EXHIBIT 10.1
 
 
SIXTH AMENDMENT TO
CREDIT AGREEMENT
 
This Sixth Amendment to Credit Agreement (this “Sixth Amendment”) is made as of
this 5th day of September, 2014 by and among Sterling Construction Company, Inc.
(“Sterling”) and certain of its affiliates and subsidiaries as set forth on the
signature pages hereto (collectively, with Sterling, the “Borrowers”), certain
of the Lenders (as defined below) and Comerica Bank, a Texas banking
association, as Administrative Agent (“Agent”).
 
RECITALS
 
A.           Agent and the financial institutions party thereto from time to
time (the “Lenders”) entered into that certain Credit Agreement dated as of
October 31, 2007 (as amended, restated or otherwise modified from time to time
collectively, the “Credit Agreement”) with the Borrowers, which Credit Agreement
has been previously amended pursuant to the certain First Amendment dated as of
December 3, 2009, that certain Second Amendment dated as of November 8, 2011 and
that certain Waiver and Third Amendment dated as of August 8, 2013, that certain
Waiver and Fourth Amendment dated as of March 14, 2014 and that certain Fifth
Amendment dated as of April 29, 2014.
 
B.           The Borrowers have  requested that Agent and Lenders make certain
other amendments to the Credit Agreement, and they are willing to do so, but
only on the terms and conditions set forth in this Sixth Amendment.
 
NOW, THEREFORE, Borrowers, Agent and the requisite Lenders agree:
 
1.
Amendments to Section 1.1.

 
(a)           Section 1.1 of the Credit Agreement is hereby amended to delete
the definition below where it appears therein, and insert the replacement
definition in its place:
 
““Tangible Net Worth” shall mean as of any date of determination, for any Person
(a) the net book value of all assets of such Person (excluding patent rights,
trademarks, tradenames, franchises, copyrights, licenses, goodwill and all other
intangible assets of such Person) after all appropriate deductions in accordance
with GAAP (including, without limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization) plus (b) all new equity raised by
such Person after June 30, 2014 minus (c) all the total liabilities of such
Person reported on the balance sheet of such Person under GAAP at such time plus
(d) any goodwill arising from any acquisition consummated after June 30, 2014 or
valuation allowances made after June 30, 2014;”

(c)           Section 1.1 of the Credit Agreement is hereby amended to insert
the following definition therein in its appropriate alphabetical order:
 
 
 

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““Permitted Acquisition” shall mean any acquisition by any Borrower or any
Guarantor of all or substantially all of the assets of another Person, or of a
division or line of business of another Person, or any Equity Interests of
another Person which satisfies and/or is conducted in accordance with the
following requirements:
 
(a)           Such acquisition is of a business or Person engaged in a line of
business which is compatible with, or complementary to, the business of the
Borrowers or such Guarantor;
 
(b)           If such acquisition is structured as an acquisition of the Equity
Interests of any Person, then the Person so acquired shall (X) become a direct
Subsidiary of a Borrower or of a Guarantor and the applicable Borrower or the
applicable Guarantor shall cause such acquired Person to comply with Section
7.13 hereof, provided, further, that after such acquisition the Person so
acquired shall be consolidated in accordance with GAAP with Sterling and its
other Consolidated Subsidiaries or (Y) provided that the Credit Parties continue
to comply with Section 7.4(a) hereof, be merged with and into such a Borrower or
such a Guarantor (and, in the case of such a Borrower, with the applicable
Borrower being the surviving entity);
 
(c)           If such acquisition is structured as the acquisition of assets,
such assets shall be acquired directly by a Borrower or a Guarantor (subject to
compliance with Section 7.4(a) hereof);
 
(d)           Borrowers shall have delivered to Agent not less than ten (10) (or
such shorter period of time agreed to by the Agent) nor more than ninety (90)
days prior to the date of such acquisition, notice of such acquisition together
with Pro Forma Projected Financial Information, copies of all material documents
relating to such acquisition (including the acquisition agreement and any
related document), and historical financial information (including income
statements, balance sheets and cash flows) covering at least two (2) complete
Fiscal Years of the acquisition target, if available, prior to the effective
date of the acquisition or the entire credit history of the acquisition target,
whichever period is shorter, in each case in form and substance reasonably
satisfactory to the Agent;
 
