10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                    to                      .

Commission file number 0001-34145

Primoris Services Corporation

(Exact name of registrant as specified in its charter)

Delaware	20-4743916
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
2100 McKinney Avenue, Suite 1500
Dallas, Texas	75201
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 740-5600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  x
Non-accelerated filer  o	Smaller reporting company  o
Do not check if a smaller reporting company.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

At November 6, 2013, 51,571,394 shares of the registrant’s common stock were outstanding.

PRIMORIS SERVICES CORPORATION

INDEX

	Page No.
Part I. Financial Information
Item 1. Financial Statements:
—Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012	3
—Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2013 and 2012	4
— Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012	5
—Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	39
Item 4. Controls and Procedures	39
Part II. Other Information
Item 1. Legal Proceedings	40
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3. Defaults Upon Senior Securities	40
Item 4. (Removed and Reserved)	40
Item 5. Other Information	40
Item 6. Exhibits	41
Signatures	42

2

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts)

(Unaudited)

	September 30, 2013		December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	174,034	$	157,551
Short term investments	3,179		3,441
Customer retention deposits and restricted cash	15,377		35,377
Accounts receivable, net	284,497		268,095
Costs and estimated earnings in excess of billings	80,434		41,701
Inventory and uninstalled contract materials	43,616		37,193
Deferred tax assets	10,477		10,477
Prepaid expenses and other current assets	12,830		10,800
Total current assets	624,444		564,635
Property and equipment, net	220,179		184,840
Investment in non-consolidated entities	6,546		12,813
Intangible assets, net	48,002		51,978
Goodwill	118,626		116,941
Other long-term assets	1,214		—
Total assets	$	1,019,011	$	931,207
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	119,882	$	151,546
Billings in excess of costs and estimated earnings	147,464		158,892
Accrued expenses and other current liabilities	101,881		76,152
Dividends payable	1,805		—
Current portion of capital leases	3,928		3,733
Current portion of long-term debt	26,910		19,446
Current portion of contingent earnout liabilities	8,763		10,900
Total current liabilities	410,633		420,669
Long-term capital leases, net of current portion	2,760		3,831
Long-term debt, net of current portion	188,713		128,367
Deferred tax liabilities	20,018		20,018
Long-term contingent earnout liabilities, net of current portion	6,083		12,531
Other long-term liabilities	13,243		13,153
Total liabilities	641,450		598,569
Commitments and contingencies
Stockholders’ equity
Common stock—$.0001 par value, 90,000,000 shares authorized, 51,571,394 and 51,403,686 issued and outstanding at September 30, 2013 and December 31, 2012	5		5
Additional paid-in capital	159,058		155,605
Retained earnings	217,540		175,517
Noncontrolling interests	958		1,511
Total stockholders’ equity	377,561		332,638
Total liabilities and stockholders’ equity	$	1,019,011	$	931,207

See Accompanying Notes to Condensed Consolidated Financial Statements

3

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended						Nine months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenues	$	551,333		$	431,842		$	1,406,341		$	1,060,851
Cost of revenues	475,868			375,551			1,225,243			922,960
Gross profit	75,465			56,291			181,098			137,891
Selling, general and administrative expenses	36,478			26,014			96,657			69,684
Operating income	38,987			30,277			84,441			68,207
Other income (expense):
Income (loss) from non-consolidated entities	113			(159		)	169			895
Foreign exchange gain (loss)	91			18			3			(30		)
Other expense	(376		)	(382		)	(809		)	(961		)
Interest income	32			96			95			143
Interest expense	(1,579		)	(937		)	(4,501		)	(3,044		)
Income before provision for income taxes	37,268			28,913			79,398			65,210
Provision for income taxes	(14,075		)	(10,965		)	(30,272		)	(24,875		)
Net income	$	23,193		$	17,948		$	49,126		$	40,335
Less net income attributable to noncontrolling interests	(1,348		)	(432		)	(1,947		)	(600		)
Net income attributable to Primoris	$	21,845		$	17,516		$	47,179		$	39,735
Earnings per share:
Basic	$	0.42		$	0.34		$	0.92		$	0.77
Diluted	$	0.42		$	0.34		$	0.91		$	0.77
Weighted average common shares outstanding:
Basic	51,568			51,398			51,529			51,387
Diluted	51,671			51,404			51,595			51,402

See Accompanying Notes to Condensed Consolidated Financial Statements

4

PRIMORIS SERVICES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Nine months Ended
	September 30,
	2013			2012
Cash flows from operating activities:
Net income	$	49,126		$	40,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	31,003			20,719
Amortization of intangible assets	5,576			4,669
Gain on sale of property and equipment	(1,176		)	(2,396		)
Income from non-consolidated entities	(169		)	(895		)
Impairment expense for non-consolidated entities	3,250			—
Non-consolidated entity distributions	3,186			1,260
Stock—based compensation expense	229			—
Changes in assets and liabilities:
Customer retention deposits and restricted cash	20,000			(3,324		)
Accounts receivable	(16,402		)	(64,933		)
Costs and estimated earnings in excess of billings	(38,733		)	(21,089		)
Other current assets	(8,665		)	475
Accounts payable	(32,551		)	20,433
Billings in excess of costs and estimated earnings	(11,428		)	7,329
Contingent earnout liabilities	(9,287		)	(2,489		)
Accrued expenses and other current liabilities	26,626			20,688
Other long-term liabilities	90			(1,510		)
Net cash provided by operating activities	20,675			19,272
Cash flows from investing activities:
Purchase of property and equipment	(68,749		)	(23,720		)
Proceeds from sale of property and equipment	6,554			7,683
Purchase of short-term investments	(5,620		)	(6,380		)
Sale of short-term investments	5,882			23,000
Cash paid for acquisitions	(2,273		)	(38,110		)
Net cash used in investing activities	(64,206		)	(37,527		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	97,035			16,671
Repayment of capital leases	(3,399		)	(8,018		)
Repayment of long-term debt	(29,225		)	(12,177		)
Repayment of subordinated debt	—			(17,501		)
Proceeds from issuance of common stock purchased by management under long-term incentive plan	1,455			1,240
Dividends paid	(3,352		)	(4,611		)
Payment of accumulated earnings to non-controlling interest holder	(2,500		)	—
Repurchase of common stock	—			(1,001		)
Net cash provided by (used in) financing activities	60,014			(25,397		)
Net change in cash and cash equivalents	16,483			(43,652		)
Cash and cash equivalents at beginning of the period	157,551			120,306
Cash and cash equivalents at end of the period	$	174,034		$	76,654

See Accompanying Notes to Condensed Consolidated Financial Statements

5

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Nine months Ended
	September 30,
	2013		2012
	(Unaudited)
Cash paid during the period for:
Interest	$	3,369	$	2,282
Income taxes, net of refunds received	$	32,379	$	18,082

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

	Nine months Ended
	September 30,
	2013		2012
	(Unaudited)
Obligations incurred for the acquisition of property and equipment	$	2,523	$	1,854
Dividends declared and not yet paid	$	1,805	$	1,542

See Accompanying Notes to Condensed Consolidated Financial Statements

6

PRIMORIS SERVICES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars In Thousands, Except Share and Per Share Amounts)

(Unaudited)

Note 1—Nature of Business

Organization and operations — Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware and its corporate headquarters are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

The following table lists the Company’s primary operating subsidiaries and their reportable operating segment:

Subsidiary	Operating Segment
ARB, Inc. (“ARB”)	West Construction Services
ARB Structures, Inc.	West Construction Services
Q3 Contracting, Inc. (“Q3C”); acquired 2012	West Construction Services
Rockford Corporation (“Rockford”)	West Construction Services
Stellaris, LLC.	West Construction Services
OnQuest, Inc.	Engineering
OnQuest, Canada, ULC (Born Heaters Canada, ULC prior to 2013)	Engineering
Cardinal Contractors, Inc.	East Construction Services
Force Specialty Services, Inc. (“FSSI”); acquired 2013	East Construction Services
James Construction Group, LLC (“JCG”)	East Construction Services
Sprint Pipeline Services, L.P. (“Sprint”); acquired 2012	East Construction Services
Silva Group (“Silva”); acquired 2012	East Construction Services
The Saxon Group (“Saxon”); acquired 2012	East Construction Services

The Company is a party to the Blythe Power Constructors joint venture (“Blythe”) for the installation of a parabolic trough solar field and steam generation system in California.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries.

Note 2—Basis of Presentation

Interim consolidated financial statements — The interim condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2013 and 2012 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in the Company’s Annual Report on Form 10-K, filed on March 7, 2013, which contains the Company’s audited consolidated financial statements for the year ended December 31, 2012, have been omitted.

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (the “Third Quarter 2013 Report”) should be read in concert with the Company’s most recent Annual Report on form 10-K.  The interim financial information is unaudited.  In the opinion of management, the unaudited information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information.

Revenue recognition

Fixed-price contracts — Historically, a substantial portion of the Company’s revenue has been generated under fixed-price contracts. For fixed-price contracts, the Company recognizes revenues using the percentage-of-completion method, which may result in uneven and irregular results. In the percentage-of-completion method, estimated revenues and resulting contract income are calculated based on the total costs incurred to date as a percentage of total estimated costs. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.  The loss amount is recognized as an “accrued loss provision” and is included in the accrued expenses and other liabilities amount on the balance sheet.  As the percentage-of-completion method is used to calculate revenues, the accrued loss provision is changed so that the gross profit for the contract is zero.

7

Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract.  Total estimated costs, and thus contract revenues and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and thus the timing of revenue recognition.  To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected.

Other contract forms — The Company also uses unit-price, time and material, and cost reimbursable plus fee contracts.  For these jobs, revenue is recognized based on contractual terms.  For example, time and material contract revenues are recognized based on purchasing and employee time records.  Similarly, unit price contracts recognize revenue based on completion of specific units at a specified unit price.

For all of its contracts, the Company includes any provision for estimated losses on uncompleted contracts in accrued expenses. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which the revisions are identified.

The caption “Costs and estimated earnings in excess of billings” represents unbilled receivables which arise when revenues have been recorded but the amount will not be billed until a later date.  Balances represent:  (a) unbilled amounts arising from the use of the percentage-of-completion method of accounting which may not be billed under the terms of the contract until a later date, (b) incurred costs to be billed under cost reimbursement type contracts, or (c) amounts arising from routine lags in billing.  For those contracts in which billings exceed contract revenues recognized to date, the excess amounts are included in the caption “Billings in excess of costs and estimated earnings”.

The Company considers unapproved change orders to be contract variations for which it has customer approval for a change in scope but for which it does not have an agreed upon price change.  Costs associated with unapproved change orders are included in the estimated cost to complete the contracts and are treated as project costs as incurred. The Company recognizes revenue equal to costs incurred on unapproved change orders when realization of price approval is probable.  Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers.

The Company considers claims to be amounts it seeks, or will seek, to collect from customers or others for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers on both scope and price changes. Claims are included in the calculation of revenues when realization is probable and amounts can be reliably determined. Revenues in excess of contract costs incurred on claims are recognized when the amounts have been agreed upon with the customer.  Revenue in excess of contract costs from claims is recognized when agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred.

In accordance with applicable terms of certain construction contracts, retainage amounts may be withheld by customers until completion and acceptance of the project.  Some payments of the retainage may not be received for a significant period after completion of our portion of a project.  In some jurisdictions, retainage amounts are deposited into an escrow account.

Significant revision in contract estimate — As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate revenue. Total estimated costs, and thus contract revenues and margin, are impacted by many factors which can cause significant changes in estimates during the life cycle of a project.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits recognized to the prior year, had current year estimates of costs to complete been known in the prior year.

8

Customer Concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three months and nine months ending September 30, 2013, revenues generated by the top ten customers were $274 million and $717 million, respectively, which represented 49.7% and 51.0%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2013, a large gas and electric utility represented 8.8% and 8.3%, respectively, of total revenues and a large pipeline company represented 9.7% and 6.8%, respectively, of total revenues.

During the three and nine months ending September 30, 2012, revenues generated by the top ten customers were $243.6 million and $607.8 million, respectively, which represented 56.4% and 57.3%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2012, the Louisiana Department of Transportation represented 11.9% and 12.7%, respectively, of total revenues and a large gas and electric utility represented 16.1% and 13.6%, respectively, of total revenues.

At September 30, 2013, approximately 13.1% of the Company’s accounts receivable were due from one customer, and that customer provided 7.4% of the Company’s revenues for the nine months ended September 30, 2013.  At September 30, 2012, approximately 10.8% of the Company’s accounts receivable were due from one customer, and that customer provided 13.6% of the Company’s revenues for the nine months ended September 30, 2012.

Multiemployer Plans — Various subsidiaries in the West Construction Services segment are signatories to collective bargaining agreements.  These agreements require that the Company participate in and contribute to a number of multiemployer benefit plans for its union employees at rates determined by the agreements.  The trustees for each multiemployer plan determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  Federal law requires that if the Company were to withdraw from an agreement, it will incur a withdrawal obligation.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with generally accepted accounting principles (“GAAP”).  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan.  The Company has no plans to withdraw from any other agreements.  See Note 19 — Commitments and Contingencies.

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method relating the cost incurred to a specific project.

Note 3—Recent Accounting Pronouncements

In January 2013, the FASB issued ASU 2013-01, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11 , “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” .  The ASU was effective for the fiscal years and interim periods beginning January 1, 2013.  Retrospective application is required for any period presented that begins before the entity’s initial application of the new requirements.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

In February 2013, the FASB issued ASU 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)”  (“ASU 2013-04”).  ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. This ASU is an update to FASB ASC Topic 405, “Liabilities”.  The amendments in this ASU are effective for fiscal years, and interim periods, beginning after December 15, 2013.  The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

Note 4—Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value in GAAP, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements.  ASC Topic 820 requires that certain financial assets and financial liabilities be re-measured and reported at fair value each reporting period and that other non-financial assets and liabilities be re-measured and reported at fair value on a non-recurring basis.

9

ASC Topic 820 also establishes three reporting levels for fair value measurements.  Fair values determined by Level 1 use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for an asset or liability and include situations where there is little, if any, market activity for the asset or liability.

The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, the Company’s financial assets and liabilities that are required to be measured at fair value at September 30, 2013 and December 31, 2012:

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets as of September 30, 2013:
Cash and cash equivalents	$	174,034	$	174,034	—	—
Short-term investments	$	3,179	$	3,179	—	—
Liabilities as of September 30, 2013:
Contingent consideration	$	14,846	—		—	$	14,846
Assets as of December 31, 2012:
Cash and cash equivalents	$	157,551	$	157,551	—	—
Short-term investments	$	3,441	$	3,441	—	—
Liabilities as of December 31, 2012:
Contingent consideration	$	23,431	—		—	$	23,431

Short-term investments consist primarily of Certificates of Deposit (“CDs”) purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government.

Other financial instruments of the Company not listed in the table consist of accounts receivable, accounts payable and certain accrued liabilities.  These financial instruments generally approximate fair value based on their short-term nature.  The carrying value of the Company’s long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities.

The following table provides changes to the Company’s contingent consideration liability Level 3 fair value measurements during the nine months ended September 30, 2013:

Contingent Consideration
Balance at December 31, 2012	$	23,431
Additions:
FSSI acquisition on March 11, 2013	702
Change in fair value of contingent consideration	1,613
Reductions:
Payment to Rockford sellers	(6,900		)
Payment to Sprint sellers	(4,000		)
Balance at September 30, 2013	$	14,846

On a quarterly basis, the Company assesses the estimated fair value of the contractual obligation to pay the contingent consideration and any changes in estimated fair value are recorded as other non-operating expense or income in the Company’s statement of operations.  Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management’s estimate of the probability (which range from 33% to 100%) of the acquired company meeting the contractual operating performance target and the estimated discount rate (a rate that approximates the Company’s cost of capital). Significant changes in either of those inputs in isolation would result in a significantly different fair value measurement.  Generally, a change in the assumption of the probability of meeting the performance target is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption of the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability.

10

Note 5—Accounts Receivable

The following is a summary of the Company’s accounts receivable:

	September 30, 2013		December 31, 2012
Contracts receivable, net of allowance for doubtful accounts of $535 at September 30, 2013 and $432 at December 31, 2012	$	235,302	$	227,548
Retention	48,768		39,710
	284,070		267,258
Other accounts receivable	427		837
	$	284,497	$	268,095

Note 6—Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of the following at:

	September 30, 2013			December 31, 2012
Costs incurred on uncompleted contracts	$	4,256,810		$	3,882,968
Reserve for estimated losses on uncompleted contracts	2,018			764
Gross profit recognized	516,451			448,928
	4,775,279			4,332,660
Less: billings to date	(4,842,309		)	(4,449,851		)
	$	(67,030	)	$	(117,191	)

This amount is included in the accompanying consolidated balance sheet under the following captions:

	September 30, 2013			December 31, 2012
Costs and estimated earnings in excess of billings	$	80,434		$	41,701
Billings in excess of costs and estimated earnings	(147,464		)	(158,892		)
	$	(67,030	)	$	(117,191	)

Note 7—Equity Method Investments

WesPac Energy LLC and WesPac Midstream LLC

On July 1, 2010, the Company acquired a 50% membership interest in WesPac Energy LLC, a Nevada limited liability company (“WesPac”), from Kealine Holdings, LLC (“Kealine”), a Nevada limited liability company.  Kealine held the remaining 50% membership interest in WesPac.  WesPac developed pipeline and terminal projects in the United States, Canada and Mexico.

On September 30, 2013, WesPac, Kealine and the Company entered into a contribution agreement (the “Agreement”) with Highstar Capital IV, LP (“Highstar”), to form a new entity, WesPac Midstream LLC, a Delaware limited liability company (“WesPac-Midstream”), owned collectively by Highstar, Kealine and the Company.  WesPac contributed certain project assets to WesPac-Midstream.  Highstar contributed $6.1 million in cash for an 85% ownership interest in certain developmental projects.  Of this amount, $3.04 million was distributed to the Company and accounted for as a reduction of the carrying value of the WesPac investment.  Highstar also obtained a 75% interest in two of WesPac-Midstream’s more mature projects.  Highstar may make additional payments to Kealine and the Company for the two projects contingent on completion of certain milestones as follows:

1.When the first project reaches “commercial acceptance” (as that term is defined in the Agreement), a payment of $4.5 million will be made ($2.25 million to the Company), and an additional payment of $4.5 million when the project goes into production ($2.25 million to the Company).

2.If the second project successfully reaches “commercial acceptance” prior to January 31, 2014, a payment of $4.5 million ($2.25 million to the Company) will be made and a similar payment when the project goes into production.  If “commercial acceptance” is not received prior to July 1, 2014, no contingent payments will be made for this project.

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Highstar will fund WesPac-Midstream’s operations over the next two years.  The Company is not required to fund any of WesPac-Midstream’s activities and retains one of five board seats.

During the third quarter 2013 and prior to the Agreement, WesPac recorded a third quarter loss of $0.2 million and the Company recorded its 50% share of the loss of $0.1 million.  After recording the loss, the carrying value of the WesPac investment prior to the sale to Highstar, was $11.5 million.

In July 2010, the Company recorded a $5 million amount greater than its pro-rata share of the WesPac equity as part of its original investment (“basis difference”).  In December 2011, as a result of certain events impacting WesPac, the Company recorded a reduction of $1.7 million of its $5 million basis difference.  As a result of the Agreement, the Company eliminated the remaining basis difference of $3.25 million to recognize an other than temporary decrease in the value of its basis difference.  The non-cash impairment charge was recorded as a Selling, General and Administrative expense.  The Company’s remaining $4.76 million investment represents the Company’s pro-rata equity ownership in both the WesPac and WesPac-Midstream entities.

The following is a summary of the financial position and results as of and for the periods ended:

	September 30, 2013		December 31, 2012
WesPac & WesPac-Midstream
Balance sheet data
Assets	$	18,856	$	16,896
Liabilities	1,067		1,063
Net assets	$	17,789	$	15,833
Company’s equity investment	$	4,757	$	11,463

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Earnings data:
Revenue	$	10		$	—		$	99		$	511
Expenses	$	235		$	358		$	754		$	1,002
Earnings before taxes	$	(225	)	$	(358	)	$	(655	)	$	(491	)
Company’s equity in earnings	$	(113	)	$	(178	)	$	(328	)	$	(245	)

St.—Bernard Levee Partners

The Company purchased a 30% interest in St.—Bernard Levee Partners (“Bernard”) in 2009 for $300 and accounts for this investment using the equity method.  Bernard engaged in construction activities in Louisiana, and all work was completed in January 2013. The Company’s share of Bernard distributions for the nine months ended September 30, 2013 and 2012, was $145 and $1,260, respectively.  The following is a summary of the financial position and results as of and for the periods ended:

	September 30, 2013		December 31, 2012
St. — Bernard Levee Partners
Balance sheet data
Assets	$	22	$	592
Liabilities	22		86
Net assets	$	—	$	506
Company’s equity investment	$	—	$	150

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	Three months ended September 30,					Nine months ended September 30,
	2013		2012			2013			2012
Earnings data:
Revenue	$	—	$	36		$	—		$	3,970
Expenses	$	—	$	(36	)	$	16		$	162
Earnings before taxes	$	—	$	72		$	(16	)	$	3,808
Company’s equity in earnings	$	—	$	19		$	(5	)	$	1,140

Alvah, Inc.

As part of the acquisition of Q3C, the Company acquired a 49% membership interest in Alvah, Inc., a California corporation (“Alvah”).  Alvah is engaged in electrical contracting activities, primarily in Northern California and worked as a subcontractor for ARB both prior to and subsequent to the Q3C acquisition.  In December 2012, the company received $98 from a distribution by Alvah.  During the three and nine months ending September 30, 2013, payments made by ARB to Alvah were $2,154 and $5,064, respectively, and payments made by Q3C were $2 and $214, respectively.  For the same periods in the prior year, ARB made payments of $1,609 and $3,762, respectively and Q3C made payments of $120 and $353, respectively.

The following is a summary of the financial position and results as of and for the period ended:

	September 30, 2013		December 31, 2012
Balance sheet data
Assets	$	3,849	$	2,177
Liabilities	1,677		1,208
Net assets	$	2,172	$	969
Company’s equity investment in venture	$	1,789	$	1,200

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Earnings data:
Revenue	$	4,824	$	—	$	10,832	$	—
Expenses	$	4,185	$	—	$	9,630	$	—
Earnings after taxes	$	639	$	—	$	1,202	$	—
Company’s equity in earnings	$	313	$	—	$	589	$	—

Because Alvah was not acquired until November 2012, no activity is shown for the prior year.

Note 8 — Business Combinations

2013 Acquisition - FSSI

On March 11, 2013, the Company’s subsidiary, Primoris Energy Services (“PES”), purchased the assets of Force Specialty Services Inc. (“FSSI”) which specializes in turn-around work at refineries and chemical plants in the Gulf Coast area.  Based in the greater Houston, Texas area, FSSI’s location provides a presence and convenient access to refineries in south Texas, the Houston ship channel and Louisiana.

The fair value of the consideration for the acquisition was $2,377.  Consideration consisted of cash totaling $1,675, of which $1,025 was paid at closing and $650 was paid in the second quarter 2013.  The agreement provides for three future potential payments, contingent upon FSSI meeting certain operating performance targets for the remainder of calendar year 2013 and calendar years 2014 and 2015.

The contingent consideration is as follows:  (1) $500 in cash for the achievement of pretax income of at least $553 for the remainder of the year ending December 31, 2013; (2) a payment of $500 in cash if pretax income for the year 2014 is at least $2,502; and (3), a payment of $500 in cash if pretax income for the year 2015 is at least $4,227.  The estimated fair value of the potential contingent consideration on the acquisition date was $702 and at September 30, 2013 was $741.

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The purchase agreement also included a provision that PES make an up-front payment of $1,000 for a five-year employment, non-competition and non-solicitation agreement with a key employee.  If the employee terminates his employment or violates the agreement prior to the end of the five-year period, he is required to repay the unamortized amount of the $1,000 payment.  This agreement has been accounted for as a prepaid asset and is being amortized equally over the five-year period.

At closing the Company received $302 in small tools inventory, $448 in property, plant and equipment, and recorded accounts payable of $1,060.

The acquisition was accounted for using the acquisition method of accounting.  The assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date Since its March 11, 2013 acquisition date, FSSI contributed revenues of $670 and $4,143 and gross profit of $14 and $325, for the three and nine months ended September 30, 2013, respectively.

During the second quarter 2013, the Company finalized its estimates of the fair value of the contingent consideration, intangible assets and goodwill for the acquisition.  The final revision resulted in a change from the estimated values recorded at March 31, 2013, including a decrease in the fair value of the contingent consideration of $136, increases in intangible assets of $800 and a decrease of $936 for goodwill

The customer relationships were valued at $950 utilizing the “excess earnings method” of the income approach.  The estimated discounted cash flows associated with existing customers and projects were based on historical and market participant data.  Such discounted cash flows were net of fair market returns on the various tangible and intangible assets that are necessary to realize the potential cash flows.

The fair value of the tradename of $550 was determined based on the “relief from royalty” method.  A royalty rate was selected based on consideration of several factors, including external research of third party tradename licensing agreements and their royalty rate levels, and management estimates.  The useful life was estimated at five years based on management’s expectation for continuing value of the tradename in the future.

The fair value for the non-compete agreement of $100 was based on a discounted “income approach” model, including estimated financial results with and without the non-compete agreement in place.  The agreement was analyzed based on the potential impact of competition that certain individuals could have on the financial results, assuming the agreement was not in place.  An estimate of the probability of competition was applied and the results were compared to a similar model assuming the agreement was in place.

Goodwill of $1,087 largely consists of expected benefits from the greater presence and convenient access to south Texas, the Houston ship channel and Louisiana and FSSI’s expertise in turn-around work for refineries and chemical plants.  Goodwill also includes the value of the assembled workforce of the FSSI business.  Based on the current tax treatment, goodwill and other intangible assets will be deductible for income tax purposes over a fifteen-year period.

2012 Acquisition - Sprint Pipeline Services, L.P.

The March 12, 2012 acquisition of Sprint was accounted for using the acquisition method of accounting.  The fair value of the consideration totaled $28,377, which included cash payments of $21,197, Company stock valued at $980 (or 62,052 shares of restricted common stock) and contingent consideration of $6,200.

The contingent consideration was as follows:  if income before interest, taxes, depreciation and amortization (“EBITDA”) for 2012, as defined in the purchase agreement, was at least $7,000, we would pay $4,000 in cash to the sellers. The earnout target was achieved in 2012 and was paid in April 2013.

The 2013 earnout target provides for an additional cash payment of $4,000 to the sellers if 2013 EBITDA is at least $7,750.  The estimated fair value of the 2013 contingent consideration as of the acquisition date was $2,745 and at September 30, 2013 and December 31, 2012, the estimated fair value of the contingent consideration was $3,300 and $3,020, respectively.

2012 Acquisition - Silva Companies

The May 30, 2012 acquisition of Silva was accounted for using the acquisition method of accounting.  The fair value of the consideration was $14,090.

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2012 Acquisition - The Saxon Group

The September 28, 2012 acquisition of Saxon was accounted for using the acquisition method of accounting.  The fair value of the consideration was $550 in cash, payment of a banknote for $2,429, and contingent consideration valued at $1,950 for total consideration of $4,929.

The contingent consideration included an earnout where the Company would pay $2,500 to the sellers, contingent upon Saxon meeting one of the following two targets:  (1) EBITDA for the fifteen month period ending December 31, 2013 of at least $4,000 or; (2) EBITDA for the twenty-one month period ending September 30, 2014 of at least $4,750.  The estimated fair value of the contingent consideration on the acquisition date was $1,950.  The estimated fair value of the contingent consideration was $2,269 and $2,028 at September 30, 2013 and December 31, 2012, respectively.

2012 Acquisition — Q3 Contracting

Using the acquisition method of accounting, the fair value of the consideration for the November 17, 2012 acquisition of Q3C totaled $56,592.  At closing we made a cash payment of $48,116 and recorded a contingent earnout with a fair value of $7,448 and a liability for a future payment of $430 in Company common stock.

The contingent earnout requires the Company to pay additional cash to the sellers, contingent on Q3C meeting certain EBITDA targets (as that term is defined in the stock purchase agreement).  The targets are as follows:

1.For the period November 18, 2012 through December 31, 2013, if EBITDA is at least $17,700, the Company will pay an additional $3,750.  The payment amount increases by $1,250, to $5,000, if EBITDA exceeds $19,000.

2.For calendar year 2014, if EBITDA is at least $19,000, the Company will pay an additional $3,750.  The payment amount increases by $1,250, to $5,000, if EBITDA exceeds $22,000.

As of the purchase date, the estimated fair value of the contingent consideration was $7,448.  The fair value estimate is based on management’s evaluation of the probability of Q3C meeting the financial performance targets for the two periods, discounted at the Company’s estimated average cost of capital.  The estimated fair value at September 30, 2013 and December 31, 2012 was $8,536 and $7,490, respectively (which includes the expectation that the 2013 target, item 1 above, will be met, with the fair value of $5,000 at September 30, 2013).

In January 2013, we issued 29,273 shares of unregistered stock.  In August 2013, we paid $598 in cash to the sellers as part of tax-related elections that were made under the terms of the purchase agreement.

During the third quarter of 2013, the Company finalized its estimate of the fair value of the acquired assets and liabilities for the acquisition, resulting in no change to the initial estimate.  Additionally, under the purchase agreement, the Company made a final true-up of the purchase amount during the third quarter 2013, resulting in an additional payment to the sellers of $598.  This increased goodwill as of September 30, 2013, an increase in the original estimated goodwill value that had been recorded at December 31, 2012, March 31, 2013 and June 30, 2013.

Summary of Cash Paid for Acquisitions for the nine months ended September 30, 2013 and 2012

The following table summarizes the cash paid for acquisitions for the nine months ended September 30, 2013 and 2012.  The Q3C acquisition was made on November 17, 2012 and included a cash payment of $48,116.  The Company made an additional post-closing payment to the sellers in August 2013, which is included below:

	Nine Months ended September 30,
	2013		2012
Sprint — Purchased March 12, 2012	$	—	$	21,197
Silva — purchased May 30, 2012	—		13,934
Saxon — purchased September 28, 2012	—		2,979
FSSI — purchased March 11, 2013	1,675		—
Additional cash paid August 2013 — Q3C — purchased November 17, 2012	598		—
	$	2,273	$	38,110

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Supplemental Unaudited Pro Forma Information for the three and nine months ended September 30, 2013 and 2012

In accordance with ASC Topic 805 we are combining the pro forma information for the FSSI, Sprint, Silva, Saxon and Q3C acquisitions (“the Acquisitions”).  The following pro forma information for the three and nine months ended September 30, 2013 and 2012 presents the combined results of operations of the Acquisitions combined, as if the Acquisitions had each occurred at the beginning of 2012. The supplemental pro forma information has been adjusted to include:

·the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment, based on the purchase price allocations;

·the pro forma impact of the expense associated with the amortization of the discount for the fair value of the contingent consideration for potential earnout liabilities that may be achieved in 2013 for the Sprint and FSSI acquisitions and 2013 or 2014 for the Saxon, Q3C and FSSI acquisitions;

·the pro forma tax effect of both the income before income taxes and the pro forma adjustments, calculated using a tax rate of 39.0% for the three and nine months ended September 30, 2012 and the same periods in 2013; and

·the pro forma increase in weighted average shares outstanding including 62,052 unregistered shares of common stock issued as part of the Sprint acquisition and 29,273 shares of unregistered common stock issued as part of the Q3C acquisition.

The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the Acquisitions been completed on January 1, 2012.  For example, the pro forma results do not reflect any operating efficiencies and associated cost savings that the Company might have achieved with respect to the combined companies.

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Revenues	551,333		476,570		1,409,140		1,192,167
Income before provision for income taxes	37,268		31,967		79,283		65,395
Net income attributable to Primoris	21,845		19,379		47,109		39,848
Weighted average common shares outstanding:
Basic	51,568		51,427		51,530		51,433
Diluted	51,671		51,433		51,594		51,448
Earnings per share:
Basic	$	0.42	$	0.38	$	0.91	$	0.77
Diluted	$	0.42	$	0.38	$	0.91	$	0.77

Note 9—Intangible Assets

At September 30, 2013 and December 31, 2012, intangible assets totaled $48,002 and $51,978, respectively, net of amortization.  The September 30, 2013 balance includes the effect of the FSSI acquisition (See Note 8).  The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, as follows:

	Amortization	September 30,		December 31,
	Period	2013		2012
Tradename	3 to 10 years	$	21,808	$	23,586
Non-compete agreements	2 to 5 years	$	2,991	$	4,130
Customer relationships	5 to 15 years	$	23,203	$	24,212
Backlog	0.75 years	$	—	$	50
Total		$	48,002	$	51,978

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Amortization expense of intangible assets was $1,891 and $1,476 for the three months ended September 30, 2013 and 2012, respectively, and amortization expense for the nine months ended September 30, 2013 and 2012 was $5,576 and $4,669, respectively. Estimated future amortization expense for intangible assets is as follows:

For the Years Ending December 31,	Estimated Intangible Amortization Expense
2013 (remaining three months)	$	1,891
2014	7,454
2015	6,404
2016	6,029
2017	5,909
Thereafter	20,315
	$	48,002

Note 10—Accounts Payable and Accrued Liabilities

At September 30, 2013 and December 31, 2012, accounts payable included retention amounts of approximately $8,359 and $15,946, respectively.  These amounts are due to subcontractors but have been retained pending contract completion and customer acceptance of jobs.

The following is a summary of accrued expenses and other current liabilities at:

	September 30, 2013		December 31, 2012
Payroll and related employee benefits	$	51,354	$	33,086
Insurance, including self-insurance reserves	35,233		22,982
Reserve for estimated losses on uncompleted contracts	2,018		764
Corporate income taxes and other taxes	2,396		3,779
Accrued overhead cost	1,326		2,007
Other	9,554		13,534
	$	101,881	$	76,152

Note 11—Credit Arrangements

Revolving Credit Facility

As of September 30, 2013, the Company had a revolving credit facility (the “Credit Agreement”). The Credit Agreement was entered into by and among the Company, The PrivateBank and Trust Company, as administrative agent (the “Administrative Agent”) and co-lead arranger, The Bank of the West, as co-lead arranger, and IBERIABANK Corporation (the “Lenders”). The Credit Agreement is a $75 million revolving credit facility whereby the lenders agree to make loans on a revolving basis from time to time and to issue letters of credit for up to the $75 million committed amount. The Credit Agreement also provides for an incremental facility of up to $50 million. The termination date of the Credit Agreement is December 28, 2017.

The principal amount of any loans under the Credit Agreement will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Credit Agreement (based on the Company’s senior debt to EBITDA ratio), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.5% or (b) the prime rate as announced by the Administrative Agent). Quarterly non-use fees, letter of credit fees and administrative agent fees are payable at rates specified in the Credit Agreement.

The principal amount of any loan drawn under the Credit Agreement may be prepaid in whole or in part, with a minimum prepayment of $5 million, at any time, potentially subject to make-whole provisions.

The Credit Agreement includes customary restrictive covenants for facilities of this type, as discussed below.

Commercial letters of credit were $4,808 at September 30, 2013 and $4,808 at December 31, 2012.  Other than commercial letters of credit, there were no borrowings under this line of credit during the nine months ended September 30, 2013, leaving available borrowing capacity at $70,192 at September 30, 2013.

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At the execution of the Credit Agreement, the previous Loan and Security Agreement dated October 29, 2009, as amended, between the Company and The Private Bank and Trust Company (the “PrivateBank Agreement”), was terminated.  There were no borrowings outstanding at the time of the termination and all outstanding letters of credit were transferred to the Credit Agreement.

Senior Secured Notes and Shelf Agreement

On December 28, 2012, the Company entered into a $50 million Senior Secured Notes purchase (“Senior Notes”) and a $25 million private shelf agreement (the “Notes Agreement”) by and among the Company, The Prudential Investment Management, Inc. and certain Prudential affiliates (the “Noteholders”).

The Senior Notes amount was funded on December 28, 2012. The Senior Notes are due December 28, 2022 and bear interest at an annual rate of 3.65%, paid quarterly in arrears. Annual principal payments of $7.1 million are required from December 28, 2016 through December 28, 2021 with a final payment due on December 28, 2022. The principal amount may be prepaid, with a minimum prepayment of $5 million, at any time, subject to make-whole provisions.

The Notes Agreement provided for the issuance of notes of up to $25 million, prior to December 28, 2016.  On July 25, 2013, the Company drew the full $25 million available under the Notes Agreement.  The notes are due July 25, 2023 and bear interest at an annual rate of 3.85% paid quarterly in arrears.  Seven annual principal payments of $3.6 million are required from July 25, 2017 with a final payment due on July 25, 2023.

All loans made under both the Credit Agreement and the Notes Agreement are secured by our assets, including, among others, our cash, inventory, goods, equipment (excluding equipment subject to permitted liens) and accounts receivable. All of our domestic subsidiaries have issued joint and several guaranties in favor of the Lenders and Noteholders for all amounts under the Credit Agreement and Notes Agreement.

Both the Credit Agreement and the Notes Agreement contain various restrictive and financial covenants including among others, minimum tangible net worth, senior debt/EBITDA ratio, debt service coverage requirements and a minimum balance for unencumbered net book value for fixed assets. In addition, the agreements include restrictions on investments, change of control provisions and provisions in the event the Company disposes more than 20% of its total assets.

The Company was in compliance with the covenants for the Credit Agreement and Notes Agreement at September 30, 2013.

Canadian Credit Facility

The Company has a credit facility for $10,000 in Canadian dollars with a Canadian bank for purposes of issuing commercial letters of credit in Canada.  The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years. The facility provides for an annual fee of 1% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. At September 30, 2013 and December 31, 2012, letters of credit outstanding totaled $3,410 and $1,364 in Canadian dollars, respectively.  At September 30, 2013, the available borrowing capacity was $6,590 in Canadian dollars.  The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, OnQuest Canada, ULC.  At September 30, 2013, OnQuest Canada, ULC was in compliance with the covenant.

Subordinated Promissory Notes

Subordinated Promissory Note — Rockford.  In connection with the 2010 acquisition of Rockford, the Company executed an unsecured promissory note with an initial principal amount of $16,712.  In December 2012, the subordinated note was deemed paid.

Subordinated Promissory Note — JCG.  In connection with the 2009 acquisition of JCG, the Company executed an unsecured promissory note on December 18, 2009 with an initial principal amount of $53,500.  The JCG note was paid in full on March 12, 2012.

Note 12 — Noncontrolling Interests

The Company applies the provisions of ASC Topic 810-10-45, which establishes accounting and reporting standards for ownership interests of parties other than the Company in subsidiaries, such as joint ventures and partnerships.

The Company determined that the Blythe joint venture was a variable interest entity (“VIE”) and that the Company was the primary beneficiary as a result of its significant influence over the joint venture operations.

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The Blythe joint venture operating activities are included in the Company’s consolidated statements of income as follows:

	Three months ended September 30,		Nine months ended September 30,
	2013	2012	2013	2012
Revenues	15,468	7,750	47,371	13,164
Net income attributable to noncontrolling interests	1,348	432	1,947	600

Since Blythe is a partnership, no tax effect was recognized for the income.   Blythe made a $2.5 million distribution to the noncontrolling interests and $2.5 million distribution to the Company during the nine months ended September 30, 2013.  There were no distributions made in the prior year, and there were no capital contributions made during the nine months ended September 30, 2013.

The carrying value of the assets and liabilities associated with the operations of the Blythe joint venture are included in the Company’s consolidated balance sheets as follows:

	September 30, 2013		December 31, 2012
Cash	$	1,793	$	3,565
Accounts receivable	8,448		8,843
Current liabilities	8,318		9,379

The net assets of the joint venture are restricted for use by the project and are not available for general operations of the Company.

Note 13 — Contingent Earnout Liabilities

As part of the Rockford acquisition in November 2010, the Company agreed to issue additional cash and common stock to the sellers, contingent upon Rockford meeting certain operating performance targets  The final contingent earnout  for 2012 was achieved and in April 2013, the Company made a $6,900 cash payment.

The Company has recorded additional contingent earnout consideration liabilities related to the acquisitions of FSSI, Sprint, Saxon and Q3C as discussed in Note 8 — Business Combinations.

Note 14—Related Party Transactions

Primoris has entered into leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Executive Vice President and General Counsel, is secretary of SIGI.

Primoris leases properties from SIGI at the following locations:

1.         Bakersfield, California (lease expires October 2022)

2.         Pittsburg, California (lease expires April 2023)

3.         San Dimas, California (lease expires March 2019)

4.         Pasadena, Texas (leases expire in July 2019 and 2021)

During the nine months ended September 30, 2013 and 2012, the Company paid $688 and $695, respectively, in lease payments to SIGI for the use of these properties.

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  The project was substantially completed in December 2011.  The Company recognized no revenues or profits in 2013 and recognized revenues of $362 for the nine months ended September 30, 2012, at normal margins.

Primoris leases a property from Roger Newnham, a former owner and current manager of our subsidiary, OnQuest Canada, ULC. The property is located in Calgary, Canada. During the nine months ended September 30, 2013 and 2012, Primoris paid $223 and $212, respectively, in lease payments.  The current term of the lease is through December 31, 2014.

19

Primoris leases a property from Lemmie Rockford, one of the Rockford sellers, which commenced November 1, 2011.  The property is located in Toledo, Washington.  During the nine months ended September 30, 2013 and 2012, Primoris paid $68 and $68, respectively, in lease payments.  The lease expires in January 2015.

As a result of the November 2012 acquisition of Q3C, the Company became party to leased property from Quality RE Partners, owned by three of the Q3C selling shareholders, of whom two are current employees, including Jay Osborn, President of Q3C.  The property is located in Little Canada, Minnesota.  During the nine months ended September 30, 2013, the Company paid $198, in lease payments to Quality RE Partners for the use of this property.  The lease commenced October 28, 2012 and expires in October 2022.

As discussed in Note 7— “Equity Method Investments”, the Company owns several non-consolidated investments and has recognized revenues on work performed by the Company for those joint ventures.

Note 15—Stock-Based Compensation

On May 3, 2013, the Board of Directors granted 100,000 Restricted Stock Units (“Units”) under the 2013 Equity Incentive Plan (the “2013 Plan”).  The Units vest over a service period of four equal installments in 2014 through 2017, subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying award agreement.  Each Unit represents the right to receive one share of the Company’s common stock when vested.

The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant, or $21.98 per Unit.  Stock compensation expense for the Units is being amortized using the straight-line method over the service vesting period.  For the three and nine months ended September 30, 2013 the Company recognized $138 and $229, respectively, in compensation expense.  At September 30, 2013, approximately $1.97 million of unrecognized compensation expense remains for the Units which will be recognized over a period of 3.6 years.

Vested Units accrue “Dividend Equivalents” (as defined in the 2013 Plan) which will be accrued as additional Units.  At September 30, 2013, there were no accrued Dividend Equivalent Units.

Note 16—Income Taxes

The effective tax rate on income before taxes and noncontrolling interests for the nine months ended September 30, 2013 is 38.13%.  The effective tax rate for income attributable to Primoris is 39.09%. The rate differs from the U.S. federal statutory rate of 35% due primarily to state income taxes, the “Domestic Production Activity Deduction” and nondeductible meals and incidental per diems common in the construction industry.

To determine its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.  The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment date.

In September 2012, the Internal Revenue Service (“IRS”) concluded an examination of our federal income tax returns for 2008 and 2009, which did not have a material impact on our financial statements.  In the third quarter of 2013, the IRS initiated an examination of our federal income tax return for 2011.  The tax years 2010 through 2012 remain open to examination by the IRS.  The statute of limitations of state and foreign jurisdictions vary generally between 3 to 5 years.  Accordingly, the tax years 2008 through 2012 generally remain open to examination by the other major taxing jurisdictions in which the Company operates.

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Note 17—Dividends and Earnings Per Share

The Company has paid or declared cash dividends during 2013 as follows:

·On March 5, 2013, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on March 29, 2013.  The dividend, totaling $1,547, was paid on April 15, 2013.

·On May 3, 2013, the Company declared a cash dividend of $0.035 per common share, payable to stockholders of record on June 28, 2013.  The dividend, totaling $1,805, was paid on July 15, 2013.

·On August 2, 2013, the Company declared a cash dividend of $0.035 per common share, payable to stockholders of record on September 30, 2013.  The dividend, totaling $1,805, was paid on October 15, 2013.

The table below presents the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2013 and 2012:

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to Primoris	$	21,845	$	17,516	$	47,179	$	39,735
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,568		51,398		51,529		51,387
Dilutive effect of shares issued to independent directors	3		6		10		15
Dilutive effect of shares issued as part of Q3C acquisition	—		—		1		—
Dilutive effect of unvested restricted stock units	100		—		55		—
Weighted average shares for computation of diluted earnings per share	51,671		51,404		51,595		51,402
Earnings per share:
Basic earnings per share	$	0.42	$	0.34	$	0.92	$	0.77
Diluted earnings per share	$	0.42	$	0.34	$	0.91	$	0.77

Note 18—Stockholders’ Equity

Common stock — In March 2013, the Company received $1,455 for 131,989 shares of common stock issued, under a purchase arrangement within the Company’s Long-Term Incentive Plan (“LTI Plan”) for managers and executives. The LTI Plan allows participants to use a portion of their annual bonus amount to purchase Company common stock at a discount from the market price. The shares purchased in March 2013 were for bonus amounts earned in 2012 and were calculated at 75% of the average market closing price of December 2012.  In March 2012, the Company received $1,240 for 111,790 shares of common stock issued under the LTI Plan for bonus amounts earned in the prior year.

In March 2013 and in August 2013, the Company issued 12,480 shares and 9,110 shares, respectively, of common stock as part of the quarterly compensation of the non-employee members of the Board of Directors.

As part of the acquisition of Q3C, the Company issued 29,273 unregistered shares of stock on January 7, 2013.  The shares were issued based on the average December 2012 closing prices, or $14.69 per share for a total value of $430.

Note 19—Commitments and Contingencies

Leases — The Company leases certain property and equipment under non-cancellable operating leases which expire at various dates through 2019. The leases require the Company to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”.

Total lease expense during the three and nine months ended September 30, 2013 was $3,566 and $11,111, respectively, compared to $2,629 and $7,388 for the same periods in 2012.  The amounts for the three and nine months ended September 30, 2013 included lease payments made to related parties of $379 and $1,176, respectively, and $327 and $975 for the three and nine months ended September 30, 2012, respectively.

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Letters of credit — At September 30, 2013, the Company had letters of credit outstanding of $8,123 and at December 31, 2012, the Company had letters of credit outstanding of $6,168.  The outstanding amounts include the U.S. dollar equivalents for letters of credit issued in Canadian dollars.

Litigation — On February 7, 2012, the Company was sued in an action entitled North Texas Tollway Authority, Plaintiff v. James Construction Group, LLC, and KBR, Inc., Defendants, v. Reinforced Earth Company, Third-Party Defendant (the “Lawsuit”). The Lawsuit was brought in the District Court of Collin County, Texas, 401st Judicial District, Cause No. 401-01747-2012.  In the Lawsuit, the North Texas Tollway Authority (“NTTA”) is alleging damages to a road and retaining wall that were constructed in 1999 on the George Bush Turnpike near Dallas, Texas, due to negligent construction by JCG.  The Lawsuit claims that the cost to repair the retaining wall was approximately $5.4 million.  The NTTA also alleges that six other walls constructed on the project by JCG could have the same potential exposure to failure.  The Company has denied any liability, but has tendered the claim to its insurance carriers and has cross-complained against its engineering subcontractor for potential design liability.  The extent of insurance coverage by the carriers of the Company and its subcontractor are undetermined at this time.  The Company has investigated all potential causes of the alleged loss, including design liabilities of the owner, owner’s engineers and/or the Company’s subcontractor.   To date, mediation efforts have not been successful, and a jury trial is likely to be scheduled for 2014.  While the Company will vigorously defend the claims, after discussion with its legal counsel, the Company recorded an accrual amount for this issue.

The Company is subject to other claims and legal proceedings arising out of its business. Management believes that the Company has meritorious defenses to such claims. Although management is unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, management believes that the outcome of these matters will not have a materially adverse effect on the consolidated financial position of the Company.

Bonding— At September 30, 2013 and December 31, 2012, the Company had bid and completion bonds issued and outstanding totaling approximately $1,449,158 and $1,298,589, respectively.

Withdrawal liability for multiemployer pension plan — In November 2011, Rockford and ARB, along with other members of the Pipe Line Contractors Association (“PLCA”), withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan (the “Plan”).  The Company withdrew from the Plan in order to mitigate its liability in connection with the Plan, which is significantly underfunded.   The Company recorded a liability of $7,500 based on information provided by the Plan. However, the Plan has asserted that the PLCA members did not affect a proper withdrawal in 2011. The Company believes that a legally effective withdrawal occurred in November 2011 and has recorded the withdrawal liability on that basis. If the Plan were to prevail in its assertion and the withdrawal of the Company were deemed to occur after 2011, the amount of any withdrawal liability could increase.

Prior to its acquisition, Q3C had also withdrawn from the Plan.  In November 2012, Q3C estimated a withdrawal liability of $85.  In the first quarter of 2013, the Plan asserted that the liability was $119.  Without agreeing to the amount, Q3C is making payments toward the liability amount.

Contingent Consideration — Earnouts related to acquisitions are discussed in Note 8 — Business Combinations and Note 13 — Contingent Earnout Liabilities.

Note 20—Reportable Operating Segments

The Company segregates its business into three operating segments: the East Construction Services (“East”) segment, the West Construction Services (“West”) segment and the Engineering segment.

The East segment includes the JCG construction business, located primarily in the southeastern United States and the businesses located in the Gulf Coast region of the United States, including Cardinal Contractors, Inc.  The segment also includes the operating results relating to the acquisitions of Sprint, Silva and Saxon in 2012 and FSSI in 2013.

The West segment includes the construction services performed by ARB, ARB Structures, Inc., Rockford, Alaska Continental Pipeline, Inc., All Day Electric Company, Inc., Primoris Renewables, Inc., Juniper Rock, Inc. and Stellaris, LLC.  This segment also includes the operating results of Q3C acquired in November 2012.  While most of the entities perform work primarily in California, Rockford operates throughout the United States and Q3C operates in the upper Midwest United States.  The Blythe joint venture is also included as a part of the segment.

The Engineering segment includes the results of OnQuest, Inc. and OnQuest Canada, ULC.

All intersegment revenues and gross profit, which were immaterial, have been eliminated in the following tables.

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Segment Revenues

Revenue by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	178,716	32.4	%	$	181,260	42.0	%
West	362,362		65.7	%	242,033		56.0	%
Engineering	10,255		1.9	%	8,549		2.0	%
Total	$	551,333	100.0	%	$	431,842	100.0	%

Revenue by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	544,325	38.7	%	$	459,167	43.3	%
West	828,242		58.9	%	567,351		53.5	%
Engineering	33,774		2.4	%	34,333		3.2	%
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%

Segment Gross Profit

Gross profit by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	10,600	5.9	%	$	18,664	10.3	%
West	62,520		17.3	%	35,602		14.7	%
Engineering	2,345		22.9	%	2,025		23.7	%
Total	$	75,465	13.7	%	$	56,291	13.0	%

Gross profit by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	40,810	7.5	%	$	47,442	10.3	%
West	133,195		16.1	%	84,297		14.9	%
Engineering	7,093		21.0	%	6,152		17.9	%
Total	$	181,098	12.9	%	$	137,891	13.0	%

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Segment Goodwill

The following presents the amount of goodwill recorded by segment at September 30, 2013 and at December 31, 2012.

Segment	September 30, 2013		December 31, 2012
East	$	70,946	$	69,859
West	45,239		44,641
Engineering	2,441		2,441
Total	$	118,626	$	116,941

Geographic Region — Revenues and Total Assets

Revenue and total assets by geographic area for the nine months ended September 30, 2013 and 2012 were as follows:

	Revenues
	For the nine months ended September 30,
	2013				2012				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		September 30, 2013		December 31, 2012
United States	$	1,393,837	99.1	%	$	1,053,547	99.3	%	$	1,007,980	$	920,872
Non-United States	12,504		0.9		7,304		0.7		11,097		10,335
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%	$	1,019,077	$	931,207

All non-United States revenue were generated in the Engineering segment.  For the table above, revenues generated by OnQuest Canada, ULC, were used to determine non-United States revenues.

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PRIMORIS SERVICES CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (“Third Quarter 2013 Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of regulation and the economy, generally. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “projects”, “should”, “will”, “would” or similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss many of these risks in detail in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2012 and our other filings with the Securities and Exchange Commission (“SEC”). Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Third Quarter 2013 Report. You should read this Third Quarter 2013 Report, our Annual Report on Form 10-K for the year ended December 31, 2012 and our other filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. We assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available.

The following discussion and analysis should be read in conjunction with the unaudited financial statements and the accompanying notes included in Part 1, Item 1 of this Third Quarter 2013 Report and our Annual Report on Form 10-K for the year ended December 31, 2012.

Introduction

Primoris Services Corporation (“Primoris”, the “Company”, “we”, “us” or “our”) is a holding company of various subsidiaries, which form one of the largest publicly traded specialty contractor and infrastructure companies in the United States.  Serving diverse end-markets, Primoris provides a wide range of construction, fabrication, maintenance, replacement, water and wastewater, and engineering services to major public utilities, petrochemical companies, energy companies, municipalities, state departments of transportation and other customers. We install, replace, repair and rehabilitate natural gas, refined product, water and wastewater pipeline systems, large diameter gas and liquid pipeline facilities, heavy civil projects, earthwork and site development and also construct mechanical facilities and other structures, including power plants, petrochemical facilities, refineries and parking structures. In addition, we provide maintenance services, including inspection, overhaul and emergency repair services, to cogeneration plants, refineries and similar mechanical facilities. One of our subsidiaries provides engineering and design services for fired heaters and furnaces primarily used in refinery applications.

Including our predecessor companies, we have been in business for more than 65 years.  We became a publicly traded company in 2008.  At that time, our operations were focused primarily on the West Coast through our subsidiaries ARB, Inc. (“ARB”) and ARB Structures, Inc.  We also provided product engineering services through a subsidiary, OnQuest, Inc. and its wholly owned subsidiary, OnQuest Canada, ULC (formerly Born Heaters Canada, ULC) to international customers and water and waste water construction services in Florida through Cardinal Contractors, Inc.  ARB and ARB Structures, Inc. are headquartered in Lake Forest, CA, OnQuest is headquartered in San Dimas, CA, OnQuest Canada, ULC is headquartered in Calgary, Canada and Cardinal Contractors is headquartered in Sarasota, FL.

Since July 2008, we have continued to strategically expand both our capabilities and our geographic presence.  This expansion has resulted in significant increases in revenues and profitability.  The following is a discussion of the major acquisitions.

·On December 18, 2009, we acquired James Construction Group, LLC, a privately-held Florida limited liability company (“JCG”).  JCG is one of the largest general contractors based in the Gulf Coast states and is engaged in highway, industrial and environmental construction, primarily in Louisiana, Texas and Florida.  JCG is the successor company to T. L. James and Company, Inc., a Louisiana company that has been in business for over 80 years.  Headquartered in Baton Rouge, Louisiana, JCG serves government and private clients in a broad geographical region that includes the entire Gulf Coast region of the United States.

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·On November 8, 2010, we acquired privately-held Rockford Corporation (“Rockford).  Based in Hillsboro (outside Portland), Oregon, Rockford specializes in construction of large diameter natural gas and liquid pipeline projects and related facilities throughout most of North America.

·In 2012, we made four acquisitions:

·On March 12, 2012, we purchased certain assets of Sprint Pipeline Services, L.P. (“Sprint”), headquartered in Pearland (outside Houston), Texas.  Sprint provides a comprehensive range of pipeline construction, maintenance, upgrade, fabrication and specialty services primarily in Texas and the southeastern United States.

·On May 30, 2012, we purchased certain assets of Silva Contracting Company, Inc., Tarmac Materials, LLC and C3 Interest, LLC (collectively, “Silva”).  Based outside of Houston, Texas, Silva provides transportation infrastructure maintenance, asphalt paving, and material sales in the Gulf Coast region of the United States.  Following this acquisition, Silva was merged with the operations of JCG.

·On September 28, 2012, we purchased certain assets of The Saxon Group, Inc. (“Saxon”).  Based in Suwannee, Georgia (outside Atlanta), Saxon is a full service industrial construction enterprise with special expertise in the industrial gas processing and power plant sectors.

·On November 17, 2012, we purchased all of the stock of Q3 Contracting, Inc., a privately-held Minnesota corporation (“Q3C”).  Based in Little Canada, Minnesota, north of St. Paul, Minnesota, Q3C specializes in small diameter pipeline and gas distribution construction, restoration and other services, primarily for utilities in the upper Midwest region of the United States.

·In March 2013, the Company’s subsidiary, Primoris Energy Services Inc. (PES) purchased the assets of Force Specialty Services, Inc. (“FSSI”) which specializes in turn-around work at refineries and chemical plants in the Gulf Coast area.

The Company is a party to the Blythe Power Constructors (“Blythe”) joint venture for the installation of a parabolic trough solar field and steam generation system in California.

During the past five years, we have also created legal entities to consolidate or focus our efforts.  For example, in 2009 we created Primoris Renewables, Inc. to focus on alternative energy projects, and in 2012, we created PES which is the legal entity that owns Sprint, Saxon and FSSI.  Additionally, some of our subsidiaries have increased their focus on certain industries or geographies.  For example, during the past year, Cardinal Contractors has opened a facility near Dallas to better serve water and wastewater construction opportunities in Texas.

Historically, we have longstanding relationships with major utility, refining, petrochemical, power and engineering companies.  We have completed major underground and industrial projects for a number of large natural gas transmission and petrochemical companies.  With our acquisitions of JCG and Q3C we have expanded our ability to provide services to our historical customers in additional geographies.  Our diversified customer base includes many of the leading pipeline, power generation and utility companies in the United States.  We often provide services under multi-year master service agreements (“MSA”).

In the second quarter of 2013, we made the decision to close two of our small subsidiaries, Calidus and All Day Electric Company, Inc.  Operations should cease by year end.  For the nine months ended September 30, 2013 and for the year of 2012, their combined revenue was less than 0.5% and 0.3% of total consolidated Primoris revenues, respectively.  The costs of closure are not expected to be material.

Additional information about us can be found in our press releases and other public filings.  We make our press releases, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and all other required filings with the SEC available free of charge through our Internet website, as soon as reasonably practical after they are electronically filed with, or furnished to, the SEC. Our principal executive offices are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201, and our telephone number is (214) 740-5600. Our website address is www.prim.com. The information on our Internet website is neither part of nor incorporated by reference into this Third Quarter 2013 Report.

End-Markets

We are a diversified specialty construction company, and our strategy is to serve customers in different end markets.  Our primary focus is on the following end markets:

·Underground construction.  This market consists of two types of projects.  The first is the construction of major capital projects primarily underground infrastructure for the oil and gas, telecommunication and water and wastewater industries.  The second is installation, repair and maintenance of underground services, typically for utility customers.  Our subsidiaries ARB and Sprint serve both end markets while our subsidiary Rockford provides construction services primarily to the major capital projects market and Q3C provides services primarily to utility customers.

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·Industrial construction.  In this market we provide construction services in such facilities as power plants, refineries and industrial gas and petrochemical facilities.  Our subsidiaries ARB, JCG and Saxon are providers of services in this market.

·Heavy civil construction.  We provide construction for highways and bridges, primarily to state agencies.  We also sell aggregates and asphalt.  Our subsidiary JCG is focused on this market, primarily in the states of Louisiana, Texas and Mississippi.

·Water and wastewater construction.  Our subsidiary Cardinal Contractors provides construction services to the water and wastewater industry, primarily in Florida and Texas.

·Engineering services.  We provide product engineering services primarily for the energy industry.  Our Engineering group specializes in designing, supplying, and installing high-performance furnaces, heaters, burner management systems, and related combustion and process technologies for clients in the oil refining, petrochemical, and power generation industries. It furnishes turnkey project management with technical expertise and the ability to deliver custom engineering solutions worldwide.

·Other construction services.  Our subsidiary ARB Structures, Inc. builds poured-in-place parking structures in Southern California and our subsidiary FSSI provides turnaround services in the Houston market at refineries and chemical plants.

As opportunities change in our end markets and as we have grown the company, the amount of work we do in any of our end markets fluctuates.  The following table shows the approximate percentage of revenues derived from the major end markets for the twelve-month periods listed:

	Twelve Months Ended September 2013		Twelve Months Ended December 2012		Twelve Months Ended September 2012
Underground capital projects	22	%	14	%	11	%
Utility services	31	%	28	%	27	%
Industrial	21	%	25	%	25	%
Heavy Civil	16	%	21	%	24	%
Engineering	2	%	2	%	3	%
Other	8	%	10	%	10	%
Total	100.0	%	100.0	%	100.0	%

Reportable Segments

We present our operations in three reportable segments:  West Construction Services (“West”), East Construction Services (“East”) and Engineering.  Our segment structure has been determined in accordance with ASC 280, Segment Reporting.  All of our segments derive their revenues primarily from construction and product engineering in the United States.

Our East and West segments provide the following:

·installation of underground pipeline, cable and conduits for entities in the petroleum, petrochemical and water industries;

·installation and maintenance of industrial facilities for entities in the petroleum, petrochemical and water industries;

·installation of complex commercial and industrial cast-in-place structures; and

·construction of highways and industrial and environmental construction.

The East segment consists of businesses located primarily in the southeastern United States and along the Gulf Coast.  The West segment consists of businesses located primarily in the western United States.  The West segment also includes the operations of the Blythe joint venture.  The Engineering segment includes both domestic and international project work.

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The following table lists the Company’s primary operating subsidiaries and their reportable operating segment:

Subsidiary	Operating Segment
ARB, Inc. (“ARB”)	West Construction Services
ARB Structures, Inc.	West Construction Services
Q3 Contracting, Inc. (“Q3C”); acquired 2012	West Construction Services
Rockford Corporation (“Rockford”)	West Construction Services
Stellaris, LLC.	West Construction Services
OnQuest, Inc.	Engineering
OnQuest, Canada, ULC (Born Heaters Canada, ULC prior to 2013)	Engineering
Cardinal Contractors, Inc.	East Construction Services
Force Specialty Services, Inc. (“FSSI”); acquired 2013	East Construction Services
James Construction Group, LLC (“JCG”)	East Construction Services
Sprint Pipeline Services, L.P. (“Sprint”); acquired 2012	East Construction Services
Silva Group (“Silva”); acquired 2012	East Construction Services
The Saxon Group (“Saxon”); acquired 2012	East Construction Services

Material trends and uncertainties

We generate our revenue from both large and small construction and engineering projects. The award of these contracts is dependent on a number of factors, many of which are not within our control. Business in the construction industry is cyclical. We depend in part on spending by companies in the energy and oil and gas industries, as well as on municipal water and wastewater customers. Over the past several years, each segment has benefited from demand for more efficient and more environmentally friendly energy and power facilities, local highway and bridge needs and from the strength of the oil and gas industry; however, each of these industries and the government agencies periodically are adversely affected by macroeconomic conditions.  Economic factors outside of our control affect the amount and size of contracts in any particular period.

