WAIVER AND FOURTH AMENDMENT TO
 
CREDIT AGREEMENT
 
This Waiver and Fourth Amendment to Credit Agreement (this “Fourth Amendment”)
is made as of this 14th day of March, 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.
 
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 Fourth 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
each definition below where it appears therein, and insert the applicable
replacement definition in its place:
 
““Asset Coverage Ratio” shall mean, as of any date of determination, a ratio the
numerator of which is an amount equal to eighty percent (80%) of the orderly
liquidation value as set forth in the most recent appraisal conducted at the
Agent’s request or, if no such appraisal exists as to any specific item, the
original cost of the machinery and equipment owned by Sterling and its
Consolidated Subsidiaries on such date of determination (but excluding all
machinery and equipment (i) which has been leased by Sterling or any of its
Consolidated Subsidiaries to a Person that is not a Borrower or (ii) which is
subject to the lien of any Person other than the Agent) and the denominator of
which is Average Total Debt of Sterling and its Consolidated Subsidiaries for
the fiscal month then ending.”
 
““EBITDA” shall mean for any period, as determined in accordance with GAAP, Net
Income for such period plus, without duplication and only to the extent
reflected as a charge or reduction in the statement of such Net Income for such
period, the sum of (a) income tax expense, (b) interest expense, (c)
depreciation and amortization expense (including amortized debt financing
costs), (d) any extraordinary or non-recurring non-cash expenses or losses, and
any other non-cash expenses or losses approved by the Majority Lenders,
including non-cash losses on sales of assets outside the ordinary course of
business, and (e) all non-controlling interest expenses less the amount of any
distributions made to Mr. Richard Buenting, Mr. Clinton W. Myers and Mr. Clinton
C. Myers in connection with the payment of taxes as permitted under Section
8.5(c) hereof minus, (f) to the extent included in consolidated Net Income for
such period, any extraordinary or non-recurring non-cash gains including
non-cash gains on sales of assets outside the ordinary course of business.”
 
 
 

--------------------------------------------------------------------------------

 
““Leverage Ratio” shall mean as of any date of determination, a ratio the
numerator of which is the Average Total Debt of Sterling and its Consolidated
Subsidiaries for the fiscal month then ending and the denominator of which is
EBITDA of Sterling and its Consolidated Subsidiaries for the twelve month period
then ending, in each case as determined in accordance with GAAP, provided that
EBITDA, for the period commencing February 1, 2014 through December 31, 2014
shall be determined on an annualized basis.”
 
““Revolving Credit Aggregate Commitment” shall mean Forty Million Dollars
($40,000,000), subject to increases pursuant to Section 2.13 hereof by an amount
not to exceed the Revolving Credit Optional Increase Amount, subject to
reduction or termination under Sections 2.11 or 9.2 hereof.”
 
““Revolving Credit Optional Increase Amount” shall mean zero dollars ($0).”
 
““Swing Line Amount” shall mean zero dollars ($0).”
 
““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 March 10, 2014 minus (c) all the total liabilities of such
Person reported on the balance sheet of such Person under GAAP at such time.”
 
(b)           Section 1.1 of the Credit Agreement is hereby amended to delete
the definitions of “Permitted Acquisition” and “Revolving Credit Facility Fee”
as set forth therein.
 
(c)           Section 1.1 of the Credit Agreement is hereby amended to insert
the following definitions therein in their appropriate alphabetical order:
 
““Myers” shall mean Myers & Sons Construction, L.P., a California limited
partnership.”
 
 
 

--------------------------------------------------------------------------------

 
““Revolving Credit Unused Fee” shall mean the fee payable to the Agent for
distribution to the Revolving Credit Lenders in accordance with Section 2.9
hereof.”
 
““RHBP” shall mean RHB Properties, LLC, a Nevada limited liability company.”
 
““SHA” shall mean Sterling Hawaii Asphalt, LLC, a Hawaii limited liability
company.”
 
(d)           Section 1.1 of the Credit Agreement is hereby amended to insert
the following language at the end of the definition of “Indebtedness”:
 
“Notwithstanding the foregoing, the term “Indebtedness” shall not be deemed to
include any obligation of a Credit Party to guarantee, become jointly and
severally obligated for or pledge assets in support of a “swap,” as defined in
Section 1(a)(47) of the Commodity Exchange Act (“CEA”), entered into on or after
October 12, 2012, if at the time that swap is entered into, such Credit Party is
not an “eligible contract participant” as defined in Section 1(a)(18) of the
CEA.”
 