(e)           Both immediately before and after the consummation of such
acquisition and after giving effect to the Pro Forma Projected Financial
Information, no Default or Event of Default shall have occurred and be
continuing;
 
(f)           Intentionally omitted;
 
(g)           The board of directors (or other Person(s) exercising similar
functions) of the seller of the assets or issuer of the Equity Interests being
acquired shall not have disapproved such transaction or recommended that such
transaction be disapproved;
 
 
 

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(h)           All governmental, quasi-governmental, agency, regulatory or
similar licenses, authorizations, exemptions, qualifications, consents and
approvals necessary under any laws applicable to the Borrower or Guarantor that
is making the acquisition, or the acquisition target (if applicable) for or in
connection with the proposed acquisition and all necessary non-governmental and
other third-party approvals which, in each case, are material to such
acquisition shall have been obtained, and all necessary or appropriate
declarations, registrations or other filings with any court, governmental or
regulatory authority, securities exchange or any other Person, which in each
case, are material to the consummation of such acquisition or to the acquisition
target, if applicable, have been made, and evidence thereof reasonably
satisfactory in form and substance to Agent shall have been delivered, or caused
to have been delivered, by Borrowers to Agent;
 
(i)           There shall be no actions, suits or proceedings pending or, to the
knowledge of any Credit Party threatened against or affecting the acquisition
target in any court or before or by any governmental department, agency or
instrumentality, which could reasonably be expected to be decided adversely to
the acquisition target and which, if decided adversely, could reasonably be
expected to have a material adverse effect on the business, operations,
properties or financial condition of the acquisition target and its subsidiaries
(taken as a whole) or would materially adversely affect the ability of the
acquisition target to enter into or perform its obligations in connection with
the proposed acquisition, nor shall there be any actions, suits, or proceedings
pending, or to the knowledge of any Credit Party threatened against the Credit
Party that is making the acquisition which would materially adversely affect the
ability of such Credit Party to enter into or perform its obligations in
connection with the proposed acquisition; and
 
(j)           The purchase price of such proposed new acquisition together with
all other Permitted Acquisitions consummated in the same calendar year, computed
on the basis of total acquisition consideration paid or incurred, or required to
be paid or incurred, with respect thereto, including the amount of Debt (such
Debt being otherwise permitted under this Agreement) assumed or to which such
assets, businesses or business or Equity Interests, or any Person so acquired is
subject and including any portion of the purchase price allocated to any
non-compete agreements shall not exceed Eight Million Dollars ($8,000,000) in
aggregate amount and provided, further, the consideration for such acquisition
is paid solely in the form of common stock of Sterling (provided, that, for the
avoidance of doubt, such common stock will not be convertible, mandatorily
redeemable, exchangeable or require the payment of cash dividends (except in
connection with taxes).”
 
2.
Amendment of Section 7.2(a).  Section 7.2(a) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
“(a)           Concurrently with the delivery of the financial statements
described in Sections 7.1(a) and 7.1(b) of this Agreement for each fiscal
year-end and fiscal quarter-end, respectively, a Covenant Compliance Report duly
executed by a Responsible Officer of the Borrower Representative;”
 
 
 

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3.
Amendment of Section 7.9(b).  Section 7.9(b) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
 
“(b)
Commencing June 30, 2014, maintain at all times a Tangible Net Worth of Sterling
and its Consolidated Subsidiaries of $88,724,000 plus (i) 100% of the positive
Net Income of Sterling and its Consolidated Subsidiaries for the fiscal month
ending July 31, 2014 and each subsequent fiscal month, in each case without
reduction for losses, (ii) any equity raises consummated after June 30, 2014 and
(iii) any goodwill arising from any acquisition consummated after June 30, 2014
or valuation allowances made after June 30, 2014;”

 
4.
Amendment of Section 7.9(d).  Section 7.9(d) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
 
“(d)
Intentionally omitted.”