We and our customers are operating in a challenging business environment in light of the on-going economic uncertainty, fluctuations in capital markets and potential regulatory changes and uncertainties.  We are closely monitoring our customers and the effect that changes in economic and market conditions and regulatory environment may have on them. We have experienced delays in project awards and the start of awarded projects as customers carefully consider their overall environment prior to investing in new infrastructure.  However, we believe that most of our customers, some of whom are regulated utilities, remain financially stable and will be able to continue with their business plans in the long-term without substantial constraints.

Within these trends for the economy in general, we believe that there are positive opportunities within our end markets over the next five-year horizon.  The development of shale oil and gas has a positive impact on the capital projects in our underground market both in large diameter pipeline projects and the well fields.  The increased emphasis on pipeline integrity by utility companies provides growth potential in our utility underground markets.  The apparent long-term nature of reduced natural gas prices should lead to increased opportunities for our industrial markets in the Gulf Coast region, and the impact of regulatory rules in California provides an opportunity for continuing upgrades to power plants.  At present, the heavy civil market growth is moderate as state funding is restrained and the timing of any federal funding growth is uncertain. Finally, the continuing drought in the western United States may lead to future opportunities in the water and wastewater market.

The opportunities in our end markets may lead to both increases in unit labor costs and shortages in availability of qualified personnel, especially in the Gulf Coast region.  Depending on contractual terms, cost increases or reductions in efficiency, could reduce our margins.  Furthermore, the uncertain impact of the Affordable Care Act on our current and future employees could also increase our cost structure.

We believe that we will be able to take advantage of the opportunities in our end market segments; however, these opportunities may not occur in a linear fashion.  As a contractor, we are dependent on the owners for project development, project funding and project timing.  Owners’ decisions and market opportunities tend to cause significant fluctuations in revenues, profits and cash flows.

Seasonality and cyclicality

Our results of operations can be subject to quarterly variations. Some of the variation is the result of weather, particularly rain, which can impact our ability to perform construction services.  The weather also limits our ability to bid for and perform pipeline integrity testing and routine maintenance for our utility customers’ underground systems since the systems are used for heating.  The acquisitions of Sprint and Q3C have added to the seasonality of our business.  Q3C’s primary operations are in the Midwest United States, an area usually affected by inclement weather during the first quarter.  Similarly, a significant portion of Sprint’s revenue is derived from utility customers.  In most years, utility owners obtain bids and award contracts for major maintenance, integrity and replacement work after the heating season, and the work must be completed by the following winter.  In addition, demand for new projects can be lower during the early part of the year due to clients’ internal budget cycles. As a result, we usually experience higher revenues and earnings in the third and fourth quarters of the year as compared to the first two quarters.

We are also dependent on large construction projects which tend not to be seasonal, but can fluctuate from year to year based on general economic conditions. Because of the cyclical nature of our business, the financial results for any period may fluctuate from prior periods, and our financial condition and operating results may vary from quarter-to-quarter.

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Our volume of business may be adversely affected by declines or delays in new projects in various geographic regions in the United States. Project schedules, in particular in connection with larger, longer-term projects, can also create fluctuations in the services provided, which may adversely affect us in a given period. The financial condition of our customers and their access to capital, variations in the margins of projects performed during any particular period, regional, national and global economic and market conditions, timing of acquisitions, the timing and magnitude of acquisition assimilation costs, interest rate fluctuations and other factors may also materially affect our periodic results. Accordingly, our operating results for any particular period may not be indicative of the results that can be expected for any other period.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and also affect the amounts of revenues and expenses reported for each period. These estimates and assumptions must be made because certain information that is used in the preparation of our financial statements cannot be calculated with a high degree of precision from data available, is dependent on future events, or is not capable of being readily calculated based on generally accepted methodologies. Often, these estimates are particularly difficult to determine, and we must exercise significant judgment. We use estimates in our assessments of revenue recognition under percentage-of-completion accounting, the allowance for doubtful accounts, useful lives of property and equipment, fair value assumptions in analyzing goodwill and long-lived asset impairments, self-insured claims liabilities and deferred income taxes.  Actual results could differ significantly from our estimates, and our estimates could change if there were made under different assumptions or conditions.

Our critical accounting policies, as described in our Annual Report on Form 10-K for the year ended December 31, 2012, relate primarily to revenue recognition for fixed price contracts, income taxes, goodwill, long-lived assets, reserves for uninsured risks and litigation and contingencies.  There have been no material changes to our critical accounting policies since December 31, 2012.

Results of operations

In the discussion of our results of operations, we provide separate information for the results of the companies that we have acquired since September 2012.  Saxon, Q3C and FSSI are identified as “Acquired Companies.”  For the business units that were part of Primoris at the end of September 2012, results of operations are identified as “Comparable Companies.”

Revenues, gross profit, operating income and net income for the three months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,
	2013					2012
	(Thousands)			% of Revenue		(Thousands)			% of Revenue
Revenues	$	551,333		100.0	%	$	431,842		100.0	%
Gross profit	75,465			13.7	%	56,291			13.0	%
Selling, general and administrative expense	36,478			6.6	%	26,014			6.0	%
Operating income	38,987			7.1	%	30,277			7.0	%
Other income (expense)	(1,719		)	(0.3	)%	(1,364		)	(0.3	)%
Income before income taxes	37,268			6.8	%	28,913			6.7	%
Income tax provision	(14,075		)	(2.6	)%	(10,965		)	(2.5	)%
Net income	$	23,193		4.2	%	$	17,948		4.2	%
Net income attributable to noncontrolling interests	(1,348		)	(0.2	)%	(432		)	(0.1	)%
Net income attributable to Primoris	$	21,845		4.0	%	$	17,516		4.1	%

Revenues, gross profit, operating income and net income for the nine months ended September 30, 2013 and 2012 were as follows:

	Nine months Ended September 30,
	2013					2012
	(Thousands)			% of Revenue		(Thousands)			% of Revenue
Revenues	$	1,406,341		100.0	%	$	1,060,851		100.0	%
Gross profit	181,098			12.9	%	137,891			13.0	%
Selling, general and administrative expense	96,657			6.9	%	69,684			6.6	%
Operating income	84,441			6.0	%	68,207			6.4	%
Other income (expense)	(5,043		)	(0.4	)%	(2,997		)	(0.3	)%
Income before income taxes	79,398			5.6	%	65,210			6.1	%
Income tax provision	(30,272		)	(2.1	)%	(24,875		)	(2.3	)%
Net income	$	49,126		3.5	%	$	40,335		3.8	%
Net income attributable to noncontrolling interests	(1,947		)	(0.1	)%	(600		)	(0.1	)%
Net income attributable to Primoris	$	47,179		3.4	%	$	39,735		3.7	%

29

Revenues

Revenues for the three months ended September 30, 2013 increased by $119.5 million, or 27.7%, compared to the same period in 2012.  The Acquired Companies contributed $76.4 million, or 17.7%, while the Comparable Companies contributed growth of $43.1 million, or 10.0%. Revenues increased at our West and Engineering segments while decreasing in our East segment.  The primary increases for the Comparable Companies were in underground pipeline revenue for Rockford, which increased by $67.0 million primarily from its work in Pennsylvania and Ohio, and the Blythe joint venture revenue increased by $7.7 million.  These increases were partially offset by a decrease of $15.2 million at the JCG Heavy Civil division and of $9.8 million at ARB.

Revenues for the nine months ended September 30, 2013 increased by $345.5 million, or 32.6%, compared to the same period in 2012.  Growth from Comparable Companies contributed $189.2 million, or 17.9%, and the Acquired Companies contributed $156.3 million, or 14.7%.  Revenues increased at our two construction segments while decreasing at our Engineering segment.  The primary increases for the Comparable Companies were in underground pipeline, where Rockford revenues increased by $161.9 million and Sprint revenues increased by $49.0 million (we acquired Sprint during the first quarter of 2012).  In addition, the Blythe joint venture revenue increased by $34.2 million.  The increases were somewhat offset by a reduction in revenues at ARB of $27.2 million.

Gross Profit

Gross profit increased by $19.2 million, or 34.1%, for the three months ended September 30, 2013 compared to the same period in 2012. The Acquired Companies contributed $15.5 million, or 27.5%, while the profit increase from growth at the Comparable Companies was $3.7 million, or 6.6%.  The Comparable Companies growth increase included $10.8 million from the West segment primarily attributable to the completion of a major power project at the ARB Industrial division.  Gross profit for the Comparable Companies in the East segment declined by $7.4 million, due primarily to lower volume and lower gross profit margins at the JCG Heavy Civil division.

Gross profit increased by $43.2 million, or 31.3%, for the nine months ended September 30, 2013 compared to the same period in 2012. The Acquired Companies contributed $21.7 million, or 15.7%, while the profit increase from the Comparable Companies was $21.5 million, or 15.6%.  The Comparable Companies gross profit increase was $27.7 million from the West segment primarily attributable to the benefit of nearing completion of a major power project.  However, for the Comparable Companies of the East segment, gross profit decreased by $7.1 million, mainly due to the volume decline at the JCG Heavy Civil division.

Selling, general and administrative expenses

Selling, general and administrative expenses (“SG&A”) increased $10.5 million, or 40.2%, for the three months ended September 30, 2013, compared to the same period in 2012.  The increase in SG&A expenses for the Acquired Companies was $5.6 million.  The remaining $4.9 million increase included a $3.3 million impairment charge for the WesPac nonconsolidated entity investment and a $0.5 million expense to recognize achievement of the 2013 Q3C earn-out target.  The remainder of the increase of $1.1 million, or 4.2%, was due primarily to a $0.4 million increase in compensation and compensation-related expenses and increases in other SG&A expenses of $0.7 million.

For the nine months ended September 30, 2013, the increase was $27.0 million, or 38.7% compared to the first nine months of 2012.  The amount of the increase attributable to the Acquired Companies was $12.9 million, or 18.5%.  Of the remaining $14.1 million increase, $3.8 million was from the third quarter impairment charge and recording the Q3C earn-out payment.  Compensation and compensation-related expenses increased by $7.6 million as a result of increased administrative support costs related to labor-intensive pipeline integrity work, increased incentive compensation expense for a larger number of participants in the management incentive compensation program and cost of living increases.  Transportation expenses increased by $1.1 million, and all other SG&A expenses increased by $1.6 million, or 2.3%.

SG&A as a percentage of revenue was 6.6% and 6.9% for the three and nine months ended September 30, 2013, respectively, compared to 6.0% and 6.6% for the corresponding periods in 2012.  Excluding the impact of the impairment and the Q3C earn-out accrual, SG&A as a percentage of revenue was 5.9% and 6.6% for the three and nine months ended September 30, 2013, respectively.

Other income and expense

Non-operating income and expense items for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(Thousands)						(Thousands)
Income (loss) from non-consolidated entities	$	113		$	(159	)	$	169		$	895
Foreign exchange gain (loss)	91			$	18		$	3		$	(30	)
Other expense	(376		)	(382		)	(809		)	(961		)
Interest income	32			96			95			143
Interest expense	(1,579		)	$	(937	)	$	(4,501	)	$	(3,044	)
Total other income (expense)	$	(1,719	)	$	(1,364	)	$	(5,043	)	$	(2,997	)

30

For the three and nine months ended September 30, 2013, income from non-consolidated investments was primarily due to income from the investment in Alvah, offset by a loss recorded at WesPac

The Company uses the U.S. dollar as its functional currency in Canada since most monetary transactions are made in U.S. dollars. For accounting purposes, transactions made in Canadian dollars are converted to U.S. dollars, and we record foreign exchange gains and losses for the periods presented based on the value of the Canadian dollar to the US dollar.

Other expense represents the increase in the estimated fair value of the contingent earnout liabilities for the acquisitions of Sprint, Saxon, Q3C and FSSI.

For the three and nine months ended September 30, 2013, interest expense was $1.6 million and $4.5 million, respectively, compared to $1.0 million and $3.0 million for the same periods in 2012.  The increases were due primarily to interest on the $50 million 3.65% Senior Secured Notes, dated December 29, 2012, and the additional $25 million 3.85% Senior Secured Notes, dated July 25, 2013.

Provision for income taxes

Our provision for income taxes increased $3.1 million for the three months ended September 30, 2013 to $14.1 million compared to $11.0 million in the same period in 2012 primarily as a result of higher income before taxes.

Our provision for income taxes increased $5.4 million for the nine months ended September 30, 2013 to $30.3 million, compared to $24.9 million for the same period in 2012. The $5.4 million increase results from higher income before taxes and a higher effective tax rate, which contributed to the increase by $4.9 million and $0.5 million, respectively. The tax rate applied to income attributable to Primoris in the nine months ended September 30, 2013 was 39.1%, compared to 38.5% for the same period in 2012.  The 0.6% increase in the effective tax rate results primarily from the variability of estimated nondeductible per diem expenses.

To determine our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.

Segment results

East Segment

Revenue and gross profit for the East segment for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	178,716			$	181,260
Gross profit	10,600		5.9	%	18,664		10.3	%

Revenues for the East Construction Services segment decreased by $2.5 million, or 1.4%, for the three months ended September 30, 2013 compared to the same period in the prior year.  The primary reason that revenues at the JCG Heavy Civil division decreased by $15.2 million was that a $17.6 million increase in work for the Texas Department of Transportation (“TXDOT”) was offset by a $31.9 million reduction in work for the Louisiana Department of Transportation (“LADOT”) projects.  Sprint revenues decreased in the quarter by $11.5 million as larger capital projects were completed in previous quarters and a new capital project has been delayed awaiting permit approvals.  The decreases in revenues were offset by a revenue contribution from the two Acquired Companies of $14.4 million.  Cardinal Contractors revenues increased by $4.5 million from work on water treatment facilities in Florida and Texas, JCG Industrial division revenues increased $2.8 million from Gulf Coast area projects and JCG Infrastructure & Maintenance division revenues increased $2.4 million also from Gulf Coast area projects.

Gross profit for the East segment decreased by $8.1 million, or 43.2%, for the three months ended September 30, 2013 compared to the same period in the prior year. Gross profit from the JCG Heavy Civil division decreased by $6.0 million due primarily from the reduced revenues, the transition from completed projects with higher margins in Louisiana in 2012 and the startup of the Belton, Texas area projects in 2013.  Sprint Pipeline gross profit decreased $2.4 million due to its reduced revenue.  The Acquired Companies operated at a gross deficit of $0.6 million while the Cardinal Contractors, JCG Industrial division and JCG Infrastructure & Maintenance division combined increased gross revenues by $1.0 million reflecting their increased level of revenues.

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Gross profit as a percentage of revenues decreased to 5.9% for the three months ended September 30, 2013 compared to 10.3% in the prior year quarter reflecting primarily the reductions in revenues and gross profit.

	Nine months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	544,325			$	459,167
Gross profit	40,810		7.5	%	47,442		10.3	%

Revenues increased by $85.2 million, or 18.5%, for the nine months ended September 30, 2013 compared to the same period of the prior year.  The acquisitions of Saxon and FSSI contributed $38.1 million, or 8.3%, in revenues.  Sprint revenues increased by $49.0 million, Cardinal Contractors revenues increased $12.2 million and revenues for the JCG Industrial division increased by $35.8 million.  These increases were offset by revenue decreases at the JCG Heavy Civil division of $40.6 million and a $9.3 million reduction at the JCG Infrastructure and Maintenance division, both as a result of weather and delays on project startup.  Compared to the first nine months of 2012, revenues at the JCG Heavy Civil division from LADOT decreased by $76.1 million while revenues from TXDOT increased by $43.9 million.

Gross profit decreased by $6.6 million, or 14.0%, for the nine months ended September 30, 2013 compared to the same period of the prior year.  The acquisitions of Saxon and FSSI contributed $0.5 million in gross profit.  Increased revenues at Cardinal Contractors added $1.7 million to gross profit and $4.4 million to the JCG Industrial division gross profit.  These increases in gross profit were offset by a decrease of $12.8 million at the JCG Heavy Civil division reflecting the significant reduction in revenues and the start-up nature of the TXDOT projects.

Gross profit as a percentage of revenues decreased to 7.5% for the nine months ended September 30, 2013 compared to 10.3% in the same period in the previous year.  In addition to the reduction in revenues, the gross profit margin percentage decrease was impacted by a gross margin percentage reduction from 21.2% to 10.4% at Sprint due to reduced productivity, adverse weather conditions and project delays.

West Segment

Revenue and gross profit for the West segment for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	362,362			$	242,033
Gross profit	62,520		17.3	%	35,602		14.7	%

Revenue for the West segment increased by $120.3 million, or 49.7%, for the three months ended September 30, 2013, compared to the same period in 2012.  The Q3C acquisition added revenues of $62.0 million.  Excluding Q3C, the revenue increase was $58.3 million or 24.1%.  Rockford revenues increased by $67.0 million, and parking structure projects added $1.2 million.  The Rockford increase is primarily attributable to pipeline construction projects for major gas pipeline operating companies in the Pennsylvania shale and Ohio areas.  These increases were offset by decreases in the ARB Underground division of $8.0 million and a decrease of $1.8 million for the ARB Industrial division.  The reduced revenues at ARB Underground are primarily the result of a $15.9 million reduction in revenues from its largest customer, and the reduction at ARB Industrial reflects the completion of power plant projects at the end of 2012 and during the current quarter.

Gross profit for the West segment increased by $26.9 million, or 75.6%, during the three months ended September 30, 2013, compared to the same period in 2012.  Gross profit at Q3C was $16.1 million while gross profit excluding Q3C increased by $10.8 million, or 30.4%.  The increases were mainly due to increased profit at the ARB Industrial division of $17.6 million as a result of the completion of field work at the NRG facility.  Gross profit at the ARB Underground division decreased by $4.2 million mainly due to lower revenues and a reduction in expected profit at a wastewater collection system project in central California.  Gross profit at Rockford declined by $2.6 million due to adverse weather conditions and technical complications on a large Ohio project.

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Gross profit as a percentage of revenue increased to 17.3% during the three months ended September 30, 2013, from 14.7% in the same period in 2012. The increased percentage was due primarily to the impact of the completion of field work at the ARB Industrial NRG power plant project.

	Nine months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	828,242			$	567,351
Gross profit	133,195		16.1	%	84,297		14.9	%

Revenue for the West segment increased by $260.9 million, or 46.0%, for the nine months ended September 30, 2013, compared to the same period in 2012.  Of this increase, $118.2 million was attributable to the acquisition of Q3C.  Excluding Q3C, the revenue increase was $142.7 million, or 25.2%.  Rockford’s revenues increased by $161.9 million and parking structure projects increased by $7.9 million.  These increases were offset by decreases at ARB Underground of $17.4 million and at ARB Industrial of $9.8 million.  The ARB Underground decrease was primarily the result of a decrease of $14.1 million to $114.9 million from its largest customer while the ARB Industrial decrease reflects the reduced activity level at two power plant projects.

Gross profit for the West segment increased by $48.9 million, or 58.0%, during the nine months ended September 30, 2013, compared to the same period in 2012.  Goss profit at Q3C was $21.2 million for the period.  Excluding Q3C, gross profit for the West increased by $27.7 million, or 32.9%.  Gross profit increased at ARB Industrial by $29.1 million and ARB Structures by $1.4 million, offset by reductions in margins at ARB Underground of $3.4 million.  The increased margin at ARB Industrial division resulted from elimination of contingency amounts with the completion of filed work for the NRG facility while the reduced margin at the ARB Underground division reflected the lower level of revenues.

Gross profit as a percentage of revenue increased to 16.1% during the nine months ended September 30, 2013, from 14.9%, in the same period of 2012. The increased percentage was due primarily to the impact of the ARB Industrial NRG power plant project.

Engineering Segment

Revenue and gross profit for the Engineering segment for the three and nine months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	10,255			$	8,549
Gross profit	2,345		22.9	%	2,025		23.7	%
	Nine months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Revenue	$	33,774			$	34,333
Gross profit	7,093		21.0	%	6,152		17.9	%

Revenue for the Engineering segment increased by $1.7 million, or 20.0%, for the three months ended September 30, 2013, and decreased by $0.6 million, or 1.6%, for the nine months ended September 30, 2013, compared to the same periods in 2012. The increase  in the third quarter of 2013 is mainly due to the increase in new sales bookings, which is expected to continue for the rest of 2013.

Gross profit for the Engineering segment for the three months ended September 30, 2013 increased by $0.3 million, compared to the same period in 2012.  For the nine months ended September 30, 2013, gross profit increased by $0.9 million, or 15.3%, compared to the same period in 2012.

Geographic area financial information

Revenue by geographic area for the nine months ended September 30, 2013 and 2012 was as follows:

	Nine months Ended September 30,
	2013				2012
	(Thousands)		% of Revenue		(Thousands)		% of Revenue
Country:
United States	$	1,393,837	99.1	%	$	1,053,547	99.3	%
Non—United States	12,504		0.9	%	7,304		0.7	%
Total revenues	$	1,406,341	100.0	%	$	1,060,851	100.0	%

33

All non-United States revenue was generated in the Engineering Segment.  For the table above, we use revenues from OnQuest’s Canadian subsidiary, OnQuest Canada, ULC, to estimate non-United States revenues.  Traditionally, most of OnQuest Canada’s work has been done in the Far East and Australia.

Backlog

For companies in the construction industry, backlog can be an indicator of the future revenue stream. Different companies define and calculate backlog in different manners. For the past few years, we considered backlog as the anticipated revenue from the uncompleted portions of existing contracts for which we had known revenue amounts.  Thus, we included in our backlog amount the unearned revenue from our fixed price and fixed unit price contracts. We did not include time-and-equipment, time-and-materials and cost-plus contracts in the calculation of backlog, since their ultimate revenue amount is difficult to determine.  We also did not include any anticipated revenue from our  MSAs until we had been given a specific work order or contract.  An MSA provides a framework for future work in that contractual terms and conditions have been agreed on, but there is not a minimum amount to which a customer commits.  In some instances, no revenues have resulted from a signed MSA.

The following table shows backlog by operating segment at December 31, 2012 and September 30, 2013 and the changes in backlog for the nine months ended September 30, 2013 (in millions):

Segment	Backlog at December 31, 2012		Contract Additions to Backlog		Revenue Recognized from Backlog		Backlog at September 30, 2013		Revenue Recognized from Non-Backlog Projects		Total Revenue for nine months ended September 30, 2013
East	$	970	$	596	$	469	$	1,097	$	75	$	544
West	361		489		535		315		293		828
Engineering	15		55		34		36		—		34
Total	$	1,346	$	1,140	$	1,038	$	1,448	$	368	$	1,406

At September 30, 2013, our total backlog was $1.45 billion representing an increase of $102 million, or 7.6%, from $1.35 billion at December 31, 2012.  We expect that during the next four quarters, we will recognize as revenue approximately 60% of the East backlog; approximately 98% of the West backlog and approximately 91% of the Engineering backlog at September 30, 2013.

With the acquisitions of Sprint and Q3C, we have increased the percentage of revenues derived from MSAs.  For the first nine months of 2013, Q3C derived approximately 75% of its revenue from MSAs, Sprint derived approximately 25% of its revenue from MSAs and ARB derived approximately 53% of its revenue from MSAs.

The following table shows MSA revenue ($ in millions) for the past seven quarters:

	2013		2012
MSA Revenue:
First Quarter	$	98	$	73
Second Quarter	123		88
Third Quarter	131		111
Fourth Quarter	N/A		139

Starting in the second quarter of 2013, we changed our backlog calculation to include an estimated level of MSA revenues for the next four quarters.  The following table shows the revised backlog by operating segment at September 30, 2013 (in millions).

Segment	Revised Backlog at June 30, 2013		Additions		Revenue Recognized in Third Quarter 2013		Revised Backlog at September 30, 2013
East	$	1,091	$	281	$	179	$	1,193
West	690		366		362		694
Engineering	22		24		10		36
Total	$	1,803	$	671	$	551	$	1,923

We expect that during the next four quarters, we will recognize as revenue approximately 63% of the East revised backlog; approximately 99% of the West revised backlog and approximately 91% of the Engineering revised backlog at September 30, 2013.

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Backlog should not be considered a comprehensive indicator of future revenues.  The backlog estimates include amounts from estimated MSA revenues, but our customers are not contractually obligated to purchase an amount of services from us under the MSAs.  Any of our contracts, MSA, fixed price or fixed unit price, may be terminated by our customers on relatively short notice. In the event of a project cancellation, we may be reimbursed for certain costs, but typically we have no contractual right to the total revenues reflected in backlog.  Projects may remain in backlog for extended periods of time as a result of customer delays, regulatory requirements or project specific issues.  Even with the inclusion of estimated MSA amounts, future revenues from projects completed under time-and-equipment, time-and-materials and cost-reimbursable-plus-fee contracts are not included in our estimated backlog amount.

Our estimated backlog amount does not include anticipated contract awards.

Liquidity and Capital Resources

Liquidity represents our ability to pay our liabilities when they become due, fund business operations, meet our contractual obligations and execute our business plan.  Specifically, we need liquidity for working capital, income taxes, debt service, capital expenditures and earn-out obligations.  Our primary sources of liquidity are our cash balances at the beginning of each period and our net cash flow; however, we have availability under our lines of credit and shelf facility to meet additional liquidity needs.  In order to maintain sufficient liquidity, we evaluate our working capital requirements on a regular basis.  We may elect to raise additional capital by issuing common stock, convertible notes, term debt or increasing our credit facility as necessary to fund our operations or to fund the acquisition of new businesses.

At September 30, 2013, our balance sheet included cash and cash equivalents of $174.0 million.  We currently have the following credit facilities:

·a $75 million credit facility that expires on December 28, 2017, under which we can issue letters of credit for up to the full amount of the facility.  At September 30, 2013, we have issued letters of credit of $4.8 million on this facility, resulting in $70.2 million in available borrowing capacity. The credit agreement also provides for an incremental facility of up to $50 million;

·a $10 million (Canadian dollars) facility for commercial letters of credit in Canada.  The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years.  At September 30, 2013, $3.4 million of letters of credit (Canadian dollars) were outstanding, with $6.6 million (Canadian dollars) available under this credit facility for additional letters of credit.

We believe that with our cash on hand, short-term investments, operating cash flows and availability under our existing credit facilities, that we will be able to support our ongoing working capital needs for the next twelve month period.

Cash Flows

Cash flows during the nine months ended September 30, 2013 and 2012 are summarized as follows:

	Nine months Ended September 30,
	2013			2012
	(Thousands)
Change in cash:
Net cash (used in) provided by operating activities	$	20,675		$	19,272
Net cash (used in) provided by investing activities	(64,206		)	(37,527		)
Net cash provided by (used in) financing activities	60,014			(25,397		)
Net change in cash and cash equivalents	$	16,483		$	(43,652	)

Operating activities

The sources and uses of our cash flow from operating activities for the nine months ended September 30, 2013 are as follows:

	Nine months Ended
	September 30,
	2013			2012			Change
	(Thousands)
Operating Activities:
Operating income	$	84,441		$	68,207		$	16,234
Depreciation and amortization	36,579			25,388			11,191
Impairment expense	3,250			—			3,250
Stock-based compensation expense	229			—			229
Gain on sale of property and equipment	(1,176		)	(2,396		)	1,220
Changes in assets and liabilities	(70,350		)	(44,420		)	(25,930		)
Non-consolidated entity distributions	3,186			1,260			1,926
Other expense, net	(806		)	(991		)	185
Interest expense, net	(4,406		)	(2,901		)	(1,505		)
Provision for income taxes	(30,272		)	(24,875		)	(5,397		)
Net cash provided by operating activities	$	20,675		$	19,272		$	1,403

35

One of the components of the $20.7 million net cash provided by operations was the $70.4 million change in assets and liabilities for the nine months ended September 30, 2013.  The change is summarized as follows:

·a $20.0 million decrease in customer retention deposits representing both normal retention payments and release of the $5 million escrow associated with the Rockford note;

·a $16.4 million increase in accounts receivable as a result of the $70 million increase in revenues for the current quarter compared to the fourth quarter of 2012.  At September 30, 2013, accounts receivable represented 27.9% of our total assets compared to 28.8% at the end of 2012.  We continue to maintain an excellent collection history, and we have certain lien rights that can provide additional security for collections;

·a $38.7 million increase in costs and estimated earnings in excess of billings. Increases from a time lag from when revenues were earned until the customer can be billed were approximately $13.6 million for the ARB Underground division, $8.1 million for Q3C and $6.2 million for JCG.  Additionally, a fixed fee contract with billing allowed at certain milestones resulted in an increase of approximately $8.1 million at Rockford;

·an increase in other current assets of $8.7 million primarily as a result in customer held inventory and prepaid expenses;

·accounts payable decreased by $32.6 million.  As noted in both the 2012 Annual Report and the subsequent quarterly reports, increased operating activity at the end of the year had resulted in an unusually high level of accounts payable at the end of 2012.  Accounts payable aging at the end of September 2013 reflect more historical aging of accounts payable;

·a net decrease of $11.4 million in billings in excess of costs and estimated earnings reflecting the timing of work progression and billings;

·a $9.3 million decrease in contingent earn-out liabilities, as a result of payments made in April 2013; and,

·a net increase of $26.6 million in accrued expenses, mainly due to an increase in the insurance reserve and premiums payable, and payroll and related employee benefits, reflecting our increased operating levels for the quarter.

During the first nine months of 2013, we paid $32.3 million for income taxes compared to $18.1 million in the same period of the previous year, as a result of taxes on increased income for the nine months ended September 30, 2013, compared to the same period in 2012, which included the additional activities of the acquisitions of Sprint, Saxon, Q3C and FSSI.

Investing activities

During the nine months ended September 30, 2013, we purchased property and equipment for $71.2 million, with $68.7 million in cash and $2.5 million through capital leases.  This compares to $25.6 million during the same period in 2012, with $23.7 million in cash and $1.9 million through capital leases.  These purchases were primarily for construction equipment.

As part of our normal equipment upgrade program, during the nine months ended September 30, 2013, we received proceeds from the sale of used equipment of $6.6 million compared to $7.7 million for same period in 2012.

For the past few years, it has been our practice to invest in property and equipment on a net basis at a level approximating our combined depreciation and amortization expense levels.  In the first nine months of 2013, we invested $25.7 million in equipment at Q3C.  This investment was made to allow Q3C to expand its operations for both new and ongoing customer opportunities.  Excluding the Q3C amounts, our equipment purchase level is reasonably close to our past practice.  With the Q3C purchases, we expect that our net purchases for 2013 will be approximately $80 million.

We believe the ownership of equipment is generally preferable to renting equipment on a project by project basis, as ownership helps to ensure the equipment is available for our workloads when needed.  In addition, ownership has historically resulted in lower overall equipment costs.

We invest excess cash in short-term investments consisting primarily of CDs purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government.

36

During the first nine months of 2013, our sale of short-term investments and movement to cash was $5.9 million compared to sales and movements to cash of $23.0 million in the same period of 2012.

In March 2013, we paid $1.7 million in cash for the acquisition of FSSI and in third quarter, made an additional post-closing payment of $0.6 million for the acquisition of Q3C.

Financing activities

Financing activities provided $60.0 million of cash during the nine months ended September 30, 2013.  Significant transactions providing and using cash flows from financing activities included:

·$97.0 million proceeds from the issuance of long term debt as follows:

·Six equipment notes, with interest ranging from 1.78% (for 60 months) to 2.45% (84 months), totaling $72.0 million, secured by construction equipment

·$25 million drawn in the third quarter under the Notes Agreement;

·$32.6 million in repayment of long-term debt and capital leases;

·$1.45 million in proceeds from the issuance of 131,989 shares purchased by the participants in the Primoris Long-Term Retention Plan;

·dividends paid of $3.35 million; and,

·a $2.5 million payment of accumulated earnings to a non-controlling interest holder.

Credit agreements

For a description of our credit agreements, see Note 11 — “Credit Arrangements” in Item I of the Financial Statements.

Related party transactions

Primoris has entered into leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Executive Vice President and General Counsel, is secretary of SIGI.

Primoris leases properties from SIGI at the following locations:

·Bakersfield, California (lease expires October 2022)

·Pittsburg, California (lease expires April 2023)

·San Dimas, California (lease expires March 2019)

·Pasadena, Texas (leases expire in July 2019 and 2021)

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  The project was substantially completed in December 2011.  The Company recognized no revenues or profits in 2013 and recognized revenues of $362,000 for the nine months ended September 30, 2012, at normal margins.

During the nine months ended September 30, 2013 and 2012, the Company paid $688,000 and $695,000, respectively, in lease payments to SIGI for the use of these properties.

Primoris leases a property from Roger Newnham, a former owner and current manager of our subsidiary, OnQuest Canada, ULC. The property is located in Calgary, Canada. During the nine months ended September 30, 2013 and 2012, Primoris paid $223,000 and $212,000, respectively, in lease payments.  The current term of the lease is through December 31, 2014.

Primoris leases a property from Lemmie Rockford, one of the Rockford sellers, which commenced November 1, 2011.  The property is located in Toledo, Washington.  During the nine months ended September 30, 2013 and 2012, Primoris paid $68,000 and $68,000, respectively, in lease payments.  The lease expires January 15, 2015.

As a result of the November 2012 acquisition of Q3C, the Company became party to leased property from Quality RE Partners, owned by three of the Q3C selling shareholders, of whom two are current employees, including Jay Osborn, President of Q3C.  The property is located in Little Canada, Minnesota.  During the nine months ended September 30, 2013, the Company paid $198,000, in lease payments to Quality RE Partners for the use of this property.  The lease commenced October 28, 2012 and expires in October 2022.

37

The Company owns several non-consolidated investments and has recognized revenues on work performed for those joint ventures.  The Company recognized $129,000 and $0 in related party revenues for the nine months ended September 30, 2013 and 2012, respectively, from the WesPac joint venture.  On November 17, 2012, the Company acquired a 49% interest in Alvah, Inc. as part of the Q3C acquisition.  During the nine months ended 2013, payments made to Alvah as a subcontractor by ARB and Q3C were $5.28 million and $4.12 million, respectively.

Common stock

In March 2013, the Company received $1,455,000 and issued 131,989 shares of common stock under a purchase arrangement within the Company’s Long-Term Incentive Plan for managers and executives.

In March 2013, the Company issued 12,480 shares and in July 2013, issued 9,110 shares of common stock, both as part of the compensation of the non-employee members of the Board of Directors.

With the acquisition of Q3C, the Company agreed to issue shares of common stock with a value of $430,000 based on the average December 2012 closing price, or $14.69 per share.  The Company issued 29,273 unregistered shares of stock in February 2013.

Contractual obligations

A summary of contractual obligations at September 30, 2013 were as follows:

Payments due by period	Total		1 Year		2-3 Years		4-5 Years		After 5 Years
	(Thousands)
Debt and capital lease obligations	$	222,311	$	30,838	$	58,025	$	59,667	$	73,781
Interest on debt and capital lease obligations (1)	28,265		5,921		9,767		6,754		5,823
Equipment operating leases	13,209		5,552		6,870		787		—
Real property leases	11,838		2,951		3,870		3,020		1,997
Real property leases—related parties	6,140		1,542		1,694		1,407		1,497
	$	281,763	$	46,804	$	80,226	$	71,635	$	83,098
Stand-by letters of credit	$	8,122	$	8,122	$	—	$	—	$	—

(1)The interest amount assumes principal payments are made as originally scheduled in the obligations.

Off-balance sheet transactions

The following represent transactions, obligations or relationships that could be considered material off-balance sheet arrangements.

·Letters of credit issued under our lines of credit. At September 30, 2013, we had letters of credit outstanding of $8.1 million, primarily for international projects in our Engineering segment and for providing security to our insurance carriers.

·Equipment operating leases with a balance of $13.2 million at September 30, 2013.

·Employment agreements which provide for compensation and benefits under certain circumstances and which may contain a change of control clause.  We may be obligated to make payments under the terms of these agreements.

·In the ordinary course of our business, we may be required by our customers to post surety bid or completion bonds in connection with services that we provide.  At September 30, 2013, we had $1.45 billion in outstanding bonds.

·Certain of our subsidiaries are parties to collective bargaining agreements with unions.  In most instances, these agreements require that we contribute to multi-employer pension and health and welfare plans.  For many plans, the contributions are determined annually and required future contributions cannot be determined since contribution rates depend on the total number of union employees and actuarial calculations based on the demographics of all participants.  The Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multi-Employer Pension Amendments Act of 1980, subject employers to potential liabilities in the event of an employer’s complete or partial withdrawal of an underfunded multi-employer pension plan.  The Pension Protection Act of 2006 added new funding rules for plan years after 2007 for multi-employer plans that are classified as “endangered”, “seriously endangered”, or “critical” status.  As discussed in footnote 19 of the Financial Statements in Item 1, we have recognized a withdrawal liability for one plan.  We currently do not anticipate withdrawal from any other multi-employer pension plans.  Withdrawal liabilities or requirements for increased future contributions could negatively impact our results of operations and liquidity.

·Other guarantees that we make from time to time, such as guaranteeing the obligations of our subsidiaries.

38

Impact of Inflation

The primary inflationary factors affecting our operations are labor and fuel costs.  The price of fuel is subject to fluctuations for factors beyond our control, but we closely monitor changes and include the available information in our bidding activities.  Some of our longer-term contracts with state departments of transportation include clauses which allow us to recover some of the additional costs incurred due to inflation.  To date, we have not had a significant impact from inflationary pressures on our cost of labor; and at this time, we cannot estimate the impact of government fiscal policies on wage rates in future periods.  In some of our contracts we are responsible for procurement of materials or equipment.  For these contracts, we attempt to reduce the risk of inflation by placing firm price purchase orders, or in some cases, purchasing the materials or equipment at the time of the contract.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

In the ordinary course of business, we are exposed to risks related from financial market conditions. For us, these risks primarily include fluctuations in foreign currency exchange rates, interest rates and commodity prices. From time to time, we may seek to manage these risks through the use of financial derivative instruments such as foreign currency exchange contracts and interest rate swaps.  At September 30, 2013, we had no such derivative financial instruments.

We do not execute transactions or use financial derivative instruments for trading or speculative purposes. We enter into transactions with counter parties that are generally financial institutions in a manner to limit significant exposure with any one party.

Due to their generally short maturities, the carrying amounts for cash and cash equivalents, accounts receivable, short-term debt and accounts payable and accrued liabilities shown in the consolidated balance sheets approximate fair value at September 30, 2013 and December 31, 2012. At September 30, 2013 and December 31, 2012, we held short term investments which were primarily in four to six month certificates of deposits (“CDs”) through the CDARS (Certificate of Deposit Account Registry Service) program and U. S. Treasury bills with various financial institutions that are backed by the federal government FDIC program.  We expect to hold our investments to maturity.

At September 30, 2013, all of our long-term debt was under fixed interest rates.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

As of September 30, 2013, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), of the effectiveness of the design and operation of our “disclosure controls and procedures”, as such term is defined under Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on this evaluation, our CEO and CFO concluded that, at September 30, 2013, the disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and in reaching a reasonable level of assurance our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their stated objectives.

Changes in Internal Control Over Financial Reporting

During the fiscal quarter ended September 30, 2013, there were no changes to our internal control over financial reporting practices or processes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

39

Part II. Other Information

Item 1.  Legal Proceedings

On February 7, 2012, the Company was sued in an action entitled North Texas Tollway Authority, Plaintiff v. James Construction Group, LLC, and KBR, Inc., Defendants, v. Reinforced Earth Company, Third-Party Defendant (the “Lawsuit”). The Lawsuit was brought in the District Court of Collin County, Texas, 401st Judicial District, Cause No. 401-01747-2012.  In the Lawsuit, the North Texas Tollway Authority (“NTTA”) is alleging damages to a road and retaining wall that were constructed in 1999 on the George Bush Turnpike near Dallas, Texas, due to negligent construction by JCG.  The Lawsuit claims that the cost to repair the retaining wall was approximately $5.4 million.  The NTTA also alleges that six other walls constructed on the project by JCG could have the same potential exposure to failure.  The Company has denied any liability, but has tendered the claim to its insurance carriers and has cross-complained against its engineering subcontractor for potential design liability.  The extent of insurance coverage by the carriers of the Company and its subcontractor are undetermined at this time.  The Company has investigated all potential causes of the alleged loss, including design liabilities of the owner, owner’s engineers and/or the Company’s subcontractor.  To date, mediation efforts have not been successful, and a jury trial is likely to be scheduled for 2014.  While the Company will vigorously defend the claims, after discussion with its legal counsel, the Company recorded an accrual amount for this issue.

The Company is subject to other claims and legal proceedings arising out of its business. Management believes that the Company has meritorious defenses to such claims. Although management is unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, management believes that the outcome of these matters will not have a materially adverse effect on the consolidated financial position of the Company.

Item 1A.  Risk Factors.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which to our knowledge have not materially changed. Those risks, which could materially affect our business, financial condition or future results, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

In February 2013, as part of the consideration for the acquisition of Q3C, the Company issued 29,273 shares of unregistered common stock which have no registration rights.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  (Removed and Reserved).

Item 5.  Other Information.

None.

40

Item 6.  Exhibits.

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

Exhibit Number	Description
10.1	Loan Agreement, dated September 17, 2013, by and among Stellaris, LLC, James Construction Group LLC and Rockford Corporation and RBS Asset Finance, Inc. (*)
10.2	Loan and Security Agreement, dated September 20, 2013, by and between PNC Equipment Finance, LLC and Stellaris LLC and Q3 Contracting, Inc. (*)
10.3	Contribution Agreement, dated as of September 30, 2013, by and among WesPac Energy LLC, Kealine Holdings LLC, Primoris Services Corporation and WesPac Midstream LLC and Highstar WesPac Main Interco LLC and Highstar WesPac Prism/IV-A Interco LLC (*)
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Financial Officer
32.1	Section 1350 Certification by the Registrant’s Chief Executive Officer
32.2	Section 1350 Certification by the Registrant’s Chief Financial Officer
101 INS	XBRL Instance Document (**)
101 SCH	XBRL Taxonomy Extension Schema Document (**)
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document (**)
101 LAB	XBRL Taxonomy Extension Label Linkbase Document (**)
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document (**)
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document (**)

(*)

Filed herewith

(**)

Furnished with this Quarterly Report on Form 10-Q and included in Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language):  i) the Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, ii) the Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2013 and 2012 and iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012.  Users of the XBRL data are advised that pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and therefore is not subject to liability under these sections.

41

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PRIMORIS SERVICES CORPORATION
Date:  November 5, 2013	/s/ PETER J. MOERBEEK
	Peter J. Moerbeek
	Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

42

EXHIBITS ATTACHED TO THIS QUARTERLY REPORT ON FORM 10-Q

Exhibit Number	Description
10.1	Loan Agreement, dated September 17, 2013, by and among Stellaris, LLC, James Construction Group LLC and Rockford Corporation and RBS Asset Finance, Inc. (*)
10.2	Loan and Security Agreement, dated September 20, 2013, by and between PNC Equipment Finance, LLC and Stellaris LLC and Q3 Contracting, Inc. (*)
10.3	Contribution Agreement, dated as of September 30, 2013, by and among WesPac Energy LLC, Kealine Holdings LLC, Primoris Services Corporation and WesPac Midstream LLC and Highstar WesPac Main Interco LLC and Highstar WesPac Prism/IV-A Interco LLC (*)
31.1	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification by the Registrant’s Chief Financial Officer
32.1	Section 1350 Certification by the Registrant’s Chief Executive Officer
32.2	Section 1350 Certification by the Registrant’s Chief Financial Officer
101 INS	XBRL Instance Document (**)
101 SCH	XBRL Taxonomy Extension Schema Document (**)
101 CAL	XBRL Taxonomy Extension Calculation Linkbase Document (**)
101 LAB	XBRL Taxonomy Extension Label Linkbase Document (**)
101 PRE	XBRL Taxonomy Extension Presentation Linkbase Document (**)
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document (**)

(*)

Filed herewith

(**)

Furnished with this Quarterly Report on Form 10-Q and included in Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language):  i) the Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012, ii) the Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2013 and 2012 and iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012.  Users of the XBRL data are advised that pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, and therefore is not subject to liability under these sections.

43

EX-10.1

Exhibit 10.1

LOAN AGREEMENT

dated as of September 17, 2013

among

STELLARIS LLC, JAMES CONSTRUCTION GROUP L.L.C. and ROCKFORD CORPORATION
 jointly and severally, as Borrower

and

RBS ASSET FINANCE, INC.,as Lender

ARTICLE I:  DEFINITIONS AND ACCOUNTING TERMS
Section 1.01.	Defined Terms	1
Section 1.02.	Rules of Construction	4
Section 1.03.	Accounting and Financial Determinations	4
ARTICLE II: THE LOANS
Section 2.01.	Loans	4
Section 2.02.	Note	5
Section 2.03.	Scheduled Payments	5
Section 2.04.	Prepayments	5
Section 2.05.	Interest Provisions	5
Section 2.06.	Payments Absolute	6
Section 2.07.	Increased Capital Costs	6
Section 2.08.	Taxes	6
Section 2.09.	Joint and Several Liability	7
ARTICLE III
CONDITIONS TO LOANS		7
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER		8
ARTICLE V
SECURITY INTEREST		10
ARTICLE VI: COVENANTS
Section 6.01.	Affirmative Covenants	10
Section 6.02.	Negative Covenants	12
Section 6.03.	Indemnity	13
Section 6.04.	Performance by Lender	13
ARTICLE VII: EVENTS OF DEFAULT
Section 7.01.	Events of Default	14
Section 7.02.	Remedies	15
Section 7.03.	Use of Proceeds	15
ARTICLE VIII: MISCELLANEOUS PROVISIONS
Section 8.01.	Waivers, Amendments	15
Section 8.02.	Notices	15
Section 8.03.	Severability	16
Section 8.04.	Execution in Counterparts	16
Section 8.05.	Further Assurance and Corrective Instruments	16
Section 8.06.	Time of the Essence	16
Section 8.07.	Entire Agreement	16
Section 8.08.	Governing Law	16
Section 8.09.	Successors and Assigns; Assignments by Lender	16
Section 8.10.	Assignments, Participations and Securitizations	16
Section 8.11.	Waiver of Jury Trial	17
Section 8.12.	Forum Selection and Consent to Jurisdiction	17
Section 8.13.	Waiver of Certain Claims	17

SCHEDULES

SCHEDULE I	-	Additional Definitions
SCHEDULE II	-	Additional Conditions Precedent
SCHEDULE III	-	Financial Covenants
SCHEDULE IV	-	Disclosure Statements
SCHEDULE V	-	List of Subsidiaries

ii

LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) dated as of September 17, 2013 among STELLARIS LLC, a Nevada limited liability company (together with its successors and assigns, “Stellaris”), JAMES CONTRUCTION GROUP, L.L.C. a Florida limited liability company (together with its successors and assigns, “James”) and ROCKFORD CORPORATION a Oregon corporation (together with it succesors and assigns, “Rockford”; Stellaris, James and Rockford, jointly and severally, “Borrower”), and RBS ASSET FINANCE, INC., a New York corporation (together with its successors and assigns, “Lender”).

W I T N E S S E T H:

WHEREAS, Borrower desires to obtain one or more loans from Lender in an aggregate principal amount not to exceed the Maximum Principal Amount (as defined below), secured by the Collateral (as defined below).

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises contained in this Agreement, Lender and Borrower agree as follows:

ARTICLE I:  DEFINITIONS AND ACCOUNTING TERMS

Section 1.01.  Defined Terms.  The following terms shall have the following meanings for all purposes of this Agreement:

“Affiliate” means any Person that, directly or indirectly, controls, is controlled by or is under common control with any other Person.  “Controls,” “controlled by” or “under common control with” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person whether by ownership of voting securities, contract or otherwise.  Without limitation, any director, executive officer or beneficial owner of 20% or more of the equity of a Person shall for purposes of this Agreement be deemed to control the other Person.  In no event shall Lender be deemed an “Affiliate” of Borrower.

“Agreement” means this Loan Agreement, as amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.

“Authorizing Entities” has the meaning ascribed to such term in Schedule I hereto.

“Borrower’s State” has the meaning ascribed to such term in Schedule I hereto.

“Business Day” means any day on which Lender is open for business and is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York or Chicago, Illinois.

“Change of Control” means a change in control of Borrower, any Subsidiary or any Guarantor, including, without limitation, a change in control resulting from direct or indirect transfers of voting stock or partnership, membership or other ownership interests, whether in one or a series of transactions.  “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of Borrower, any Subsidiary or any Guarantor, and a Change of Control shall occur if any of the following occurs: (a) any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) acquires, after the date of this Agreement, the beneficial ownership directly or indirectly, of 50% or more of the voting power of the total outstanding stock or other ownership interests of Borrower, any Subsidiary or any Guarantor or (b) the occurrence of an Owner Change.

“Closing Date” means with respect to the initial Loan, the Initial Closing Date, and with respect to any Loan funded after the Initial Closing Date, the date that the proceeds of such Loan are disbursed to, or on behalf of, Borrower.

“Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

“Collateral” means the property described on each Collateral Schedule, which property shall be acceptable to Lender, in its sole discretion, and any other assets of Borrower, any Guarantor or any other Person that are subject to a Lien in favor of Lender pursuant to any Loan Document.

“Collateral Schedule” means each schedule describing Collateral attached to and referencing a Note or Notes and executed by Borrower and Lender.

“Commitment” means Lender’s obligation to make Loans to Borrower pursuant to Section 2.01 in an amount not to exceed the Maximum Principal Amount.

“Commitment Termination Date” means the earliest of (a) the date on which the aggregate Original Principal Amount of all Loans equals the Maximum Principal Amount, (b) the Scheduled Commitment Termination Date, (c) the date that an Event of Default described in subsection (i) of Section 7.01 occurs or (d) the date on which Lender elects to terminate the Commitment following (i) an Event of Default or (ii) the occurrence of a material adverse change in the business, assets or financial condition of Borrower or any Guarantor.

“Corporate Guarantor” means any Guarantor that is not an Individual Guarantor.

“Default” means any Event of Default or any condition, occurrence or event that, after notice or lapse of time or both, would constitute an Event of Default.

“Default Rate” has the meaning ascribed to such term in Section 2.05(c).

“Documentation Fee” has the meaning ascribed to such term in Schedule I hereto.

“Environmental Laws” means (a) all Federal Toxic Waste Laws, (b) all local, state or foreign law, statute, regulation, or ordinance analogous to any of the Federal Toxic Waste Laws and (c) all other federal, state, local, or foreign law (including any common law, consent decrees and administrative orders), statute, regulation, or ordinance regulating, permitting, prohibiting or otherwise restricting the placement, discharge, release, generation, treatment or disposal upon or into any environmental media of any substance, pollutant, contaminant or waste that is now or hereafter classified or considered to be hazardous or toxic; “Environmental Laws” shall also include any and all amendments to any of (a), (b) or (c).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Borrower or any Guarantor, as applicable, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived by the Pension Benefit Guaranty Corporation), (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412 (d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, (d) the incurrence by Borrower, any Guarantor or any of its or their ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, (e) the receipt by Borrower, any Guarantor or any of its or their ERISA Affiliates from the Pension Benefit Guaranty Corporation or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (f) the incurrence by the Borrower, any Guarantor or any of its or their ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan or (g) the receipt by Borrower, any Guarantor or any of its or their ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from Borrower, any Guarantor or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Federal Toxic Waste Laws” means any federal law or implementing regulation regulating any substance, matter, material, waste, contaminant or pollutant, the generation, storage, disposal, handling, release, treatment, discharge or emission of which is regulated, prohibited or limited, including, without limitation: (i) the Resource Conservation and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984, as now or hereafter amended (42 U.S.C. Section 6901 et seq.), (ii) the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act of 1986, as now or hereafter amended (42 U.S.C. Section 9601 et seq.), (iii) the Clean Water Act, as now or hereafter amended (33 U.S.C. Section 1251 et seq.), (iv) the Toxic Substances and Control Act, as now or hereafter amended (15 U.S.C. Section 2601 et seq.) and (v) the Clean Air Act, as now or hereafter amended (42 U.S.C. Section 7401 et seq.).

“Financial Statements” has the meaning ascribed to such term in Schedule I hereto.

“Fixed Rate” has the meaning ascribed to such term in Schedule I hereto.

“GAAP” means generally accepted accounting principles in the United States.

“Guarantor” means each guarantor of the Obligations.

“Guaranty” means one or more instruments by which a Guarantor guarantees the Obligations, in form and substance acceptable to Lender.

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“Indebtedness” means (a) all items of indebtedness or liability which in accordance with GAAP or federal tax law would be included in determining total liabilities as shown on the liabilities side of a balance sheet, (b) indebtedness secured by any mortgage, pledge, lien or security interest existing on property owned by Borrower, whether or not the indebtedness secured thereby shall have been assumed and (c) guaranties and endorsements (other than for purposes of collection in the ordinary course of business) by Borrower and other contingent obligations of Borrower in respect of, or to purchase or otherwise acquire, indebtedness of others.

“Individual Guarantor” means a Guarantor that is a natural person.

“Initial Closing Date” has the meaning ascribed to such term in Schedule I hereto.

“Interim Interest Date” has the meaning ascribed to such term in Schedule I hereto.

“Interim Interest Payment Date” has the meaning ascribed to such term in Schedule I hereto.

“Lien” means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever.

“Loan” means a loan from Lender to Borrower pursuant to this Agreement.

“Loan Documents” means, collectively, this Agreement, each Note, each Loan Request, any Guaranty and each other instrument or document executed or delivered pursuant to or in connection with this Agreement and the other Loan Documents, including, without limitation, any instrument or agreement given to evidence or further secure the Obligations.

“Loan Request” means a Loan Request, duly executed by an authorized officer of Borrower, in form and substance acceptable to Lender.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, properties or condition (financial or otherwise) of Borrower, any Guarantor or any of their Subsidiaries, (b) the ability of Borrower to perform or pay its Obligations or any material Indebtedness in accordance with the terms thereof, (c) the ability of any Guarantor to perform its, his or her obligations under a Guaranty, (d) Lender’s Lien on the Collateral or the priority of such Lien, or (e) the validity or enforceability of any Loan Document or the rights and remedies available to Lender under any Loan Document.

“Maximum Principal Amount” has the meaning ascribed to such term in Schedule I hereto.

“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Note” has the meaning ascribed to such term in Section 2.02.

“Notice Address” has the meaning ascribed to such term in Schedule I hereto.

“Obligations” means, subject to Section 8.10(c), the obligations to make the payment of all indebtedness evidenced by the Notes, together with all extensions, renewals, amendments and modifications thereof and the payment of all other Indebtedness and other sums owed under, and the payment and the performance of all obligations and covenants contained in the Loan Documents, in each case whether now existing or hereafter incurred, direct or indirect, absolute or contingent, and due or to become due, together with all fees and expenses (including, without limitation, all attorneys’ fees and expenses) incurred by Lender in connection with the collection or enforcement of any of the Obligations.

“Organizational Documents” has the meaning ascribed to such term in Schedule I hereto.

“Original Principal Amount” means the aggregate principal balance of each Loan as of the Closing Date for such Loan.

“Owner Change” has the meaning ascribed to such term in Schedule I hereto.

“Payment Date” has the meaning ascribed to such term in Schedule I hereto.

“Permitted Liens” means any of the following:  (a) Liens (other than Liens relating to Environmental Laws) for taxes, assessments or other governmental charges not yet due and payable, (b) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar Liens imposed by law, which are incurred in the ordinary course of business for sums  that are not delinquent, (c) Liens in favor of Lender, and (d) Liens explicitly identified in any Loan Document as “permitted liens.”

“Person” means any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Borrower, any Guarantor or any of its or their ERISA Affiliates is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Prepayment Fee” means with respect to each Loan, the prepayment fee described in the related Note.

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“Scheduled Commitment Termination Date” has the meaning ascribed to such term in Schedule I hereto.

“Stated Maturity Date” means, with respect to each Loan, the scheduled maturity date described in the related Note.

“Subsidiary” means, with respect to any Person (the “Parent”) at any date, (a) any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the Parent in the Parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (b) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors or other governing body of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by the Parent, or by one or more Subsidiaries of such Parent or (c) any partnership, joint venture, limited liability company, or other entity as to which the Parent, or one or more Subsidiaries of such Parent, owns more than a 50% ownership, equity or similar interest or has power to direct or cause the direction of management and policies, or the power to elect the managing partner (or the equivalent), of such partnership, joint venture or other entity, as the case may be.

“UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“Voluntary Prepayment Date” has the meaning ascribed to such term in Schedule I hereto.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.02.  Rules of Construction.

(a)           The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa.  The use herein of a word of any gender shall include correlative words of all genders.

(b)           Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement as originally executed.  The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole.

(c)           The headings or titles of the several articles and sections shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof.

Section 1.03.  Accounting and Financial Determinations.  Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with GAAP consistently applied.  In the event that GAAP changes during the term of this Agreement such that the financial covenants contained herein would then be calculated in a different manner or with different components, Borrower and Lender shall amend such provisions of this Agreement in such respects as necessary to conform the financial covenants as criteria for evaluating the financial condition of Borrower or a Guarantor, as applicable, to substantially the same criteria as were effective prior to such change in GAAP.

ARTICLE II:  THE LOANS

Section 2.01.  Loans.

(a)           Commitment.  Lender hereby agrees, subject to the terms and conditions of this Agreement (including, without limitation, the fulfillment of the conditions set forth in Article III or Lender’s written waiver thereof), to make one or more Loans to Borrower from time to time during the period from the Initial Closing Date to the Commitment Termination Date in the aggregate Original Principal Amount not to exceed the Maximum Principal Amount (the “Commitment”).  Not more than one Loan shall be funded in any calendar month, and each Loan shall be in an Original Principal Amount of at least $3,000,000.  The Original Principal Amount of each Loan shall reduce, dollar for dollar, the remaining available amount under the Commitment, and any amount funded may not be reborrowed after being repaid.  The Commitment shall terminate automatically and without any further action on the Commitment Termination Date.  Borrower’s obligation to repay a Loan shall commence, and interest shall begin to accrue, on the Closing Date of such Loan.

(b)           Loan Request.  By delivering a duly completed and executed Loan Request to Lender, on a Business Day, Borrower may irrevocably request that a Loan be made on the Closing Date specified in such Loan Request (which date shall be at least two Business Days but no more than 10 Business Days after the date of delivery to Lender of such Loan Request).  On such Closing Date, subject to the terms and conditions contained herein (including, without limitation, the fulfillment of the conditions set forth in Article III or Lender’s written waiver thereof), Lender shall disburse the Original Principal Amount specified in such Loan Request to, or on behalf of, Borrower to the accounts or entities specified in such Loan Request.  Such Loan Request shall specify the applicable Closing Date, the Original Principal Amount of such Loan and the applicable disbursement instructions.  Borrower agrees that the proceeds of all Loans shall be used solely for the purposes described in such Loan Request.

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Section 2.02.  Note.  Each Loan made by Lender under this Agreement shall be evidenced by, and repaid with interest in accordance with, a single promissory note of Borrower in form and substance acceptable to Lender, duly completed, in the principal amount of the Original Principal Amount of such Loan, dated as of the Closing Date for such Loan, made payable to Lender or order, and maturing on the Stated Maturity Date of such Loan or such earlier date pursuant to an acceleration hereunder (the “Note”).

Section 2.03.  Scheduled Payments.  On each Payment Date, Borrower shall pay the aggregate scheduled principal and interest payments owed with respect to each Loan as set forth in the Notes and any prepayment as provided in Section 2.04; provided, however, on the Stated Maturity Date or date of acceleration of a Loan, Borrower shall repay in full the aggregate then outstanding principal amount of such Loan plus all accrued and unpaid interest thereon and all other amounts owed hereunder or under any other Loan Document related to such Loan.

All amounts required to be paid by Borrower hereunder shall be paid in lawful money of the United States of America in immediately available funds to the following account, or to such other account as designated by Lender to Borrower in writing:

Account Name:	RBS Asset Finance Customer Payments
Account Number:	xxxxxx-xxx-x
ABA Number:	xxxxxxxxx
Bank:	RBS Citizens, National Association
	One Citizens Drive
	Riverside, RI 02915
Reference:	Stellaris LLC

Any payment received after 12:00 p.m. New York time will be deemed to be received on the next succeeding Business Day.  Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or the fees hereunder, as the case may be.  All payments shall be applied first to accrued interest and then to principal.

Section 2.04.  Prepayments.

(a)           Voluntary Prepayments.  Prior to the Stated Maturity Date, Borrower may, from time to time on any Payment Date occurring after the Voluntary Prepayment Date, make a voluntary prepayment, in whole but not in part, of the outstanding principal amount of the Loans; provided, however, that (a) any such voluntary partial prepayment shall be made only of a Loan in full; (b) all such voluntary prepayments shall require written notice on or before the date that is 30 calendar days in advance of any prepayment of the Loans; and (c) in connection with each such voluntary prepayment, Borrower shall pay all accrued interest on the outstanding principal amount of the Loan or Loans prepaid, all other amount owed under any Loan Document and, except as otherwise provided in any Loan Document, the aggregate Prepayment Fee for the Loan or Loans prepaid, which shall not be refundable.

(b)           Mandatory Prepayment Upon Acceleration.  Upon any acceleration of any Loan pursuant to Section 7.02, Borrower shall immediately repay all (or if only a portion is accelerated thereunder, such portion of) the Loans then outstanding, including accrued and unpaid interest thereon, plus the aggregate Prepayment Fee for all such Loans and all other amounts owed under the Loan Documents.

Section 2.05.  Interest Provisions.

(a)           Interest on the outstanding principal amount of each Loan shall accrue at a rate per annum equal to the Fixed Rate for such Loan.  Interest shall be computed on the basis of a 360-day year consisting of 12 30-day months. On the Interim Interest Payment Date for a Loan, Borrower shall pay interest accruing on such Loan from the applicable Closing Date through and including the last day of the calendar month immediately preceding the applicable Interim Interest Date.  Interest accruing on each Loan on and after the Interim Interest Date for such Loan shall be payable on each Payment Date or the date of prepayment, as applicable.

(b)           Any payment under a Loan Document that is not paid by Borrower on the due date thereof shall, to the extent permissible by law, bear a late charge equal to the lesser of three cents ($.03) per dollar of the delinquent amount or the lawful maximum, and Borrower shall be obligated to pay the same immediately upon receipt of Lender’s written invoice therefor.

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(c)           Upon the occurrence and during the continuation of any Event of Default or after acceleration, Borrower shall pay interest (i) with respect to all Loans at a rate per annum equal to the rate otherwise in effect plus an additional 3% per annum and (ii) with respect to all other Obligations of Borrower to Lender at a rate per annum equal to the highest Fixed Rate then in effect plus an additional 3% per annum (each such rate, a “Default Rate”).

(d)           The obligations of Borrower hereunder and under the Notes and the other Loan Documents shall be subject to the limitation that payments of interest to Lender, plus any other amounts paid to Lender in connection herewith and therewith, shall not be required to the extent (but only to the extent) that contracting for and receiving such payment by Lender would be contrary to the provisions of any law applicable to Lender limiting the highest rate of interest which may be contracted for, charged or received by Lender, and in such event Borrower shall pay such Lender interest and other amounts at the highest rate permitted by applicable law.

Section 2.06.  Payments Absolute.  The obligations of Borrower to pay interest and principal required under this Article II and to make other payments under the Loan Documents and to perform and observe the covenants and agreements contained herein and therein shall be absolute and unconditional in all events, without abatement, diminution, deduction, setoff or defense for any reason, including, without limitation, any failure of the Collateral to be delivered, installed or constructed, as applicable, any defects, malfunctions, breakdowns or infirmities in the Collateral or any accident, condemnation, destruction or unforeseen circumstances.  Notwithstanding any dispute between Borrower and Lender or any other person, Borrower shall make all payments under the Loan Documents when due and shall not withhold any payments pending final resolution of such dispute, nor shall Borrower assert any right of set-off or counterclaim against its obligation to make such payments required under the Loan Documents.

Section 2.07.  Increased Capital Costs.  If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or expected to be maintained by Lender or any Person controlling Lender, and Lender determines that the rate of return on its or such controlling Person’s capital as a consequence of its Commitment or the Loans made by Lender is reduced to a level below that which Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by Lender to Borrower, Borrower shall immediately pay directly to Lender additional amounts sufficient to compensate Lender or such controlling Person for such reduction in rate of return.  A statement of Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on Borrower.  In determining such amount, Lender may use any method of averaging and attribution that it shall deem applicable.

Section 2.08.  Taxes.

(a)           Withholding Taxes.  Any and all payments by Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder and under the Loan Documents shall be made free and clear of and without deduction for any present or future taxes, levies, imposts, deductions, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by Lender’s gross or net income or receipts by the jurisdiction under the laws of which Lender is organized or any political subdivision thereof or in which Lender is maintaining a lending office (such non-excluded items are referred to herein as “Taxes”).  In the event that any withholding or deduction from any payment to be made by Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then Borrower will (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) promptly forward to Lender an official receipt or other documentation satisfactory to Lender evidencing such payment to such authority; and (iii) pay to Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by Lender will equal the full amount Lender would have received had no such withholding or deduction been required (including penalties, interest, additional taxes and expenses (including reasonable attorney’s fees and expenses) arising therefrom or with respect thereto).

(b)           Other Taxes.  In addition, Borrower shall pay any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Note or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (collectively, “Other Taxes”).

(c)           Tax Indemnity.  Borrower shall indemnify Lender for the full amount of Taxes and Other Taxes (including, without limitation, any amounts paid by Lender) and any liability (including, without limitation, penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto.  This indemnification shall be made within 30 days from the date Lender makes written demand therefor and shall survive the termination of this Agreement.

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Section 2.09.  Joint and Several Liability.  The obligations of Stellaris LLC, James Construction Group, L.L.C. and Rockford Corporation (each, a “Co-Borrower”) under each Loan Document are joint and several.  Each reference to the term “Borrower” in each Loan Document shall be deemed to refer to each Co-Borrower; each representation and warranty made by Borrower in any Loan Document shall be deemed to have been made by each Co-Borrower; each covenant and undertaking on the part of Borrower under each Loan Document shall be deemed individually applicable with respect to each Co-Borrower; and each event constituting an Event of Default under this Agreement shall be determined with respect to each Co-Borrower.  A separate action or actions may be brought and prosecuted against any Co-Borrower whether an action is brought against any other Co-Borrower or whether any other Co-Borrower is joined in any such action or actions.  Each Co-Borrower waives any right to require Lender to:  (a) proceed against any other Co-Borrower; (b) proceed against or exhaust any security held from any other Co-Borrower; or (c) pursue any other remedy in Lender’s power whatsoever.  Notices under any Loan Document required to be provided to Borrower shall be effective if provided to any Co-Borrower.  Any consent on the part of Borrower under any Loan Document shall be effective when provided by any Co-Borrower, and Lender shall be entitled to rely upon any notice or consent given by any Co-Borrower as being notice or consent given by Borrower hereunder.

In the event any obligation of Borrower under any Loan Document is deemed to be an agreement by any Co-Borrower to answer for the debt or default of another Co-Borrower or as a hypothecation of property as security therefor, each Co-Borrower represents and warrants that:  (x) no representation has been made to it as to the creditworthiness of any other Co-Borrower and (y) it has established adequate means of obtaining from each other Co-Borrower on a continuing basis, financial or other information pertaining to each other Co-Borrower’s financial condition.  Each Co-Borrower expressly waives diligence, demand, presentment, protest and notice of every kind and nature whatsoever, consents to the taking by Lender of any additional security for the Obligations, or the alteration or release in any manner of any security now or hereafter held in connection with any Obligations, and consents that Lender and any Co-Borrower may deal with each other in connection with said obligations or otherwise, or alter any contracts now or hereafter existing between them, in any manner whatsoever, including, without limitation, the renewal, extension, acceleration, changes in time for payment, and increases or decreases in any rent, rate of interest or other amounts owing, all without in any way altering the liability of any Co-Borrower, or affecting any security for such obligations.  Should any default be made in the payment of any such Obligations or in the terms or conditions of any Loan Document, Lender is hereby expressly given the right, at its option, to proceed in the enforcement of such Obligations or Loan Document independently of any other remedy or security it may at any time hold in connection with such Obligations and it shall not be necessary for Lender to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce its rights against any Co-Borrower.  Each Co-Borrower further waives any right of subrogation, reimbursement, exoneration, contribution, indemnification, setoff or other recourse in respect of sums paid to Lender by any Co-Borrower.

ARTICLE III:  CONDITIONS TO LOANS

Lender’s agreement to make the Loans to Borrower hereunder and to disburse the proceeds thereof shall be subject to the condition precedent that Lender shall have received, on or prior to the applicable Closing Date (or by such other time as may be specified herein with respect thereto), all of the following, each in form and substance satisfactory to Lender:

(a)           This Agreement and all other Loan Documents, properly executed on behalf of Borrower, and each of the exhibits and schedules hereto and thereto properly completed.

(b)           The respective Note, properly executed on behalf of Borrower.

(c)           A Loan Request for each Loan to be funded, duly completed and properly executed on behalf of Borrower.

(d)           A certificate of the Secretary or an Assistant Secretary of Borrower, certifying as to (i) the resolutions of the Authorizing Entities of Borrower, authorizing the execution, delivery and performance of this Agreement, the Note, the other Loan Documents and any related documents, (ii) the Organizational Documents of Borrower, and (iii) the signatures of the officers or agents of Borrower authorized to execute and deliver this Agreement, the Note, the other Loan Documents and other instruments, agreements and certificates on behalf of Borrower.

(e)           Current certified copies of the Organizational Documents of Borrower.

(f)            A Certificate of Good Standing issued as to Borrower by the Secretary of the State of the state of Borrower’s organization not more than 30 days prior to the Closing Date.

(g)           A Certificate of Qualification issued as to Borrower by the Secretary of the State of the state where the Collateral is or will be located not more than 30 days prior to the Closing Date.

(h)           The Guaranties, if any, properly executed by or on behalf of Guarantors.

(i)            A certificate of the Secretary or an Assistant Secretary of any Corporate Guarantor certifying as to (i) the resolutions of the Authorizing Entities of such Guarantor, authorizing the execution, delivery and performance of the Guaranty and any related documents, (ii) the Organizational Documents of Guarantor, and (iii) the signatures of the officers or agents of Guarantor authorized to execute and deliver the Guaranty and other instruments, agreements and certificates on behalf of Guarantor.

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(j)            Current certified copies of the Organizational Documents of any Corporate Guarantor.

(k)           A Certificate of Good Standing issued as to all Corporate Guarantors by the Secretary of the State of the state of such Guarantor’s organization not more than 30 days prior to the Closing Date.

(l)            Opinion of counsel to Borrower and such opinions of local counsel to Borrower, as required by Lender.

(m)          Opinion of counsel to Guarantors, as applicable.

(n)           Certificates of the insurance required hereunder, containing a lender’s loss payable clause or endorsement in favor of Lender.

(o)           A true and correct copy of any and all leases pursuant to which Borrower is leasing any property where the Collateral will be located, together with a landlord’s disclaimer and consent with respect to each such lease.

(p)           A true and correct copy of any and all mortgages, deeds of trust or similar agreements (whether or not Borrower is a party to any such agreement) relating to the Collateral or any property where the Collateral will be located, together with a mortgagee’s waiver or estoppel certificate, as applicable, with respect to each such mortgage, deed of trust or similar agreement.

(q)           The original certificate of title or manufacturer’s certificate of origin and title application if any of the Collateral is subject to certificate of title laws.

(r)            Current searches of appropriate filing offices showing that (i) no state or federal tax liens have been filed and remain in effect against Borrower, and (ii) no financing statements have been filed and remain in effect against Borrower relating to the Collateral except those financing statements filed by Lender.

(s)            Payment, if any, of all of Lender’s other fees, commissions and expenses in connection with the funding of each Loan.  In addition to the foregoing, each time Borrower submits a Loan Request, Borrower shall pay to Lender a fee Documentation Fee.

(t)            Evidence that no Default or event or circumstance that could reasonably be likely to have a Material Adverse Effect has occurred.

(u)           Any other documents or items required by Lender.

(v)           Any other documents or items listed on Schedule II hereto.

ARTICLE IV:  REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

Borrower represents, warrants and covenants for the benefit of Lender, as follows:

(a)           Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.  Borrower is in good standing and is duly licensed or qualified to transact business in each jurisdiction where the nature of its business requires such qualification, except for those jurisdictions in which the failure to qualify could not reasonably be expected to have a Material Adverse Effect.  Borrower’s exact legal name is as set forth on the execution page hereof.

(b)           Borrower has full power and authority and holds all requisite governmental licenses, permits and other approvals to (i) enter into and perform its obligations under this Agreement, the Note and each other Loan Document to which it is a party and to own its property, (ii) use the Collateral and (iii) conduct its business substantially as currently conducted by it, except as to clause (iii) where the failure to hold such licenses, permits and approvals could not reasonably be expected to have a Material Adverse Effect.

(c)           This Agreement, the Note and the other Loan Documents to which it is a party have been duly authorized, executed and delivered by Borrower and constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or effecting the enforcement of creditors’ rights.

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(d)           The execution and delivery of this Agreement, the Note and the other Loan Documents, the consummation of the transactions contemplated hereby and thereby and the fulfillment of the terms and conditions hereof and thereof do not and will not violate any law, rule, regulation or order, conflict with or result in a breach of any of the terms or conditions of any Organizational Document of Borrower or of any corporate restriction or of any agreement or instrument to which Borrower is now a party and do not and will not constitute a default under any of the foregoing or result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Borrower other than Liens in favor of Lender.

(e)           The authorization, execution, delivery and performance of this Agreement, the Note and the other Loan Documents by Borrower do not require submission to, approval of, or other action by any governmental authority or agency, except for such action that has been duly obtained or taken and is in full force and effect.

(f)            Each of the Loan Documents that purports to create a security interest creates a valid first priority Lien on the Collateral subject only to Permitted Liens, securing the payment and performance of the Obligations.

(g)           Except as disclosed on Schedule IV, there is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower, any Guarantor or any of their Subsidiaries, challenging Borrower’s or any Guarantor’s authority to enter into this Agreement, the Note or any of the other Loan Documents or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability of this Agreement, the Note or any of the other Loan Documents, or could reasonably be expected to have a Material Adverse Effect.

(h)           Borrower has good, marketable and insurable title in fee simple to all Collateral that is real property, and good title to all other Collateral, in each case free and clear of all Liens except for Permitted Liens.  With respect to Collateral that is personal property, Borrower owns/leases the real property where the Collateral will be located, subject to no Liens of any kind except for Permitted Liens, and has provided a complete and accurate legal description and the exact name of the fee simple owner of record of such real property, and no person other than Borrower is in occupancy or possession of any portion of such real property.

(i)            Borrower is in compliance with all laws, rules, regulations and orders of governmental authorities applicable to it and its properties except to the extent the non-compliance with which could not reasonably be expected to have a Material Adverse Effect.

(j)            Borrower has heretofore furnished to Lender the Financial Statements and those statements fairly present the financial condition of Borrower and such Guarantor, if any, on the dates thereof and the results of its operations and cash flows for the periods then ended and were prepared in accordance with GAAP.  Since the date of the most recent financial statements, there has been no material adverse change in the business, properties or condition (financial or otherwise) of Borrower or any Guarantor.   Except as disclosed in the Financial Statements or the notes thereto and for the items disclosed on Schedule IV, neither Borrower nor any Guarantor, as of each Closing Date, has or will have any liabilities, contingent or otherwise, that could reasonably be expected to have a Material Adverse Effect.

(k)           Borrower has paid or caused to be paid, and will pay, to the proper authorities when due all federal, state and local taxes required to be withheld by it.  Borrower has filed, and will pay, all federal, state and local tax returns which are required to be filed, and Borrower has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on its books.

(l)            For purposes of Section 9-307 of the UCC, Borrower is and will remain located in the Borrower’s State. Borrower’s residence for federal income tax purposes is located at its Notice Address specified in Schedule I.  Borrower has authorized Lender to file financing statements that are sufficient when filed to perfect the security interests created pursuant to this Agreement and the other Loan Documents.  When such financing statements are filed in the offices noted therein, Lender will have a valid and perfected security interest in the Collateral that constitutes personal property, subject to no other Lien other than Permitted Liens.

(m)          None of the Collateral constitutes a replacement of, substitution for or accessory to any property of Borrower subject to a lien of any kind.

(n)           No ERISA Event has occurred or is reasonably likely to occur with respect to any Plan, and each Plan is in compliance in all material respects with the applicable provisions of ERISA.

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(o)           Borrower has obtained all permits, licenses and other authorizations which are required under all Environmental Laws at Borrower’s facilities or in connection with the operation of its business.  Except as disclosed on Schedule IV, Borrower and all activities of Borrower at its facilities comply with all Environmental Laws and with all terms and conditions of any required permits, licenses and authorizations applicable to Borrower with respect thereto.  Except as disclosed on Schedule IV, Borrower is also in compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in Environmental Laws or contained in any plan, order, decree, judgment or notice of which Borrower is aware.  Except as disclosed on Schedule IV, Borrower is not aware of, nor has Borrower received notice of, any events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance with, or which may give rise to any liability under, any Environmental Laws.

(p)           All factual information heretofor or contemporaneously furnished by or on behalf of Borrower or any Guarantor in writing to Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all other such factual information hereafter furnished by or on behalf of Borrower or any Guarantor to Lender will be, true and correct in every material respect on the date as of which such information is dated or certified, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading.

(q)           None of Borrower, any Guarantor or any of their Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying “margin stock.”  None of the proceeds of any Loan will be used for the purpose of, or be made available by Borrower, any Guarantor or any of their Subsidiaries in any manner to any other Person to enable or assist such Person in, directly or indirectly purchasing or carrying “margin stock”.  Terms for which meanings are provided in F.R.S. Board Regulation T, U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings.

(r)            None of Borrower, any Guarantor or any of their Subsidiaries is an “investment company” nor a “company controlled by an investment company” within the meaning of the Investment Company Act of 1940, as amended, or a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

(s)            Schedule V is an accurate and complete list of all Subsidiaries of Borrower and each Corporate Guarantor and the respective ownership interests therein.

(t)            Borrower and each Guarantor are solvent and will not be rendered insolvent by the Loan Documents or the transactions contemplated thereby and, after giving effect to such transactions, neither Borrower nor any Guarantor will be left with an unreasonably small amount of capital with which to engage in its business, nor does Borrower or any Guarantor intend to incur, or believe that it has incurred, debts beyond its ability to pay as they mature.  Neither Borrower nor any Guarantor contemplates the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Borrower or any Guarantor or any of their assets.  Neither Borrower nor any Guarantor are entering into the transactions contemplated by the Loan Documents with any intent to hinder, delay or defraud any of Borrower’s or any Guarantor’s creditors.

ARTICLE V:  SECURITY INTEREST

This Agreement is intended to constitute a security agreement within the meaning of the UCC.  To secure the payment and performance of the Obligations, Borrower hereby grants to Lender a security interest constituting a first Lien on the Collateral.  Borrower hereby authorizes, and ratifies any previous authorization for, Lender to file UCC financing statements and any amendments thereto describing the Collateral and containing any other information required by the applicable UCC.  Borrower authorizes Lender, and hereby grants Lender a power of attorney (which is coupled with an interest), to file financing statements and amendments thereto describing the Collateral and containing any other information required by the applicable UCC and all proper terminations of the filings of other secured parties with respect to the Collateral, in such form and substance as Lender, in its sole discretion, may determine.  Borrower hereby waives any right that Borrower may have to file with the applicable filing officer, and agrees that it will not file or authorize the filing of, any financing statement, amendment, termination or other record pertaining to the Collateral and/or Lender’s interest therein, except as authorized by Lender in writing.

ARTICLE VI:  COVENANTS

Section 6.01.  Affirmative Covenants.  So long as any Loan shall remain unpaid, Borrower will comply, and shall cause each Guarantor to comply, with the following requirements unless waived by Lender in writing:

(a)           Financial Statements.  Borrower shall deliver to Lender for Borrower and each Corporate Guarantor respectively: (i) as soon as practicable, and in any event within 45 days after the end of each fiscal quarter (other than the last fiscal quarter), unaudited financial statements including in each instance, balance sheets, income statements, and statements of cash flow, on a consolidated and consolidating basis, as appropriate, and separate profit and loss statements

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as of and for the quarterly period then ended and for the fiscal year to date, prepared in accordance with GAAP, and certified by Borrower’s chief financial officer or such Corporate Guarantor’s chief financial officer, as applicable, to be true and correct, (ii) as soon as practicable, and in any event within 90 days after the end of each fiscal year, annual unaudited financial statements (management prepared) for Borrower and audited financial statement for Guarantor, including balance sheets, income statements and statements of cash flow for the fiscal year then ended, on a consolidated and consolidating basis, as appropriate, which have been prepared by the independent accountants of Borrower or such Corporate Guarantor, as applicable, in accordance with GAAP and (iii) as soon as practicable, any certifications required by the Securities and Exchange Commission of the United States (the “SEC”) or by securities laws applicable to Borrower and each Corporate Guarantor concerning financial statements of Borrower or such Corporate Guarantor, as applicable.  Such audited financial statements shall be accompanied by the independent accountant’s opinion, which opinion shall be in form generally recognized as “unqualified.”   Borrower shall be deemed to have complied with the foregoing requirements with respect to Borrower and/or any Corporate Guarantor, as applicable, if such entity files Forms 10-K and 10-Q with the SEC that are publicly available within the time frames set forth above.  Borrower shall cause each Individual Guarantor to deliver such financial information as Lender shall require from time to time.

(b)           Compliance Certificate.  If any financial covenants are set forth on Schedule III, concurrently with the delivery of the financial statements pursuant to subsection (a), Borrower shall deliver to Lender a certificate from Borrower’s chief financial officer or Corporate Guarantor’s chief financial officer, as applicable, containing information (in reasonable detail and with appropriate calculations and computations in all respects reasonably satisfactory to Lender) that demonstrates compliance with the financial covenants set forth on Schedule III.

(c)           Notices.  Borrower shall deliver to Lender each of the following:

(i)            as soon as possible and in any event within three Business Days after the occurrence of a Default, an Event of Default or an event which could reasonably be expected to result in a Material Adverse Effect, a statement of Borrower setting forth reasonably detailed information regarding such Default, Event of Default or event and the action that Borrower has taken and proposes to take with respect thereto;

(ii)           promptly after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting Borrower, any Guarantor or any of their Subsidiaries of the type described in Article IV hereof or which seek a monetary recovery against Borrower, any Guarantor or any of their Subsidiaries in excess of $3,000,000;

(iii)          promptly upon knowledge thereof, notice of any loss, theft or destruction of or material damage to, any accident involving any, and any action, suit or proceeding relating to, Collateral having a value in excess of $250,000;

(iv)          promptly after the amending thereof, copies of any and all amendments to any of its Organizational Documents;

(v)           promptly upon knowledge thereof, notice of the violation by Borrower of any law, rule or regulation applicable to Borrower, which violation could reasonably be expected to have a Material Adverse Effect.

(d)           Compliance with Laws.  Borrower and each of its Subsidiaries shall comply in all material respects with all governmental rules and regulations and all other applicable laws, rules, regulations and orders, including, without limitation, all Environmental Laws.

(e)           Maintenance of Properties.  Borrower shall, at its own expense, maintain, preserve, protect and keep the Collateral in good repair, working order and condition in compliance with all applicable laws, rules, regulations and the requirements of all applicable insurance policies, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times and shall maintain in full force and effect all rights, franchises, permits, licenses, trademarks, tradenames, approvals, authorizations, leases and contracts necessary to carry on its business as presently or proposed to be conducted where the failure to so maintain the same could reasonably be expected to have a Material Adverse Effect.  Borrower will not make any material alterations, modifications or additions to the Collateral which cannot be removed without materially damaging the functional capabilities or economic value of the Collateral unless Lender has provided its prior written consent.

(f)            Insurance.  Borrower shall, at its own expense, procure and maintain continuously in effect: (i) public liability insurance for personal injuries, death or damage to or loss of property arising out of or in any way relating to the Collateral sufficient to protect Lender from liability in all events, and (ii) insurance against such hazards as Lender may require, including, without limitation, all-risk property and casualty insurance, in each case in amounts acceptable to Lender.  All insurance policies required by this Section shall be taken out and maintained with insurance companies

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acceptable to Lender; and shall contain a provision that the insurer shall not cancel or revise coverage thereunder without giving written notice to the insured parties at least 30 days before the cancellation or revision becomes effective.  No insurance shall be subject to any co-insurance clause.  Borrower shall cause Lender to be named as loss payee on all insurance policies relating to any Collateral and shall cause Lender to be named as additional insured under all liability policies, in each case pursuant to appropriate endorsements in form and substance satisfactory to Lender.  Such insurance shall not be affected by any unintentional act or negligence or representation or warranty on the part of Borrower or other owner of the policy or the property described in such policy.  Prior to each Closing Date, Borrower shall deposit with Lender evidence satisfactory to Lender of such insurance and, at least 10 days prior to the expiration thereof, shall provide Lender evidence of all renewals or replacements thereof.  Borrower shall provide or cause to be provided to Lender and to its insurance consultant (or any agent, officer or employee of Lender) such other information relating to its insurance coverage as may be reasonably requested by Lender.

(g)           Books and Records; Inspections.  Borrower will keep books and records that accurately reflect all of its business affairs and transactions.  Borrower will, and will cause each Guarantor to, permit Lender or any of its representatives (including outside auditors), at reasonable times and intervals, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant (and Borrower hereby authorizes such independent accountant to discuss Borrower’s financial matters with Lender or its representatives whether or not any representative of Borrower is present) and to examine (and, at the expense of Borrower, copy extracts from) books or other corporate records (including computer records).  If Lender exercises its rights under this Section following the occurrence of a Default, Borrower shall pay any fees of such independent accountant incurred in connection therewith.

(h)           Perfection of Liens.  Borrower shall take such action as may be necessary or as Lender may request in order to perfect and protect Lender’s Lien on the Collateral.  If requested by Lender, Borrower shall obtain a landlord and/or mortgagee’s consent and waiver with respect to the property where the Collateral is located.  If requested by Lender, Borrower shall conspicuously mark the Collateral with appropriate lettering, labels or tags, and maintain such markings, so as clearly to disclose Lender’s security interest in the Collateral.

(i)            Title.  Borrower will at all times protect and defend, at its own cost and expense, its title from and against all claims, liens and legal processes of creditors of Borrower (other than Lender), and keep all Collateral free and clear of all such claims, liens and processes other than Permitted Liens.

(j)            Financial Covenants.  Borrower agrees to comply with, and to cause each Guarantor to comply with, the financial covenants set forth on Schedule III, if any.

Section 6.02.  Negative Covenants.  So long as the Loan shall remain unpaid, Borrower agrees that unless waived by Lender in writing:

(a)           Liens.  Borrower will not create, incur or suffer to exist any mortgage, deed of trust, pledge, lien, security interest, assignment or transfer in, on or of any of the Collateral except for Permitted Liens.

(b)           Fundamental Changes.  Borrower will not, and will not permit any of its Subsidiaries to, form or acquire any Subsidiary, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its capital stock, or liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), or, other than in the ordinary course of its business, convey, sell assign, lease, transfer, or otherwise dispose of, in one transaction or series of transactions, all or any substantial part of its property or assets, unless Borrower is the surviving entity and the transaction has no Material Adverse Effect on the financial condition of Borrower.

(c)           Sale, Assignment, Substitution of Collateral.  Notwithstanding anything to the contrary in the Loan Documents, Borrower will not, and will not permit any of its Subsidiaries to, sell, transfer, lease, contribute or otherwise convey or dispose of (in each case in one transaction or series of transactions), or grant options, warrants or other rights with respect to (in each case in one transaction or series of related transactions), or agree to do any of the foregoing with respect to, all or any part of the Collateral, except Borrower may lease up to $1,000,000 Acquisition Cost of Collateral to third parties, provided such lessee is organized under the laws of the United States, the terms of such lease do not conflict with the terms of this Agreement, the lease is pursuant to a written agreement which expressly provides that the rights of the lessee are subordinate to the rights of the Lender hereunder and Lender has the right to terminate such lease upon a default by Borrower under this Agreement.  Borrower must assign any lease to Lender and provide Lender with a copy of the lease and the location of the equipment on a quarterly basis.  Further, Notwithstanding anything to the contrary in the Loan Documents, Borrower may with Lender’s prior written consent, substitute any like kind item of Collateral, for another item of “Like Collateral”, which is defined as the same type of equipment as the Collateral, has the same or greater value than the Collateral which is being substituted for (as determined by Lender) and is in the condition required under the Loan Documents.  Further, the Like Collateral (i) must be owned by the Borrower, free and clear of all liens, claims and encumbrances; (ii) will be subject to a Lien in favor of Lender; and (iii) upon transfer will be considered

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Collateral under the Loan Documents.  Borrower agrees to pay all cost and expenses associated with the substitution of Collateral, including without limitation titling fees, UCC search fees and/or UCC filing fees.  Upon the substitution of Collateral in accordance with this paragraph, Lender will take all actions necessary to terminate its Lien with respect to the Collateral being substituted at Borrower’s sole cost and expense.

(d)           Location or Name Changes.  Borrower will not change its location for purposes of Section 9-307 of the UCC or its name in any manner that could make any financing statement filed in connection with any Loan Document seriously misleading within the meaning of Section 9-506 of the UCC or any similar statute, unless it shall have given Lender at least 30 days’ prior written notice thereof.

Section 6.03.  Indemnity.

(a)           Whether or not covered by insurance, Borrower hereby assumes responsibility for and agrees to reimburse Lender, its affiliates and its and their respective officers, directors, employees and agents (individually and collectively, the “Indemnified Parties”) for and will indemnify, defend and hold the Indemnified Parties harmless from and against all liabilities, obligations, losses, damages, penalties, claims, suits, actions, proceedings, judgments, awards, amounts paid in settlements, obligations, debts, diminutions in value, fines, penalties, charges, fees, costs and expenses (including reasonable attorneys’ fees and expenses) of whatsoever kind and nature, imposed on, incurred by or asserted against any Indemnified Party that in any way relate to or arise out of any of the Loan Documents, the transactions contemplated thereby or the Collateral, including, without limitation (collectively, the “Losses”), (i) the selection, manufacture, construction, acquisition, acceptance or rejection of the Collateral, (ii) the ownership of the Collateral, (iii) the delivery, installation, lease, possession, maintenance, use, condition, return or operation of the Collateral, (iv) the condition of the Collateral sold or otherwise disposed of after possession by Borrower, (v) any patent or copyright infringement, (vi) any act or omission on the part of Borrower, Guarantor or any of its or their officers, employees, agents, contractors, lessees, licensees or invitees, (vii) any misrepresentation or inaccuracy in any representation or warranty of Borrower or any Guarantor, or a breach of Borrower or any Guarantor of any of its covenants or obligations under any of the Loan Documents, (viii) any claim, loss, cost or expense involving alleged damage to the environment relating to the Collateral , including, without limitation, investigation, removal, cleanup and remedial costs, (ix) any personal injury, wrongful death or property damage arising under any statutory or common law or tort law theory, including, without limitation, damages assess for the maintenance of a private or public nuisance or for the conducting of an abnormally dangerous activity on or near the Collateral, (x) any past, present or threatened, in writing, injury to, or destruction of, the Collateral, including, without limitation, costs to investigate and assess such injury or damage and (xi) any administrative process or proceeding or judicial or other similar proceeding (including, without limitation, any alternative dispute resolution process and any bankruptcy proceeding) in any way connected with any matter addressed in any of the Loan Documents.

(b)           If any action or proceeding be commenced, to which action or proceeding the Indemnified Parties are made a party by reason of the execution or performance of this Agreement or any other Loan Document, or in which it becomes necessary to defend or uphold the Lien of this Agreement, all sums paid by the Indemnified Parties, for the expense of any litigation to prosecute or defend the rights and Lien created hereby or otherwise, shall be paid by Borrower to such Indemnified Parties, as the case may be, as hereinafter provided.  Borrower will pay and save the Indemnified Parties harmless against any and all liability with respect to any intangible personal property tax or similar imposition of any state or any subdivision or authority thereof now or hereafter in effect, to the extent that the same may be payable by the Indemnified Parties in respect of this Agreement or any Obligation.

(c)           All amounts payable to the Indemnified Parties under this Section shall be deemed Obligations secured by this Agreement and shall be payable immediately upon demand.  In case any action, suit or proceeding is brought against the Indemnified Parties by reason of any such occurrence, Borrower, upon request of such Indemnified Parties, will, at Borrower’s expense, resist and defend such action, suit or proceeding or cause the same to be resisted or defended by counsel designated by Lender.  The obligations of Borrower under this Section shall survive the termination of this Agreement and not be merged with any applicable judgment.  If and to the extent that the foregoing undertaking may be unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Losses that is permissible under applicable law.

Section 6.04.  Performance by Lender.  If Borrower at any time fails to perform or observe any of the covenants or agreements contained in this Agreement, Lender may, but need not, perform or observe such covenant on behalf and in the name, place and stead of Borrower (or, at Lender’s option, in Lender’s name) and may, but need not, take any and all other actions which Lender may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens or encumbrances, the performance of obligations owed to account debtors or other obligors, the procurement and maintenance of insurance, the execution of assignments, security agreements and financing statements, and the endorsement of instruments), and Borrower shall thereupon pay to Lender on demand the amount of all moneys expended and

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all costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by Lender in connection with or as a result of the performance or observance of such agreements or the taking of such action by Lender, together with interest thereon from the date expended or incurred at the lesser of the highest Default Rate then in effect or the highest rate permitted by law.  To facilitate the performance or observance by Lender of such covenants of Borrower, Borrower hereby irrevocably appoints Lender, or the delegate of Lender, acting alone, as the attorney in fact of Borrower with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of Borrower any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Borrower under this Agreement.

ARTICLE VII:  EVENTS OF DEFAULT

Section 7.01.  Events of Default.  Each of the following events or occurrences shall constitute an “Event of Default”:

(a)           Borrower shall default in the payment of any Obligation when due and such failure continues for 10 calendar days;

(b)           Any representation or warranty of Borrower made in any Loan Document or any other writing or certificate furnished by or on behalf of Borrower pursuant to any Loan Document is or shall be incorrect when made in any material respect;

(c)           Borrower shall fail to perform any of its obligations under Section 6.01(c), 6.01(f), 6.01(i), 6.01(j) or 6.02(a);

(d)           Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document (other than items set forth elsewhere in this Section 7.01), and such default shall continue unremedied for a period of 30 days after Borrower has actual knowledge thereof or has received notice by Lender thereof;

(e)           The occurrence of an event of default or a breach or default, after the passage of all applicable notice and cure or grace periods provided therefor, under any other Loan Document or any other agreement between or among Borrower, any Guarantor or any of their Subsidiaries and Lender or any of its Affiliates;

(f)            The occurrence of a default or an event of default (however defined) under any instrument, agreement or other document evidencing or relating to, and the acceleration of, any indebtedness or other monetary obligation of Borrower, any Guarantor or any of their Subsidiaries having a principal amount (including, without limitation, the amount of any outstanding letters of credit), individually or in the aggregate, in excess of $3,000,000;

(g)           Any judgment or order for the payment of money (not paid or fully covered by insurance maintained in accordance with the requirements of this Agreement and as to which the relevant insurance company has acknowledged coverage) in excess of $3,000,000 shall be rendered against Borrower, or $5,000,000 against Guarantor or any of their Subsidiaries;

(h)           The occurrence of any Change in Control;

(i)            Borrower, any Guarantor or any of their Subsidiaries shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or Borrower, any Guarantor or any of their Subsidiaries shall apply for or consent to the appointment of any receiver, trustee or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of Borrower, any Guarantor or any of their Subsidiaries; or Borrower, any Guarantor or any of their Subsidiaries shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against Borrower, any Guarantor or any of their Subsidiaries; or any Individual Guarantor shall become disabled or die;

(j)            Any Loan Document or any Lien granted thereunder shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of Borrower; Borrower, any Guarantor, any of their Subsidiaries or any other party shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Loan Document or any Lien granted thereunder; or any Lien securing (or required to secure) any Obligation shall, in whole or in part, cease to be a first priority perfected Lien subject only to Permitted Liens;

(k)           The occurrence of an ERISA Event that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability under Title IV of ERISA of Borrower or any Guarantor or any of their Subsidiaries in an aggregate amount exceeding $3,000,000;

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(l)            The termination of, or the receipt by Lender of notice of the termination of, any lease with respect to the real property where the Collateral is located; or

(m)          The occurrence of a material adverse change in the business, assets or financial condition of Borrower, any Guarantor or any of their Subsidiaries.

Section 7.02.  Remedies.  (a)  Following the occurrence of an Event of Default described in subsection (i) of Section 7.01, all of the outstanding principal amount of the Loans and other Obligations shall be due and payable and the Commitment (if not theretofore terminated) shall terminate, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, and, as the case may be, the Commitment shall terminate.

(b)  Following the occurrence of any Event of Default and subject to subsection (a) of this Section, Lender may exercise, at its option, concurrently, successively or in any combination, all rights and remedies of a secured party in, to and against the Collateral granted by the UCC or otherwise available at law or in equity, including, without limitation:

(i)            by notice to Borrower, declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitment (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without presentment, notice of dishonor, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, and/or, as the case may be, the Commitment shall terminate;

(ii)           recover all fees and expenses (including, without limitation, reasonable attorneys’ fees) in connection with the collection or enforcement of the Obligations, which fees and expenses shall constitute additional Obligations of Borrower hereunder;

(iii)          take immediate and exclusive possession of the Collateral, which constitutes personal property, or any part thereof, with or without any court order or other process of law and enter the premises where such Collateral is located and remove the same therefrom, or require Borrower to assemble and package such Collateral and make it available to Lender for its possession at a place designated by Lender;

(iv)          sell, lease, sublease, hold or otherwise dispose of all or any part of the Collateral and hold, maintain, preserve and prepare the Collateral for sale until disposed of;

(v)           act as, and Borrower hereby constitutes and appoints Lender, Borrower’s true, lawful and irrevocable attorney-in-fact (which appointment is coupled with an interest) to demand, receive and enforce payments and to give receipts, releases, satisfaction for and to sue for moneys payable to Borrower under or with respect to any of the Collateral, and actions taken pursuant to this appointment may be taken either in the name of Borrower or in the name of Lender with the same force and effect as if this appointment had not been made;

(vi)          sue for specific performance of any Obligation or recover damages for breach thereof; and

(vii)         exercise any one or more of the remedies available under any Loan Document.

Section 7.03.  Use of Proceeds.  Any proceeds received by Lender in exercising the rights and remedies specified in Section 7.02 shall be first applied to pay the costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by Lender as a result of an Event of Default.  Any proceeds remaining after payment of such costs and expenses shall be applied to the satisfaction of the Obligations as determined by Lender in its sole discretion and, unless Lender accepts the Collateral in full or partial satisfaction of the Obligations, any excess proceeds after satisfaction of all Obligations shall be paid to Borrower.

ARTICLE VIII:  MISCELLANEOUS PROVISIONS

Section 8.01.  Waivers, Amendments.  No provision of this Agreement or any of the other Loan Documents shall be deemed waived or amended except by a written instrument setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought.  Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion.  No notice to or demand on Borrower in any case shall entitle it to any notice or demand in similar or other circumstances.

Section 8.02.  Notices.  All notices, certificates, requests, demands and other communications provided for hereunder or under any Loan Document shall be in writing and shall be (a) personally delivered or (b) sent by overnight courier of national reputation, and shall be deemed to have been given on (i) the date received if personally delivered and (ii) the next Business Day if sent by overnight courier.   All communications shall be addressed to the party to whom notice is being given at its Notice Address.

15

If notice to Borrower of any intended disposition of the Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in this Section) at least 10 calendar days prior to the date of intended disposition or other action.

Section 8.03.  Severability.  Any provision of this Agreement or any other Loan Document which is invalid, illegal or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

Section 8.04.  Execution in Counterparts.  This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same document, and any of the parties hereto may execute this Agreement by signing any such counterpart, provided that only the original marked “ORIGINAL: 1 of 4” on the execution page thereof shall constitute chattel paper under the UCC.

Section 8.05.  Further Assurance and Corrective Instruments.  Borrower hereby agrees that it will, from time to time, execute, acknowledge and deliver or authorize, as applicable, or cause to be executed, acknowledged and delivered or authorized, such further acts, instruments, conveyances, transfers and assurances and take such other actions, as Lender reasonably deems necessary or advisable for the implementation, correction, confirmation or perfection of this Agreement or the other Loan Documents and any rights of Lender hereunder or thereunder.  Borrower hereby designates and appoints Lender as its agent, and grants to Lender a power of attorney (which is coupled with an interest), to execute on behalf of Borrower such additional documents and to take such other action.

Section 8.06.  Time of the Essence.  Time is of the essence with respect to the performance by Borrower of the Obligations.

Section 8.07.  Entire Agreement.  This Agreement and the other Loan Documents constitute the entire agreement between Lender and Borrower.  There are no other understandings, agreements, representations or warranties, written or oral, between Lender and Borrower with respect to the subject matter of this Agreement and the other Loan Documents.  Upon the execution and delivery of this Agreement and the other Loan Documents, any proposal or loan commitment with respect to the transactions contemplated by this Agreement shall be deemed null and void and of no further force and effect (except to the extent of the provisions therein concerning any Documentation Fee), and the terms and conditions of this Agreement and the other Loan Documents shall control notwithstanding that such terms and conditions may be inconsistent with or vary from those set forth in such bid proposal or loan commitment.

Section 8.08.  Governing Law.  THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

Section 8.09.  Successors and Assigns; Assignments by Lender.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of Lender.  Lender may assign, in whole or in part, its rights under this Agreement, including, without limitation, in connection with any assignment, participation and/or securitization.  Upon any assignment by Lender of its entire right and interest under the Loan Documents, Lender shall automatically be relieved, from and after the date of such assignment, of any liability for the performance of any obligation of Lender therein.

Section 8.10.  Assignments, Participations and Securitizations.  Borrower acknowledges and agrees that a material inducement to Lender’s willingness to complete the transactions contemplated by the Loan Documents is that Lender may, at any time, complete an assignment, participation or securitization with respect to any Loan Document or any or all of the servicing rights with respect thereto.  In connection with any such assignment, participation or securitization:

(a)           Borrower agrees to cooperate in good faith with Lender, including, without limitation, providing such documents, financial information and other information (“Information”) reasonably requested by Lender or any entity involved with respect to such assignment, participation or securitization;

(b)           Borrower consents to Lender’s providing the Information, including any other information that Lender may now have or hereafter acquire with respect to Borrower or the Collateral to any entity involved with respect to such assignment, participation or securitization;

16

(c)           Notwithstanding anything to the contrary in any Loan Document, in the event that Lender assigns a Note, (i) the related Loan shall be deemed a separate loan that includes and incorporates each term and condition in this Agreement and the other Loan Documents related thereto, (ii) the term “Obligations” as used herein and in the Loan Documents with respect to any assignee shall mean only the Indebtedness and obligations evidenced by or related to the Notes held by the assignee and (iii) the term Collateral as used herein and in the Loan Documents with respect to such assignee shall mean only the Collateral described on the Collateral Schedules that specifically refer to the Notes held by such assignee.

(d)           If at least one, but not all, of the Loans is subject to an assignment, participation or securitization, Borrower, at Lender’s request, shall promptly execute (i) a separate loan agreement with respect to the Loans subject to assignment, participation or securitization which shall be in substantially the same form and substance as this Agreement but shall only apply with respect to Collateral corresponding to such Loans subject to an assignment, participation or securitization and (ii) an amendment to the Loan Documents to delete the Collateral corresponding to the Loans that are subject to assignment, participation or securitization.

Section 8.11.  Waiver of Jury Trial.  LENDER AND BORROWER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, ANY DEALINGS BETWEEN LENDER AND BORROWER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY LOAN DOCUMENT, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LENDER AND BORROWER.  BORROWER ACKNOWLEDGES AND AGREES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY LOAN DOCUMENT, OR TO ANY OTHER DOCUMENT OR AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED TRANSACTION.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 8.12.  Forum Selection and Consent to Jurisdiction.  BORROWER AND LENDER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL MAY BE FOUND.  BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.  BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.  BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

Section 8.13.  Waiver of Certain Claims.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND EACH GUARANTOR SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST LENDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED THEREBY, ANY LOAN OR THE USE OF THE PROCEEDS THEREOF.

[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]

17

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

BORROWER:
STELLARIS LLC
By: PRIMORIS SERVICES CORPORATION
Its Sole Member
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
JAMES CONSTRUCTION GROUP, L.L.C.
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
ROCKFORD CORPORATION
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
LENDER:
RBS ASSET FINANCE, INC.
By:	/s/Misty Watte
Name:	Misty Watte
Title:	Assistant Vice President

SCHEDULE I

The following terms shall have the following meanings:

“Authorizing Entities” means (i) with respect to Borrower, the managing members and, if required, the members of Borrower and (ii) with respect to each Corporate Guarantor, the board of directors and, if required, the shareholders of such Guarantor.

“Borrower’s State” means Nevada for Stellaris, Florida for James and Oregon for Rockford.

“Documentation Fee” means the $250 if the acquisition cost for the Collateral is less than $2,500,000 and $500.00 if the acquisition cost for the Collateral is $2,500,000 or more, as defined in the certain Proposal Letter dated August 21, 2013, from Lender to Borrower relating to the Loans.

“Financial Statements” means the audited financial statement of Borrower and each Guarantor for their fiscal years ended December 31, 2012 and the unaudited financial statement of Borrower and each Guarantor and for the months ended March 31, 2013.

“Fixed Rate” means, with respect to each Loan and each Note, a rate per annum equal to the sum of (i) the three and a half year US Dollar Interest Rate Swap (mid) yield as published on the Bloomberg IRSB 18 page on the applicable Closing Date and (ii) 1.35%, which rate will be set forth in such Note.

“Initial Closing Date” means September 17, 2013.

“Interim Interest Date” means, with respect to each Loan and each Note, the interim interest date described in such Note.

“Interim Interest Payment Date” means, with respect to each Loan and each Note, the interim interest date described in such Note.

“Maximum Principal Amount” means $26,000,000.00

“Notice Address” means with respect to Borrower or Lender, as applicable, the following address, or such other address as such party may designate in writing to the other party:

If to Borrower:	Senior Vice President, Finance
	Stellaris LLC
	26000 Commercenter Drive
	Lake Forest, CA 92630
	Telephone No.: (949) 454-7162
	Facsimile No.: (949) 595-5532
If to Lender:	RBS Asset Finance, Inc.
	71 S. Wacker Drive, Suite 2800
	Chicago, IL 60606
	Telephone No.: (312) 777-3500
	Facsimile No.: (312) 777-4001

“Organizational Documents” means (i) with respect to Borrower, the certificate of formation and limited liability company/operating agreement of Borrower and (ii) with respect to each Corporate Guarantor, the articles of incorporation and by-laws of such Guarantor.

“Owner Change” means Guarantor shall cease to be the record and beneficial owner of at least 100% of equity ownership of Borrower.

“Payment Date” means the first Business Day of each calendar month.

“Scheduled Commitment Termination Date” means March 31, 2014.

“Voluntary Prepayment Date” means the first anniversary of the each Closing Date.

2

SCHEDULE II

ADDITIONAL CONDITIONS PRECEDENT

EQUIPMENT — In addition to the conditions precedent contained in Article III of the Loan Agreement, Borrower shall deliver to Lender, on or prior to the applicable Closing Date, each of the following items, in form and substance acceptable to Lender:

(a)           Manufacturer or supplier invoice(s) and/or bill(s) of sale relating to the Collateral and, if such invoices have been paid by Borrower, evidence of payment therefore.

SCHEDULE III

FINANCIAL COVENANTS

NONE

SCHEDULE IV

DISCLOSURE STATEMENTS

NONE

COLLATERAL SCHEDULE NO. 1

This Collateral Schedule No. 1 dated as of September 17, 2013 (this “Collateral Schedule”) is among STELLARIS LLC, a Nevada limited liability company (together with its successors and assigns, “Stellaris”), JAMES CONSTRUCTION GROUP, L.L.C. a florida corporation (together with its successors and assigns, “James”) and ROCKFORD CORPORATION a Oregon limited liability company (together with its successors and assigns, “Rockford”; Stellaris, James and Rockford,  jointly and severally, “Borrower”), and RBS ASSET FINANCE, INC., a New York corporation (together with its successors and assigns, “Lender”), and is executed in connection with the Loan Agreement dated as of September 17, 2013 (the “Loan Agreement”) between Borrower and Lender and the Note dated as of September 17, 2013 (the “Related Note”) executed by Borrower in favor of Lender, to which this Collateral Schedule is attached.  Capitalized terms used in this Collateral Schedule but not defined herein shall have the meaning ascribed to such terms in the Loan Agreement.

Borrower agrees the Collateral set forth in the attached Exhibit A, which is incorporated herein, is given to secure the payment and performance of all Obligations and all other obligations of Borrower to Lender under any other instrument or agreement, and any renewals, extensions and modifications thereof or thereto; provided, however, that in the event that Lender assigns the Related Note, (a) the related Loan shall be deemed a separate loan that includes and incorporates each term and condition in the Loan Agreement and the other Loan Documents related thereto, (ii) the term “Obligations” as used in the Loan Agreement and the other Loan Documents with respect to any assignee shall mean only the obligations evidenced by or related to the Notes held by the assignee and (iii) the term Collateral as used in the Loan Agreement and the other Loan Documents with respect to such assignee shall mean only the Collateral described on the Collateral Schedules that specifically refer to the Notes held by such assignee.  All such Collateral shall be located and remain in the continental United States.

Borrower hereby certifies that the description of the Collateral set forth in the attached Exhibit A is accurate, complete and reasonably identifies the Collateral for UCC purposes.  Such Collateral shall be located at the following address:

See Exhibit A

Borrower will provide prior written notice to Lender of the relocation of the Collateral or any portion thereof.

Borrower hereby represents and warrants that as of the Closing Date for the Related Note, the Collateral set forth in the attached Exhibit A has been delivered and completely installed, is in good order and operating condition and is in all respects fit and satisfactory for the uses for which it is intended, and Borrower has finally and unconditionally accepted such Collateral.

[REMAINDER INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS]

IN WITNESS WHEREOF, Borrower and Lender hereto have caused this Collateral Schedule to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

BORROWER:
STELLARIS LLC
By: PRIMORIS SERVICES CORPORATION
Its Sole Member
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
JAMES CONSTRUCTION GROUP, L.L.C.
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
ROCKFORD CORPORATION
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
LENDER:
RBS ASSET FINANCE, INC.
By:	/s/Misty Watte
Name:	Misty Watte
Title:	Assistant Vice President

[EXECUTION PAGE OF COLLATERAL SCHEDULE NO. 1]

EXHIBIT A

DESCRIPTION OF COLLATERAL

The Collateral described on this Collateral Schedule consists of all of Borrower’s right, title and interest, if any, in and to EQUIPMENT - (i) the equipment described on Schedule 1 attached hereto and made part hereof, (ii) all general intangibles relating thereto, (iii) any and all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to any of the foregoing property, (iv) all additions, upgrades and accessions to any of the foregoing property, (v) all documents relating to any of the foregoing property, (vi) all replacements and substitutions for any of the foregoing property, (vii) all accounts, chattel paper and general intangibles arising out of the sale, transfer or other disposition of any of the foregoing property, (viii) all of Borrower’s rights to receive return of any premiums for or proceeds of any insurance, indemnity, warranty or guaranty with respect to any of the foregoing property and (ix) all products and proceeds of any of the foregoing property.

3

Schedule 1 to Collateral Schedule No. 1

Asset Number	Year	DESCRIPTION	SERIAL NUMBER	ADDRESS	CITY	STATE	ZIP	Original Sales Price
134078	2013	FORD F550 FLATBED 4X4	1FDUF5HT9DEB42928	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134079	2013	FORD F550 FLATBED 4X4	1FDUF5HT0DEB42929	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134080	2013	FORD F550 FLATBED 4X4	1FDUF5HT7DEB42930	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134081	2013	FORD F550 FLATBED 4X4	1FDUF5HT4DEB42934	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134082	2013	FORD F550 FLATBED 4X4	1FDUF5HT2DEB42933	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134083	2013	FORD F550 FLATBED 4X4	1FDUF5HT8DEB42936	Harrod Road	Hesperia	CA	92356	$	49,483.91
134084	2013	FORD F550 FLATBED 4X4	1FDUF5HT5DEB48225	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134085	2013	FORD F550 FLATBED 4X4	1FDUF5HT7DEB48226	32587 CA-18	Lucerne Valley	CA	92356	$	49,596.34
134086	2013	FORD F550 FLATBED 4X4	1FDUF5HT0DEB42932	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
134087	2013	FORD F550 FLATBED 4X4	1FDUF5HT9DEB42931	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	49,596.34
137074	2013	FORD F550 FLATBED	1FDUF5GT2DEB48216	1213 Pacific Avenue	Long Beach	CA	90813	$	46,586.74
137075	2013	FORD F550 FLATBED	1FDUF5GTXDEB48223	1079 11th Street	Los Osos	CA	93402	$	46,586.74
137076	2013	FORD F550 FLATBED	1FDUF5GT5DEB54219	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	40,106.62
137077	2013	FORD F550 FLATBED	1FDUF5GT4DEB48217	1235 San Antonio Road	Palo Alto	CA	94303	$	46,586.74
137078	2013	FORD F550 FLATBED	1FDUF5GT3DEB54218	Suckow Road	Boron	CA	93523	$	40,106.62
137079	2013	FORD F550 FLATBED	1FDUF5GT8DEB48219	1158 San Antonio Road	Palo Alto	CA	94303	$	46,586.74
264038	2012	CAT TL1055C TELEHANDLER	KDE00312	611 N. Henry Ford Avenue	Wilmington	CA	90744	$	138,585.28
264039	2012	CAT TL1055C TELEHANDLER	KDE00311	Air Expressway Boulevard	Adelanto	CA	92301	$	138,585.28
264040	2012	CAT TL1055C TELEHANDLER	KDE00309	7820 Torrey Santa Fe Road	San Diego	CA	92129	$	138,585.28
332050	2012	CAT TL1055C TELEHANDLER	ZJB01157	US-62	Washington Court House	OH	43160	$	425,286.73
332051	2012	CAT TL1055C TELEHANDLER	ZJB01158	264 Wilsonburg Road	Clarksburg	WV	26301	$	425,286.73
332052	2012	CAT TL1055C TELEHANDLER	ZJB01159	108 N. Mound Road	Wilmington	OH	45177	$	425,286.73
332053	2012	CAT TL1055C TELEHANDLER	ZJB01160	6335 Grassy Branch Road	Sabina	OH	45169	$	425,286.73
332054	2012	CAT TL1055C TELEHANDLER	ZJB01161	2856 Walnut Road	Hebron	OH	43025	$	425,286.73
332055	2012	CAT TL1055C TELEHANDLER	ZJB01181	108 N. Mound Road	Wilmington	OH	45177	$	425,286.73
332056	2012	CAT TL1055C TELEHANDLER	ZJB01182	1323 Wildwood Road NW	Washington Court House	OH	43160	$	425,286.73
332057	2012	CAT TL1055C TELEHANDLER	ZJB01183	1341 Carroll Southern Road	Carroll	OH	43122	$	425,286.73
332058	2012	CAT TL1055C TELEHANDLER	ZJB01184	1321 Wildwood Road NW	Washington Court House	OH	43160	$	425,286.73
332059	2013	CAT D6T PIPELAYER	ZJB01275	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	436,342.43
332060	2013	CAT D6T PIPELAYER	ZJB01276	20602 Indian Ocean Drive	Lake Forest	CA	92630	$	436,342.43
332061	2013	CAT D6T PIPELAYER	ZJB01277	230 S. Trevor Street	Anaheim	CA	92806	$	436,342.43
332062	2013	CAT D6T PIPELAYER	ZJB01283	Lincoln Avenue/S. Kingsley Street	Anaheim	CA	92806	$	436,342.43
361038	2012	CAT 320E EXCAVATOR	TFX00270	1333 Van Beurden Drive	Los Osos	CA	93402	$	166,556.37
361039	2012	CAT 320E EXCAVATOR	TFX00279	1333 Van Beurden Drive	Los Osos	CA	93402	$	173,878.36
361040	2012	CAT 320E EXCAVATOR	1FX00275	1333 Van Beurden Drive	Los Osos	CA	93402	$	170,619.44
392105	2012	CAT 420F BACKHOE	SKR01024	611 N. Henry Ford Avenue	Wilmington	CA	90744	$	86,035.52
393010	2013	CAT 450E BACKHOE	RBA00236	E. Market Street/S. Atlantic Avenue	Long Beach	CA	90805	$	114,818.21
552168	2013	WEILER P385 ASPHALT PAVER	1159	1333 Van Beurden Drive	Los Osos	CA	93402	$	149,398.13
LW0456	2013	WHEEL LOADER 950K	R4A00593	6218 North Hwy 317	Geismar	LA	70734	$	250,863.09
T0553	2012	DOZER D6T XL WITH RIPPER	GMK01011	6218 North Hwy 317	Geismar	LA	70734	$	281,090.70
LW0457	2008	FORKLIFT D80S	PA00734	6218 North Hwy 317	Geismar	LA	70734	$	43,466.61
LH0109	2012	BACKHOE 420F	JWJ00203	6218 North Hwy 317	Geismar	LA	70734	$	90,709.85
LH0108	2012	BACKHOE 420E	DAN02242	6218 North Hwy 317	Geismar	LA	70734	$	80,257.19
EB0236	2012	349EL HYDRAULIC EXCAVATOR	TFG00573	6218 North Hwy 317	Geismar	LA	70734	$	406,728.75

Asset Number	Year	DESCRIPTION	SERIAL NUMBER	ADDRESS	CITY	STATE	ZIP	Original Sales Price
LH0110	2008	BACKHOE 420E IT	DAN01665	6218 North Hwy 317	Geismar	LA	70734	$	65,601.45
EB0237	2012	ZERO TURN EXCAVATOR 314DL	SSZ00655	6218 North Hwy 317	Geismar	LA	70734	$	114,297.93
LW0458	2012	INTEGRATED TOOL CARRIER 930 IT	RHN00812	6218 North Hwy 317	Geismar	LA	70734	$	142,713.34
EB0238	2012	EXACAVATOR 349EL	KCN00219	6218 North Hwy 317	Geismar	LA	70734	$	406,096.85
T0554		DOZER D11T WITH RIPPER		6218 North Hwy 317	Geismar	LA	70734	$	1,592,967.00
385003	2013	CRC 16-30 BENDING MACHINE	PB30231C	3015 Lithopolis Road NW	Lancaster	OH	43130	$	258,316.70
381032		MCLGHLN 12-48 CRADLE BORE MACH	48C040513114	620 Old Brick Road	West Alexander	PA	15376	$	244,369.00
381031		MCLGHLN 12-48 CRADLE BORE MACH	48C032713113	620 Old Brick Road	West Alexander	PA	15376	$	244,369.00
201075	2014	PETERBILT 367 TRACTOR	1XPTD4TX0ED220464	620 Old Brick Road	West Alexander	PA	15376	$	182,693.06
201076	2014	PETERBILT 367 TRACTOR	1XPTD4TX2ED220465	620 Old Brick Road	West Alexander	PA	15376	$	182,639.81
201077	2014	PETERBILT 367 TRACTOR	1XPTD4TX4ED220466	3015 Lithopolis Road NW	Lancaster	OH	43130	$	181,782.35
201078	2014	PETERBILT 367 TRACTOR	1XPTD4TX6ED220467	3015 Lithopolis Road NW	Lancaster	OH	43130	$	181,782.35
185006	2014	PETERBILT 25TON BOOM TRUCK	1NPSL70X1ED219256	620 Old Brick Road	West Alexander	PA	15376	$	146,852.94
185005	2014	PETERBILT 25TON BOOM TRUCK	1NPSL70XXED219255	3015 Lithopolis Road NW	Lancaster	OH	43130	$	147,598.89
232056	2013	TRAILKING LOWBED TRAILER	1TKJ0533XDM041623	620 Old Brick Road	West Alexander	PA	15376	$	108,328.78
232058	2013	TRAILKING LOWBED TRAILER	1TKJ05337DM041627	3015 Lithopolis Road NW	Lancaster	OH	43130	$	108,790.26
232059	2013	TRAILKING LOWBED TRAILER	1TKJ05330DM041629	3015 Lithopolis Road NW	Lancaster	OH	43130	$	108,790.26
232057	2013	TRAILKING LOWBED TRAILER	1TKJ05333DM041625	620 Old Brick Road	West Alexander	PA	15376	$	108,328.78
185006	2014	PETERBILT 25TON BOOM TRUCK	1NPSL70X1ED219256	620 Old Brick Road	West Alexander	PA	15376	$	152,271.12
185005	2014	PETERBILT 25TON BOOM TRUCK	1NPSL70XXED219255	3015 Lithopolis Road NW	Lancaster	OH	43130	$	152,989.38
178027	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL0DV763207	3015 Lithopolis Road NW	Lancaster	OH	43130	$	83,779.29
178028	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL7DV763205	3015 Lithopolis Road NW	Lancaster	OH	43130	$	83,779.29
108029	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL9DV763206	3015 Lithopolis Road NW	Lancaster	OH	43130	$	83,779.29
178030	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL1DV763202	620 Old Brick Road	West Alexander	PA	15376	$	83,381.16
178031	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL3DV763203	620 Old Brick Road	West Alexander	PA	15376	$	83,381.16
178032	2013	FORD F750 4DR FLATBED DUMP	3FRXW7FL5DV763204	620 Old Brick Road	West Alexander	PA	15376	$	83,381.16
							TOTAL	$	14,098,600.12

NOTE

$14,098,600.12 September 17, 2013

FOR VALUE RECEIVED, the undersigned, STELLARIS LLC (“Stellaris”), JAMES CONSTRUCTION GROUP, L.L.C. (“James”) and ROCKFORD CORPORATION (“Rockford”, Stellaris, James and Rockford, jointly and severally, “Borrower”) unconditionally promise to pay to the order of RBS ASSET FINANCE, INC. (“Lender”) the principal sum of Fourteen Million Ninety-Eight Thousand Six Hundred and 12/100 DOLLARS ($14,098,600.12), which is the Original Principal Amount of the Loan made by Lender on the date hereof pursuant to that certain Loan Agreement dated as of September 17, 2013 (together with any and all amendments or supplements thereto, the “Loan Agreement”) between Borrower and Lender.  Principal shall be payable on each Payment Date in installments as set forth on Schedule A hereto, with a final installment (in the amount necessary to pay in full this Note) due and payable on October 1, 2020, which is the Stated Maturity Date for this Note and the related Loan, or earlier upon acceleration pursuant to the Loan Agreement.  Borrower also promises to pay interest on the unpaid principal amount hereof from the date hereof, which is the Closing Date for this Note and the related Loan, until maturity (whether by acceleration or otherwise) and, after maturity, until paid.  Except as otherwise provided in the Loan Agreement, interest shall accrue on this Note at a rate per annum equal to 2.45% and shall be payable on each Payment Date as set forth on Schedule A hereto.  In addition, interest for the period from the Closing Date through and including the last day of the calendar month immediately preceding October 1, 2013 (the “Interim Interest Date” for this Note and the related Loan) shall be payable on  November 1, 2013 (the “Interim Interest Payment Date” for this Note and the related Loan).  In addition to the foregoing, Borrower may make one (1) additional principal payment per year equal to 10% of the principal loan amount balance, which shall occur on a Payment Date.

Payments of both principal and interest are to be made without set-off or counterclaim in lawful money of the United States of America in same day or immediately available funds to the account designated by Lender pursuant to the Loan Agreement.

Borrower may prepay this Note only in accordance with the terms of the Loan Agreement, and in connection with any such prepayment, Borrower shall pay to Lender a Prepayment Fee equal to the sum of (a) an amount equal to 3% of the amount prepaid if prepayment is on or prior to the first anniversary of the Closing Date for this Note, 2% of the amount prepaid if prepayment is after the first anniversary of the Closing Date of this Note but on or prior to the second anniversary of the Closing Date for this Note, 1% of the amount prepaid if prepayment is after the second anniversary of the Closing Date of this Note but on or prior to the third anniversary of the Closing Date for this Note and  0% of the amount prepaid if prepayment is after the third anniversary of the Closing Date of this Note.

