Document:

exv10w1

 

EXHIBIT 10.1

Royalty Agreement

     This Royalty Agreement (“Agreement”) is entered into this 28th day of August, 2006, by and
between Kenneth R. Council, Trustee of the ALS Charitable Remainder Trust, dated August 28, 2006
(“ALSCT”), and CytRx Corporation, a Delaware corporation (“CytRx”) headquartered at 11726 San
Vicente Blvd., Suite 650, Los Angeles, CA 90049.

     Prior to 8:30 a.m. EDT on the date immediately following the date hereof, ALSCT shall transfer
shares of Tribune Co. Common Stock and Berkshire Hathaway Inc. Class A and Class B Common Stock
having a combined value of twenty four million five hundred thousand dollars ($24,500,000) (the
“Royalty Shares”) to an account designated by CytRx. For purposes of this Agreement, the Royalty
Shares shall be valued at the closing trading price of the shares on the date hereof on the New
York Stock Exchange.

     In consideration for the transfer of the Royalty Shares, CytRx shall pay to ALSCT royalties in
the amount of one percent (1.0%) of the worldwide Net Sales of Arimoclomol by CytRx and CytRx
Affiliates (as hereinafter defined) for treatment of Amyotrophic lateral sclerosis (“ALS”).

     CytRx agrees to use its commercially reasonable efforts to use the proceeds of the sale of the
Royalty Shares to advance the clinical and non-clinical development of Arimoclomol and other drugs
by CytRx for the treatment of ALS. The use of such proceeds may include, among other things, a
Phase I dose ranging study, Phase II efficacy study(ies), FDA mandatory Phase I safety studies,
including dedicated cardiac safety study, drug-interaction safety studies, special population
studies (renal insufficiency and hepatic insufficiency), special toxicology studies, additional
metabolism studies, and the evaluation of CytRx’s pipeline of other drugs for potential efficacy in
ALS using in vitro and in vivo screening tools.

     I. Definitions.

     The following definitions shall apply:

     “Arimoclomol” shall mean the chemical substance
/+/-(2R),(Z)-N-[2-HYDROXY-3-(PIPERIDIN-1-YL)PROPOXY]-PYRIDINE-1-OXIDE-3-CARBOXIMIDOYL CHLORIDE, as
well as any pharmaceutical equivalents or alternate salts thereof.

     “CytRx Affiliate” shall mean: (a) any person or entity which owns or controls at least fifty
percent (50%) of the equity or voting stock of CytRx, (b) any person or entity fifty percent (50%)
of whose equity or voting stock is owned or controlled by CytRx, or (c) any person or entity of
which at least fifty percent (50%) of the equity or voting stock is owned or controlled by the same
person or entity owning or controlling at least fifty percent (50%) of CytRx.

 

 

     “CytRx Patents” means any patent or patent application owned or controlled by CytRx or any
CytRx Affiliate, in existence as of the date of this Agreement, to the extent covering developing,
making, having made, using, importing, offering to sell, or commercializing Arimoclomol for ALS.
All CytRx Patents in existence as of the date of this Agreement and relating to Arimoclomol are
enumerated on Schedule A hereto.

     “Net Sales” shall mean the amounts actually received on all sales of Arimoclomol as a
treatment for ALS and sold by CytRx or a CytRx Affiliate, less the reasonable and customary
deductions from such gross amounts including: (i) normal and customary trade, cash and quantity
discounts, allowances and credits actually granted; (ii) credits or allowances actually granted for
damaged goods and returns or rejections of Arimoclomol; (iii) sales taxes, duties or other taxes
with respect to such sales (including, without limitation, value added taxes or other governmental
charges); (iv) insurance, postage, customs duties and transportation costs actually incurred in
shipping Arimoclomol; (v) rebates actually granted to managed health care organizations,
wholesalers or to federal, state and local governments or by national, state or local governmental
authorities in countries other than the United States. Notwithstanding the foregoing, Net Sales
shall not include, and shall be deemed zero with respect to: (i) the actual distribution of
reasonable quantities of promotional samples of Arimoclomol, (ii) Arimoclomol provided for clinical
trials or research purposes at cost or at no charge, and (iii) Arimoclomol provided to a Third
Party pursuant to a Third Party Arrangement (as hereinafter defined) in which CytRx or a CytRx
Affiliate shall be receiving royalties or other consideration upon which CytRx must make payments
to ALSCT under this Agreement.In the event that Arimoclomol is sold in the form of a combination
product containing Arimoclomol and one or more other active ingredients (a “Combination Product”),
then Net Sales for such Combination Product will be calculated by multiplying actual Net Sales of
such Combination Product by the fraction A/(A+B) where: A is the invoice price of Arimoclomol
contained in the Combination Product if sold separately by CytRx and B is the invoice price of any
other active component or components in the Combination Product if sold separately by CytRx. In the
event that Arimoclomol is sold in the form of a Combination Product containing one or more active
ingredients other than Arimoclomol and one or more such active ingredients of the Combination
Product are not sold separately, then the above formula shall be modified such that A shall be the
total cost to CytRx of Arimoclomol and B shall be the total cost to CytRx of any other active
component or components in the combination.

     “Third Party” means any natural person, corporation, general partnership, limited partnership,
limited liability company, joint venture, proprietorship or other de jure entity organized under
the laws of any jurisdiction that is neither a party to this Agreement nor a CytRx Affiliate.

     II. Royalties based on CytRx Licenses, Sublicenses and Other Business Arrangements with
Third Parties.

     This Agreement shall not preclude CytRx or CytRx Affiliates from entering into a license,
sublicense and/or other business arrangement with respect to Arimoclomol with a

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Third Party (“Third Party Arrangement”); provided, however, that CytRx shall pay ALSCT a
royalty equal to one percent (1.0%) of all cash licensing fees, royalties and milestone payments
(“Licensing Revenue”) to the extent actually received by CytRx or CytRx Affiliates as consideration
for the grant of rights to such Third Party relating to Arimoclomol for the treatment of ALS;
provided, however, that purchases of equity or debt of CytRx or CytRx Affiliates, payments made in
connection with research and development agreements or collaborations, and other payments made by a
Third Party where CytRx or CytRx Affiliates are obligated to perform services or to provide goods
in connection with such payment shall not be considered Licensing Revenue for purposes of this
Agreement.

     III. Payment Reports; Payment of Royalty; Payment Exchange Rate and Currency
Conversions.

     Within forty five (45) calendar days following the close of each calendar quarter, following
the first commercial sale of Arimoclomol or receipt of Licensing Revenue, CytRx shall furnish to
ALSCT a written report for the calendar quarter showing in each such report, if and as applicable:
(1) the number, description, internal product number and aggregate selling prices of Arimoclomol
sold or otherwise disposed of by CytRx or any CytRx Affiliate for the treatment of ALS, and the
specific itemized deductions taken during such calendar quarter, (2) any Licensing Revenue actually
received by CytRx and a summary of the relevant provisions of any Third Party Arrangement based
upon which payments are made to ALSCT hereunder during such calendar quarter, and (3) the royalties
payable to ALSCT under this Agreement for such calendar quarter. Simultaneously with the submission
of the written report, CytRx shall pay to ALSCT a sum equal to the aggregate royalty amount due
under this Agreement for such calendar quarter. In the event royalty payments or fees are not
received by ALSCT when due, CytRx shall pay to ALSCT interest at the lower of (a) the then-current
prime lending rate as published by the American East Coast edition of the Wall Street Journal or
(b) the maximum rate of interest allowed by law on the royalties overdue. Payments to be made by
CytRx to ALSCT under this Agreement shall be paid by bank wire transfer in immediately available
funds to such bank account as is designated in writing by ALSCT from time to time. Royalty payments
shall be made in United States dollars. All royalties owing with respect to Net Sales or Licensing
Revenue stated in currencies other than United States Dollars shall be converted at an exchange
rate that is the arithmetic mean of the opening telegraphic transfer selling and buying rate
published by the American East Coast edition of the Wall Street Journal on the day preceding the
payment. If by law, regulation or fiscal policy of any country, conversion from that country’s
currency into United States Dollars is restricted or forbidden, written notice thereof shall be
given to ALSCT and payment of amounts from that country shall be made through such lawful means as
ALSCT shall designate, including, without limitation, deposit of local currency in such recognized
banking institution as ALSCT shall designate. When in any country the law or regulation prohibits
both the transmittal and the deposit of royalties on sales in that country, royalty payments from
that country will be suspended for as long as the prohibition is in effect and, as soon as the
prohibition ceases, all royalties that CytRx or

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any CytRx Affiliate would have been obligated to pay, but for the prohibition, will promptly
be deposited or transmitted, as the case may be, to the extent then allowed.

     CytRx shall keep complete and accurate records in sufficient detail to enable the royalties
payable hereunder to be determined. Upon forty-five (45) days prior written notice from ALSCT,
CytRx shall permit an independent certified public accounting firm of nationally recognized
standing selected by ALSCT, at ALSCT’s expense, to have access during normal business hours to
examine the books and records of CytRx as reasonably necessary to verify the royalty reports. The
examination shall be limited to pertinent books and records for any year ending not more than
twenty-four (24) months prior to the date of such request. An examination shall not occur more than
once in any calendar year.

     If such accounting firm correctly concludes that additional royalties were owed during such
period, CytRx shall pay the additional royalties within thirty (30) days, together with
interest thereon at the lower of: (a) one percent (1%) per month pro-rated, or (b) the maximum rate
of interest allowed by law. If such underpayment exceeds ten percent (10%) of the royalty correctly
due ALSCT with respect to the audited period under inspection, then the fees charged by such
accounting firm for the work associated with the underpayment audit shall be paid by CytRx. Any
overpayments by CytRx will be credited against future royalty obligations. In the event that CytRx
disagrees with the audit report and the chief financial officer of CytRx and ALSCT (or their
designees) fail to resolve such disagreement, the dispute will be resolved through the dispute
resolution mechanism set forth in this Agreement.

     IV. Reports.

     CytRx shall submit a report to ALSCT on each anniversary of the date of this Agreement setting
forth the use of the proceeds of the sale of the Royalty Shares in reasonable detail. CytRx’s
obligations under this Section shall terminate once CytRx has delivered one or more reports to
ALSCT showing the use of all of the proceeds of the sale of the Royalty Shares.

     V. Representations and Warranties.

     ALSCT represents and warrants that:

     ALSCT is the owner of all right, title and interest in and to the Royalty Shares, free
and clear of any and all liens, encumbrances or security interests of any kind. Except as
set forth in this Agreement, no person or entity has any agreement, contract, option,
warrant or other right entitling such party to the Royalty Shares. Kenneth Council is the
sole Trustee of the ALSCT. The trust agreement establishing the ALSCT has not been
revoked.

