exv10w2



 






Exhibit 10.2




INTERCREDITOR AGREEMENT




      THIS INTERCREDITOR AGREEMENT made and entered into this 14th day of March, 2005, by and
between FEDERAL INSURANCE COMPANY, an Indiana corporation, and BANK OF AMERICA, N.A., a national
banking association, as Lender Agent on behalf of the other Lender Parties. All capitalized terms
will have the meaning set forth in Section 1.



W I T N E S S E T H:




      WHEREAS, Quanta Services, Inc., a Delaware corporation, is Borrower and certain of its
Subsidiaries and Affiliates are Guarantors of Borrower, under that certain Credit Agreement dated
as of December 19, 2003, as amended from time to time, pursuant to which the Lender Parties agreed
to establish certain credit facilities described therein and provide certain financial services for
the benefit of certain Indemnitors;



      WHEREAS, the Indemnitors are indebted and/or obligated to Surety as evidenced by the Surety
Credit Documents;



      WHEREAS, the Indemnitors from time to time have obtained and/or may in the future obtain Bonds
from Surety as Principals;



      WHEREAS, as one of the conditions to Surety agreeing to consider requests from Indemnitors for
the issuance of any Bond, this Agreement must be executed by the parties hereto;



      WHEREAS, Surety and Lender Agent on behalf of the Lender Parties agree that the rights of
Surety with respect to the Surety Priority Collateral will be senior to the rights of the Lender
Parties with respect to the Surety Priority Collateral, pursuant to the terms and provisions of
this Agreement; and



      WHEREAS, Surety agrees that it will have no rights with respect to the Lender Priority
Collateral except to the extent expressly provided in this Agreement;



      NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:



      1. Definitions. For the purposes of this Agreement, the following terms will have the
meanings listed below:



      “Accounts” means and includes all of Indemnitors’ now owned or hereafter acquired accounts (as
defined in the UCC) and (whether included in such definition) accounts receivable, and proceeds,
including without limitation, all insurance proceeds and proceeds of any letter of credit on which
any Indemnitor is a beneficiary, but only to the extent such accounts, accounts



 








 




receivable, and proceeds arise pursuant to a Bonded Contract, including, but not limited to
Retainage, and all forms of obligations whatsoever owing to any Indemnitor under instruments and
documents of title constituting the foregoing or proceeds thereof; and all rights, securities, and
guarantees with respect to each of the foregoing. In no event, shall “Accounts” or the proceeds
thereof include accounts, accounts receivable, contract rights, insurance proceeds or proceeds of
any letter of credit of which any Indemnitor is a beneficiary to the extent such assets arise
pursuant to contracts other than “Bonded Contracts.”




      “Affiliate” means, with respect to any Person, any other person or group acting in concert
with respect of the Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under the common control with such Person. For purposes of
this definition, “control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”), as used with respect to any Person or group of Persons, will mean the
possession, directly or indirectly, of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities or by contract or
otherwise. Principal and Indemnitors are Affiliates of each other. None of Indemnitors is an
Affiliate of Surety, Lenders, or Lender Agent.



      “Agreement” or “this Agreement” means this Intercreditor Agreement together with all
amendments, modifications, and supplements hereto.



      “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereinafter in effect, or any successor statute.



      “Bonded Contract” means any existing or future contract in respect of which any Bond is issued
on behalf of any Principal or on behalf of Island Mechanical, Hawaii.



      “Bonded Contract Balances” means all payments made, or to be made, to or on behalf of any
Principal pursuant to or arising out of any Bonded Contract, including, without limitation, whether
earned and unpaid or to be earned, Retainage, increases in contract amounts and payments made, or
to be made, as a result of affirmative claims, including, but not limited to, claims against
Obligees, design professionals (including, but not limited to architects and engineers), certified
public accountants, subcontractors, laborers, materialmen, and against any of their sureties,
including, without limitation, changed condition claims or wrongful termination claims.



      “Bonds” means any surety agreements, undertakings, or instruments of guarantee signed by
Surety on behalf of any Principal, Island Mechanical, Hawaii, or Foreign Subsidiary, whether
executed before or after the execution of this Agreement.



      “Borrower” means Quanta Services, Inc., a Delaware corporation.



      “Default Rate” on each day of its determination the prime rate reflected in the Money Rates
section of The Wall Street Journal plus two percent (2%).



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      “Domestic Subsidiary” means any Subsidiary of Quanta Services, Inc. that is organized under
the laws of any political subdivision of the United States.



      “Equipment” means all of Indemnitor’s now owned or hereafter acquired right, title, and
interest with respect to equipment (as defined in the UCC) and (whether or not included in such
definition) all tangible property including all retail store, storage, office, computer, or
facility equipment and other retail, manufacturing, and research items, computer hardware, all
vehicles, goods, machinery, chattels, tools, dies, machine tools, furniture, furnishing, fixtures,
and supplies, of every nature, wherever located, all additions, accessories, and improvements
thereto and substitutions therefore and all accessories, parts, and equipment which may be attached
to or which are necessary for the operation and use of such personal property or fixtures, whether
or not the same will be deemed to be affixed to, arise out of, or relate to any real property,
together with all accessions thereto. For avoidance of doubt, “Equipment” is not intended to and
does not include any Licensed Property.



      “Foreclosure Action” means and includes any action, whether under the Bankruptcy Code or other
applicable law, to foreclose upon or enforce a Lien against particular property, including
commencing judicial or non-judicial foreclosure proceedings or any other remedy designed to or that
has the effect of dispossessing the Borrower, any Guarantor or Surety, as the case may be, of any
collateral.



      “Foreign Subsidiary” means any Subsidiary of Quanta Services, Inc. that is not a Domestic
Subsidiary.



      “Guarantors” has the meaning given in the definition of Lender Credit Documents.



      “Identified Equipment” means, whether owned or leased, any and all (i) boom-mountable robotic
arms and (ii) if one or more Bonds is in effect for the benefit of H.L. Chapman Pipeline
Construction, Inc., such company’s following rock trenching equipment: (a) Astec Model 3000SM
surface miner (two units); (b) Trencor Model 1860HD trencher (two units); and (c) Trencor Model
1760HD trencher (two units).



      “Indemnitors” means Quanta Services, Inc., a Delaware corporation, and Principal. In
addition, any parent of Principal (exclusive of any Joint Venture) and any other Person that owns
an equity interest in Principal (exclusive of any Joint Venture), their successors and assigns,
will be deemed to be an Indemnitor under this Agreement. Thereafter, said parent of Principal
(exclusive of any Joint Venture) and any other Person that owns an equity interest in Principal
(exclusive of any Joint Venture), their successors and assigns, will be deemed to be an Indemnitor
hereunder as though they were original signatories hereto. Notwithstanding the foregoing or
anything in this Agreement or any or any other Surety Credit Document to the contrary, in no event
will any parent, shareholder, or other equity holder of any nature in Quanta Services, Inc. be or
be deemed to be an Indemnitor for any purpose under this Agreement. The exclusion of any parent,
shareholder, or other equity holder of Quanta Services, Inc. as an Indemnitor for the purposes of
this Agreement will not limit the indemnity obligations of any parent, shareholder, or other equity
holder as may be agreed by any such parent, shareholder, or other equity holder in any agreement
entered into by any such parent, shareholder, or other



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equity holder. Notwithstanding the foregoing or anything in this Agreement or any other Surety
Credit Document (exclusive of any Surety Credit Document executed by any Foreign Subsidiary or
Joint Venture) to the contrary, in no event will any Foreign Subsidiary or Joint Venture be an
Indemnitor. The exclusion of Foreign Subsidiaries and Joint Ventures as Indemnitors for the
purposes of this Agreement will not limit the indemnity obligations of any Foreign Subsidiary or
any Joint Venture as may be agreed to by such Foreign Subsidiary or such Joint Venture in any
agreement entered into by such Foreign Subsidiary or such Joint Venture.