This Note evidences Indebtedness incurred under the Loan Agreement and is secured by the Collateral described in the Loan Agreement, including, without limitation, the Collateral described on the Collateral Schedule referencing this Note.  This Note is subject to the terms and conditions set forth in the Loan Agreement.  Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

Borrower hereby irrevocably authorizes Lender to make (or cause to be made) appropriate notations on the Schedule A attached to this Note (or on any continuation of or supplements to such schedule), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate applicable to, the Loan evidenced hereby.  Such notations shall be, absent manifest error, evidence of the information so set forth therein; provided, however, that the failure of Lender to make any such notations shall not limit or otherwise affect any Obligations of Borrower.

All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

All of the obligations, promises, agreements and covenants of Borrower under this Note are joint and several.

THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS]

IN WITNESS WHEREOF, each Borrower has caused this Note to be executed by its officer and duly authorized as of the day and year first above written.

BORROWER:
STELLARIS LLC
By: PRIMORIS SERVICES CORPORATION
Its Sole Member
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
JAMES CONSTRUCTION GROUP, L.L.C.
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer
ROCKFORD CORPORATION
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	Treasurer

2

SCHEDULE A

Date	Payment
11/1/2013	$	182,815.22
12/1/2013	$	182,815.22
1/1/2014	$	182,815.22
2/1/2014	$	182,815.22
3/1/2014	$	182,815.22
4/1/2014	$	182,815.22
5/1/2014	$	182,815.22
6/1/2014	$	182,815.22
7/1/2014	$	182,815.22
8/1/2014	$	182,815.22
9/1/2014	$	182,815.22
10/1/2014	$	182,815.22
11/1/2014	$	182,815.22
12/1/2014	$	182,815.22
1/1/2015	$	182,815.22
2/1/2015	$	182,815.22
3/1/2015	$	182,815.22
4/1/2015	$	182,815.22
5/1/2015	$	182,815.22
6/1/2015	$	182,815.22
7/1/2015	$	182,815.22
8/1/2015	$	182,815.22
9/1/2015	$	182,815.22
10/1/2015	$	182,815.22
11/1/2015	$	182,815.22
12/1/2015	$	182,815.22
1/1/2016	$	182,815.22
2/1/2016	$	182,815.22
3/1/2016	$	182,815.22
4/1/2016	$	182,815.22
5/1/2016	$	182,815.22
6/1/2016	$	182,815.22
7/1/2016	$	182,815.22
8/1/2016	$	182,815.22
9/1/2016	$	182,815.22
10/1/2016	$	182,815.22
11/1/2016	$	182,815.22
12/1/2016	$	182,815.22
1/1/2017	$	182,815.22
2/1/2017	$	182,815.22
3/1/2017	$	182,815.22
4/1/2017	$	182,815.22
5/1/2017	$	182,815.22
6/1/2017	$	182,815.22
7/1/2017	$	182,815.22
8/1/2017	$	182,815.22
9/1/2017	$	182,815.22
10/1/2017	$	182,815.22
11/1/2017	$	182,815.22
12/1/2017	$	182,815.22

3

1/1/2018	$	182,815.22
2/1/2018	$	182,815.22
3/1/2018	$	182,815.22
4/1/2018	$	182,815.22
5/1/2018	$	182,815.22
6/1/2018	$	182,815.22
7/1/2018	$	182,815.22
8/1/2018	$	182,815.22
9/1/2018	$	182,815.22
10/1/2018	$	182,815.22
11/1/2018	$	182,815.22
12/1/2018	$	182,815.22
1/1/2019	$	182,815.22
2/1/2019	$	182,815.22
3/1/2019	$	182,815.22
4/1/2019	$	182,815.22
5/1/2019	$	182,815.22
6/1/2019	$	182,815.22
7/1/2019	$	182,815.22
8/1/2019	$	182,815.22
9/1/2019	$	182,815.22
10/1/2019	$	182,815.22
11/1/2019	$	182,815.22
12/1/2019	$	182,815.22
1/1/2020	$	182,815.22
2/1/2020	$	182,815.22
3/1/2020	$	182,815.22
4/1/2020	$	182,815.22
5/1/2020	$	182,815.22
6/1/2020	$	182,815.22
7/1/2020	$	182,815.22
8/1/2020	$	182,815.22
9/1/2020	$	182,815.22
10/1/2020	$	182,815.22

4

EX-10.2

Exhibit 10.2

PNC EQUIPMENT FINANCE, LLC

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made as of the 20th day of September, 2013, by and between PNC EQUIPMENT FINANCE, LLC (“Lender”) and STELLARIS LLC and Q3 CONTRACTING, INC. (hereinafter individually and collectively, “Borrower”).

Borrower is desirous of obtaining a loan from Lender and Lender is willing to make the loan to Borrower upon the terms and conditions set forth herein.

Capitalized terms used herein without definition shall have the meanings assigned to them in Schedule A attached hereto and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Schedule A shall govern.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

1.ADVANCE OF LOAN.

(a)The Loan.  On the terms and conditions hereinafter set forth, the parties agree that Lender shall lend to Borrower certain sums (the “Loan”) on the terms specified herein.  Time is of the essence.

(b)Promissory Note.  The obligation to repay the Loan hereunder shall be evidenced by one or more promissory notes payable by Borrower to the order of Lender in form and substance satisfactory to Lender (hereinafter collectively referred to as the “Promissory Note”).

(c)Expiration of Commitment.  The obligation of Lender to make the Loan herein shall expire on November 30, 2013; provided, however, that such obligation shall terminate (at Lender’s option) upon the occurrence of any Default or of any event which, with the giving of notice or lapse of time, or both, would become a Default hereunder.

(d)Single Loan.  The Loan and all of the other Obligations of Borrower to Lender shall constitute one general obligation of Borrower secured by all of the Collateral.

2.PAYMENTS AND PREPAYMENT OF LOAN.

(a)Principal Payment.  On each Payment Date, Borrower shall pay the aggregate principal payments owed with respect to the Loan as set forth in the Promissory Note; provided, however, on the Stated Maturity Date or date of acceleration of the Loan, Borrower shall repay in full the aggregate of then outstanding principal amount of the Loan plus all accrued and unpaid interest thereon, any Prepayment Fee applicable to the Loan and all other amounts owed hereunder and under each Loan Document related to the Loan.  Borrower shall pay accrued interest on the Loan on each Payment Date as provided in Section 2(d) hereof.

(b)Prepayment.  Borrower shall have the right, on a Payment Date  upon thirty (30) days’ prior written notice to Lender, to prepay all (but not less than all) of the Loan.  If Borrower exercises its right of prepayment, Borrower shall pay to Lender the outstanding principal amount of the Loan, all accrued interest thereon, all other amounts owed under any Loan Document and any applicable Prepayment Fee, none of which shall be refundable.

(c)Acceleration.  Upon any acceleration of the Loan pursuant to this Agreement or any other Loan Document, Borrower shall immediately repay all (or if only a portion is accelerated thereunder, such portion of) the Loan then outstanding, including all accrued and unpaid interest thereon, plus the aggregate Prepayment Fee for the Loan and all other amounts owed under the Loan Documents.

(d)Interest.  Borrower shall pay interest to Lender on the aggregate outstanding principal balance of the Loan at the rate specified in the Promissory Note (the “Loan Rate”).  In no event will Lender charge interest at a rate that exceeds the highest rate of interest permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  Interest shall be payable on the outstanding principal amount of the Loan on each Payment Date.  If any payment due hereunder is not received within ten (10) days of its due date, Borrower shall pay a late charge equal to five (5) percent of the amount in arrears.

(e)Default Rate.  Effective upon the occurrence of any Default and for so long as any Default shall be continuing, the Loan Rate shall automatically be increased by two (2) percent per annum (such increased rate, the “Default Rate”), and all outstanding Obligations, including unpaid interest, shall continue to accrue interest from the date of such Default at the Default Rate applicable to such Obligations.

(f)Payment Date.  If any interest or any other payment to Lender under this Agreement becomes due and payable on a day other than a Business Day, such Payment Date shall be extended to the next succeeding Business Day (unless such next succeeding Business Day is in the next calendar month, in which case such payment date shall be the immediately preceding Business Day) and interest thereon shall be payable at the then applicable rate during such extension.

(g)Payment.  Borrower shall make each payment under this Agreement without set-off, counterclaim or deduction and free and clear of all Taxes to such account or address as Lender shall specify from time to time in writing.  If Borrower shall be required by law to deduct any Taxes from any payment to Lender under any Loan Document, then the amount payable to Lender shall be increased so that, after making all required deductions, Lender receives an amount equal to that which it could have received had no such deductions been made.

(h)Application of Payments.  Borrower irrevocably agrees that Lender shall have the continuing and exclusive right to apply any and all payments against the then due and payable Obligations in such order as Lender may deem advisable.  Lender is authorized to, and at its option may (without prior notice or precondition and at any time or times), but shall not be obligated to, make or cause to be made advances on behalf of Borrower for:  (1) payment of all fees, expenses, indemnities, charges, costs, principal, interest, or other Obligations owing by Borrower under this Agreement or any of the other Loan Documents, (2) the payment, performance or satisfaction of any of Borrower’s obligations with respect to preservation of the Collateral, or (3) any premium in whole or in part required in respect of any of the policies of insurance required by this Agreement, even if the making of any such advance causes the outstanding balance of the Loan to exceed the Maximum Amount and Borrower agrees to repay immediately, in cash, any amount by which the Loan exceeds the Maximum Amount.

(j)Funding Losses.  In the event of (1) the payment or prepayment of any principal of the Loan other than on the last day of the Interest Period applicable thereto (including as a result of a Default), or (2) the failure by Borrower to borrow or prepay the Loan on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked), then, in any such event, Lender shall promptly notify Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate Lender as a result of such event, and Borrower shall compensate Lender within three (3) Business Days after such written notice from Lender for any loss, cost or expense attributable to such event.  Such notice shall, in absence of manifest error, be conclusive and binding on Borrower.

3.SECURITY.  As security for the payment as and when due of the indebtedness of Borrower to Lender hereunder and under the Promissory Note (and any renewals, extensions and modifications thereof) and under any other agreement or instrument, both now in existence and hereafter created (as the same may be renewed, extended or modified), and the performance as and when due of all other Obligations of Borrower to Lender, both now in existence and hereafter created (as the same may be renewed, extended or modified), Borrower hereby grants to Lender a [purchase money] security interest in the items of equipment described on the collateral schedule(s) in form and substance satisfactory to Lender (hereinafter collectively referred to as the “Collateral Schedule”) now or hereafter executed in connection with the Promissory Note, and all replacements, substitutions and exchanges therefor and thereof and accessions thereto (the “Equipment”) and any and all Proceeds thereof (the “Collateral”).  Borrower agrees that, with respect to the Collateral, Lender shall have all of the rights and remedies of a secured party under the UCC.  Borrower hereby authorizes Lender to file UCC financing statements (“UCC Statements”) describing the Collateral.  Without Lender’s prior written consent, Borrower agrees not to file any corrective or termination statements or partial releases with respect to any UCC Statements filed by Lender pursuant to this Agreement.

2

4.CONDITIONS PRECEDENT TO LENDER’S OBLIGATION.  The obligation of Lender to make the Loan as set forth in Section 1 hereof is expressly conditioned upon compliance by Borrower, to the reasonable satisfaction of Lender and its counsel, of the following conditions precedent:

(a)Initial Advance.  Concurrently with the execution hereof, or on or prior to the first date on which Lender is to advance the Loan hereunder, Borrower shall cause to be provided to Lender the following:

(1)Resolutions of the [Board of Directors/ managing body] or validly authorized Executive Committee of Borrower, certified by the Secretary or an Assistant Secretary of Borrower, duly authorizing the borrowing of funds hereunder and the execution, delivery and performance of this Agreement, the Promissory Note and all related instruments and documents.

(2)An opinion of counsel for Borrower satisfactory as to form and substance to Lender, as to each of the matters set forth in sub-parts (a) through (e) of Section 5 hereof  and as to such other matters as Lender may reasonably request.

(3)An Agreement of Guaranty in form and substance satisfactory to Lender (hereinafter referred to as the “Guaranty”) duly executed by or on behalf of Primoris Services Corporation (hereinafter referred to as “Guarantor”).

(4)Resolutions of the Board of Directors or validly authorized Executive Committee of Guarantor, certified by the Secretary or an Assistant Secretary of Guarantor, duly authorizing the undertaking to guarantee Borrower’s obligations hereunder and the execution, delivery and performance of the Guaranty.

(5)An opinion of counsel for Guarantor satisfactory as to form and substance to Lender, as to each of the matters set forth in sub-parts (a), (b), (d) and (e) of Section 4 of the Guaranty and as to such other matters as Lender reasonably may request.

(b)Each Advance.  On each date on which Lender is to advance funds hereunder,

(1)Borrower shall cause to be provided to Lender the following:

a.A certificate executed by the Secretary or an Assistant Secretary of Borrower, certifying that the representations and warranties of Borrower contained herein remain true and correct as of such date, and that no Default or event which, with the giving of notice or the lapse of time, or both, would become a Default hereunder, has then occurred.

b.Evidence satisfactory to Lender as to due compliance with the insurance provisions of Section 6(f) hereof.

c.Photocopies of the invoice(s) or other evidence reasonably satisfactory to Lender and its counsel, related to the acquisition cost of the Equipment to which such advance of the Loan relates[; and, if requested by Lender, an appraisal of such Equipment in form and substance, and by an appraiser, acceptable to Lender].

d.A Collateral Schedule describing the Equipment to which such advance of the Loan relates.

e.A Pay Proceeds Authorization in the amount of the Loan to be advanced on such date, duly executed on behalf of Borrower.

f.A Promissory Note in the amount of the Loan to be advanced on such date, duly executed on behalf of Borrower, pursuant to Section 1 hereof.

3

g.Such documents and instruments as reasonably may be required by Lender to note Lender as the registered lienholder on the certificate of title (the “Title Lien Notation Documents”) with respect to the Equipment to which such advance of the Loan relates.

(2)Such filings shall have been made and other actions taken as reasonably may be required by Lender and its counsel to perfect a valid, first priority purchase money security interest granted by Borrower to Lender with respect to the Collateral.

(3)No Default or event which, with the giving of notice or lapse of time, or both, would become a Default hereunder, shall have occurred.

(4)No event shall have occurred which could have a Material Adverse Effect.

5.REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants that:

(a)Business Existence.  Borrower has the form of business organization, and is and will remain duly organized and validly existing in good standing under the laws of the jurisdiction, specified below the signature of Borrower; and is duly qualified and authorized to transact business and is in good standing wherever necessary to perform its obligations under the Loan Documents, including each jurisdiction in which the Collateral is to be located.

(b)Requisite Power and Authority.  Borrower has the requisite power and authority to own or hold under lease its properties and to enter into and perform its obligations hereunder; and the borrowing hereunder by Borrower from Lender, the execution, delivery and performance of the Loan Documents, (1) have been duly authorized by all necessary action consistent with Borrower’s form of organization; (2) do not require any approval or consent of any stockholder, member, partner, trustee or holders of any indebtedness or obligations of Borrower except such as have been duly obtained; and (3) do not and will not contravene any law, governmental rule, regulation or order now binding on Borrower, or the organizational documents of Borrower, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien or encumbrance upon the property of Borrower under any agreement to which Borrower is a party or by which it or its property is bound.

(c)No Consents or Approvals.  Neither the execution and delivery by Borrower of the Loan Documents, nor the consummation of any of the transactions by Borrower contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any Federal, state or foreign governmental authority or agency, except as provided herein.

(d)Enforceability.  This Agreement constitutes, and all other Loan Documents when entered into will constitute, the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with the terms hereof and thereof, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally, and by applicable laws (including any applicable common law and equity) and judicial decisions which may affect the remedies provided herein and therein.

(e)Litigation.  There are no pending or threatened actions or proceedings to which Borrower is a party, and there are no other pending or threatened actions or proceedings of which Borrower has knowledge, before any court, arbitrator or administrative agency, which, either individually or in the aggregate, would have a Material Adverse Effect.  Further, Borrower is not in default under any material obligation for the payment of borrowed money, for the deferred purchase price of property or for the payment of any rent which, either individually or in the aggregate, would have a Material Adverse Effect.

(f)Not Real Property Fixtures.  Under the laws of the state(s) in which the Equipment is to be located, the Equipment consists solely of personal property and not fixtures.

(g)Validity and Priority of Security Interest.  Upon payment in full of the acquisition cost of the Equipment, Borrower will have good and marketable title to the Equipment, free and clear of all Liens and encumbrances (excepting only the Lien of Lender).  Upon the last to occur of: (1) delivery of an item of Equipment, (2) payment to the vendor of the acquisition cost of such item of the Equipment, (3) advance by Lender to Borrower of the Loan relating to such item of the Equipment, and (4) filing in the appropriate public office of a UCC financing statement naming Borrower as debtor, and Lender as secured party, and describing such item of the Equipment,

4

and (5) filing in the appropriate public office of the Title Lien Notation Documents with respect to such Equipment,

Lender will have a valid, perfected, first priority purchase money security interest in such item of the Equipment.

(h)Financial Statements.  The financial statements of Borrower (copies of which have been furnished to Lender) have been prepared in accordance with GAAP, and fairly present Borrower’s financial condition and the results of Borrower’s operations as of the date of and for the period covered by such statements, and since the date of such statements there has been no Material Adverse Effect on such conditions or operations.

(i)Tax Returns and Payments.  Borrower has filed or has caused to have been filed all federal, state and local tax returns which, to the knowledge of Borrower, are required to be filed, and has paid or caused to have been paid all taxes as shown on such returns or on any assessment received by it, to the extent that such taxes have become due, unless and to the extent only that such taxes, assessments and governmental charges are currently contested in good faith and by appropriate proceedings by Borrower and adequate reserves therefor have been established as required under GAAP.  To the extent Borrower believes it advisable to do so, Borrower has set up reserves which are believed by Borrower to be adequate for the payment of additional taxes for years which have not been audited by the respective tax authorities.

(j)No Violation of Law.  Borrower is not in violation of any law, ordinance, governmental rule or regulation to which it is subject and the violation of which would have a Material Adverse Effect, and Borrower has obtained any and all licenses, permits, franchises or other governmental authorizations necessary for the ownership of its properties and the conduct of its business.

(k)Use of Proceeds.  None of the proceeds of the Loan will be used, directly or indirectly, by Borrower for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry, any “margin security” or “margin stock” within the meaning of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal Reserve System (herein called “margin security” and “margin stock”) or for any other purpose which might make the transactions contemplated herein a “purpose credit” within the meaning of Regulation U, or cause this Agreement to violate any other regulation of the Board of Governors of the Federal Reserve System or the Securities Exchange Act of 1934 or the Small Business Investment Act of 1958, as amended, or any rules or regulations promulgated under any of such statutes.

(l)Business Information.  The legal name, jurisdiction of organization, Federal Employer Identification Number and Organizational Number of Borrower, specified on the signature page hereof, are true and correct.  Within the previous six (6) years, Borrower has not changed its name, done business under any other name, or merged or been the surviving entity of any merger, except as disclosed to Lender in writing.

(m)ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other existing ERISA Events, could reasonably be expected to result in a liability of Borrower of more than the Minimum Actionable Amount.  The present value of all accumulated benefit obligations of Borrower under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan by more than the Minimum Actionable Amount, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Account Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such underfunded Plans by more than the Minimum Actionable Amount.  Neither Borrower nor any ERISA Affiliate has incurred or reasonably expects to incur any Withdrawal Liability in excess of the Minimum Actionable Amount.

(n)Full Disclosure.  No information contained in any Loan Document, the financial statements or any written statement furnished by or on behalf of Borrower under any Loan Document, or to induce Lender to execute the Loan Documents, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

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6.COVENANTS OF BORROWER.  Borrower covenants and agrees as follows:

(a)Application of Proceeds.  The proceeds of the Loan will be used exclusively for business or commercial purposes to finance the acquisition of the Equipment and/or to reimburse Borrower with respect to the acquisition cost of the Equipment.

(b)Use of Collateral.  Borrower shall locate and use the Equipment solely in the Continental United States and in the conduct of its business and in a careful and proper manner; shall not permanently discontinue use of the Equipment.

(c)Titling and Registration;  No Sale or Further Encumbrance.

If any of the Equipment are titled vehicles, Borrower shall cause such Equipment to be titled in the name of Borrower and shall deliver to Lender the original certificate of title with respect to the Equipment, promptly upon receipt thereof.  Borrower shall cause the Equipment to be registered in the name of Borrower, and shall take all actions as reasonably may be required to maintain such registration of the Equipment in the name of Borrower.

Borrower shall not dispose of or further encumber its interest in the Collateral without the prior written consent of Lender.  Borrower shall maintain the Equipment free from all claims, Liens and legal processes of creditors of Borrower other than Liens (1) for fees, taxes, or other governmental charges of any kind which are not yet delinquent or are being contested in good faith by appropriate proceedings which suspend the collection thereof (provided, however, that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of the Equipment or any interest therein); (2) Liens of mechanics, materialmen, laborers, employees or suppliers and similar Liens arising by operation of law incurred by Borrower in the ordinary course of business for sums that are not yet delinquent or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof (provided, however, that such contest does not involve any substantial danger of the sale, forfeiture or loss of the Equipment or any interest therein); and (3) Liens arising out of any judgments or awards against Borrower which have been adequately bonded to protect Lender’s interests or with respect to which a stay of execution has been obtained pending an appeal or a proceeding for review (“Permitted Liens”).  Borrower shall notify Lender immediately upon receipt of notice of any Lien, attachment or judicial proceeding affecting the Equipment in whole or in part.

(d)Fees and Taxes; Maintenance.  Borrower, at its own expense, will pay or cause to be paid all taxes and fees relating to the ownership and use of the Equipment and will keep and maintain, or cause to be kept and maintained, the Equipment in accordance with the manufacturer’s recommended specifications, and in as good operating condition as on the date of execution hereof (or on the date on which acquired, if such date is subsequent to the date of execution hereof), ordinary wear and tear resulting from proper use thereof alone excepted, and will make all modifications and improvements to the Equipment as are required by Applicable Law; and will provide all maintenance and service and make all repairs necessary for such purpose.

(e)  Loss or Damage.  Borrower shall advise Lender in writing within ten (10) days of the occurrence of any material damage, loss, theft, destruction or governmental confiscation or appropriation of any item of the Equipment (an “Event of Loss”) and of the circumstances and extent of such Event of Loss.  Within thirty (30) days after receipt of notice from Lender, Borrower shall (at Lender’s option) either:  (1) replace the item of Equipment having suffered the Event of Loss with equipment which is free and clear of all Liens and has a value and utility at least equal to the item of Equipment having suffered the Event of Loss, and such replacement equipment shall immediately be deemed “Equipment” hereunder and subject to the security interest granted by Borrower herein; or (2) prepay the Obligations to the extent attributable to the unpaid portion of the Obligations funded with respect to the item of Equipment having suffered the Total Loss (as reasonably determined by Lender).  If any item of Equipment is damaged and such damage can be repaired, Borrower shall (at its expense) promptly effect such repairs.  Proceeds of insurance shall be paid to Lender with respect to such reparable damage to the Equipment and shall, at the election of Lender, be applied either to the repair of the Equipment by payment by Lender directly to the party completing the repairs, or to the reimbursement of Borrower for the cost of such repairs; provided, however, that Lender shall have no obligation to make such payment or any part thereof until receipt of such evidence as Lender shall deem satisfactory that such repairs have been completed, and further provided that Lender may apply such proceeds to the payment of any installment or other sum due or to become due under this Agreement if at the time such proceeds are received by Lender there shall have occurred and be continuing any Default or Event of Default.  All accessories, parts and replacements for or which are added to or become attached to the Equipment shall immediately be deemed incorporated in the Equipment and subject to the security interest granted by Borrower herein.  Upon reasonable advance notice, Lender shall have the right to inspect the Equipment and all maintenance records thereto, if any, at any reasonable time.

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(f)Personal Property.  The parties intend that the Equipment shall remain personal property, notwithstanding the manner in which it may be affixed to any real property, and Borrower shall obtain and deliver to Lender (to be recorded at Borrower’s expense) from each Person having an interest in or Lien on the property (the “Premises”) where the Equipment is to be located, waivers of any Lien, encumbrance or interest which such Person might have or hereafter obtain or claim with respect to the Equipment.

(g)Insurance.  At its own expense, Borrower shall keep the Equipment or cause it to be kept insured

for comprehensive and collision coverage and

against loss or damage due to fire and the risks normally included in extended coverage, malicious mischief and vandalism, for the full replacement value thereof.  All insurance for loss or damage shall provide that losses, if any, shall be payable to Lender under a lender’s loss payee endorsement.  The proceeds of such insurance payable as a result of loss of or damage to the Equipment shall be applied, at Lender’s option, (x) toward the replacement, restoration or repair of the Equipment which may be lost, stolen, destroyed or damaged, or (y) toward payment of the balance outstanding on the Promissory Note or the Obligations.  In addition, Borrower shall also carry public liability insurance, both personal injury and property damage.  All insurance required hereunder shall be in form and amount and with companies satisfactory to Lender.  Borrower shall pay or cause to be paid the premiums therefor and deliver to Lender evidence satisfactory to Lender of such insurance coverage.  Borrower shall cause to be provided to Lender, prior to the scheduled expiration or lapse of such insurance coverage, evidence satisfactory to Lender of renewal or replacement coverage.  Each insurer shall agree, by endorsement upon the policy or policies issued by it, or by independent instrument furnished to Lender, that (1) it will give Lender thirty (30) days’ prior written notice of the effective date of any material alteration or cancellation of such policy; and (2) insurance as to the interest of any named loss payee other than Borrower shall not be invalidated by any actions, inactions, breach of warranty or conditions or negligence of Borrower with respect to such policy or policies.

(h)Further Assurances.  Borrower shall promptly and duly execute and deliver to Lender such further documents, instruments and assurances and take such further action as Lender may from time to time reasonably request in order to carry out the intent and purpose of this Agreement and to establish and protect the rights and remedies created or intended to be created in favor of Lender hereunder; including, without limitation, the execution and delivery of any document reasonably required, and payment of all necessary costs to record such documents (including payment of any documentary or stamp tax), to perfect and maintain perfected the security interest granted under this Agreement.

(i)Notices to Lender.  Borrower shall provide written notice to Lender: (1) not less than thirty (30) days prior to any contemplated change in the name, the jurisdiction of organization, or address of the chief executive office, of Borrower or of Borrower’s organizational structure such that a filed financing statement would become seriously misleading (within the meaning of the UCC); and (2) promptly upon the occurrence of any event which constitutes a Default (as hereinafter defined) hereunder or which, with the giving of notice, lapse of time or both, would constitute a Default hereunder.

(j)Delivery of Financial Information.  Borrower shall furnish Lender (1) within one hundred twenty (120) days after the end of each fiscal year of Borrower, its annual internally prepared financial statements; (2) within sixty (60) days after the end of each quarter of Borrower’s fiscal year, its internally prepared quarterly financial statements as at the end of such quarter.  Upon the written request of Lender, Borrower will deliver to Lender any additional information reasonably requested by Lender relating to the Collateral and/or the general financial condition of Borrower.

(k)Notice of Bankruptcy.  Borrower shall provide written notice to Lender of the commencement of proceedings under the Federal bankruptcy laws or other insolvency laws (as now or hereafter in effect) involving Borrower as a debtor.

(l)Bank Secrecy Act, etc.  (1) Borrower has been advised by Lender that the USA Patriot Act establishes minimum standards of account information to be collected and maintained by Lender, and that to help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account; and specifically, this means that

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when Borrower executes this Agreement, Lender may ask for Borrower’s name and address, the date of birth of the officers executing this Agreement, and other information that will allow Lender to identify Borrower; and that Lender may also ask to see the driver’s license or other identifying documents of the officers of Borrower executing this Agreement. (2)  Borrower is and will remain in full compliance with all Applicable Laws.  (e)  As of the date of this Agreement, as of the date of each advance of the Loan pursuant to this Agreement, and at all times that any obligations exist hereunder: (1) neither Borrower nor any guarantor, or any other obligor of the obligations created hereunder (together, the “Obligor”) (i) is listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejections of transactions) under any order or directive of any Compliance Authority; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Person or Sanctioned Country in violation of any law or regulation enforced by any Compliance Authority; (2) the Loan made under this Agreement will not be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country; and (3) each Obligor is in compliance with, and no Obligor engages in any dealings or transactions prohibited by, any laws of the United States including the USA Patriot Act, the Trading with the Enemy Act, or the U.S. Foreign Corrupt Practices Act of 1977, all as amended, supplemented or replaced from time to time.  As used herein: “Compliance Authority” means each and all of the (A) U.S. Department of the Treasury’s Office of Foreign Asset Control; (B) U.S. Treasury Department/Financial Crimes Enforcement Network; (C) U.S. State Department/Directorate of Defense Trade Controls; (D) U.S. Commerce Department/Bureau of Industry and Security; (E) U.S. Internal Revenue Service; (F) U.S. Justice Department; and (G) U.S. Securities and Exchange Commission; “Sanctioned Country” means a country subject to a sanctions program maintained by any Compliance Authority; and “Sanctioned Person” means any individual person, a group, regime, entity or thing subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.

(m)Indemnification.  Borrower shall indemnify (on an after-tax basis) and defend Lender, its successors and assigns, and their respective directors, officers and employees, from and against any and all claims, actions and suits

of any kind, nature or description whatsoever arising, directly or indirectly, in connection with any of the Collateral (other than such as may result from the gross negligence or willful misconduct of Lender, its successors and assigns, and their respective directors, officers and employees). The obligations of Borrower under this Section 6(l) shall survive the expiration of the term of this Agreement.

7.DEFAULT.  A default shall be deemed to have occurred hereunder (“Default”) upon the occurrence of any of the following:  (a) non-payment of an installment of principal and/or interest due under the Promissory Note within ten (10) days of the applicable payment date; (b) non-payment of any other Obligation within five (5) days after it is due; (c) failure to maintain, use or operate the Equipment in compliance with Applicable Law; (d) failure to obtain, maintain and comply with all of the insurance coverages required under this Agreement; (e) any transfer or encumbrance, or the existence of any Lien, that is prohibited by this Agreement; (f) a payment or other default by Borrower or its Affiliates under any loan, lease, guaranty or other financial obligation to Lender or its Affiliates which default entitles the other party to such obligation to exercise remedies; (g) a payment or other default by Borrower or its Affiliates under any material loan, lease, guaranty or other material financial obligation to any third party which default has been declared; (h) an inaccuracy in any representation or breach of warranty by Borrower (including any false or misleading representation or warranty) in any financial statement or Loan Document, including any omission of any substantial contingent or unliquidated liability or claim against Borrower; (i) the failure by Borrower generally to pay its debts as they become due or its admission in writing of its inability to pay the same, or the commencement of any bankruptcy, insolvency, receivership or similar proceeding by or against Borrower or any of its properties or business (unless, if involuntary, the proceeding is dismissed within sixty (60) days of the filing thereof) or the rejection of this Agreement or any other Loan Document in any such proceeding; (j) Borrower shall (1) enter into any transaction of merger or consolidation where Borrower is not the surviving entity (such actions being referred to as an “Event”), unless the surviving entity is organized and existing under the Laws of the United States or any state, and prior to such Event: (A) such Person executes and delivers to Lender (x) an agreement satisfactory to Lender, in its sole discretion, containing such Person’s effective assumption, and its agreement to pay, perform, comply with and otherwise be liable for, in a due and punctual manner, all of Borrower’s Obligations having previously arisen, or then or thereafter arising, under any and all of the Loan Documents, and (y) any and all other documents, agreements, instruments, certificates, opinions and filings requested by Lender; and (B) Lender is satisfied as to the creditworthiness of such Person, and as to such Person’s conformance to the other standard criteria then used by Lender when approving transactions similar to the transactions contemplated in this Agreement; (2) cease to do business as a going concern,

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liquidate, or dissolve; or (3) sell, transfer, or otherwise dispose of all or substantially all of its assets or property; (k) if Borrower is privately held and effective control of Borrower’s voting capital stock/membership interests/partnership interests, issued and outstanding from time to time, is not retained by the present holders (unless Borrower shall have provided thirty (30) days’ prior written notice to Lender of the proposed disposition and Lender shall have consented thereto in writing); (l) if Borrower is a publicly held corporation and there is a material change in the ownership of Borrower’s capital stock, unless Lender is satisfied as to the creditworthiness of Borrower and as to Borrower’s conformance to the other standard criteria then used by Lender for such purpose immediately thereafter; (m) there occurs a default or anticipatory repudiation under any guaranty executed in connection with this Agreement; (n) failure to satisfy the requirements of any financial covenants set forth in this Agreement; or (o) breach by Borrower of Section 6(l) of this Agreement; or (p) breach by Borrower of any other covenant, condition or agreement (other than those in items (a)-(o)) under this Agreement or any of the other Loan Documents that continues for thirty (30) days after Lender’s written notice to Borrower (but such notice and cure period will not be applicable unless such breach is curable by practical means within such notice period).

The occurrence of a Default with respect to any Promissory Note shall, at the sole discretion of Lender (as set forth in a written declaration to Borrower), constitute a Default with respect to any or all of the other Promissory Notes.  Notwithstanding anything to the contrary set forth herein, Lender or its assignee(s) (as applicable) may exercise all rights and remedies hereunder or under a Promissory Note independently with respect to each Promissory Note and/or with respect to the Collateral collateralizing such Promissory Note.

8.REMEDIES.  Upon the occurrence of a Default hereunder, Lender may, at its option, declare this Agreement to be in default with respect to any or all of the Promissory Notes, and at any time thereafter may do any one or more of the following, all of which are hereby authorized by Borrower:

(a)Rights and Remedies.  If any Default shall occur and be continuing, Lender may declare the unpaid principal amount of the Promissory Note together with accrued and unpaid interest thereon, and all other Obligations then outstanding to be immediately due and payable, whereupon the same shall become and be forthwith due and payable by Borrower to Lender, without presentment, demand, protest or notice of any kind, all of which are expressly waived by Borrower; provided, that, in the case of any Default referred to in Section 7(i), the unpaid principal amount of the Promissory Note together with accrued and unpaid interest thereon, and all other Obligations then outstanding shall be automatically and immediately due and payable by Borrower to Lender without notice, presentment, demand, protest or other action of any kind, all of which are expressly waived by Borrower.  Upon the occurrence and during the continuation of any Default, then in each and every case, Lender shall be entitled to exercise any and all rights and remedies of a secured party under the UCC in effect in any applicable jurisdiction at the date of this Agreement and in addition to those rights, at its sole discretion, may require Borrower (at Borrower’s sole expense) to forward promptly any or all of the Collateral to Lender at such location as shall reasonably be required by Lender, or enter upon the premises where any such Collateral is located (without obligation for rent) and take immediate possession of and remove the Collateral by summary proceedings or otherwise, all without liability from Lender to Borrower for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise.

(b)Disposition of Collateral.  Subject to any right of Borrower to redeem the Collateral, sell, lease or otherwise dispose of any or all of the Collateral in a commercially reasonable manner at public or private sale with notice to Borrower (the parties agreeing that ten (10) days’ prior written notice shall constitute adequate notice of such sale) at such price as it may deem best, for cash, credit, or otherwise, with the right of Lender to purchase and apply the proceeds:

First, to the payment of all expenses and charges, including the expenses of any sale, lease or other disposition, the expenses of any taking, attorneys’ fees, court costs and any other expenses incurred or advances made by Lender in the protection of its rights or the pursuance of its remedies, and to provide adequate indemnity to Lender against all taxes and Liens which by law have, or may have, priority over the rights of Lender to the monies so received by Lender;

Second, to the payment of the Obligations; and

Third, to the payment of any surplus thereafter remaining to Borrower or to whosoever may be entitled thereto;

and in the event that the proceeds are insufficient to pay the amounts specified in clauses “First” and “Second” above, Lender may collect such deficiency from Borrower.

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(c)Other Rights and Remedies.  Lender may exercise any other right or remedy available to it under the Loan Documents or Applicable Law, or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof or to rescind this Agreement in whole or in part.

(d)Costs and Expenses; No Remedy Exclusive.  In addition, Borrower shall be liable for any and all unpaid additional sums due hereunder or under the Promissory Note, before, after or during the exercise of any of the foregoing remedies; for all reasonable legal fees and other reasonable costs and expenses incurred by reason of any Default or of the exercise of Lender’s remedies with respect thereto.  No remedy referred to in this Section is intended to be exclusive, but each shall be cumulative, and shall be in addition to any other remedy referred to above or otherwise available at law or in equity, and may be exercised concurrently or separately from time to time.  Borrower hereby waives any and all existing or future claims to any offset against the sums due hereunder or under the Promissory Note and agrees to make the payments regardless of any offset or claim which may be asserted by Borrower or on its behalf in connection with this Agreement.

(e)No Waiver.  The failure of Lender to exercise, or delay in the exercise of, the rights granted hereunder upon any Default by Borrower or its Affiliates shall not constitute a waiver of any such right upon the continuation or recurrence of any such Default.  Lender may take or release other security; may release any party primarily or secondarily liable for the Obligations; may grant extensions, renewals or indulgences with respect to the Obligations and may apply any other security therefor held by it to the satisfaction of the Obligations without prejudice to any of its rights hereunder.

9.NOTICES.  All notices (excluding billings and communications in the ordinary course of business) hereunder shall be in writing, personally delivered, sent by overnight courier service, sent by facsimile telecopier, or sent by certified mail, return receipt requested, addressed to the other party at its respective address stated below the signature of such parties or at such other addresses as such parties shall from time to time designate in writing to the other parties; and shall be effective from the date of receipt.  NOTWITHSTANDING THE FOREGOING, COMMUNICATIONS CONCERNING DISPUTED DEBTS HEREUNDER, INCLUDING AN INSTRUMENT TENDERED AS FULL SATISFACTION OF A DEBT HEREUNDER, ARE TO BE SENT TO:  2713 FOREST HILLS ROAD, BUILDING B, WILSON, NORTH CAROLINA  27893-4432, ATTN:  EQUIPMENT FINANCE SERVICING.

10.LENDER’S RIGHT TO PERFORM FOR BORROWER.  (a) Performance and Reimbursement. If Borrower fails to perform or comply with any of its agreements contained herein, Lender shall have the right, but shall not be obligated, to effect such performance or compliance, and the amount of any out-of-pocket expenses and other reasonable expenses of Lender thereby incurred, together with interest thereon at the Default Rate, shall be due and payable by Borrower upon demand.

(b) Power of Attorney. Borrower hereby appoints Lender as Borrower’s attorney-in-fact (which power shall be deemed coupled with an interest) to execute, endorse and deliver any deed, conveyance, assignment or other instrument in writing as may be required to vest in Lender any right, title or power which by the terms hereof are expressed to be conveyed to or conferred upon Lender, including, without limitation, real property waivers, and documents and checks or drafts relating to or received in payment for any loss or damage under the policies of insurance required hereby, but only to the extent that the same relates to the Collateral.

11.SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the benefit of Lender, its successors and assigns, and shall be binding upon the successors of Borrower.  The rights and obligations of Borrower under this Agreement may not be assigned or delegated.  Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender’s rights and obligations hereunder, in the Promissory Notes, in the Collateral and/or the Obligations held by it to others at any time and from time to time; and Lender may disclose to any such purchaser, assignee, transferee or participant (the “Participant”), or potential Participant, this Agreement and all information, reports, financial statements and documents executed or obtained in connection with this Agreement which Lender now or hereafter may have relating to the Loan, Borrower, or the business of Borrower.  Borrower hereby grants to any Participant all Liens, rights and remedies of Lender under the provisions of this Agreement or any other documents relating hereto or under applicable laws.  Borrower agrees that any Participant may enforce such Liens and exercise such rights and remedies in the same manner as if such Participant were Lender and a direct creditor of Borrower.  Upon the request of any Participant, Borrower agrees to promptly execute and deliver to Participant an acknowledgment of the assignment, transfer or sale of participation interest, in form and substance satisfactory to Participant.

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12.CHOICE OF LAW; JURISDICTION; WAIVER OF JURY TRIAL.  (a) GOVERNING LAW. THIS AGREEMENT AND ALL OTHER RELATED INSTRUMENTS AND DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, IN ALL RESPECTS, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW)), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

(b) Jurisdiction. The parties agree that any action or proceeding arising out of or relating to this Agreement may be commenced in any state or Federal court of competent jurisdiction in the State of New York, and each party submits to the jurisdiction of such court and agrees that a summons and complaint commencing an action or proceeding in any such court shall be properly served and shall confer personal jurisdiction if served personally or by certified mail to it at its address designated pursuant hereto, or as otherwise provided under the laws of the State of New York.

(c)  WAIVER OF JURY TRIAL. BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER AND LENDER MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS AGREEMENT OR THE PROMISSORY NOTE.  BORROWER AUTHORIZES LENDER TO FILE THIS PROVISION WITH THE CLERK OR JUDGE OF ANY COURT HEARING SUCH CLAIM.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND BORROWER HEREBY ACKNOWLEDGES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND THE PROMISSORY NOTE AND IN THE MAKING OF THIS WAIVER BY LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

13.MISCELLANEOUS.  (a)  Entire Agreement.  The Loan Documents constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall not be amended or altered in any manner except by a document in writing executed by both parties.

(b)Survival.  All representations, warranties, and covenants of Borrower contained herein or made pursuant hereto shall survive closing and continue throughout the term hereof and until the Obligations are satisfied in full.

(c)Severability.  Any provision of the Loan Documents which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by Applicable Law, Borrower hereby waives any provision of law which renders any provision hereof or thereof prohibited or unenforceable in any respect.

(d)Captions.  The captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

(e)Expenses.  Borrower agrees to pay or reimburse Lender for all costs and expenses (including the fees and expenses of all counsel, advisors, consultants and auditors retained in connection therewith), incurred in connection with:  (1) the preparation, negotiation, execution, delivery, performance and enforcement of the Loan Documents and the preservation of any rights thereunder (including, without limitation, filing or recording fees and taxes); (2) collection, including deficiency collections; (3) any amendment, waiver or other modification or waiver of, or consent with respect to, any Loan Document or advice in connection with the administration of the Loan or the rights thereunder; (4) any litigation, dispute, suit, proceeding or action (whether instituted by or between any combination of Lender, Borrower or any other Person), and an appeal or review thereof, in any way relating to the Collateral, any Loan Document, or any action taken or any other agreements to be executed or delivered in connection therewith, whether as a party, witness or otherwise; and (5) any effort (i) to monitor the Loan, (ii) to evaluate, observe or assess Borrower or the affairs of such Person, and (iii) to verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the Collateral.

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(f)Counterparts.  This Agreement and all of the other Loan Documents may be executed in counterparts.  Photocopies, electronic or facsimile transmissions of signatures shall be deemed original signatures and shall be fully binding on the parties to the same extent as original signatures.

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IN WITNESS WHEREOF, the parties hereto have caused this Loan and Security Agreement to be duly executed  as of the day and year first above written.

PNC EQUIPMENT FINANCE, LLC		STELLARIS LLC
Lender		Borrower
By:	/s/Cheree F. Kurela	By:	/s/ Alfons Theeuwes
Name:	Cheree F. Kurela	Name:	Alfons Theeuwes
Title:	Vice President	Title:	CFO
995 Dalton Avenue		Address:		26000 Commercentre Dr.
Cincinnati, Ohio 45203				Lake Forest, CA 92630
Facsimile: 513-763-1637		Facsimile:
		Form of Organization: Limited Liability Company
		Jurisdiction of Organization: Nevada
		Organizational No.: E0355482007-5
		Federal Employer Identification No.: xx-xxxxxxx
		Q3 CONTRACTING, INC.
		Borrower
		By:	/s/Tom Henkels
		Name:	Tom Henkels
		Title:	CFO
		Address:		3066 Spruce St.
				Little Canada, MN 55117
		Facsimile:
		Form of Organization: Corporation
		Jurisdiction of Organization: Minnesota
		Organizational No.: 7J-390
		Federal Employer Identification No.: xx-xxxxxxx

13

SCHEDULE A

DEFINITIONS

Capitalized terms used in this Agreement and the other Loan Documents shall have (unless otherwise provided elsewhere in this Agreement or in the Loan Documents) the following respective meanings:

“Adverse Environmental Condition” shall mean (i) the existence or the continuation of the existence of an Environmental Contamination (including, without limitation, a sudden or non-sudden accidental or non-accidental Environmental Contamination), or exposure to any substance, chemical, material, pollutant, Hazardous Substance, odor or audible noise or other release or emission in, into or onto the environment (including without limitation, the air, ground, water or any surface) at, in, by, from or related to any Collateral, (ii) the environmental aspect of the transportation, storage, treatment or disposal of materials in connection with the operation of any Collateral, or (iii) the violation, or alleged violation, of any Environmental Law, permits or licenses of, by or from any governmental authority, agency or court relating to environmental matters connected with any of the Collateral.

“Affiliate” means, with respect to any Person: (i) each other Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, five (5) percent or more of the Stock having ordinary voting power for the election of directors of such Person; (ii) each other Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person; or (iii) each of such Person’s officers, directors, joint venturers and partners.  For the purpose of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting Stock, by contract or otherwise.

“Agreement” means this Loan and Security Agreement including all appendices, exhibits or schedules attached or otherwise identified thereto, restatements and modifications and supplements thereto, and any appendices, exhibits or schedules to any of the foregoing, each as in effect at the time such reference becomes operative.

“Applicable Law” means any law, rule, regulation, ordinance, order, code, common law, interpretation, judgment, directive, decree, treaty, injunction, writ, determination, award, permit or similar norm or decision of any Governmental Authority.

“Borrower” means the Person identified as such in the preamble of this Agreement.

“BSA” has the meaning assigned to it in Section 6(l) of this Agreement.

“Business Day” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of New York.

“Closing Date” means the date on which a Promissory Note is executed and delivered to Lender pursuant to this Agreement.

“Collateral” has the meaning assigned to it in Section 3 of this Agreement.

“Collateral Schedule” has the meaning assigned to it in Section 3 of this Agreement.

“Default” has the meaning assigned to it in Section 7 of this Agreement.

“Default Rate” has the meaning assigned to it in Section 2(e) of this Agreement.

“Environmental Claim” shall mean any accusation, allegation, notice of violation, claim, demand, abatement or other order on direction (conditional or otherwise) by any governmental authority or any Person for personal injury (including sickness, disease or death), tangible or intangible property damage, damage to the environment or other adverse affects on the environment, or for fines, penalties or restrictions, resulting from or based upon any Adverse Environmental Condition.

“Environmental Contamination” shall mean any actual or threatened release, spill, emission, leaking, pumping, injection, presence, deposit, abandonment, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, or into or out of any of the Collateral, including, without limitation, the movement of any Hazardous Substance or other substance through or in the air, soil, surface water, groundwater or property which is not in compliance with applicable Environmental Laws.

“Environmental Law” shall mean any present or future federal, foreign, state or local law, ordinance, order, rule or regulation and all judicial, administrative and regulatory decrees, judgments and orders, pertaining to health, industrial hygiene, the use, disposal or transportation of Hazardous Substances, Environmental Contamination, or pertaining to the protection of the environment, including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) (42 U.S.C. §9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. §1801 et seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §1361 et seq.), the Occupational Safety and Health Act (19 U.S.C. §651 et seq.), and the Hazardous and Solid Waste Amendments (42 U.S.C. §2601 et seq.), as these laws have been or may be amended or supplemented, and any successor thereto, and any analogous foreign, state or local statutes, and the rules, regulations and orders promulgated pursuant thereto.

“Environmental Loss” shall mean any loss, cost, damage, liability, deficiency, fine, penalty or expense (including, without limitation, reasonable attorneys’ fees, engineering and other professional or expert fees), investigation, removal, cleanup and remedial costs (voluntarily or involuntarily incurred) and damages to, loss of the use of or decrease in value of the Collateral arising out of or related to any Adverse Environmental Condition.

“Equipment” has the meaning assigned to it in Section 3 of this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time, and any regulations promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Borrower, is treated as a single employer under Section 414(b), (c), (m) or (o) of the IRC, or, solely for the purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer under Section 414 of the IRC.

“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(b) of the IRC or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by Borrower or any ERISA Affiliate of any liability with respect to any withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Event” has the meaning assigned to it in Section 7(j) of this Agreement.

“Event of Loss” has the meaning assigned to it in Section 6(e) of this Agreement.

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, consistently applied.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guarantor” has the meaning assigned to it in Section 4(a)(3) of this Agreement.

2

“Guaranty” has the meaning assigned to in Section 4(a)(3) of this Agreement.

“Hazardous Substances” shall mean and include hazardous substances as defined in CERCLA; oil of any kind, petroleum products and their by-products, including, but not limited to, sludge or residue; asbestos containing materials; polychlorinated biphenyls; any and all other hazardous or toxic substances; hazardous waste, as defined in CERCLA; medical waste; infectious waste; those substances listed in the United States Department of Transportation Table (49 C.F.R. §172.101); explosives; radioactive materials; and all other pollutants, contaminants and other substances regulated or controlled by the Environmental Laws and any other substance that requires special handling in its collection, storage, treatment or disposal under the Environmental Laws.

“Interest Period” has the meaning assigned to it in the Promissory Note.

“IRC” means the Internal Revenue Code of 1986, as now or hereafter amended.

“Lender” has the meaning assigned to it in the preamble of this Agreement and, if at any time Lender shall decide to assign, participate or syndicate all or any of the Obligations, such term shall include each such assignee, Participant or such other members of the syndicate; together with its or their successors and assigns.

“Lien” means any mortgage, security deed or deed of trust, pledge, hypothecation, assignment, deposit arrangement, Lien, charge, claim, security interest, security title, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC or comparable law of any jurisdiction).

“Loan” means the loan in the amount of the aggregate principal amount of all advances and evidenced by the Promissory Note, and made to Borrower under the terms of this Agreement, and any renewals, extensions, revisions, modifications or replacements therefor or thereof.

“Loan Documents” means this Agreement, the Promissory Note, the Collateral Schedule, [the Guaranty], and the other documents and instruments executed pursuant hereto, the financial statements, and all other documents, instruments, certificates and notices at any time delivered by any Person (other than Lender) in connection with any of the foregoing.

“Loan Rate” has the meaning assigned to it in Section 2(d) of this Agreement.

“Material Adverse Effect” means:  a material adverse effect on (a) the business, assets, operations, prospects or financial or other condition of Borrower or the industry within which Borrower operates, (b) Borrower’s ability to pay or perform the Obligations under the Loan Documents in accordance with the terms thereof, (c) the Collateral or the Lien of Lender on the Collateral or the priority of any such Lien, or (d) Lender’s rights and remedies under this Agreement and the other Loan Documents.

“Maximum Amount” means $15,600,000.00.

“Minimum Actionable Amount” means $50,000.

“Multiemployer Plan” means a “multiemployer plan,” as defined in Section 4001(a) (3) of ERISA, to which Borrower or any ERISA Affiliate is making, is obligated to make, has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.

“Obligations” means all loans, advances, debts, expense reimbursement, fees, liabilities, and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or amounts are liquidated or determinable) owing by Borrower to Lender, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, whether arising under any of the Loan Documents or under any other agreement between Borrower and Lender, and all covenants and duties regarding such amounts.  This term includes all principal, interest (including interest accruing at the then applicable rate provided in this Agreement after the maturity of the Loan and interest accruing at the then applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), fees, charges, expenses, attorneys’ fees and any other sum chargeable to Borrower under any of the Loan Documents, and all principal and interest due in respect of the Loan.

3

“OFAC” has the meaning assigned to it in Section 6(l) of this Agreement.

“Participant” has the meaning assigned to it in Section 11 of this Agreement.

“Payment Date” has the meaning assigned to it in the Promissory Note.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Permitted Liens” has the meaning assigned to it in Section 6(c) of this Agreement.

“Person” means any individual, sole proprietorship, entity, limited liability entity, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation or government (whether Federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof), and shall include such Person’s successors and assigns.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the IRC or Section 302 of ERISA, and in respect of which Borrower or any ERISA Affiliate is (or, if such plan were terminated, could under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Premises” has the meaning assigned to it in Section 6(f) of this Agreement.

“Prepayment Fee” means an amount equal to the principal amount outstanding of the Loan to be prepaid on the date of prepayment, multiplied by: 3% if prepayment shall occur (voluntarily by Borrower, upon a Default or otherwise) after the Closing Date and on or before the first anniversary of the Closing Date; 2% if prepayment shall occur (voluntarily by Borrower, upon a Default or otherwise) after the first anniversary of the Closing Date and on or before the second anniversary of the Closing Date; 1% if prepayment shall occur (voluntarily by Borrower, upon a Default or otherwise) after the second anniversary of the Closing Date and on or before the third anniversary of the Closing Date; and 0% if prepayment shall occur (voluntarily by Borrower, upon a Default or otherwise) after the third anniversary of the Closing Date.  Borrower acknowledges and agrees that (i) it could be difficult or impractical to calculate Lender’s actual damages from prepayment for any reason pursuant to Sections 2 or 8 of this Agreement, (ii) the Prepayment Fee is intended to be a fair and reasonable approximation of such damages, and (iii) the Prepayment Fee is not intended to be a penalty.

“Prime Rate” has the meaning assigned to it in the Promissory Note.

“Proceeds” means “proceeds,” as such term is defined in the UCC and, in any event, shall include:  (i) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to Borrower from time to time with respect to any Collateral; (ii) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any Collateral by any governmental body, authority, bureau or agency (or any Person acting under color of governmental authority); (iii) any recoveries by Borrower against third parties with respect to any litigation or dispute concerning any Collateral, including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, Collateral; and (iv) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral.

“Promissory Note” has the meaning assigned to it in Section 1(b) of this Agreement.

“SEC” has the meaning assigned to it in Section 6(j) of this Agreement.

“Stated Maturity Date” has the meaning assigned to it in the Promissory Note.

“Stock” means all certificated and uncertificated shares, options, warrants, membership interests, general or limited partnership interests, participation or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934).

4

“Taxes” means taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Lender.

“Title Lien Notation Documents” has the meaning assigned to it in Section 4(b)(1) of this Agreement.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to the Lien of Lender on any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions of this Agreement relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions; provided further, that to the extent that the UCC is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.

“UCC Statements” has the meaning assigned to it in Section 3 of this Agreement.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Any accounting term used in this Agreement or the other Loan Documents shall have, unless otherwise specifically provided therein, the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed, unless otherwise specifically provided therein, in accordance with GAAP consistently applied; provided, that all financial covenants and calculations in the Loan Documents shall be made in accordance with GAAP as in effect on the Closing Date unless Borrower and Lender shall otherwise specifically agree in writing.  That certain items or computations are explicitly modified by the phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing.  All other undefined terms contained in this Agreement or the other Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the UCC.  The words “herein,” “hereof” and “hereunder” or other words of similar import refer to this Agreement as a whole, including the exhibits and schedules thereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement.

For purposes of this Agreement and the other Loan Documents, the following additional rules of construction shall apply, unless specifically indicated to the contrary:  (a) wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural; (b) the term “or” is not exclusive; (c) the term “including” (or any form thereof) shall not be limiting or exclusive; (d) all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations; and (e) all references to any instruments or agreements, including references to any of the Loan Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof.

5

PNC EQUIPMENT FINANCE, LLC

COLLATERAL SCHEDULE NO. 177362000

THIS COLLATERAL SCHEDULE NO. 177362000 is executed pursuant to and made a part of that certain Loan and Security Agreement dated as of September 20, 2013 (the “Agreement”), between PNC Equipment Finance, LLC, as Lender, and STELLARIS LLC and Q3 CONTRACTING, INC. (hereinafter individually and collectively, as Borrower, and describes collateral in which Borrower has granted Lender a security interest in connection with the Obligations (as defined in the Agreement) including without limitation that certain Promissory Note No. 177362000 dated September 20, 2013 in the original principal amount of $15,573,402.04.

DESCRIPTION				LOCATION
F350 4x2 Reg Cab Fitting	$	45,349.14	1FDRF3G68DEA20261	2351 East County Line	Des Moines,	IA	50320
F350 4x2 Reg Cab Fitting	$	42,063.11	1FDRF3G61DEA20263	1613 Read Street	Omaha	NE	68112
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GYXDEA81117	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY1DEA81118	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY3DEA81119	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GYXDEA81120	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY1DEA81121	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	48,382.75	1FDUF5GY3DEA81122	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	48,382.75	1FDUF5GY5DEA81123	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY9DEA87121	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY0DEA87122	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY2DEA87123	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	44,671.15	1FDUF5GY4DEA87124	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Ext Cab Service Body	$	31,538.71	1FD8X3E60DEA87139	3066 Spruce Street	Little Canada	MN	55117
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY6DEA87125	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY8DEA87126	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,683.45	1FDUF5GYXDEA87127	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY1DEA87128	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY3DEA87129	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY7DEA99784	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 S.Cab W/Open Body-56”	$	42,421.82	1FT7X3A67DEA54662	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,965.04	1FT8X3A68CED16451	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	42,448.11	1FT8X3A63CEC23644	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,992.33	1FT8X3A65CEC64955	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,422.36	1FT8X3A66CEC85152	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,710.58	1FT8X3A6XCEA90915	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	43,826.00	1FDRF3G63DEA18398	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-60”	$	42,553.77	1FD7X3E63CED13135	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G67DEB10159	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G63DEB10160	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G65DEB10161	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G67DEB10162	5300 Colorado Blvd	Commerce	CO	80022

					City
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G69DEB10163	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G60DEB10164	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G62DEB10165	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G64DEB10166	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G66DEB10167	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G68DEB10168	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G6XDEB10169	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G66DEB10170	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G68DEB10171	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	42,788.61	1FDRF3G6XDEB10172	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G65DEB20401	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G63DEB20395	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G65DEB20396	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	42,992.32	1FT8X3A62DEB23536	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	43,142.32	1FT8X3A64DEB23537	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	42,554.75	1FT8X3A6XDEB34266	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G61DEB20394	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G63DEB20400	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G69DEB20403	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G60DEB20404	2351 East County Line	Des Moines	IA	50320
L8501 S/A F/B Drill Trk-450011	$	28,601.27	2FZAAVDC67AZ14175	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A Contractor Dump	$	98,824.40	2NKHHM6X8EM385842	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A Contractor Dump	$	98,824.40	2NKHHM6XXEM385843	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X1EM392728	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X3EM392729	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6XXEM392730	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X1EM392731	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	94,905.35	2NKHHM6X3EM392732	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	91,680.80	2NKHHM6X2EM392733	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	95,009.00	2NKHHM6X7EM392734	633 Cecelia Drive	Pewaukee	WI	53072
T270 Reg Cab 16’ F/B Barricade	$	95,009.00	2NKHHM6X9EM392735	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A Contractor Dump	$	94,082.57	2NKHHM6X0EM392736	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A Reg Cab 18’ Saw Truck	$	95,113.85	2NKHHM6X4EM392738	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A W/Serv Body-Concrete	$	110,655.75	2NKHHM6X6EM392739	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A W/Serv Body-Concrete	$	110,530.75	2NKHHM6X2EM392740	1613 Read Street	Omaha	NE	68112
T270 S/A W/Serv Body-Concrete	$	110,030.75	2NKHHM6X4EM392741	3066 Spruce Street	Little Canada	MN	55117
T270 S/A W/Serv Body-Concrete	$	110,655.75	2NKHHM6X6EM392742	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6XXEM392744	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X1EM392745	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X3EM392746	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X5EM392747	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X7EM392748	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X9EM392749	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X5EM392750	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X9EM394288	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X3EM394285	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X5EM394286	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,728.20	2NKHHN7X0DM340249	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	110,224.22	2NKHHN7X1DM340213	5300 Colorado Blvd	Commerce	CO	80022

					City
T370 S/A Contractor Dump	$	108,342.64	2NKHHN7X9DM341237	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	108,342.64	2NKHHN7X0DM341238	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	103,805.05	2NKHHM7XXDM352614	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	107,282.68	2NKHHN7X4DM352629	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,864.58	2NKHHM7X6DM365506	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	98,951.60	2NKHHM7X0EM392783	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X2EM392784	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X4EM392785	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	93,855.72	2NKHHM7X6EM392786	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	94,230.72	2NKHHM7X8EM392787	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7XXEM392788	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X1EM392789	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	95,325.38	2NKHHM7X8EM392790	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	93,855.72	2NKHHM7XXEM392791	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	94,480.72	2NKHHM7X1EM392792	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X3EM392793	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X5EM392794	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X7EM392795	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	94,700.38	2NKHHM7X9EM392796	3066 Spruce Street	Little Canada	MN	55117
T370 S/A F/B Drill Trk-450	$	103,191.23	2NKHHN7X9DM339990	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450	$	103,191.23	2NKHHN7X0DM339991	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450047	$	97,370.15	2NKHHN7X2DM339992	3066 Spruce Street	Little Canada	MN	55117
T370 S/A F/B Drill Trk-450048	$	103,191.23	2NKHHN7X4DM339993	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450049	$	102,206.53	2NKHHN7X6DM339994	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450050	$	102,206.53	2NKHHN7X8DM339995	5300 Colorado Blvd	Commerce City	CO	80022
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS98AZ86294	2351 East County Line	Des Moines,	IA	50320
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS08AZ86295	2351 East County Line	Des Moines	IA	50320
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS48AZ86297	3066 Spruce Street	Little Canada,	MN	55117
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X8EM394281	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7XXEM394282	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X1EM394283	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X3EM394284	5300 Colorado Blvd	Commerce City	CO	80022
Peterbilt 357 T/A DUMP	$	28,581.93	1NPALU9X97N678383	633 Cecelia Drive	Pewaukee	WI	53072
Kenworth T800 Tri/A Dump	$	185,093.24	1NKDXPEX1EJ394068	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX3EJ394069	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEXXEJ394070	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	185,230.17	1NKDXPEX1EJ394071	2351 East County Line	Des Moines	IA	50320
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX3EJ394072	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX5EJ394073	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	193,616.21	1NKDXPEX7EJ394074	5300 Colorado Blvd	Commerce City	CO	80022
Kenworth T800 Tri/A Dump	$	193,620.71	1NKDXPEX9EJ394075	5300 Colorado Blvd	Commerce City	CO	80022
Kenworth T800 Tri/A Dump	$	185,092.55	1NKDXPEX0EJ394076	4445 Stickney Avenue	Toledo	OH	43612
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX2EJ394077	1613 Read Street	Omaha	NE	68112
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX4EJ394078	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX6EJ394079	633 Cecelia Drive	Pewaukee	WI	53072
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV26AV32759	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	83,721.86	2FWJA3CV17AY22055	5300 Colorado Blvd	Commerce City	CO	80022

AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV37AY19299	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV37AY22056	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV57AY24925	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	64,688.14	2FWJA3CG87AY40621	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2220DL161262	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2222DL161263	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2224DL161264	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2226DL161265	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2228DL161266	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2229DL161275	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2220DL161276	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2222DL161277	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2224DL161278	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2226DL161279	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2222DL161280	1613 Read Street	Omaha	NE	68112
T-20DD T/A Equipment Trlr-AR	$	21,199.42	4KNFT2224DL161281	2351 East County Line	Des Moines	IA	50320
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2226DL161282	633 Cecelia Drive	Pewaukee	WI	53072
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2228DL161283	633 Cecelia Drive	Pewaukee	WI	53072
T-20DD T/A Equipment Trlr-AR	$	21,484.42	4KNFT222XDL161284	4445 Stickney Avenue	Toledo	OH	43612
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2325DL161272	3066 Spruce Street	Little Canada,	MN	55117
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2327DL161273	3066 Spruce Street	Little Canada,	MN	55117
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2329DL161274	2351 East County Line	Des Moines	IA	50320
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2323DL161271	3066 Spruce Street	Little Canada,	MN	55117
Lane LCV 0406 Line Tam	$	35,744.57	1L9LC3023DG321027	3066 Spruce Street	Little Canada,	MN	55117
T-20DD T/A Equipment Trlr-AR	$	22,428.98	4KNFT2222DL161389	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,428.98	4KNFT2222DL161390	5300 Colorado Blvd	Commerce City	CO	80022
T-40 T/A Equipment Trailer	$	21,871.77	4KNFT2324DL161151	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXJDE243725	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXVDE243727	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE243746	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243752	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243886	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXVDE243890	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXEDE243894	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243900	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXJDE243904	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXADE243907	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXHDE243909	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE243911	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,548.14	1T0310KXCDE243914	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXKDE243917	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,548.14	1T0310KXLDE243892	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE244268	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXADE244278	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE244282	3066 Spruce Street	Little Canada	MN	55117
CAT 259B3 Multi-Terrain Loader	$	48,584.69	YYZ04366	2351 East County Line	Des Moines	IA	50320
CAT 259B3 Multi-Terrain Loader	$	48,584.69	YYZ04367	2351 East County Line	Des Moines	IA	50320
CAT 259B3 Multi-Terrain Loader	$	49,100.33	YYZ04371	3066 Spruce Street	Little Canada	MN	55117
CAT 279C Multi-Terrain Loader	$	65,010.64	KWB00771	2067 County Road 61	Carlton	MN	55718
CAT 279C Multi-Terrain Loader	$	65,010.64	KWB00772	2067 County Road 61	Carlton	MN	55718
CAT 279C2HF Multi-Terrain Loader	$	65,010.64	KWB00637	2067 County Road 61	Carlton	MN	55718

CAT 236B3	$	35,966.08	A9H03550	5300 Colorado Blvd	Commerce City	CO	80022
CAT 236B3	$	35,966.08	A9H03551	5300 Colorado Blvd	Commerce City	CO	80022
CAT 236B3	$	35,592.79	0A9H03568	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03569	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03570	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03571	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03572	3066 Spruce Street	Little Canada	MN	55117
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01491	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01494	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01501	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01502	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EPRKY01479	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EPRKY01482	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EARKY01490	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EJRKY01498	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01567	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035ECRKY01633	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01634	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035ECRKY01650	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01651	5300 Colorado Blvd	Commerce City	CO	80022
Vermeer RTX1250 Trench	$	116,628.21	1V2R6110R2D1001405	110 Turner Parkway	Camdenton	MO	65020
Vermeer D24x40II Series	$	233,943.56	1VRZ1903XD1002244	3066 Spruce Street	Little Canada,	MN	55117
Vermeer 36x50 Series 2	$	357,947.83	1VR4230D6D1002108	2351 East County Line	Des Moines, IA	IA	50320
Vermeer D24x40II Series 2	$	218,739.61	1VRZ19031D1002293	3066 Spruce Street	Little Canada	MN	55117
Vermeer D24x40II Series 2	$	259,521.92	1VRZ19032D1002335	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140201/4S9BU1427DL228215	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140202/4S9BU1425DL228214	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV500DHO (110416)	$	39,725.00	3152201	3066 Spruce Street	Little Canada,	MN	55117
Pacific Tek PV500DHO(110417)	$	42,590.00	3152202	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V500LEHD (110418)	$	43,029.38	S5H032013551	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V500LEHD (110419)	$	43,029.38	S5H032013552	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140203/4S9BU1429DL228216	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140204/4S9BU1429DL228217	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	54,077.63	V8H072712979	3066 Spruce Street	Little Canada	MN	55117
McLaughlin V800LEHD	$	56,072.00	V8H040513580	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	56,008.50	V8H040813585	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	56,008.50	V8H040813586	5300 Colorado Blvd	Commerce City	CO	80022
Baker Frac Tank w/Wacker	$	24,483.35	F277 / 20137613	5300 Colorado Blvd	Commerce City	CO	80022

Date: September 20, 2013
PNC EQUIPMENT FINANCE, LLC		STELLARIS LLC
Lender		Borrower
By:	/s/Cheree F. Kurela	By:	/s/Alfons Theeuwes
Name:	Cheree F. Kurela	Name:	Alfons Theeuwes
Title:	Vice President	Title:	CFO
		Q3 CONTRACTING, INC.
		Borrower
		By:	/s/Tom Henkels
		Name:	Tom Henkels
		Title:	CFO

PNC EQUIPMENT FINANCE, LLC

PROMISSORY NOTE NO. 177362000

$15,573,402.04 September 20, 2013

For value received, the receipt and sufficiency of which are hereby acknowledged, STELLARIS LLC and Q3 CONTRACTING, INC. (together with its successors and assigns, hereinafter individually and collectively, “Borrower”), hereby promises to pay to the order of PNC EQUIPMENT FINANCE, LLC (together with its successors and assigns, “Lender”), FIFTEEN MILLION FIVE HUNDRED SEVENTY THREE THOUSAND FOUR HUNDRED TWO AND 4/100 DOLLARS ($15,573,402.04), or, if less, the aggregate unpaid principal amount of the advances then having been made under the Agreement (as hereinafter defined), together with interest on the unpaid balance of such amount from the date of this Promissory Note at the Loan Rate or, under the circumstances contemplated by the Agreement, at the Default Rate.  Interest shall be computed on the basis of a 30 day month/360 day year.

This Promissory Note is one of the Promissory Notes issued under the Loan and Security Agreement dated as of September 20, 2013, between Borrower and Lender (said agreement, as the same shall be amended, restated or supplemented from time to time, being herein called the “Agreement”), to which reference is made for a statement of all of the terms and conditions of the Loan evidenced hereby.  Capitalized terms not defined in this Promissory Note shall have the respective meanings assigned to them in the Agreement.  This Promissory Note is secured by the Agreement, the other Loan Documents and the Collateral, and is entitled to the benefit of the rights and security provided thereby.

Principal and interest due hereunder shall be payable as follows:

(a)  Sixty (60) consecutive monthly installments of principal and interest, each in the amount of $274,878.71; payable, in arrears on the 20th day of each calendar month during the term hereof, commencing October 20, 2013 (each a “Payment Date”).

(b)  If any payment due hereunder is not received within ten (10) days of its due date, Borrower shall pay a late charge equal to five (5%) percent of the amount in arrears.

“Loan Rate” shall mean two point twenty eight (2.28%) percent per annum.

All payments shall be made to such account or address as Lender shall specify from time to time in writing. Unless payable earlier as provided in the Agreement, the outstanding principal and interest under this Promissory Note shall be immediately due and payable on September 20, 2018 (the “Stated Maturity Date”).  This Promissory Note may not be prepaid except as and to the extent provided in the Agreement.

To the fullest extent permitted by Applicable Law, Borrower waives:  (a) presentment, demand and protest, and notice of presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all of the Obligations, this Promissory Note or the other Loan Documents; (b) all rights to notice and a hearing prior to Lender’s taking possession or control of, or to Lender’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Lender to exercise any of its remedies; and (c) the benefit of all valuation, appraisal and exemption laws.

Borrower acknowledges that this Promissory Note is executed as part of a commercial transaction and that the proceeds of this Promissory Note will not be used for any personal or consumer purpose.

In the event of the declaration by Lender of a Default under the Agreement, then this Promissory Note shall be in default and the balance of the principal sum then due hereunder, together with all accrued interest thereon, immediately shall become due and payable without further notice, such further notice being expressly waived, and Borrower shall be liable to the holder hereof for reasonable attorneys’ fees and costs of suit.

The remedies of Lender as provided herein and in the Agreement shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

It is the intention of the parties hereto to comply with the applicable usury laws.  Accordingly, it is agreed that, notwithstanding any provisions to the contrary in this Promissory Note or the Agreement, in no event shall this Promissory Note or the Agreement require the payment or permit the collection of interest in excess of the maximum amount permitted by Applicable Law.  If any such excess interest is contracted for, charged or received under this Promissory Note or the Agreement, or in the event that all of the principal balance shall be prepaid, so that under any of such circumstances the amount of interest contracted for, charged or received under this Promissory Note or the Agreement on the principal balance shall exceed the maximum amount of interest permitted by Applicable Law, then in such event:  (a) the provisions of this paragraph shall govern and control, (b) neither Borrower nor any other person or entity now or hereafter liable for the payment hereof shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted by Applicable Law, (c) any such excess which may have been collected shall either be applied as a credit against the then unpaid principal balance or refunded to Borrower, at the option of Lender, and (d) the effective rate of interest shall be automatically reduced to the maximum lawful contract rate allowed under Applicable Law as now or hereafter construed by the courts having jurisdiction thereof.  It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received under this Promissory Note or the Agreement which are made for the purpose of determining whether such rate exceeds the maximum lawful contract rate, shall be made, to the extent permitted by Applicable Law, by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the Indebtedness evidenced hereby, all interest at any time contracted for, charged or received from Borrower or otherwise by Lender in connection with such Obligations; provided, however, that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it becomes lawful for Lender to receive a greater interest per annum rate than is presently allowed by law, Borrower agrees that, on the effective date of such amendment or preemption, as the case may be, the lawful maximum hereunder shall be increased to the maximum interest rate per annum allowed by the amended state law or the law of the United States of America (but not in excess of the Loan Rate (or, if applicable, the Default Rate) [or the Adjusted Rate] provided for herein).

BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH BORROWER AND LENDER MAY BE PARTIES ARISING OUT OF OR IN ANY WAY PERTAINING TO THIS PROMISSORY NOTE.  BORROWER AUTHORIZES LENDER TO FILE THIS PROVISION WITH THE CLERK OR JUDGE OF ANY COURT HEARING SUCH CLAIM.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND BORROWER HEREBY ACKNOWLEDGES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  BORROWER FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS PROMISSORY NOTE AND IN THE MAKING OF THIS WAIVER BY LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

BORROWER AGREES THAT THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW)), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.  Venue for any action hereunder or related hereto shall be in any state or Federal court of competent jurisdiction in the State of New York, and Borrower submits to the jurisdiction of such courts.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

IN WITNESS WHEREOF, this Promissory Note has been duly executed as of the date first written above.

STELLARIS LLC
By:	/s/Alfons Theeuwes
Name:	Alfons Theeuwes
Title:	CFO
Q3 CONTRACTING, INC.
By:	/s/Tom Henkels
Name:	Tom Henkels
Title:	CFO

3

PNC EQUIPMENT FINANCE, LLC

COLLATERAL SCHEDULE NO. 177362000

THIS COLLATERAL SCHEDULE NO. 177362000 is executed pursuant to and made a part of that certain Loan and Security Agreement dated as of September 20, 2013 (the “Agreement”), between PNC Equipment Finance, LLC, as Lender, and STELLARIS LLC and Q3 CONTRACTING, INC. (hereinafter individually and collectively, as Borrower), and describes collateral in which Borrower has granted Lender a security interest in connection with the Obligations (as defined in the Agreement) including without limitation that certain Promissory Note No. 177362000 dated September 20, 2013 in the original principal amount of $15,573,402.04

DESCRIPTION				LOCATION
	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
F350 4x2 Reg Cab Fitting	$	45,349.14	1FDRF3G68DEA20261	2351 East County Line	Des Moines,	IA	50320
F350 4x2 Reg Cab Fitting	$	42,063.11	1FDRF3G61DEA20263	1613 Read Street	Omaha	NE	68112
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GYXDEA81117	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY1DEA81118	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY3DEA81119	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GYXDEA81120	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY1DEA81121	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	48,382.75	1FDUF5GY3DEA81122	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	48,382.75	1FDUF5GY5DEA81123	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY9DEA87121	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY0DEA87122	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	47,092.75	1FDUF5GY2DEA87123	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 RegCb Contractor Dump	$	44,671.15	1FDUF5GY4DEA87124	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Ext Cab Service Body	$	31,538.71	1FD8X3E60DEA87139	3066 Spruce Street	Little Canada	MN	55117
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY6DEA87125	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY8DEA87126	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,683.45	1FDUF5GYXDEA87127	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY1DEA87128	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY3DEA87129	5300 Colorado Blvd	Commerce City	CO	80022
F550 4x2 Reg Cab 11’ F/B	$	44,608.45	1FDUF5GY7DEA99784	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 S.Cab W/Open Body-56”	$	42,421.82	1FT7X3A67DEA54662	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,965.04	1FT8X3A68CED16451	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	42,448.11	1FT8X3A63CEC23644	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,992.33	1FT8X3A65CEC64955	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,422.36	1FT8X3A66CEC85152	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-56”	$	41,710.58	1FT8X3A6XCEA90915	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	43,826.00	1FDRF3G63DEA18398	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 S.Cab W/Open Body-60”	$	42,553.77	1FD7X3E63CED13135	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G67DEB10159	3066 Spruce Street	Little Canada	MN	55117

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G63DEB10160	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G65DEB10161	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G67DEB10162	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G69DEB10163	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G60DEB10164	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G62DEB10165	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G64DEB10166	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G66DEB10167	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G68DEB10168	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G6XDEB10169	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G66DEB10170	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G68DEB10171	5300 Colorado Blvd	Commerce City	CO	80022
F350 4x2 Reg Cab Fitting Body	$	42,788.61	1FDRF3G6XDEB10172	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G65DEB20401	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G63DEB20395	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G65DEB20396	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	42,992.32	1FT8X3A62DEB23536	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	43,142.32	1FT8X3A64DEB23537	2351 East County Line	Des Moines	IA	50320
F350 4x2 S.Cab W/Open Body-56”	$	42,554.75	1FT8X3A6XDEB34266	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G61DEB20394	2351 East County Line	Des Moines	IA	50320
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G63DEB20400	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,188.61	1FDRF3G69DEB20403	3066 Spruce Street	Little Canada	MN	55117
F350 4x2 Reg Cab Fitting Body	$	41,538.61	1FDRF3G60DEB20404	2351 East County Line	Des Moines	IA	50320
L8501 S/A F/B Drill Trk-450011	$	28,601.27	2FZAAVDC67AZ14175	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A Contractor Dump	$	98,824.40	2NKHHM6X8EM385842	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A Contractor Dump	$	98,824.40	2NKHHM6XXEM385843	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X1EM392728	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X3EM392729	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6XXEM392730	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X1EM392731	5300 Colorado Blvd	Commerce City	CO	80022

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
T270 Reg Cab 16’ F/B Barricade	$	94,905.35	2NKHHM6X3EM392732	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	91,680.80	2NKHHM6X2EM392733	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	95,009.00	2NKHHM6X7EM392734	633 Cecelia Drive	Pewaukee	WI	53072
T270 Reg Cab 16’ F/B Barricade	$	95,009.00	2NKHHM6X9EM392735	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A Contractor Dump	$	94,082.57	2NKHHM6X0EM392736	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A Reg Cab 18’ Saw Truck	$	95,113.85	2NKHHM6X4EM392738	5300 Colorado Blvd	Commerce City	CO	80022
T270 S/A W/Serv Body-Concrete	$	110,655.75	2NKHHM6X6EM392739	633 Cecelia Drive	Pewaukee	WI	53072
T270 S/A W/Serv Body-Concrete	$	110,530.75	2NKHHM6X2EM392740	1613 Read Street	Omaha	NE	68112
T270 S/A W/Serv Body-Concrete	$	110,030.75	2NKHHM6X4EM392741	3066 Spruce Street	Little Canada	MN	55117
T270 S/A W/Serv Body-Concrete	$	110,655.75	2NKHHM6X6EM392742	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6XXEM392744	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X1EM392745	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X3EM392746	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X5EM392747	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X7EM392748	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,316.67	2NKHHM6X9EM392749	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X5EM392750	3066 Spruce Street	Little Canada	MN	55117
T270 S/A Reg Cab W/Service Bdy	$	99,337.25	2NKHHM6X9EM394288	3066 Spruce Street	Little Canada	MN	55117
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X3EM394285	5300 Colorado Blvd	Commerce City	CO	80022
T270 Reg Cab 16’ F/B Barricade	$	102,166.75	2NKHHM6X5EM394286	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,728.20	2NKHHN7X0DM340249	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	110,224.22	2NKHHN7X1DM340213	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	108,342.64	2NKHHN7X9DM341237	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	108,342.64	2NKHHN7X0DM341238	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	103,805.05	2NKHHM7XXDM352614	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	107,282.68	2NKHHN7X4DM352629	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,864.58	2NKHHM7X6DM365506	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	98,951.60	2NKHHM7X0EM392783	5300 Colorado Blvd	Commerce City	CO	80022

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X2EM392784	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X4EM392785	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	93,855.72	2NKHHM7X6EM392786	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	94,230.72	2NKHHM7X8EM392787	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7XXEM392788	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X1EM392789	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	95,325.38	2NKHHM7X8EM392790	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	93,855.72	2NKHHM7XXEM392791	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	94,480.72	2NKHHM7X1EM392792	3066 Spruce Street	Little Canada	MN	55117
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X3EM392793	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X5EM392794	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	100,401.60	2NKHHM7X7EM392795	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	94,700.38	2NKHHM7X9EM392796	3066 Spruce Street	Little Canada	MN	55117
T370 S/A F/B Drill Trk-450	$	103,191.23	2NKHHN7X9DM339990	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450	$	103,191.23	2NKHHN7X0DM339991	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450047	$	97,370.15	2NKHHN7X2DM339992	3066 Spruce Street	Little Canada	MN	55117
T370 S/A F/B Drill Trk-450048	$	103,191.23	2NKHHN7X4DM339993	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450049	$	102,206.53	2NKHHN7X6DM339994	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A F/B Drill Trk-450050	$	102,206.53	2NKHHN7X8DM339995	5300 Colorado Blvd	Commerce City	CO	80022
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS98AZ86294	2351 East County Line	Des Moines,	IA	50320
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS08AZ86295	2351 East County Line	Des Moines	IA	50320
Acterra S/A Contractor Dump	$	77,104.55	2FZACGBS48AZ86297	3066 Spruce Street	Little Canada,	MN	55117
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X8EM394281	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7XXEM394282	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X1EM394283	5300 Colorado Blvd	Commerce City	CO	80022
T370 S/A Contractor Dump	$	99,715.75	2NKHHM7X3EM394284	5300 Colorado Blvd	Commerce City	CO	80022
Peterbilt 357 T/A DUMP	$	28,581.93	1NPALU9X97N678383	633 Cecelia Drive	Pewaukee	WI	53072
Kenworth T800 Tri/A Dump	$	185,093.24	1NKDXPEX1EJ394068	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX3EJ394069	3066 Spruce Street	Little Canada	MN	55117

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEXXEJ394070	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	185,230.17	1NKDXPEX1EJ394071	2351 East County Line	Des Moines	IA	50320
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX3EJ394072	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX5EJ394073	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	193,616.21	1NKDXPEX7EJ394074	5300 Colorado Blvd	Commerce City	CO	80022
Kenworth T800 Tri/A Dump	$	193,620.71	1NKDXPEX9EJ394075	5300 Colorado Blvd	Commerce City	CO	80022
Kenworth T800 Tri/A Dump	$	185,092.55	1NKDXPEX0EJ394076	4445 Stickney Avenue	Toledo	OH	43612
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX2EJ394077	1613 Read Street	Omaha	NE	68112
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX4EJ394078	3066 Spruce Street	Little Canada	MN	55117
Kenworth T800 Tri/A Dump	$	184,730.17	1NKDXPEX6EJ394079	633 Cecelia Drive	Pewaukee	WI	53072
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV26AV32759	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	83,721.86	2FWJA3CV17AY22055	5300 Colorado Blvd	Commerce City	CO	80022
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV37AY19299	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV37AY22056	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	80,999.06	2FWJA3CV57AY24925	3066 Spruce Street	Little Canada	MN	55117
AT9500 T/A F/B DRILL TRUCK	$	64,688.14	2FWJA3CG87AY40621	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2220DL161262	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2222DL161263	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2224DL161264	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2226DL161265	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,488.98	4KNFT2228DL161266	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2229DL161275	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2220DL161276	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2222DL161277	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2224DL161278	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	20,894.42	4KNFT2226DL161279	3066 Spruce Street	Little Canada	MN	55117
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2222DL161280	1613 Read Street	Omaha	NE	68112
T-20DD T/A Equipment Trlr-AR	$	21,199.42	4KNFT2224DL161281	2351 East County Line	Des Moines	IA	50320
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2226DL161282	633 Cecelia Drive	Pewaukee	WI	53072

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
T-20DD T/A Equipment Trlr-AR	$	21,352.42	4KNFT2228DL161283	633 Cecelia Drive	Pewaukee	WI	53072
T-20DD T/A Equipment Trlr-AR	$	21,484.42	4KNFT222XDL161284	4445 Stickney Avenue	Toledo	OH	43612
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2325DL161272	3066 Spruce Street	Little Canada,	MN	55117
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2327DL161273	3066 Spruce Street	Little Canada,	MN	55117
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2329DL161274	2351 East County Line	Des Moines	IA	50320
T-40 T/A Equipment Trailer	$	22,794.75	4KNFT2323DL161271	3066 Spruce Street	Little Canada,	MN	55117
Lane LCV 0406 Line Tam	$	35,744.57	1L9LC3023DG321027	3066 Spruce Street	Little Canada,	MN	55117
T-20DD T/A Equipment Trlr-AR	$	22,428.98	4KNFT2222DL161389	5300 Colorado Blvd	Commerce City	CO	80022
T-20DD T/A Equipment Trlr-AR	$	22,428.98	4KNFT2222DL161390	5300 Colorado Blvd	Commerce City	CO	80022
T-40 T/A Equipment Trailer	$	21,871.77	4KNFT2324DL161151	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXJDE243725	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXVDE243727	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE243746	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243752	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243886	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXVDE243890	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXEDE243894	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE243900	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXJDE243904	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXADE243907	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXHDE243909	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE243911	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,548.14	1T0310KXCDE243914	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXKDE243917	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,548.14	1T0310KXLDE243892	5300 Colorado Blvd	Commerce City	CO	80022
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXCDE244268	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXADE244278	3066 Spruce Street	Little Canada	MN	55117
John Deere 310K 2WD ROPS	$	65,319.47	1T0310KXLDE244282	3066 Spruce Street	Little Canada	MN	55117
CAT 259B3 Multi-Terrain Loader	$	48,584.69	YYZ04366	2351 East County Line	Des Moines	IA	50320

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
CAT 259B3 Multi-Terrain Loader	$	48,584.69	YYZ04367	2351 East County Line	Des Moines	IA	50320
CAT 259B3 Multi-Terrain Loader	$	49,100.33	YYZ04371	3066 Spruce Street	Little Canada	MN	55117
CAT 279C Multi-Terrain Loader	$	65,010.64	KWB00771	2067 County Road 61	Carlton	MN	55718
CAT 279C Multi-Terrain Loader	$	65,010.64	KWB00772	2067 County Road 61	Carlton	MN	55718
CAT 279C2HF Multi-Terrain Loader	$	65,010.64	KWB00637	2067 County Road 61	Carlton	MN	55718
CAT 236B3	$	35,966.08	A9H03550	5300 Colorado Blvd	Commerce City	CO	80022
CAT 236B3	$	35,966.08	A9H03551	5300 Colorado Blvd	Commerce City	CO	80022
CAT 236B3	$	35,592.79	0A9H03568	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03569	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03570	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03571	3066 Spruce Street	Little Canada	MN	55117
CAT 236B3	$	35,592.79	0A9H03572	3066 Spruce Street	Little Canada	MN	55117
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01491	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01494	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01501	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	0RKY01502	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EPRKY01479	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EPRKY01482	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EARKY01490	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EJRKY01498	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01567	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035ECRKY01633	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01634	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035ECRKY01650	5300 Colorado Blvd	Commerce City	CO	80022
CAT 303.5E CR Mini-X	$	40,204.05	CAT3035EVRKY01651	5300 Colorado Blvd	Commerce City	CO	80022
Vermeer RTX1250 Trench	$	116,628.21	1V2R6110R2D1001405	110 Turner Parkway	Camdenton	MO	65020
Vermeer D24x40II Series	$	233,943.56	1VRZ1903XD1002244	3066 Spruce Street	Little Canada,	MN	55117
Vermeer 36x50 Series 2	$	357,947.83	1VR4230D6D1002108	2351 East County Line	Des Moines, IA	IA	50320
Vermeer D24x40II Series 2	$	218,739.61	1VRZ19031D1002293	3066 Spruce Street	Little Canada	MN	55117
Vermeer D24x40II Series 2	$	259,521.92	1VRZ19032D1002335	5300 Colorado Blvd	Commerce City	CO	80022

	COST		SERIAL #	STREET ADDRESS	CITY	STATE	ZIP CODE
Pacific Tek PV800DHO	$	49,688.75	3140201/4S9BU1427DL228215	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140202/4S9BU1425DL228214	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV500DHO (110416)	$	39,725.00	3152201	3066 Spruce Street	Little Canada,	MN	55117
Pacific Tek PV500DHO(110417)	$	42,590.00	3152202	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V500LEHD (110418)	$	43,029.38	S5H032013551	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V500LEHD (110419)	$	43,029.38	S5H032013552	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140203/4S9BU1429DL228216	5300 Colorado Blvd	Commerce City	CO	80022
Pacific Tek PV800DHO	$	49,688.75	3140204/4S9BU1429DL228217	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	54,077.63	V8H072712979	3066 Spruce Street	Little Canada	MN	55117
McLaughlin V800LEHD	$	56,072.00	V8H040513580	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	56,008.50	V8H040813585	5300 Colorado Blvd	Commerce City	CO	80022
McLaughlin V800LEHD	$	56,008.50	V8H040813586	5300 Colorado Blvd	Commerce City	CO	80022
Baker Frac Tank w/Wacker	$	24,483.35	F277 / 20137613	5300 Colorado Blvd	Commerce City	CO	80022

EX-10.3

Exhibit 10.3

CONTRIBUTION AGREEMENT

among

WESPAC ENERGY LLC,

KEALINE HOLDINGS LLC and

PRIMORIS SERVICES CORPORATION

and

WESPAC MIDSTREAM LLC,

HIGHSTAR WESPAC MAIN INTERCO LLC and

HIGHSTAR WESPAC PRISM/IV-A INTERCO LLC

Dated as of September 30, 2013

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS AND INTERPRETATION	2
Defined Terms	2
Interpretation	14
ARTICLE II CONTRIBUTIONS	15
Company Contribution	15
Premium Payments	15
ARTICLE III CLOSING	16
Closing	16
Deliveries at Closing	16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS	18
Organization; Power and Authority	18
No Violation	18
Consents and Approvals	19
Litigation	19
Compliance with Laws	19
Financial Statements	20
Material Contracts	20
No Material Adverse Event	21
Taxes	21
Undisclosed Liabilities	22
Insurance	22
Investment Representations and Warranties	23
Capitalization	24
No Broker Fees	25
Transactions with Affiliates	25
Property	25
Tangible Personal Property	26
Accurate and Complete Records	26
Intellectual Property	26
No Employees and No Employee Plans	26
Labor Matters	27
Environmental Matters	27
Indebtedness	28
Bank Accounts	28
Credit Enhancements	28

i

Permits	28
Project Milestones	29
No Other Representations	29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES	29
Organization; Power and Authority	29
No Violation	30
Consents and Approvals	30
Litigation	30
Compliance with Laws	30
Capitalization	31
Issuance of Kealine-Primoris Class A Units	31
Status	31
No Broker Fees	32
Investment Representations and Warranties	32
Financial Capability	33
Financial Statements	33
No Other Representations	33
ARTICLE VI ADDITIONAL AGREEMENTS	33
Regulatory Matters Agreement	33
Additional Agreements	33
Tax Matters	34
Non-Competition and Non-Solicitation	36
SK Tank Farm Project	37
WesPac Marks	38
Termination of Services Agreement	38
ARTICLE VII INDEMNIFICATION	39
Assumed Liabilities and Retained Liabilities	39
Indemnification Obligations	40
Limitations of Liability	41
Third Party Claims Procedure	43
Survival	44
Exclusive Remedies	44
Limited Duty to Mitigate	45
Tax Treatment	45
ARTICLE VIII GENERAL PROVISIONS	45
Expenses	45
Notices	45
Counterparts and Effectiveness	46
Future Actions	47

ii

Applicable Law; Jurisdiction	47
Enforcement of Agreement	48
Invalidity	48
Entire Agreement and Construction	48
Amendment	49
Extension; Waiver	49
Assignment; Third Party Beneficiaries	49
Interpretation	49
Press Releases	49
Records	49

EXHIBITS

Exhibit A	Business and Projects
Exhibit B	Knowledge of Sellers
Exhibit C	Form of Assignment

SELLERS’ DISCLOSURE SCHEDULE

Section 1.1(b)	Excluded Project Assets
Section 4.3	Consents and Approvals
Section 4.7(a)	Material Contracts
Section 4.7(b)	Letters of Intent
Section 4.7(c)	Drafts of Material Contracts
Section 4.8	Material Adverse Event
Section 4.10	Undisclosed Liabilities
Section 4.11	Insurance
Section 4.13	Capitalization
Section 4.15	Transactions with Affiliates
Section 4.16(a)	Real Property
Section 4.19	Intellectual Property
Section 4.21	Labor Matters
Section 4.24	Bank Accounts
Section 4.25	Credit Enhancements
Section 4.26(a)	Permits
Section 4.26(b)	Permit Applications
Section 4.26(c)	Permit Exceptions
Section 4.27	Project Milestones
Section 7.1(a)(i)	Certain Assumed Liabilities

HIGHSTAR DISCLOSURE SCHEDULE

Section 5.3	Consents and Approvals
Section 5.4	Litigation
Section 5.6	Capitalization
Section 5.12	Financial Statements

iii

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT, dated as of September 30, 2013 (this “Agreement”), is between WESPAC ENERGY LLC, a Nevada limited liability company (the “Contributor”), KEALINE HOLDINGS LLC, a Nevada limited liability company (“Kealine”), PRIMORIS SERVICES CORPORATION, a Delaware corporation (“Primoris” and, together with the Contributor and Kealine, the “Sellers”) and WESPAC MIDSTREAM LLC, a Delaware limited liability company (the “Company Issuer”), and HIGHSTAR WESPAC MAIN INTERCO LLC, a Delaware limited liability company (“Highstar Main”), and HIGHSTAR WESPAC PRISM/IV-A INTERCO LLC, a Delaware limited liability company (together with Highstar Main, the “Highstar Entities”).  Each of the Contributor, Primoris, Kealine, the Company Issuer, and the Highstar Entities is sometimes referred to herein as a “Party” and collectively, as the “Parties.”

RECITALS

WHEREAS, as of the date hereof, Primoris and Kealine collectively own 100.0% of the Equity Interests of the Contributor;

WHEREAS, as of the date hereof, the Highstar Entities collectively own 100.0% of the Equity Interests of the Company Issuer, and the Company Issuer holds or is about to receive cash in an amount equal to $8,103,936.90;

WHEREAS, the membership interests of the Company Issuer are divided into two classes: Class A Units and Class B Units, each having the relative rights and preferences set forth in the Company Issuer LLC Agreement (as defined below);

WHEREAS, the Class A Units are further divided into three series: Series A-1 Units, Series A-2 Units and Series A-3 Units, each having the relative rights and preferences set forth in the Company Issuer LLC Agreement; and

WHEREAS, the Parties have agreed that, pursuant to the terms of this Agreement, the Contributor will contribute (a) all of the Project Assets to the Company Issuer, (b) 25.0% of the Equity Interests and a 15.0% carried interest, as more particularly described in the Pittsburg LLC Agreement (together, the “Pittsburg LLC Interests”) of WesPac Energy — Pittsburg LLC, a Delaware limited liability company (“Pittsburg LLC”), to the Company Issuer and (c) 100.0% of the Equity Interests (the “Port Arthur LLC Interests”) of WesPac Port Arthur LLC, a Delaware limited liability company (“Port Arthur LLC”), to the Company Issuer and, as consideration for such contributions, the Company Issuer will (i) issue to each of Primoris and Kealine (A) 25.0% of the Series A-1 Units of the Company Issuer, (B) 25.0% of the Series A-2 Units of the Company Issuer and (C) 7.5% of the Series A-3 Units of the Company Issuer (collectively, the “Kealine-Primoris Class A Units”), and (ii) distribute to the Contributor an amount in cash of $6,081,426.90 (the “Company Distribution”).

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreement contained herein, as well as other good and valuable consideration, the

1

receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I
DEFINITIONS AND INTERPRETATION

Section 1.1Defined Terms.  For all purposes of this Agreement, the following terms shall have the respective meanings set forth in this Article I (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):

“Affiliate” means, when used with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such Person.  For the purposes of this definition, the terms “control, controlling, controlled by, or under common control” mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or by contract) of a Person; provided, however, that for purposes of this Agreement, Pittsburg LLC shall be deemed an Affiliate of the Contributor, Kealine, and Primoris.

“Agreement” has the meaning set forth in the preamble of this Agreement.

“Assignment” has the meaning set forth in Section 3.2(a)(i).

“Assumed Liabilities” has the meaning set forth in Section 7.1(a).

“Business” means the development, ownership, operation, maintenance, expansion, construction, commissioning and decommissioning of, and acquisition of, crude oil, natural gas, refined products and natural gas liquids and liquefied natural gas storage and transportation facilities and processing and treating facilities, including the projects described on Exhibit A, the marketing of crude oil, natural gas, liquefied natural gas, refined products, natural gas liquids and other hydrocarbons in connection therewith and all other acts or activities incidental or related to any of the foregoing.

“Business Assets” means, collectively, the Project Assets, the Pittsburg Assets and the Port Arthur Assets.

“Business Day” means a day other than a Saturday or a Sunday, on which commercial banks are authorized to be open for business with the public in New York, New York.

“Closing” has the meaning set forth in Section 3.1.

“Closing Date” has the meaning set forth in Section 3.1.

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and any comparable successor statute or statutes.

“Commercial Close” means, in reference to the Port Arthur Project, the full execution and delivery of a commercial contract between Port Arthur LLC and a counterparty that obligates Port Arthur LLC, subject to normal and customary conditions, to construct and operate

2

for the use or benefit of the counterparty an oil, refined products or liquid natural gas loading and unloading facility, or other terminaling facilities, at or near the Port of Port Arthur, in Port Arthur, Texas, in exchange for which the counterparty agrees to provide Port Arthur LLC with a revenue stream sufficient to induce Port Arthur LLC to enter into the contract and commit to the construction and operation of the Port Arthur Project, as more specifically described in Exhibit F to the Company Issuer LLC Agreement.  Additionally for Commercial Close the Port Arthur LLC will (a) have obtained the full execution and delivery of site control, or site control options, or other land use agreements between Port Arthur LLC and the Port of Port Arthur to give Port Arthur LLC the right to construct and operate the Port Arthur Project on the applicable property, (b) have made sufficient progress toward receiving such material permits and easements (in the reasonable judgment of the Board) necessary to begin ordering long-lead items, and (c) have construction estimates and quotes from contractors or suppliers that provide sufficient support that (in the reasonable judgment of the Board) a construction contract can be achieved to provide necessary economics.  “Commercial Close” means, in reference to the Pittsburg Project, the full execution and delivery of a commercial contract between Pittsburg LLC and a counterparty that obligates Pittsburg LLC, subject to normal and customary conditions, to construct and operate Phase 1 of the Pittsburg Project for the use or benefit of the counterparty, in exchange for which the counterparty agrees to provide Pittsburg LLC with a revenue stream sufficient to induce Pittsburg LLC to enter into the contract and commit to the construction and operation of Phase 1 of the Pittsburg Project, as more specifically described in Exhibit E (under the subheading “For Purposes of Definition of ‘Commercial Operation’”) to the Company Issuer LLC Agreement.  Additionally, for Commercial Close, Pittsburg LLC will (a) have obtained the full execution and delivery of site control, or site control options, or other land use agreements between Pittsburg LLC and all pertinent counterparties sufficient to give Pittsburg LLC the right to construct and operate the Phase 1 of the Pittsburg Project on the applicable property, (b) have made sufficient progress toward receiving such material permits and easements (in the reasonable judgment of the Board) necessary to begin ordering long-lead items, and (c) have construction estimates and quotes from contractors or suppliers for Phase 1 of the Pittsburg Project that provide sufficient support that (in the reasonable judgment of the Board) a construction contract can be achieved to provide necessary economics.

“Commercial Operation” means, in reference to either the Port Arthur Project or the Pittsburg Project, the commencement of revenue generating operation of the facilities that constitute such project in full compliance with all required permits and applicable Law and the applicable commercial contracts and agreements relating to such project; provided, however, that in order for the Pittsburg Project to be deemed to have reached Commercial Operation, it must satisfy the requirements set forth in Exhibit E to the Company Issuer LLC Agreement under the subheading “For Purposes of Definition of ‘Commercial Operation’.”  Notwithstanding the specific definitions in Exhibit E and F to the Company Issuer LLC Agreement, if either the Port Arthur Project or Pittsburg Project achieves financial value that is materially similar to what is described in those Exhibits by a different means without any material diminution in risk profile or financeability (e.g., expansions or modifications that yield equal or greater EBITDA with the same level of legal certainty and creditworthiness), then Commercial Operation shall be deemed to have occurred with respect to such project.

“Company Allocation” has the meaning set forth in Section 6.3(b).

3

“Company Distribution” has the meaning set forth in the Recitals.

“Company Issuer” has the meaning set forth in the Recitals.

“Company Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Company Issuer.

“Competing Opportunity” has the meaning set forth in Section 6.4(a)(i).

“Consent” has the meaning set forth in Section 4.3.

“Contracts” means contracts, leases of personal property, licenses, royalty agreements, joint venture agreements, instruments, security interests, purchase and sale orders and other similar binding arrangements and other agreements, whether written or oral, that are in effect as of the date of this Agreement (or with respect to which any Person has continuing liability, contingent or otherwise, as of the date of this Agreement).

“Contribution Documents” means this Agreement, the Company Issuer LLC Agreement, the Operating Services Agreement and any other documents relevant hereto and thereto.

“Contributor” has the meaning set forth in the preamble of this Agreement.

“Contributor Entities” means the Contributor, the Subsidiaries of the Contributor and Pittsburg LLC.

“Contributor Financial Statements” means the consolidated balance sheets and related statements of income and cash flows of the Contributor as, at and for the years ended December 31, 2011 and December 31, 2012, in each case including the notes thereto.

“Contributor Indemnitees” has the meaning set forth in Section 7.2(b).

“Contributor Taxes” means any and all Taxes imposed on the Contributor Entities or for which the Contributor Entities may otherwise be liable (a) attributable to any Pre-Closing Taxable Period; (b) resulting from a breach of the covenants set forth in Section 6.3; or (c) as a result of being a member, prior to the Closing, of any affiliated, consolidated, combined, unitary or similar group for Tax purposes by reason of Treasury Regulation § 1.1502-6(a) or any analogous or similar foreign, state or local law.  The portion, if any, of any Taxes due with respect to a Straddle Period that is attributable to the Pre-Closing Taxable Period is in the case of any Taxes that are either (i) based upon or related to income or receipts or (ii) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), equal to the amount that would be payable as determined by an interim closing of the books if the relevant Straddle Period ended on and included the Closing Date; provided, however, that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the portion of the Straddle Period ending on and including the Closing Date and the remainder of such Straddle Period in proportion to the number of days in each period; provided further that any franchise Tax or other Tax providing the right to do business shall be allocated to the period during which the income, operations, assets or capital comprising the base of such Tax is measured, regardless

4

of whether the right to do business for another period is obtained by the payment of such Tax.  In the case of any other Taxes due with respect to a Straddle Period, the portion, if any, of such Taxes that is attributable to the Pre-Closing Taxable Period shall be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the portion of the Straddle Period up to and including the Closing Date and the denominator of which is the number of days in the entire Straddle Period.

“Covered Claim” has the meaning set forth in Section 8.5(b).

“Encumbrance” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever, other than those arising under the Securities Act or applicable state securities or blue sky Laws.

“Environmental Law” means all foreign, federal, state and local Laws relating to pollution or protection of the environment or human health, including Laws relating to Releases or threatened Releases of Hazardous Substances into the environment (including ambient air, surface water, groundwater, land, surface and subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Substances and all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances, and all Laws relating to endangered or threatened species and the protection, management or use of natural resources.

“Environmental Permits” means any Permit required under, or issued by a Governmental Authority pursuant to, any Environmental Law.

“Equity Interests” means (a)(i) with respect to a limited liability company, any and all shares, interests, participations or other equivalents (however designated) of membership interests of a limited liability company, (ii) with respect to a partnership, any and all partnership interests, units, interests, participations shares or other equivalents (however designated) of partnership interests and (iii) with respect to a corporation, any and all capital stock, shares and other equivalents (however designated) of equity interests and (b) securities convertible into or exchangeable for any of the foregoing, and any and all warrants, rights or options to purchase, or obligations of a Person to sell, any of the foregoing, whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excluded Business Assets” means (a) any claims for and rights to receive refunds, credits, and loss carryforwards with respect to Taxes and Tax periods for which the Contributor is liable under Section 6.3 and Taxes and Tax loss carryforwards relating to the Business or Business Assets attributable to the period ending on or prior to the Closing Date; (b) any claims, causes of action or rights of the Contributor to receive indemnification, reimbursement, contributions, damages or other payments from Kealine, Primoris or their Affiliates owing to the Contributor; (c) the rights of the Contributor, Kealine and Primoris, respectively, under or pursuant to this Agreement and the other agreements and documents executed and delivered in

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connection herewith; (d) capital stock, membership interests or other equity interests in the Contributor; (e) any Equity Interests issued to the Contributor pursuant to the terms of this Agreement; (f) the Contributor’s Organizational Documents; (g) the projects and Equity Interests in Subsidiaries holding such projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule; and (h) cash and cash equivalents of the Contributor.

“Existing Title Policies” has the meaning set forth in Section 4.16(b).

“Final Pittsburg Premium” has the meaning set forth in Section 2.2(a)(ii).

“Final Port Arthur Premium” has the meaning set forth in Section 2.2(b)(iii).

“Fundamental Representations” has the meaning set forth in Section 7.3(b).

“GAAP” means United States generally accepted accounting principles, consistently applied with the applicable party’s past practices.

“Governmental Authority” means any court or tribunal in any jurisdiction (domestic or foreign) or any governmental or regulatory body, agency, department, commission, board, bureau or other authority or instrumentality (domestic or foreign).

“Governmental Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to Law.

“Hazardous Substances” means any chemicals, materials or substances, whether solid, liquid or gaseous, that is listed, regulated, classified, defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning and regulatory effect under any applicable Environmental Law, and shall include petroleum hydrocarbons, petroleum products, oil and natural gas exploration and production wastes, natural gas liquids, condensate, natural gas, naturally occurring radioactive materials or any other substance or waste regulated under or for which liability or standards of care are imposed by Environmental Laws.

“Highstar Disclosure Schedule” means the disclosure schedules delivered by the Company Issuer and the Highstar Entities in connection with the execution of this Agreement.

“Highstar Entities” has the meaning set forth in the preamble to this Agreement.

“Highstar Main” has the meaning set forth in the preamble to this Agreement.

“Highstar Financial Statements” means the consolidated statements of financial condition and related statements of income and cash flows of Highstar Capital IV, L.P. and its Subsidiaries, Highstar Capital IV-A, L.P. and its Subsidiaries and Highstar Capital IV Prism, L.P. and its Subsidiaries, in each case, as, at and for the year ended December 31, 2012 and including the notes thereto.

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“Indebtedness” means, with respect to any Person, the aggregate amount (without duplication including the current portions thereof) of all (a) indebtedness for money borrowed from any Person, purchase money obligations, capitalized lease obligations, obligations to pay deferred purchase price of assets, services or securities and reimbursement obligations for letters of credit or similar instruments that have been drawn, in each case of such Person (provided that the foregoing shall not include trade accounts payable and other accrued current liabilities, in each case, arising in the ordinary course), (b) indebtedness of the type described in clause (a) above guaranteed, directly or indirectly, in any manner by such Person or for which such Person may be liable, but excluding endorsements of checks and other similar instruments in the ordinary course of business, (c) interest expense accrued but unpaid on or relating to any of such indebtedness, and (d) prepayment penalties, premiums, late charges, penalties and collection fees relating to any of such indebtedness.

“Indemnifiable Loss” has the meaning set forth in Section 7.2(a).

“Indemnifying Party” has the meaning set forth in Section 7.3(c).

“Indemnitee” has the meaning set forth in Section 7.3(c).

“Independent Accountant” has the meaning set forth in Section 6.3(b).

“Initial Pittsburg Premium” has the meaning set forth in Section 2.2(a)(i).

“Initial Port Arthur Premium” has the meaning set forth in Section 2.2(b)(i).

“Insurance Policies” has the meaning set forth in Section 4.11.

“Intellectual Property” has the meaning set forth in Section 4.19.

“Investing Seller” has the meaning set forth in Section 4.12(a).

“Issuer Indemnitees” has the meaning set forth in Section 7.2(a).

“Knowledge” means, with respect to any Party, the knowledge of the individuals listed in Exhibit B, in each case after reasonable inquiry.  For purposes of the definition of “Knowledge,” “reasonable inquiry” by any Person with respect to any fact, event, circumstance or condition means such Person’s making inquiries of each of the following, but only to the extent that such Person would reasonably expect any of the following to have actual knowledge regarding the relevant fact, event, circumstance or condition: (a) the officers, directors and managers of the Company or any of its Subsidiaries, (b) any employees of the Company or any of its Subsidiaries reporting directly to the officers of the Company or (c) the Company’s accountants or legal counsel.

“Law” means any supernational, regional, federal, state, local or foreign law, statute, code, ordinance, rule, judgment, writ, injunction, regulation, order or decree.

“Leased Real Property” has the meaning set forth in Section 4.16(a).

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“Letters of Intent” has the meaning set forth in Section 4.7(b).

“Liability Cap” has the meaning set forth in Section 7.3(b).

“Loss Basket” has the meaning set forth in Section 7.3(a).

“Kealine” has the meaning set forth in the preamble of this Agreement.

“Kealine-Primoris Class A Units” has the meaning set forth in the Recitals.

“Material Adverse Event” means with respect to any Party, (a) any event that has a material adverse effect on the business, financial condition or results of operations of such Party and its Subsidiaries, taken as a whole; provided, however, that none of the following changes, effects, developments, circumstances or conditions shall be taken into account for purposes of determining whether or not a Material Adverse Event has occurred: (i) any change in applicable Law or in the interpretation of any applicable Law by any Governmental Authority, (ii) any change in GAAP, (iii) any circumstances or conditions generally affecting the industry in which such Party is engaged (iv) general economic, political or market conditions in the United States, (v) natural disasters that affect any real property owned by the Contributor Entities, (vi) the announcement of the transactions contemplated in this Agreement (except this clause (vi) shall not be applicable with respect to the representations set forth in Section 4.2, Section 4.26(a) (last sentence only) or Section 5.2), or (vii) unknown geological fault lines that affect any real property owned by the Contributor Entities, except in the cases of clauses (i) through (vii), to the extent disproportionately affecting the business, financial condition or results of operations of such Party as compared with other Persons engaging in any business of the type described in the definition of “Business”; or (b) any event that materially impairs the ability of such Party to consummate the transactions contemplated hereby.

“Material Contracts” has the meaning set forth in Section 4.7.

“Non-Compete Party” means each of Kealine, David Smith and the Contributor.

“Non-Compete Term” means the earlier of (x) the fifth anniversary of the date of this Agreement and (y) the last day that David Smith is employed by or an owner, directly or indirectly through any holding companies or otherwise, of any equity interest in any of Services Provider or Company Issuer and, in each case, for a period of two years thereafter.

“Operating Services Agreement” means that certain Operating and Development Services Agreement to be entered into on the Closing Date between the Company Issuer and Kealine for the day-to-day management of the Company Issuer.

“Organizational Documents” means: (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the articles of formation and regulations or company agreement of a limited liability company; (c) the partnership agreement and any statement of partnership of a general or limited liability partnership; (d) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing.

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“Owned Real Property” has the meaning set forth in Section 4.16(a).

“Party” or “Parties” has the meaning set forth in the preamble of this Agreement.

“Per Claim Threshold” has the meaning set forth in Section 7.2(b).

“Permits” means any permit, license, approval and similar authorization given by or required from any Governmental Authority.

“Permitted Encumbrance” means Encumbrances for:

(a)Current Taxes not yet due and payable or not yet delinquent;

(b)Mechanics’, materialmen’s, carriers’, workers’, repairers’, maritime and statutory liens and rights in rem and other similar Encumbrances arising or incurred in the ordinary and usual course of business for amounts that are not yet delinquent and would not materially impair the continued use or operation of any portion of the Business;

(c)Inchoate liens and charges imposed by Law and incidental to the construction, maintenance, development or operation of the Contributor Entities’ properties or the operation of the Business, if payment of the obligation secured thereby is not yet delinquent;

(d)Liens for assessments, obligations under workers’ compensation or other social welfare legislation or other requirements, charges or levies of any Governmental Authority, in each case not yet delinquent;

(e)Easements, servitudes, rights-of-way and other rights, exceptions, reservations, conditions, limitations, covenants and other restrictions that do not materially interfere with the operation or use of the Contributor Entities’ assets, including the Business Assets, affected thereby;

(f)Conventional provisions contained in any contracts or agreements affecting properties under which the applicable Contributor Entity is required immediately before the expiration, termination or abandonment of a particular property to reassign to such Person’s predecessor in title all or a portion of such Person’s rights, titles and interests in and to all or a portion of such property;

(g)Pledges and deposits to secure the performance of bids, tenders, trade or government contracts (other than for repayment of borrowed money), statutory obligations, surety bonds, performance bonds, completion bonds and other obligations of a like kind that do not materially interfere with, impair or impede the Business as currently conducted or contemplated to be conducted; and

(h)Any liens consisting of (i) statutory landlord’s liens under leases to which any Contributor Entity is a party or other liens on leased property reserved in leases thereof for rent or for compliance with the terms of such leases, (ii) rights reserved to or vested in any Governmental Authority to control or regulate any property of the Company Issuer, or to limit the use of such property in any manner which does not materially impair the use of such property

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for the purposes for which it is held by the Company Issuer, (iii) obligations or duties to any Governmental Authority with respect to any Governmental Authorization and the rights reserved or vested in any Governmental Authority to terminate any such Governmental Authorization or to condemn or expropriate any property, or (iv) zoning or other land use or environmental laws and ordinances of any Governmental Authority.

“Person” means an individual, partnership, limited partnership, limited liability partnership, limited liability company, foreign limited liability company, trust, estate, corporation, custodian, trustee, executor, administrator, nominee or any other entity.

“Pittsburg Allocation” has the meaning set forth in Section 6.3(b).

“Pittsburg Assets” means, to the extent applicable to Pittsburg LLC, less and except for the Excluded Business Assets:

(a)any Equity Interests owned or held by Pittsburg LLC;

(b)the Tangible Personal Property owned or held by Pittsburg LLC;

(c)all Contracts relating to the Business to which Pittsburg LLC is a party or with respect to which Pittsburg LLC is a beneficiary;

(d)the Intellectual Property owned by Pittsburg LLC and all rights associated therewith;

(e)all of the Records that are owned by and in the possession or control of Pittsburg LLC;

(f)accounts receivable and other current assets of Pittsburg LLC other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by Pittsburg LLC; and notes receivable and other financial instruments owned by Pittsburg LLC;

(g)the goodwill of the Business attributable to Pittsburg LLC; and

(h)all Permits held by Pittsburg LLC, including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

“Pittsburg Financial Statements” means the balance sheets and related statements of income and cash flows of Pittsburg LLC as, at and for the years ended December 31, 2011 and December 31, 2012, in each case including the notes thereto.

“Pittsburg LLC” has the meaning set forth in the Recitals.

“Pittsburg LLC Agreement” means the Operating Agreement of WesPac Energy-Pittsburg LLC, effective as of the 22nd day of July, 2011.

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“Pittsburg LLC Interests” has the meaning set forth in the Recitals.

“Pittsburg Project” has the meaning set forth in the Company Issuer LLC Agreement.

“Port Arthur Allocation” has the meaning set forth in Section 6.3(b).

“Port Arthur Assets” means, to the extent applicable to Port Arthur LLC, less and except for the Excluded Business Assets:

(a)any Equity Interests owned or held by Port Arthur LLC;

(b)the Tangible Personal Property owned or held by Port Arthur LLC;

(c)all Contracts relating to the Business to which Port Arthur LLC is a party or with respect to which Port Arthur LLC is a beneficiary;

(d)the Intellectual Property owned by Port Arthur LLC and all rights associated therewith;

(e)all of the Records that are owned by and in the possession or control of Port Arthur LLC;

(f)accounts receivable and other current assets of Port Arthur LLC other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by Port Arthur LLC; and notes receivable and other financial instruments owned by Port Arthur LLC;

(g)the goodwill of the Business attributable to Port Arthur LLC; and

(h)all Permits held by Port Arthur LLC, including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

“Port Arthur LLC” has the meaning set forth in the Recitals.

“Port Arthur LLC Interests” has the meaning set forth in the Recitals.

“Port Arthur Project” has the meaning set forth in the Company Issuer LLC Agreement.

“Pre-Closing Taxable Period” means any taxable period ending on or before the Closing Date and that portion of any Straddle Period up to and including the Closing Date.

“Primoris” has the meaning set forth in the preamble of this Agreement.

“Project Assets” means, less and except for the Excluded Business Assets:

(a)the Tangible Personal Property owned or held by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC);

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(b)all Contracts relating to the Business to which any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) is a party or with respect to which any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) is a beneficiary;

(c)the Intellectual Property owned by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) and all rights associated therewith;

(d)all of the Records that are owned by and in the possession or control of the Contributor Entities (other than Pittsburg LLC and Port Arthur LLC);

(e)accounts receivable and other current assets of the Contributor other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by the Contributor; and notes receivable and other financial instruments owned by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC);

(f)the goodwill of the Business; and

(g)all Permits held by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC), including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

“Project Gantt Charts” has the meaning set forth in Section 4.27.

“Purchase Price Allocations” has the meaning set forth in Section 6.3(b).

“Real Property” has the meaning set forth in Section 4.16(a).

“Release” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, or migration of Hazardous Substances into or through air, surface water, groundwater, sediments, land, soils, or surface or subsurface strata.

“Retained Liabilities” has the meaning set forth in Section 7.1(b).

“Records” means all of the following that are owned by and in the possession or control of the Contributor Entities: (a) financial, accounting and operating data, including customer lists; contact information and files; sales and promotional data, including sales and marketing contact information; advertising materials; credit information; cost and pricing information; vendor, supplier and distributor lists; and contact information, (b) agreements (including contracts in draft form), term sheets, project timelines, memoranda, and similar documents relating to the Business and (c) except for books, records and information relating to Taxes and Tax periods for which the Sellers are liable under Section 6.3, other books, records and information of the Sellers relating to the Business Assets or the Business.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Sellers” has the meaning set forth in the preamble to this Agreement.

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“Sellers’ Disclosure Schedule” means the disclosure schedules delivered by Sellers in connection with the execution of this Agreement.

“Series A-1 Units” has the meaning set forth in the Company Issuer LLC Agreement.

“Series A-2 Units” has the meaning set forth in the Company Issuer LLC Agreement.

“Series A-3 Units” has the meaning set forth in the Company Issuer LLC Agreement.

“Services Provider” has the meaning set forth in the Company Issuer LLC Agreement.

“SK” has the meaning set forth in Section 6.5.

“SK JDA” has the meaning set forth in Section 6.5.

“SK Tank Farm Project” means the new refined products tank farm to be situated near the Port of Long Beach or the Port of Los Angeles for marine and pipeline deliveries and receipts.

“Straddle Period” means any taxable period beginning on or before the Closing Date and ending after the Closing Date.

“Subsidiary” means, with respect to any specified Person, any corporation, limited liability company, association, partnership or other business entity (a) that is controlled by such Person and (b) the outstanding equity securities of which are entitled to more than 50.0% of the distributions.

“Subsidiary Equity Interests” has the meaning set forth in Section 4.13(b).

“Tangible Personal Property” means all capital equipment, together with all other machinery, equipment, vehicles, leasehold improvements, furniture and fixtures, office equipment, supplies, inventory and other tangible personal property owned, held or used by any Contributor Entity in connection with the conduct of the Business.

“Tax” or “Taxes” means, however denominated, any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, escheats, unclaimed property, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp and taxes arising under Treasury Regulation Section 1.1502-6 (or any comparable state or local Law) as a transferee or successor, by contract, or otherwise), together with any interest thereon, penalties, fines, additions to tax or additional amounts with respect thereto, imposed by any Tax Authority.

“Tax Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity

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or subdivision, including any governmental or quasi-governmental entity or agency that imposes, or is charged with collecting, social security or similar charges or premiums.

“Tax Claim” has the meaning set forth in Section 6.3(f).

“Tax Proceeding” has the meaning set forth in Section 4.9(d).

“Tax Return(s)” means any report, return, document, declaration or other information or filing (including any amendments, elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any federal, state or local Tax Authority or jurisdiction with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes any Contributor Entity, any documents supplied with respect to or accompanying payments of estimated Taxes, or supplied with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

“Third Party Claim” has the meaning set forth in Section 7.4(a).

“Transfer Taxes” has the meaning set forth in Section 6.3(e).

“Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code.  All references in this Agreement to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

“Units” has the meaning set forth in the Company Issuer LLC Agreement.

Section 1.2Interpretation.  Unless the context of this Agreement otherwise requires:  (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and similar words refer to this entire Agreement and not to any particular Article, Section, Clause, Exhibit or Schedule or any subdivision of this Agreement; (d) references to “Article,” “Section,” “Clause,” “Exhibit” or “Schedule” are to the Articles, Sections, Clauses, Exhibits, Sellers’ Disclosure Schedules and Issuer Disclosure Schedules, respectively, of this Agreement; (e) the words “include” or “including” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not such words are followed by such phrases or phrases of like import; and (f) references to “this Agreement” or any other agreement or document shall be construed as a reference to such agreement or document as amended, modified or supplemented and in effect from time to time and shall include a reference to any document which amends, modifies or supplements it.  Each section of the Sellers’ Disclosure Schedule or Issuer Disclosure Schedule will apply only to the corresponding Section or subsection of this Agreement, unless the relevance of a disclosure on a particular section of the Sellers’ Disclosure Schedule or Issuer Disclosure Schedule to one or more other sections of such disclosure schedule is reasonably apparent from the text of such disclosure.

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ARTICLE II
CONTRIBUTIONS

Section 2.1Company Contribution.  Upon the terms and subject to the conditions of this Agreement, at the Closing, (a) the Contributor shall contribute, or cause to be contributed, free and clear of any Encumbrances (other than Permitted Encumbrances), to the Company Issuer the Project Assets, the Pittsburg LLC Interests and the Port Arthur LLC Interests, and (b) in exchange therefor, the Company Issuer shall (i) issue and deliver 50.0% of the Kealine-Primoris Class A Units to Kealine and 50.0% of the Kealine-Primoris Class A Units to Primoris, and (ii) distribute the Company Distribution to the Contributor.

Section 2.2Premium Payments.  As further consideration in exchange for the Project Assets, the Highstar Entities will contribute to the Company Issuer the following payments, subject to the following terms and conditions:

(a)Pittsburg Premium Payment.

(i)In the event the Pittsburg Project reaches Commercial Close, then within 10 Business Days following such date, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Initial Pittsburg Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Initial Pittsburg Premium, the Company Issuer will distribute 50.0% of the Initial Pittsburg Premium to Kealine on account of its Series A-1 Units and 50.0% of the Initial Pittsburg Premium to Primoris on account of its Series A-1 Units.  If the Pittsburg Project does not reach Commercial Close, the Initial Pittsburg Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts, including the Final Pittsburg Premium, to Company Issuer, Kealine or Primoris under this Section 2.2(a).

(ii)In the event the Pittsburg Project commences Commercial Operation, then within 10 Business Days following such commencement of Commercial Operation, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Final Pittsburg Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Final Pittsburg Premium, the Company Issuer will distribute 50.0% of the Final Pittsburg Premium to Kealine on account of its Series A-1 Units and 50.0% of the Final Pittsburg Premium to Primoris on account of its Series A-1 Units.  If the Pittsburg Project does not commence Commercial Operation, the Final Pittsburg Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(a)(ii).

(b)Port Arthur Premium Payment.

(i)In the event the Port Arthur Project reaches Commercial Close on or before January 31, 2014, then within 10 Business Days following such date, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Initial Port Arthur Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Initial Port Arthur Premium, the Company Issuer will distribute 50.0% of the Initial Port Arthur Premium to

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Kealine on account of its Series A-2 Units and 50.0% of the Initial Port Arthur Premium to Primoris on account of its Series A-2 Units.

(ii)In the event the Port Arthur Project fails to reach Commercial Close on or before January 31, 2014 but subsequently reaches Commercial Close on or before March 31, 2014, then the Initial Port Arthur Premium will be equal to $3.5 million, and such amount will be distributed in accordance with Section 2.2(b)(i).  In the event the Port Arthur Project fails to reach Commercial Close on or before March 31, 2014 but subsequently reaches Commercial Close on or before June 30, 2014, then the Initial Port Arthur Premium will be equal to $1.5 million, and such amount will be distributed in accordance with Section 2.2(b)(i).  If the Port Arthur Project reaches Commercial Close at any time after June 30, 2014, the Initial Port Arthur Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(b).

(iii)In the event the Port Arthur Project commences Commercial Operation, then within 10 Business Days following such commencement of Commercial Operation, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to the amount of the Initial Port Arthur Premium, as determined under Section 2.2(b) depending on when the Port Arthur Project reached Commercial Close (the “Final Port Arthur Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Final Port Arthur Premium, the Company Issuer will distribute 50.0% of the Final Port Arthur Premium to Kealine on account of its Series A-2 Units and 50.0% of the Final Port Arthur Premium to Primoris on account of its Series A-2 Units.  If the Port Arthur Project does not commence Commercial Operation, the Final Port Arthur Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(b)(iii).

ARTICLE III
CLOSING

Section 3.1Closing.  Subject to the terms of this Agreement, the closing of the Contribution (the “Closing”) will take place at the offices of Sidley Austin LLP, 1000 Louisiana Street, Suite 6000, Houston, Texas  77002 concurrently with the execution of this Agreement (the “Closing Date”).

Section 3.2Deliveries at Closing.

(a)Sellers.  At the Closing, Sellers shall deliver, or cause to be delivered, to the Highstar Entities:

(i)an executed counterpart, duly signed by the Contributor, of the Assignment and Assumption Agreement, evidencing the assignment of the Project Assets to the Company Issuer, in substantially the form attached as Exhibit C (the “Assignment”);

(ii)executed counterparts, duly signed by Primoris, Kealine and any recipients of Class B Units (such Persons to be recipients at Closing to be determined by mutual agreement of Kealine and the Highstar Entities), of the Company Issuer LLC Agreement;

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(iii)executed counterparts, duly signed by Kealine, of the Operating Services Agreement;

(iv)a copy of the certificates of formation, and any amendments thereto, of the Contributor, each of its Subsidiaries and Pittsburg LLC, in each case, certified by the Secretary of State of the state of such entity’s formation;

(v)a certificate of good standing of the Contributor, each of its Subsidiaries and Pittsburg LLC from the Secretary of State of the state of such entity’s formation dated no earlier than seven Business Days prior to the Closing Date;

(vi)duly executed copies of all required consents, if any, listed on Section 4.3 of the Sellers’ Disclosure Schedule; and

(vii)a certification of non-foreign status executed by Contributor in the form prescribed by Treasury Regulation Section 1.1445-2(b)(2).

(b)Highstar Entities and the Company Issuer.  At the Closing, the following specified entity shall deliver, or cause to be delivered:

(i)from the Company Issuer, evidence of the issuance of the Kealine-Primoris Class A Units to Kealine and Primoris in form and substance acceptable to the Contributor;

(ii)from the Company Issuer, evidence of the issuance of the Class B Units to the recipients of such Class B Units at Closing;

(iii)from the Company Issuer to the Contributor, an executed counterpart, duly signed by the Company Issuer, of the Assignment;

(iv)from the Highstar Entities to the Contributor, an executed counterpart, duly signed by the Highstar Entities, of the Company Issuer LLC Agreement;

(v)from the Company Issuer to the Contributor, the Company Distribution by wire transfer of immediately available funds to the account or accounts designated by Sellers;

(vi)from the Company Issuer to Kealine, executed counterparts, duly signed by the Company Issuer, of the Operating Services Agreement;

(vii)from the Highstar Entities, a copy of the certificate of formation of the Company Issuer and any amendments thereto, certified by the Secretary of State of the State of Delaware;

(viii)from the Highstar Entities, certificate of good standing of the Company Issuer  from the Secretary of State of the State of Delaware dated no earlier than seven Business Days prior to the Closing Date; and

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(ix)from the Highstar Entities, duly executed copies of all required consents, if any, listed in Section 5.3 of the Highstar Disclosure Schedule.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth in the corresponding section of the Sellers’ Disclosure Schedule delivered concurrently with the execution of this Agreement by Sellers to the Company Issuer, and the Highstar Entities, but subject to Section 1.2, each Seller hereby severally represents and warrants to the Company Issuer and the Highstar Entities as follows:

Section 4.1Organization; Power and Authority.

(a)Such Seller (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to materially and adversely affect its ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.

(b)Such Seller has full authority to execute, deliver and perform its obligations under this Agreement and each other Contribution Document to which it is a party, and to carry out the transactions contemplated hereby and thereby.  This Agreement and each Contribution Document to which such Seller is a party has been duly and validly executed by it and, assuming the due authorization, execution and delivery by the Company Issuer and the Highstar Entities, as applicable, constitutes the legal, valid and binding obligation of it enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

(c)Each of the Contributor Entities (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary unless the failure to be so qualified or in good standing would not reasonably be expected to result in a Material Adverse Event.  No claims, actions or proceedings to dissolve any Contributor Entity are pending or, to the Sellers’ Knowledge, threatened.

Section 4.2No Violation.  Assuming the accuracy of the Company Issuer’s and Highstar Entities’ representations and warranties set forth herein, except for (a) the receipt of

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consents, if any, set forth in Section 4.3 of the Sellers’ Disclosure Schedule and (b) the effectuation of the filings and registrations with and the receipt of the Governmental Authorizations from Governmental Authorities set forth on Section 4.3 of the Sellers’ Disclosure Schedule, neither the execution and delivery by such Seller of the Contribution Documents to which it is a party, nor the consummation by such Seller of the transactions contemplated hereby and thereby, nor compliance by such Seller with any of the terms or provisions hereof and thereof, will (i) violate any provision of the Organizational Documents of such Seller or any Contributor Entity, (ii) violate any material Law applicable to such Seller or any Contributor Entity, or any of its or their properties or assets or (iii) violate, conflict with, result in a breach of any provision of or the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by such Party under any Material Contract, or result in the creation of any Encumbrance (other than Encumbrances created by any of the Contribution Documents) upon any of the properties or assets of such Seller or any Contributor Entity under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Seller or any Contributor Entity is a party, or by which such Seller or any Contributor Entity or any of its or their properties or assets may be bound or affected.

Section 4.3Consents and Approvals.  No consent, waiver, approval, authorization, exemption, registration or declaration (“Consent”) is required to be obtained by such Seller from, and no notice or filing is required to be given by such Seller to, or made by such Seller with, any Governmental Authority or other Person in connection with the execution, delivery and performance by such Seller of this Agreement and each other Contribution Document to which such Seller is a party or to which any Contributor Entity is a party, except as set forth in Section 4.3 of the Sellers’ Disclosure Schedule.

Section 4.4Litigation.  There are no material claims, actions, proceedings or investigations (including condemnation proceedings) pending or, to the Sellers’ Knowledge, threatened against such Seller or any Contributor Entity before any Governmental Authority that would reasonably be expected to materially and adversely affect such Seller’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it or any Contributor Entity is a party.  Such Seller is not, and the Contributor Entities are not, subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority that would reasonably be expected to materially and adversely affect such Seller’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it or any Contributor Entity is a party.

Section 4.5Compliance with Laws.  (a) The Contributor Entities are in material compliance with all Laws applicable to them or the Business (other than Environmental Laws, which are addressed in Section 4.22, and other than any non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a material liability to any Contributor Entity), and (b) none of the Sellers or Contributor Entities has received any written notification within the past six years from any applicable Governmental Authority that any Contributor Entity is not in compliance with or is or may be in violation of any Law or has any material liability or alleged material liability pursuant to any applicable Law, and (c) no event has

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occurred, and no circumstance or condition exists, that would reasonably be expected to constitute or result in a failure of any Contributor Entity to comply with the terms of any Law.

Section 4.6Financial Statements.  Sellers have delivered to the Highstar Entities the Contributor Financial Statements and the Pittsburg Financial Statements.  The Contributor Financial Statements and notes have been prepared from the books and records of the Contributor and its Subsidiaries and fairly present the assets and liabilities of the Contributor and its Subsidiaries, the financial condition and the results of operations and cash flows of the Contributor and its Subsidiaries on the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP.  The Pittsburg Financial Statements and notes have been prepared from the books and records of Pittsburg LLC and fairly present the assets and liabilities of Pittsburg LLC, the financial condition and the results of operations and cash flows of Pittsburg LLC on the respective dates of and for the periods referred to in the Pittsburg Financial Statements, all in accordance with GAAP.  The financial statements referred to in this Section 4.6 reflect the consistent application of such accounting principles throughout the periods involved.

Section 4.7Material Contracts.

(a)Section 4.7(a) of the Sellers’ Disclosure Schedule sets forth a list of each Contract to which (i) any Contributor Entity is a party relating to the Business or the Business Assets or by which the Business Assets are bound or (ii) any Seller or any Affiliate of a Contributor Entity is a party and which relates to Business Assets, and, in each case, involves receipts or payments by such Contributor Entity of more than $50,000 annually.  The foregoing Contracts are collectively referred to as the “Material Contracts.”  The Highstar Entities have been provided with true, complete and correct copies of all Material Contracts, including all amendments thereto. Each Material Contract is in full force and effect and constitutes the legal, valid and binding obligation of the applicable Contributor Entity and, to the Sellers’ Knowledge, the other parties thereto, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.  Except as set forth in Section 4.7 of the Sellers’ Disclosure Schedules, no Material Contract has any conditions to effectiveness that have not been satisfied.  None of the Contributor Entities or, to the Sellers’ Knowledge, any other party thereto is in material breach or default under (and no event or condition has occurred that with or without the giving of notice, the lapse of time or both would constitute a material default or material breach or permit termination, modification or acceleration under) any Material Contract.  No Person (including the Contributor Entities) has provided any Contributor Entity or any Seller with written notice that such Person intends to cancel or terminate any Material Contract.

(b)Section 4.7(b) of the Sellers’ Disclosure Schedule sets forth a list of all material letters of intent, memoranda of understanding or similar documents under which any party thereto still has liability (contingent or otherwise (other than as relates solely to confidentiality obligations)) on the date hereof to which any Contributor Entity is a party or of which any Contributor Entity is a beneficiary (the “Letters of Intent”).  A true, correct and complete copy of each such Letter of Intent has been provided to the Highstar Entities.  To the

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Sellers’ Knowledge, no party (including the applicable Contributor Entity) to any such Letter of Intent (i) intends to terminate or permit to expire such Letter of Intent or (ii) desires to modify or eliminate any material term set forth in such Letter of Intent in any material respect.  Except as set forth on Section 4.7(b) of the Sellers’ Disclosure Schedule, Sellers and the Contributor Entities are negotiating with respect to each Letter of Intent in good faith, and, to Sellers’ Knowledge, with respect to each such Letter of Intent, the current state of the negotiations has not resulted in any material changes in the overall economics or timing of the project that is the subject of such Letter of Intent.  For the avoidance of doubt, the Company Issuer and the Highstar Entities acknowledge that the Sellers are providing no assurance that a definitive agreement will be entered into in respect of the subject of matter of any Letter of Intent.

(c)Section 4.7(c) of the Sellers’ Disclosure Schedule sets forth a list of the material Contracts that any Contributor Entity is negotiating with a third party as of the date of this Agreement and the redline draft date of the most recent draft of each such Contract received by the Contributor Entity from such third party.  A true, correct and complete copy of each such draft Contract has been provided to Buyer.  Except as set forth on Section 4.7(c) of the Sellers’ Disclosure Schedule, to Sellers’ Knowledge the redline drafts of the draft Contracts identified on Section 4.7(c)(i) of the Sellers’ Disclosure Schedule accurately reflect the respective current position of the parties regarding material terms of the business arrangement between the applicable Contributor Entity and the third party.  To Sellers’ Knowledge, with respect to each such draft Contract, the current state of the negotiations has not resulted in any material changes in the overall economics or timing of the project that is the subject of such draft Contract.  For the avoidance of doubt, the Company Issuer and the Highstar Entities acknowledge that the Sellers are providing no assurance that a definitive agreement will be entered into in respect of any draft Contract.

Section 4.8No Material Adverse Event.  Except as set forth in Section 4.8 of the Sellers’ Disclosure Schedule, since December 31, 2012, there has not been any Material Adverse Event in or at any Contributor Entity, and no event has occurred or, to the Sellers’ Knowledge, circumstance exists that would reasonably be expected to result in a Material Adverse Event.

Section 4.9Taxes.

(a)All Tax Returns required to have been filed by the Contributor Entities or with respect to their assets have been duly and timely filed (taking into account extensions of time within which to file) with the appropriate Tax Authority and each such Tax Return is true, correct and complete in all material respects;

(b)all Taxes due and payable by the Contributor Entities or for which the Contributor Entities may be liable have been timely paid in full whether or not such Taxes are shown as due and payable on any Tax Return;

(c)all Tax withholding and deposit requirements imposed on the Contributor Entities have been satisfied in full;

(d)no Tax Return of any Contributor Entity has been the subject of an audit, examination or other administrative or judicial proceeding (a “Tax Proceeding”) during the past

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five years; no such Tax Proceeding is currently pending or has been proposed or threatened in writing against any Contributor Entity, there are no pending claims for unpaid Taxes due from any Contributor Entity, and, during the past five years, no claim has been made in writing by an authority in a jurisdiction where any Contributor Entity does not file Tax Returns or pay Taxes that it is or may be subject to Taxes in that jurisdiction;

(e)none of the Contributor Entities has in force any waiver of any statute of limitations in respect of Taxes or any extension of time with respect to a Tax assessment or deficiency or with respect to the due date for the filing of any Tax Return;

(f)there are no Encumbrances for Taxes, other than Encumbrances for current Taxes not yet due and payable or not yet delinquent, on any of the interests in or assets of the Contributor Entities;

(g)none of the Contributor Entities is a party to a Tax allocation or sharing agreement or similar arrangement, is or has previously been a member of a consolidated, combined or unitary group of companies for Tax purposes, or has any obligation to indemnify or make a payment to any Person (other than the Contributor) in respect of any Tax for any past, current or future period (other than pursuant to customary indemnification provisions contained in commercial agreements not principally related to Taxes);

(h)each of the Contributor Entities is, and has been since its inception, properly treated as either a partnership or an entity disregarded as separate from its owner for U.S. federal income tax purposes; and

(i)none of the Contributor Entities has ever participated in any “listed transaction” within the meaning of Treasury Regulations § 1.6011-4(b)(2).

Section 4.10Undisclosed Liabilities.  Except (a) for liabilities and obligations incurred in the ordinary course of business since December 31, 2012, (b) as otherwise disclosed and referenced as such in this Agreement or in Contributor Financial Statements or Pittsburg Financial Statements, and (c) other liabilities that, in the aggregate, are not material to the Contributor Entities taken as a whole, none of the Contributor Entities has incurred any liabilities or obligations (whether direct, indirect, accrued or contingent, secured, unsecured or otherwise).

Section 4.11Insurance.  Sellers have delivered to the Highstar Entities true and complete copies of all policies of insurance and fidelity bonds to which any Contributor Entity is a party or under which Kealine (with respect to the Contributor Entities and the Business only) or any of the Contributor Entities is currently covered (or with respect to which any Contributor Entity has been covered in the six months prior to the date hereof) (the “Insurance Policies”), and each such Insurance Policy is listed with expiration dates and deductibles and described in reasonable detail in Section 4.11 of the Sellers’ Disclosure Schedule).  Other than as set forth in Section 4.11 of the Sellers’ Disclosure Schedule, all Insurance Policies (a) are valid, outstanding, and enforceable, (b) will continue in full force and effect following the consummation of the transactions contemplated by this Agreement, and (c) are, to the Sellers’ Knowledge, sufficient for compliance in all material respects with all requirements of applicable Law (i.e., where applicable Law requires insurance policies, binder or fidelity bonds) and of all Material

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Contracts, and (d) taken together, to the Sellers’ Knowledge, provide adequate insurance coverage for the assets and the operations of the Contributor Entities for all risks normally insured against by a Person carrying on the same business or businesses as the Contributor Entities.  All premiums with respect to the Insurance Policies covering all periods up to and including the Closing Date that are due and owing have been paid, and no written notice of cancellation or termination has been received with respect to any Insurance Policy.

Section 4.12Investment Representations and Warranties.

(a)Each of Kealine and Primoris (each an “Investing Seller”) is acquiring the Kealine-Primoris Class A Units for investment purposes for its own account only.

(b)Each Investing Seller is financially able to bear the economic risk of an investment in the Kealine-Primoris Class A Units and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Company Issuer, and can afford a complete loss of its investment.

(c)Each Investing Seller acknowledges that (i) the Kealine-Primoris Class A Units have not been registered under the Securities Act or with any state securities agency or similar Governmental Authority, or qualified under any applicable blue sky Laws, and that the Company Issuer has not undertaken such registration or qualification, in reliance, in part, on its representations, warranties, and agreements in Article IV (including the representations and warranties with respect to the bona fide nature of the investment intent); (ii) the Company Issuer and the Highstar Entities are under no obligation to register or qualify the Kealine-Primoris Class A Units under the Securities Act or under any state securities Law, or to assist Sellers in complying with any exemption from registration and qualification; (iii) the Kealine-Primoris Class A Units are “restricted securities” under the Securities Act in that the Kealine-Primoris Class A Units will be acquired from the Company Issuer and the Highstar Entities in a transaction not involving a public offering, and that the Kealine-Primoris Class A Units may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Kealine-Primoris Class A Units or an available exemption from registration under the Securities Act, such securities must be held indefinitely; (iv) there are substantial restrictions on the transferability of the Kealine-Primoris Class A Units pursuant to the Company Issuer LLC Agreement; (v) there is no public market for the Kealine-Primoris Class A Units and none is expected to develop, and, accordingly, it may not be possible to liquidate its investment in the Company Issuer; and (vi) the Kealine-Primoris Class A Units are speculative investments that involve a substantial degree of risk of loss of an entire investment in the Company Issuer, and each Investing Seller understands and takes full cognizance of the risks related to the purchase of such interest.

(d)Each Investing Seller has been provided an opportunity for a reasonable time prior to the date hereof to obtain information concerning the offering of the Kealine-Primoris Class A Units, the Company Issuer, and all other information to the extent the Company Issuer and the Highstar Entities possess such information or can acquire it without unreasonable effort or expense.  Each Investing Seller has been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, the

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Company Issuer, the Highstar Entities and their representatives concerning the terms and conditions of the offering of the Kealine-Primoris Class A Units and other matters pertaining to this investment.  Such Investing Seller has not been furnished with any representation, oral or otherwise, or information, oral or otherwise, in connection with the offering of the Kealine-Primoris Class A Units other than the Company Issuer’s and the Highstar Entities’ express representations and warranties set forth herein, and such Investing Seller is not relying on the Company Issuer, the Highstar Entities, their Affiliates or any of their representatives with respect to economic considerations involved in this investment.

Section 4.13Capitalization.

(a)The legal name, jurisdiction of organization and ownership of each of Pittsburg LLC and the Subsidiaries of the Contributor is set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule.  Other than the Equity Interests listed on Section 4.13(a) of the Sellers’ Disclosure Schedule, (i) there are no outstanding Equity Interests in Pittsburg LLC or any Subsidiary of the Contributor and (ii) none of the Contributor Entities owns any Equity Interest in any other Person or is a party to any Contract relating thereto.  All of the Equity Interests in Pittsburg LLC and the Subsidiaries of the Contributor are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third-party rights, and have been offered, sold and issued by the applicable entity in compliance with applicable Laws, Contracts applicable to such entity and its Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights.  The rights and privileges of the Equity Interests of each of Pittsburg LLC and the Subsidiaries of the Contributor are set forth in the applicable entity’s Organizational Documents.  Except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule, there is no option, warrant, call, subscription, convertible security, right (including preemptive right) or Contracts of any character to which Pittsburg LLC or any Subsidiary of the Contributor is a party or by which it is bound obligating such entity to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any Equity Interests or obligating such entity to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract.  There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Pittsburg LLC or any Subsidiary of the Contributor.  Except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule and as otherwise contemplated by this Agreement, there are no registration rights agreements, no voting trust, proxy or other Contract and no restrictions on transfer with respect to the Equity Interests of Pittsburg LLC or any Subsidiary of the Contributor.

(b)The Contributor owns, of record and beneficially, the Pittsburg LLC Interests and the Port Arthur LLC Interests, free and clear of any Encumbrance except those imposed under the Pittsburg LLC Organizational Documents and Port Arthur LLC Organizational Documents.  The Contributor owns, of record and beneficially, all of the Equity Interests of each of the Subsidiaries (the “Subsidiary Equity Interests”), which are identified in Section 4.13(b) of the Sellers’ Disclosure Schedule, free and clear of any Encumbrance except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule.  At Closing, the Company Issuer will obtain good and valid title to all of the Subsidiary Equity Interests, of record and beneficially, free and clear of any Encumbrance, other than those that may arise by virtue of any actions taken by or on behalf of the Company Issuer, the Highstar Entities or their Affiliates, and

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will then own 100.0% of the Subsidiaries of the Contributor and will own all of the Pittsburg LLC Interests.

Section 4.14No Broker Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of each Seller or any of its Affiliates, that is or will be payable by any of the Contributor Entities or the Highstar Entities, the Company Issuer or any Affiliate of the foregoing.

Section 4.15Transactions with Affiliates.  Except as set forth on Section 4.15 of the Sellers’ Disclosure Schedule, neither any officer, director or equity holder of any Seller nor any Affiliate of any Seller (a) has any agreement or arrangement with any Contributor Entity or any interest in any property, real or personal, tangible or intangible or (b) has any pending, or to the Sellers’ Knowledge, threatened claim or cause of action against any Contributor Entity, except for reimbursement of expenses incurred in the ordinary course of business.

Section 4.16Property.

(a)Section 4.16(a) of the Sellers’ Disclosure Schedules contains a true correct and complete list of all real property owned, either beneficially or of record, by any Contributor Entity or pursuant to which any Contributor Entity has an option to acquire a fee interest in any real property (the “Owned Real Property”) and a true, correct and complete list of each parcel of real property, leased, subleased or occupied to or by any Contributor Entity, (the “Leased Real Property” and together with the Owned Real Property, the “Real Property”).  The Contributor Entities have delivered or made available, to the Highstar Entities, true, correct and complete copies of all deeds and option agreements relating to the Owned Real Property.  The Contributor Entities have good, valid and marketable title to all of the Owned Real Property (or, except as described on Section 4.16(a) of the Sellers’ Disclosure Schedules, the option rights thereto), free and clear of any Encumbrance (except for Permitted Encumbrances and, in the case of Owned Real Property under option, any applicable option agreement that is listed on Section 4.16(a) of the Sellers’ Disclosure Schedules).  None of the Leased Real Property is subject to any ground lease, master lease, mortgage, deed of trust or other Encumbrance (except for Permitted Encumbrances) or interests that would entitle the holder thereof to interfere with or disturb use or enjoyment of such Leased Real Property or the exercise by the lessee of its rights under such lease so long as the lessee is not in default under such lease.  None of the Contributor Entities owes any brokerage commissions with respect to any such Leased Real Property (including any contingent obligation in respect of future lease extensions).

(b)The Real Property constitutes all material real property used or held for use in connection with the operation of the Business by the Contributor Entities as presently conducted.  The Contributor Entities have valid rights of ingress and egress with respect to each parcel of the Real Property, buildings, structures, facilities, fixtures and other improvements as are required to conduct the applicable portions of the Business in a safe, efficient and lawful manner consistent with past practice.  None of the Contributor Entities has received within the last six years notice of any, and to the Sellers’ Knowledge there are no, (i) pending condemnation proceedings affecting any Real Property, or proceedings to change the zoning or real property tax assessment of any Real Property, (ii) material existing, pending, contemplated,

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threatened or anticipated widening, change of grade or limitation on use of any streets or other rights of way abutting any Real Property, (iii) pending or threatened legal actions, claims or lawsuits affecting any Real Property or any Contributor Entity’s ownership of same, (iv) outstanding violations of any Law materially affecting any Real Property, nor any condition with which the passage of time will result in any such violation if not corrected, and (v) unconfirmed assessments for municipal improvements affecting any Real Property. The Contributor Entities have delivered, or made available, to the Highstar Entities true, correct and complete copies of all existing title insurance policies (together with true, correct and complete copies of all title exception documents listed thereon) insuring the Contributor Entities’ interest in any of the Real Property (the “Existing Title Policies”).  Each of the Existing Title Policies is in full force and effect and none of the Contributor Entities has made any claim under any of the Existing Title Policies.

Section 4.17Tangible Personal Property.  All material items of Tangible Personal Property are in a state of reasonable repair (ordinary wear and tear excepted) so as to be suitable for the purposes of which such Tangible Personal Property was constructed, obtained or currently being used in all material respects.  The Contributor Entities have good and marketable title to, or a valid leasehold interest in, all material Tangible Personal Property, free of all Encumbrances other than Permitted Encumbrances.  The Contributor Entities own, or lease under valid leases, all buildings, machinery, equipment and other tangible assets and properties necessary for the conduct of its respective Business as presently conducted.

Section 4.18Accurate and Complete Records.  The books, ledgers, financial records and other records of the Contributor Entities:

(a)are in the possession of the Contributor Entities, as applicable;

(b)have been, in all material respects, maintained in accordance with all applicable Laws and generally accepted standards of practice; and

(c)are accurate and complete and do not contain or reflect any material discrepancies.

Section 4.19Intellectual Property.  Section 4.19 of the Sellers’ Disclosure Schedule sets forth a complete list of all issued patents, registered patents, registered trademarks and registered copyrights (collectively, “Intellectual Property”) owned or licensed by any Contributor Entity.  The Contributor Entities own or have the right to use pursuant to license, sublicense, agreement or otherwise all material items of Intellectual Property required in the operation of the Business of the Contributor Entities as presently conducted.  No third party has asserted in writing against Sellers or any Contributor Entity a claim that any Contributor Entity is infringing on the Intellectual Property of such third party, and to the Sellers’ Knowledge, no third party is infringing on the Intellectual Property owned by any Contributor Entity.

Section 4.20No Employees and No Employee Plans.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has any employees or has ever had any employees.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has any employee benefit plans (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) and has

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never had any such employee benefit plans.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has, or could reasonably be expected to have, any liabilities under Section 302 or Title IV of ERISA or Section 412 or Section 4980B of the Code.

Section 4.21Labor Matters.  Except as set forth on Section 4.21 of the Sellers’ Disclosure Schedule, there are no collective bargaining agreements, contracts or other agreements or understandings with labor unions or labor organizations to which any Contributor Entity is a party.

Section 4.22Environmental Matters.

(a)The operations of the Contributor Entities are in compliance in all material respects with Environmental Laws;

(b)all Environmental Permits required to be obtained by any Contributor Entity under Environmental Law in connection with its operations as they are currently being conducted (including Environmental Permits that are required for the current stage of the portion of the Contributor Entity’s systems or facilities that are under construction or otherwise under development and including those relating to Hazardous Substances), have been duly obtained or timely filed for, and if duly obtained, are in full force and effect, and the Contributor Entities are in material compliance with the terms and conditions of all such Environmental Permits;

(c)there is no pending or, to the Sellers’ Knowledge, threatened litigation under any Environmental Law relating to the Contributor Entities or any of their assets;

(d)no Contributor Entity has received any written or, to the Sellers’ Knowledge, oral notice from any Governmental Authority of an actual or potential violation of or actual or potential material liability under any Environmental Laws and, to the Sellers’ Knowledge, there are no conditions or circumstances that would reasonably be expected to result in the receipt of such written or verbal notice or that would reasonably be expected to result in material liability for any Contributor Entity under Environmental Laws;

(e)there has been no Release or threatened Release of Hazardous Substances at, on, under, or from any of the property owned or operated by any Contributor Entity, or arising out of or in connection with the operations of any Contributor Entity (including with respect to any off-site disposal of Hazardous Substances) in violation of Environmental Laws or in a manner that would give rise to material liability under Environmental Laws;

(f)to the Sellers’ Knowledge, there has been no exposure of any Person or property to any Hazardous Substances as a result of or in connection with operations of any Contributor Entity that would reasonably be expected to form the basis for a material Claim for damages or compensation;

(g)none of the Contributor Entities has assumed or retained by contract or operation of law any material liabilities under any Environmental Law or regarding any Hazardous Substances; and

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(h)Sellers have provided to the Highstar Entities true and complete copies of all internal and external environmental audits, studies, analyses, assessments, and all material correspondence relating to environmental matters in Sellers’ possession or control received within the past six years and which pertain to any Contributor Entity or otherwise relate to the Business or the Business Assets.

Section 4.23Indebtedness.  There is no outstanding Indebtedness of the Contributor Entities.

Section 4.24Bank Accounts.  Section 4.24 of the Sellers’ Disclosure Schedule sets forth a list of the names and locations of banks, trust companies and other financial institutions at which any Contributor Entity maintains accounts of any nature or safe deposit boxes, and the authorized signatories on each such account.

Section 4.25Credit Enhancements.  Section 4.25 of the Sellers’ Disclosure Schedule sets forth all guarantees, letters of credit, bonds, security deposits and other surety obligations or credit support provided by or on behalf of Sellers or their Affiliates with respect to the Contributor Entities or their respective assets.

Section 4.26Permits.

(a)Section 4.26(a)of the Sellers’ Disclosure Schedule set forth all Permits relating to the Business Assets and held by the Contributor Entities as of the date of this Agreement, and a true and complete copy of each such Permit has been provided to the Highstar Entities.  All such Permits are in full force and effect, and there are no claims, causes of action or proceedings before any Governmental Authority pending or, to the Sellers’ Knowledge, threatened that seek the revocation, cancellation, suspension or adverse modification thereof.  None of the Contributor Entities is in violation in any material respect of the terms of any Permit.  No Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution, delivery and consummation of the transactions contemplated by the Contribution Documents.

(b)Section 4.26(b)of the Sellers’ Disclosure Schedule set forth all Permits relating to the Business Assets and for which any Contributor Entity has applied as of the date of this Agreement and the status of such Permit application as of the date of this Agreement.  The information contained in each Permit application was true and correct in all material respects at the time such application was filed, and no event or circumstance has occurred that could reasonably be expected to require such Permit application to be amended, modified or supplemented.  Sellers have complied with all required obligations to facilitate the issuance of any such pending Permit, and to Sellers’ Knowledge, no event, fact or circumstance exists that could be reasonably expected to materially delay the issuance of any pending Permit or cause Sellers’ application for such Permit to be denied.

(c)There are no material Permits for which the Contributor Entities have not yet applied and that are either required for the current stage of the portion of the projects that are under development by Pittsburg LLC and Port Arthur LLC or will be required for the next stage of development by Pittsburg LLC and Port Arthur LLC or, to the Sellers’ Knowledge, the

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construction, testing or commissioning of any project facilities of Pittsburg LLC and Port Arthur LLC.  Except as set forth in Section 4.26(c) of the Sellers’ Disclosure Schedule, to the Sellers’ Knowledge, no event, fact, or circumstance exists that could be reasonably expected to materially delay the submission of an application for any such Permit or cause Sellers’ application for such Permit to be denied.

Section 4.27Project Milestones.  Attached to Section 4.27 of the Sellers’ Disclosure Schedule are the Gantt charts for the projects being developed by Pittsburg LLC and Port Arthur LLC (the “Project Gantt Charts”).  The Project Gantt Charts are complete and based on reasonable assumptions, have been prepared in good faith and fairly represent Sellers’ reasonable expectations as to the matters covered thereby as of the date of this Agreement; provided, however, that the Project Gantt Charts are not in any way a guarantee or predictor of future results.  Contributor Entities have completed any milestone or project deadline scheduled to be completed on or prior to the date of this Agreement pursuant to the Project Gantt Charts.

Section 4.28No Other Representations.  Except for the representations and warranties contained in this Article IV, or set forth in the other Contribution Documents, neither the Sellers nor any other Person makes any representation or warranty, express or implied, on behalf of the Sellers.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES

Except as set forth in the corresponding section of the Highstar Disclosure Schedule delivered by the Company Issuer and the Highstar Entities to the Sellers concurrently with the execution of this Agreement, but subject to Section 1.2, the Company Issuer and the Highstar Entities hereby represent and warrant to the Sellers as follows:

Section 5.1Organization; Power and Authority.

(a)Each of the Highstar Entities and the Company Issuer (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary.

(b)Each of the Highstar Entities and the Company Issuer has full authority to execute, deliver and perform its obligations under this Agreement and the Contribution Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby.  This Agreement and the Contribution Documents to which each such Party is a party have been duly and validly executed by such Party and, assuming the due authorization, execution and delivery by Sellers, constitutes the legal, valid and binding obligation of such Party enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights

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generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

Section 5.2No Violation.  Assuming the accuracy of Sellers’ representations and warranties set forth therein, except for (a) the receipt of consents, if any, set forth on Section 5.3 of the Highstar Disclosure Schedule and (b) the effectuation of the filings and registrations with and the receipt of the Governmental Authorizations from Governmental Authorities set forth on Section 5.3 of the Highstar Disclosure Schedule, neither the execution and delivery by each of the Highstar Entities and the Company Issuer of the Contribution Documents to which it is a party, nor the consummation by such Party of the transactions contemplated hereby and thereby, nor compliance by such Party with any of the terms or provisions hereof and thereof, will (i) violate any provision of such Party’s respective Organizational Documents or the Company Issuer LLC Agreement, (ii) violate any Law applicable to such Party, or any of its properties or assets, or (iii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by such Party under any material contract, or result in the creation of any Encumbrance (other than Encumbrances created by this Agreement) upon any of the properties or assets of the Company Issuer, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Party is a party, or by which such Party or any of its properties or assets may be bound or affected.

Section 5.3Consents and Approvals.  No Consent is required to be obtained by the Company Issuer or any Highstar Entity from, and no notice or filing is required to be given by the Company Issuer or any Highstar Entity to, or made by the Company Issuer or any Highstar Entity with, any Governmental Authority or other Person in connection with the execution, delivery and performance by the Company Issuer and the Highstar Entities of this Agreement, except as set forth in Section 5.3 of the Highstar Disclosure Schedule.

Section 5.4Litigation.  Except as set forth on Section 5.4 of the Highstar Disclosure Schedule, there are no claims, actions, proceedings or investigations (including condemnation proceedings) pending or, to the Knowledge of the Highstar Entities, threatened against the Company Issuer or the Highstar Entities before any Governmental Authority that would reasonably be expected to materially and adversely affect the Company Issuer’s or any Highstar Entity’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.  None of the Highstar Entities and the Company Issuer is subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority that would reasonably be expected to materially and adversely affect such Party’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.

Section 5.5Compliance with Laws.  The Company Issuer is in material compliance with all Laws.  The Company Issuer has not received any written notification from any applicable Governmental Authority that it is not in compliance with or is or may be in violation of any Law or has any material liability or potential or alleged liability pursuant to any applicable Law, and no event has occurred, and no circumstance or condition exists, that would reasonably

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be expected to constitute or result in a failure of the Company Issuer to comply with the terms of any Law.

Section 5.6Capitalization.  Other than the Equity Interests listed on Section 5.6 of the Highstar Disclosure Schedule, (i) there are no outstanding Equity Interests in the Company Issuer and (ii) the Company Issuer does not own any Equity Interest in any other Person and is not a party to any Contract relating thereto.  All of the Equity Interests in the Company Issuer set forth on Section 5.6 of the Highstar Disclosure Schedule are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third-party rights, and have been offered, sold and issued by the applicable entity in compliance with applicable Laws, Contracts applicable to such entity and such entity’s Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights.  The rights and privileges of the Equity Interests of the Company Issuer are set forth in the Company Issuer’s Organizational Documents.  There is no option, warrant, call, subscription, convertible security, right (including preemptive right) or Contract of any character to which the Company Issuer is a party or by which it is bound obligating such entity to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any Equity Interests in such entity or obligating such entity to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract.  There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company Issuer.  Except as otherwise contemplated by this Agreement, there are no registration rights agreements, no voting trust, proxy or other Contract and no restrictions on transfer with respect to any equity interests of the Company Issuer.  Collectively, the Highstar Entities currently own, of record and beneficially, all of the Equity Interests of the Company Issuer free and clear of any Encumbrance.  At Closing, Kealine and Primoris will obtain good and valid title to the Kealine-Primoris Class A Units, of record and beneficially, free and clear of any Encumbrance other than those that may arise by virtue of any actions taken by or on behalf of Sellers or their Affiliates, and the capitalization of the Company Issuer will be as set forth on Section 5.6 of the Highstar Disclosure Schedule.

Section 5.7Issuance of Kealine-Primoris Class A Units.  The Kealine-Primoris Class A Units that are being issued pursuant to this Agreement, when issued, and delivered in accordance with the terms of this Agreement, for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under the Company Issuer LLC Agreement and under applicable state and federal securities Laws.

Section 5.8Status.  The Company Issuer was formed on September 26, 2013, and, except for the transactions contemplated by the Contribution Documents, it does not conduct, nor has it ever conducted, any business or activities other than immaterial activities of an administrative nature that are incidental to being a holding company. The Company Issuer does not currently have nor has it ever had any right, title or interest to or in any properties and assets (real, personal or mixed, tangible or intangible), other than its rights under the Contribution Documents, if any, and has not and has never been a party to any Contract other than the Contribution Documents and the Organizational Documents of the Company Issuer and any Contract incidental to any of the foregoing or the transactions contemplated by this Agreement.

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Section 5.9No Broker Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Highstar Entities or any of their Affiliates, that is or will be payable by the Sellers or any of their Affiliates.

Section 5.10Investment Representations and Warranties.

(a)The Company Issuer is acquiring the Subsidiary Equity Interests and the Pittsburg LLC Interests for investment purposes for its own account only.

(b)The Company Issuer and the Highstar Entities are financially able to bear the economic risk of an investment in the Subsidiary Equity Interests and the Pittsburg LLC Interests and have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of such investment, as the case may be, and can afford a complete loss of their investment.

(c)The Company Issuer and the Highstar Entities acknowledge that (i) the Subsidiary Equity Interests and the Pittsburg LLC Interests have not been registered under the Securities Act or with any state securities agency or similar Governmental Authority, or qualified under any applicable blue sky laws, and that Sellers have not undertaken such registration or qualification, in reliance, in part, on the representations, warranties, and agreements in this Article V (including the representations and warranties with respect to the bona fide nature of the investment intent); (ii) Sellers are under no obligation to register or qualify the Subsidiary Equity Interests or the Pittsburg LLC Interests under the Securities Act or under any state securities law, or to assist the Company Issuer or the Highstar Entities in complying with any exemption from registration and qualification; (iii) the Subsidiary Equity Interests and the Pittsburg LLC Interests are “restricted securities” under the Securities Act in that such interests will be acquired from Sellers in a transaction not involving a public offering, may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and, in the absence of an effective registration statement covering such interests or an available exemption from registration under the Securities Act, such interests must be held indefinitely; (iv) there are substantial restrictions on the transferability of the Subsidiary Equity Interests and the Pittsburg LLC Interests pursuant to the Organizational Documents of the applicable entity; (v) there is no public market for the Subsidiary Equity Interests and the Pittsburg LLC Interests and none is expected to develop, and that, accordingly, it may not be possible to liquidate its investment; and (vi) the Subsidiary Equity Interests and the Pittsburg LLC Interests are speculative investments that involve a substantial degree of risk of loss of an entire investment, and the Company Issuer and the Highstar Entities understand and take full cognizance of the risks related to the purchase of such interest.

(d)The Company Issuer and the Highstar Entities have been provided an opportunity for a reasonable time prior to the date hereof to obtain information concerning the offering of the Subsidiary Equity Interests and the Pittsburg LLC Interests, Sellers, and all other information to the extent Sellers possesses such information or can acquire it without unreasonable effort or expense.  The Company Issuer and the Highstar Entities have been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, Sellers or their representatives concerning the terms and conditions of the offering

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of the Subsidiary Equity Interests and the Pittsburg LLC Interests and other matters pertaining to this investment.  The Company Issuer and the Highstar Entities have not been furnished with any representation, oral or otherwise, or information, oral or otherwise, in connection with the offering of the Subsidiary Equity Interests and the Pittsburg LLC Interests other than Sellers’ express representations and warranties set forth herein and are not relying on Sellers, their Affiliates or their representatives with respect to economic considerations involved in this investment.

Section 5.11Financial Capability.  The Highstar Entities’ obligations hereunder are not subject to any conditions regarding its or any other Person’s ability to obtain financing.  The Highstar Entities have access to, or will have access to at the Closing, sufficient funds to enable them to perform all of their obligations at Closing under the Contribution Documents.

Section 5.12Financial Statements.  The Highstar Entities have delivered to the Sellers the Highstar Financial Statements.  Except as set forth in Section 5.12 of the Highstar Disclosure Schedule, the Highstar Financial Statements and notes have been prepared from the books and records of the Persons described therein and fairly present the assets and liabilities of such Persons, the financial condition and the results of operations and cash flows of such Persons on the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP.  The financial statements referred to in this Section 5.12 reflect the consistent application of such accounting principles throughout the periods involved.

Section 5.13No Other Representations.  Except for the representations and warranties contained in this Article V or set forth in the other Contribution Documents, none of the Company Issuer, the Highstar Entities and any other Person makes any representation or warranty, express or implied, on behalf of the Company Issuer or the Highstar Entities.

ARTICLE VI
ADDITIONAL AGREEMENTS

Section 6.1Regulatory Matters Agreement.

(a)Each Party shall, upon request, furnish each other Party so requesting with all information concerning itself, its respective Subsidiaries, if any, directors, officers and limited partners, members and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of the Parties or any of their respective Subsidiaries to any Governmental Authority in connection with the transactions contemplated by this Agreement, the continuation of the Business after the Contribution and the other transactions contemplated by this Agreement.

(b)Each Party shall promptly furnish each other Party so requesting with copies of written communications received by the Party, or any of its respective subsidiaries or Affiliates from, or delivered by any of the foregoing to, any Governmental Authority in respect of the transactions contemplated by this Agreement.

Section 6.2Additional Agreements.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each Party and, if

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applicable, the members, general partner, proper officers, managers and directors of each Party and its respective Subsidiaries, if any, shall take all such necessary action as may be reasonably requested by any other Party.

Section 6.3Tax Matters.

(a)The Parties hereby acknowledge and agree that they intend for U.S. federal income tax purposes to treat (i) the contribution of the Project Assets to the Company Issuer, to the maximum extent possible, as qualifying for nonrecognition of gain or loss in accordance with Section 721 of the Code and the portion of the Company Distribution allocable to such Project Assets, to the maximum extent possible, as a reimbursement of preformation expenditures in accordance with Treasury Regulation Section 1.707-4(d), (ii) the contribution of the Pittsburg LLC Interests to the Company Issuer, in part as a contribution of an undivided interest in such interests qualifying for nonrecognition of gain or loss in accordance with Section 721 of the Code and in part as a sale of an undivided interest in such interests in accordance with the Treasury Regulations under Section 707 of the Code, and (iii) the contribution of the Port Arthur LLC Interests to the Company Issuer, in part as a contribution of an undivided interest in each of the assets of Port Arthur LLC and in part as a sale of an undivided interest in each of such assets.

(b)Any consideration required to be taken into account as part of a sale of the Project Assets under applicable Law shall be allocated among the Project Assets in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (the “Company Allocation”).  Any consideration required to be taken into account as part of a sale of the Pittsburg LLC Interests under applicable Law shall be allocated among the assets of the Pittsburg LLC in accordance with Sections 755 and 1060 of the Code and the Treasury Regulations thereunder (the “Pittsburg Allocation”).  Any consideration required to be taken into account as part of a sale of the assets of the Port Arthur LLC shall be allocated among such assets in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (the “Port Arthur Allocation”).  On or prior to the date that is 90 days after the Closing Date, the Highstar Entities shall provide to the Contributor the Highstar Entities’ proposed Company Allocation, Pittsburg Allocation and Port Arthur Allocation.  Within 30 days after the date of the delivery of such proposed allocations to the Contributor, the Contributor shall either propose to the Highstar Entities any changes to such allocations in writing (together with reasonable details supporting such changes) or otherwise shall be deemed to have agreed with such allocations upon the expiration of such 30 day period.  The Contributor and the Highstar Entities shall cooperate in good faith to mutually agree to such allocations and shall reduce such agreement to writing; provided, however, that if the allocations cannot be agreed upon by the Parties within 30 days of the Highstar Entities’ receipt of Contributor’s proposed changes (if any) to the Highstar Entities’ proposed allocations, then the same shall be submitted to a nationally recognized accounting firm mutually selected by the Highstar Entities and Contributor (the “Independent Accountant”) for final determination (as agreed upon or determined by the Independent Accountant, the “Purchase Price Allocations”).  The costs and expenses of the Independent Accountant shall be borne equally by the Highstar Entities on the one hand and the Contributor on the other hand.  The Parties shall file timely any forms and statements required under U.S. federal or state income Tax Laws consistent with such Purchase Price Allocations.  The Purchase Price Allocations shall be revised to take into account subsequent adjustments to the Company Distribution and other

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consideration, in the manner provided by Sections 755 and 1060 of the Code and the Treasury Regulations thereunder.  The Contributor, the Company Issuer, and the Highstar Entities shall, and shall cause their Affiliates to, report consistently with the Purchase Price Allocations in all Tax Returns, including IRS Form 8594, which the Highstar Entities, the Company Issuer, the Pittsburg Issuer and the Contributor (as applicable) shall timely file with the IRS, and none of the Contributor, the Company Issuer, and the Highstar Entities shall file any Tax Return that is inconsistent with such Purchase Price Allocation except as otherwise required by applicable Law following a final determination by the relevant Tax Authority.  Each of the Contributor and the Highstar Entities agrees to promptly advise each other regarding the existence of any Tax audit, controversy or litigation related to the Purchase Price Allocations (in which case they shall cooperate in good faith in the defense of the Purchase Price Allocation).

(c)The Contributor shall (i) cause each of the Contributor’s Subsidiaries that is treated as a partnership (and use commercially reasonable efforts to cause Pittsburg LLC, with reasonable out-of-pocket professional fees or filing fees at the expense of the Company Issuer) to have in effect a valid election under Section 754 of the Code for any taxable year that includes the Closing Date; and (ii) provide evidence satisfactory to the Highstar Entities thereof.

(d)The Parties shall reasonably cooperate, and shall cause their respective Affiliates and representatives to reasonably cooperate, in preparing and filing all Tax Returns relating to any Pre-Closing Period or Straddle Period, including maintaining and making available to each other, and to any Tax Authority as reasonably requested, all records in their possession necessary in connection with filing Tax Returns and payment of Taxes and in resolving all Tax Proceedings with respect to any Pre-Closing Period or Straddle Period relating to Taxes.

(e)The Sellers shall be responsible for all transfer, documentary, sales, use, stamp, recording, value added, registration and other similar Taxes and all conveyance fees, recording fees and other similar charges (all including penalties, interest and other charges with respect thereto, collectively “Transfer Taxes”) incurred in connection with the consummation of the transactions contemplated by this Agreement relating to the transfer of any interest in such entity.  The Parties shall cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.

(f)If a claim with respect to Taxes shall be made by any Governmental Authority that, if successful, could result in an obligation to make an indemnity payment to an Issuer Indemnitee pursuant to Article VII (a “Tax Claim”), then, notwithstanding any provisions of Article VII to the contrary, the relevant Issuer Indemnitee shall promptly, and in any event no more than 15 days following the Issuer Indemnitee’s receipt of written notice of such Tax Claim, give written notice to the Contributor of such Tax Claim; provided, however, the failure of the Issuer Indemnitee to give such notice shall only relieve the Contributor from its indemnification obligations hereunder to the extent it is materially prejudiced by such failure.  Within 30 days of receipt of written notice of a Tax Claim, the Contributor shall provide written notice to the Highstar Entities and the relevant Issuer Indemnitee of its intent to control the defense of such Tax Claim.  Upon providing such notice, the Contributor shall be entitled to control all proceedings relating to such Tax Claim and may make all decisions taken in connection with such Tax Claim (including selection of counsel) at its own expense; provided, however, that the

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Issuer Indemnitee shall be entitled to participate in the defense of any such Tax Claim and shall jointly control the defense of any such Tax Claim, the resolution of which could reasonably be expected to result in an increase in the Taxes of the Issuer Indemnitee (or of any of the Highstar Entities or any direct or indirect owner thereof) and that are not Contributor Taxes.  With respect to any Tax Claim that the Contributor and the Issuer Indemnitee jointly control, the Parties agree not to settle, compromise or otherwise resolve the Tax Claim without the written consent of the Contributor and the Issuer Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed.  Absent written notice of the Contributor’s intent to control the defense of a Tax Claim as set forth above, or upon written notification to the Issuer Indemnitee that the Contributor will decline to control the defense of a Tax Claim, the Issuer Indemnitee shall thereupon be permitted to defend and settle such proceeding at the Contributor’s expense.  The Contributor, the Issuer Indemnitees, the Contributor Entities and each of their respective Affiliates shall reasonably cooperate with each other in contesting or defending against any Tax Claim.  Such cooperation shall include the retention and, upon the request of the Party or Parties controlling proceedings relating to such Tax Claim, the provision to such Party or Parties of records and information that are reasonably relevant to such Tax Claim and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim.  To the extent there is a conflict between the provisions of this Section 6.3(e) and the procedures set forth in Article VII, the provisions of this Section 6.3(e) shall control.

Section 6.4Non-Competition and Non-Solicitation.

(a)Agreement Not to Compete.  As a further inducement to the Company Issuer and the Highstar Entities to enter into this Agreement, each Non-Compete Party agrees that during such Non-Compete Party’s Non-Compete Term, such Non-Compete Party will not:

(i)directly or indirectly participate in the promotion, financing, ownership, operation or management of, or assist in, furnish advice with respect to, or carry on through a proprietorship, partnership, joint venture, corporation or other form of business entity, or otherwise, or solicit, any opportunity that is (A) within a 250-mile radius of any existing Company Issuer project that is of the type described in the definition of “Business” or any project of the type described in the definition of “Business” then being pursued by the Company Issuer as evidenced by substantive negotiations of the Company Issuer regarding such project and (B) that is related to, competitive with or detrimental to any such project, whether directly or indirectly, or through another business, as an employee, principal, agent, shareholder, representative, consultant, independent contractor, or otherwise in any capacity (each, a “Competing Opportunity”);

(ii)directly or indirectly solicit or encourage any current customer or counterparty (or any customer or counterparty with which the Company Issuer has had substantive discussions within the immediately preceding 12 months) of the Company Issuer not to conduct business with the Company Issuer or solicit to do business with any such customer or counterparty, in either case, relating to a Competing Opportunity; or

(iii)either on such Non-Compete Party’s own behalf or for any other person, firm, partnership, corporation or other entity (A) solicit, interfere with or endeavor to

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cause any employee of the Company Issuer, Services Provider or any Affiliate thereof to leave his or her employment or (B) induce or attempt to induce any such employee to breach his employment agreement with the Company Issuer, Services Provider or any Affiliate thereof.

(b)Remedies.  The Non-Compete Parties, the Company Issuer and the Highstar Entities agree that the Company Issuer and the Highstar Entities may pursue all available legal and equitable remedies and rights with respect to a violation of this Section 6.4, and the specific inclusion of any remedy in this Agreement will not constitute a whole or partial election or waiver of any other available remedy or right.

(c)Injunctive Relief.  Each Non-Compete Party agrees that a violation of the terms, provisions, covered obligations, duties and conditions described in this Section 6.4 will give rise to the Company Issuer’s and the Highstar Entities’ causes of action against such Non-Compete Party for, among other relief, issuance of injunctive relief, issuance of a temporary restraining order, recovery of damages and recovery of costs, reasonable attorneys’ fees, and expert witness fees.  Each Non-Compete Party further agrees that it is difficult to calculate the amount and extent of any damages caused by such a violation and such a violation threatens to injure or actually does injure the Company Issuer and its assets and the Highstar Entities.  Each Non-Compete Party agrees that the Company Issuer and the Highstar Entities will have the non-exclusive right to apply for and to receive a temporary restraining order, a temporary or preliminary injunction and a permanent injunction to enforce the terms, provisions, covenants, obligations, duties and conditions described in this Section 6.4.

(d)Acknowledgements.  Each Non-Compete Party expressly agrees and acknowledges that the non-competition covenant contained in this Agreement is reasonable and necessary for the protection of the Company Issuer and its Subsidiaries and their respective members, including the Highstar Entities, with respect to the covenant’s respective stated purposes, time, scope and geographic area, and supported by adequate compensation.  Although the Parties have, in good faith, used their best efforts to make this covenant reasonable in geographic area, scope of restricted activity, and duration, and it is not anticipated, nor is it intended, by any of the Parties that any court of competent jurisdiction would find it necessary to reform this covenant not to compete to make it reasonable, the Parties agree that any court of competent jurisdiction making a determination that it is necessary to reform this covenant not to compete to make it reasonable, shall be, and hereby is, empowered and directed to reform the covenant to the extent necessary to render it enforceable and afford the greatest protection to the Company Issuer’s and the Highstar Entities’ legitimate business interests.

Section 6.5SK Tank Farm Project.  The Parties acknowledge that as of the Closing, the Contributor has not yet obtained the consent of SK Energy Americas, Inc. (“SK”) to assign to the Company Issuer the Contributor’s rights under the Joint Development Agreement dated July 25, 2012 by and between SK and the Contributor (the “SK JDA”).  Notwithstanding anything to the contrary in this Agreement or in the LLC Agreement, the SK JDA and any assets related to the SK Tank Farm Project that would otherwise be Project Assets will be excluded from the Project Assets at the Closing and will be deemed Excluded Business Assets.  Following the Closing, the Contributor will use all reasonable efforts to obtain any required consent of SK to the assignment to the Company Issuer of the Contributor’s rights under the SK JDA and related assets, and the Company Issuer will reasonably cooperate with the Contributor to obtain

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any such consent.  Promptly following the receipt by the Contributor of any such required consent from SK, the Contributor will assign to the Company Issuer the Contributor’s rights under SK JDA and the Contributor’s right, title and interest to any other assets related to the SK Tank Farm Project that were excluded from the Project Assets at Closing, using the form of assignment attached hereto as Exhibit C, and such assets will be deemed Project Assets for all purposes hereunder following the date of assignment to the Company Issuer.  At such time, the Highstar Entities will contribute to the Company Issuer cash in an amount equal to $205,644.74, in exchange for which the Company Issuer will issue to Highstar Main 84,330.799 Series A-3 Units and issue to Highstar Wespac Prism/IV-A Interco LLC 121,313.951 Series A-3 Units.  Following such contribution by the Highstar Entities and in exchange for the contribution of the SK Tank Farm Project assets, the Company Issuer will (a) distribute to the Contributor an amount equal to $205,644.74; (b) issue to Kealine 18,145.125 Series A-3 Units and (c) issue to Primoris 18,145.125 Series A-3 Units.  Until such time as the SK Tank Farm Project assets are assigned to the Company Issuer pursuant to this Section 6.5, none of the the Contributor, Kealine, Primoris or any officer, employee or Affiliate thereof will (x) incur any liabilities, costs or expenses related to the SK Tank Farm Project or the SK JDA, (y) expend any time working on the SK Tank Farm Project other than in connection with obtaining any required consent from SK as described herein or (z) directly or indirectly participate in the development of the SK Tank Farm Project except, in each case, to the extent legally compelled to do so or as agreed to in writing by the Highstar Entities.

Section 6.6WesPac Marks.  No later than 10 days following the Closing, Kealine and its members will convey to the Company Issuer, in a form acceptable to the Highstar Entities in their reasonable judgment, all right, title and interest to all service marks, trademarks, trade dress, trade names and other indicia of origin of use used in connection with the Business Assets or the Business, including the name “WesPac” and the stylized “WesPac” mark.

Section 6.7Termination of Services Agreement.  Kealine and its Subsidiary have an arrangement with the Contributor pursuant to which all employees and certain independent contractors providing services for the Contributor and the Business have been employed or engaged by Kealine and its Subsidiary, which arrangement is described in the third item listed under Section 4.15 of the Sellers’ Disclosure Schedule.  Promptly following the Closing, Kealine and the Contributor will enter into a written agreement, in a form acceptable to the Highstar Entities in their reasonable judgment, to amend such arrangement such that (a) Kealine and its Subsidiary and their employees and independent contractors will provide services to the Contributor, at the Contributor’s cost and expense, only in connection with the projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule and (b) the fully loaded cost on an hourly basis of all time spent by such employees or independent contractors will not exceed $50,000 in any year without the prior written consent of the Company Issuer.  Such written agreement will terminate immediately following abandonment or assignment to the Company Issuer of all the projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule.

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ARTICLE VII
INDEMNIFICATION

Section 7.1Assumed Liabilities and Retained Liabilities.

(a)Assumed Liabilities.  Upon the terms and subject to the conditions set forth herein (including any right of the Issuer Indemnitees to seek indemnification pursuant to this Article VII), the Company Issuer agrees, effective at the Closing, to assume and to timely satisfy and discharge the following liabilities of the Contributor and relating to the Business (but excluding, in each case (x) the Retained Liabilities, (y) any liabilities relating to Port Arthur LLC or its assets or business and (z) any liabilities relating to Pittsburg LLC or its assets or business other than any obligation to make capital contributions to Pittsburg LLC) (collectively, the “Assumed Liabilities”):

(i)All liabilities to third parties for materials and services, to the extent relating to the Business, pursuant to a Contract or acquired in the ordinary course of business prior to the Closing but scheduled to be delivered or provided after the Closing, in each case as set forth on Section 7.1(a)(i) of Sellers’ Disclosure Schedule; and

(ii)Those liabilities arising out of or relating to the ownership of the Business or the Business Assets by the Company Issuer, including the use, ownership, operation, development and management of the Business Assets by the Company Issuer, but only to the extent such liabilities arise from or relate to any action, omission, performance, non-performance, event, condition or circumstance after the Closing (it being understood that the foregoing shall not be deemed to create any liability of the Company Issuer for actions by any Contributor Entity or Seller following the Closing that are not contemplated or expressly permitted by this Agreement or the Contribution Documents or that are not taken with the prior written consent of the Company Issuer).

(b)Retained Liabilities.  Notwithstanding any provision in this Agreement to the contrary, the Contributor will continue to be responsible for all liabilities and obligations of the Contributor that are not assumed by the Company Issuer pursuant to Section 7.1(a) as Assumed Liabilities (the “Retained Liabilities”), including, by way of example, the following:

(i)any of the Contributor’s payables (or any other liabilities owing by the Contributor) to Kealine or Primoris or any of their Affiliates regardless of the capacity in which such liability is owed;

(ii)any Indebtedness of the Sellers including any guarantees made by a Seller in respect of indebtedness for borrowed money incurred by any other Seller;

(iii)any liabilities and obligations that are unrelated to any Business Asset or otherwise unrelated to the conduct of the Business;

(iv)all liabilities and obligations of the Contributor arising out of or relating to any Excluded Business Asset;

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(v)any liabilities and obligations of the Sellers or any of their Affiliates (which shall not include the Subsidiaries of the Contributor) arising from this Agreement, the Contribution Documents or the transactions contemplated hereby and thereby;

(vi)all legal, accounting, environmental, brokerage, consulting or other professional advisory fees and expenses accrued by the Sellers and their Affiliates (which shall not include the Subsidiaries of the Contributor), regardless of the nature of such fees or expenses, in connection with this Agreement or the transactions contemplated hereby;

(vii)any and all Taxes for which the Sellers are or may be liable, any Transfer Taxes incurred in connection with the consummation of the transactions contemplated by this Agreement and any and all Contributor Taxes; and

(viii)any obligations of the Contributor under the Organizational Documents of the Contributor.

Section 7.2Indemnification Obligations.  Subject to the limitations and conditions set forth in this Article VII:

(a)Sellers shall severally and not jointly indemnify, defend and hold harmless the Company Issuer, the Highstar Entities, and their Affiliates and their respective successors and assigns (collectively with the Company Issuer,  the Highstar Entities and their Affiliates (and with respect to the Highstar Entities, their direct and indirect owners), the “Issuer Indemnitees”) from and against any and all claims, actions, causes of action, demands or suits by any Person, and all losses, liabilities, damages, obligations, payments, assessments, judgments, penalties, costs and expenses (including reasonable legal fees and expenses and including costs and expenses incurred in connection with investigations and settlement proceedings) (each, an “Indemnifiable Loss”), as incurred, asserted against or suffered by any Issuer Indemnitee relating to, resulting from or arising out of any breach by Sellers of: (i) any representation or warranty set forth in Article IV; (ii) any covenant or agreement of Sellers contained in this Agreement; and (iii) any and all Indemnifiable Losses attributable to, resulting from or arising out of the Retained Liabilities. For purposes of whether indemnification is payable under this Section 7.2(a), such representations and warranties shall be qualified by the references to materiality contained in such representations and warranties (i.e., such qualifications shall be considered in determining whether a breach has occurred), but with respect to the amount of indemnification payable and the limitations set forth in Section 7.3, such representations and warranties shall be without qualification to any references in such representations and warranties to materiality (i.e., once a breach has been determined, such references to materiality shall be disregarded in calculating the damages resulting from such breach and the amounts to be considered in determining whether the threshold amounts and dollar levels set forth in Section 7.3 have been exceeded).  Without limiting the generality of the foregoing, Sellers will be liable for their indemnification obligations, as set forth herein, regardless of whether any individual Seller made or did not make a particular representation or warranty in this Agreement. Each Seller is liable for any indemnification obligations relating to representations made with respect to, or covenants to be performed by, such Seller.  In addition, Kealine and Primoris are each liable for 50.0% of any indemnification obligations relating to representations made with respect to, or covenants to be performed by, Contributor, any of its Subsidiaries, Pittsburg LLC or the Business.

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(b)The Highstar Entities shall jointly and severally indemnify, defend and hold harmless Sellers and their Affiliates and respective successors and assigns (the “Contributor Indemnitees”) from and against any and all Indemnifiable Losses, as incurred, asserted against or suffered by any Contributor Indemnitee relating to, resulting from or arising out of any breach by the Company Issuer or the Highstar Entities of: (i) any representation or warranty set forth in Article V; or (ii) any covenant or agreement of the Company Issuer or the Highstar Entities contained in this Agreement; provided, however, that for purposes of whether indemnification is payable under this Section 7.2(b), such representations and warranties shall be qualified by the references to materiality contained in such representations and warranties (i.e., such qualifications shall be considered in determining whether a breach has occurred), but with respect to the amount of indemnification payable and the limitations set forth in Section 7.3, such representations and warranties shall be without qualification to any references in such representations and warranties to materiality (i.e., once a breach has been determined, such references to materiality shall be disregarded in calculating the damages resulting from such breach and the amounts to be considered in determining whether the threshold amounts and dollar levels set forth in Section 7.3 have been exceeded).

(c)The Company Issuer shall indemnify, defend and hold harmless the Contributor Indemnitees from and against any and all Indemnifiable Losses, as incurred, asserted against or suffered by any Contributor Indemnitee relating to, resulting from or arising out of any of the Assumed Liabilities.

Section 7.3Limitations of Liability.

(a)Notwithstanding anything to the contrary in this Agreement or otherwise, and subject to the limitations in this Article VII, no Indemnitee shall be entitled to recover for any Indemnifiable Loss under Section 7.2(a)(i) unless and until (i) with respect to any single claim (or series of related claims arising out of the same or similar facts, events or circumstances), the amount of such Indemnifiable Losses related to such claim or related claims exceeds $17,250 (the “Per Claim Threshold”), and (ii) the amount of any Indemnifiable Loss with all other Indemnifiable Losses in the aggregate, exceeds $300,000 (the “Loss Basket”), whereupon all such Indemnifiable Losses in excess of the Loss Basket shall be recoverable (but excluding, for the sake of clarity, any single claim (or series of related claims arising out of the same or similar facts, events or circumstances) that does not meet the Per Claim Threshold); provided, however, that the Loss Basket shall not apply to breaches by the Sellers or by the Company Issuer and the Highstar Entities of the Fundamental Representations, the representations and warranties contained in Section 4.9 (Taxes) or any covenant.

(b)In no event shall the maximum aggregate amount of Indemnifiable Losses that may be recovered by the Contributor Indemnitees or the Issuer Indemnitees under Section 7.2 exceed $3,750,000 (the “Liability Cap”); provided, however, that the Liability Cap set forth in this Section 7.3(b) shall not apply to breaches by the Sellers or by the Company Issuer and the Highstar Entities of the representations and warranties contained in Section 4.1(b) or Section 5.1(b) (Due Authority), Section 4.13 or Section 5.6 (Capitalization), Section 4.14 or Section 5.9  (Brokers or Finders) (collectively, the “Fundamental Representations”) and the representations and warranties contained in Section 4.9 (Taxes) or any covenant.

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(c)Any Person entitled to receive indemnification under this Agreement having a claim under these indemnification provisions shall make a good faith effort to recover any Indemnifiable Loss from insurers of such Indemnitee under applicable insurance policies so as to reduce the amount of any Indemnifiable Loss hereunder.  The amount of any Indemnifiable Loss shall be reduced to the extent that the relevant Issuer Indemnitee or Contributor Indemnitee (each, an “Indemnitee”) actually receives any insurance proceeds with respect to an Indemnifiable Loss (less any costs, expenses or premiums incurred in connection therewith).  If the amount of any Indemnifiable Loss, at any time subsequent to the making of an indemnity payment in respect thereof, is reduced by recovery, settlement, mitigation or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith, will promptly be repaid by the Indemnitee to the Party required to provide indemnification hereunder (the “Indemnifying Party”) with respect to such Indemnifiable Loss.

(d)TO THE FULLEST EXTENT PERMITTED BY LAW, NO PARTY NOR ANY ISSUER INDEMNITEE OR ANY CONTRIBUTOR INDEMNITEE SHALL BE LIABLE TO ANY OTHER PARTY OR ANY OTHER ISSUER INDEMNITEE OR CONTRIBUTOR INDEMNITEE FOR ANY CLAIMS, DEMANDS OR SUITS FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT OR MULTIPLE DAMAGES CONNECTED WITH OR RESULTING FROM ANY BREACH OF, OR OBLIGATION UNDER, THIS AGREEMENT, OR ANY ACTIONS UNDERTAKEN IN CONNECTION WITH OR RELATED HERETO OR THERETO; PROVIDED, HOWEVER, THAT ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT OR MULTIPLE DAMAGES RECOVERED BY A THIRD PARTY (INCLUDING A GOVERNMENTAL AUTHORITY BUT EXCLUDING ANY AFFILIATE OF ANY PARTY) AGAINST AN INDEMNITEE SHALL BE INCLUDED IN THE INDEMNIFIABLE LOSSES RECOVERABLE UNDER SUCH INDEMNITY.

(e)EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE IV, THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACKNOWLEDGE AND AGREE THAT NONE OF THE SELLERS, THE CONTRIBUTOR ENTITIES AND THEIR RESPECTIVE AFFILIATES ARE MAKING ANY REPRESENTATIONS OR WARRANTIES, WHETHER WRITTEN, ORAL, STATUTORY, EXPRESS, OR IMPLIED, CONCERNING THE CONTRIBUTOR ENTITIES, THE BUSINESS ASSETS OR THE OPERATION OF THE BUSINESS, INCLUDING ANY RELATING TO LIABILITIES, CONDITION, VALUE OR QUALITY OF THE BUSINESS OR THEIR PROSPECTS (FINANCIAL OR OTHERWISE), RISKS OR OTHER INCIDENTS OF THE BUSINESS, OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACKNOWLEDGE AND AGREE THAT SELLERS SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS OF THE CONTRIBUTOR ENTITIES OR ANY PART THEREOF, AS TO THE WORKMANSHIP THEREOF, THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 

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IV AND THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACCEPT THE BUSINESS ASSETS IN THEIR AS-IS, WHERE-IS CONDITION, WITH ALL FAULTS.

(f)If a claim for indemnification is not based upon a Third Party Claim, the Indemnifying Party shall pay such claim within 30 days after the later of (i) receipt of a notice of such claim and (ii) the date that the amount of such payment has been agreed in writing or finally determined in accordance with this Agreement.

Section 7.4Third Party Claims Procedure.

(a)If any Indemnitee receives notice of the assertion of any claim or of the commencement of any claim, action, or proceeding made or brought by any Person who is not a Party or an Affiliate of a Party (a “Third Party Claim”) with respect to which indemnification is to be sought from an Indemnifying Party, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 5 Business Days after the Indemnitee’s receipt of notice of such Third Party Claim; provided, however, that a failure to give timely notice will not affect the rights or obligations of any Indemnitee except if, and only to the extent that, as a result of such failure, the Indemnifying Party was actually prejudiced.  Such notice shall describe the nature of the Third Party Claim in reasonable detail and will indicate the estimated amount, if practicable, of the Indemnifiable Loss that has been or may be sustained by the Indemnitee.

(b)If a Third Party Claim is made against an Indemnitee, the Indemnifying Party will be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof at its sole cost and expense with counsel selected by the Indemnifying Party by delivering written notice to the Indemnitee within 30 days of receiving notice of such Third Party Claim from Indemnitee.  If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnitee (i) will cooperate in all reasonable respects with the Indemnifying Party in connection with such defense and (ii) will not admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the Indemnifying Party’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, and the Indemnifying Party will not compromise or settle such Third Party Claim without the Indemnitee’s written consent, which shall not be unreasonably withheld, conditioned or delayed, unless such compromise or settlement by its terms (A) obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim, (B) releases the affected Indemnitees completely and unconditionally in connection with such Third Party Claim and (C) does not impose any injunctive or other equitable relief on the Indemnitee.  In the event the Indemnifying Party shall assume the defense of any Third Party Claim, the Indemnitee shall be entitled to participate in (but not control) such defense with its own counsel at its own expense.  The Indemnifying Party shall keep such Indemnitee reasonably apprised of the status of the claim, liability or expense and any resulting suit, proceeding or enforcement action.  If the Indemnifying Party elects not to assume the defense of any such Third Party Claim or fails to respond to Indemnitee within the specified 30-day period, then (i) the Indemnitee may defend the same as it may deem appropriate with counsel of its own choice, including settling such claim or litigation in a reasonable manner after giving notice to the Indemnifying Party of the terms of the proposed settlement and (ii) if the underlying claim is an Indemnifiable Loss, the Indemnifying Party will reimburse the Indemnitee for the Indemnitee’s reasonable expenses in defending the

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claim.  If the claim or demand is asserted against both the Indemnifying Party and the Indemnitee and, based on the advice of counsel reasonably satisfactory to the Indemnifying Party, it is determined that there is a conflict of interest which renders it inappropriate for the same counsel to represent both the Indemnifying Party and the Indemnitee, the Indemnifying Party shall be responsible for paying the reasonable costs of separate counsel for the Indemnitee; provided, however, that the Indemnifying Party shall not be responsible for paying for more than one separate firm of attorneys to represent all the Indemnitees regardless of the number of Indemnitees.  Anything contained in this Agreement to the contrary notwithstanding, no Indemnifying Party shall be entitled to assume the defense of any Third Party Claim to the extent such Third Party Claim seeks an order, injunction or other equitable relief or relief for other than monetary damages against the Indemnitee that, if successful, would materially and adversely affect the business of the Indemnitee.

Section 7.5Survival.  Each representation and warranty contained herein shall survive the Closing Date for a period of 12 months after the Closing Date and shall thereafter terminate and be of no further force and effect; provided, however, that:

(a)the representations and warranties contained in Section 4.9 (Taxes) shall survive for 90 days following the expiration of the applicable statute of limitations and shall thereafter terminate and be of no further force and effect;

(b)the representations and warranties contained in Section 4.22 (Environmental Matters) shall survive the Closing Date for a period of 36 months after the Closing Date and shall thereafter terminate and be of no further force and effect;

(c)the Fundamental Representations shall survive the Closing Date indefinitely; and

(d)Indemnitees shall not be entitled to indemnification hereunder unless written notice of a claim for indemnity or written notice of specific facts as to which an Indemnifiable Loss is expected to be incurred shall have been given within the applicable survival period.  From and after the termination of each such representation and warranty, no Party or any officer, shareholder, director, trustee or Affiliate of any of them shall have any liability whatsoever with respect to any such representation and warranty; provided, however, that there will be no termination of any representation or warranty with respect to a bona fide claim asserted with respect thereto prior to the end of the applicable survival period.

Section 7.6Exclusive Remedies.  After the Closing Date, except as otherwise provided in Section 8.6, the remedies specifically provided for by this Article VII shall be the sole and exclusive remedies of the Parties for (a) any breach or inaccuracy of the representations and warranties contained in this Agreement, Sellers’ Disclosure Schedule, Highstar’s Disclosure Schedule or in any certificate, agreement or document furnished or delivered pursuant hereto, (b) the failure to perform any covenants, agreements or obligations contained in this Agreement or in any agreement or document furnished or delivered pursuant hereto, or (c) any loss, relating to, resulting from or arising out of any transaction or matter relating in any manner whatsoever to (i) the operation of the Contributor Entities or the Business prior to Closing, (ii) this Agreement or (iii) any document furnished or delivered pursuant hereto.

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Section 7.7Limited Duty to MitigateSection 1.1  Each Indemnitee shall use reasonable efforts to mitigate its respective Indemnifiable Losses upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Indemnifiable Losses.  For the avoidance of doubt, no Indemnitee will be required to incur any out-of-pocket costs (other than de minimis expenditures) in order to mitigate any Indemnifiable Loss.  In the event an Indemnitee fails to so mitigate an Indemnifiable Loss to the extent required by this Section 7.7, the Indemnifying Party shall have no liability for any portion of such Indemnifiable Loss that reasonably could have been avoided had the Indemnitee made such efforts.

Section 7.8Tax Treatment.  The Parties to this Agreement agree that any payment made under Article VII shall be treated by such Parties as an adjustment to the amount of the Company Distribution  for all Tax purposes except as otherwise required by applicable Law following a final determination by the relevant Tax Authority.

ARTICLE VIII
GENERAL PROVISIONS

Section 8.1Expenses.  All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.  Costs and expenses incurred by the Company Issuer shall be paid by Highstar Entities.

Section 8.2Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when delivered by hand (with written confirmation of receipt), sent by electronic mail (with written confirmation of receipt, including any automatic confirmation that is received) or when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a Party may designate by notice to the other Parties):

(a)if to the Company Issuer or the Highstar Entities to:

c/o Highstar Capital IV, L.P.
277 Park Avenue, Floor 45
New York, New York  10172
Attn: Scott Litman
Email: scott.litman@highstarcapital.com

Copies (which shall
not constitute notice) to:

Sidley Austin LLP
1000 Louisiana, Ste 6000

Houston, Texas 77002

Attn: J. Mark Metts

Email: mark.metts@sidley.com

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(b)if to Contributor to:

WesPac Energy LLC
2355 Main St., No. 210

Irvine, CA 92614
Attention:  Dave Smith
Email: dsmith@wespac.com

Copies (which shall
not constitute notice) to:

Snell & Wilmer L.L.P.

350 S. Grand Ave, Suite 2600

Los Angeles, CA 90071

Attn: Josh Schneiderman

E-mail: jschneiderman@swlaw.com

(c)if to Primoris to:

John M. Perisich

Primoris Services Corporation

26000 Commercentre Drive

Lake Forest, CA  92630

Email: JPerisich@prim.com

Copies (which shall
not constitute notice) to:

George J. Wall

Rutan & Tucker, LLP

611 Anton Boulevard, 14th Floor

Costa Mesa, CA 92626

Email: gwall@rutan.com

(d)if to Kealine to:

2355 Main St., No. 210

Irvine, CA 92614
Attention:  Dave Smith
Email: dsmith@wespac.com

or to such other address as any Party shall have designated by 15 days’ notice in writing to the other Parties.

Section 8.3Counterparts and Effectiveness.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument, it being understood that each of the Parties need not sign

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the same counterpart.  Any signature hereto delivered by a Party by facsimile or electronic transmission shall be deemed an original signature hereto.

Section 8.4Future Actions.  Each of the Parties shall execute and deliver all such future instruments and take such other and further action as may be reasonably necessary or appropriate to carry out the provisions of this Agreement and the intention of the Parties expressed herein.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each Party and, in the event a Party is a legal organization, the proper officers, managers, partners and directors of such Party and its respective Subsidiaries, if any, or, in the event a Party is a natural person, then the personal representatives, heirs and assigns of such Party, shall take all such necessary action as may be reasonably requested by any of the other Parties.

Section 8.5Applicable Law; Jurisdiction.

(a)THIS AGREEMENT IS GOVERNED BY AND WILL BE CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

(b)THE PARTIES AGREE THAT ANY SUIT, ACTION OR PROCEEDING OF ANY AND EVERY KIND (INCLUDING ANY SUIT, ACTION OR PROCEEDING BASED ON CONTRACT, TORT, STATUTE, REGULATION OR OTHERWISE) INVOLVING THIS AGREEMENT OR SEEKING TO ENFORCE ANY PROVISION OF THIS AGREEMENT (EACH, A “COVERED CLAIM”) WILL BE BROUGHT ONLY IN CHANCERY COURT OF THE STATE OF DELAWARE OR ANY FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF DELAWARE.  THE PARTIES MUTUALLY CONSENT TO THE JURISDICTION OF THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE (AND OF THE APPROPRIATE APPELLATE COURTS THEREFROM) AND AGREE THAT ANY COVERED CLAIM WILL BE BROUGHT ONLY IN A CHANCERY COURT OR IN FEDERAL COURT IN DELAWARE.  THE PARTIES AGREE THAT THEY WILL NOT RAISE, AND HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW AND AGREE NOT TO ASSERT, ANY DEFENSE OR OBJECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, INCONVENIENCE OF THE FORUM OR THE LIKE AND ANY DEFENSE OR OBJECTION THAT SUCH COVERED CLAIM MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN ANY CASE FILED IN A CHANCERY COURT OR FEDERAL COURT IN DELAWARE.  THE PARTIES IRREVOCABLY AGREE TO ABIDE BY THE RULES OF PROCEDURE APPLIED BY THE CHANCERY COURTS OR FEDERAL COURTS IN DELAWARE AND WAIVE ANY OBJECTION TO ANY SUCH PROCEDURE ON THE GROUND THAT SUCH PROCEDURE WOULD NOT BE PERMITTED IN THE COURTS OF SOME OTHER JURISDICTION OR WOULD BE CONTRARY TO THE LAWS OF SOME OTHER JURISDICTION.  THE PARTIES FURTHER AGREE THAT ANY COVERED CLAIM HAS A SIGNIFICANT CONNECTION WITH THE STATE OF DELAWARE AND WILL NOT

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CONTEND OTHERWISE IN ANY PROCEEDING IN ANY COURT OF ANY OTHER JURISDICTION.  EACH PARTY REPRESENTS THAT IT HAS AGREED TO THE JURISDICTION OF THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE IN RESPECT OF COVERED CLAIMS AFTER BEING FULLY AND ADEQUATELY ADVISED BY LEGAL COUNSEL OF ITS OWN CHOICE CONCERNING THE PROCEDURES AND LAW APPLIED IN THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE AND HAS NOT RELIED ON ANY REPRESENTATION BY ANY OTHER PARTY OR ITS AFFILIATES OR REPRESENTATIVES AS TO THE CONTENT, SCOPE OR EFFECT OF SUCH PROCEDURES AND LAW AND WILL NOT CONTEND OTHERWISE IN ANY PROCEEDING IN ANY COURT OF ANY JURISDICTION.  EACH PARTY AGREES THAT SERVICE OF PROCESS ON SUCH PARTY AS PROVIDED IN Section 8.2 WILL BE DEEMED EFFECTIVE SERVICE OF PROCESS ON SUCH PERSON.

(c)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY DISPUTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Section 8.6Enforcement of Agreement.  The Parties agree that irreparable damage would occur in the event that the provisions contained in this Agreement were not performed in accordance with its specific terms or were otherwise breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 8.7Invalidity.  If any provision of this Agreement is held invalid or unenforceable, such invalidity or unenforceability shall not affect in any way the validity or enforceability of any other provision of this Agreement.  In the event any provision of this Agreement is held invalid or unenforceable, the Parties shall attempt to agree on a valid or enforceable provision which shall be a reasonable substitute for such invalid or unenforceable provision in light of the tenor of this Agreement and, on so agreeing, shall incorporate such substitute provision in this Agreement.

Section 8.8Entire Agreement and Construction.  The Contribution Documents together with any schedules, exhibits, annexes and other documents contemplated hereby and thereby, contain the entire agreement between the Parties hereto with respect to the subject matter hereof and thereof and all prior understandings and agreements shall merge herein and therein.  There are no additional terms, whether consistent or inconsistent, oral or written, which are intended to be part of the Parties’ understandings which have not been incorporated into the Contribution Documents and any schedules, exhibits, annexes and other agreements and documents contemplated hereby or thereby.

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Section 8.9Amendment.  Subject to compliance with applicable Law, this Agreement may be amended by the Parties only by an instrument signed in writing on behalf of each Party.

Section 8.10Extension; Waiver.  The Parties may by written instrument (a) extend the time for the performance of any of the obligations or other acts of the other Parties and (b) waive compliance or performance by any other Party with or of any of the covenants or agreements made to it by any other Party contained in this Agreement.  No extension of the time for performance of any obligation hereunder or waiver of any condition or breach of any representation, warranty, covenant or agreement or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall operate as an extension, waiver of, or estoppel with respect to, any subsequent or other breach or failure.  The single or partial exercise of any right, power or remedy provided under this Agreement shall not preclude any other or further exercise thereof or the exercise of any other right, power or remedy except where expressly stated in this Agreement.

Section 8.11Assignment; Third Party Beneficiaries.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party (whether by operation of law or otherwise) without the prior written consent of the other Parties.  Subject to the preceding sentence, this Agreement shall inure to the benefit of, and be binding upon, the Parties and their respective successors, permitted assigns and other permitted transferees.  Nothing contained in this Agreement, express or implied, is intended to confer upon any Person other than the Parties and their respective successors, permitted assigns and other permitted transferees, any rights or remedies under or by reason of this Agreement.

Section 8.12Interpretation.  If any claim is made by any party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Party or its counsel.

Section 8.13Press Releases.  No Party shall make, or cause any other Person to make, any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the Contributor and the Highstar Entities; provided, however, that the foregoing shall not restrict disclosures to the extent (a) necessary for a Party to perform this Agreement (including disclosure to Governmental Authorities or Third Parties holding rights that may be applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide notices, seek waivers, amendments or termination of such rights), (b) required (upon advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates; provided further that, in the case of clauses (a) and (b), each Party shall use its reasonable efforts to consult with the other Party regarding the contents of any such release or announcement prior to making such release or announcement.

Section 8.14Records.  Company Issuer shall use commercially reasonable efforts to maintain the Records received from Sellers for at least six years after the Closing Date and afford Sellers reasonable access to the Records and a right to copy the Records at Sellers’ expense as reasonably requested by Sellers.  If Company Issuer desires to destroy the Records, within such

49

six-year period, it shall use commercially reasonable efforts to notify Sellers prior to such destruction and provide Sellers an opportunity to take possession of them at Sellers’ expense.  In addition, Company Issuer may, in its sole discretion, afford Sellers access to records and data produced after the Closing Date and reasonably requested by Sellers in connection with any Retained Liabilities or any claim for indemnity by Company Issuer under this Agreement (excluding, however, attorney work product and attorney-client communications entitled to legal privilege), and may permit Sellers to copy such records and data at Sellers’ expense.

[Signature Pages Follow]

50

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

CONTRIBUTOR:
WesPac Energy LLC, a Delaware limited liability company
By:	/s/David P. Smith
	David P. Smith
	President
PRIMORIS:
Primoris Services Corporation, a Delaware corporation
By:	John M. Perisich
	John M. Perisich
	Executive Vice President, General
	Counsel and Secretary
KEALINE:
Kealine Holdings LLC, a Nevada limited liability company
By:	David P. Smith
	David P. Smith
	Managing Member

Signature Page to Contribution Agreement

COMPANY ISSUER:
WESPAC MIDSTREAM LLC,
a Delaware limited liability company
By:	/s/Michael J. Miller
	Name:  Michael J. Miller
	Title:    Authorized Person
HIGHSTAR ENTITIES:
HIGHSTAR WESPAC MAIN INTERCO LLC,
a Delaware limited liability company
By:		HIGHSTAR CAPITAL GP IV, L.P.
Its:		Manager
By:		HIGHSTAR CAPITAL GP IV, LLC
Its:		General Partner
By:		/s/Michael J. Miller
		Michael J. Miller
		Executive Vice President
HIGHSTAR WESPAC PRISM/IV-A INTERCO LLC,
a Delaware limited liability company
By:		HIGHSTAR CAPITAL GP IV, L.P.
Its:		Managing Member
By:		HIGHSTAR CAPITAL GP IV, LLC
Its:		General Partner
By:		/s/Michael J. Miller
		Michael J. Miller
		Executive Vice President

Signature Page to Contribution Agreement

Exhibit C

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian Pratt, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2013 of Primoris Services Corporation;

2.Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d)Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 5, 2013

/s/ BRIAN PRATT

Brian Pratt

Chairman of the Board, Chief Executive Officer and President
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter J. Moerbeek, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2013, of Primoris Services Corporation;

2.Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report;

3.Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report based on such evaluation; and

(d)Disclosed in this Quarterly Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 5, 2013

/s/ PETER J. MOERBEEK

Peter J. Moerbeek

Executive Vice President, Chief Financial Officer and Director
(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report of Primoris Services Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Pratt, Chairman of the Board, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: November 5, 2013	/s/ BRIAN PRATT
	Brian Pratt
	Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

In connection with the Quarterly Report of Primoris Services Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter J. Moerbeek, Executive Vice President, Chief Financial Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: November 5, 2013	/s/ PETER J. MOERBEEK
	Peter J. Moerbeek
	Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)

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Noncontrolling Interests

9 Months Ended

Sep. 30, 2013

Noncontrolling Interests

Noncontrolling Interests

Note 12 — Noncontrolling Interests

The Company applies the provisions of ASC Topic 810-10-45, which establishes accounting and reporting standards for ownership interests of parties other than the Company in subsidiaries, such as joint ventures and partnerships.

The Company determined that the Blythe joint venture was a variable interest entity (“VIE”) and that the Company was the primary beneficiary as a result of its significant influence over the joint venture operations.

The Blythe joint venture operating activities are included in the Company’s consolidated statements of income as follows:

	Three months ended September 30,		Nine months ended September 30,
	2013	2012	2013	2012
Revenues	15,468	7,750	47,371	13,164
Net income attributable to noncontrolling interests	1,348	432	1,947	600

Since Blythe is a partnership, no tax effect was recognized for the income.   Blythe made a $2.5 million distribution to the noncontrolling interests and $2.5 million distribution to the Company during the nine months ended September 30, 2013.  There were no distributions made in the prior year, and there were no capital contributions made during the nine months ended September 30, 2013.

The carrying value of the assets and liabilities associated with the operations of the Blythe joint venture are included in the Company’s consolidated balance sheets as follows:

	September 30, 2013		December 31, 2012
Cash	$	1,793	$	3,565
Accounts receivable	8,448		8,843
Current liabilities	8,318		9,379

The net assets of the joint venture are restricted for use by the project and are not available for general operations of the Company.

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Noncontrolling Interests (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Noncontrolling Interests
Revenues	$ 551,333,000	$ 431,842,000	$ 1,406,341,000	$ 1,060,851,000
Net income attributable to noncontrolling interests	1,348,000	432,000	1,947,000	600,000
Tax effect on income recognized	14,075,000	10,965,000	30,272,000	24,875,000
Accounts receivable	284,497,000		284,497,000		268,095,000
Current liabilities	410,633,000		410,633,000		420,669,000
Blythe joint venture | Primary beneficiary
Noncontrolling Interests
Revenues	15,468,000	7,750,000	47,371,000	13,164,000
Net income attributable to noncontrolling interests	1,348,000	432,000	1,947,000	600,000
Tax effect on income recognized			0
Distributions to noncontrolling interests			2,500,000	0
Distributions from joint venture			2,500,000	0
Capital contributions			0
Cash	1,793,000		1,793,000		3,565,000
Accounts receivable	8,448,000		8,448,000		8,843,000
Current liabilities	$ 8,318,000		$ 8,318,000		$ 9,379,000

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Revenues	$ 551,333	$ 431,842	$ 1,406,341	$ 1,060,851
Cost of revenues	475,868	375,551	1,225,243	922,960
Gross profit	75,465	56,291	181,098	137,891
Selling, general and administrative expenses	36,478	26,014	96,657	69,684
Operating income	38,987	30,277	84,441	68,207
Other income (expense):
Income (loss) from non-consolidated entities	113	(159)	169	895
Foreign exchange gain (loss)	91	18	3	(30)
Other expense	(376)	(382)	(809)	(961)
Interest income	32	96	95	143
Interest expense	(1,579)	(937)	(4,501)	(3,044)
Income before provision for income taxes	37,268	28,913	79,398	65,210
Provision for income taxes	(14,075)	(10,965)	(30,272)	(24,875)
Net income	23,193	17,948	49,126	40,335
Less net income attributable to noncontrolling interests	(1,348)	(432)	(1,947)	(600)
Net income attributable to Primoris	$ 21,845	$ 17,516	$ 47,179	$ 39,735
Earnings per share:
Basic (in dollars per share)	$ 0.42	$ 0.34	$ 0.92	$ 0.77
Diluted (in dollars per share)	$ 0.42	$ 0.34	$ 0.91	$ 0.77
Weighted average common shares outstanding:
Basic (in shares)	51,568	51,398	51,529	51,387
Diluted (in shares)	51,671	51,404	51,595	51,402

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Accounts Receivable

9 Months Ended

Sep. 30, 2013

Accounts Receivable

Accounts Receivable

Note 5—Accounts Receivable

The following is a summary of the Company’s accounts receivable:

	September 30, 2013		December 31, 2012
Contracts receivable, net of allowance for doubtful accounts of $535 at September 30, 2013 and $432 at December 31, 2012	$	235,302	$	227,548
Retention	48,768		39,710
	284,070		267,258
Other accounts receivable	427		837
	$	284,497	$	268,095

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies.

Commitments and Contingencies

Note 19—Commitments and Contingencies

Leases— The Company leases certain property and equipment under non-cancellable operating leases which expire at various dates through 2019. The leases require the Company to pay all taxes, insurance, maintenance and utilities and are classified as operating leases in accordance with ASC Topic 840 “Leases”.

Total lease expense during the three and nine months ended September 30, 2013 was $3,566 and $11,111, respectively, compared to $2,629 and $7,388 for the same periods in 2012.  The amounts for the three and nine months ended September 30, 2013 included lease payments made to related parties of $379 and $1,176, respectively, and $327 and $975 for the three and nine months ended September 30, 2012, respectively.

Letters of credit— At September 30, 2013, the Company had letters of credit outstanding of $8,123 and at December 31, 2012, the Company had letters of credit outstanding of $6,168.  The outstanding amounts include the U.S. dollar equivalents for letters of credit issued in Canadian dollars.

Litigation — On February 7, 2012, the Company was sued in an action entitled North Texas Tollway Authority, Plaintiff v. James Construction Group, LLC, and KBR, Inc., Defendants, v. Reinforced Earth Company, Third-Party Defendant (the “Lawsuit”). The Lawsuit was brought in the District Court of Collin County, Texas, 401st Judicial District, Cause No. 401-01747-2012.  In the Lawsuit, the North Texas Tollway Authority (“NTTA”) is alleging damages to a road and retaining wall that were constructed in 1999 on the George Bush Turnpike near Dallas, Texas, due to negligent construction by JCG.  The Lawsuit claims that the cost to repair the retaining wall was approximately $5.4 million.  The NTTA also alleges that six other walls constructed on the project by JCG could have the same potential exposure to failure.  The Company has denied any liability, but has tendered the claim to its insurance carriers and has cross-complained against its engineering subcontractor for potential design liability.  The extent of insurance coverage by the carriers of the Company and its subcontractor are undetermined at this time.  The Company has investigated all potential causes of the alleged loss, including design liabilities of the owner, owner’s engineers and/or the Company’s subcontractor.   To date, mediation efforts have not been successful, and a jury trial is likely to be scheduled for 2014.  While the Company will vigorously defend the claims, after discussion with its legal counsel, the Company recorded an accrual amount for this issue.

The Company is subject to other claims and legal proceedings arising out of its business. Management believes that the Company has meritorious defenses to such claims. Although management is unable to ascertain the ultimate outcome of such matters, after review and consultation with counsel and taking into consideration relevant insurance coverage and related deductibles, management believes that the outcome of these matters will not have a materially adverse effect on the consolidated financial position of the Company.

Bonding— At September 30, 2013 and December 31, 2012, the Company had bid and completion bonds issued and outstanding totaling approximately $1,449,158 and $1,298,589, respectively.

Withdrawal liability for multiemployer pension plan— In November 2011, Rockford and ARB, along with other members of the Pipe Line Contractors Association (“PLCA”), withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan (the “Plan”).  The Company withdrew from the Plan in order to mitigate its liability in connection with the Plan, which is significantly underfunded.   The Company recorded a liability of $7,500 based on information provided by the Plan. However, the Plan has asserted that the PLCA members did not affect a proper withdrawal in 2011. The Company believes that a legally effective withdrawal occurred in November 2011 and has recorded the withdrawal liability on that basis. If the Plan were to prevail in its assertion and the withdrawal of the Company were deemed to occur after 2011, the amount of any withdrawal liability could increase.

Prior to its acquisition, Q3C had also withdrawn from the Plan.  In November 2012, Q3C estimated a withdrawal liability of $85.  In the first quarter of 2013, the Plan asserted that the liability was $119.  Without agreeing to the amount, Q3C is making payments toward the liability amount.

Contingent Consideration— Earnouts related to acquisitions are discussed in Note 8 — Business Combinations and Note 13 — Contingent Earnout Liabilities.

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Stock-Based Compensation (Details) (2013 Plan, Restricted Stock Units, USD $)	0 Months Ended	3 Months Ended	9 Months Ended
	May 03, 2013	Sep. 30, 2013	Sep. 30, 2013 item
2013 Plan | Restricted Stock Units
Stock-based compensation
Shares granted	100,000
Number of equal installments to vest units over the service period from 2014 through 2017			4
Number of shares of common stock issued for each unit when vested		1	1
Grant date fair value (in dollars per unit)		$ 21.98	$ 21.98
Compensation expense recognized		$ 138,000	$ 229,000
Unrecognized compensation expense		$ 1,970,000	$ 1,970,000
Period to recognize unrecognized compensation expense			3 years 7 months 6 days
Accrued dividend equivalent units			0

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Contingent Earnout Liabilities

9 Months Ended

Sep. 30, 2013

Contingent Earnout Liabilities

Contingent Earnout Liabilities

Note 13 — Contingent Earnout Liabilities

As part of the Rockford acquisition in November 2010, the Company agreed to issue additional cash and common stock to the sellers, contingent upon Rockford meeting certain operating performance targets  The final contingent earnout  for 2012 was achieved and in April 2013, the Company made a $6,900 cash payment.

The Company has recorded additional contingent earnout consideration liabilities related to the acquisitions of FSSI, Sprint, Saxon and Q3C as discussed in Note 8 — Business Combinations.

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Business Combinations (Details 5) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		0 Months Ended		1 Months Ended	9 Months Ended			0 Months Ended			0 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jan. 07, 2013 Q3C	Nov. 17, 2012 Q3C	Aug. 31, 2013 Q3C	Sep. 30, 2013 Q3C	Dec. 31, 2012 Q3C	Nov. 17, 2012 Q3C Earnout target period from November 18, 2012 through December 31, 2013	Nov. 17, 2012 Q3C Earnout target period from November 18, 2012 through December 31, 2013 Minimum	Nov. 17, 2012 Q3C Earnout target period from November 18, 2012 through December 31, 2013 Maximum	Nov. 17, 2012 Q3C 2014 earnout target	Nov. 17, 2012 Q3C 2014 earnout target Minimum	Nov. 17, 2012 Q3C 2014 earnout target Maximum	Sep. 30, 2013 Q3C 2014 earnout target Maximum
2012 Acquisition - Q3 Contracting
Total consideration				$ 56,592
Cash paid for acquisitions	2,273	38,110		48,116	598	598
Contingent consideration				7,448		8,536	7,490
Company common stock as a part of consideration				430
Pretax income threshold for measuring financial performance									17,700			19,000
Contingent consideration in cash								3,750			3,750
Additional potential contingent consideration									1,250	5,000		1,250	5,000	5,000
EBITDA threshold for measuring financial performance, case two									$ 19,000			$ 22,000
Unregistered shares of common stock issued with an acquisition			29,273			29,273

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Income Taxes (Details)	9 Months Ended
	Sep. 30, 2013
Income Taxes
Effective tax rate on income before taxes and noncontrolling interests (as a percent)	38.13%
Effective tax rate for income attributable to Primoris (as a percent)	39.09%
U.S. federal statutory rate (as a percent)	35.00%
Minimum period of statute of limitations of state and foreign jurisdictions	3 years
Maximum period of statute of limitations of state and foreign jurisdictions	5 years

XML

Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Customer concentration
Revenues	$ 551,333	$ 431,842	$ 1,406,341	$ 1,060,851
Revenues | Customer concentration | Top ten customers
Customer concentration
Number of top customers	10	10	10	10
Number of calendar years in which top customers typically generate minimum specified percentage of revenue			1
Revenues	$ 274,000	$ 243,600	$ 717,000	$ 607,800
Percentage of concentration risk	49.70%	56.40%	51.00%	57.30%
Revenues | Customer concentration | Top ten customers | Minimum
Customer concentration
Minimum percentage of revenues generated by top ten customers			50.00%
Revenues | Customer concentration | Large gas and electric utility
Customer concentration
Percentage of concentration risk	8.80%	16.10%	8.30%	13.60%
Revenues | Customer concentration | Large gas pipeline company
Customer concentration
Percentage of concentration risk	9.70%		6.80%
Revenues | Customer concentration | One customer
Customer concentration
Percentage of concentration risk			7.40%	13.60%
Revenues | Customer concentration | Louisiana Department of Transportation
Customer concentration
Percentage of concentration risk		11.90%		12.70%
Accounts receivable | Customer concentration | One customer
Customer concentration
Percentage of concentration risk			13.10%	10.80%

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Nature of Business (Tables)

9 Months Ended

Sep. 30, 2013

Nature of Business

Schedule of list of primary operating subsidiaries and their reportable operating segment

Subsidiary	Operating Segment
ARB, Inc. (“ARB”)	West Construction Services
ARB Structures, Inc.	West Construction Services
Q3 Contracting, Inc. (“Q3C”); acquired 2012	West Construction Services
Rockford Corporation (“Rockford”)	West Construction Services
Stellaris, LLC.	West Construction Services
OnQuest, Inc.	Engineering
OnQuest, Canada, ULC (Born Heaters Canada, ULC prior to 2013)	Engineering
Cardinal Contractors, Inc.	East Construction Services
Force Specialty Services, Inc. (“FSSI”); acquired 2013	East Construction Services
James Construction Group, LLC (“JCG”)	East Construction Services
Sprint Pipeline Services, L.P. (“Sprint”); acquired 2012	East Construction Services
Silva Group (“Silva”); acquired 2012	East Construction Services
The Saxon Group (“Saxon”); acquired 2012	East Construction Services

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2013

Basis of Presentation

Revenue recognition

Revenue recognition

Fixed-price contracts — Historically, a substantial portion of the Company’s revenue has been generated under fixed-price contracts. For fixed-price contracts, the Company recognizes revenues using the percentage-of-completion method, which may result in uneven and irregular results. In the percentage-of-completion method, estimated revenues and resulting contract income are calculated based on the total costs incurred to date as a percentage of total estimated costs. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.  The loss amount is recognized as an “accrued loss provision” and is included in the accrued expenses and other liabilities amount on the balance sheet.  As the percentage-of-completion method is used to calculate revenues, the accrued loss provision is changed so that the gross profit for the contract is zero.

Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract.  Total estimated costs, and thus contract revenues and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and thus the timing of revenue recognition.  To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected.

Other contract forms — The Company also uses unit-price, time and material, and cost reimbursable plus fee contracts.  For these jobs, revenue is recognized based on contractual terms.  For example, time and material contract revenues are recognized based on purchasing and employee time records.  Similarly, unit price contracts recognize revenue based on completion of specific units at a specified unit price.

For all of its contracts, the Company includes any provision for estimated losses on uncompleted contracts in accrued expenses. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which the revisions are identified.

The caption “Costs and estimated earnings in excess of billings” represents unbilled receivables which arise when revenues have been recorded but the amount will not be billed until a later date.  Balances represent:  (a) unbilled amounts arising from the use of the percentage-of-completion method of accounting which may not be billed under the terms of the contract until a later date, (b) incurred costs to be billed under cost reimbursement type contracts, or (c) amounts arising from routine lags in billing.  For those contracts in which billings exceed contract revenues recognized to date, the excess amounts are included in the caption “Billings in excess of costs and estimated earnings”.

The Company considers unapproved change orders to be contract variations for which it has customer approval for a change in scope but for which it does not have an agreed upon price change.  Costs associated with unapproved change orders are included in the estimated cost to complete the contracts and are treated as project costs as incurred. The Company recognizes revenue equal to costs incurred on unapproved change orders when realization of price approval is probable.  Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers.

The Company considers claims to be amounts it seeks, or will seek, to collect from customers or others for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers on both scope and price changes. Claims are included in the calculation of revenues when realization is probable and amounts can be reliably determined. Revenues in excess of contract costs incurred on claims are recognized when the amounts have been agreed upon with the customer.  Revenue in excess of contract costs from claims is recognized when agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred.

In accordance with applicable terms of certain construction contracts, retainage amounts may be withheld by customers until completion and acceptance of the project.  Some payments of the retainage may not be received for a significant period after completion of our portion of a project.  In some jurisdictions, retainage amounts are deposited into an escrow account.

Significant revision in contract estimate

Significant revision in contract estimate— As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate revenue. Total estimated costs, and thus contract revenues and margin, are impacted by many factors which can cause significant changes in estimates during the life cycle of a project.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits recognized to the prior year, had current year estimates of costs to complete been known in the prior year.

Customer Concentration

Customer Concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three months and nine months ending September 30, 2013, revenues generated by the top ten customers were $274 million and $717 million, respectively, which represented 49.7% and 51.0%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2013, a large gas and electric utility represented 8.8% and 8.3%, respectively, of total revenues and a large pipeline company represented 9.7% and 6.8%, respectively, of total revenues.

During the three and nine months ending September 30, 2012, revenues generated by the top ten customers were $243.6 million and $607.8 million, respectively, which represented 56.4% and 57.3%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2012, the Louisiana Department of Transportation represented 11.9% and 12.7%, respectively, of total revenues and a large gas and electric utility represented 16.1% and 13.6%, respectively, of total revenues.

At September 30, 2013, approximately 13.1% of the Company’s accounts receivable were due from one customer, and that customer provided 7.4% of the Company’s revenues for the nine months ended September 30, 2013.  At September 30, 2012, approximately 10.8% of the Company’s accounts receivable were due from one customer, and that customer provided 13.6% of the Company’s revenues for the nine months ended September 30, 2012.

Multiemployer Plans

Multiemployer Plans— Various subsidiaries in the West Construction Services segment are signatories to collective bargaining agreements.  These agreements require that the Company participate in and contribute to a number of multiemployer benefit plans for its union employees at rates determined by the agreements.  The trustees for each multiemployer plan determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  Federal law requires that if the Company were to withdraw from an agreement, it will incur a withdrawal obligation.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with generally accepted accounting principles (“GAAP”).  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan.  The Company has no plans to withdraw from any other agreements.  See Note 19 — Commitments and Contingencies.

Inventory and uninstalled contract materials

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method relating the cost incurred to a specific project.

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Business Combinations (Details 3) (Silva, USD $) In Thousands, unless otherwise specified	0 Months Ended
	May 30, 2012
Silva
2012 Acquisition - Silva Companies
Total consideration	$ 14,090

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Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Accounts Payable and Accrued Liabilities

Summary of accrued expenses and other current liabilities

	September 30, 2013		December 31, 2012
Payroll and related employee benefits	$	51,354	$	33,086
Insurance, including self-insurance reserves	35,233		22,982
Reserve for estimated losses on uncompleted contracts	2,018		764
Corporate income taxes and other taxes	2,396		3,779
Accrued overhead cost	1,326		2,007
Other	9,554		13,534
	$	101,881	$	76,152

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	9 Months Ended		0 Months Ended	3 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended			0 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Mar. 11, 2013 FSSI acquisition	Jun. 30, 2013 FSSI acquisition	Sep. 30, 2013 FSSI acquisition	Mar. 12, 2012 Sprint sellers	Sep. 30, 2012 Sprint sellers	Sep. 30, 2012 Saxon Group	Sep. 30, 2013 Contingent consideration item	Mar. 11, 2013 Contingent consideration FSSI acquisition	Sep. 30, 2013 Contingent consideration Rockford sellers	Sep. 30, 2013 Contingent consideration Sprint sellers
Rollforward of contingent consideration liability level three fair value measurements
Balance at the beginning of the period									$ 23,431
Additions										702
Change in fair value of contingent consideration	(9,287)	(2,489)							1,613
Payments	(2,273)	(38,110)	(1,025)	(650)	(1,675)	(21,197)	(21,197)	(2,979)			(6,900)	(4,000)
Balance at the end of the period									$ 14,846
Additional information
Number of unobservable inputs									2
Minimum probability of acquired entity meeting contractual operating performance target (as a percent)									33.00%
Maximum probability of acquired entity meeting contractual operating performance target (as a percent)									100.00%

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Business Combinations (Details 6) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		0 Months Ended	9 Months Ended				0 Months Ended	3 Months Ended	9 Months Ended	0 Months Ended		1 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Mar. 12, 2012 Sprint	Sep. 30, 2013 Sprint	Sep. 30, 2012 Sprint	Sep. 30, 2012 Silva	Sep. 30, 2012 Saxon	Mar. 11, 2013 FSSI	Jun. 30, 2013 FSSI	Sep. 30, 2013 FSSI	Jan. 07, 2013 Q3C	Nov. 17, 2012 Q3C	Aug. 31, 2013 Q3C	Sep. 30, 2013 Q3C
Business combinations
Cash paid for acquisitions			$ 2,273	$ 38,110	$ 21,197		$ 21,197	$ 13,934	$ 2,979	$ 1,025	$ 650	$ 1,675		$ 48,116	$ 598	$ 598
Pro forma results
Pro forma tax rate used in calculating taxes on income from continuing operations (as a percent)	39.00%	39.00%	39.00%	39.00%
Unregistered shares of common stock issued with an acquisition					62,052	62,052							29,273			29,273
Revenues	551,333	476,570	1,409,140	1,192,167
Income before provision for income taxes	37,268	31,967	79,283	65,395
Net income attributable to Primoris	$ 21,845	$ 19,379	$ 47,109	$ 39,848
Weighted average common shares outstanding:
Basic (in shares)	51,568	51,427	51,530	51,433
Diluted (in shares)	51,671	51,433	51,594	51,448
Earnings per share:
Basic (in dollars per share)	$ 0.42	$ 0.38	$ 0.91	$ 0.77
Diluted (in dollars per share)	$ 0.42	$ 0.38	$ 0.91	$ 0.77

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Equity Method Investments (Tables)

9 Months Ended

Sep. 30, 2013

WesPac & WesPac-Midstream

Equity method investments

Summary of the financial position and results

	September 30, 2013		December 31, 2012
WesPac & WesPac-Midstream
Balance sheet data
Assets	$	18,856	$	16,896
Liabilities	1,067		1,063
Net assets	$	17,789	$	15,833
Company’s equity investment	$	4,757	$	11,463

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Earnings data:
Revenue	$	10		$	—		$	99		$	511
Expenses	$	235		$	358		$	754		$	1,002
Earnings before taxes	$	(225	)	$	(358	)	$	(655	)	$	(491	)
Company’s equity in earnings	$	(113	)	$	(178	)	$	(328	)	$	(245	)

Bernard

Equity method investments

Summary of the financial position and results

	September 30, 2013		December 31, 2012
St. — Bernard Levee Partners
Balance sheet data
Assets	$	22	$	592
Liabilities	22		86
Net assets	$	—	$	506
Company’s equity investment	$	—	$	150

	Three months ended September 30,					Nine months ended September 30,
	2013		2012			2013			2012
Earnings data:
Revenue	$	—	$	36		$	—		$	3,970
Expenses	$	—	$	(36	)	$	16		$	162
Earnings before taxes	$	—	$	72		$	(16	)	$	3,808
Company’s equity in earnings	$	—	$	19		$	(5	)	$	1,140

Alvah, Inc.

Equity method investments

Summary of the financial position and results

	September 30, 2013		December 31, 2012
Balance sheet data
Assets	$	3,849	$	2,177
Liabilities	1,677		1,208
Net assets	$	2,172	$	969
Company’s equity investment in venture	$	1,789	$	1,200

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Earnings data:
Revenue	$	4,824	$	—	$	10,832	$	—
Expenses	$	4,185	$	—	$	9,630	$	—
Earnings after taxes	$	639	$	—	$	1,202	$	—
Company’s equity in earnings	$	313	$	—	$	589	$	—

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Reportable Operating Segments (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Revenues and total assets by geographic area
Revenue	$ 551,333	$ 431,842	$ 1,406,341	$ 1,060,851
% of Revenue	100.00%	100.00%	100.00%	100.00%
Total Assets	1,019,011		1,019,011		931,207
United States
Revenues and total assets by geographic area
Revenue			1,393,837	1,053,547
% of Revenue			99.10%	99.30%
Total Assets	1,007,980		1,007,980		920,872
Non-United States
Revenues and total assets by geographic area
Revenue			12,504	7,304
% of Revenue			0.90%	0.70%
Total Assets	$ 11,097		$ 11,097		$ 10,335

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Equity Method Investments (Details) (USD $)	3 Months Ended		9 Months Ended			12 Months Ended					3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended				1 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended				3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011 WesPac	Sep. 30, 2013 WesPac	Jul. 31, 2010 WesPac	Jul. 01, 2010 WesPac	Jul. 01, 2010 WesPac Kealine	Sep. 30, 2013 WesPac & WesPac-Midstream	Sep. 30, 2012 WesPac & WesPac-Midstream	Sep. 30, 2013 WesPac & WesPac-Midstream	Sep. 30, 2012 WesPac & WesPac-Midstream	Dec. 31, 2012 WesPac & WesPac-Midstream	Sep. 30, 2012 Bernard	Sep. 30, 2013 Bernard	Sep. 30, 2012 Bernard	Dec. 31, 2012 Bernard	Dec. 31, 2009 Bernard	Dec. 31, 2012 Alvah, Inc.	Sep. 30, 2013 Alvah, Inc.	Sep. 30, 2013 Alvah, Inc.	Nov. 17, 2012 Alvah, Inc.	Sep. 30, 2013 Alvah, Inc. ARB	Sep. 30, 2012 Alvah, Inc. ARB	Sep. 30, 2013 Alvah, Inc. ARB	Sep. 30, 2012 Alvah, Inc. ARB	Sep. 30, 2013 Alvah, Inc. Q3C	Sep. 30, 2012 Alvah, Inc. Q3C	Sep. 30, 2013 Alvah, Inc. Q3C	Sep. 30, 2012 Alvah, Inc. Q3C	Sep. 30, 2013 WesPac-Midstream item	Sep. 30, 2013 WesPac-Midstream Highstar	Sep. 30, 2013 WesPac-Midstream WesPac, Kealine and the Company Highstar Developmental projects	Sep. 30, 2013 WesPac-Midstream WesPac, Kealine and the Company Highstar Mature projects item	Sep. 30, 2013 WesPac-Midstream WesPac, Kealine and the Company Highstar First mature project	Sep. 30, 2013 WesPac-Midstream WesPac, Kealine and the Company Highstar Second mature project	Sep. 30, 2013 WesPac-Midstream Company Highstar Developmental projects	Sep. 30, 2013 WesPac-Midstream Company Highstar First mature project	Sep. 30, 2013 WesPac-Midstream Company Highstar Second mature project
Equity method investments
Membership interest (as a percent)									50.00%	50.00%										30.00%				49.00%
Project interest sold (as a percent)																																			85.00%	75.00%
Cash proceeds from sale of projects																																			$ 6,100,000				$ 3,040,000
Number of projects sold																																				2
Payment to be made by the counterparty to agreement upon the project reaching commercial acceptance stage																																					4,500,000	4,500,000		2,250,000	2,250,000
Payment to be made by the counterparty to agreement upon the project reaching production stage																																					4,500,000			2,250,000
Payment to be made by the counterparty to agreement, upon project not successfully reaching the commercial acceptance stage prior to July 1, 2014																																						0
Funding period																																		2 years
Number of board seats retained by Company																																	1
Number of board seats																																	5
Basis difference between the entity's original investment and its pro-rata share of the investee equity prior to any impairment adjustment							3,250,000	5,000,000
Reduction recorded to recognize an estimate for an other than temporary decrease			3,250,000			1,700,000
Balance sheet data
Assets											18,856,000		18,856,000		16,896,000		22,000		592,000		2,177,000	3,849,000	3,849,000
Liabilities											1,067,000		1,067,000		1,063,000		22,000		86,000		1,208,000	1,677,000	1,677,000
Net assets											17,789,000		17,789,000		15,833,000				506,000		969,000	2,172,000	2,172,000
Company's equity investment	6,546,000		6,546,000		12,813,000						4,757,000		4,757,000		11,463,000				150,000		1,200,000	1,789,000	1,789,000
Earnings data:
Revenue											10,000		99,000	511,000		36,000		3,970,000				4,824,000	10,832,000
Expenses											235,000	358,000	754,000	1,002,000		(36,000)	16,000	162,000				4,185,000	9,630,000
Earnings before taxes											(225,000)	(358,000)	(655,000)	(491,000)		72,000	(16,000)	3,808,000
Earnings after taxes																						639,000	1,202,000
Company's equity in earnings	113,000	(159,000)	169,000	895,000							(113,000)	(178,000)	(328,000)	(245,000)		19,000	(5,000)	1,140,000				313,000	589,000
Cost of investment																				300,000
Share in distribution			3,186,000	1,260,000													145,000	1,260,000			98,000
Payments made to equity method investee																									$ 2,154,000	$ 1,609,000	$ 5,064,000	$ 3,762,000	$ 2,000	$ 120,000	$ 214,000	$ 353,000

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Reportable Operating Segments

9 Months Ended

Sep. 30, 2013

Reportable Operating Segments

Reportable Operating Segments

Note 20—Reportable Operating Segments

The Company segregates its business into three operating segments: the East Construction Services (“East”) segment, the West Construction Services (“West”) segment and the Engineering segment.

The East segment includes the JCG construction business, located primarily in the southeastern United States and the businesses located in the Gulf Coast region of the United States, including Cardinal Contractors, Inc.  The segment also includes the operating results relating to the acquisitions of Sprint, Silva and Saxon in 2012 and FSSI in 2013.

The West segment includes the construction services performed by ARB, ARB Structures, Inc., Rockford, Alaska Continental Pipeline, Inc., All Day Electric Company, Inc., Primoris Renewables, Inc., Juniper Rock, Inc. and Stellaris, LLC.  This segment also includes the operating results of Q3C acquired in November 2012.  While most of the entities perform work primarily in California, Rockford operates throughout the United States and Q3C operates in the upper Midwest United States.  The Blythe joint venture is also included as a part of the segment.

The Engineering segment includes the results of OnQuest, Inc. and OnQuest Canada, ULC.

All intersegment revenues and gross profit, which were immaterial, have been eliminated in the following tables.

Segment Revenues

Revenue by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	178,716	32.4	%	$	181,260	42.0	%
West	362,362		65.7	%	242,033		56.0	%
Engineering	10,255		1.9	%	8,549		2.0	%
Total	$	551,333	100.0	%	$	431,842	100.0	%

Revenue by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	544,325	38.7	%	$	459,167	43.3	%
West	828,242		58.9	%	567,351		53.5	%
Engineering	33,774		2.4	%	34,333		3.2	%
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%

Segment Gross Profit

Gross profit by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	10,600	5.9	%	$	18,664	10.3	%
West	62,520		17.3	%	35,602		14.7	%
Engineering	2,345		22.9	%	2,025		23.7	%
Total	$	75,465	13.7	%	$	56,291	13.0	%

Gross profit by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	40,810	7.5	%	$	47,442	10.3	%
West	133,195		16.1	%	84,297		14.9	%
Engineering	7,093		21.0	%	6,152		17.9	%
Total	$	181,098	12.9	%	$	137,891	13.0	%

Segment Goodwill

The following presents the amount of goodwill recorded by segment at September 30, 2013 and at December 31, 2012.

Segment	September 30, 2013		December 31, 2012
East	$	70,946	$	69,859
West	45,239		44,641
Engineering	2,441		2,441
Total	$	118,626	$	116,941

Geographic Region — Revenues and Total Assets

Revenue and total assets by geographic area for the nine months ended September 30, 2013 and 2012 were as follows:

	Revenues
	For the nine months ended September 30,
	2013				2012				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		September 30, 2013		December 31, 2012
United States	$	1,393,837	99.1	%	$	1,053,547	99.3	%	$	1,007,980	$	920,872
Non-United States	12,504		0.9		7,304		0.7		11,097		10,335
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%	$	1,019,077	$	931,207

All non-United States revenue were generated in the Engineering segment.  For the table above, revenues generated by OnQuest Canada, ULC, were used to determine non-United States revenues.

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Nature of Business

9 Months Ended

Sep. 30, 2013

Nature of Business

Nature of Business

Note 1—Nature of Business

Organization and operations— Primoris Services Corporation is a holding company of various construction and product engineering subsidiaries. The Company’s underground and directional drilling operations install, replace and repair natural gas, petroleum, telecommunications and water pipeline systems, including large diameter pipeline systems. The Company’s industrial, civil and engineering operations build and provide maintenance services to industrial facilities including power plants, petrochemical facilities, and other processing plants; construct multi-level parking structures; and engage in the construction of highways, bridges and other environmental construction activities. The Company is incorporated in the State of Delaware and its corporate headquarters are located at 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.

The following table lists the Company’s primary operating subsidiaries and their reportable operating segment:

Subsidiary	Operating Segment
ARB, Inc. (“ARB”)	West Construction Services
ARB Structures, Inc.	West Construction Services
Q3 Contracting, Inc. (“Q3C”); acquired 2012	West Construction Services
Rockford Corporation (“Rockford”)	West Construction Services
Stellaris, LLC.	West Construction Services
OnQuest, Inc.	Engineering
OnQuest, Canada, ULC (Born Heaters Canada, ULC prior to 2013)	Engineering
Cardinal Contractors, Inc.	East Construction Services
Force Specialty Services, Inc. (“FSSI”); acquired 2013	East Construction Services
James Construction Group, LLC (“JCG”)	East Construction Services
Sprint Pipeline Services, L.P. (“Sprint”); acquired 2012	East Construction Services
Silva Group (“Silva”); acquired 2012	East Construction Services
The Saxon Group (“Saxon”); acquired 2012	East Construction Services

The Company is a party to the Blythe Power Constructors joint venture (“Blythe”) for the installation of a parabolic trough solar field and steam generation system in California.

Unless specifically noted otherwise, as used throughout these consolidated financial statements, “Primoris”, “the Company”, “we”, “our”, “us” or “its” refers to the business, operations and financial results of the Company and its wholly-owned subsidiaries.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2013

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 3—Recent Accounting Pronouncements

In January 2013, the FASB issued ASU 2013-01, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11 , “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” .  The ASU was effective for the fiscal years and interim periods beginning January 1, 2013.  Retrospective application is required for any period presented that begins before the entity’s initial application of the new requirements.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

In February 2013, the FASB issued ASU 2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)”  (“ASU 2013-04”).  ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. This ASU is an update to FASB ASC Topic 405, “Liabilities”.  The amendments in this ASU are effective for fiscal years, and interim periods, beginning after December 15, 2013.  The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

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Costs and Estimated Earnings on Uncompleted Contracts

9 Months Ended

Sep. 30, 2013

Costs and Estimated Earnings on Uncompleted Contracts

Costs and Estimated Earnings on Uncompleted Contracts

Note 6—Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings on uncompleted contracts consist of the following at:

	September 30, 2013			December 31, 2012
Costs incurred on uncompleted contracts	$	4,256,810		$	3,882,968
Reserve for estimated losses on uncompleted contracts	2,018			764
Gross profit recognized	516,451			448,928
	4,775,279			4,332,660
Less: billings to date	(4,842,309		)	(4,449,851		)
	$	(67,030	)	$	(117,191	)

This amount is included in the accompanying consolidated balance sheet under the following captions:

	September 30, 2013			December 31, 2012
Costs and estimated earnings in excess of billings	$	80,434		$	41,701
Billings in excess of costs and estimated earnings	(147,464		)	(158,892		)
	$	(67,030	)	$	(117,191	)

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Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Measurements

Fair Value Measurements

Note 4—Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures”, defines fair value in GAAP, establishes a framework for measuring fair value and requires certain disclosures about fair value measurements.  ASC Topic 820 requires that certain financial assets and financial liabilities be re-measured and reported at fair value each reporting period and that other non-financial assets and liabilities be re-measured and reported at fair value on a non-recurring basis.

ASC Topic 820 also establishes three reporting levels for fair value measurements.  Fair values determined by Level 1 use quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs use data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are “unobservable data points” for an asset or liability and include situations where there is little, if any, market activity for the asset or liability.

The following table presents, for each of the fair value hierarchy levels identified under ASC Topic 820, the Company’s financial assets and liabilities that are required to be measured at fair value at September 30, 2013 and December 31, 2012:

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets as of September 30, 2013:
Cash and cash equivalents	$	174,034	$	174,034	—	—
Short-term investments	$	3,179	$	3,179	—	—
Liabilities as of September 30, 2013:
Contingent consideration	$	14,846	—		—	$	14,846
Assets as of December 31, 2012:
Cash and cash equivalents	$	157,551	$	157,551	—	—
Short-term investments	$	3,441	$	3,441	—	—
Liabilities as of December 31, 2012:
Contingent consideration	$	23,431	—		—	$	23,431

Short-term investments consist primarily of Certificates of Deposit (“CDs”) purchased through the CDARS (Certificate of Deposit Account Registry Service) process and U.S. Treasury bills with various financial institutions that are backed by the federal government.

Other financial instruments of the Company not listed in the table consist of accounts receivable, accounts payable and certain accrued liabilities.  These financial instruments generally approximate fair value based on their short-term nature.  The carrying value of the Company’s long-term debt approximates fair value based on comparison with current prevailing market rates for loans of similar risks and maturities.

The following table provides changes to the Company’s contingent consideration liability Level 3 fair value measurements during the nine months ended September 30, 2013:

Contingent Consideration
Balance at December 31, 2012	$	23,431
Additions:
FSSI acquisition on March 11, 2013	702
Change in fair value of contingent consideration	1,613
Reductions:
Payment to Rockford sellers	(6,900		)
Payment to Sprint sellers	(4,000		)
Balance at September 30, 2013	$	14,846

On a quarterly basis, the Company assesses the estimated fair value of the contractual obligation to pay the contingent consideration and any changes in estimated fair value are recorded as other non-operating expense or income in the Company’s statement of operations.  Fluctuations in the fair value of contingent consideration are impacted by two unobservable inputs, management’s estimate of the probability (which range from 33% to 100%) of the acquired company meeting the contractual operating performance target and the estimated discount rate (a rate that approximates the Company’s cost of capital). Significant changes in either of those inputs in isolation would result in a significantly different fair value measurement.  Generally, a change in the assumption of the probability of meeting the performance target is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption of the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability.

