OF LAW OR OTHERWISE, IN WHOLE OR IN PART, BY ISSUER WITHOUT THE PRIOR
WRITTEN CONSENT OF THE HOLDERS’ REPRESENTATIVE AND ANY SUCH ASSIGNMENT WITHOUT
SUCH WRITTEN CONSENT SHALL BE VOID.

 

13.                                 NOTICES.  ALL NOTICES, REQUESTS, DEMANDS,
CLAIMS, AND OTHER COMMUNICATIONS HEREUNDER WILL BE IN WRITING. ANY NOTICE,
REQUEST, DEMAND, CLAIM, OR OTHER COMMUNICATION HEREUNDER SHALL BE DEEMED DULY
GIVEN ON THE EARLIER OF (A) WHEN ACTUALLY RECEIVED, (B) TWO BUSINESS DAYS AFTER
IT IS SENT BY OVERNIGHT COURIER, OR (C) TWO BUSINESS DAYS AFTER IT IS SENT BY

 

6

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REGISTERED OR CERTIFIED MAIL (RETURN RECEIPT REQUESTED, POSTAGE PREPAID) AND
ADDRESSED TO THE INTENDED RECIPIENT AS SET FORTH BELOW:

 

If to Holders or Holders’ Representative:

 

Donald B. Bonaventure
James Construction Group
11200 Industriplex Boulevard, Suite 150
Baton Rouge, LA 70809

Telephone:                      (225) 906-1110

Facsimile:                           (225) 295-4838

 

7

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Copy
to:                                                                                                 
KEAN, MILLER, HAWTHORNE, D’ARMOND,
McCOWAN & JARMAN, L.L.P.

Post Office Box 3513 (70821)

Suite 1800, One American Place

Baton Rouge, Louisiana 70802

Telephone:                      (225) 382-3414

Facsimile:                           (225) 215-4014

Attn: Mr. G. Blane Clark, Jr.

 

And:                                                                                                                    
Stefani & Stefani, Professional Corporation

512 E. Eleven Mile Road

Royal Oak, MI  48067

Attn: Michael L. Stefani

 

If to
Issuer:                                                                                  
PRIMORIS SERVICES CORPORATION

26000 Commercentre Drive

Lake Forest, CA  92630

Telephone:                      (949) 598-9242

Facsimile:                           (949) 595-5544

Attn:                    General Counsel

 

Copy
to:                                                                                                 
Rutan & Tucker, LLP

611 Anton Blvd., Suite 1400

Costa Mesa, CA 92626

Telephone:                      (714) 641-5100

Facsimile:                           (714) 546-9035

Attn:                    George Wall, Esq.

 

EITHER PARTY MAY SEND ANY NOTICE, REQUEST, DEMAND, CLAIM, OR OTHER COMMUNICATION
HEREUNDER TO THE INTENDED RECIPIENT AT THE ADDRESS SET FORTH ABOVE USING ANY
OTHER MEANS (INCLUDING PERSONAL DELIVERY, EXPEDITED COURIER, MESSENGER SERVICE,
TELECOPY, TELEX, ORDINARY MAIL, OR ELECTRONIC MAIL), BUT NO SUCH NOTICE,
REQUEST, DEMAND, CLAIM, OR OTHER COMMUNICATION SHALL BE DEEMED TO HAVE BEEN DULY
GIVEN UNLESS AND UNTIL IT ACTUALLY IS RECEIVED BY THE INTENDED RECIPIENT. 
EITHER PARTY MAY CHANGE THE ADDRESS TO WHICH NOTICES, REQUESTS, DEMANDS, CLAIMS,
AND OTHER COMMUNICATIONS HEREUNDER ARE TO BE DELIVERED BY GIVING THE OTHER PARTY
NOTICE IN THE MANNER HEREIN SET FORTH.

 

14.                                 PAYMENT.  PAYMENT SHALL BE MADE IN LAWFUL
TENDER OF THE UNITED STATES.

 

15.                                 USURY.  IN THE EVENT ANY INTEREST IS PAID ON
THIS NOTE WHICH IS DEEMED TO BE IN EXCESS OF THE THEN LEGAL MAXIMUM RATE, THEN
THAT PORTION OF THE INTEREST PAYMENT REPRESENTING AN AMOUNT IN EXCESS OF THE
THEN LEGAL MAXIMUM RATE SHALL BE DEEMED A PAYMENT OF PRINCIPAL AND APPLIED
AGAINST THE PRINCIPAL OF THIS NOTE.

 

16.                                 EXPENSES; WAIVERS.  ISSUER AGREES TO PAY ALL
COSTS AND EXPENSES OF COLLECTION INCURRED BY THE HOLDERS IN CONNECTION WITH
ENFORCEMENT OF THIS NOTE WHETHER INCURRED PRIOR TO OR AFTER AN ACTION IS
INSTITUTED BY HOLDERS. IF ACTION IS INSTITUTED TO COLLECT THIS NOTE, THE
NON-PREVAILING PARTY PROMISES TO PAY ALL COSTS AND EXPENSES, INCLUDING, WITHOUT
LIMITATION, REASONABLE

 