      “Inventory” means and includes all of Indemnitors’ now owned and hereafter acquired inventory,
including, without limitation, goods, merchandise, and other personal property furnished under any
contract of service, Bonded Contract, or intended for sale or lease, all raw materials, work in
process, finished goods and materials, and supplies of any kind, nature, or description used or
consumed in Indemnitors’ business or are used in connection with the manufacture, packaging,
shipping, advertising, selling, or finishing of such goods, merchandise, and other personal
property, all returned or repossessed goods now, or hereafter, in the possession or under the
control of Indemnitor or Surety, and all documents of title or documents representing the same.



      “Joint Venture” means any Person in which (i) one or more other Persons of the type described
in clauses (i), (ii), (iii), or (iv) of the definition of “Principal” has an equity or other
ownership or income participation interest equal to or greater than twenty-five percent (25%) of
the total such interest outstanding and (ii) one or more other Persons which are not Affiliates of
the Persons described in clause (i) above have an equity or other ownership or income participation
interest.



      “Lender Agent” means Bank of America, N.A., a national banking association, as administrative
agent on behalf of the Lender Parties under the Lender Credit Documents, or its successors or
assigns under the Lender Credit Documents.



      “Lender Collateral” means all present and future property of Borrower and Guarantors
(including the Indemnitors) under and as defined in the Lender Credit Documents, real and personal,
tangible and intangible, now existing or after acquired, and all proceeds thereof, excluding only
those specific items delineated in the Lender Credit Documents.



      “Lender Credit Documents” means and includes that certain Credit Agreement, dated as of
December 19, 2003, among Borrower, certain Subsidiaries and Affiliates of Borrower as Guarantors,
and the Lender Parties, together with all other loan documents, agreements, hedging agreements,
bank product or treasury management agreements and other instruments entered into or delivered in
connection therewith (including, without limitation, any and all security agreements, pledge
agreements, letters of credit, notes and other collateral documents of any nature), as amended,
modified, supplemented and extended from time to time, and any renewals, restatements or
replacements of any of the foregoing.



      “Lender Debt” means and includes all indebtedness, liabilities, and obligations of Borrower
and the Guarantors to any Lender Parties under the Lender Credit Documents whether now or hereafter
created, incurred or arising, and whether direct or indirect, absolute or



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contingent, primary or secondary, due or to become due, joint or several, now or at any time
or times hereafter owing to any Lender Party under any of the Lender Credit Documents including
obligations in respect of hedging agreements and treasury management services provided by any of
the Lender Parties or any affiliate of any Lender Party.




      “Lender Parties” means Lender Agent, Lenders, and their successors and assigns. “Lender
Party” will mean any one of them.



      “Lender Priority Collateral” means all Lender Collateral other than Surety Priority
Collateral.



      “Lenders” means the lenders from time to time under the Lender Credit Documents.



      “Licensed Property” means all proprietary systems or software, or any other assets of a
similar nature which are employed by Principal in connection with any and all contractual Work
required by the Bonded Contracts and/or the Bonds; any and all inventions, designs, patents, patent
applications, trademarks, trademark applications, trade names, trade secrets, registrations,
copyrights, licenses, franchises, customer lists, and any associated goodwill that is required for
the completion of any Bonded Contract and/or the fulfillment of any of Surety’s obligations under
the Bonds.



      “Lien” means any mortgage, deed of trust, pledge, security interest, hypothecation,
assignment, deposit arrangement to assure payment of any debt, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement, or preferential arrangement to assure
payment of any debt, charge, or encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing of any financing
statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing).
This definition of “Lien” will include any grant of a security interest in any Bonded Contract,
Accounts, Bonded Contracts Balances, and other items of Surety Priority Collateral that may be
governed or effected by the Contracts Dispute Act, 41 U.S.C. §601 et. seq. and/or any Federal
Acquisition Regulations.



      “Obligee” means any named party or parties appearing on the Bond(s) in whose favor the Bond(s)
are issued, or such parties’ successors and assigns.



      “Permitted Surety Liens” has the meaning specified in Section 3(c).



      “Person” means any entity, whether an individual, trustee, corporation, partnership, joint
stock company, unincorporated organization, business association or firm, joint venture, a
government or any agent or instrumentality or political subdivision thereof.



      “Principal” means (i) Quanta Services, Inc., a Delaware corporation, (ii) those of its
Domestic Subsidiaries listed on Exhibit A, (iii) any other Domestic Subsidiaries of Quanta
Services, Inc. for whom Surety executes Bonds, (iv) any new Principal added to the Underwriting
Agreement by rider as therein provided and (v) any Joint Ventures in which one or



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more of them are involved (A) that is listed on Exhibit A, (B) for which a Bond is
outstanding or (C) for which a Bond is requested by Indemnitors, in each case in their respective
capacity as a named principal under any Bond, but in all events excluding any Foreign Subsidiaries;
provided, however, that notwithstanding anything herein to the contrary, Island Mechanical, Hawaii,
a Hawaii general partnership (“Island Mechanical, Hawaii”), shall not be or be deemed to be a
Principal.




      “Records” means correspondence, memoranda, tapes, books, discs, papers, magnetic storage, and
other documents or information of any type, whether expressed in ordinary or machine language, any
and all accounts, computer software, other computer stored information, all progress schedules,
work in process schedules (including, but not limited to, estimates of completion costs), accounts
receivable ledgers, accounts payable ledgers, and estimates of completion costs.



      “Reserve” means a sum of money that may be set aside by Surety to pay present and future
liabilities under Bonds as required by statute.



      “Retainage” means contract proceeds periodically withheld by an Obligee to provide further
security for Principal’s or Island Mechanical, Hawaii’s performance of a Bonded Contract, and as
such are payable to Principal only upon a clear demonstration of compliance with terms of the
Bonded Contract.



      “Subsidiaries” means, with respect to any Person, any corporations, partnerships, or other
entities wherein such Person owns or acquires, directly or indirectly, more than fifty percent
(50%) of the issued and outstanding voting stock, securities, or other equity interest of such
corporation, partnership, or other entity, or any other corporation, partnership, or other entity
the management of which is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by any Person.



      “Surety” means Federal Insurance Company, an Indiana corporation, its Affiliates and
Subsidiaries, and any other companies writing Bonds for which the Underwriting Agreement is
consideration (and other companies from whom Surety procures Bonds for Principal), and their
co-sureties and reinsurors bound pursuant to Section 25, and their respective successors and
permitted assigns.



      “Surety Credit Documents” means: (i) this Agreement; (ii) each Bond; (iii) the Underwriting
Agreement; (iv) UCC Financing Statements listing any of Indemnitors as debtor and Surety as
secured party; (v) any collateral agreement to be entered into by Surety and any collateral agent
named therein in accordance with the Underwriting Agreement; (vi) any indemnity agreement or other
agreement executed by any Foreign Subsidiary with respect to any Bond and/or for the benefit of
Surety; (vii) any confidentiality agreement entered into between Surety or any Affiliate of Surety
and an Indemnitor; (viii) the Indemnity Agreement (as defined in the Underwriting Agreement); and
(ix) all amendments, modifications, extensions, additions, substitutions, or other documents
hereafter executed or delivered by any of Indemnitors or any Foreign Subsidiary, which relate to
any of the foregoing documents.



