Document:

Exhibit
10.4

 

	
  DATE:

  	
   

  	
  December 18, 2009

  

 

SUBORDINATION AGREEMENT

 

The
undersigned is a creditor (the “Creditor”) of Primoris Services Corporation, a
Delaware corporation (the “Company”).  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 (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
Membership Interest Purchase Agreement by and among the Company, the
undersigned and other Sellers dated effective October     ,
2009 (the “Purchase Agreement”) except as evidenced by the 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 fifty-three million five
hundred thousand Dollars ($53,500,000) (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.

 

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

 

1

 

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 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.

 

2

 

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 in the manner and to the extent set forth in that certain
Subordination Agreement with said Bank dated December 18, 2009, 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.”

 

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.

 

3

 

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:

  
	
   

  	
   

  	
   

  
	
  Michael
  D. Killgore

  	
   

  	
  THE PRIVATEBANK AND TRUST COMPANY

  
	
  As
  Sellers’ Representative 

  	
   

  	
   

  
	
  By:

  	
  /s/
  Michael D. Killgore

  	
   

  	
  By:

  	
  /s/
  Steve Trepiccione

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  

 

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:
December 18, 2009

 

 

PRIMORIS
SERVICES CORPORATION

 

	
  By:

  	
  /s/
  Brian Pratt

  	
   

  
	
  Its:

  	
  CEO

  	
   

  

 

5Exhibit
10.5

 

	
  

  	
   

  	
  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.

  	
  Michael
  D. Killgore, 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 $53,500,000, as evidenced by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  that
  certain Promissory Note dated December 15, 2009 in favor of the members of
  James Construction Group, L.L.C., 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, until the entire debt is paid in lawful money
  of the United States of America: a) installments no greater than the normally
  scheduled principal and interest amounts as set forth in the Promissory Note;
  and b) prepayments or accelerated payments, as set forth in
  2.1(a)(i) and 2.1(a)(ii) of the Promissory Note. In the event that
  Contractor desires to make and Creditor desires to receive any other
  prepayment or accelerated payment including but not limited to the prepayment
  set forth in 2.1(a)(iii) (hereinafter “Qualified Debt Prepayment”), the
  Contractor and/or Creditor must provide Surety with 30 days prior written
  notice sent by certified mail (‘Surety Notice”) of its request to make such a
  repayment. Surety retains the right to expressly consent to such a Qualified
  Debt Prepayment, 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 Qualified Debt Prepayment 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
  therein. 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 to be given hereunder shall be given in writing and sent to the
  respective parties or their designated representative as the address below:

  
	
   

  	
   

  
	
   

  	
  If
  to Surety:

  	
  Liberty
  Mutual Surety

  	
  If
  to Creditor:

  	
  Michael
  D. Killgore

  
	
   

  	
   

  	
  450
  Plymouth Road, Suite 400

  	
   

  	
  17653
  Cross Boulevard

  
	
   

  	
   

  	
  Plymouth
  Meeting, PA 19462

  	
   

  	
  Baton
  Rouge, LA 70810

  
	
   

  	
   

  	
  Attn:
  Home Office Underwriter

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  If
  to Contractor:

  	
  Primoris Services
  Corporation

  	
   

  
	
   

  	
   

  	
  26000 Commercentre Drive

  	
   

  
	
   

  	
   

  	
  Lake Forest, CA 92630

  	
   

  
	
   

  	
   

  	
  Attn: General Counsel

  	
   

  
						

 

	
  DATED as of this 18th day of December, 2009.

  

 

WITNESS/ATTEST

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (CORPORATION/PARTNER/PERSON
  as CONTRACTOR)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Hays Alexander

  	
   

  	
  By:

  	
  /s/
  Brian Pratt

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Donald B. Bonaventure

  	
   

  	
  (CREDITOR)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael D. Killgore

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIBERTY
  MUTUAL INSURANCE COMPANY

  	
   

  
	
   

  	
   

  	
  (SURETY)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael McGowan

  	
  (Seal)

  
	
   

  	
   

  	
  Attorney-in-Fact

  	
   

  
									

 

	
  PRIMORIS
  LMS-4500 (Allowance of Normally Scheduled Payments)

  	
   

  	
  Rev. 9/09

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