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     CytRx represents and warrants that:

     (1) At the date of this Agreement, CytRx has full title and ownership to the CytRx
Patents;

     (2) the CytRx Patents are to CytRx’s knowledge not currently being infringed or
misappropriated by any Third Party;

     (3) at the date of this Agreement, CytRx has not received any notices of infringement
or any written communications relating in any way to a possible infringement with respect
to Arimoclomol, and CytRx is not aware of any manner in which to develop, make, have made,
use, import, offer to sell, or commercialize Arimoclomol that would infringe any patent
rights of any Third Party;

     (4) there are no claims pending against CytRx before any court, arbitrator,
governmental or administrative agency or regulatory authority (“Governmental Agency”)
relating to the CytRx Patents, and CytRx is not subject to any judgment or settlement from
or with any Governmental Agency relating to the CytRx Patents; and

     (5) CytRx does not own or control any patents or patent applications other than the
CytRx Patents that currently, or when issued, would be infringed by the making, using,
offering for sale, selling, or importing of Arimoclomol.

     ALSCT and CytRx represent and warrant that:

     CytRx and ALSCT have the right, power, legal capacity and authority to enter into and
perform their respective obligations under this Agreement; and no approvals or consents of
any persons other than CytRx and ALSCT are necessary in connection with it. This Agreement
has been duly executed and delivered by CytRx and ALSCT and constitutes the legal, valid
and binding obligation of CytRx and ALSCT enforceable against them in accordance with its
terms. The consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: (1) a breach of any term or provision of this
Agreement; (2) a default or an event that, with notice, lapse of time, or both, would be a
default, breach, or violation of the terms of the ALSCT trust agreement or any promissory
note, contract, commitment, indenture, other agreement, instrument or arrangement to which
CytRx or ALSCT is a party or by which any of them or the property of any of them is bound;
or (3) the creation or imposition of any lien, charge or encumbrance on any of the
properties of ALSCT.

     VI. Confidentiality and Publicity.

     The parties may provide to one another information that is confidential (“Confidential
Information”), which the parties agree includes all materials and reports provided by the parties
pursuant to this Agreement. All other information which is Confidential Information must, prior to
its disclosure, (1) be labeled as “Confidential” or

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otherwise clearly identified as confidential, or (2) if disclosed orally, be identified as such and
be reduced to writing, marked as “Confidential” and delivered to the recipient within twenty days
of such disclosure. Confidential Information shall not include information which: (a) is or
becomes a part of the public domain through no act or omission of the receiving party; (b) was in
the receiving party’s lawful possession prior to the disclosure and had not been obtained by the
receiving party either directly or indirectly from the disclosing party; (c) is lawfully disclosed
to the receiving party by a third party without restriction on disclosure; (d) is independently
developed by the receiving party; or (e) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided, however, that the receiving
party shall provide prompt notice of such court order or requirement to the disclosing party to
enable the disclosing party to seek a protective order or otherwise prevent or restrict such
disclosure. The parties agree that, for the term of ten years from receipt, the receiving Party
shall keep confidential and shall not publish or otherwise disclose or use for any purpose other
than as provided for herein any such Confidential Information. Disclosure of Confidential
Information by either party shall be strictly limited to the recipient’s employees, consultants or
contractors on a need to know basis only and subject to a written undertaking which protects the
information at least as well as this Agreement.

     Except as required by applicable law (including securities laws), neither party may use the
name of the other party or any of its trustees, beneficiaries, officers, directors, employees,
agents or affiliated entities, or any terms of this Agreement, in public announcements or
disclosures without the prior written consent of the other party, which consent shall not be
unreasonably withheld.

     This provision shall survive any termination or expiration of this Agreement.

     VII. Indemnification.

     CytRx agrees to indemnify, defend, and hold harmless ALSCT, its trustees, beneficiaries and
successors and assigns, and each of their respective affiliated entities, officers, directors,
employees, agents, and successors and assigns, from any claims relating to the clinical and
non-clinical development of Arimoclomol by CytRx and any CytRx Affiliates and the judicial exercise
of any rights by CytRx or any CytRx Affiliate in connection with the CytRx Patents (“Claims”).
Claims means any and all costs (including, without limitation, attorneys’ fees and expenses, which
fees and expenses shall include, without limitation, fees and expenses of both outside and staff
counsel), expenses or losses arising from any and all claims, seizures, forfeitures, demands,
obligations, losses, damages, liabilities, fines, penalties, charges, injuries to person, property,
administrative and judicial proceedings, causes of action and orders, injunctive relief, judgments
and enforcement actions of any kind, arising directly or indirectly, in whole or in part, out of or
attributable to the research, development and commercialization of Arimoclomol and the
judicial exercise of any rights by CytRx or any CytRx Affiliate in connection with the CytRx
Patents.

     This provision shall survive any termination or expiration of this Agreement.

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     VIII. General Provisions.

     This Agreement constitutes the entire agreement of the parties with respect to the subject
matter hereof, and the provisions hereof and thereof have superseded any and all prior and
contemporaneous agreements or understandings relating to the matters specifically addressed herein
or therein. This Agreement may be assigned by ALSCT to the beneficiaries of ALSCT pursuant to the
terms of the trust agreement establishing ALSCT. CytRx may not assign this Agreement to any Third
Party absent prior written consent from ALSCT; provided, however, that CytRx may assign this
Agreement to any CytRx Affiliate or to a successor in connection with the merger, consolidation, or
sale of all or substantially all of its assets or that portion of its business to which this
Agreement relates.

     Failure or inability of either party to enforce any right hereunder shall not waive any right
with respect to any other or future rights or occurrences, nor shall waiver of any condition or
right in any instance be deemed a waiver of any condition or right in any other instance. If any
provision of this Agreement shall be determined by any court of competent jurisdiction to be
invalid and unenforceable to any extent, the remainder of this Agreement shall not be affected
thereby, and each provision shall be valid and shall be enforced to the fullest extent permitted by
law.

     If any legal action or other proceeding is brought for the enforcement of this Agreement, or
because of an alleged or actual dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorney’s fees and other costs incurred in such action or proceeding in
addition to any other relief to which it may be entitled.

     It is the express intention of the parties that their relationship is that of independent
contractors and not agents, partners, or joint venturers. Nothing in this Agreement is intended or
will be construed to permit or authorize either party to incur, or represent that it has the power
to incur, any obligation or liability on behalf of the other party.

     This Agreement has been negotiated, executed and delivered and will be performed in the State
of California and shall be governed by and construed in accordance with its laws.

     This Agreement may be executed in counterparts, each of which shall be deemed an original and
all of which, together, shall constitute one and the same instrument.

     Any dispute between the parties related to this Agreement shall be resolved exclusively by
arbitration, which shall be held in Los Angeles, California, and conducted in accordance with the
Rules of the American Arbitration Association. The award of arbitration shall be final and
non-appealable and may be entered as a judgment in any

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court having jurisdiction. Each party shall bear its own expenses of the arbitration, and the
arbitrator’s fees shall be shared equally.

     This Agreement is binding upon and inures to the benefit of the parties and their respective
permitted successors and assigns.

     This Agreement may be amended or modified only by a written instrument executed by CytRx and
ALSCT.

     IN WITNESS WHEREOF, CytRx and ALSCT have executed this Agreement on the date first written
above.

	 	 	 
	CytRx Corporation,

	 	Kenneth R. Council,
	a Delaware corporation

	 	as Trustee of ALS Charitable Remainder
	 

	 	Trust dated August 28, 2006
	 
	 	 
	 

	 	/s/ STEVEN A. KRIEGSMAN
	 

	 	 
	/s/ STEVEN A. KRIEGSMAN
 

	 	 
	By: Steven A. Kriegsman
	 	 
	Its: President and Chief Executive Officer
	 	 

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Schedule A

CytRx Patents

	 	(1)	 	PCT applications

	 	•	 	PCT/HU96/00064 published as WO 97/16439 (CytRx/009)
	 
	 	•	 	PCT/HU00/00015 published as WO 00/50403 (CytRx/010)
	 
	 	•	 	PCT/HU01/00046 published as WO 01/79174 (CytRx/011)
	 
	 	•	 	PCT/HU2004/000098 published as WO 05/041965 (CytRx/012)

	 	(2)	 	Foreign Counterparts entitled to claim priority from (1)

Select Application Numbers

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Foreign	 	 
	DOCKET	 	TITLE	 	PCT	 	U.S.	 	EP	 	Counterparts	 	Coverage
	 
	CytRx/009

	 	Hydroxylamine
derivatives for
enhancing molecular
chaperone
production and the
preparation thereof
	 	PCT/HU96/00064

WO 97/16439
	 	08/860,582

U.S. Pat. 6,653,326

DIV 10/618,157

DIV2 10/618,162
	 	Granted European

Patent EP0801649B1
	 	Pending
	 	Arimoclomol

(generic)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CytRx/010

	 	N-[2-hydroxy-3-(1-piperidinyl)-propoxy]-
pyridine-1-oxide-3-carboximidoyl
chloride and its
use in the
treatment of
insulin resistance
(Insulin
Resistance)
	 	PCT/HU00/00015

WO 00/50403
	 	09/913,263

U.S. Pat. 6,649,628
	 	Granted European

Patent EP1163224B1
	 	Pending
	 	Arimoclomol

(species)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CytRx/011

	 	A pyridine-1-oxide
derivative and
process for its
transformation into
pharmaceutically
effective compounds
(N-Oxide
Intermediate)
	 	PCT/HU01/00046

WO 01/79174
	 	10/257,755

Allowed; RCE filed
	 	EP 01 928 133.6
Pending
	 	Pending
	 	intermediate for

arimoclomol
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	CytRx/012

	 	Use of a hydroximic
acid halide
derivative in the
treatment of
neurodegenerative
diseases
(arimoclomol)
	 	PCT/HU04/00098

WO 05/041965
	 	10/582,124 pending
	 	EP [ ]

Pending
	 	Pending
	 	Arimoclomol
(generic and
species)

9exv10w1

 

Exhibit 10.1

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

among

STERLING CONSTRUCTION COMPANY, INC.,

STERLING GENERAL, INC., 

STERLING HOUSTON
HOLDINGS, INC.

and

TEXAS STERLING
CONSTRUCTION, L.P. 

as the Borrowers,

COMERICA BANK,

as Agent

and

The Lenders Party Hereto

$35,000,000 

SENIOR CREDIT FACILITY

INDEX OF CLOSING DOCUMENTS

PARTIES

Sterling Construction Company, Inc., a Delaware corporation
(“SCC”)

Sterling General, Inc., a Delaware corporation (“SGI”)

 Sterling Houston Holdings,
Inc., a Delaware corporation (“SHH”) 

Texas Sterling Construction, L.P., a Texas limited partnership
(“TSC”)

Comerica Bank, as administrative agent (“Administrative Agent”)

Comerica Bank as Lender and L/C Issuer (“Comerica”)

COUNSEL

Thompson & Knight LLP, Administrative Agent’s counsel

 

 

CLOSING DOCUMENTS

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT CLOSED MAY 10, 2006. PREVIOUSLY EXECUTED
GUARANTIES, SECURITY AGREEMENTS AND MORTGAGES CONTINUE IN EFFECT TO SECURE OBLIGATION UNDER FOURTH
AMENDED AND RESTATED CREDIT AGREEMENT.