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      “Surety Loss” means, without duplication:



          (a) all damages, costs, reasonable attorney fees, and liabilities (including all reasonable
expenses incurred in connection therewith) which Surety actually incurs by reason of executing or
procuring the execution of any surety agreements, undertakings, or instrument of guarantee signed
by Surety on behalf of (i) any Principal or Island Mechanical, Hawaii and (ii) if requested by any
Indemnitor, any Affiliates and Subsidiaries of Quanta Services, Inc., and/or Bonds, which may be
already or hereafter executed on behalf of any Principal and/or any Foreign Subsidiary, or renewal
or continuation thereof; or which Surety actually incurs by reason of making any investigation on
account thereof, prosecuting or defending any action in connection therewith, obtaining a release,
recovering, or attempting to recover any salvage in connection therewith or enforcing by litigation
or otherwise any of the provisions of this Agreement, including, but not limited to:



          (1) money judgments, amounts paid in settlement or compromise, the full amount of reasonable
attorney and other professional fees incurred or paid by Surety, including without limitation
allocated costs (to the extent reasonably documented) of in-house counsel, accountants, and
engineers, court costs and fees, and interest at the Default Rate on all sums due it from the date
of Surety’s demand for said sums, (to the extent then due), if interest has been awarded by a
court;



          (2) any loss which Surety actually incurs as a result of any Bonded Contract or any Bonds, whether
that loss results from any activity of any Principal, Island Mechanical, Hawaii and/or any Foreign
Subsidiary individually or as part of a joint venture, partnership, or other entity which has been
or may be formed in which Principal or any Foreign Subsidiary is involved;



          (3) any loss which Surety actually incurs as a result of any actions taken by Surety upon
information provided by any Indemnitor, Island Mechanical, Hawaii and/or any Foreign Subsidiary
with respect to the issuance of any Bonds;



          (4) any Bond premiums due from Principal, Island Mechanical, Hawaii and/or any Foreign Subsidiary
to Surety;



          (5) any amounts that have been paid to Surety to be applied to Surety Loss that a court of
competent jurisdiction determines constitute “preferences,” within the meaning of Section 547 of
the Bankruptcy Code, and by reason thereof Surety is required to disgorge said amounts paid; and



      (b) reasonable legal, accounting, consulting, and related fees and expenses incurred after
January 15, 2005, in connection with the Bonds, the Surety Credit Documents, and/or any application
or submission by any of Indemnitors and/or any Foreign Subsidiary for the issuance of any Bond or
renewal of any existing Bond, whether or not Surety decides to issue said Bond. Notwithstanding
the foregoing, Indemnitors will be required to reimburse Surety for one hundred percent (100%) of
any filing fees and recording taxes incurred by Surety to perfect and continue
Surety’s security interest in the Surety Priority Collateral regardless of when those fees are
incurred.



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      “Surety Priority Collateral” means (i) all amounts that may be owing from time to time by
Surety to any Indemnitor in any capacity, including, but without limitation, any balance or share
belonging to any Indemnitor of any deposit or other account with Surety (this Lien and security
interest will be independent of any right of setoff which Surety may have); (ii) all rights of any
Principal to any distribution, right to distribution, or other similar interest in connection with
or on account of any Bond signed by Surety on behalf of any Joint Venture; (iii) all of any
Indemnitor’s right, title, and interest in and to all Bonded Contracts; (iv) Accounts; (v) all
rights of any Principal that is a Joint Venture to any distributions from any Person that is a
party to or has an interest in any Bonded Contract with respect to such Bonded Contract (whether
such Principal is the named Principal in such Bonded Contract); (vi) all claims, rights, and choses
in action against any Obligee on any Bond or against any other Person in either case on account of
any Bond or Bonded Contract; (vii) Bonded Contract Balances; (viii) to the extent assignable
(provided, that, any such prohibition on assignment would not be rendered ineffective pursuant to
Article 9 of the UCC, including, without limitation Section 9-406 and 9-408 of the UCC, or any
successor provisions and further provided, that, any such prohibition on assignment has not
otherwise been rendered ineffective, lapsed, or terminated), all rights and actions that any
Indemnitor may have or acquire in any subcontract, purchase order, or other agreement in connection
with any Bonded Contract, and against any subcontract, purchase order, or other agreement with any
Person furnishing or agreeing to furnish or supply vehicles, labor, supplies, machinery, or other
equipment in connection with or on account of any Bonded Contract, and against any surety or
sureties of any such subcontractor, laborer, or other Person in connection with such Bonded
Contract; (ix) any and all Equipment (exclusive of any Equipment owned by any Joint Venture) which
is specifically purchased for or prefabricated for the Work that is the subject of any Bonded
Contract and/or delivered to the site of such Work to be incorporated into the Work that is the
subject of any Bonded Contract and/or that is required pursuant to the terms of any Bonded Contract
to be transferred to any Obligee on any Bond (or any assignees of any such Obligee or any other
owner, or assignee of any owner, of the Work that is the subject of the Bonded Contract) upon
completion or termination of the Work; (x) any and all Inventory which is specifically purchased
for or prefabricated for the Work that is the subject of any Bonded Contract and/or delivered to
the site of such Work to be incorporated into the Work that is the subject of any Bonded Contract
and/or that is required pursuant to the terms of any Bonded Contract to be transferred to any
Obligee on any Bond or any assignees of any such Obligee or any other owner, or assignee of any
owner, of the Work that is the subject of the Bonded Contract) upon completion or termination of
the Work that is the subject of the Bonded Contract; (xi) any and all plans, specifications, shop
and as-built drawings utilized in or necessary to fully perform all obligations and services
required under the Bonded Contracts; and (xii) any and all proceeds and products arising with
respect thereto. References to “Surety Priority Collateral” includes the Bonded Contracts and any
other of the above-described assets that may be subject to the Contract Disputes Act, 41 U.S.C.
§§601, et. seq. The Surety Priority Collateral does not and is not intended to
include any Licensed Property.



      “UCC” means the Uniform Commercial Code as in effect on the date hereof in New York, as it may
be amended from time-to-time provided that if by reason of mandatory



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provisions of law, the perfection or the effect of perfection or non-perfection of a security
interest in any Surety Priority Collateral or Lender Collateral is governed by any state other than
New York, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of perfection or
non-perfection.




      “Underwriting Agreement” means that certain Underwriting, Continuing Indemnity and Security
Agreement of even date executed by and between Principal and Surety.



      “Work” means the specialized contracting services, including but not limited to design,
construction, maintenance, installation and repair of network infrastructures for electric power,
telecommunications, broadband cable and gas pipelines systems, as the case may be, required of any
Principal, Island Mechanical, Hawaii, or Indemnitor by any Bonded Contract, whether completed or
partially completed, and includes all other labor, materials, equipment, and services provided or
to be provided by any Indemnitor, Island Mechanical, Hawaii, or Principal to fulfill such
Principal’s, Island Mechanical, Hawaii’s, or Indemnitor’s obligations pursuant to such Bonded
Contract.



      2. Security Interests of Lender Parties and Surety. As security for the full repayment of
all Lender Debt, each of Borrower and the Guarantors has assigned and granted to Lender Agent for
the benefit of the Lender Parties a security interest in and to the Lender Collateral. As security
for the full and timely payment of Surety Loss, Indemnitors have assigned and granted to Surety a
security interest in and to the Surety Priority Collateral. Lender Agent on behalf of Lender
Parties hereby consents to the granting of a security interest by Indemnitors to Surety in the
Surety Priority Collateral. As additional security for any and all Surety Loss, Indemnitors have
caused to be delivered to Surety and named Surety as the beneficiary of that certain Letter of
Credit No. 3064365 dated July 14, 2004, issued by Lender Agent in the face amount of Ten Million
Dollars ($10,000,000). Surety agrees that it has not obtained or perfected (and will not obtain or
perfect) a security interest in any of the Lender Priority Collateral without the consent of Lender
Agent, except to the extent expressly permitted by Section 3(c) of this Agreement.