5.
Amendment of Section 8.3.  Section 8.3 of the Credit Agreement is deleted in its
entirety and the following is inserted in its place:

 
“8.3           Acquisitions.  Except for any Permitted Acquisition, purchase or
otherwise acquire or become obligated for the purchase of all or substantially
all or any material portion of the assets or business interests or a division or
other business unit of any Person, or any Equity Interest of any Person, or any
business or going concern.”

6.
Exhibits.  Exhibit J to the Credit Agreement is hereby deleted in its entirety
and the Exhibit J attached hereto as Annex A is inserted in its place.

 
7.
Effectiveness.  This Sixth Amendment shall become effective (according to the
terms hereof) on the date that the following conditions have been fully
satisfied:

 

 
(a)
Agent shall have received counterpart copies, with originals to follow of this
Sixth Amendment, duly executed and delivered by the Borrowers, the Agent and the
requisite Lenders (as applicable) and in form and substance satisfactory to
Agent.

 

 
(b)
Agent shall have received whatever other documentation it may request in its
sole discretion.

 
 
 

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8.
Representations and Warranties.  Each Borrower hereby represents and warrants
that, after giving effect to the amendments contained herein (a) execution and
delivery of this Sixth Amendment, the Joinder Agreements, the Note and any other
Loan Documents required to be delivered hereunder, and the performance by each
Borrower of its obligations under the Credit Agreement as amended hereby and as
amended prior to the date hereof (herein, as so amended, the “Amended Credit
Agreement”) are within each Borrower’s corporate powers, have been duly
authorized, are not in contravention of law or the terms of its articles of
incorporation or bylaws or other organic documents of the parties thereto, as
applicable, and except as have been previously obtained do not require the
consent or approval, material to the amendments contemplated in this Sixth
Amendment or the Amended Credit Agreement, of any governmental body, agency or
authority, and this Sixth Amendment, the Amended Credit Agreement, and any other
Loan Documents required to be delivered hereunder, will constitute the valid and
binding obligations of the Borrowers enforceable in accordance with its terms,
except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium, ERISA or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity
(whether enforcement is sought in a proceeding in equity or at law), (b) the
representations and warranties set forth in this Sixth Amendment, the Amended
Credit Agreement and any other Loan Documents required to be delivered hereunder
are true and correct on and as of the date hereof (except to the extent such
representations specifically relate to an earlier date), and such
representations and warranties are and shall remain continuing representations
and warranties during the entire life of the Sixth Amendment, the Amended Credit
Agreement and any other Loan Documents required to be delivered hereunder and
(c) as of the date hereof (after giving effect to the waiver contained in
Section 2 hereof), no Default or Event of Default shall have occurred and be
continuing.

 
9.
Reaffirmation; Ratification.  Each Borrower hereby acknowledges, agrees,
ratifies, reaffirms, covenants and agrees to be bound by each of the Loan
Documents to which it is named as a party, including but not limited to the
Credit Agreement, the Security Agreement, any joinder to the Credit Agreement,
any joinder to the Security Agreement, any Notes, and any Mortgages.

 
10.
No Waiver.  Except as specifically set forth above, this Sixth Amendment shall
not be deemed to amend or alter in any respect the terms and conditions of the
Credit Agreement, any of the Notes issued thereunder or any of the other Loan
Documents, or to constitute a waiver by the Agent or any Lender of any right or
remedy under or a consent to any transaction not meeting the terms and
conditions of the Credit Agreement, any of the Notes issued thereunder or any of
the other Loan Documents.

 
11.
No Course of Dealing.  Each Borrower hereby acknowledges and agrees that this
Sixth Amendment and the amendments and waivers contained herein do not
constitute any course of dealing or other basis for altering any obligation of
such Borrower or any other party or any rights, privilege or remedy of the Agent
or any Lender under the Credit Agreement, any other Loan Document, any other
agreement or document, or any contract or instrument.

 
 
 

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12.
Capitalized Terms.  Unless otherwise defined to the contrary herein, all
capitalized terms used in this Sixth Amendment shall have the meaning set forth
in the Credit Agreement.