CREDIT AGREEMENT

1. Fourth Amended and Restated Credit Agreement

Addenda

Defined Terms Addendum

Financial Covenants Addendum

Loan Terms, Conditions and Procedures Addendum

Exhibits

Exhibit A
Form of Borrowing Base Certificate

Exhibit B Form of Compliance Certificate

Exhibit C Form of Request for Advance (Revolving Loan)

Exhibit D Form of Request for Advance (Third Lien Real Estate Loan)

Schedules

3.14 — Employee Benefit Plans

3.17 — Environmental Disclosures

3.19 — Equity Ownership

3.20 —  Intellectual Property

 5.2  —  Names

 5.4  —  Debt

 5.5  —  Liens

CORPORATE DOCUMENTS

   Corporate Resolutions and Incumbency Certification

2. Corporate Resolutions and Incumbency Certification — SCC

3. Corporate Resolutions and Incumbency Certification — SGI

4. Corporate Resolutions and Incumbency Certification — SHH

5. Partnership Authority to Procure Loans — TSC

State Certified Organizational Documents

6. Certificate of Incorporation from Delaware — SCC

7. Certificate of Incorporation from Delaware — SGI

8. Certificate of Incorporation from Delaware — SHH

9. Partnership Authority to Procure Loans — TSC

ii

 

   Certificates of Existence and Good Standing

10. SCC
— Delaware

11. SGI — Delaware

12. SHH — Delaware

13. TSC — Texas

Certificates of Foreign Qualification

14. SGI—Texas

   NOTES

15. $35,000,000.00 Revolving Note payable to Comerica Bank

16. $1,500,000.00 Third Lien Real Estate Note payable to Comerica Bank

MORTGAGES

17. Second Modification Agreement — TSC

SECURITY AGREEMENTS

18. Security Agreement — SCC

19. Security Agreement — SGI

20. Security Agreement — SHH

21. Supplemental Security Agreement — TSC

22. Amended and Restated Supplemental Security Agreement (Pledge) — SCC

23. Security Agreement (Pledge) — SGI

24. Security Agreement (Pledge) — SHH

25. Stock Certificate No. ______ for ______ shares of SGI common stock

26. Stock Power for SGI stock — SCC

CLOSING CERTIFICATES AND OTHER CLOSING DOCUMENTS

27. No Oral Agreements

28. Business Purpose Statement

29. Borrowers’ Authorization

30. Patriot Act Notice

LIEN SEARCHES

31. Lien Search — SCC from Delaware

32. Lien Search — SGI from Delaware

33. Lien Search — SHH from Delaware

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34. Lien Search — TSC from Texas

UCC
FILINGS

35. SCC Amendment filed with the Delaware Secretary of State 5/23/06, file no. 61735901

36. SGI filed with the Delaware Secretary of State 6/1/06, file no. 61855543

37. SHH Amendment filed with the Delaware Secretary of State 5/23/06, file no. 61735950

MISCELLANEOUS

38. Attorney Closing Letter

39. Certificates of Insurance and Endorsements

40. Closing Checklist

iv

 

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

BY AND BETWEEN

COMERICA BANK (“Agent”),

CERTAIN FINANCIAL INSTITUTIONS NAMED HEREIN,

(the “Banks”),

AND

 STERLING CONSTRUCTION COMPANY, INC.

STERLING GENERAL, INC. 

STERLING HOUSTON HOLDINGS, INC.

AND

TEXAS STERLING CONSTRUCTION L.P.

(collectively, “Borrowers”)

$35,000,000 Revolving
Facility 

$1,500,000 Third Lien Real Estate Loan Facility

Dated May 10, 2006

 

 

INDEX

ADDENDA:

Defined Terms Addendum

Financial Covenants Addendum

Loan Terms, Conditions and Procedures Addendum

EXHIBITS:

Exhibit A — Form of Borrowing Base Certificate

Exhibit B — Form of Compliance Certificate

Exhibit C — Form of Request for Advance (Revolving Loan)

Exhibit D — Form of Request for Advance (Third Lien Real Estate Loan)

SCHEDULES:

Schedule 3.14 Employee Benefit Plans 

Schedule 3.17 Environmental Disclosures 
Schedule 3.19 Equity
Ownership 
Schedule 3.20 Intellectual Property 

Schedule 5.2 Names 
Schedule 5.4 Debt 

Schedule 5.5 Liens

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FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

     THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is made and
delivered effective as of the 10th day of May, 2006, by and among STERLING CONSTRUCTION COMPANY,
INC., a Delaware corporation (“Parent”), STERLING GENERAL, INC., a Delaware corporation (
“Sterling General”), STERLING HOUSTON HOLDINGS, INC., a Delaware corporation (“SHH”), TEXAS
STERLING CONSTRUCTION L.P., a Texas limited partnership (“Texas Sterling”) (Parent, Sterling
General, SHH and Texas Sterling being collectively called the “Borrowers” and individually called
“Borrower”), and COMERICA BANK (“Comerica”), individually as a Bank and as agent (in such
capacity, “Agent”) for all Banks hereafter a party hereto (individually, together with Comerica, a
“Bank” and collectively, together with Comerica, the “Banks”).

RECITALS

     A. This
 Agreement is entered into for purposes of renewing, extending and
modifying the credit facilities and extensions of credit made pursuant to that certain Third
Amended and Restated Revolving Credit Loan Agreement dated effective as of December 23, 2004
entered into by Comerica and Texas Sterling, as borrower, as the same has heretofore been amended,
restated and modified from time to time (the “Original Credit
Agreement”) and amending and
restating the Original Credit Agreement in its entirety.

     B. Such credit facilities and extensions of credit are made available to Borrowers by Banks
subject to the terms and conditions set forth herein and in every other Loan Document.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual promises herein
contained, Borrowers, Agent and Banks agree as follows:

SECTION 1. DEFINITIONS

     1.1 Defined Terms. The terms as used in this Agreement shall have the meanings
assigned to such terms herein and in the Defined Terms Addendum.

     1.2 Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be determined and construed in accordance with GAAP.

     1.3 Singular and Plural. Where the context herein requires, the singular number shall
be deemed to include the plural, the masculine gender shall include the feminine and neuter
genders, and vice versa.

SECTION 2. TERMS, CONDITIONS AND PROCEDURES FOR BORROWING

     Subject to the terms, conditions and procedures of this Agreement and each other Loan
Document including, but not limited to, the terms, conditions and procedures set forth in the
Defined Terms Addendum and Loan Terms, Conditions and Procedures Addendum, Banks agree to make
credit available to the Borrowers or any individual Borrower on such dates and in such

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amounts as the Borrowers or any individual Borrower shall request from time to time or as may
otherwise be agreed to by Borrowers, Agent and Banks.

SECTION 3. REPRESENTATIONS AND WARRANTIES

     Borrowers represent and warrant, and such representations and warranties shall be deemed
to be continuing representations and warranties during the entire life of this Agreement, and so
long as any Bank shall have any commitment or obligation to make any Loans or issue any Letters of
Credit hereunder, and so long as any Indebtedness remains unpaid and outstanding under any Loan
Document, as follows:

     3.1 Authority. Parent and SHH are each a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization and each is
duly qualified and authorized to do business in each other jurisdiction in which the character of
its assets or the nature of its business makes such qualification necessary. Texas Sterling is a
limited partnership and its general partner, Sterling General, is a corporation, each of which is
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization and each is duly qualified and authorized to do business in each other jurisdiction in
which the character of its assets or the nature of its business makes such qualification necessary.

     3.2 Due Authorization. Each Loan Party has all requisite power and authority to
execute, deliver and perform its obligations under each Loan Document to which it is a party or is
otherwise bound, all of which have been duly authorized by all necessary action, and are not in
contravention of law or the terms of any Loan Party’s organizational or other governing documents.

     3.3 Title to Property. Each Loan Party has good title to all property and assets
purported to be owned by it, including those assets identified on the Financial Statements most
recently delivered by Borrowers to Bank.

     3.4 Encumbrances. There are no security interests or other Liens or encumbrances on,
and no financing statements on file with respect to, any of the property or assets of any Loan
Party, except for Permitted Encumbrances.

     3.5 Subsidiaries. Borrowers have no Subsidiaries, except as set forth in
Schedule 3.19 which Schedule sets forth the percentage of ownership of Borrowers in each
such Subsidiary as of the date of this Agreement.

     3.6 Taxes. Each Loan Party has filed, on or before their respective due dates, all
federal, state, local and foreign tax returns which are required to be filed, or has obtained
extensions for filing such tax returns, and is not delinquent in filing such returns in accordance
with such extensions, and has paid all taxes which have become due pursuant to those returns or
pursuant to any assessments received by any such party, as the case may be, to the extent such
taxes have become due, except to the extent such tax payments are being actively and diligently
contested in good faith by appropriate proceedings, and if requested by Bank, have been bonded or
reserved in an amount and manner satisfactory to Bank.

     3.7 No-Defaults. There exists no default (or event which, with the giving of notice or
passage of time, or both, would result in a default) under the provisions of any instrument or

3

 

agreement evidencing, governing, securing or otherwise relating to any Debt of any Loan
Party or pertaining to any of the Permitted Encumbrances.

     3.8 Enforceability of Agreement and Loan Documents. Each Loan Document has been duly
executed and delivered by duly authorized officer(s) or other representative(s) of each Loan Party,
and constitutes the valid and binding obligations of each Loan Party, enforceable in accordance
with its terms, except to the extent that enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the enforcement of
creditors’ rights generally at the time in effect.

     3.9 Non-contravention. The execution, delivery and performance by each Loan Party of
the Loan Documents to which such Loan Party is a party or otherwise bound, are not in contravention
of the terms of any indenture, agreement or undertaking to which any such Loan Party is a party or
by which it is bound, except to the extent that such terms have been waived or that failure to
comply with any such terms would not have a Material Adverse Effect.

     3.10 Actions, Suits, Litigation or Proceedings. There are no actions, suits,
litigation or proceedings, at law or in equity, and no proceedings before any arbitrator or by or
before any Governmental Authority, pending, or, to the actual knowledge of Borrowers, threatened
against or affecting any Loan Party, which, if adversely determined, could materially impair the
right of any Loan Party to carry on its business substantially as now conducted or would have a
Material Adverse Effect. No Loan Party is under investigation by, or is operating under any
restrictions imposed by, any Governmental Authority.

     3.11 Compliance with Laws. Each Loan Party has complied with all Governmental
Requirements, including, without limitation, Environmental Laws, to the extent that failure to so
comply could have a Material Adverse Effect.

     3.12 Consents, Approvals and Filings, Etc. Except as have been previously obtained or
as otherwise expressly provided in this Agreement, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or registration with, any
Governmental Authority and no material authorization, consent or approval from any other Person, is
required in connection with the execution, delivery and performance by each Loan Party of any Loan
Document to which it is a party. All such authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations which have previously been
obtained or made, as the case may be, are in full force and effect and are not the subject of any
attack, or to the knowledge of Borrowers, any threatened attack, in any material respect, by
appeal, direct proceeding or otherwise.