      3. Priority of Liens. Notwithstanding anything to the contrary arising from any note,
agreement, instrument, or document now or hereafter executed and delivered by Surety, any Lender,
any Lender Party, any Indemnitors or any Foreign Subsidiary in connection with any Surety Loss or
Lender Debt, including without limitation, the terms and conditions of the Lender Credit Documents,
the Surety Credit Documents, or any promissory note, security agreement, guaranty agreement, or
mortgage executed and delivered by Indemnitors, or any instrument or document executed and
delivered in connection therewith, or otherwise, any prior perfection of a Lien, or the provisions
of the UCC, or other law of any jurisdiction which is applicable, or the existence of any present
or future filing of financing statements under the UCC or other law of any jurisdiction which is
applicable, or other filings or recordings under any other law of any jurisdiction which is
applicable or in which such filing or recording has been made, Lender Agent on behalf of Lender
Parties and Surety agree that:



      (a) (i) Subject in all cases to the provisions set forth in Section 8, (y) the priorities of
the Liens of Surety in the Surety Priority Collateral securing Surety Loss will be



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senior and prior to the Liens of Lender Agent for the benefit of Lender Parties at any time
obtained in the Surety Priority Collateral to secure Lender Debt, and (z) in the event of any
bankruptcy proceedings or any receivership, assignment for the benefit of creditors, liquidation,
readjustment, merger, consolidation, amalgamation, reorganization, arrangement, or other similar
proceedings in connection therewith, relative to any Indemnitor or to the property of any thereof,
and in the event of any proceedings for voluntary liquidation, dissolution, or other winding up of
any of Indemnitors, whether or not involving insolvency or bankruptcy, Surety will be entitled to
receive the proceeds of Surety Priority Collateral for application to Surety Loss before any Lender
Party will be entitled to receive any such proceeds for application to Lender Debt and furthermore,
Lender Agent will not be entitled to receive any of the proceeds of Surety Priority Collateral
until no Bonds remain outstanding (and Surety reasonably determines that it has no exposure under
any Bond).




          (ii) Subject in all cases to the provisions set forth in Section 8, (y) the priorities of the
Liens of Lender Agent for the benefit of Lender Parties in the Lender Priority Collateral securing
Lender Debt will be senior and prior to any Permitted Surety Liens that Surety obtains at any time
in the Lender Priority Collateral to secure Surety Loss, and (z) in the event of any bankruptcy
proceedings or any receivership, assignment for the benefit of creditors, liquidation,
readjustment, merger, consolidation, amalgamation, reorganization, arrangement, or other similar
proceedings in connection therewith, relative to any Indemnitor or to the property of any thereof,
and in the event of any proceedings for voluntary liquidation, dissolution, or other winding up of
any of Indemnitors, whether or not involving insolvency or bankruptcy, the Lender Parties will be
entitled to receive the proceeds of Lender Priority Collateral for application to Lender Debt
before Surety will be entitled to receive any such proceeds for application to Surety Loss and
furthermore, Surety will not be entitled to receive any of the proceeds of Lender Priority
Collateral until all obligations of the Lender Parties have been satisfied, any outstanding letters
of credit have been terminated and no commitments remain outstanding, under the Lender Credit
Documents (and Lenders acknowledge that nothing in this paragraph or this Agreement constitutes a
restriction of Surety’s existing rights under any letter of credit).



      (b) Notwithstanding the foregoing or any provision in this Agreement, or any other Agreement
between Surety and any Lender Party, in the event Surety does not hold a valid, non-avoidable,
perfected, and enforceable Lien in the Surety Priority Collateral, then the subordination of Liens
of Lender Agent for the benefit of Lender Parties in the Surety Priority Collateral will not be
effective on any date with respect to any part of the Surety Priority Collateral, in which Lender
Agent for the benefit of Lender Parties, but not Surety, holds on such date, a valid,
non-avoidable, perfected, and enforceable Lien. Provided, however, the foregoing will not serve to
diminish, abridge, or otherwise adversely affect the equitable subrogation rights of Surety,
subject to Section 8. Lender Agent agrees that it will not perfect any security interest in any
Bonded Contracts, Accounts, Bonded Contract Balances, and other items of Surety Priority Collateral
that may be governed or effected by the Contracts Dispute Act, 41 U.S.C. §601 et. seq. and/or any
Federal Acquisition Regulations without the written consent of Surety in its sole and absolute
discretion.



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      (c) Surety acknowledges and agrees that it has no rights with respect to, or Liens on, the
Lender Priority Collateral and covenants that it will not obtain any such rights or Liens in the
future; provided, however, that the foregoing will not limit any such rights or Liens that Surety
may obtain (i) as a judgment creditor pursuant to a court order in any judicial proceedings; (ii)
as a result of equitable subrogation; or (iii) pursuant to a court order in any insolvency,
bankruptcy, or similar proceedings (collectively, the “Permitted Surety Liens”).



      (d) Notwithstanding the foregoing or any provision in this Agreement, or any other agreement
between Lender Agent and Surety, in the event Lender Agent or any of Lenders do not hold a valid,
perfected, and enforceable Lien in the Lender Priority Collateral, then the subordination of Liens
by Surety will not be effective on any date with respect to any part of the Lender Priority
Collateral in which Surety, but not Lender Agent or Lenders, holds on such date a valid,
non-avoidable, perfected, and enforceable Lien. Moreover, nothing herein will require any Lender
Party to turn over to Surety any amounts or assets (exclusive of any Surety Priority Collateral)
received by it as adequate protection of its junior security interest in the Surety Priority
Collateral in any insolvency, bankruptcy, or similar proceeding and Surety will not be entitled to
receive any of the proceeds of Lender Priority Collateral until all obligations of the Lender
Parties have been satisfied, and no commitments remain outstanding, under the Lender Credit
Documents.



      Lender Agent on behalf of Lender Parties agrees to not instigate, promote, institute,
cooperate, or join as a party in the institution of any action, suit, or proceeding seeking to
challenge the validity, enforceability, amount, or priority of Liens of Surety in the Surety
Priority Collateral securing Surety Loss unless agreed to by Surety or required by law or judicial
order. Lender Agent on behalf of Lender Parties further agrees that it has no right and it will
not challenge the manner in which Surety handles any claim under any Bond, including, but not
limited to, any decision by Surety whether to litigate, settle, or pay any claim (or settlement or
resolution with any Obligee as to any Bonded Contract Balances) and/or assert any defenses, set
offs, back charges, etc. with respect to any claim; any such determination with respect to any
claim will be made by Surety in its sole and absolute discretion. The foregoing will not be deemed
to modify the provisions of Section 7 with respect to the use and sharing of Identified Equipment,
Licensed Property, and Records. Surety agrees not to instigate, promote, institute, cooperate, or
join as a party in the institution of any action, suit, or proceeding seeking to challenge the
validity, enforceability, amount, or priority of the Liens of any Lender Party securing the Lender
Debt.



      4. Foreclosure Action by Lender Agent; Standby.



      (a) Lender Agent on behalf of the Lender Parties agrees to forbear from taking any Foreclosure
Action with respect to any of the Surety Priority Collateral until such time as (i) Surety has no
outstanding exposure under any of the Bonds and any Surety Loss has been paid in full or (ii)
Surety Loss has been cash collateralized (or secured by a letter of credit) to the satisfaction of
Surety, in its sole and absolute discretion. Notwithstanding the foregoing, nothing will prohibit
any Lender Party from taking such action as may be required to preserve the claims of Lender
Parties against Indemnitors or any Foreign Subsidiary or its junior Lien on Surety Priority
Collateral (including without limitation, seeking adequate protection of its security



11








 




interest in any bankruptcy proceeding), but only to the extent that any relief requested or
afforded as a result does not reduce or affect the availability to Surety of any of Surety Priority
Collateral; provided, however, in no event will any Lender Party take any action to: (a) foreclose
upon any Lien on the Surety Priority Collateral (including, but not limited to, any right pursuant
to the UCC or otherwise to collect any Accounts constituting Surety Priority Collateral); or (b)
sell or convey any portion of the Surety Priority Collateral during the standstill period provided
for in the first sentence in this Section 4(a) without the prior written consent of Surety. At
such time as (y) Surety Loss has been paid and satisfied in full and Surety has no outstanding and
unfilled obligations under the Bonded Contracts or any Bonds issued in relation thereto, or (z)
Surety Loss has been cash collateralized (or secured by a letter of credit, in form and from a
financial institution acceptable to Surety in its sole and absolute discretion) to the satisfaction
of Surety, in its sole and absolute discretion, this Section 4(a) will be of no force and effect.




      (b) Surety agrees to forbear from taking any Foreclosure Action with respect to any of the
Lender Priority Collateral until such time as (i) the Lender Parties have no obligations under, and
no commitments or letters of credit remain outstanding under, the Lender Credit Documents or (ii)
all obligations of the Lender Parties under the Lender Credit Documents have been cash
collateralized (or secured by a letter of credit) to the satisfaction of the Lender Parties, in
their sole and absolute discretion. Notwithstanding the foregoing, nothing will prohibit Surety
from taking such action as may be required to preserve the claims of Surety against Indemnitors or
any Foreign Subsidiary or its junior Permitted Surety Liens on Lender Priority Collateral
(including without limitation, seeking adequate protection of its security interest in any
bankruptcy proceeding), but only to the extent that any relief requested or afforded as a result
does not reduce or affect the availability to Lender Agent, on behalf of the Lender Parties, of any
of Lender Priority Collateral; provided, however, in no event will Surety take any action to: (a)
foreclose upon any Permitted Surety Lien on the Lender Priority Collateral; or (b) sell or convey
any portion of the Lender Priority Collateral during the standstill period provided for in the
first sentence in this Section 4(b) without the prior written consent of the Lender Agent. At such
time as (y) all obligations of the Lender Parties have been satisfied, and no commitments remain
outstanding, under the Lender Credit Documents or (z) all obligations of the Lender Parties under
the Lender Credit Documents have been cash collateralized (or secured by a letter of credit) to the
satisfaction of the Lender Parties, in their sole and absolute discretion, this Section 4(b) will
be of no force and effect.



      (c) Principal has granted to Surety a non-exclusive royalty free license and right to use the
Licensed Property as required in Surety’s discretion to complete the Bonded Contracts. Lender
Agent hereby recognizes Surety’s right to use, at no cost to Surety, the Licensed Property, subject
to the terms of the license, and agrees that any action taken by Lender Agent with respect to the
Licensed Property will be subject to all of the rights of Surety to use the Licensed Property to
complete the Bonded Contracts in accordance with the terms of the license. At such time as (x)
Surety Loss has been paid and satisfied in full and Surety has no outstanding and unfilled
obligations under the Bonded Contracts, or any Bonds issued in relation thereto, or (y) Surety Loss
has been cash collateralized (or secured by a letter of credit, in form and from a financial
institution acceptable to Surety in its sole and absolute discretion) to the satisfaction of
Surety, in its sole and absolute discretion, or (z) the license is terminated pursuant to the terms
of the license, this Section 4(c) will be of no force and effect.



12








 





      5. Use of Identified Equipment. Following an Event of Default under (and as defined in)
the Underwriting Agreement and receipt by Lender Agent of written notice identifying such Event of
Default from Surety, if Surety decides, in its sole and absolute discretion, to perform and
complete, or to cause or procure the performance and completion of any Bonded Contracts, the Lender
Agent hereby agrees on behalf of Lender Parties that should Lender Parties (in such capacity) have
any control over the access to and use of any Identified Equipment, Surety, or any properly
licensed third party appointed by Surety, will, subject to the limitations set out in Sections 6
and 7, have full access to and use of all Identified Equipment for the discharge of the duties,
obligations, and undertakings of Surety under the Bonds.



      6. Consideration for Use of Identified Equipment/Sharing. Upon a determination by Surety
to utilize, or reserve for utilization, any Identified Equipment (that is not included in Surety
Priority Collateral) in which Lender Agent holds a first priority security interest for the benefit
of Lender Parties, Surety will periodically (and in any event no less frequently than monthly), pay
Lender Agent for the benefit of Lender Parties the fair market rental value of such Identified
Equipment for the period said Identified Equipment is utilized, or reserved for utilization, by
Surety or its appointee (with such rental commencing on the earlier of the date such Identified
Equipment is first utilized or reserved by Surety for utilization, in consideration of the
utilization of such Identified Equipment necessary to fulfill the Bonded Contracts. In no event
will Surety be required to pay any rental or other consideration with respect to the use of any
Surety Priority Collateral.



      In the event Surety and Lender Agent cannot agree on the above referenced “fair market rental
value,” then (i) Surety will be entitled to utilize the Identified Equipment during the period that
the parties are endeavoring to resolve their dispute and come to an agreement regarding the “fair
market rental value” and (ii) pending resolution of such dispute, Surety will pay Lender Agent for
the benefit of Lender Parties the amount Surety deems to be fair market rental value of such
Identified Equipment for such period. All disputes regarding the “fair market rental value” will
be determined by appraisal. Surety and Lender Agent will endeavor to agree on the selection of an
appraiser of national recognition to determine such “fair rental market value.” In the event
Lender Agent and Surety cannot agree on an appraiser, then each of Surety and Lender Agent will
select an appraiser to determine said “fair market rental value” and the average of the values so
determined by these appraisers will be the “fair market rental value.” The appraiser’s
determination will be deemed final and conclusive. The cost of the appraisers will be borne by
Indemnitors.



      During any period in which Surety is utilizing, or reserving for utilization, the Identified
Equipment, Surety will preserve and maintain said Identified Equipment in good repair, and will
return said Identified Equipment in as good a condition as when received by Surety, ordinary wear
and tear excepted. In addition, Surety will maintain insurance coverage relative to the Identified
Equipment during any period in which Surety is utilizing, or reserving for utilization, Identified
Equipment. Any and all costs and expenses incurred by Surety will be borne by Indemnitors.



13








 





      Surety agrees that in the event any of the Identified Equipment utilized, or reserved for
utilization, by Surety is also needed to be used in connection with the completion and performance
of contracts other than Bonded Contracts, Surety will work with Principal to allow Principal and
its Affiliates reasonable access to and use of such Identified Equipment; provided, however, in
this event, any consideration paid by Surety for the use of such Identified Equipment will be
prorated and reduced for the time that such Identified Equipment is utilized or reserved for
utilization on any contract other than a Bonded Contract.



      7. Limited Use Sharing. Sections 5 and 6 of this Agreement are intended, subject to the
terms set forth therein, to grant Surety the limited right at its option to have reasonable access
to and use of, or cause a duly licensed third party to have reasonable access to and use, the
Identified Equipment necessary to perform its obligations under the Bonds. In the event Surety
elects to perform any of the Bonded Contracts, or cause any duly licensed third party to perform
any of the Bonded Contracts, then Surety hereby agrees in favor of Lender Parties to use all
reasonable efforts in order to perform, or cause any such duly licensed third party to perform, its
obligations under such related Bonds in a timely and cost effective manner. Upon the written
request of Lender Agent, Surety will release from the terms of this Agreement any Identified
Equipment that are not required for use, nor required to be reserved for use, by Surety, or a third
party designated by Surety, for the performance of the Bonded Contracts. Lender Agent will not
deliver any such written request until it has decided to begin a Foreclosure Action against the
Identified Equipment and will advise Surety of the contemplated Foreclosure Action in its written
request. Whether any Identified Equipment is required for use, or required to be reserved for use,
will be determined within thirty (30) days of receipt by Surety of any such written request of
Lender Agent; said determination to be made in Surety’s reasonable business discretion. However,
until such time as Surety has made such determination with respect to any Identified Equipment, as
provided in the preceding sentence (or, for thirty (30) days if Surety fails to make such
determination within such period), such Identified Equipment will be deemed to be reserved by
Surety for utilization pursuant to the terms hereto; said reservation to be deemed to commence on
the date of receipt by Surety of the written request from Lender Agent.



      Surety and Lender Agent agree that to the extent any of the Licensed Property or Records that
are Surety Priority Collateral or Lender Priority Collateral, or any other books and records of
Indemnitors that are Surety Priority Collateral or Lender Priority Collateral, as applicable,
relate to both Bonded Contracts and contracts other than Bonded Contracts, Surety and Lender
Parties will allow each other reasonable access to, and otherwise share with one another, the
information reflected in such items as will permit Lender Parties and Surety to preserve, protect
or, as applicable, take any action deemed appropriate (including the exercise of remedies) with
respect to the Lender Priority Collateral and the Surety Priority Collateral, as applicable.