2.
Amendment of Section 2.9.  Section 2.9 of the Credit Agreement is hereby deleted
in its entirety and the following is inserted in its place:

 
“2.9           Revolving Credit Unused Fee.  From the Effective Date to the
Revolving Credit Maturity Date, the Borrowers shall pay, jointly and severally,
to the Agent for distribution to the Lenders pro-rata in accordance with their
respective Percentages, a Revolving Credit Unused Fee quarterly in arrears
commencing January 1, 2008 and on the first day of each calendar quarter
thereafter (in respect of the prior three months or any portion thereof). The
Revolving Credit Unused Fee payable to each Revolving Credit Lender shall be
determined by multiplying the Applicable Fee Percentage times the average daily
amount by which such Lender’s Percentage of the Revolving Credit Aggregate
Commitment then in effect exceeds the sum of (i) such Lender’s Revolving Credit
Percentage of the aggregate principal amount of Revolving Credit Advances and
Swing Line Advances (including in the case of Swing Line Advances, such Lender’s
pro rata participation in any outstanding Swing Line Advances) outstanding from
time to time during such period and (ii) such Lender’s Percentage of the Letter
of Credit Obligations outstanding from time to time during such period,
calculated on a daily basis. The Revolving Credit Unused Fee shall be computed
on the basis of a year of three hundred sixty (360) days and assessed for the
actual number of days elapsed. Whenever any payment of the Revolving Credit
Unused Fee shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next Business Day. Upon receipt of such
payment, the Agent shall make prompt payment to each Revolving Credit Lender of
its share of the Revolving Credit Unused Fee based upon its respective Revolving
Credit Percentage. It is expressly understood that the Revolving Credit Unused
Fees described in this Section are not refundable.”
 
 
 

--------------------------------------------------------------------------------

 
3.
Amendment of Section 2.10(b).  Section 2.10(b) of the Credit Agreement is
deleted in its entirety and the following is inserted in its place:

 
“(b)           Upon the sale or other disposition by any Credit Party of any of
its assets, the proceeds thereof (net of customary and reasonable fees, costs
and expenses) shall be used to prepay any outstanding Revolving Credit Advances,
until all such Advances have been paid in full, and then to cash collateralize
any outstanding Letters of Credit and finally, after the repayment of all such
Advances and the cash collateralization of such Letters of Credit, any remaining
proceeds may be retained by the applicable Credit Party;”

4.
Amendment of Section 7.1(b).  Section 7.1(b) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
“(b)           as soon as available, but in any event within thirty (30) days
after the end of each fiscal month of Sterling:

(i)           Borrower prepared unaudited Consolidated and Consolidating balance
sheets of Sterling and its Consolidated Subsidiaries as at the end of such month
together with the related stockholders equity and cash flows and setting forth
in each case in comparative form the figures for the corresponding periods in
the previous Fiscal Year;

(ii)           a jobs-in-progress report for such month for Sterling and its
Consolidated Subsidiaries;

(iii)           a backlog report for such month for Sterling and its
Consolidated Subsidiaries;

(iv)           accounts receivable and payable statements for such month for
Sterling and its Consolidated Subsidiaries; and

(v)           a statement of the Average Total Debt of Sterling and its
Consolidated Subsidiaries commencing with January 1 of such year through the end
of the applicable month.

Each of the foregoing financial statements, reports and certificates shall be
certified by a Responsible Officer of the Borrower Representative as being
fairly stated in all material respects;”

5.
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 month-end, respectively, a Covenant Compliance Report duly
executed by a Responsible Officer of the Borrower Representative;”
 
 
 

--------------------------------------------------------------------------------

 
6.
Amendment of Section 7.2(h).  Section 7.2(h) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
“(h)           (i) within thirty (30) days of each fiscal quarter end, a report
(including such information as the Agent may request) on the existing joint
ventures of any of the Borrowers, (ii) by each Tuesday, a thirteen week rolling
cash flow budget in form and substance acceptable to the Agent and (iii) such
additional financial and/or other information as Agent or any Lender may from
time to time reasonably request, promptly following such request.”