     3.13 Contracts, Agreements and Leases. To Borrowers’ knowledge, no Loan Party is in
default (beyond any applicable period of grace or cure) in complying with any provision of any
material contract, agreement, indenture, lease or instrument to which it is a party or by which it
or any of its properties or assets are bound, where such default would have a Material Adverse
Effect. To each Borrower’s knowledge, each such contract, commitment, undertaking,
agreement, indenture and instrument is in full force and effect and is valid and legally binding.

     3.14 ERISA. Except as shown on Schedule 3.14, no Loan Party maintains or
contributes to any employee benefit plan subject to Title IV of ERISA. Furthermore, no Loan Party
has incurred any accumulated funding deficiency within the meaning of ERISA or incurred

4

 

any liability to the PBGC in connection with any employee benefit plan established or
maintained by such Loan Party, and no reportable event or prohibited transaction, as defined in
ERISA, has occurred with respect to such plans.

     3.15 No Investment Company. No Loan Party is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, nor is any Loan Party “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.

     3.16 No Margin Stock. No Loan Party is engaged principally, or as one of its
important activities, directly or indirectly, in the business of extending credit for the purpose
of purchasing or carrying margin stock, and none of the proceeds of any of the Loans will be used,
directly or indirectly, to purchase or carry any margin stock or made available by any Loan Party
in any manner to any other Person to enable or assist such Person in purchasing or carrying margin
stock, or otherwise used or made available for any other purpose which might violate the provisions
of Regulations T, U, or X of the Board of Governors of the Federal Reserve System. Terms for which
meanings are provided in Regulation U of said Board of Governors or any regulations substituted
therefor, as are from time to time in effect, are used in this Section with such meanings, and
these representations and warranties shall be immediately effective.

     3.17 Environmental Representations.

	 	(a)	 	No Loan Party has received any notice of any violation
of any Environmental Law(s); and no Loan Party is a party to any litigation or
administrative proceeding, nor, so far as is known by Borrowers, is any
litigation or administrative proceeding threatened against any Loan Party
which, in any case, (i) asserts or alleges that any Loan Party violated any
Environmental Law(s), (ii) asserts or alleges that any Loan Party is required
to clean up, remove or take any other remedial or response action due to the
disposal, depositing, discharge, leaking or other release of any Hazardous
Materials, or (iii) asserts or alleges that any Loan Party is required to pay
all or a portion of any past, present or future clean-up, removal or other
remedial or response action which arises out of or is related to the disposal,
depositing, discharge, leaking or other release of any Hazardous Materials by
any Loan Party, and which, either singularly or in the aggregate, could have a
Material Adverse Effect.
	 
	 	(b)	 	To Borrowers’ knowledge, there are no conditions existing
currently which could subject any Loan Party to damages, penalties, injunctive
relief or clean-up costs under any applicable Environmental Law(s), or which
require, or are likely to require, clean-up, removal, remedial action or other
response pursuant to any applicable Environmental Law(s) by any Loan Party, and
which, in any case, either singularly or in aggregate, could have a Material
Adverse Effect.
	 
	 	(c)	 	No Loan Party is subject to any judgment, decree, order or
citation related to or arising out of any applicable Environmental
Law(s),
which, either singularly or in the aggregate, could have a Material Adverse
Effect; and, to Borrowers’ knowledge, no Loan Party has been named or listed as
a

5

 

	 	 	 	potentially responsible party by any Governmental Authority in any
matter arising under any applicable Environmental Law(s), except as
disclosed in Schedule 3.17, and, in the event that any such matters
are disclosed in said Schedule 3.17 they will not, either
singularly or in the aggregate, have a Material Adverse Effect.
	 
	 	(d)	 	Each Loan Party has all permits, licenses and approvals
required under applicable Environmental Laws, where the failure to so obtain
or maintain any such permits, licenses or approvals could have a Material
Adverse Effect.

     3.18 Accuracy of Information. The Financial Statements previously furnished to Bank
have been prepared in accordance with GAAP and fairly present the financial condition of Borrowers
and, as applicable, the consolidated financial condition of Borrowers
and such other Person(s) as
such Financial Statements purport to present, and the results of their respective operations as of
the dates and for the periods covered thereby; and since the date(s) of said Financial Statements,
there has been no material adverse change in the financial condition of Borrowers or any other
Person covered by such Financial Statements. No Loan Party, nor any such other Person has any
material contingent obligations, liabilities for taxes, long-term leases or long-term commitments
not disclosed by, or reserved against in, such Financial Statements. Each Loan Party is solvent,
able to pay its respective debts as they mature, has capital sufficient to carry on its business
and has assets the fair market value of which exceed its liabilities, and no Loan Party will be
rendered insolvent, under-capitalized or unable to pay debts generally as they become due by the
execution or performance of any Loan Document to which it is a party or by which it is otherwise
bound.

     3.19 Equity Ownership. Schedule 3.19 sets forth the equity ownership of all
Subsidiaries of Parent. There are no outstanding options, warrants or rights to purchase, nor any
agreement for the subscription, purchase or acquisition of, any equity ownership interests of any
Loan Party, except described in Schedule 3.19.

     3.20 Intellectual Property. Borrowers and each Loan Party own or have rights to use
all intellectual property necessary to continue to conduct their businesses as now or heretofore
conducted or proposed to be conducted, and each patent, trademark, copyright and license for any
thereof held by any Borrower or such other Loan Party is listed, together with application or
registration, numbers, as applicable, on Schedule 3.20, other than off-the-shelf software
licenses. Borrowers and each Loan Party conduct their respective businesses and affairs without
infringement upon or interference with any intellectual property of any other Person.

SECTION 4. AFFIRMATIVE COVENANTS

     Each Borrower covenants and agrees that, so long as any Bank is committed to make any
Loan or issue any Letter of Credit under this Agreement, and until all instruments and agreements
evidencing any Loan which is payable on demand or which conditions advances upon the Banks’
discretion are fully discharged and terminated, and thereafter, so long as any Indebtedness
remains outstanding, it will, and, as applicable, it will cause each Loan Party within its control
or under common control to:

6

 

     4.1 Preservation of Existence, Etc. Preserve and maintain its existence and
preserve and maintain such of its rights, licenses, and privileges as are material to the business
and operations conducted by it; qualify and remain qualified to do business in each jurisdiction in
which such qualification is material to its business and operations or ownership of its properties,
continue to conduct and operate its business substantially as conducted and operated during the
present and preceding calendar year; at all times maintain, preserve and protect all of its
franchises and trade names and preserve all the remainder of its property and keep the same in good
repair, working order and condition; and from time to time make, or cause to be made, all needed
and proper repairs, renewals, replacements, betterments and improvements thereto.

     4.2 Keeping of Books. Keep proper books of record and account in which full and
correct entries shall be made of all of its financial transactions and its assets and businesses so
as to permit the presentation of financial statements (including, without limitation, those
Financial Statements to be delivered to Agent pursuant Section 4.3 hereof) prepared in
accordance with GAAP; and permit Agent, or its representatives, at reasonable times and intervals,
at Borrowers’ cost and expense, to visit any office of any Loan Party, discuss its financial
matters with its officers, employees and independent certified public accountants, and by this
provision, each Borrower authorizes such officers, employees and accountants to discuss the
finances and affairs of any Loan Party and to examine any of its books and other corporate records.

     4.3 Reporting Requirements. Furnish to Agent and each Bank, or cause to be
furnished to Agent and each Bank, the following:

	 	(a)	 	as soon as possible, and in any event within three (3) calendar
days after becoming aware of the occurrence or existence of each Default or
Event of Default hereunder or any material adverse change in the financial
condition of any Loan Party, a written statement of the chief financial officer
of Parent (or in his or her absence, a responsible senior officer of Parent),
setting forth details of such Default, Event of Default or change, and the
action which Parent has taken, or has caused to be taken, or proposes to take,
or to cause to be taken, with respect thereto;
	 
	 	(b)	 	as soon as available, and in any event within one hundred
twenty (120) days after and as of the end of each fiscal year of Parent,
audited Financial Statements of Parent and such other of the Loan Parties as
may be required by the Bank, consolidated, as applicable, including a balance
sheet, income statement, statement of profit and loss and statement of cash
flows, for and as of such fiscal year then ending, with comparative numbers for
the preceding fiscal year, in each case, prepared by the Parent or such other
Person, as applicable, and completed in such detail as Bank shall require, and
certified by the chief financial officer of Parent or of such other Person, as
applicable, as to consistency with prior financial reports and accounting
periods, accuracy and fairness of presentation; and such other comments and
financial details as are usually included in similar reports. Such audited
Financial Statements shall be prepared in accordance with GAAP and shall be
audited by independent certified public accountants of recognized
standing selected by Parent and

7

 

	 	 	 	approved by Bank and shall contain unqualified opinions as to the
fairness of the statements therein contained;
	 
	 	(c)	 	as soon as available, and in any event within forty-five (45)
days after and as of the end of each calendar quarter, including the last such
reporting period of each of Parent’s fiscal years, Financial Statements of
Parent and such of the other Loan Parties as may be required by the Bank,
consolidated, as applicable, for and as of such reporting period, including a
balance sheet, income statement, statement of profit and loss, surplus
reconciliation statement and statement of cash flows for and as of such
reporting period then ending and for and as of that portion of the fiscal year
then ending, with comparative numbers for the same period of the preceding
fiscal year, in each case, certified by the chief financial officer of Parent
and, as applicable, each other Loan Party as to consistency with prior
financial reports and accounting periods, accuracy and fairness of
presentation;
	 
	 	(d)	 	as soon as available, and in any event within forty-five (45)
days after and as of the end of each calendar quarter, agings and reports of
accounts receivable of Borrowers and such of the Loan Parties as may be
required by the Bank, in form and detail satisfactory to Bank;
	 
	 	(e)	 	as soon as available, and in any event within forty-five (45)
days after and as of the end of each calendar quarter, agings and reports of
accounts payable of Borrowers and such of the other Loan Parties as may be
required by the Bank, in form and detail satisfactory to Bank;
	 
	 	(f)	 	as soon as available, upon the Bank’s request, an appraisal of
each Borrower’s Equipment to determine the Forced Sale Value, to
be performed by the Bank or such other party as the Bank shall designate, and
to be performed in such form and detail as the Bank shall reasonably require,
such request to be made no more than once per year and as of such dates as the
Bank shall designate, and at the Borrowers’ expense;
	 
	 	(g)	 	simultaneously with the Financial Statements to be delivered to
Bank pursuant to Sections (b) and (c) above, a Compliance
Certificate and a Borrowing Base Certificate, each dated as of the end of such
quarter or year, as the case may be;
	 
	 	(h)	 	promptly upon receipt thereof, copies of all management
letters and other substantive reports submitted to any Loan Party by
independent certified public accountants in connection with any annual audit
of any such party;
	 
	 	(i)	 	as soon as available and in any event within forty-five (45)
days after and as of the end of each calendar quarter, a report concerning
each Borrower’s quarterly progress billings (without allocations of general
and administrative expenses or overhead) and backlog reports in a form
satisfactory to the Bank;

8

 

	 	(j)	 	promptly upon the filing thereof, and in any event, within ten
(10) days after filing, copies of all registration statements (other than
the exhibits thereto and any registration statements on Form S-8 or its
equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and
all other periodic reports, if any, which Parent shall file with the
Securities and Exchange Commission (or any Governmental Authority
substituted therefor) or any national securities exchange; and
	 
	 	(k)	 	promptly, and in form and detail satisfactory to Bank, such
other information as Bank may request from time to time.