      8. Equitable Subrogation. The parties agree that with respect to all funds due or to
become due under any specific Bonded Contract: (i) nothing herein will waive, impair, or limit
Surety’s right of equitable subrogation with respect to such Bonded Contract, which the parties
hereby expressly recognize; and (ii) such funds will be trust funds pursuant to applicable statutes
or the terms of the Underwriting Agreement; provided, however, notwithstanding the foregoing or
anything to the contrary (a) set forth in any Surety Credit Document or (b) arising pursuant to
principles of legal or equitable subrogation (including, without limitation, trust fund
principles),



14








 




Surety agrees that Surety will have no right or claim of any nature with respect to any funds that
are received by any Lender Party out of such funds, or constituting proceeds of such funds, prior
to (x) the occurrence of an Event of Default under (and as defined in) the Underwriting Agreement
and (y) Lender Agent’s receipt of written notice from Surety identifying such Event of Default and
indicating that Surety is expressly reserving its rights hereunder. The foregoing will not be
construed to be a waiver by Surety of any requirement that Principal or Island Mechanical, Hawaii
comply with applicable law and the provisions of the Underwriting Agreement.




      9. Priority Not Impaired by Acts or Omissions of Indemnitors, Surety, or Lender. No right
of Surety to enforce the priorities provided in this Agreement will at any time or in any way be
prejudiced or impaired by any act or failure to act on the part of Indemnitors or by any act or
failure to act by Surety (except the failure to perfect as expressly required under Section 3), or
by any noncompliance by Indemnitors with the provisions of the Lender Credit Documents. Without
limiting the generality of the foregoing, Surety may, at any time and from time to time, without
the consent of or notice to any Lender Party, without incurring responsibility to Lender Party, and
without impairing or releasing the subordination and other benefits provided in this Agreement, do
any one or more of the following: (i) change the manner, place, or terms of payment or extend,
renew, modify, or amend the terms of Surety Loss or any of the Surety Credit Documents, exercise or
delay in or refrain from exercising any right or remedy against Indemnitors or any liability of
Indemnitors; (ii) release, exercise, or delay in or refrain from exercising any right or remedy
against, change the terms of any agreement or instrument with or otherwise deal freely with any
guarantor or any other Person liable or contingently liable in any manner for Surety Loss; (iii)
settle or compromise any of Surety Loss or any other liability of Borrower or any Indemnitors to
Surety and apply any sums by whomsoever paid and howsoever realized to any liability (including,
without limitation, the Surety Loss) in any manner or order; or (iv) fail to take or to record
(except for any recording required to perfect as expressly required under Section 3) for any reason
or for no reason, any lien securing Surety Loss by whomsoever granted, and release, sell, exercise,
or delay in or refrain from exercising any right or remedy against, exchange, enforce, realize
upon, or otherwise deal freely with, in any manner and in any order, any collateral pledged as
security for Surety Loss.



      No right of any Lender Party to enforce the priorities provided in this Agreement will at any
time or in any way be prejudiced or impaired by any act or failure to act on the part of
Indemnitors or by any act or failure to act by any Lender Party, or by any noncompliance by
Indemnitors with the provisions of the Lender Credit Documents. Without limiting the generality of
the foregoing, the Lender Parties may, at any time and from time to time, without the consent of or
notice to Surety, without incurring responsibility to Surety, and without impairing or releasing
the subordination and other benefits provided in this Agreement, do any one or more of the
following: (i) change the manner, place, or terms of payment or extend, renew, modify, or amend
the terms of Lender Debt or any of the Lender Credit Documents, exercise or delay in or refrain
from exercising any right or remedy against Indemnitors or any liability of Indemnitors; (ii)
release, exercise, or delay in or refrain from exercising any right or remedy against, change the
terms of any agreement or instrument with or otherwise deal freely with any guarantor or any other
Person liable or contingently liable in any manner for Lender



15








 




Debt; (iii) settle or compromise any of Lender Debt or any other liability of Borrower or any
Guarantor including that of any Indemnitor to the Lender Parties and apply any sums by whomsoever
paid and howsoever realized to any liability (including, without limitation, the Lender Debt) in
any manner or order; or (iv) fail to take or to record (except for any recording required to
perfect as expressly required under Section 3) for any reason or for no reason, any lien securing
Lender Debt by whomsoever granted, and release, sell, exercise, or delay in or refrain from
exercising any right or remedy against, exchange, enforce, realize upon, or otherwise deal freely
with, in any manner and in any order, any Lender Collateral.




      10. Notices. It is mutually agreed that any and all notices herein provided for must be
given in writing and will be deemed given if and when delivered in person or duly deposited in the
United States Mails, postage prepaid for regular or certified mail, properly addressed to the party
to whom given at the address of such party shown in this Agreement, provided however, that any
party may specify any other post office address in the United States by giving at least ten (10)
days written notice thereof to the other party.



	 	 	 	 	 
	Surety:
	 	Federal Insurance Company
	 
	 	15 Mountain View Road
	 
	 	P.O. Box 1615
	 
	 	Warren, New Jersey 07061-1615
	

	 	Attn.:
	 	Edward J. Reilly
	

	 	 	 	John B. Fuoss
	 
	 	 	 	 
	With a copy to:
	 	Manier & Herod
	 
	 	2200 One Nashville Place
	 
	 	150 Fourth Avenue, North
	 
	 	Nashville, Tennessee 37219
	

	 	Attn.:
	 	Sam H. Poteet, Jr.
	

	 	 	 	Mary Paty Lynn LeVan
	 
	 	 	 	 
	Lender Agent:
	 	Bank of America, N.A.
	 
	 	Agency Management
	 
	 	231 South LaSalle Street
	 
	 	Chicago, Illinois 60604
	 
	 	Mail Code: IL1-231-08-30
	

	 	Attn:
	 	Rosanne Parsill
	 
	 	 	 	 
	With a copy to:
	 	Moore & Van Allen PLLC
	 
	 	Bank of America Corporate Center
	 
	 	Suite 4700
	 
	 	100 North Tryon Street
	 
	 	Charlotte, North Carolina 28202
	

	 	Attn:
	 	Thomas L. Mitchell
	

	 	 	 	Alan W. Pope






16








 





      11. Relationship of Parties. This Agreement is entered into solely for the purposes
set forth herein, and, except as is otherwise expressly provided, no party assumes any
responsibility to any other party to advise such other party of information known to such party
regarding the financial condition of Borrower, any Indemnitor, or regarding any of the collateral
pledged to any Lender Party or Surety, or of any other circumstances bearing upon the risk of
nonpayment of the Surety Loss or the Lender Debt. Each party will be responsible for managing its
relationship with each of Borrower and Indemnitors, and no party will be deemed the agent of the
other for any purpose.



      12. Rights of Third Parties. This Agreement is intended to establish certain
priorities and rights between Surety and Lender Parties and is not intended by the parties hereto
to create any rights in any other Person, including, without limitation, Indemnitors.



      13. Term of Agreement. This Agreement will continue in full force and effect and will
be irrevocable by any party hereto until the first to occur of: (i) the termination of this
Agreement in writing by the parties; (ii) the satisfaction in full of the Surety Loss (or the
written acceptance by Surety of less than full payment in satisfaction of Surety Loss) and the
termination of the Surety Credit Documents; (iii) the entry of a final, nonappealable order by a
court of competent jurisdiction whereby Surety is required to accept less than the full amount of
Surety Loss in satisfaction of Indemnitors’ obligations to Surety; or (iv) the Lender Debt and
other obligations of Borrower and Guarantors to Lender Parties under the Lender Credit Documents
have been satisfied in full in cash (including the payment in full and cash of all obligations of
Borrower and Guarantors for the payment of money) and no Lender Party has any further commitment to
make any financial accommodations to Borrower or any Guarantor in connection therewith. In the
event that, for any reason, all or any portion of any payment by, on behalf of, Borrower or
Indemnitors to Surety or Lender Party is set aside or restored, whether voluntary or involuntary,
after the making thereof, this Agreement will be revived (if terminated) and continue in full force
and effect as if said payment or payments had not been made.



      14. Amendment and Waiver in Writing. No provision of this Agreement can be amended or
waived, except by a statement in writing signed by the party against which enforcement of the
amendment or waiver is sought.



      15. Binding Effect. This Agreement will be binding upon and inure to the benefit of
the respective heirs, successors, and assigns of Surety and Lender Parties.



      16. Entire Agreement. This Agreement represents the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior agreements are
merged herein.



      17. Severability. Should any provision of this Agreement be invalid or unenforceable
for any reason, the remaining provisions hereof will remain in full effect.



      18. Time of Essence. Time is of the essence of this Agreement, and all dates and time
periods specified herein will be strictly observed, except that Surety or Lender may permit
specific deviations therefrom by its written consent.



17








 





      19. Jury Waiver. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN BONDED
CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE
PROVISIONS OF THIS SECTION 19 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE
RELIED, ARE RELYING, AND WILL RELY IN ENTERING INTO THIS AGREEMENT. THE PARTIES HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 19 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF SUCH OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.



      20. Governing Law. This Agreement is to be performed in the State of New York and
will be governed by and construed and enforced in accordance with the laws of such state applicable
to contracts made and to be performed entirely within such state. Unless the jurisdictional
pre-requisites are not met, the parties hereto irrevocably consent to the exclusive jurisdiction of
the United States District Courts for the purpose of any litigation concerning this Agreement. No
party hereto will object to or contest New York as the proper venue for any action or proceeding to
enforce the terms hereof.



      21. Gender and Number. Words used herein indicating gender or number will be read as
context may require.



      22. Captions Not Controlling. Captions and headings have been included in this
Agreement for the convenience of the parties, and will not be construed as affecting the content of
the respective Sections and Paragraphs.



      23. Counterparts. This Agreement may be executed by the parties in one or more
counterparts, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.



      24. Conflict with Surety Credit Documents or Lender Credit Documents. The provisions
of this Agreement are intended by the parties to control any conflicting provisions in the Surety
Credit Documents or the Lender Credit Documents, including, without limitation, any provisions
allowing for the taking of additional collateral by Surety or the prosecution of any Foreclosure
Action against the Surety Priority Collateral by Lender Agent or Lender Parties.



      25. Authority of Lender Agent and Surety. The execution, delivery, and
performance of this Agreement by Lender Agent has been duly authorized by the requisite Lender
Parties necessary to bind Lender Parties hereto. Lender Agent on behalf of Lender Parties hereby
represents and warrants to Surety that the requisite Lenders have consented to, and directed Lender



18








 




Agent to execute on behalf of all Lender Parties this Agreement and the requisite Lender
Parties, as and if required, have approved this final form of this Agreement. This Agreement is,
when executed and delivered by Lender Agent, the valid and binding obligation of Lender Agent,
enforceable against Lender Agent in accordance with its terms. The execution, delivery, and
performance of this Agreement has been duly authorized by Surety (exclusive of any future
co-sureties). Federal Insurance Company on behalf of Surety hereby represents and warrants to
Lender Agent that the requisite Sureties have consented to, and directed Federal Insurance Company
to execute this Agreement on behalf of Surety (exclusive of any future co-sureties) and the
requisite Surety, as and if required, have approved this final form of this Agreement. This
Agreement is, when executed and delivered by Federal Insurance Company, the valid and binding
obligation of Federal Insurance Company, enforceable against Federal Insurance Company in
accordance with its terms. Lender Agent on behalf of Lender Parties confirms that Surety and
Quanta Services, Inc. may agree to a co-surety to issue or procure Bonds for Principal. (The
foregoing sentence will not serve to modify Borrower’s rights under the terms of the Lender Credit
Documents.) In this event and with respect to any co-surety (other than any co-surety of a project
for which a Bond has been issued for the benefit of a Principal that is a Joint Venture), such
co-surety will be bound by and entitled to the benefits of this Agreement (and will be deemed to
make the representations of Surety contained herein) upon the Lender Agent’s receipt of a Joinder
Certificate, in the form set forth as Exhibit B, executed by such co-surety, or pursuant to
an addendum executed by all of the parties to this Agreement. Any reinsuror asserting rights under
this Agreement will also be subject to the obligations of Surety under this Agreement.




19








 





      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.



	 	 	 	 	 
	 
	 	SURETY:
	

	 	 	 	 
	 
	 	FEDERAL INSURANCE COMPANY
	

	 	 	 	 
	

	 	By:	 	/s/ Edward J. Reilly
	

	 	 	 	 
	

	 	Its:	 	Edward J. Reilly
	

	 	 	 	 
	

	 	 	 	Assistant Secretary
	

	 	 	 	 
	 
	 	LENDER AGENT:
	

	 	 	 	 
	 
	 	BANK OF AMERICA, N.A.,

as Lender Agent on behalf of Lender Parties
	

	 	 	 	 
	

	 	By:	 	/s/ David A. Johanson
	

	 	 	 	 
	

	 	Its:	 	David A. Johanson
	

	 	 	 	 
	

	 	 	 	Vice President






20








 





ACKNOWLEDGEMENT BY INDEMNITORS




      Each of the undersigned hereby accepts and acknowledges receipt of a copy of the foregoing
Intercreditor Agreement and consents to and agrees to be bound by all provisions thereof. Each of
the undersigned further acknowledges and understands that the Intercreditor Agreement may be
modified or amended at any time or times without notice to or the consent of any of the
undersigned.



      Executed this 14th day of March, 2005.


	 	 	 	 	 
	 	INDEMNITORS:





QUANTA SERVICES, INC.

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	ARBY CONSTRUCTION, INC.

AUSTIN TRENCHER, INC.

CCLC, INC.

CONTI COMMUNICATIONS, INC.

CROCE ELECTRIC COMPANY, INC.

DILLARD SMITH CONSTRUCTION COMPANY

DRIFTWOOD ELECTRICAL CONTRACTORS, INC.

GLOBAL ENERCOM MANAGEMENT, INC.

GOLDEN STATE UTILITY CO.

H.L. CHAPMAN PIPELINE CONSTRUCTION, INC.

MANUEL BROS., INC.

MEARS GROUP, INC.

NETWORK ELECTRIC COMPANY

NORTH SKY COMMUNICATIONS, INC.

PARKSIDE SITE & UTILITY COMPANY CORPORATION

PARKSIDE UTILITY CONSTRUCTION CORP.

each a Delaware corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 





21








 





	 	 	 	 	 
	 	QUANTA DELAWARE, INC.

QUANTA GOVERNMENT SERVICES, INC.

QUANTA GOVERNMENT SOLUTIONS, INC.

QUANTA UTILITY INSTALLATION

COMPANY, INC.

R.A. WAFFENSMITH & CO., INC.

SOUTHEAST PIPELINE CONSTRUCTION, INC.

SOUTHWESTERN COMMUNICATIONS, INC.

SPALJ CONSTRUCTION COMPANY

SUMTER UTILITIES, INC.

TOM ALLEN CONSTRUCTION COMPANY

UNDERGROUND CONSTRUCTION CO., INC.

UTILITY LINE MANAGEMENT SERVICES, INC.

VCI TELCOM, INC.

W.C. COMMUNICATIONS, INC.,

each a Delaware corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	ADVANCED TECHNOLOGIES AND INSTALLATION CORPORATION,

ALLTECK LINE CONTRACTORS (USA), INC.

POTELCO, INC.,

each a Washington corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	BRADFORD BROTHERS, INCORPORATED

TTM, INC.,

each a North Carolina corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




22








 





	 	 	 	 	 
	 	CMI SERVICES, INC.

TRAWICK CONSTRUCTION COMPANY, INC.,

each a Florida corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	CROWN FIBER COMMUNICATIONS, INC.,

a Virginia corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	ENVIRONMENTAL PROFESSIONAL ASSOCIATES, LIMITED

a California corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	FIVE POINTS CONSTRUCTION CO.

MEJIA PERSONNEL SERVICES, INC.

TRANS TECH ACQUISITION, INC.

SOUTHWEST TRENCHING COMPANY, INC.

each a Texas corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	INTERMOUNTAIN ELECTRIC, INC.,

a Colorado corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




23








 





	 	 	 	 	 
	 	IRBY CONSTRUCTION COMPANY,

a Mississippi corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	METRO UNDERGROUND SERVICES, INC. OF ILLINOIS,

PROFESSIONAL TELECONCEPTS, INC.,

each an Illinois corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	PAR ELECTRICAL CONTRACTORS, INC.,

a Missouri corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	PROFESSIONAL TELECONCEPTS, INC.,

a New York corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	THE RYAN COMPANY, INC.,

a Massachusetts corporation

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




24








 





	 	 	 	 	 
	 	TOTAL QUALITY MANAGEMENT SERVICES, LLC,

a Delaware limited liability company

COAST TO COAST, LLC,

a California limited liability company

 	 
	 	By:  	Environmental Professional Associates,

Limited, Its Sole Member

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	QUANTA UTILITY SERVICES, LLC,

a Delaware limited liability company

 	 
	 	By:  	PAR Electrical Contractors, Inc.,

Its Sole Member

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	TJADER, L.L.C.

OKAY CONSTRUCTION COMPANY, LLC

each a Delaware limited liability company

 	 
	 	By:  	Spalj Construction Company,

Its Sole Member

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




25








 





	 	 	 	 	 
	 	MEARS/CPG LLC

MEARS ENGINEERING/ LLC

MEARS/HDD, LLC

MEARS SERVICES LLC

each a Michigan limited liability company

 	 
	 	By:  	Mears Group, Inc., The Sole Member of each of

the foregoing limited liability companies

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	S.K.S. PIPELINERS, LLC,

a Delaware limited liability company

 	 
	 	By:  	Arby Construction, Inc., Its Sole Member

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	TNS-VA, LLC,

a Delaware limited liability company

 	 
	 	By:  	Professional Teleconcepts, Inc., Its Sole Member

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




26








 





	 	 	 	 	 
	 	NORTH HOUSTON POLE LINE, L.P.

LINDSEY ELECTRIC, L.P.

DIGCO UTILITY CONSTRUCTION, L.P.

each a Texas limited partnership

 	 
	 	By:  	Mejia Personnel Services, Inc., Its General

Partner

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	QUANTA SERVICES MANAGEMENT PARTNERSHIP, L.P.

a Texas limited partnership

 	 
	 	By:  	QSI, Inc., Its General Partner

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 
	 	TRANS TECH ELECTRIC, L.P.,

a Texas limited partnership

 	 
	 	By:  	By TTGP, Inc., Its General Partner

 	 
	 	By:  	/s/ Dana A. Gordon
 	 
	 	Name:  	Dana A. Gordon 	 
	 	Title:  	Vice President 	 
	 




27








 





EXHIBIT A




PRINCIPAL




(Attached)













 





EXHIBIT B




JOINDER CERTIFICATE




      The undersigned co-surety hereby accepts and acknowledges receipt of a copy of the foregoing
Intercreditor Agreement and consents to and agrees on its behalf and on behalf of its successors
and assigns to be bound by all provisions thereof in consideration of its entitlement to the
benefits thereunder.



      Executed this       day of                     , 200___.



	 	 	 	 	 
	

	 	CO-SURETY:
	 
	 	 	 	 
	

	 	[NAME]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	Title:	 	 







EXHIBIT B









 






EXHIBIT A




	 	 	 
	 	 	JURISDICTION
	PRINCIPAL	 	OF FORMATION
	Advanced Technologies and Installation Corporation
	 	Washington
	Allteck Line Contractors (USA), Inc.
	 	Washington
	Arby Construction, Inc.
	 	Delaware
	Austin Trencher, Inc.
	 	Delaware
	Bradford Brothers, Incorporated
	 	North Carolina
	CCLC, Inc.
	 	Delaware
	Coast to Coast, LLC
	 	California
	CMI Services, Inc.
	 	Florida
	Conti Communications, Inc.
	 	Delaware
	Croce Electric Company, Inc.
	 	Delaware
	Crown Fiber Communications, Inc.
	 	Virginia
	Digco Utility Construction, L.P.
	 	Delaware
	Dillard Smith Construction Company
	 	Delaware
	Driftwood Electrical Contractors, Inc.
	 	Delaware
	Environmental Professional Associates, Limited
	 	California
	Five Points Construction Co.
	 	Texas
	Global Enercom Management, Inc.
	 	Delaware
	Golden State Utility Co.
	 	Delaware
	H. L. Chapman Pipeline Construction, Inc.
	 	Delaware
	Intermountain Electric, Inc.
	 	Colorado
	Irby Construction Company
	 	Mississippi
	Lindsey Electric, L.P.
	 	Texas
	Manuel Bros., Inc.
	 	Delaware






 








 





	 	 	 
	 	 	JURISDICTION
	PRINCIPAL	 	OF FORMATION
	Mears Engineering/ LLC
	 	Michigan
	Mears Group, Inc.
	 	Delaware
	Mears/HDD, LLC
	 	Michigan
	Mears Services LLC
	 	Michigan
	Mears/CPG LLC
	 	Michigan
	Mejia Personnel Services, Inc.
	 	Texas
	Metro Underground Services, Inc. of Illinois
	 	Illinois
	Network Electric Company
	 	Delaware
	North Houston Pole Line, L.P.
	 	Texas
	North Sky Communications, Inc.
	 	Delaware
	Okay Construction Company, LLC
	 	Delaware
	PAR Electrical Contractors, Inc.
	 	Missouri
	Parkside Site & Utility Company Corporation
	 	Delaware
	Parkside Utility Construction Corp.
	 	Delaware
	Potelco, Inc.
	 	Washington
	Professional Teleconcepts, Inc.
	 	Illinois
	Professional Teleconcepts, Inc.
	 	New York
	Quanta Delaware, Inc.
	 	Delaware
	Quanta Government Services, Inc.
	 	Delaware
	Quanta Government Solutions, Inc.
	 	Delaware
	Quanta Services Management Partnership, L.P.
	 	Texas
	Quanta Utility Installation Company, Inc.
	 	Delaware
	Quanta Utility Services, LLC
	 	Delaware
	R.A. Waffensmith & Co., Inc.
	 	Delaware
	S.K.S. Pipeliners, LLC
	 	Delaware






2








 





	 	 	 
	 	 	JURISDICTION
	PRINCIPAL	 	OF FORMATION
	Southeast Pipeline Construction, Inc.
	 	Delaware
	Southwestern Communications, Inc.
	 	Delaware
	Southwest Trenching Company, Inc.
	 	Texas
	Spalj Construction Company
	 	Delaware
	Sumter Utilities, Inc.
	 	Delaware
	The Ryan Company, Inc.
	 	Massachusetts
	Tjader, L.L.C.
	 	Delaware
	TNS-VA, LLC
	 	Delaware
	Tom Allen Construction Company
	 	Delaware
	Total Quality Management Services, LLC
	 	Delaware
	Trans Tech Acquisition, Inc.
	 	Texas
	Trans Tech Electric, L.P.
	 	Texas
	Trawick Construction Company, Inc.
	 	Florida
	TTM, Inc.
	 	North Carolina
	Underground Construction Co., Inc.
	 	Delaware
	Utility Line Management Services, Inc.
	 	Delaware
	VCI Telcom, Inc.
	 	Delaware
	W. C. Communications, Inc.
	 	Delaware







3