 
13.
Counterparts; Signatures. This Sixth Amendment may be executed in counterpart in
accordance with Section 13.9 of the Credit Agreement.  Delivery of a signature
page to this Sixth Amendment, the Joinder Agreements, the Note or any other Loan
Document by telecopy or other electronic means shall be effective (for all
purposes) as delivery of a manually executed counterpart of this Sixth
Amendment, the Joinder Agreements, the Note or any other Loan Document.

 
14.
NO CLAIMS.  EACH BORROWER HEREBY ACKNOWLEDGES THAT: (A) IT HAS NO DEFENSES,
CLAIMS OR SET-OFFS TO THE ENFORCEMENT BY ANY LENDER OR THE AGENT OF SUCH
BORROWER’S LIABILITIES, OBLIGATIONS AND AGREEMENTS ON THE DATE HEREOF; (B) TO
ITS KNOWLEDGE, EACH LENDER AND THE AGENT HAVE FULLY PERFORMED ALL UNDERTAKINGS
AND OBLIGATIONS OWED TO IT AS OF THE DATE HEREOF; AND (C) EXCEPT TO THE LIMITED
EXTENT EXPRESSLY SET FORTH IN THIS SIXTH AMENDMENT, EACH LENDER AND THE AGENT DO
NOT WAIVE, DIMINISH OR LIMIT ANY TERM OR CONDITION CONTAINED IN THE CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH BORROWER HEREBY REMISES,
RELEASES, ACQUITS, SATISFIES AND FOREVER DISCHARGES THE LENDERS AND THE AGENT,
THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS, PREDECESSORS, ATTORNEYS AND ALL
OTHERS ACTING OR PURPORTING TO ACT ON BEHALF OF OR AT THE DIRECTION OF THE
LENDERS AND THE AGENT (“RELEASEES”), OF AND FROM ANY AND ALL MANNER OF ACTIONS,
CAUSES OF ACTION, SUIT, DEBTS, ACCOUNTS, COVENANTS, CONTRACTS, CONTROVERSIES,
AGREEMENTS, VARIANCES, DAMAGES, JUDGMENTS, CLAIMS AND DEMANDS WHATSOEVER, IN LAW
OR IN EQUITY, WHICH ANY OF SUCH PARTIES EVER HAD, NOW HAS OR, TO THE EXTENT
ARISING FROM OR IN CONNECTION WITH ANY ACT, OMISSION OR STATE OF FACTS TAKEN OR
EXISTING ON OR PRIOR TO THE DATE HEREOF, MAY HAVE AFTER THE DATE HEREOF AGAINST
THE RELEASEES, FOR, UPON OR BY REASON OF ANY MATTER, CAUSE OR THING WHATSOEVER
THROUGH THE DATE HEREOF.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH
BORROWER WAIVES AND AFFIRMATIVELY AGREES NOT TO ALLEGE OR OTHERWISE PURSUE ANY
DEFENSES, AFFIRMATIVE DEFENSES, COUNTERCLAIMS, CLAIMS, CAUSES OF ACTION, SETOFFS
OR OTHER RIGHTS THEY DO, SHALL OR MAY HAVE AS OF THE DATE HEREOF, INCLUDING, BUT
NOT LIMITED TO, THE RIGHTS TO CONTEST: (A) THE RIGHT OF THE AGENT AND EACH
LENDER TO EXERCISE ITS RIGHTS AND REMEDIES DESCRIBED IN THIS SIXTH AMENDMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; (B) ANY PROVISION OF THIS SIXTH AMENDMENT OR
ANY OF THE OTHER THE LOAN DOCUMENTS; OR (C) ANY CONDUCT OF THE LENDERS OR OTHER
RELEASEES RELATING TO OR ARISING OUT OF THE CREDIT AGREEMENT OR THE OTHER LOAN
DOCUMENTS ON OR PRIOR TO THE DATE HEREOF.

 
 
 

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15.
Laws of Texas.  This Sixth Amendment shall be construed in accordance with and
governed by the laws of the State of Texas (without giving effect to principles
of conflict of laws).