7.
Amendment of Section 7.6(b).  Section 7.6(b) of the Credit Agreement is deleted
in its entirety and the following is inserted in its place:

 
“(b)  from time to time, during normal business hours, upon the request of the
Agent, to conduct appraisals of all or a portion of the machinery and equipment
and other material fixed assets of the Credit Parties, such appraisals to be
completed by an appraiser as may be selected by Agent, with all reasonable costs
and expenses of such appraisals to be reimbursed by the Credit Parties,”

8.
Amendment of Section 7.9.  Section 7.9 of the Credit Agreement is deleted in its
entirety and the following is inserted in its place:

 
“Section 7.9.  Financial Covenants.

 
(a)
Commencing March 31, 2014, maintain as of the end of each fiscal month a
Leverage Ratio of Sterling and its Consolidated Subsidiaries of not more than
2.00 to 1.00;

 
 
(b)
Commencing March 31, 2014, maintain at all times a Tangible Net Worth of
Sterling and its Consolidated Subsidiaries in an amount at least equal to the
Tangible Net Worth of Sterling and its Consolidated Subsidiaries as reported in
the draft audited financial statements prepared by Grant Thornton and delivered
to the Agent prior to March 13, 2014 for the Fiscal Year ending December 31,
2013 minus $1,784,000 plus 100% of the positive Net Income of Sterling and its
Consolidated Subsidiaries for the fiscal month ending January 31, 2014 and each
subsequent fiscal month, in each case without reduction for losses;

 
 
(c)
Commencing March 31, 2014, maintain as of the end of each fiscal month an Asset
Coverage Ratio of Sterling and its Consolidated Subsidiaries of at least 2.00 to
1.00; and

 
 
(d)
As of the end of each fiscal quarter, commencing with the quarter ending March
31, 2014, Sterling and its Consolidated Subsidiaries shall not have a loss
greater than $1,000,000 for such quarter.”

 
 
 

--------------------------------------------------------------------------------

 
9.
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.  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.”

10.
Amendment of Sections 8.4(c), (d), (e) and (f).  Sections 8.4(c), (d), (e) and
(f) of the Credit Agreement are deleted in their entireties and the following
are inserted in their respective places:

 
“(c)           Intentionally omitted;

(d)           Intentionally omitted;

(e)           Intentionally omitted;

(f)           Intentionally omitted;”

11.
Amendment of Section 8.5.  Section 8.5 of the Credit Agreement is hereby deleted
in its entirety and the following is inserted in its place:

 
“8.5           Restricted Payments.  Declare or make any distributions,
dividend, payment or other distribution of assets, properties, cash, rights,
obligations or securities (collectively, “Distributions”) on account of any of
its Equity Interests, as applicable, or purchase, redeem or otherwise acquire
for value any of its Equity Interests, as applicable or any warrants, rights or
options to acquire any of its Equity Interests, now or hereafter outstanding
(regardless of whether any written consent was previously provided for such
acquisition of Equity Interests, warrants, rights or options)  (collectively,
“Purchases”), except that:

 
(a)
each Credit Party may pay cash Distributions to Sterling or any other Borrower
which is a wholly-owned Subsidiary of Sterling;

 
 
(b)
each Credit Party may declare and make Distributions payable in the Equity
Interests of such Credit Party, provided that the issuance of such Equity
Interests does not otherwise violate the terms of this Agreement and no Default
or Event of Default has occurred and is continuing at the time of making such
Distribution or would result from the making of such Distribution; and

 
 
(c)
provided that no Default or Event of Default has occurred and is continuing or
could reasonably be expected to result therefrom and so long as each of RHBL,
Myers and SHA is taxed as a partnership or disregarded as an entity for tax
purposes, such Credit Party may distribute on or about fifteen days prior to the
due date for any tax return (including quarterly tax estimates) to Mr. Richard
Buenting, Mr. Clinton W. Myers and Mr. Clinton C. Myers, an amount sufficient to
enable each such holder to discharge any federal, state and local income tax
attributable to his ownership of RHBL, Myers and/or SHA, as applicable, taking
into account the character of any income, gain or loss recognized and the
deducting of state taxes for federal income tax purposes.”