     4.4 Financial Covenants. On a consolidated basis, the Borrowers will maintain all
financial covenants set forth in the Financial Covenants Addendum.

     4.5 Inspections. Permit Agent, through its authorized attorneys, accountants and
representatives, at Borrowers’ cost and expense, to examine each Loan Party’s books, accounts,
records, ledgers, assets and properties of every kind and description, wherever located, at all
reasonable times during normal business hours, upon reasonable prior oral or written notice of
Agent.

     4.6 Further Assurances; Financing Statements. Furnish Agent, at Borrowers’
expense, upon Agent’s request and in form satisfactory to Agent (and execute and deliver or cause
to be executed and delivered), such additional pledges, assignments, mortgages, lien instruments or
other security instruments, consents, acknowledgments, subordinations and financing statements
covering any or all of the Collateral pledged, assigned, mortgaged or encumbered pursuant to any
Loan Document, of every nature and description, whether now owned or hereafter acquired by any
Borrower or any other Person providing such Collateral, together with such other documents or
instruments as Agent may require to effectuate more fully the purposes of any Loan Document.

     4.7 Compliance with Leases. Comply with all terms and conditions of any leases
covering any premises or property (real or personal) wherein any of the Collateral is or may be
located, or covering any of the other material personal or real property now or hereafter owned,
leased or otherwise used by any Loan Party in the conduct of its business, and any Governmental
Requirement, except where the failure to so comply could not cause a Material Adverse Effect.

     4.8 Indemnification. Indemnify, defend and save Agent and each Bank harmless from
any and all claims, losses, costs, damages, liabilities, obligations and expenses, including,
without limitation, reasonable attorneys’ fees (whether inside or outside counsel is used),
incurred by Agent or any Bank by reason of any Default or Event of Default, in defending or
protecting the Liens which secure or purport to secure all or any portion of the Indebtedness,
whether existing under any Loan Document or otherwise or the priority thereof, or in enforcing the
obligations of Borrowers or any other Person under or pursuant to any Loan Document, or in the
prosecution or defense of any action or proceeding concerning any matter growing out of or
connected with the Collateral or any Loan Document, INCLUDING ANY CLAIMS, LOSSES, COSTS, DAMAGES,
LIABILITIES, OBLIGATIONS, AND EXPENSES RESULTING FROM BANK’S OWN NEGLIGENCE, except and to
the extent but only to the extent caused by Agent’s or such Bank’s gross negligence or willful
misconduct.

9

 

     4.9 Governmental and Other Approvals. Apply for, obtain and/or maintain in
effect, as applicable, all authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations and registrations (whether with any court, governmental agency,
regulatory authority, securities exchange or otherwise) which are necessary in connection with the
execution, delivery and/or performance by any Loan Party of any Loan Document to which it is a
party.

     4.10 Insurance. Maintain insurance coverage on its physical assets and against other
business risks in such amounts and of such types as are customarily carried by companies similar in
size and nature (including, without limitation, loss of rent and/or business interruption insurance
and boiler and machinery insurance), and in the event of acquisition of additional property, real
or personal, or of the incurrence of additional risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment and present practice would
dictate; and in the case of all policies covering property subject to any Loan Document or property
in which the Agent shall have a Lien of any kind whatsoever, other than those policies protecting
against casualty liabilities to strangers, all such insurance policies shall provide that the loss
payable thereunder shall be payable to Borrowers (or other Person providing Collateral) and Agent,
with mortgagee’s clauses in favor of and satisfactory to Agent for all such policies, and such
policies shall also provide that they may not be canceled or changed without thirty (30) days’
prior written notice to Agent. Upon the request of Agent, all of said policies, or copies thereof,
including all endorsements thereon and those required hereunder, shall be deposited with Agent.

     4.11 Compliance with ERISA. In the event that any Loan Party or any of its
Subsidiaries maintain(s) or establish(es) a Pension Plan subject to ERISA, (a) comply in all
material respects with all requirements imposed by ERISA as presently in effect or hereafter
promulgated, including, but not limited to, the minimum funding requirements thereof; (b) promptly
notify Bank upon the occurrence of a “reportable event” or “prohibited transaction” within the
meaning of ERISA, or that the PBGC or any Loan Party has instituted or will institute proceedings
to terminate any Pension Plan, together with a copy of any proposed notice of such event which may
be required to be filed with the PBGC; and (c) furnish to Bank (or cause the plan administrator to
furnish Bank) a copy of the annual return (including all schedules and attachments) for each
Pension Plan covered by ERISA, and filed with the Internal Revenue Service by any Loan Party not
later than thirty (30) days after such report has been so filed.

     4.12 Environmental Covenants.

	 	(a)	 	Comply with all applicable Environmental Laws, and maintain all
permits, licenses and approvals required under applicable Environmental Laws,
where the failure to do so could have a Material Adverse Effect.
	 
	 	(b)	 	Promptly notify Agent, in writing, as soon as any Borrower
becomes aware of any condition or circumstance which makes any of the
environmental representations or warranties set forth in this Agreement
incomplete, incorrect or inaccurate in any material respect as of any date; and
promptly provide to Agent, immediately upon receipt thereof, copies of any
material correspondence, notice, pleading, citation, indictment, complaint,
order, decree, or other document from any source asserting or alleging a
violation of any Environmental Laws by any Loan Party, or of

10

 

	 	 	 	any circumstance or condition which requires or may require, a
financial contribution by any Loan Party, or a clean-up, removal, remedial
action or other response by or on behalf of any Loan Party, under
applicable Environmental Law(s), or which seeks damages or civil, criminal
or punitive penalties from any Loan Party or any violation or alleged
violation of Environmental
Law(s).
	 
	 	(c)	 	Each Borrower hereby agrees to indemnify, defend and hold
Agent and each Bank, and any of Agent’s or such Bank’s past, present and
future officers, directors, shareholders, employees, representatives and
consultants, harmless from any and all claims, losses, damages, suits,
penalties, costs, liabilities, obligations and expenses (including, without
limitation, reasonable legal expenses and attorneys’ fees, whether inside or
outside counsel is used) incurred or arising out of any claim, loss or damage
of any property, injuries to or death of any persons, contamination of or
adverse effects on the environment, or other violation of any applicable
Environmental Law(s), in any case, caused by any Loan Party or in any way
related to any property owned or operated by any Loan Party or due to any acts
of any Loan Party or any of its officers, directors, shareholders, employees,
consultants and/or representatives INCLUDING ANY CLAIMS, LOSSES, DAMAGES,
SUITS, PENALTIES, COSTS, LIABILITIES, OBLIGATIONS OR EXPENSES, RESULTING FROM
BANK’S OWN NEGLIGENCE; provided however, that the foregoing indemnification
shall not be applicable, and Borrowers shall not be liable for any such
claims, losses, damages, suits, penalties, costs, liabilities, obligations or
expenses, to the extent (but only to the extent) the same arise or result from
any gross negligence or willful misconduct of Agent or any Bank or any of
their agents or employees.

     4.13 Intellectual Property. Borrowers and each Loan Party will conduct their
businesses and affairs without infringement of or interference with any intellectual property of
any other Person.

SECTION 5. NEGATIVE COVENANTS

     Borrowers covenant and agree that, so long as any Bank is committed to make any Loan or issue
any Letter of Credit under this Agreement and until all instruments and agreements evidencing any
Loan which is payable on demand or which conditions advances upon the Banks’ discretion are fully
discharged and terminated, and thereafter, so long as any Indebtedness remains outstanding, it
will not, and it will not allow any Loan Party within its control or under common control to,
without the prior written consent of the Agent and Banks:

     5.1 Capital Structure, Business Objects or Purpose. Purchase, acquire or redeem any
of its equity ownership interests, or enter into any reorganization or recapitalization or
reclassify its equity ownership interests, or make any material change in its capital structure or
general business objects or purpose other than the sale of the assets, business and/or membership
interest in Steel City.

11

 

     5.2 Mergers or Dispositions. Change its name unless thirty (30) days prior
written notice shall have been given by Borrowers to Bank, change the name under which it is doing
business if such name shall be a name other than those set forth on Schedule 5.2, enter into any
merger or consolidation, whether or not the surviving entity thereunder, or sell, lease, transfer,
relocate or dispose of all, substantially all, or any material part of its assets (whether in a
single transaction or in a series of transactions); provided however, the foregoing shall not apply
to Steel City or Oakhurst.

     5.3 Guaranties. Guarantee, endorse, or otherwise become secondarily liable for or
upon the obligations or Debt of others (whether directly or indirectly), except:

	 	(a)	 	guaranties in favor of and satisfactory to Agent;
	 
	 	(b)	 	endorsements for deposit or collection in the ordinary course
of business; and
	 
	 	(c)	 	any guarantee of Steel City or Oakhurst.

     5.4 Debt. Become or remain obligated for any Debt, except:

	 	(a)	 	Indebtedness and other Debt from time to time outstanding and
owing to Bank;
	 
	 	(b)	 	current unsecured trade, utility or non-extraordinary accounts
payable arising in the ordinary course of business;
	 
	 	(c)	 	Debt subordinated to the prior payment in full of the
Indebtedness upon terms and conditions approved in writing by Bank;
	 
	 	(d)	 	Debt secured by Permitted Encumbrances;
	 
	 	(e)	 	Debt (including, without limitation, Capitalized Lease
Obligations) outstanding as of the date hereof more particularly described in
Schedule 5.4 attached hereto;
	 
	 	(f)	 	contingent Debt to the extent permitted by Section 5.3 of this
Agreement; and
	 
	 	(g)	 	Debt owing by Steel City and/or Oakhurst.

     5.5 Encumbrances. Create, incur, assume or suffer to exist any Lien upon, or create,
suffer or permit to exist any Lien upon any of its property or assets, whether now owned or
hereafter acquired, except for Permitted Encumbrances; provided however, the foregoing shall not
apply to Steel City or Oakhurst.

     5.6 Acquisitions. Purchase or otherwise acquire or become obligated for the purchase
of all or substantially all of the assets or business interests of any Person or any shares of
stock or other ownership interests of any Person or in any other manner effectuate or attempt to
effectuate an expansion of present business by acquisition, in any such instance in an amount
greater than five million dollars ($5,000,000) without the prior written consent of the Bank.

12

 

     5.7 Dividends. Declare or pay dividends on, or make any other Distribution
(whether by reduction of capital or otherwise) in respect of any shares of Parent’s capital stock
or other ownership interests, except (a) dividends payable solely in stock; and (b) the redemption,
repurchase or acquisition of any shares of Parent’s capital stock payable upon an employee’s
termination pursuant to its employee stock option, repurchase, or similar plan; provided, however,
that after giving effect to such redemption, repurchase or acquisition, Borrowers shall be in full
compliance with the terms of this Agreement.

     5.8 Investments. Make or allow to remain outstanding any investment (whether such
investment shall be of the character of investment in shares of stock, evidences of indebtedness or
other securities or otherwise) in, or any loans, advances or extensions of credit to, any Person,
other than:

	 	(a)	 	each Borrower’s current ownership interests in those
Subsidiaries of such Borrower identified on Schedule 3.19 attached
hereto;
	 
	 	(b)	 	any investment in direct obligations of the United States of
America or any agency thereof, or in direct obligations of any state of the
United States of America or any political subdivision thereof or any investment
in any securities that are exempt from federal taxation or in certificates of
deposit issued by commercial banks with capital, surplus and undivided profits
in excess of one hundred million ($100,000,000), maintained consistent with
Borrower’s or such Subsidiary’s business practices prior to the date hereof;
provided, that no such investment shall mature more than one year after the
date when made or the issuance thereof;
	 
	 	(c)	 	the purchase of assets in an aggregate amount not to exceed one
hundred thousand dollars ($100,000) after the date hereof; and
	 
	 	(d)	 	loans advances or extensions of credit to any Person in an
amount in excess of $250,000; provided no Borrower shall make any loans,
advances or extensions of credit to either Steel City or Oakhurst.

     5.9 Transactions with Affiliates. Enter into any transaction with any of their
stockholders, officers, employees, partners or any of their Affiliates, except subject to the terms
hereof, transactions in the ordinary course of business and on terms not less favorable than would
be usual and customary in similar transactions between Persons dealing at arm’s length.

     5.10 Defaults on Other Obligations. Fail to perform, observe or comply duly with any
covenant, agreement or other obligation to be performed, observed or complied with by any Loan
Party, subject to any grace periods provided therein, which failure could have a Material Adverse
Effect.

     5.11 Prepayment of Debt. Prepay any Debt (or take any actions which impose an
obligation to prepay), except, subject to the terms hereof or thereof, Indebtedness.

     5.12 Pension Plans. Except in compliance with this Agreement, enter into, maintain,
or make contribution to, directly or indirectly, any Pension Plan that is subject to ERISA.

13

 

     5.13 Subordinate Indebtedness. Subordinate any indebtedness due to it from
any Person to indebtedness of other creditors of such Person.

     5.14 No Further Negative Pledges. Enter into or become subject to any agreement
(other than this Agreement or the Loan Documents) (a) prohibiting the guaranteeing by any Loan
Party of any obligations, (b) prohibiting the creation or assumption of any Lien upon the
properties or assets of any Loan Party, whether now owned or hereafter acquired or (c) requiring an
obligation to become secured (or further secured) if another obligation is secured or further
secured; provided however, the foregoing shall not apply to Steel City or Oakhurst.

     5.15 No License Restrictions. Permit any restriction in any license or other
agreement that restricts any Borrower or any other Loan Party from granting a Lien to Agent upon
any of such Borrower’s or such other Loan Party’s rights under such license or agreement; provided
however, the foregoing shall not apply to Steel City or Oakhurst.

     5.16 Subordinated Debt. Make any direct or indirect payment of all or any part of any
Subordinated Debt or take any other action or omit to take any other action in respect of any
Subordinated Debt. Neither Borrowers nor any Loan Party shall repurchase, redeem or retire in any
way any instrument evidencing Subordinated Debt prior to maturity or enter into any agreement (oral
or written) which could in any way be construed to amend, modify, alter or terminate any one or
more instruments or agreements evidencing, governing, guaranteeing or otherwise relating to
Subordinated Debt.

SECTION 6. EVENTS OF DEFAULT

     6.1 Events of Default. The occurrence or existence of any of the
following conditions or events shall constitute an “Event of Default” hereunder:

	 	(a)	 	upon non-payment of any principal, interest or other sums due
under the terms of this Agreement or under any Note(s), or under any other
instrument or evidence of Indebtedness, whether under this Agreement, any
Note(s), or otherwise, in any case, when due in accordance with the terms
hereof or thereof;
	 
	 	(b)	 	default in the observance or performance of any of the other
conditions, covenants or agreements of Borrowers set forth in this Agreement;
	 
	 	(c)	 	any representation or warranty made by any Loan Party in any
Loan Document shall be untrue or incorrect in any material respect;
	 
	 	(d)	 	any default or event of default, as the case may be, in the
observance or performance of any of the conditions, covenants or agreements of
any Loan Party set forth in any Loan Document and continuation thereof beyond
any applicable period of grace or cure provided with respect thereto;
	 
	 	(e)	 	any default by any Loan Party, in the payment of any Debt
(other than the Indebtedness), or in the observance or performance of any
conditions, covenants or agreements related or given with respect thereto and,
in each

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	 	 	 	such case, continuation thereof beyond any applicable grace or cure
period;
	 
	 	(f)	 	the rendering of one or more judgments or decrees for the
payment of money in an aggregate amount in excess of one hundred thousand
($100,000), against any Loan Party, and such judgment(s) or decree(s) shall
remain unvacated, unbonded or unstayed, by appeal or otherwise, for a period of
twenty (20) consecutive days after the date of entry;
	 
	 	(g)	 	if there shall be any change in the management, ownership or
control of Parent, which, in Agent’s sole judgment, shall have a material
adverse effect upon the future prospects for the successful operation by
Borrowers, of their businesses as conducted before such change, or their
ability to pay and perform their liabilities and obligations under this
Agreement, the Indebtedness, or the Loan Documents;
	 
	 	(h)	 	the failure by any Loan Party, to meet the minimum funding
requirements under ERISA with respect to any Pension Plan established or
maintained by it; the occurrence of any “reportable event”, as defined in
ERISA, which could constitute grounds for termination by the PBGC of any
Pension Plan or for the appointment by the appropriate United States District
Court of a trustee to administer such Pension Plan, and such reportable event
is not corrected and such determination is not revoked within thirty (30) days
after notice thereof has been given to the plan administrator or any Loan
Party, as the case may be; or the institution of any proceedings by the PBGC to
terminate any such Pension Plan or to appoint a trustee by the appropriate
United States District Court to administer any such Pension Plan;
	 
	 	(i)	 	if any Loan Party, becomes insolvent or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver, liquidator, conservator or other custodian for any Loan Party, or a
substantial part of its property, or makes a general assignment for the
benefit of creditors; or in the absence of such application, consent or
acquiescence, a trustee, receiver, liquidator, conservator or other custodian
is appointed for any Loan Party, or for a substantial part of its property,
and the same is not discharged within thirty (30) days; or any bankruptcy,
reorganization, debt arrangement, or other proceedings under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding, is instituted by
or against any Loan Party, and, if instituted against any Loan Party, the same
is consented to or acquiesced in by any such Loan Party or otherwise remains
undismissed for thirty (30) days; or any warrant of attachment is issued
against any substantial part of the property of any Loan Party, which is not
released within thirty (30) days of service thereof;
	 
	 	(j)	 	if any Loan Document shall be terminated, revoked, or
otherwise rendered void or unenforceable, in any case, without Agent’s prior
written consent;

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	 	(k)	 	Borrowers shall fail to allow the Agent to conduct an appraisal
of the Equipment as required herein by Section 4.3(f);
	 
	 	(1)	 	Texas Sterling, as borrower, or Parent, Sterling General or
SHH, as guarantor, defaults in making timely payment of any amount owing in
connection with the First Lien Real Estate Loan and/or Second Lien Real Estate
Loan; or
	 
	 	(m)	 	if Agent deems itself insecure, believing in good faith that
the prospect of payment or performance of any of the Indebtedness is impaired.

     6.2 Remedies Upon Event of Default. Upon the occurrence and at any time during the
existence or continuance of any Event of Default, but without impairing or otherwise limiting the
Agent’s right to demand payment of all or any portion of the Indebtedness which is payable on
demand, at Agent’s option, Agent may give notice to Borrowers declaring all or any portion of the
Indebtedness remaining unpaid and outstanding, whether under the Notes or otherwise, to be due and
payable in full without presentation, demand, protest, notice of dishonor, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are hereby expressly
waived, whereupon all such Indebtedness shall immediately become due and payable. Furthermore, upon
the occurrence of a Default or Event of Default and at any time during the existence or continuance
of any Default or Event of Default, but without impairing or otherwise limiting the right of Banks,
if reserved under any Loan Document, to make or withhold financial accommodations at its
discretion, to the extent not yet disbursed, any commitment by Banks to make any further loans to
Borrowers or issue any further Letters of Credit for Borrowers’ account under this Agreement shall
automatically terminate; provided, should such Default or Event of Default be cured to Agent and
Banks’ satisfaction, Banks may, but shall be under no obligation to, reinstate any such commitment
by written notice to Borrowers. Notwithstanding the foregoing, in the case of an Event of Default
under Section 6.1(i), and notwithstanding the lack of any notice, demand or declaration by
Agent, the entire Indebtedness remaining unpaid and outstanding shall become automatically due and
payable in full, and any commitment by Banks to make any further loans to Borrowers or issue any
further Letters of Credit for Borrowers’ account shall be automatically and immediately terminated,
without any requirement of notice or demand by Agent or any Bank upon Borrowers, each of which are
hereby expressly waived by Borrowers. The foregoing rights and remedies are in addition to any
other rights, remedies and privileges Agent and/or Banks may otherwise have or which may be
available to it, whether under this Agreement, any other Loan Document, by law, or otherwise.

     6.3 Setoff. In addition to any other rights or remedies of Agent under any Loan
Document, by law or otherwise, upon the occurrence and during the continuance or existence of any
Event of Default, Agent may, at any time and from time to time, without notice to Borrowers (any
requirements for such notice being expressly waived by Borrowers), setoff and apply against any or
all of the Indebtedness (whether or not then due), any or all deposits (general or special, time or
demand, provisional or final) at any time held by any Borrower and other indebtedness at any time
owing by Agent or any Bank to or for the credit or for the account of any Borrower, and any
property of any Borrower, from time to time in possession or control of Agent or any Bank,
irrespective of whether or not Agent shall have made any demand hereunder or for payment of the
Indebtedness and although such obligations may be contingent or unmatured, and regardless of
whether any Collateral then held by Agent or any Bank is

16

 

adequate to cover the Indebtedness. The rights of Agent and Banks under this Section are in
addition to any other rights and remedies (including, without limitation, other rights of setoff)
which Agent and Banks may otherwise have. Each Borrower hereby grants Agent and Banks a Lien on
and security interest in all such deposits, indebtedness and other property as additional
collateral for the payment and performance of the Indebtedness.

     6.4 Waiver of Certain Laws. To the extent permitted by applicable law, each
Borrower hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish,
the benefit and advantage of any valuation, stay, appraisement, extension or redemption laws now
existing or which may hereafter exist, which, but for this provision, might be applicable to any
sale made under the judgment, order or decree of any court, on any claim for interest on the Notes,
or to any security interest or other Lien contemplated by or granted under or in connection with
this Agreement or the Indebtedness.

     6.5 Waiver of Defaults. No Default or Event of Default shall be waived by Agent
except in a written instrument specifying the scope and terms of such waiver and signed by an
authorized officer of Agent, and such waiver shall be effective only for the specific time(s) and
purpose(s) given. No single or partial exercise of any right, power or privilege hereunder, nor
any delay in the exercise thereof, shall preclude other or further exercise of Agent’s or any
Bank’s rights. No waiver of any Default or Event of Default shall extend to any other or further
Default or Event of Default. No forbearance on the part of Agent or any Bank in enforcing any of
Agent or Bank’s rights or remedies under any Loan Document shall constitute a waiver of any of its
rights or remedies. Each Borrower expressly agrees that this Section may not be waived or modified
by Agent or any Bank by course of performance, estoppel or otherwise.

     6.6 Receiver. Agent, in any action or suit to foreclose upon any of the Collateral,
shall be entitled, without notice or consent, and completely without regard to the adequacy of any
security for the Indebtedness, to the appointment of a receiver of the business and premises in
question, and of the rents and profits derived therefrom. This appointment shall be in addition to
any other rights, relief or remedies afforded Agent. Such receiver, in addition to any other
rights to which he shall be entitled, shall be authorized to sell, foreclose or complete
foreclosure on Collateral for the benefit of Agent, pursuant to provisions of applicable law.

     6.7 Discretionary Credit and Credit Payable Upon Demand. To the extent that any of the
Indebtedness shall, at anytime, be payable upon demand, nothing contained in this Agreement, or
any other Loan Document, shall be construed to prevent Agent from making demand, without notice and
with or without reason, for immediate payment of all or any part of such Indebtedness at any time
or times, whether or not a Default or Event of Default has occurred or exists. In the event that
such demand is made upon any portion of the Indebtedness, the Agent, at its election, may terminate
any commitment by Banks to make any further loans to Borrowers or issue any further Letters of
Credit for Borrower’s account under this Agreement or otherwise. Furthermore, to the extent any
Loan Document authorizes the Agent, at its discretion, to make or to decline to make financial
accommodations to the Borrowers, nothing contained in this Agreement or any other Loan Document
shall be construed to limit or impair such discretion or to commit or otherwise obligate the Agent
to make any such financial accommodation.

     6.8 Application of Proceeds of Collateral. Notwithstanding anything to the contrary
set forth in any Loan Document, after an Event of Default, the proceeds of any of the Collateral,
together with any offsets, voluntary payments, and any other sums received or collected in

17

 

respect of the Indebtedness, may be applied in such order and manner as determined by Agent
in its sole and absolute discretion.

SECTION 7. ADMINISTRATIVE AGENT

     Section 7.1 Appointment, Powers, and Immunities. Each Bank hereby irrevocably appoints
and authorizes Agent to act as its agent under this Agreement and the other Loan Documents with
such powers and discretion as are specifically delegated to Agent by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably incidental thereto.
Agent (which term as used in this sentence and in Section 7.5 and the first sentence of Section 7.6
hereof shall include its Affiliates and its own and its Affiliates’ officers, directors, employees,
and agents): shall not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Bank; shall not be responsible to the
Banks for any recital, statement, representation, or warranty (whether written or oral) made in or
in connection with any Loan Document or any certificate or other document referred to or provided
for in, or received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document, or any other
document referred to or provided for therein or for any failure by any Loan Party or any other
Person to perform any of its obligations thereunder; shall not be responsible for or have any duty
to ascertain, inquire into, or verify the performance or observance of any covenants or agreements
by any Loan Party or the satisfaction of any condition or to inspect the property (including the
books and records) of any Loan Party or any of its Subsidiaries or Affiliates; shall not be
required to initiate or conduct any litigation or collection proceedings under any Loan Document;
and shall not be responsible for any action taken or omitted to be taken by it under or in
connection with any Loan Document, except for its own gross negligence or willful misconduct. Agent
may employ agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with reasonable care.

     Section 7.2 Reliance by Agent. Agent shall be entitled to rely upon any certification,
notice, instrument, writing, or other communication (including, without limitation, any thereof by
telephone or telecopy) believed by it to be genuine and correct and to have been signed, sent or
made by or on behalf of the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Loan Party), independent accountants, and other experts selected
by Agent. Agent may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until Agent receives and accepts an Assignment and Acceptance executed in
accordance with Section 8.8 hereof. As to any matters not expressly provided for by this Agreement,
Agent shall not be required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Banks, and such instructions shall be binding on all of the
Banks; provided, however, that Agent shall not be required to take any action that exposes
Agent to personal liability or that is contrary to any Loan Document or applicable Law or unless it
shall first be indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking any such action.

     Section 7.3 Defaults. Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default unless Agent has received written notice from a Bank or
Borrowers specifying such Default or Event of Default and stating that such notice is a “Notice

18

 

of Default.” In the event that Agent receives such a notice of the occurrence of an Event of
Default, Agent shall give prompt notice thereof to the Banks. Agent shall (subject to Section 7.11
hereof) take such action with respect to such Event of Default as shall reasonably be directed by
the Majority Banks, provided that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable in the best interest of
the Banks.

     Section 7.4 Rights as Bank. With respect to its Percentage Share of the Revolving
Credit Maximum Amount and the Loans made by it, Agent (and any successor acting as Agent) in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as Agent, and the term “Bank” or “Banks” shall,
unless the context otherwise indicates, include Agent in its individual capacity. Agent (and any
successor acting as Agent) and its Affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, make investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any Loan Party or any of its
Subsidiaries or Affiliates as if it were not acting as Agent, and Agent (and any successor acting
as Agent) and its Affiliates may accept fees and other consideration from any Loan Party or any of
its Subsidiaries or Affiliates for services in connection with this Agreement or otherwise without
having to account for the same to the Banks.

     Section 7.5 Indemnification. The Banks agree to indemnify Agent (to the extent not
reimbursed under Section 8.5 hereof, but without limiting the obligations of Borrowers under such
section) ratably in accordance with their respective Percentage Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys’ fees), or disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Agent (including by any Bank) in any way relating to
or arising out of any Loan Document or the transactions contemplated thereby or any action taken
or omitted by Agent under any Loan Document (INCLUDING ANY OF THE FOREGOING ARISING FROM THE
NEGLIGENCE OF AGENT); provided that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the Person to be
indemnified. Without limitation of the foregoing, each Bank agrees to reimburse Agent promptly
upon demand for its ratable share of any costs or expenses payable by Borrowers under Section 8.5,
to the extent that Agent is not promptly reimbursed for such costs and expenses by Borrowers. The
agreements contained in this section shall survive payment in full of the Loans and all other
amounts payable under this Agreement.

     Section 7.6 Non-Reliance on Agent and Other Banks. Each Bank agrees that it has,
independently and without reliance on Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the Borrowers and its
Subsidiaries and decision to enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in taking or not
taking action under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Banks by Agent hereunder, Agent shall not
have any duty or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of any Loan Party or any of its
Subsidiaries or Affiliates that may come into the possession of Agent or any of its Affiliates.

19

 

     Section 7.7 Rights as Bank. In its capacity as a Bank, Agent shall have the same
rights and obligations as any Bank and may exercise such rights as though it were not Agent. Agent
may accept deposits from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with any Loan Party or their Affiliates, all as if it were not Agent
hereunder and without any duty to account therefor to any other Bank.

     Section 7.8 Sharing of Set-Offs and Other Payments. Each Bank Party agrees that if it
shall, whether through the exercise of rights under Security Documents or rights of banker’s lien,
set off, or counterclaim against Borrowers or otherwise, obtain payment of a portion of the
aggregate Indebtedness owed to it which, taking into account all distributions made by Agent under
Section 3.1, causes such Bank Party to have received more than it would have received had such
payment been received by Agent and distributed pursuant to the Loan Terms, Conditions and
Procedures Addendum, then it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Indebtedness as necessary to cause all Bank Parties to share
all payments as provided for in the Loan Terms, Conditions and Procedures Addendum, and such other
adjustments shall be made from time to time as shall be equitable to ensure that Agent and all Bank
Parties share all payments of Indebtedness as provided in the Loan Terms, Conditions and Procedures
Addendum; provided, however, that nothing herein contained shall in any way affect the right of any
Bank Party to obtain payment (whether by exercise of rights of banker’s lien, set-off or
counterclaim or otherwise) of indebtedness other than the Indebtedness. Each Borrower expressly
consents to the foregoing arrangements and agrees that any holder of any such interest or other
participation in the Indebtedness, whether or not acquired pursuant to the foregoing arrangements,
may to the fullest extent permitted by law exercise any and all rights of banker’s lien, set-off,
or counterclaim as fully as if such holder were a holder of the Indebtedness in the amount of such
interest or other participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which received the same, the
purchase provided for in this section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to the order of a
tribunal order to be paid on account of the possession of such funds prior to such recovery.

     Section 7.9 Investments. Whenever Agent in good faith determines that it is uncertain
about how to distribute to Bank Parties any funds which it has received, or whenever Agent in good
faith determines that there is any dispute among Bank Parties about how such funds should be
distributed, Agent may choose to defer distribution of the funds which are the subject of such
uncertainty or dispute. If Agent in good faith believes that the uncertainty or dispute will not
be promptly resolved, or if Agent is otherwise required to invest funds pending distribution to
Bank Parties, Agent shall invest such funds pending distribution; all interest on any such
investment shall be distributed upon the distribution of such Investment and in the same
proportion and to the same Persons as such investment. All moneys received by Agent for
distribution to Bank Parties (other than to the Person who is Agent in its separate capacity as a
Bank Party) shall be held by Agent pending such distribution solely as Agent for such Bank
Parties, and Agent shall have no equitable title to any portion thereof.

     Section 7.10 Benefit of Article 7. The provisions of this Article are intended solely
for the benefit of Bank Parties, and no Loan Party shall be entitled to rely on any such provision
or assert any such provision in a claim or defense against any Bank. Bank Parties may waive or

20

 

amend such provisions as they desire without any notice to or consent of Borrowers or any
Loan Party.

     Section 7.11 Resignation. Agent may resign at any time by giving written notice
thereof to Banks and Borrowers. Each such notice shall set forth the date of such resignation.
Upon any such resignation, Majority Banks shall have the right to appoint a successor Agent. A
successor must be appointed for any retiring Agent, and such Agent’s resignation shall become
effective when such successor accepts such appointment. If, within thirty days after the date of
the retiring Agent’s resignation, no successor Agent has been appointed and has accepted such
appointment, then the retiring Agent may appoint a successor Agent, which shall be a commercial
bank organized or licensed to conduct a banking or trust business under the laws of the United
States of America or of any state thereof. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any retiring Agent’s
resignation hereunder the provisions of this Article 7 shall continue to inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents.