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Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accounts Receivable
Contracts receivable, net of allowance for doubtful accounts	$ 235,302	$ 227,548
Retention	48,768	39,710
Contracts receivable and retention	284,070	267,258
Other accounts receivable	427	837
Accounts receivable, net	284,497	268,095
Allowance for doubtful accounts	$ 535	$ 432

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Measurements

Schedule of financial assets and liabilities which are required to be measured at fair value

			Fair Value Measurements at Reporting Date
	Amount Recorded on Balance Sheet		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Assets as of September 30, 2013:
Cash and cash equivalents	$	174,034	$	174,034	—	—
Short-term investments	$	3,179	$	3,179	—	—
Liabilities as of September 30, 2013:
Contingent consideration	$	14,846	—		—	$	14,846
Assets as of December 31, 2012:
Cash and cash equivalents	$	157,551	$	157,551	—	—
Short-term investments	$	3,441	$	3,441	—	—
Liabilities as of December 31, 2012:
Contingent consideration	$	23,431	—		—	$	23,431

Schedule of changes to the Company's contingent consideration liability Level 3 fair value measurements

Contingent Consideration
Balance at December 31, 2012	$	23,431
Additions:
FSSI acquisition on March 11, 2013	702
Change in fair value of contingent consideration	1,613
Reductions:
Payment to Rockford sellers	(6,900		)
Payment to Sprint sellers	(4,000		)
Balance at September 30, 2013	$	14,846

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2013

Business Combinations

Summary of the cash paid for acquisitions

	Nine Months ended September 30,
	2013		2012
Sprint — Purchased March 12, 2012	$	—	$	21,197
Silva — purchased May 30, 2012	—		13,934
Saxon — purchased September 28, 2012	—		2,979
FSSI — purchased March 11, 2013	1,675		—
Additional cash paid August 2013 — Q3C — purchased November 17, 2012	598		—
	$	2,273	$	38,110

Schedule of pro forma results

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Revenues	551,333		476,570		1,409,140		1,192,167
Income before provision for income taxes	37,268		31,967		79,283		65,395
Net income attributable to Primoris	21,845		19,379		47,109		39,848
Weighted average common shares outstanding:
Basic	51,568		51,427		51,530		51,433
Diluted	51,671		51,433		51,594		51,448
Earnings per share:
Basic	$	0.42	$	0.38	$	0.91	$	0.77
Diluted	$	0.42	$	0.38	$	0.91	$	0.77

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Reportable Operating Segments (Tables)

9 Months Ended

Sep. 30, 2013

Reportable Operating Segments

Schedule of revenue by segment

Segment Revenues

Revenue by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	178,716	32.4	%	$	181,260	42.0	%
West	362,362		65.7	%	242,033		56.0	%
Engineering	10,255		1.9	%	8,549		2.0	%
Total	$	551,333	100.0	%	$	431,842	100.0	%

Revenue by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Revenue		% of Segment Revenue		Revenue		% of Segment Revenue
East	$	544,325	38.7	%	$	459,167	43.3	%
West	828,242		58.9	%	567,351		53.5	%
Engineering	33,774		2.4	%	34,333		3.2	%
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%

Schedule of gross profit by segment

Segment Gross Profit

Gross profit by segment for the three months ended September 30, 2013 and 2012 were as follows:

	For the three months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	10,600	5.9	%	$	18,664	10.3	%
West	62,520		17.3	%	35,602		14.7	%
Engineering	2,345		22.9	%	2,025		23.7	%
Total	$	75,465	13.7	%	$	56,291	13.0	%

Gross profit by segment for the nine months ended September 30, 2013 and 2012 were as follows:

	For the nine months ended September 30,
	2013				2012
Segment	Gross Profit		% of Segment Revenue		Gross Profit		% of Segment Revenue
East	$	40,810	7.5	%	$	47,442	10.3	%
West	133,195		16.1	%	84,297		14.9	%
Engineering	7,093		21.0	%	6,152		17.9	%
Total	$	181,098	12.9	%	$	137,891	13.0	%

Schedule of amount of goodwill recorded by segment

Segment Goodwill

The following presents the amount of goodwill recorded by segment at September 30, 2013 and at December 31, 2012.

Segment	September 30, 2013		December 31, 2012
East	$	70,946	$	69,859
West	45,239		44,641
Engineering	2,441		2,441
Total	$	118,626	$	116,941

Schedule of revenue and total assets by geographic area

Geographic Region — Revenues and Total Assets

Revenue and total assets by geographic area for the nine months ended September 30, 2013 and 2012 were as follows:

	Revenues
	For the nine months ended September 30,
	2013				2012				Total Assets
Country:	Revenue		% of Revenue		Revenue		% of Revenue		September 30, 2013		December 31, 2012
United States	$	1,393,837	99.1	%	$	1,053,547	99.3	%	$	1,007,980	$	920,872
Non-United States	12,504		0.9		7,304		0.7		11,097		10,335
Total	$	1,406,341	100.0	%	$	1,060,851	100.0	%	$	1,019,077	$	931,207

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Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended											12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 SIGI	Sep. 30, 2012 SIGI	Sep. 30, 2013 Roger Newnham	Sep. 30, 2012 Roger Newnham	Sep. 30, 2013 Lemmie Rockford	Sep. 30, 2012 Lemmie Rockford	Sep. 30, 2013 Quality RE Partners item	Sep. 30, 2013 Pluris, LLC	Sep. 30, 2012 Pluris, LLC	Dec. 31, 2010 Pluris, LLC
Related party transactions
Lease payments to related party	$ 379,000	$ 327,000	$ 1,176,000	$ 975,000	$ 688,000	$ 695,000	$ 223,000	$ 212,000	$ 68,000	$ 68,000	$ 198,000
Amount of the agreement to construct a wastewater facility for Pluris, LLC														6,100,000
Related party revenues recognized												0	362,000
Net income	$ 23,193,000	$ 17,948,000	$ 49,126,000	$ 40,335,000								$ 0
Number of former shareholders owning leased property											3
Number of current employees owning leased property											2

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Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Intangible assets
Amortization expense of intangible assets	$ 1,891	$ 1,476	$ 5,576	$ 4,669
Estimated future amortization expense for intangible assets
2013 (remaining three months)	1,891		1,891
2014	7,454		7,454
2015	6,404		6,404
2016	6,029		6,029
2017	5,909		5,909
Thereafter	20,315		20,315
Total	48,002		48,002		51,978
Tradename
Estimated future amortization expense for intangible assets
Total	21,808		21,808		23,586
Tradename | Minimum
Intangible assets
Amortization Period			3 years
Tradename | Maximum
Intangible assets
Amortization Period			10 years
Non-compete agreements
Estimated future amortization expense for intangible assets
Total	2,991		2,991		4,130
Non-compete agreements | Minimum
Intangible assets
Amortization Period			2 years
Non-compete agreements | Maximum
Intangible assets
Amortization Period			5 years
Customer relationship
Estimated future amortization expense for intangible assets
Total	23,203		23,203		24,212
Customer relationship | Minimum
Intangible assets
Amortization Period			5 years
Customer relationship | Maximum
Intangible assets
Amortization Period			15 years
Backlog
Intangible assets
Amortization Period			9 months
Estimated future amortization expense for intangible assets
Total					$ 50

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Business Combinations (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		0 Months Ended	9 Months Ended			0 Months Ended				0 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Mar. 12, 2012 Sprint	Sep. 30, 2013 Sprint	Sep. 30, 2012 Sprint	Mar. 12, 2012 Sprint 2012 earnout target	Mar. 12, 2012 Sprint 2012 earnout target Minimum	Sep. 30, 2013 Sprint 2013 earnout target	Dec. 31, 2012 Sprint 2013 earnout target	Mar. 12, 2012 Sprint 2013 earnout target	Mar. 12, 2012 Sprint 2013 earnout target Minimum
2012 Acquisition - Sprint Pipeline Services, L.P.
Total consideration			$ 28,377
Cash paid for acquisitions	2,273	38,110	21,197		21,197
Company common stock as a part of consideration			980
Number of shares of common stock issued			62,052	62,052
Contingent consideration			6,200					3,300	3,020	2,745
Pretax income threshold for measuring financial performance							7,000				7,750
Contingent consideration in cash						$ 4,000				$ 4,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	51,571,394	51,403,686
Common stock, shares outstanding	51,571,394	51,403,686

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Intangible Assets

9 Months Ended

Sep. 30, 2013

Intangible Assets

Intangible Assets

Note 9—Intangible Assets

At September 30, 2013 and December 31, 2012, intangible assets totaled $48,002 and $51,978, respectively, net of amortization.  The September 30, 2013 balance includes the effect of the FSSI acquisition (See Note 8).  The table below summarizes the intangible asset categories, amounts and the average amortization periods, which are generally on a straight-line basis, as follows:

	Amortization	September 30,		December 31,
	Period	2013		2012
Tradename	3 to 10 years	$	21,808	$	23,586
Non-compete agreements	2 to 5 years	$	2,991	$	4,130
Customer relationships	5 to 15 years	$	23,203	$	24,212
Backlog	0.75 years	$	—	$	50
Total		$	48,002	$	51,978

Amortization expense of intangible assets was $1,891 and $1,476 for the three months ended September 30, 2013 and 2012, respectively, and amortization expense for the nine months ended September 30, 2013 and 2012 was $5,576 and $4,669, respectively. Estimated future amortization expense for intangible assets is as follows:

For the Years Ending December 31,	Estimated Intangible Amortization Expense
2013 (remaining three months)	$	1,891
2014	7,454
2015	6,404
2016	6,029
2017	5,909
Thereafter	20,315
	$	48,002

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income	$ 49,126	$ 40,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	31,003	20,719
Amortization of intangible assets	5,576	4,669
Gain on sale of property and equipment	(1,176)	(2,396)
Income from non-consolidated entities	(169)	(895)
Impairment expense for non-consolidated entities	3,250
Non-consolidated entity distributions	3,186	1,260
Stock-based compensation expense	229
Changes in assets and liabilities:
Customer retention deposits and restricted cash	20,000	(3,324)
Accounts receivable	(16,402)	(64,933)
Costs and estimated earnings in excess of billings	(38,733)	(21,089)
Other current assets	(8,665)	475
Accounts payable	(32,551)	20,433
Billings in excess of costs and estimated earnings	(11,428)	7,329
Contingent earnout liabilities	(9,287)	(2,489)
Accrued expenses and other current liabilities	26,626	20,688
Other long-term liabilities	90	(1,510)
Net cash provided by operating activities	20,675	19,272
Cash flows from investing activities:
Purchase of property and equipment	(68,749)	(23,720)
Proceeds from sale of property and equipment	6,554	7,683
Purchase of short-term investments	(5,620)	(6,380)
Sale of short-term investments	5,882	23,000
Cash paid for acquisitions	(2,273)	(38,110)
Net cash used in investing activities	(64,206)	(37,527)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	97,035	16,671
Repayment of capital leases	(3,399)	(8,018)
Repayment of long-term debt	(29,225)	(12,177)
Repayment of subordinated debt		(17,501)
Proceeds from issuance of common stock purchased by management under long-term incentive plan	1,455	1,240
Dividends paid	(3,352)	(4,611)
Payment of accumulated earnings to non-controlling interest holder	(2,500)
Repurchase of common stock		(1,001)
Net cash provided by (used in) financing activities	60,014	(25,397)
Net change in cash and cash equivalents	16,483	(43,652)
Cash and cash equivalents at beginning of the period	157,551	120,306
Cash and cash equivalents at end of the period	174,034	76,654
Cash paid during the period for:
Interest	3,369	2,282
Income taxes, net of refunds received	32,379	18,082
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Obligations incurred for the acquisition of property and equipment	2,523	1,854
Dividends declared and not yet paid	$ 1,805	$ 1,542

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Dividends and Earnings Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	0 Months Ended						3 Months Ended		9 Months Ended
	Oct. 15, 2013	Aug. 02, 2013	Jul. 15, 2013	May 03, 2013	Apr. 15, 2013	Mar. 05, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Dividends and Earnings Per Share
Cash dividend declared (in dollars per share)		$ 0.035		$ 0.035		$ 0.03
Total dividend paid	$ 1,805		$ 1,805		$ 1,547				$ 3,352	$ 4,611
Numerator:
Net income attributable to Primoris							$ 21,845	$ 17,516	$ 47,179	$ 39,735
Denominator:
Weighted average shares for computation of basic earnings per share							51,568	51,398	51,529	51,387
Dilutive effect of shares issued to independent directors							3	6	10	15
Dilutive effect of shares issued as part of Q3C acquisition									1
Dilutive effect of unvested restricted stock units							100		55
Weighted average shares for computation of diluted earnings per share							51,671	51,404	51,595	51,402
Earnings per share:
Basic earnings per share (in dollars per share)							$ 0.42	$ 0.34	$ 0.92	$ 0.77
Diluted earnings per share (in dollars per share)							$ 0.42	$ 0.34	$ 0.91	$ 0.77

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 174,034	$ 157,551
Short term investments	3,179	3,441
Customer retention deposits and restricted cash	15,377	35,377
Accounts receivable, net	284,497	268,095
Costs and estimated earnings in excess of billings	80,434	41,701
Inventory and uninstalled contract materials	43,616	37,193
Deferred tax assets	10,477	10,477
Prepaid expenses and other current assets	12,830	10,800
Total current assets	624,444	564,635
Property and equipment, net	220,179	184,840
Investment in non-consolidated entities	6,546	12,813
Intangible assets, net	48,002	51,978
Goodwill	118,626	116,941
Other long-term assets	1,214
Total assets	1,019,011	931,207
Current liabilities:
Accounts payable	119,882	151,546
Billings in excess of costs and estimated earnings	147,464	158,892
Accrued expenses and other current liabilities	101,881	76,152
Dividends payable	1,805
Current portion of capital leases	3,928	3,733
Current portion of long-term debt	26,910	19,446
Current portion of contingent earnout liabilities	8,763	10,900
Total current liabilities	410,633	420,669
Long-term capital leases, net of current portion	2,760	3,831
Long-term debt, net of current portion	188,713	128,367
Deferred tax liabilities	20,018	20,018
Long-term contingent earnout liabilities, net of current portion	6,083	12,531
Other long-term liabilities	13,243	13,153
Total liabilities	641,450	598,569
Commitments and contingencies
Stockholders' equity
Common stock-$.0001 par value, 90,000,000 shares authorized, 51,571,394 and 51,403,686 issued and outstanding at September 30, 2013 and December 31, 2012	5	5
Additional paid-in capital	159,058	155,605
Retained earnings	217,540	175,517
Noncontrolling interests	958	1,511
Total stockholders' equity	377,561	332,638
Total liabilities and stockholders' equity	$ 1,019,011	$ 931,207

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Accounts Payable and Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accounts Payable and Accrued Liabilities
Retention amounts included in accounts payable	$ 8,359	$ 15,946
Accrued expenses and other current liabilities
Payroll and related employee benefits	51,354	33,086
Insurance, including self-insurance reserves	35,233	22,982
Reserve for estimated losses on uncompleted contracts	2,018	764
Corporate income taxes and other taxes	2,396	3,779
Accrued overhead cost	1,326	2,007
Other	9,554	13,534
Total accrued expenses and other current liabilities	$ 101,881	$ 76,152

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Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2013

Accounts Receivable

Summary of accounts receivable

	September 30, 2013		December 31, 2012
Contracts receivable, net of allowance for doubtful accounts of $535 at September 30, 2013 and $432 at December 31, 2012	$	235,302	$	227,548
Retention	48,768		39,710
	284,070		267,258
Other accounts receivable	427		837
	$	284,497	$	268,095

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Stockholders' Equity

9 Months Ended

Sep. 30, 2013

Stockholders' Equity

Stockholders' Equity

Note 18—Stockholders’ Equity

Common stock — In March 2013, the Company received $1,455 for 131,989 shares of common stock issued, under a purchase arrangement within the Company’s Long-Term Incentive Plan (“LTI Plan”) for managers and executives. The LTI Plan allows participants to use a portion of their annual bonus amount to purchase Company common stock at a discount from the market price. The shares purchased in March 2013 were for bonus amounts earned in 2012 and were calculated at 75% of the average market closing price of December 2012.  In March 2012, the Company received $1,240 for 111,790 shares of common stock issued under the LTI Plan for bonus amounts earned in the prior year.

In March 2013 and in August 2013, the Company issued 12,480 shares and 9,110 shares, respectively, of common stock as part of the quarterly compensation of the non-employee members of the Board of Directors.

As part of the acquisition of Q3C, the Company issued 29,273 unregistered shares of stock on January 7, 2013.  The shares were issued based on the average December 2012 closing prices, or $14.69 per share for a total value of $430.

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Business Combinations (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended			9 Months Ended			0 Months Ended	3 Months Ended		9 Months Ended	3 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended			0 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Customer relationship Minimum	Sep. 30, 2013 Tradename Minimum	Sep. 30, 2013 Non-compete agreement Minimum	Mar. 11, 2013 FSSI	Sep. 30, 2013 FSSI item	Jun. 30, 2013 FSSI	Sep. 30, 2013 FSSI item	Jun. 30, 2013 FSSI Revisions	Mar. 11, 2013 FSSI 2013 earnout target	Mar. 11, 2013 FSSI 2013 earnout target Minimum	Mar. 11, 2013 FSSI 2014 earnout target	Mar. 11, 2013 FSSI 2014 earnout target Minimum	Mar. 11, 2013 FSSI 2015 earnout target	Mar. 11, 2013 FSSI 2015 earnout target Minimum	Mar. 11, 2013 FSSI Non-competition and non-solicitation agreement with a key employee	Mar. 11, 2013 FSSI Customer relationship	Mar. 11, 2013 FSSI Tradename	Mar. 11, 2013 FSSI Non-compete agreement
2013 Acquisition - FSSI
Total consideration							$ 2,377
Cash consideration							1,675
Cash paid for acquisitions	2,273	38,110					1,025		650	1,675
Number of future potential payments based on agreed upon contingencies								3		3
Contingent consideration in cash												500		500		500
Pretax income threshold for measuring financial performance													553		2,502		4,227
Contingent consideration							702	741		741
Up-front payment																		1,000
Period of employment, non-competition and non-solicitation agreement with a key employee																		5 years
Intangible assets																		1,000	950	550	100
Amortization period of agreement				5 years	3 years	2 years												5 years
Small tools inventory received in acquisition							302
Property, plant and equipment received in acquisition							448
Accounts payable received in acquisition							1,060
Revenues								670		4,143
Gross Profit								14		325
Decrease in the fair value of the contingent consideration	9,287	2,489									136
Increases in intangible assets											800
Decrease in goodwill											936
Estimated useful life of intangible assets																				5 years
Goodwill	$ 118,626		$ 116,941				$ 1,087
Amortization period of goodwill and other intangible assets for income tax purposes							15 years

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Contingent Earnout Liabilities (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		1 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Apr. 30, 2013 Rockford 2012 earnout target
Contingent earnout liabilities
Cash paid	$ 2,273	$ 38,110	$ 6,900

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Short-term investments	$ 3,179	$ 3,441
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Cash and cash equivalents	174,034	157,551
Short-term investments	3,179	3,441
Recurring | Significant Unobservable Inputs (Level 3)
Liabilities
Contingent consideration	14,846	23,431
Recurring | Amount Recorded on Balance Sheet
Assets
Cash and cash equivalents	174,034	157,551
Short-term investments	3,179	3,441
Liabilities
Contingent consideration	$ 14,846	$ 23,431

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Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2013

Noncontrolling Interests

Schedule of the Blythe joint venture operating activities included in the Company's consolidated statements of income

	Three months ended September 30,		Nine months ended September 30,
	2013	2012	2013	2012
Revenues	15,468	7,750	47,371	13,164
Net income attributable to noncontrolling interests	1,348	432	1,947	600

Schedule of the carrying value of the assets and liabilities associated with the operations of the Blythe joint venture included in the Company's consolidated balance sheets

	September 30, 2013		December 31, 2012
Cash	$	1,793	$	3,565
Accounts receivable	8,448		8,843
Current liabilities	8,318		9,379

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Dividends and Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Dividends and Earnings Per Share

Schedule of computation of basic and diluted earnings per share

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to Primoris	$	21,845	$	17,516	$	47,179	$	39,735
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,568		51,398		51,529		51,387
Dilutive effect of shares issued to independent directors	3		6		10		15
Dilutive effect of shares issued as part of Q3C acquisition	—		—		1		—
Dilutive effect of unvested restricted stock units	100		—		55		—
Weighted average shares for computation of diluted earnings per share	51,671		51,404		51,595		51,402
Earnings per share:
Basic earnings per share	$	0.42	$	0.34	$	0.92	$	0.77
Diluted earnings per share	$	0.42	$	0.34	$	0.91	$	0.77

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Business Combinations

9 Months Ended

Sep. 30, 2013

Business Combinations

Business Combinations

Note 8 — Business Combinations

2013 Acquisition - FSSI

On March 11, 2013, the Company’s subsidiary, Primoris Energy Services (“PES”), purchased the assets of Force Specialty Services Inc. (“FSSI”) which specializes in turn-around work at refineries and chemical plants in the Gulf Coast area.  Based in the greater Houston, Texas area, FSSI’s location provides a presence and convenient access to refineries in south Texas, the Houston ship channel and Louisiana.

The fair value of the consideration for the acquisition was $2,377.  Consideration consisted of cash totaling $1,675, of which $1,025 was paid at closing and $650 was paid in the second quarter 2013.  The agreement provides for three future potential payments, contingent upon FSSI meeting certain operating performance targets for the remainder of calendar year 2013 and calendar years 2014 and 2015.

The contingent consideration is as follows:  (1) $500 in cash for the achievement of pretax income of at least $553 for the remainder of the year ending December 31, 2013; (2) a payment of $500 in cash if pretax income for the year 2014 is at least $2,502; and (3), a payment of $500 in cash if pretax income for the year 2015 is at least $4,227.  The estimated fair value of the potential contingent consideration on the acquisition date was $702 and at September 30, 2013 was $741.

The purchase agreement also included a provision that PES make an up-front payment of $1,000 for a five-year employment, non-competition and non-solicitation agreement with a key employee.  If the employee terminates his employment or violates the agreement prior to the end of the five-year period, he is required to repay the unamortized amount of the $1,000 payment.  This agreement has been accounted for as a prepaid asset and is being amortized equally over the five-year period.

At closing the Company received $302 in small tools inventory, $448 in property, plant and equipment, and recorded accounts payable of $1,060.

The acquisition was accounted for using the acquisition method of accounting.  The assets acquired and liabilities assumed were measured at their estimated fair value at the acquisition date Since its March 11, 2013 acquisition date, FSSI contributed revenues of $670 and $4,143 and gross profit of $14 and $325, for the three and nine months ended September 30, 2013, respectively.

During the second quarter 2013, the Company finalized its estimates of the fair value of the contingent consideration, intangible assets and goodwill for the acquisition.  The final revision resulted in a change from the estimated values recorded at March 31, 2013, including a decrease in the fair value of the contingent consideration of $136, increases in intangible assets of $800 and a decrease of $936 for goodwill

The customer relationships were valued at $950 utilizing the “excess earnings method” of the income approach.  The estimated discounted cash flows associated with existing customers and projects were based on historical and market participant data.  Such discounted cash flows were net of fair market returns on the various tangible and intangible assets that are necessary to realize the potential cash flows.

The fair value of the tradename of $550 was determined based on the “relief from royalty” method.  A royalty rate was selected based on consideration of several factors, including external research of third party tradename licensing agreements and their royalty rate levels, and management estimates.  The useful life was estimated at five years based on management’s expectation for continuing value of the tradename in the future.

The fair value for the non-compete agreement of $100 was based on a discounted “income approach” model, including estimated financial results with and without the non-compete agreement in place.  The agreement was analyzed based on the potential impact of competition that certain individuals could have on the financial results, assuming the agreement was not in place.  An estimate of the probability of competition was applied and the results were compared to a similar model assuming the agreement was in place.

Goodwill of $1,087 largely consists of expected benefits from the greater presence and convenient access to south Texas, the Houston ship channel and Louisiana and FSSI’s expertise in turn-around work for refineries and chemical plants.  Goodwill also includes the value of the assembled workforce of the FSSI business.  Based on the current tax treatment, goodwill and other intangible assets will be deductible for income tax purposes over a fifteen-year period.

2012 Acquisition - Sprint Pipeline Services, L.P.

The March 12, 2012 acquisition of Sprint was accounted for using the acquisition method of accounting.  The fair value of the consideration totaled $28,377, which included cash payments of $21,197, Company stock valued at $980 (or 62,052 shares of restricted common stock) and contingent consideration of $6,200.

The contingent consideration was as follows:  if income before interest, taxes, depreciation and amortization (“EBITDA”) for 2012, as defined in the purchase agreement, was at least $7,000, we would pay $4,000 in cash to the sellers. The earnout target was achieved in 2012 and was paid in April 2013.

The 2013 earnout target provides for an additional cash payment of $4,000 to the sellers if 2013 EBITDA is at least $7,750.  The estimated fair value of the 2013 contingent consideration as of the acquisition date was $2,745 and at September 30, 2013 and December 31, 2012, the estimated fair value of the contingent consideration was $3,300 and $3,020, respectively.

2012 Acquisition - Silva Companies

The May 30, 2012 acquisition of Silva was accounted for using the acquisition method of accounting.  The fair value of the consideration was $14,090.

2012 Acquisition - The Saxon Group

The September 28, 2012 acquisition of Saxon was accounted for using the acquisition method of accounting.  The fair value of the consideration was $550 in cash, payment of a banknote for $2,429, and contingent consideration valued at $1,950 for total consideration of $4,929.

The contingent consideration included an earnout where the Company would pay $2,500 to the sellers, contingent upon Saxon meeting one of the following two targets:  (1) EBITDA for the fifteen month period ending December 31, 2013 of at least $4,000 or; (2) EBITDA for the twenty-one month period ending September 30, 2014 of at least $4,750.  The estimated fair value of the contingent consideration on the acquisition date was $1,950.  The estimated fair value of the contingent consideration was $2,269 and $2,028 at September 30, 2013 and December 31, 2012, respectively.

2012 Acquisition — Q3 Contracting

Using the acquisition method of accounting, the fair value of the consideration for the November 17, 2012 acquisition of Q3C totaled $56,592.  At closing we made a cash payment of $48,116 and recorded a contingent earnout with a fair value of $7,448 and a liability for a future payment of $430 in Company common stock.

The contingent earnout requires the Company to pay additional cash to the sellers, contingent on Q3C meeting certain EBITDA targets (as that term is defined in the stock purchase agreement).  The targets are as follows:

1. For the period November 18, 2012 through December 31, 2013, if EBITDA is at least $17,700, the Company will pay an additional $3,750.  The payment amount increases by $1,250, to $5,000, if EBITDA exceeds $19,000.

2. For calendar year 2014, if EBITDA is at least $19,000, the Company will pay an additional $3,750.  The payment amount increases by $1,250, to $5,000, if EBITDA exceeds $22,000.

As of the purchase date, the estimated fair value of the contingent consideration was $7,448.  The fair value estimate is based on management’s evaluation of the probability of Q3C meeting the financial performance targets for the two periods, discounted at the Company’s estimated average cost of capital.  The estimated fair value at September 30, 2013 and December 31, 2012 was $8,536 and $7,490, respectively (which includes the expectation that the 2013 target, item 1 above, will be met, with the fair value of $5,000 at September 30, 2013).

In January 2013, we issued 29,273 shares of unregistered stock.  In August 2013, we paid $598 in cash to the sellers as part of tax-related elections that were made under the terms of the purchase agreement.

During the third quarter of 2013, the Company finalized its estimate of the fair value of the acquired assets and liabilities for the acquisition, resulting in no change to the initial estimate.  Additionally, under the purchase agreement, the Company made a final true-up of the purchase amount during the third quarter 2013, resulting in an additional payment to the sellers of $598.  This increased goodwill as of September 30, 2013, an increase in the original estimated goodwill value that had been recorded at December 31, 2012, March 31, 2013 and June 30, 2013.

Summary of Cash Paid for Acquisitions for the nine months ended September 30, 2013 and 2012

The following table summarizes the cash paid for acquisitions for the nine months ended September 30, 2013 and 2012.  The Q3C acquisition was made on November 17, 2012 and included a cash payment of $48,116.  The Company made an additional post-closing payment to the sellers in August 2013, which is included below:

	Nine Months ended September 30,
	2013		2012
Sprint — Purchased March 12, 2012	$	—	$	21,197
Silva — purchased May 30, 2012	—		13,934
Saxon — purchased September 28, 2012	—		2,979
FSSI — purchased March 11, 2013	1,675		—
Additional cash paid August 2013 — Q3C — purchased November 17, 2012	598		—
	$	2,273	$	38,110

Supplemental Unaudited Pro Forma Information for the three and nine months ended September 30, 2013 and 2012

In accordance with ASC Topic 805 we are combining the pro forma information for the FSSI, Sprint, Silva, Saxon and Q3C acquisitions (“the Acquisitions”).  The following pro forma information for the three and nine months ended September 30, 2013 and 2012 presents the combined results of operations of the Acquisitions combined, as if the Acquisitions had each occurred at the beginning of 2012. The supplemental pro forma information has been adjusted to include:

· the pro forma impact of amortization of intangible assets and depreciation of property, plant and equipment, based on the purchase price allocations;

· the pro forma impact of the expense associated with the amortization of the discount for the fair value of the contingent consideration for potential earnout liabilities that may be achieved in 2013 for the Sprint and FSSI acquisitions and 2013 or 2014 for the Saxon, Q3C and FSSI acquisitions;

· the pro forma tax effect of both the income before income taxes and the pro forma adjustments, calculated using a tax rate of 39.0% for the three and nine months ended September 30, 2012 and the same periods in 2013; and

· the pro forma increase in weighted average shares outstanding including 62,052 unregistered shares of common stock issued as part of the Sprint acquisition and 29,273 shares of unregistered common stock issued as part of the Q3C acquisition.

The pro forma results are presented for illustrative purposes only and are not necessarily indicative of, or intended to represent, the results that would have been achieved had the Acquisitions been completed on January 1, 2012.  For example, the pro forma results do not reflect any operating efficiencies and associated cost savings that the Company might have achieved with respect to the combined companies.

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Revenues	551,333		476,570		1,409,140		1,192,167
Income before provision for income taxes	37,268		31,967		79,283		65,395
Net income attributable to Primoris	21,845		19,379		47,109		39,848
Weighted average common shares outstanding:
Basic	51,568		51,427		51,530		51,433
Diluted	51,671		51,433		51,594		51,448
Earnings per share:
Basic	$	0.42	$	0.38	$	0.91	$	0.77
Diluted	$	0.42	$	0.38	$	0.91	$	0.77

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Reportable Operating Segments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 item	Sep. 30, 2012	Dec. 31, 2012
Reportable Operating Segments
Number of operating segments			3
Segment reporting information
Revenue	$ 551,333	$ 431,842	$ 1,406,341	$ 1,060,851
% of Segment Revenue	100.00%	100.00%	100.00%	100.00%
Gross Profit	75,465	56,291	181,098	137,891
% of Segment Revenue	13.70%	13.00%	12.90%	13.00%
Goodwill	118,626		118,626		116,941
East
Segment reporting information
Revenue	178,716	181,260	544,325	459,167
% of Segment Revenue	32.40%	42.00%	38.70%	43.30%
Gross Profit	10,600	18,664	40,810	47,442
% of Segment Revenue	5.90%	10.30%	7.50%	10.30%
Goodwill	70,946		70,946		69,859
West
Segment reporting information
Revenue	362,362	242,033	828,242	567,351
% of Segment Revenue	65.70%	56.00%	58.90%	53.50%
Gross Profit	62,520	35,602	133,195	84,297
% of Segment Revenue	17.30%	14.70%	16.10%	14.90%
Goodwill	45,239		45,239		44,641
Engineering
Segment reporting information
Revenue	10,255	8,549	33,774	34,333
% of Segment Revenue	1.90%	2.00%	2.40%	3.20%
Gross Profit	2,345	2,025	7,093	6,152
% of Segment Revenue	22.90%	23.70%	21.00%	17.90%
Goodwill	$ 2,441		$ 2,441		$ 2,441

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Costs and Estimated Earnings on Uncompleted Contracts (Tables)

9 Months Ended

Sep. 30, 2013

Costs and Estimated Earnings on Uncompleted Contracts

Schedule of costs and estimated earnings on uncompleted contracts

	September 30, 2013			December 31, 2012
Costs incurred on uncompleted contracts	$	4,256,810		$	3,882,968
Reserve for estimated losses on uncompleted contracts	2,018			764
Gross profit recognized	516,451			448,928
	4,775,279			4,332,660
Less: billings to date	(4,842,309		)	(4,449,851		)
	$	(67,030	)	$	(117,191	)

Schedule of costs and estimated earnings on uncompleted contracts included in consolidated balance sheet

	September 30, 2013			December 31, 2012
Costs and estimated earnings in excess of billings	$	80,434		$	41,701
Billings in excess of costs and estimated earnings	(147,464		)	(158,892		)
	$	(67,030	)	$	(117,191	)

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Costs and Estimated Earnings on Uncompleted Contracts (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Costs and Estimated Earnings on Uncompleted Contracts
Costs incurred on uncompleted contracts	$ 4,256,810	$ 3,882,968
Reserve for estimated losses on uncompleted contracts	2,018	764
Gross profit recognized	516,451	448,928
Costs and Estimated Earnings on Uncompleted Contracts	4,775,279	4,332,660
Less: billings to date	(4,842,309)	(4,449,851)
Net cost and estimated earnings in excess of billings	(67,030)	(117,191)
Amount included in consolidated balance sheet
Costs and estimated earnings in excess of billings	80,434	41,701
Billings in excess of costs and estimated earnings	(147,464)	(158,892)
Net cost and estimated earnings in excess of billings	$ (67,030)	$ (117,191)

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Credit Arrangements

9 Months Ended

Sep. 30, 2013

Credit Arrangements

Credit Arrangements

Note 11—Credit Arrangements

Revolving Credit Facility

As of September 30, 2013, the Company had a revolving credit facility (the “Credit Agreement”). The Credit Agreement was entered into by and among the Company, The PrivateBank and Trust Company, as administrative agent (the “Administrative Agent”) and co-lead arranger, The Bank of the West, as co-lead arranger, and IBERIABANK Corporation (the “Lenders”). The Credit Agreement is a $75 million revolving credit facility whereby the lenders agree to make loans on a revolving basis from time to time and to issue letters of credit for up to the $75 million committed amount. The Credit Agreement also provides for an incremental facility of up to $50 million. The termination date of the Credit Agreement is December 28, 2017.

The principal amount of any loans under the Credit Agreement will bear interest at either: (i) LIBOR plus an applicable margin as specified in the Credit Agreement (based on the Company’s senior debt to EBITDA ratio), or (ii) the Base Rate (which is the greater of (a) the Federal Funds Rate plus 0.5% or (b) the prime rate as announced by the Administrative Agent). Quarterly non-use fees, letter of credit fees and administrative agent fees are payable at rates specified in the Credit Agreement.

The principal amount of any loan drawn under the Credit Agreement may be prepaid in whole or in part, with a minimum prepayment of $5 million, at any time, potentially subject to make-whole provisions.

The Credit Agreement includes customary restrictive covenants for facilities of this type, as discussed below.

Commercial letters of credit were $4,808 at September 30, 2013 and $4,808 at December 31, 2012.  Other than commercial letters of credit, there were no borrowings under this line of credit during the nine months ended September 30, 2013, leaving available borrowing capacity at $70,192 at September 30, 2013.

At the execution of the Credit Agreement, the previous Loan and Security Agreement dated October 29, 2009, as amended, between the Company and The Private Bank and Trust Company (the “PrivateBank Agreement”), was terminated.  There were no borrowings outstanding at the time of the termination and all outstanding letters of credit were transferred to the Credit Agreement.

Senior Secured Notes and Shelf Agreement

On December 28, 2012, the Company entered into a $50 million Senior Secured Notes purchase (“Senior Notes”) and a $25 million private shelf agreement (the “Notes Agreement”) by and among the Company, The Prudential Investment Management, Inc. and certain Prudential affiliates (the “Noteholders”).

The Senior Notes amount was funded on December 28, 2012. The Senior Notes are due December 28, 2022 and bear interest at an annual rate of 3.65%, paid quarterly in arrears. Annual principal payments of $7.1 million are required from December 28, 2016 through December 28, 2021 with a final payment due on December 28, 2022. The principal amount may be prepaid, with a minimum prepayment of $5 million, at any time, subject to make-whole provisions.

The Notes Agreement provided for the issuance of notes of up to $25 million, prior to December 28, 2016.  On July 25, 2013, the Company drew the full $25 million available under the Notes Agreement.  The notes are due July 25, 2023 and bear interest at an annual rate of 3.85% paid quarterly in arrears.  Seven annual principal payments of $3.6 million are required from July 25, 2017 with a final payment due on July 25, 2023.

All loans made under both the Credit Agreement and the Notes Agreement are secured by our assets, including, among others, our cash, inventory, goods, equipment (excluding equipment subject to permitted liens) and accounts receivable. All of our domestic subsidiaries have issued joint and several guaranties in favor of the Lenders and Noteholders for all amounts under the Credit Agreement and Notes Agreement.

Both the Credit Agreement and the Notes Agreement contain various restrictive and financial covenants including among others, minimum tangible net worth, senior debt/EBITDA ratio, debt service coverage requirements and a minimum balance for unencumbered net book value for fixed assets. In addition, the agreements include restrictions on investments, change of control provisions and provisions in the event the Company disposes more than 20% of its total assets.

The Company was in compliance with the covenants for the Credit Agreement and Notes Agreement at September 30, 2013.

Canadian Credit Facility

The Company has a credit facility for $10,000 in Canadian dollars with a Canadian bank for purposes of issuing commercial letters of credit in Canada.  The credit facility has an annual renewal and provides for the issuance of commercial letters of credit for a term of up to five years. The facility provides for an annual fee of 1% for any issued and outstanding commercial letters of credit. Letters of credit can be denominated in either Canadian or U.S. dollars. At September 30, 2013 and December 31, 2012, letters of credit outstanding totaled $3,410 and $1,364 in Canadian dollars, respectively.  At September 30, 2013, the available borrowing capacity was $6,590 in Canadian dollars.  The credit facility contains a working capital restrictive covenant for our Canadian subsidiary, OnQuest Canada, ULC.  At September 30, 2013, OnQuest Canada, ULC was in compliance with the covenant.

Subordinated Promissory Notes

Subordinated Promissory Note — Rockford.  In connection with the 2010 acquisition of Rockford, the Company executed an unsecured promissory note with an initial principal amount of $16,712.  In December 2012, the subordinated note was deemed paid.

Subordinated Promissory Note — JCG.  In connection with the 2009 acquisition of JCG, the Company executed an unsecured promissory note on December 18, 2009 with an initial principal amount of $53,500.  The JCG note was paid in full on March 12, 2012.

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Equity Method Investments

9 Months Ended

Sep. 30, 2013

Equity Method Investments.

Equity Method Investments

Note 7—Equity Method Investments

WesPac Energy LLC and WesPac Midstream LLC

On July 1, 2010, the Company acquired a 50% membership interest in WesPac Energy LLC, a Nevada limited liability company (“WesPac”), from Kealine Holdings, LLC (“Kealine”), a Nevada limited liability company.  Kealine held the remaining 50% membership interest in WesPac.  WesPac developed pipeline and terminal projects in the United States, Canada and Mexico.

On September 30, 2013, WesPac, Kealine and the Company entered into a contribution agreement (the “Agreement”) with Highstar Capital IV, LP (“Highstar”), to form a new entity, WesPac Midstream LLC, a Delaware limited liability company (“WesPac-Midstream”), owned collectively by Highstar, Kealine and the Company.  WesPac contributed certain project assets to WesPac-Midstream.  Highstar contributed $6.1 million in cash for an 85% ownership interest in certain developmental projects.  Of this amount, $3.04 million was distributed to the Company and accounted for as a reduction of the carrying value of the WesPac investment.  Highstar also obtained a 75% interest in two of WesPac-Midstream’s more mature projects.  Highstar may make additional payments to Kealine and the Company for the two projects contingent on completion of certain milestones as follows:

1. When the first project reaches “commercial acceptance” (as that term is defined in the Agreement), a payment of $4.5 million will be made ($2.25 million to the Company), and an additional payment of $4.5 million when the project goes into production ($2.25 million to the Company).

2. If the second project successfully reaches “commercial acceptance” prior to January 31, 2014, a payment of $4.5 million ($2.25 million to the Company) will be made and a similar payment when the project goes into production.  If “commercial acceptance” is not received prior to July 1, 2014, no contingent payments will be made for this project.

Highstar will fund WesPac-Midstream’s operations over the next two years.  The Company is not required to fund any of WesPac-Midstream’s activities and retains one of five board seats.

During the third quarter 2013 and prior to the Agreement, WesPac recorded a third quarter loss of $0.2 million and the Company recorded its 50% share of the loss of $0.1 million.  After recording the loss, the carrying value of the WesPac investment prior to the sale to Highstar, was $11.5 million.

In July 2010, the Company recorded a $5 million amount greater than its pro-rata share of the WesPac equity as part of its original investment (“basis difference”).  In December 2011, as a result of certain events impacting WesPac, the Company recorded a reduction of $1.7 million of its $5 million basis difference.  As a result of the Agreement, the Company eliminated the remaining basis difference of $3.25 million to recognize an other than temporary decrease in the value of its basis difference.  The non-cash impairment charge was recorded as a Selling, General and Administrative expense.  The Company’s remaining $4.76 million investment represents the Company’s pro-rata equity ownership in both the WesPac and WesPac-Midstream entities.

The following is a summary of the financial position and results as of and for the periods ended:

	September 30, 2013		December 31, 2012
WesPac & WesPac-Midstream
Balance sheet data
Assets	$	18,856	$	16,896
Liabilities	1,067		1,063
Net assets	$	17,789	$	15,833
Company’s equity investment	$	4,757	$	11,463

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Earnings data:
Revenue	$	10		$	—		$	99		$	511
Expenses	$	235		$	358		$	754		$	1,002
Earnings before taxes	$	(225	)	$	(358	)	$	(655	)	$	(491	)
Company’s equity in earnings	$	(113	)	$	(178	)	$	(328	)	$	(245	)

St.—Bernard Levee Partners

The Company purchased a 30% interest in St.—Bernard Levee Partners (“Bernard”) in 2009 for $300 and accounts for this investment using the equity method.  Bernard engaged in construction activities in Louisiana, and all work was completed in January 2013. The Company’s share of Bernard distributions for the nine months ended September 30, 2013 and 2012, was $145 and $1,260, respectively.  The following is a summary of the financial position and results as of and for the periods ended:

	September 30, 2013		December 31, 2012
St. — Bernard Levee Partners
Balance sheet data
Assets	$	22	$	592
Liabilities	22		86
Net assets	$	—	$	506
Company’s equity investment	$	—	$	150

	Three months ended September 30,					Nine months ended September 30,
	2013		2012			2013			2012
Earnings data:
Revenue	$	—	$	36		$	—		$	3,970
Expenses	$	—	$	(36	)	$	16		$	162
Earnings before taxes	$	—	$	72		$	(16	)	$	3,808
Company’s equity in earnings	$	—	$	19		$	(5	)	$	1,140

Alvah, Inc.

As part of the acquisition of Q3C, the Company acquired a 49% membership interest in Alvah, Inc., a California corporation (“Alvah”).  Alvah is engaged in electrical contracting activities, primarily in Northern California and worked as a subcontractor for ARB both prior to and subsequent to the Q3C acquisition.  In December 2012, the company received $98 from a distribution by Alvah.  During the three and nine months ending September 30, 2013, payments made by ARB to Alvah were $2,154 and $5,064, respectively, and payments made by Q3C were $2 and $214, respectively.  For the same periods in the prior year, ARB made payments of $1,609 and $3,762, respectively and Q3C made payments of $120 and $353, respectively.

The following is a summary of the financial position and results as of and for the period ended:

	September 30, 2013		December 31, 2012
Balance sheet data
Assets	$	3,849	$	2,177
Liabilities	1,677		1,208
Net assets	$	2,172	$	969
Company’s equity investment in venture	$	1,789	$	1,200

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Earnings data:
Revenue	$	4,824	$	—	$	10,832	$	—
Expenses	$	4,185	$	—	$	9,630	$	—
Earnings after taxes	$	639	$	—	$	1,202	$	—
Company’s equity in earnings	$	313	$	—	$	589	$	—

Because Alvah was not acquired until November 2012, no activity is shown for the prior year.

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Basis of Presentation

9 Months Ended

Sep. 30, 2013

Basis of Presentation

Basis of Presentation

Note 2—Basis of Presentation

Interim consolidated financial statements— The interim condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2013 and 2012 have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, certain disclosures, which would substantially duplicate the disclosures contained in the Company’s Annual Report on Form 10-K, filed on March 7, 2013, which contains the Company’s audited consolidated financial statements for the year ended December 31, 2012, have been omitted.

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (the “Third Quarter 2013 Report”) should be read in concert with the Company’s most recent Annual Report on form 10-K.  The interim financial information is unaudited.  In the opinion of management, the unaudited information includes all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the interim financial information.

Revenue recognition

Fixed-price contracts — Historically, a substantial portion of the Company’s revenue has been generated under fixed-price contracts. For fixed-price contracts, the Company recognizes revenues using the percentage-of-completion method, which may result in uneven and irregular results. In the percentage-of-completion method, estimated revenues and resulting contract income are calculated based on the total costs incurred to date as a percentage of total estimated costs. If an estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full at the time of the estimate.  The loss amount is recognized as an “accrued loss provision” and is included in the accrued expenses and other liabilities amount on the balance sheet.  As the percentage-of-completion method is used to calculate revenues, the accrued loss provision is changed so that the gross profit for the contract is zero.

Unforeseen events and circumstances can alter the estimate of the costs and potential profit associated with a particular contract.  Total estimated costs, and thus contract revenues and income, can be impacted by changes in productivity, scheduling, the unit cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, client needs, client delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and thus the timing of revenue recognition.  To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition and profitability from a particular contract may be adversely affected.

Other contract forms — The Company also uses unit-price, time and material, and cost reimbursable plus fee contracts.  For these jobs, revenue is recognized based on contractual terms.  For example, time and material contract revenues are recognized based on purchasing and employee time records.  Similarly, unit price contracts recognize revenue based on completion of specific units at a specified unit price.

For all of its contracts, the Company includes any provision for estimated losses on uncompleted contracts in accrued expenses. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income. These revisions are recognized in the period in which the revisions are identified.

The caption “Costs and estimated earnings in excess of billings” represents unbilled receivables which arise when revenues have been recorded but the amount will not be billed until a later date.  Balances represent:  (a) unbilled amounts arising from the use of the percentage-of-completion method of accounting which may not be billed under the terms of the contract until a later date, (b) incurred costs to be billed under cost reimbursement type contracts, or (c) amounts arising from routine lags in billing.  For those contracts in which billings exceed contract revenues recognized to date, the excess amounts are included in the caption “Billings in excess of costs and estimated earnings”.

The Company considers unapproved change orders to be contract variations for which it has customer approval for a change in scope but for which it does not have an agreed upon price change.  Costs associated with unapproved change orders are included in the estimated cost to complete the contracts and are treated as project costs as incurred. The Company recognizes revenue equal to costs incurred on unapproved change orders when realization of price approval is probable.  Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers.

The Company considers claims to be amounts it seeks, or will seek, to collect from customers or others for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no agreement with customers on both scope and price changes. Claims are included in the calculation of revenues when realization is probable and amounts can be reliably determined. Revenues in excess of contract costs incurred on claims are recognized when the amounts have been agreed upon with the customer.  Revenue in excess of contract costs from claims is recognized when agreement is reached with customers as to the value of the claims, which in some instances may not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to complete the contracts and are treated as project costs when incurred.

In accordance with applicable terms of certain construction contracts, retainage amounts may be withheld by customers until completion and acceptance of the project.  Some payments of the retainage may not be received for a significant period after completion of our portion of a project.  In some jurisdictions, retainage amounts are deposited into an escrow account.

Significant revision in contract estimate— As previously discussed, revenue recognition is based on the percentage-of-completion method for firm fixed-price contracts. Under this method, the costs incurred to date as a percentage of total estimated costs are used to calculate revenue. Total estimated costs, and thus contract revenues and margin, are impacted by many factors which can cause significant changes in estimates during the life cycle of a project.

For projects that were in process in the prior year, but are either completed or continue to be in process during the current year, there can be a difference in revenues and profits recognized to the prior year, had current year estimates of costs to complete been known in the prior year.

Customer Concentration — The Company operates in multiple industry segments encompassing the construction of commercial, industrial and public works infrastructure assets throughout the United States. Typically, the top ten customers in any one calendar year generate revenues in excess of 50% of total revenues and consist of a different group of customers in each year.

During the three months and nine months ending September 30, 2013, revenues generated by the top ten customers were $274 million and $717 million, respectively, which represented 49.7% and 51.0%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2013, a large gas and electric utility represented 8.8% and 8.3%, respectively, of total revenues and a large pipeline company represented 9.7% and 6.8%, respectively, of total revenues.

During the three and nine months ending September 30, 2012, revenues generated by the top ten customers were $243.6 million and $607.8 million, respectively, which represented 56.4% and 57.3%, respectively, of total revenues during the periods.  During the three and nine month periods ending September 30, 2012, the Louisiana Department of Transportation represented 11.9% and 12.7%, respectively, of total revenues and a large gas and electric utility represented 16.1% and 13.6%, respectively, of total revenues.

At September 30, 2013, approximately 13.1% of the Company’s accounts receivable were due from one customer, and that customer provided 7.4% of the Company’s revenues for the nine months ended September 30, 2013.  At September 30, 2012, approximately 10.8% of the Company’s accounts receivable were due from one customer, and that customer provided 13.6% of the Company’s revenues for the nine months ended September 30, 2012.

Multiemployer Plans— Various subsidiaries in the West Construction Services segment are signatories to collective bargaining agreements.  These agreements require that the Company participate in and contribute to a number of multiemployer benefit plans for its union employees at rates determined by the agreements.  The trustees for each multiemployer plan determine the eligibility and allocations of contributions and benefit amounts, determine the types of benefits and administer the plan.  Federal law requires that if the Company were to withdraw from an agreement, it will incur a withdrawal obligation.  The potential withdrawal obligation may be significant.  Any withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with generally accepted accounting principles (“GAAP”).  In November 2011, the Company withdrew from the Central States Southeast and Southwest Areas Pension Fund multiemployer pension plan.  The Company has no plans to withdraw from any other agreements.  See Note 19 — Commitments and Contingencies.

Inventory and uninstalled contract materials — Inventory consists of expendable construction materials and small tools that will be used in construction projects and is valued at the lower of cost, using first-in, first-out method, or market.  Uninstalled contract materials include certain job specific materials not yet installed which are valued using the specific identification method relating the cost incurred to a specific project.

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Credit Arrangements (Details)	9 Months Ended		9 Months Ended	0 Months Ended		9 Months Ended	0 Months Ended			9 Months Ended						9 Months Ended			9 Months Ended		9 Months Ended
	Sep. 30, 2013 Senior Notes USD ($)	Dec. 28, 2012 Senior Notes USD ($)	Sep. 30, 2013 Senior Notes Minimum USD ($)	Jul. 25, 2013 Notes Agreement USD ($) item	Dec. 28, 2012 Notes Agreement USD ($)	Sep. 30, 2013 Notes Agreement Minimum	Dec. 28, 2012 Notes Agreement Maximum USD ($)	Dec. 31, 2010 Subordinated Promissory Note Rockford USD ($)	Dec. 18, 2009 Subordinated Promissory Note James Construction Group LLC USD ($)	Sep. 30, 2013 Credit Agreement LIBOR	Sep. 30, 2013 Credit Agreement Base rate	Sep. 30, 2013 Credit Agreement Federal funds rate	Sep. 30, 2013 Credit Agreement Prime rate	Sep. 30, 2013 Credit Agreement Minimum	Sep. 30, 2013 Credit Agreement Revolving line of credit USD ($)	Sep. 30, 2013 Credit Agreement Revolving line of credit Minimum USD ($)	Sep. 30, 2013 Credit Agreement Commercial letters of credit USD ($)	Dec. 31, 2012 Credit Agreement Commercial letters of credit USD ($)	Sep. 30, 2013 Canadian Credit Facility Commercial letters of credit CAD	Dec. 31, 2012 Canadian Credit Facility Commercial letters of credit CAD	Sep. 30, 2013 Canadian Credit Facility Commercial letters of credit Maximum	Oct. 29, 2009 Agreement with Private Bank and Trust Company USD ($)
Credit arrangements
Maximum borrowing capacity															$ 75,000,000		$ 75,000,000		10,000,000
Incremental maximum borrowing capacity															50,000,000
Variable rate basis										LIBOR	Base Rate	Federal Funds Rate	prime rate
Basis spread on variable rate (as a percent)												0.50%
Prepayment to be paid on debt			5,000,000													5,000,000
Interest rate (as a percent)	3.65%			3.85%
Restrictions on investments, change of control provisions and provisions as a percentage of total assets to be disposed off						20.00%								20.00%
Total commercial letters of credit outstanding																	4,808,000	4,808,000	3,410,000	1,364,000
Available borrowing capacity															70,192,000				6,590,000
Borrowings to be incurred prior to December 28, 2016							25,000,000
Borrowings outstanding															0							0
Term of credit facility																					5 years
Annual fee (as a percent)																			1.00%
Required principal payment	7,100,000			3,600,000
Initial principal amount		$ 50,000,000		$ 25,000,000	$ 25,000,000			$ 16,712,000	$ 53,500,000
Number of annual principal payments				7

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Business Combinations (Details 4) (Saxon, USD $) In Thousands, unless otherwise specified	0 Months Ended
	Sep. 28, 2012 item	Sep. 30, 2013	Dec. 31, 2012
2012 Acquisition - The Saxon Group
Cash consideration	$ 550
Bank note as part of consideration	2,429
Contingent consideration	1,950	2,269	2,028
Total consideration	4,929
Contingent consideration in cash	2,500
Number of targets for payment of contingent cash consideration	2
2013 earnout target
2012 Acquisition - The Saxon Group
EBITDA period	15 months
2013 earnout target | Minimum
2012 Acquisition - The Saxon Group
Pretax income threshold for measuring financial performance	4,000
2014 earnout target
2012 Acquisition - The Saxon Group
EBITDA period	21 months
2014 earnout target | Minimum
2012 Acquisition - The Saxon Group
Pretax income threshold for measuring financial performance	$ 4,750

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2013

Intangible Assets

Summary of intangible asset categories, amounts and the average amortization periods

	Amortization	September 30,		December 31,
	Period	2013		2012
Tradename	3 to 10 years	$	21,808	$	23,586
Non-compete agreements	2 to 5 years	$	2,991	$	4,130
Customer relationships	5 to 15 years	$	23,203	$	24,212
Backlog	0.75 years	$	—	$	50
Total		$	48,002	$	51,978

Schedule of estimated future amortization expense for intangible assets

For the Years Ending December 31,	Estimated Intangible Amortization Expense
2013 (remaining three months)	$	1,891
2014	7,454
2015	6,404
2016	6,029
2017	5,909
Thereafter	20,315
	$	48,002

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Stockholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended			0 Months Ended	9 Months Ended
	Aug. 31, 2013	Mar. 31, 2013	Mar. 31, 2012	Jan. 07, 2013 Q3 Contracting	Sep. 30, 2013 Q3 Contracting	Dec. 31, 2012 Q3 Contracting
Stockholders' equity
Amount received for shares of common stock issued under a purchase arrangement		$ 1,455	$ 1,240
Shares of common stock issued to managers and executives under a purchase arrangement within the Long-Term Incentive Plan for bonus amounts earned in the prior year		131,989	111,790
Discounted price from market price at which shares purchased by participants in LTI Plan (as a percent)		75.00%
Shares of common stock issued as a part of quarterly compensation of non-employee members of the Board of Directors	9,110	12,480
Stock issued to sellers (in shares)				29,273	29,273
Price of shares issued (in dollars per share)						$ 14.69
Stock issued for acquisition						$ 430

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Related Party Transactions

9 Months Ended

Sep. 30, 2013

Related Party Transactions

Related Party Transactions

Note 14—Related Party Transactions

Primoris has entered into leasing transactions with Stockdale Investment Group, Inc. (“SIGI”).  Brian Pratt, our Chief Executive Officer, President and Chairman of the Board of Directors and our largest stockholder, holds a majority interest and is the chairman, president and chief executive officer and a director of SIGI.  John M. Perisich, our Executive Vice President and General Counsel, is secretary of SIGI.

Primoris leases properties from SIGI at the following locations:

1.          Bakersfield, California (lease expires October 2022)

2.          Pittsburg, California (lease expires April 2023)

3.          San Dimas, California (lease expires March 2019)

4.          Pasadena, Texas (leases expire in July 2019 and 2021)

During the nine months ended September 30, 2013 and 2012, the Company paid $688 and $695, respectively, in lease payments to SIGI for the use of these properties.

The Company entered into a $6.1 million agreement in 2010 to construct a wastewater facility for Pluris, LLC, a private company in which Brian Pratt holds the majority interest.  The transaction was reviewed and approved by the Audit Committee of the Board of Directors of the Company.  The project was substantially completed in December 2011.  The Company recognized no revenues or profits in 2013 and recognized revenues of $362 for the nine months ended September 30, 2012, at normal margins.

Primoris leases a property from Roger Newnham, a former owner and current manager of our subsidiary, OnQuest Canada, ULC. The property is located in Calgary, Canada. During the nine months ended September 30, 2013 and 2012, Primoris paid $223 and $212, respectively, in lease payments.  The current term of the lease is through December 31, 2014.

Primoris leases a property from Lemmie Rockford, one of the Rockford sellers, which commenced November 1, 2011.  The property is located in Toledo, Washington.  During the nine months ended September 30, 2013 and 2012, Primoris paid $68 and $68, respectively, in lease payments.  The lease expires in January 2015.

As a result of the November 2012 acquisition of Q3C, the Company became party to leased property from Quality RE Partners, owned by three of the Q3C selling shareholders, of whom two are current employees, including Jay Osborn, President of Q3C.  The property is located in Little Canada, Minnesota.  During the nine months ended September 30, 2013, the Company paid $198, in lease payments to Quality RE Partners for the use of this property.  The lease commenced October 28, 2012 and expires in October 2022.

As discussed in Note 7— “Equity Method Investments”, the Company owns several non-consolidated investments and has recognized revenues on work performed by the Company for those joint ventures.

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Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2013

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

Note 10—Accounts Payable and Accrued Liabilities

At September 30, 2013 and December 31, 2012, accounts payable included retention amounts of approximately $8,359 and $15,946, respectively.  These amounts are due to subcontractors but have been retained pending contract completion and customer acceptance of jobs.

The following is a summary of accrued expenses and other current liabilities at:

	September 30, 2013		December 31, 2012
Payroll and related employee benefits	$	51,354	$	33,086
Insurance, including self-insurance reserves	35,233		22,982
Reserve for estimated losses on uncompleted contracts	2,018		764
Corporate income taxes and other taxes	2,396		3,779
Accrued overhead cost	1,326		2,007
Other	9,554		13,534
	$	101,881	$	76,152

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Dividends and Earnings Per Share

9 Months Ended

Sep. 30, 2013

Dividends and Earnings Per Share

Dividends and Earnings Per Share

Note 17—Dividends and Earnings Per Share

The Company has paid or declared cash dividends during 2013 as follows:

· On March 5, 2013, the Company declared a cash dividend of $0.03 per common share, payable to stockholders of record on March 29, 2013.  The dividend, totaling $1,547, was paid on April 15, 2013.

· On May 3, 2013, the Company declared a cash dividend of $0.035 per common share, payable to stockholders of record on June 28, 2013.  The dividend, totaling $1,805, was paid on July 15, 2013.

· On August 2, 2013, the Company declared a cash dividend of $0.035 per common share, payable to stockholders of record on September 30, 2013.  The dividend, totaling $1,805, was paid on October 15, 2013.

The table below presents the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2013 and 2012:

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Numerator:
Net income attributable to Primoris	$	21,845	$	17,516	$	47,179	$	39,735
Denominator (shares in thousands):
Weighted average shares for computation of basic earnings per share	51,568		51,398		51,529		51,387
Dilutive effect of shares issued to independent directors	3		6		10		15
Dilutive effect of shares issued as part of Q3C acquisition	—		—		1		—
Dilutive effect of unvested restricted stock units	100		—		55		—
Weighted average shares for computation of diluted earnings per share	51,671		51,404		51,595		51,402
Earnings per share:
Basic earnings per share	$	0.42	$	0.34	$	0.92	$	0.77
Diluted earnings per share	$	0.42	$	0.34	$	0.91	$	0.77

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Stock-Based Compensation

Stock-Based Compensation

Note 15—Stock-Based Compensation

On May 3, 2013, the Board of Directors granted 100,000 Restricted Stock Units (“Units”) under the 2013 Equity Incentive Plan (the “2013 Plan”).  The Units vest over a service period of four equal installments in 2014 through 2017, subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying award agreement.  Each Unit represents the right to receive one share of the Company’s common stock when vested.

The fair value of the Units was based on the closing market price of our common stock on the day prior to the date of the grant, or $21.98 per Unit.  Stock compensation expense for the Units is being amortized using the straight-line method over the service vesting period.  For the three and nine months ended September 30, 2013 the Company recognized $138 and $229, respectively, in compensation expense.  At September 30, 2013, approximately $1.97 million of unrecognized compensation expense remains for the Units which will be recognized over a period of 3.6 years.

Vested Units accrue “Dividend Equivalents” (as defined in the 2013 Plan) which will be accrued as additional Units.  At September 30, 2013, there were no accrued Dividend Equivalent Units.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 06, 2013
Document and Entity Information
Entity Registrant Name	Primoris Services Corp
Entity Central Index Key	0001361538
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		51,571,394
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Taxes

Income Taxes

Note 16—Income Taxes

The effective tax rate on income before taxes and noncontrolling interests for the nine months ended September 30, 2013 is 38.13%.  The effective tax rate for income attributable to Primoris is 39.09%. The rate differs from the U.S. federal statutory rate of 35% due primarily to state income taxes, the “Domestic Production Activity Deduction” and nondeductible meals and incidental per diems common in the construction industry.

To determine its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter.  The Company recognizes interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment date.

In September 2012, the Internal Revenue Service (“IRS”) concluded an examination of our federal income tax returns for 2008 and 2009, which did not have a material impact on our financial statements.  In the third quarter of 2013, the IRS initiated an examination of our federal income tax return for 2011.  The tax years 2010 through 2012 remain open to examination by the IRS.  The statute of limitations of state and foreign jurisdictions vary generally between 3 to 5 years.  Accordingly, the tax years 2008 through 2012 generally remain open to examination by the other major taxing jurisdictions in which the Company operates.

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Commitments and Contingencies (Details 2) (USD $)		0 Months Ended
	Nov. 30, 2011	Feb. 07, 2012 James Construction Group LLC North Texas Tollway Authority v. James Construction Group, LLC item	Mar. 31, 2013 Q3C	Nov. 30, 2012 Q3C	Sep. 30, 2013 Letters of credit	Dec. 31, 2012 Letters of credit	Sep. 30, 2013 Bonding	Dec. 31, 2012 Bonding
Commitments and contingencies
Total commercial letters of credit outstanding					$ 8,123,000	$ 6,168,000
Cost to repair retaining wall		5,400,000
Number of other walls constructed on the project, which could have potential exposure to failure		6
Bid and completion bonds issued and outstanding							1,449,158,000	1,298,589,000
Withdrawal liability recorded	$ 7,500,000		$ 119,000	$ 85,000

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Commitments and Contingencies.
Total lease expense	$ 3,566	$ 2,629	$ 11,111	$ 7,388
Lease payments to related party	$ 379	$ 327	$ 1,176	$ 975