 
 

--------------------------------------------------------------------------------

 
12.
Amendment of Section 8.7(d), (g) and (h).  Sections 8.7(d), (g) and (h) are
hereby deleted in their entireties and the following are inserted in their
respective places:

 
“(d)           intercompany loans or intercompany Investments made by a Credit
Party to Sterling or a wholly-owned Subsidiary of Sterling which is a Borrower,
provided, further, that in each case, no Default or Event of Default shall have
occurred and be continuing at the time of making such intercompany loan or
intercompany Investment or result from such intercompany loan or intercompany
Investment being made and that any intercompany loans shall be evidenced by and
funded under an Intercompany Note pledged to the Agent under the appropriate
Collateral Documents;

(g)           Intentionally omitted;

(h)           Intentionally omitted;”

13.
Amendment of Section 9.1(j).  Section 9.1(j) is hereby deleted in its entirety
and the following is inserted in its place:

 
“(j)           any Person either alone or together with any of its Subsidiaries,
shall acquire more than fifty percent (50%) of the issued and outstanding Equity
Interests of Sterling, (ii) Sterling shall directly or indirectly cease to hold
one hundred percent (100%) (or in the case of RHBL, RHBP, SHA and Myers, at
least 50% of each such Person) of the issued and outstanding Equity Interests of
any other Borrower or any Guarantor; (iii) any Person either alone or together
with any of its Affiliates shall have the ability to elect a controlling
majority of the Board of Directors of Sterling or (iv) any “change of control”
or “change in control” occurs as defined in any Subordinated Debt Documents.

14.
Revolving Credit Unused Fee.  In each place in which it appears in the Credit
Agreement or any other Loan Document, the term “Revolving Credit Facility Fee”
is hereby deleted and the words “Revolving Credit Unused Fee” are hereby
inserted in their place.

 
15.
Base Rate Only.  Notwithstanding any of the provisions of the Credit Agreement
or any other Loan Document, as of the date hereof, the Borrowers may only elect
the Base Rate as the Applicable Interest Rate for any Advances made from time to
time under the Credit Agreement and the Lenders will extend Advances which bear
interest at the Base Rate.

 
 
 

--------------------------------------------------------------------------------

 
16.
Amendment to Schedules and Exhibits.  Schedule 1.1 to the Credit Agreement is
hereby deleted and the Schedule 1.1 attached hereto as Annex A is hereby
inserted in its place.  Exhibit A to the Credit Agreement is hereby deleted and
Exhibit A attached hereto as Annex B is hereby inserted in its place.  Exhibit B
to the Credit Agreement is hereby deleted and Exhibit B attached hereto as Annex
C is hereby inserted in its place.  Exhibit J to the Credit Agreement is hereby
deleted and Exhibit J attached hereto as Annex D is hereby inserted in its
place.

 
17.
Additional Covenants.

 
 
(a)
No later than March 15, 2014, Sterling shall engage a third party financial
consultant (the “Consultant”) acceptable to the Agent to examine, among other
matters, the Credit Parties’ Texas operations and the Credit Parties’
forecasting process.

 
 
(b)
Within thirty (30) days of the engagement of the Consultant, Sterling shall
cause such Consultant to provide a draft report in form acceptable to the Agent.

 
 
(c)
Within fifteen (15) days of the date of this Fourth Amendment, the Credit
Parties shall provide a Perfection Certificate in form and substance acceptable
to the Agent;

 
 
(d)
Within thirty (30) days of the date of this Fourth Amendment, Sterling shall or
shall cause the applicable Credit Party to provide a Mortgage, in form and
substance acceptable to the Agent, over those certain premises located at 3475
High River Road, Fort Worth, Texas, together with such amendments and/or
amendments and restatements of the existing Mortgages as the Agent may deem
necessary or appropriate;

 
 
(e)
On and after the date of this Amendment, neither Sterling nor any other Credit
Party shall provide collateral (including but not limited to cash on deposit) to
any Person (other than to the Agent for the benefit of the Lenders) in support
of any hedging transactions of any kind;

 
 
(f)
Sterling shall have raised at least Twenty Million Dollars ($20,000,000) in
aggregate amount of new equity capital on terms and conditions satisfactory to
the Agent no later than September 30, 2014;

 
 
(g)
Promptly upon the request of the Agent, Sterling and each other Credit Party
shall provide (a) such additional documentation as the Agent may deem necessary
or appropriate to evidence the first priority and perfection of its lien over
the Collateral, including but not limited to the recordation of the Agent’s lien
on the titles of any motor vehicles, (b) a Mortgage over any real estate owned
by Sterling or any other Credit Party not otherwise required to be pledged
pursuant to the terms of the Credit Agreement and (c) environmental reports, a
title policy, survey and such other documentation as the Agent may request with
regard to any owned real estate of Sterling or any other Credit Party;

 
 
 

--------------------------------------------------------------------------------

 
 
(h)
Within ten (10) days of the date hereof, Agent shall have received insurance
certificates for each Borrower who has not previously delivered an insurance
certificate to Agent in form and substance satisfactory to the Agent and
evidencing Agent’s status as Additional Insured and Lender Loss Payee;

 
 
(i)
Within ten (10) days of the date hereof, deliver all stock certificates of J.
Banicki Construction, Inc. to the Agent accompanied by blank stock powers in
form and substance acceptable to the Agent; and

 
 
(j)
Within fifteen (15) days of the date hereof, execute and deliver a modification
to that certain previously executed term note payable to Comerica Bank
increasing the applicable interest rate margin thereunder to Comerica Bank’s
prime rate plus one hundred and fifty (150) basis points.

 
Failure to comply with any of the foregoing requirements shall be an immediate
Event of Default under the Credit Agreement.

18.
Waiver.  The Agent and Lenders hereby waive the Events of Default set forth on
Schedule I attached hereto.

 
19.
Effectiveness.  This Fourth 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
Fourth 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 the original Second Amended and Restated Revolving
Credit Note, duly executed and delivered by the Borrowers and in form and
substance satisfactory to Agent;

 
 
(c)
Agent shall have received that certain Joinder to and Reaffirmation of Credit
Agreement duly executed and delivered by the Borrowers and in form and substance
satisfactory to Agent (the “Credit Agreement Joinder”);

 
 
(d)
Agent shall have received that certain Joinder to, Amendment to and
Reaffirmation of Security Agreement duly executed and delivered by the Borrowers
and in form and substance satisfactory to Agent (the “Security Agreement
Joinder” and together with the Credit Agreement Joinder, the “Joinder
Agreements”);

 
 
 

--------------------------------------------------------------------------------

 
 
(e)
Agent shall have received an Amended and Restated Intercompany Note duly
executed and delivered by the Borrowers and in form and substance satisfactory
to Agent;

 
 
(f)
Agent shall have received secretary’s certificates, containing resolutions,
corporate documentation, good-standings and incumbencies for each Borrower each
in form and substance satisfactory to the Agent, accompanied by, in the case of
those Borrowers who are not wholly-owned Subsidiaries of Sterling, evidence of
the consent of the third party holders of the Equity Interests of such Borrowers
(the “Non-Sterling Equity Holders”) to this Fourth Amendment, the Note and the
related Loan Documents;

 
 
(g)
Agent shall have received fully executed agreements for each of the non-wholly
owned Borrowers evidencing the consent of Sterling and the Non-Sterling Equity
Holders to the grant of lien to Comerica over the Equity Interests in such
entities owned by Sterling;

 
 
(h)
Agent shall have received that certain Amended and Restated Agreement re: No
Oral Agreements duly executed and delivered by the Borrowers and in form and
substance satisfactory to the Agent; and

 
 
(i)
Agent shall have received, for distribution to the Lenders, a closing fee equal
to fifty (50) basis points of the Revolving Credit Aggregate Commitment after
giving effect to this Fourth Amendment.

 
20.
Representations and Warranties.  Each Borrower hereby represents and warrants
that, after giving effect to the amendments contained herein (a) execution and
delivery of this Fourth 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 Fourth
Amendment or the Amended Credit Agreement, of any governmental body, agency or
authority, and this Fourth Amendment, the Amended Credit Agreement, the Joinder
Agreements, the Note 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
Fourth Amendment, the Amended Credit Agreement, the Joinder Agreements, the Note
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 Fourth Amendment, the Amended Credit Agreement, the Joinder
Agreements, the Note 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.

 
 
 

--------------------------------------------------------------------------------

 
21.
No Waiver.  Except as specifically set forth above, this Fourth 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.

