Document:

Exhibit
10.4

 

	
  

  	
  Interchange
  Corporate Center

  450 Plymouth Road, Suite 400

  Plymouth Meeting, PA 19462-1644

  Ph. (610) 832-8240

  

 

SUBORDINATION AGREEMENT

 

I.      PARTIES

 

The parties to this
Agreement are:

 

1.     Primoris Services
Corporation                                                                                                      ,
hereinafter called Contractor.

 

2.     Christopher S. Wallace, as
Sellers’ Representative                                                                           ,
hereinafter called Creditor.

 

3.     Liberty Mutual Insurance
Company and any other company that is part of or added to the Liberty Mutual
Group and for which Liberty Mutual Surety underwrites surety business,
hereinafter called “Surety”. For the purposes of this Agreement, the definition
of Surety shall include Safeco Insurance Company of America, General Insurance
Company of America, First National Insurance Company of America, Safeco
National Insurance Company (individually and collectively the “Safeco Insurance
Companies”).

 

II.    RECITALS:

 

This Agreement is entered
into based upon the following facts and circumstances:

 

	
  (1)

  	
  From time to time
  Contractor may request Surety to execute instruments of suretyship on its
  behalf, hereinafter called Bonds.

  
	
   

  	
   

  
	
  (2)

  	
  Contractor is indebted to
  Creditor in the sum of
  $16,711,967                                          ,
  as evidenced by that certain Convertible Promissory Note dated November 12,
  2010 in favor of certain stockholders of Rockford Holdings Corporation
  hereinafter called “Promissory Note”.

  
	
   

  	
   

  
	
  (3)

  	
  Contractor and Creditor
  desire Surety to furnish Bonds as requested by Contractor and as an
  inducement therefor enter into the following Agreement.

  

 

III.   COVENANTS:

 

In consideration of the
furnishing of any such Bonds by Surety, Contractor and Creditor hereby agree as
follows:

 

1.     Creditor hereby subordinates
all rights and claims against Contractor on account of the above mentioned
indebtedness to any and all rights and claims of Surety on account of Loss as
defined herein. Loss shall mean any and all loss or expense of whatever kind,
including interest, court costs and counsel fees which Surety incurs or
sustains as a result of or in connection with any Bond furnished by Surety.
Originals or photocopies of claim drafts, or of payment records kept in the
ordinary course of business, including computer print-outs, verified by
affidavit, shall be prima facie evidence of the fact and amount of Surety’s
loss and Surety shall be entitled to reimbursement for any and all disbursements
made by it in good faith, under the belief that it was liable, or that such
disbursement was necessary or expedient.

 

2.     Surety’s Loss shall be paid
in full out of the assets of the Contractor before any payment on account of
the above mentioned indebtedness is made to or realized by Creditor.

 

3.     Creditor hereby assigns to
Surety all of its rights and claims, including its security, if any, on account
of such indebtedness so that in the event of receivership, bankruptcy or
insolvency of Contractor, Surety may enforce such rights and claims and may
have dividends thereon until Surety is reimbursed in full for its Loss.

 

4.     Unless specifically
permitted in paragraph 11 below or Surety provides its express written consent,
Creditor and Contractor agree that until Surety has been provided with
competent legal evidence of the release or exoneration of each and every Bond,
the mentioned indebtedness shall remain unchanged and unliquidated; that
neither Creditor nor Contractor will by act or omission procure or permit the
reduction of such indebtedness; nor will Creditor sell, transfer or hypothecate
said indebtedness.

 

5.     Creditor agrees that in the
event of a breach of any of the terms of this Agreement, all funds, the value
of any property and any benefit received by Creditor in connection with such
breach shall be returned by Creditor to Contractor upon Surety’s demand.
Contractor further agrees to compensate Surety for any damage the Surety
sustained that was caused by or contributed to by any breach of the Agreement,
including, but not limited to any breach of the Agreement by Creditor.

 

6.     This Agreement shall apply
to Bonds heretofore or hereafter executed and furnished by Surety, procured by
Surety, or executed by any other surety as sole surety or as co-surety, and the
rights hereunder shall inure to the benefit of Surety, such other surety, if
any, and their reinsurers, if any.

 

7.     This Agreement shall apply
to Bonds executed both before and after the effective date of this Agreement
including any alterations, renewals, extensions and modifications thereof.

 

8.     The Surety’s ability to
exercise any particular right or remedy under this Agreement, shall not be
prejudiced by either a delay or failure to exercise such right or remedy. The
obligations of the Creditor and Contractor hereunder shall be in addition to,
and not in lieu of, their obligations to the Surety under any other agreements,
including but not limited to the General Agreement of Indemnity executed in
favor of the Surety, and in the event of any conflict or inconsistency between
the terms of this Agreement and the terms of any other agreements, the term or
interpretation most favorable to the Surety, as determined by the Surety, shall
control. Creditor and Contractor further acknowledge each has been provided
with an opportunity to consult its own counsel prior to execution hereof.

 

9.     Notwithstanding this
Agreement, Surety has no obligation to issue Bonds requested by Contractor or
Creditor.

 

10.   This Agreement may not be
terminated without the prior written consent of all parties hereto. In the
event that all liability under the Bonds issued to Contractor has been
extinguished, in the sole and absolute discretion of the Surety, Surety shall
not withhold its consent to terminate this Agreement.

 

11.   NOTWITHSTANDING the
foregoing provisions, Contractor shall be entitled to make and Creditor shall
be entitled to receive: a) payouts as set forth in Section 2.1(B)(iv)(b) &
(c) of the Promissory Note; and b) installments no greater than the normally
scheduled principal and interest amounts as set forth in the Promissory Note.
In the event that Contractor desires to make and Creditor desires to receive
any other prepayment or accelerated payment, the Contractor and/or the Creditor
must provide Surety with 30 days prior written notice sent by certified mail (“Surety
Notice”) of its request to make such a payment. Surety retains the right to
expressly consent to such a payment, however, if Surety withholds its consent,
Surety will provide written notice to both Contractor and Creditor within 30
days of receipt of the Surety Notice. Any payment made in violation of this
paragraph shall be considered a breach of this Agreement as described in
paragraph 5 and Surety shall be entitled to all remedies as described herein.
Provided, however, that no payments of any kind may be made while any Loss
remains unpaid to the Surety, or should Contractor be in breach of the General
Agreement of Indemnity, this Agreement, or any other agreement executed in
favor of Surety.

 

12.   Any notice given to Surety
or Contractor hereunder shall be given in writing and sent to the respective
parties or their designated representative at the address below:

 

	
  If to Surety:

  	
   

  	
  Liberty Mutual Surety

  	
   

  	
  If to Creditor:

  	
   

  	
  Christopher S. Wallace

  
	
   

  	
   

  	
  450 Plymouth Road,
  Suite 400

  	
   

  	
   

  	
   

  	
  Second City Capital
  Corporation

  
	
   

  	
   

  	
  Plymouth Meeting, PA 19462

  	
   

  	
   

  	
   

  	
  1075 West George Street,
  Suite 2600

  
	
   

  	
   

  	
  ATTN: Home Office
  Underwriter

  	
   

  	
   

  	
   

  	
  Vancouver,
  BC, Canada V6E 3C9

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If to Contractor:

  	
   

  	
  Primoris Services Corporation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  26000 Commercenter Drive

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lake Forest, CA 92630

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATTN: General Counsel

  	
   

  	
   

  	
   

  	
   

  

 

 

DATED as of this 12th day of
November, 2010.

 

WITNESS/ATTEST

	
   

  	
   

  	
  Primoris Services
  Corporation

  
	
   

  	
   

  	
  (CORPORATION/PARTNER/PERSON
  as CONTRACTOR)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Brian Pratt

  	
  (SEAL)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Christopher S. Wallace, as
  Sellers’ Representative

  
	
   

  	
   

  	
  (CREDITOR)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Christopher S. Wallace

  	
  (Seal)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Sellers’ Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIBERTY
  MUTUAL INSURANCE COMPANY

  
	
   

  	
   

  	
  (SURETY)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Brett D. Asmus

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  Attorney-in-FactExhibit 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

 

2

 

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.”

 

3

 

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

  
						

 

4

 

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

  	
   

  

 

5

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