8

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ATTORNEYS’ FEES, EXPERT FEES AND ALL OTHER COSTS, INCURRED BY THE PREVAILING
PARTY IN CONNECTION WITH SUCH ACTION. SUCH EXPENSES, COSTS AND FEES INCLUDE BUT
ARE NOT LIMITED TO THOSE WHICH MAY BE INCURRED IN CONNECTION WITH ALL
APPEARANCES AND OTHER ACTIVITY IN BANKRUPTCY OR INSOLVENCY PROCEEDINGS INVOLVING
THE ISSUER OR THE ENFORCEMENT OF THE NOTE, THE DEFENSE OF ANY CLAIMS OR CAUSES
OF ACTION AGAINST THE HOLDERS, AND IN THE NEGOTIATION OR SETTLEMENT BY THE
HOLDERS OF ANY MODIFICATION OR COMPROMISE, OR REQUEST FOR SAME, REGARDING THE
PERFORMANCE BY ISSUER OF ANY OF ITS OBLIGATIONS HEREUNDER, ALL WITHOUT REGARD TO
ANY STATUTORY, JUDICIAL, ADMINISTRATIVE OR OTHER SCHEDULE FOR REIMBURSEMENT OR
PAYMENT OF LEGAL FEES.  ISSUER HEREBY WAIVES NOTICE OF DEFAULT, PRESENTMENT OR
DEMAND FOR PAYMENT, PROTEST OR NOTICE OF NONPAYMENT OR DISHONOR AND ALL OTHER
NOTICES OR DEMANDS RELATIVE TO THIS INSTRUMENT.

 

17.                                 GOVERNING LAW; VENUE.  THIS NOTE AND ALL
ACTIONS ARISING OUT OF OR IN CONNECTION WITH THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE CONFLICTS OF LAW PROVISIONS OF THE STATE OF DELAWARE, OR OF ANY OTHER
STATE. VENUE FOR ALL PROCEEDINGS SHALL BE IN HARRIS COUNTY, TEXAS.  EACH OF THE
PARTIES SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT SITTING IN
THE STATE OF TEXAS, COUNTY OF HARRIS, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS NOTE AND AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT.  EACH PARTY ALSO
AGREES NOT TO BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE IN ANY OTHER COURT.  EACH OF THE PARTIES WAIVES ANY DEFENSE OF INCONVENIENT
FORUM TO THE MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY
BOND, SURETY, OR OTHER SECURITY THAT MIGHT BE REQUIRED OF THE OTHER PARTY WITH
RESPECT THERETO.  EITHER PARTY MAY MAKE SERVICE ON THE OTHER PARTY BY SENDING OR
DELIVERING A COPY OF THE PROCESS TO THE PARTY TO BE SERVED AT THE ADDRESS AND IN
THE MANNER PROVIDED FOR THE GIVING OF NOTICES IN SECTION 13 ABOVE.  NOTHING IN
THIS SECTION 17, HOWEVER, SHALL AFFECT THE RIGHT OF EITHER PARTY TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AT EQUITY.  EACH PARTY AGREES
THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW OR AT EQUITY.

 

18.                                 FAILURE OR INDULGENCE NOT WAIVER. NO FAILURE
OR DELAY ON THE PART OF THE HOLDERS IN THE EXERCISE OF ANY POWER, RIGHT OR
PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR
PARTIAL EXERCISE OF ANY SUCH POWER, RIGHT OR PRIVILEGE PRECLUDE OTHER OR FURTHER
EXERCISE THEREOF OR OF ANY OTHER RIGHT, POWER OR PRIVILEGES. ALL RIGHTS AND
REMEDIES EXISTING HEREUNDER ARE CUMULATIVE TO, AND NOT EXCLUSIVE OF, ANY RIGHTS
OR REMEDIES OTHERWISE AVAILABLE.

 

9

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IN WITNESS WHEREOF, Issuer has caused this Note to be issued as of the date
first written above.

 

 

 

PRIMORIS SERVICES CORPORATION,
a Delaware corporation

 

 

 

 

 

/s/BRIAN PRATT

 

Brian Pratt, Chief Executive Officer, President and Chairman of the Board

 

 

EXHIBITS:

 

A                                      List of Holders and Principal Amounts

B                                        Subordination Agreements

 

[Signature page to Promissory Note]

 

10

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EXHIBIT A

 

HOLDERS AND PRINCIPAL AMOUNTS

 

 

 

Note Allocation(1)

 

Family Members

 

 

 

Dominic Iafrate

 

$

8,492,307.69

 

Angelo Iafrate

 

8,492,307.69

 

Trust for Stephen M. Iafrate

 

7,076,923.08

 

Trust for Dominic A. Iafrate

 

7,076,923.08

 

Trust for Jaclyn Iafrate

 

4,953,846.15

 

Trust for Donielle M. Iafrate

 

4,953,846.15

 

Trust for Anthony C. Iafrate

 

4,953,846.15

 

 

 

46,000,000.00

 

 

 

 

 

Management Members

 

 

 

Mike Killgore

 

1,428,571.43

 

Donald Bonaventure

 

1,428,571.43

 

Danny Hester

 

1,428,571.43

 

Rodney James

 

642,857.14

 

Charles Poole

 

642,857.14

 

Bruce Hix

 

535,714.29

 

Conrad Bourg

 

428,571.43

 

Tommy Lasseigne

 

321,428.57

 

Kan Janke

 

321,428.57

 

Thomas Love Jr

 

321,428.57

 

 

 

7,500,000.00

 

Total Note

 

$

53,500,000.00

 

 

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EXHIBIT B

 

SUBORDINATION AGREEMENT

 

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