 
16.
No Oral Agreements.  Each of the undersigned parties hereby covenant and agree
as follows:

 
(a)           The rights and obligations of the parties shall be determined
solely from the written “Loan Agreement” (as such term is defined in Section
26.02(a)(2) of the Texas Business and Commerce Code) executed and delivered in
connection with the Advances, and any oral agreements between or among the
parties are superseded by and merged into the Credit Agreement.
 
(b)           This Sixth Amendment, the Joinder Agreements, the Note, the Credit
Agreement and each of the other Loan Documents has not been and may not be
varied by any oral agreements or discussions that have or may occur before,
contemporaneously with, or subsequent thereto.
 
(c)           THE WRITTEN SIXTH AMENDMENT, THE JOINDER AGREEMENTS, THE NOTE, THE
CREDIT AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS EACH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
 
[SIGNATURE PAGES FOLLOW IMMEDIATELY HEREAFTER]
 

 
 

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WITNESS the due execution hereof as of the day and year first above written.

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ANNEX A
 
EXHIBIT J
 
FORM OF COVENANT COMPLIANCE REPORT
 
TO:           Comerica Bank, as Agent

RE:           Credit Agreement made as of October 31, 2007, (as amended,
restated or otherwise modified from time to time, the “Credit Agreement”) by and
among the financial institutions from time to time signatory thereto
(individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”), Comerica Bank as Administrative Agent for the
Lenders (in such capacity, the “Agent”), Arranger, Syndication Agent and
Documentation Agent, Sterling Construction Company, Inc. (“Sterling”), and
certain subsidiaries and affiliates of Sterling (together with Sterling, the
“Borrowers” and each of them a “Borrower”).

This Covenant Compliance Report (“Report”) is furnished pursuant to Section
7.2(a) of the Credit Agreement and sets forth various information as of
______________, _____ (the “Computation Date”).

1.
Leverage Ratio (Section 7.9(a)).  On the Computation Date, the Leverage Ratio,
which is required to be not more than 2.00 to 1.00 was _____ to 1.00, as
computed in the supporting documents attached hereto as Schedule 1.

 
2.
Minimum Tangible Net Worth (Section 7.9(b)).  On the Computation Date, the
Minimum Tangible Net Worth, which is required to be not less than $__________
was $__________, as computed in the supporting documents attached hereto as
Schedule 2.

 
3.
Asset Coverage Ratio (7.9(c)).  On the Computation Date, the Asset Coverage
Ratio, which is required to be not less than 2.00 to 1.00 was ______ to 1.00, as
computed in the supporting documents attached hereto as Schedule 3.

 
The undersigned Responsible Officer of the Borrower Representative hereby
certifies, solely in the capacity as a Responsible Officer of Borrower
Representative and not in an individual capacity, that:
 
A.           To the best of my knowledge, all of the information set forth in
this Report (and in any Schedule attached hereto) is true and correct in all
material respects.
 
B.           To the best of my knowledge, the representations and warranties of
the Credit Parties contained in the Credit Agreement and in the Loan Documents
are true and correct in all material respects with the same effect as though
such representations and warranties had been made on and at the date hereof,
except to the extent that such representations and warranties expressly relate
to an earlier specific date, in which case such representations and warranties
were true and correct in all material respects as of the date when made.
 
 
 

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C.           I have reviewed the Credit Agreement and this Report is based on an
examination sufficient to assure that this Report is accurate.
 
D.           To the best of my knowledge, except as stated in Schedule 4 hereto
(which shall describe any existing Default or Event of Default and the notice
and period of existence thereof and any action taken with respect thereto or
contemplated to be taken by Borrowers or any other Credit Party), no Default or
Event of Default has occurred and is continuing on the date of this Report.
 
Capitalized terms used in this Report and in the Schedules hereto, unless
specifically defined to the contrary, have the meanings given to them in the
Credit Agreement.
 
The undersigned by execution of this document agrees that any copy of this
document signed by it and transmitted by facsimile or email, or any other method
for delivery shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence
 
IN WITNESS WHEREOF, the Borrower Representative has caused this Report to be
executed and delivered by a Responsible Officer of the Borrower Representative
this ______ day of __________________, ____.
 
 
 
 

 
STERLING CONSTRUCTION
COMPANY, INC., as Borrower Representative
              By:     Its: