Exhibit 10.5


 


DATE:  NOVEMBER 12,
2010


 


SUBORDINATION AGREEMENT


 


The
undersigned is a representative of the creditor (the “Creditor”) of Primoris
Services Corporation, a Delaware corporation (the “Company”) and is duly
authorized to enter into this Subordination Agreement on behalf of the
Creditor.  In consideration of loans made
or to be made, credit given or to be given, or other financial accommodations
afforded or to be afforded to the Company, on such terms as may be agreed upon
between THE PRIVATEBANK AND TRUST COMPANY
or its successors or assigns (the “Bank”) and the Company, the Creditor agrees
that all monetary obligations of the Company to the Creditor except for (i) wages
earned and (ii) other payments (such as reimbursements and appropriate
bonuses) to be made in the ordinary course of the Company’s business and (iii) all
obligations of the Company under the Agreement and Plan of Merger by and among
the Company, the undersigned and other Sellers dated effective November 12,
2010 (the “Merger Agreement”) except as evidenced by the Convertible Promissory
Note (collectively, except for the excluded items described in (i), (ii) and
(iii) above, the “Subordinated Indebtedness”) now existing or hereafter
arising and howsoever evidenced or acquired (the aggregate principal amount of
such Subordinated Indebtedness as of the date hereof being that amount
outstanding pursuant to that certain Promissory Note, in form attached hereto
as EXHIBIT A, in the face amount of
Sixteen Million Seven Hundred Eleven Thousand Nine Hundred Sixty-Seven Dollars
($16,711,967) (the “Promissory Note”) of the Company payable to the Creditor)
shall be and remain junior and subordinate to any and all obligations of the
Company to the Bank (“Superior Indebtedness”) now existing or hereafter
arising, whether direct or indirect, secured or unsecured, absolute or
contingent, joint and several, and howsoever owned, or acquired.


 


Addresses
of the parties hereto for notice purposes are set forth on the signature page.


 

















 


Without
limiting the generality of the foregoing, the Creditor further agrees with the
Bank as follows:


 


1(a).        Except as provided in Section 1(b),
so long as there is any “Default”, whether technical or monetary, on any
Superior Indebtedness no payment of principal or interest (notwithstanding the
expressed maturity or any time for the payment of principal on the Promissory
Note) shall be made on the Promissory Note except with Bank’s prior written
consent and the Creditor will take no steps, whether by suit or otherwise to
compel or enforce the collection of the Promissory Note, nor will the Creditor
use the Promissory Note by way of counterclaim, set off, recoupment or
otherwise as to diminish, discharge or otherwise satisfy in whole or in part any
indebtedness or liability of the Creditor to the Company.


 


1(b).        Upon the occurrence and
continuance of any Event of Default
under the Promissory Note, the Creditor shall not be entitled to accelerate
outstanding obligations payable by the Company until 180 days after the date
that the Event of Default was triggered.


 


1(c).        The Company may, however, pay scheduled
principal (including scheduled prepayments of principal) and interest on the
Promissory Note as outlined in paragraph #2 of the Promissory Note without
obtaining written consent of the Bank, so long as no event of Default on
Superior Indebtedness has occurred, or will occur as a result of such payment,
and notwithstanding the provisions of Section 1(d) Creditor need not
give Bank notice of such payments..


 


1(d).        The Creditor must provide the Bank with
notice prior to a draw on the Subordinated Note.


 


2.             The Bank need not at any time give
the Creditor notice of any kind of the creation or existence of any Superior
Indebtedness, nor of the amount or terms thereof, all such notice being hereby
expressly waived.  Also, the Bank may at
any time from time to time, without the consent of or notice to the Creditor,
without incurring responsibility to the Creditor, and without impairing or
releasing the obligation of the Creditor under this agreement (i) renew,
refund or extend the maturity of any Superior Indebtedness, or any part
thereof, or otherwise revise, amend


 


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or
alter the terms and conditions thereof, (ii) sell, exchange, release or
otherwise deal with any property by whomsoever at any time pledged, mortgaged
or otherwise hypothecated or subjected to a lien to secure any Superior
Indebtedness, and (iii) exercise or refrain from exercising any rights
against the Company and others, including the Creditor.


 


3.             The Creditor without prior written
consent will not sell, assign, transfer, pledge or hypothecate any Subordinated
Indebtedness, or any part thereof, or agree to discharge or forgiveness of the same
so long as there remains any Superior Indebtedness except subject to and in
accordance with the terms hereof and upon the agreement of the transferee or
assignee to abide by and be bound by the terms hereof.


 


4.             The Bank shall provide the Creditor
with immediate notice upon an Event of Default under the Superior
Indebtedness.  Upon receipt of such
notice, the Creditor shall not accept any payments from the Company on the
Subordinated Indebtedness.  If the
Company does make a payment to the Creditor in violation of the prohibition
herein, all funds, the value of any property and any benefit received by the
Creditor in connection with such payment shall be returned to the Company
immediately upon demand by the Bank.


 


5.             The Creditor will cause all Subordinated
Indebtedness to be at all times evidenced by the Promissory Note or notes of
the Company and will cause all such notes to bear thereon a legend
substantially as follows:


 


“The indebtedness evidenced by this Note is subordinate to any and all
indebtedness, obligations and liabilities of the maker hereof to THE PRIVATEBANK AND TRUST COMPANY or its
successors or assigns in the manner and to the extent set forth in that certain
Subordination Agreement with said Bank dated
November       , 2010, to which reference is
hereby made for a more full statement thereof. 
The holder has agreed thereby without said Bank’s written consent not to
sell, assign, transfer, pledge or hypothecate this Note.”


 


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6.             This Subordination Agreement shall
be continuing and binding until written notice of its discontinuance shall be
actually received by you, and also shall continue to remain in full force and
effect until all Superior Indebtedness created or existing prior to the receipt
of such notice shall have been fully paid and satisfied.


 


Each
and all of the promises herein contained shall be binding on the Creditor, his
or her heirs, legal representatives and assigns, and shall inure to your
benefit and the benefit of your successors and assigns.


 


 


	
  CREDITOR:

  	
  BANK:

  
	
   

  	
   

  
	
  CHRISTOPHER S. WALLACE,

  	
  THE PRIVATEBANK AND TRUST COMPANY

  
	
  AS CREDITOR’S REPRESENTATIVE

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Christopher S. Wallace

  	
   

  	
  By:

  	
  /s/
  John M. O’Connell

  
	
   

  	
  Creditor’s
  Representative

  	
   

  	
  Its:

  	
  Associate
  Managing Director

  
	
  Address:

  	
  Address:

  	
  120
  S. LaSalle Street

  
	
   

  	
   

  	
  Chicago, Illinois
  60603

  
						



 


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Primoris
Services Corporation  hereby
acknowledges receipt of a copy of the above Subordination Agreement and agrees
to be bound by the terms and provisions thereof, to make no payment or
distribution contrary to the terms thereof and to do every other act and thing
necessary or appropriate to be done or performed by it in order to carry out
the terms of the Subordination Agreement.


 


 


Dated:    November 12, 2010


 


 


PRIMORIS SERVICES CORPORATION


 


	
  By:

  	
  /s/
  Brian Pratt

  	
   

  
	
  Its:

  	
  CEO

  	
   

  



 


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