 
22.
No Course of Dealing.  Each Borrower hereby acknowledges and agrees that this
Fourth 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.

 
23.
Capitalized Terms.  Unless otherwise defined to the contrary herein, all
capitalized terms used in this Fourth Amendment shall have the meaning set forth
in the Credit Agreement.

 
24.
Counterparts; Signatures. This Fourth Amendment may be executed in counterpart
in accordance with Section 13.9 of the Credit Agreement.  Delivery of a
signature page to this Fourth 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 Fourth
Amendment, the Joinder Agreements, the Note or any other Loan Document.

 
25.
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 Fourth 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 Fourth Amendment or
any of the other Loan Documents; (b) any provision of this Fourth 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.

 
 
 

--------------------------------------------------------------------------------

 
26.
Laws of Texas.  This Fourth 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).

 
27.
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 Fourth 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 FOURTH 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]
 

 
 

--------------------------------------------------------------------------------

 
[exh1046_5.jpg]

 
 

--------------------------------------------------------------------------------

 
[exh1046_1.jpg]

 
 

--------------------------------------------------------------------------------

 
[exh1046_3.jpg]
[exh1046_4.jpg]

 
 

--------------------------------------------------------------------------------

 
Annex A

Schedule 1.1*
Applicable Margin Grid
Credit Agreement
 
(basis points per annum)
 

Basis for Pricing
Applicable Margin
Revolving Credit Base Rate Margin
150.00
Revolving Credit Unused Fee
75.00
Letter of Credit Fees (exclusive of facing fees)
475.00

Provided, further, that if Sterling has not raised at least Ten Million Dollars
($10,000,000) in aggregate amount of new liquid capital on terms and conditions
satisfactory to the Agent by June 30, 2014, the Revolving Credit Base Rate
Margin shall increase, commencing July 1, 2014, to 250 basis points per annum
and the Letter of Credit Fees shall increase to 575.00 basis points.

In addition, all Applicable Margins set forth herein remain subject to the
imposition of any additional default rates or fees as may be applicable from
time to time under the terms of the Credit Agreement.

* Definitions as set forth in the Credit Agreement.
 
 
 

--------------------------------------------------------------------------------

 
ANNEX B
 
EXHIBIT A
 
FORM OF REQUEST FOR REVOLVING CREDIT ADVANCE
 

No. __________________________ Dated: ________, _____

 

TO:           Comerica Bank (“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”).

 
Pursuant to the terms and conditions of the Credit Agreement, Borrowers hereby
request an Advance from the Lenders, as described herein:
 
(A)
Date of Advance:  _____________________________
 

 
(B)
o(check if applicable)

 
This Advance is or includes a whole or partial refunding/conversion of:
 
Advance No(s). _____________________________
 
(C)
Type of Advance:

 
o  Base Rate Advance

(D)
Amount of Advance:

 
$_____________________
 
(E)           Disbursement Instructions
 
o  Comerica Bank Account No. _________________
o  Other:                                                                           
 
Borrowers certify to the matters specified in Section 2.3(f) of the Credit
Agreement.
 
 
 

--------------------------------------------------------------------------------

 
Capitalized terms used herein, except as defined to the contrary, have the
meanings given 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.
 
STERLING CONSTRUCTION COMPANY, INC., as Borrower Representative

By: _____________________________

Its: _____________________________

Agent Approval: ________________
 
 
 

--------------------------------------------------------------------------------

 
ANNEX C
 
EXHIBIT B
 
THIRD AMENDED AND RESTATED REVOLVING CREDIT NOTE
 

$40,000,000 March __, 2014

 

On or before the Revolving Credit Maturity Date, FOR VALUE RECEIVED, Sterling
Construction Company, Inc., a Delaware corporation (“Sterling”), Texas Sterling
Construction Co., a Delaware corporation (“TSC”), Ralph L. Wadsworth
Construction Company, LLC, a  Utah limited liability company (“RLW”), Road
Highway Builders, LLC, a Nevada limited liability company (“RHBLLC”), Road and
Highway Builders Inc., a Nevada corporation (“RHBI”), Road and Highway Builders
of California, Inc., a California corporation (“RHBC”) and J. Banicki
Construction, Inc., an Arizona corporation (“Banicki”), RHB Properties, LLC, a
Nevada limited liability company (“RHBP”), Ralph L. Wadsworth Construction Co.
LP, a California limited partnership (“RLW LP”), Myers & Sons Construction,
L.P., a California limited partnership (“Myers”) and Sterling Hawaii Asphalt,
LLC, a Hawaii limited liability company (“SHA” and together with Sterling, TSC,
RLW, RHBLLC, RHBI, RHBC, Banicki, RHBP, RLW LP, and Myers, collectively the
“Borrowers” and each of them a “Borrower”) jointly and severally promise to pay
to the order of Comerica Bank (“Payee”) at Detroit, Michigan, care of the Agent,
in lawful money of the United States of America, so much of the sum of Forty
Million Dollars ($40,000,000), as may from time to time have been advanced by
Payee and then be outstanding hereunder pursuant to the Credit Agreement dated
as of October 31, 2007, 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, and Borrowers, as amended, restated or otherwise modified
from time to time (the “Credit Agreement”).  Each of the Revolving Credit
Advances made hereunder shall bear interest at the Applicable Interest Rate from
time to time applicable thereto under the Credit Agreement or as otherwise
determined thereunder, and interest shall be computed, assessed and payable on
the unpaid principal amount of each Revolving Credit Advance made by the Payee
from the date of such Revolving Credit Advance until paid at the rate and at the
times set forth in the Credit Agreement.

This Note is a Revolving Credit Note under which Revolving Credit Advances
(including refundings and conversions), repayments and readvances may be made
from time to time, but only in accordance with the terms and conditions of the
Credit Agreement. This Note evidences borrowings under, is subject to, is
secured in accordance with, and may be accelerated or matured under, the terms
of the Credit Agreement, to which reference is hereby made. Capitalized terms
used herein, except as defined to the contrary, shall have the meanings given
them in the Credit Agreement.

 
 

--------------------------------------------------------------------------------

 
This Note shall be interpreted and the rights of the parties hereunder shall be
determined under the laws of, and enforceable in, the State of Texas, without
giving effect to its principle of conflicts of law.

Borrowers hereby waive, to the extent permitted by applicable law, presentment
for payment, demand, protest and notice of dishonor and nonpayment of this Note
and agree that no obligation hereunder shall be discharged by reason of any
extension, indulgence, release, or forbearance granted by any holder of this
Note to any party now or hereafter liable hereon or any present or subsequent
owner of any property, real or personal, which is now or hereafter security for
this Note.

This Note amends, restates and continues that certain Second Amended and
Restated Revolving Credit Note dated as of November 8, 2011 (the “Prior
Note”).  All indebtedness and obligations outstanding under the Prior Note
remain outstanding under this Note and all collateral and/or guaranties which
secured the obligations under the Prior Note continue to secure the obligations
under this Note.

EXECUTED, as of the date first written above.
 
[exh1046_1.jpg]

 
 

--------------------------------------------------------------------------------

 
[exh1046_3.jpg]

 

 
 

--------------------------------------------------------------------------------

 
[exh1046_4.jpg]
 
 
 

--------------------------------------------------------------------------------

 
ANNEX D
 
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.

 
4.
Losses (7.9(d)).  As of each applicable fiscal quarter end, Sterling and its
Consolidated Subsidiaries have [no losses/losses of $_______], which losses, if
any, are not to be in excess of $1,000,000.

 
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.
 
 
 

--------------------------------------------------------------------------------

 
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 5 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: _____________________________

 
 
 

--------------------------------------------------------------------------------

 
SCHEDULE I

(1)           That certain Event of Default arising due to failure to comply
with Section 7.9(b) for the period ending December 31, 2013.

(2)           That certain Event of Default arising due to failure to comply
with Section 7.9(c) for the period ending December 31, 2013.

(3)           That certain Event of Default arising under Section 9.1(j) due to
the transfer of more than 9% of the Equity Interests of RHBL to a Person other
than Sterling.

(4)           That certain Event of Default arising under Section 7.13 due to
the failure to join Sterling Hawaii Asphalt, LLC, RHB Properties, LLC, Myers &
Sons Construction, L.P. and Ralph L. Wadsworth Construction Co. LP into the Loan
Documents as required thereby.