SECTION 8. MISCELLANEOUS

     8.1 Accounting Principles. Except to the extent expressly stated to the contrary
herein, where the character or amount of any asset or liability or item of income or expense is
required to be determined, or any consolidation or other accounting computation is required to be
made for purposes of this Agreement, it shall be done in accordance with GAAP.

     8.2 Taxes and Fees. Unless otherwise prohibited by applicable law, should any tax
(other than a tax based upon the net income of Bank) or recording or filing fee become payable in
respect of any Loan Document, any of the Collateral, any of the Indebtedness or any amendment,
modification or supplement hereof or thereof, Borrowers agree to pay such taxes (or reimburse Bank
therefor upon demand for reimbursement), together with any interest or penalties thereon, and
agrees to hold Bank harmless with respect thereto.

     8.3 Governing Law. Each Loan Document shall be deemed to have been delivered in the
State of Texas, and shall be governed by and construed and enforced in accordance with the laws of
the State of Texas, except to the extent that the Uniform Commercial Code, other personal property
law or real property law of another jurisdiction where Collateral is located is applicable, and
except to the extent expressed to the contrary in any Loan Document. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions of
this Agreement.

     8.4 Intentionally Omitted.

     8.5 Costs and Expenses. Borrowers shall pay Bank, on demand, all costs and
expenses, including, without limitation, reasonable attorneys’ fees and legal expenses (whether
inside or outside counsel is used), incurred by Bank in perfecting, revising, protecting or
enforcing any of its rights or remedies against any Loan Party or any Collateral, or otherwise
incurred by Bank in connection with any Default or Event of Default or the enforcement of the

21

 

Loan Documents or the Indebtedness. Following Bank’s demand upon Borrowers for the payment
of any such costs and expenses, and until the same are paid in full, the unpaid amount of such
costs and expenses shall constitute Indebtedness and shall bear interest at the Default Rate.

     8.6 Notices. All notices and other communications provided for in any Loan Document
(unless otherwise expressly stipulated therein) or contemplated thereby, given thereunder or
required by law to be given, shall be in writing (unless expressly provided to the contrary). If
personally delivered, such notices shall be effective when delivered, and in the case of mailing or
delivery by overnight courier, such notices shall be effective when placed in an envelope and
deposited at a post office or official depository under the exclusive care and custody of the
United States Postal Service or delivered to an overnight courier, postage prepaid, in each case
addressed to the parties as set forth on the signature page of this Agreement, or to such other
address as a party shall have designated to the other in writing in accordance with this Section.
In the case of mailing, the mailing shall be by certified or first class mail. The giving of at
least five (5) days’ notice before Bank shall take any action described in any notice shall
conclusively be deemed reasonable for all purposes; provided, that this shall not be deemed to
require Bank to give such five (5) days’ notice, or any notice, if not specifically required to do
so in this Agreement.

     8.7 Further Action. Borrowers, from time to time, upon written request of Bank, will
promptly make, execute, acknowledge and deliver, or cause to be made, executed, acknowledged and
delivered, all such further and additional instruments, and promptly take all such further action
as may be reasonably required to carry out the intent and purpose of the Loan Documents, and to
provide for the Loans thereunder and payment of the Notes, according to the intent and purpose
therein expressed.

     8.8 Assignments and Participations.

     (a) Each Bank may assign to one or more Eligible Transferees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all or a
portion of its Loans, its Notes, and its Percentage Share of the Revolving Credit Maximum
Amount); provided, however, that

     (i) each such assignment shall be to an Eligible Transferee;

     (ii) except in the case of an assignment to another Bank or an assignment of
all of a Bank’s rights and obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to $1,000,000 or an integral
multiple of $1,000,000 in excess thereof;

     (iii) each such assignment by a Bank shall be of a constant, and not varying,
percentage of all of its rights and obligations under the Loan Documents; and

     (iv) the parties to such assignment shall execute and deliver to Agent for its
acceptance an Assignment and Acceptance, together with any Note subject to such
assignment and a processing fee of $3,500.

22

 

Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such assignment, have the
obligations, rights, and benefits of a Bank hereunder and the assigning Bank shall, to the
extent of such assignment, relinquish its rights and be released from its obligations under
this Agreement. Upon the consummation of any assignment pursuant to this section, the
assignor, Agent and Borrowers shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not incorporated under
the Laws of the United States of America or a state thereof, it shall deliver to Borrowers
and Agent certification as to exemption from deduction or withholding of Taxes.

     (b) Agent shall maintain at its address shown on the signature page to this Agreement a
copy of each Assignment and Acceptance delivered to and accepted by it and a register for
the recordation of the names and addresses of the Banks and their Percentage Share of the
Revolving Credit Maximum Amount of, and principal amount of the Loans owing to, each Bank
from time to time (the “Register”). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrowers, Agent and the Banks may
treat each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by Borrowers or
any Bank at any reasonable time and from time to time upon reasonable prior notice.

     (c) Upon its receipt of an Assignment and Acceptance executed by the parties thereto,
together with any Note subject to such assignment and payment of the processing fee, Agent
shall, if such Assignment and Acceptance has been completed, accept such Assignment and
Acceptance, record the information contained therein in the Register and give prompt notice
thereof to the parties thereto.

     (d) Each Bank may sell participations to one or more Persons in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Revolving
Credit Maximum Amount and its Loans); provided, however, that such Bank’s
obligations under this Agreement shall remain unchanged, such Bank shall remain solely
responsible to the other parties hereto for the performance of such obligations, the
participant shall be entitled to the right of setoff contained in Section 6.3, and Borrowers
shall continue to deal solely and directly with such Bank in connection with such Bank’s
rights and obligations under this Agreement, and such Bank shall retain the sole right to
enforce the obligations of Borrowers relating to its Loans and its Note and to approve any
amendment, modification, or waiver of any provision of this Agreement (other than
amendments, modifications, or waivers decreasing the amount of principal of or the rate at
which interest is payable on such Loans or Note, extending any scheduled principal payment
date or date fixed for the payment of interest on such Loans or Note, or extending its
Revolving Credit Maximum Amount).

     (e) Notwithstanding any other provision set forth in this Agreement, any Bank may at
any time assign and pledge all or any portion of its Loans and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release the assigning Bank
from its obligations hereunder.

23

 

     (f) Any Bank may furnish any information concerning Borrowers or any of its
Subsidiaries in the possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants), provided that such assignee or
participant is legally obligated to keep in confidence any such information that is not
public.

     8.9 Indulgence. No delay or failure of Bank in exercising any right, power or
privilege hereunder or under any of the Loan Documents shall affect such right, power or privilege,
nor shall any single or partial exercise thereof preclude any further exercise thereof, nor the
exercise of any other right, power or privilege available to Bank. The rights and remedies of
Bank hereunder are cumulative and are not exclusive of any rights or remedies of Bank.

     8.10 Amendment and Waiver.

     (a) No failure or delay (whether by course of conduct or otherwise) by any Bank in
exercising any right, power or remedy which such Bank Party may have under any of the Loan
Documents shall operate as a waiver thereof or of any other right, power or remedy, nor
shall any single or partial exercise by any Bank Party of any such right, power or remedy
preclude any other or further exercise thereof or of any other right, power or remedy. No
waiver of any provision of any Loan Document and no consent to any departure therefrom shall
ever be effective unless it is in writing and signed as provided below in this section, and
then such waiver or consent shall be effective only in the specific instances and for the
purposes for which given and to the extent specified in such writing. No notice to or demand
on any Loan Party shall in any case of itself entitle any Loan Party to any other or further
notice or demand in similar or other circumstances. This Agreement and the other Loan
Documents set forth the entire understanding between the parties hereto with respect to the
transactions contemplated herein and therein and supersede all prior discussions and
understandings with respect to the subject matter hereof and thereof, and no waiver,
consent, release, modification or amendment of or supplement to this Agreement or the other
Loan Documents shall be valid or effective against any party hereto unless the same is in
writing and signed by if such parties are Borrowers, by Borrowers, if such party is Agent,
by such party, and if such party is a Bank, by such Bank or by Agent on behalf of Banks with
the written consent of Majority Banks. Notwithstanding the foregoing or anything to the
contrary herein, Agent shall not, without the prior consent of each individual Bank, execute
and deliver on behalf of such Bank any waiver or amendment which would: waive any of the
conditions specified in Section 4 of the Loan Terms, Conditions and Procedures Addendum,
increase the maximum amount which such Bank is committed hereunder to lend, reduce any fees
payable to such Bank hereunder, or the principal of, or interest on, such Bank’s Notes,
postpone any date fixed for any payment of any such fees, principal or interest, amend the
definition herein of “Majority Banks” or otherwise change the aggregate amount of Percentage
Shares which is required for Agent, Banks or any of them to take any particular action under
the Loan Documents, release any Borrower from its obligation to pay such Bank’s Note or
amend this Section 8.10(a).

     (b) Acknowledgments and Admissions. Each Borrower hereby represents, warrants,
acknowledges and admits that it has been advised by counsel in the negotiation,

24

 

execution and delivery of the Loan Documents to which it is a party, it has made an
independent decision to enter into this Agreement and the other Loan Documents to which it
is a party, without reliance on any representation, warranty, covenant or undertaking by
Agent or any Bank, whether written, oral or implicit, other than as expressly set out in
this Agreement or in another Loan Document delivered on or after the date hereof, there are
no representations, warranties, covenants, undertakings or agreements by any Bank as to the
Loan Documents except as expressly set out in this Agreement or in another Loan Document
delivered on or after the date hereof, no Bank has any fiduciary obligation toward any Loan
Party with respect to any Loan Document or the transactions contemplated thereby, the
relationship pursuant to the Loan Documents between Borrowers and the other Loan Parties, on
one hand, and each Bank, on the other hand, is and shall be solely that of debtor and
creditor, respectively, no partnership or joint venture exists with respect to the Loan
Documents between any Loan Party and any Bank, Agent is not Borrowers’ agent, but agent for
Banks, should an Event of Default or Default occur or exist, each Bank will determine in its
sole discretion and for its own reasons what remedies and actions it will or will not
exercise or take at that time, without limiting any of the foregoing, no Loan Party is
relying upon any representation or covenant by any Bank, or any representative thereof, and
no such representation or covenant has been made, that any Bank will, at the time of an
Event of Default, or at any other time, waive, negotiate, discuss, or take or refrain from
taking any action permitted under the Loan Documents with respect to any such Event of
Default or any other provision of the Loan Documents, and all Bank Parties have relied upon
the truthfulness of the acknowledgments in this section in deciding to execute and deliver
this Agreement and to become obligated hereunder.

     8.11 Severability. In case any one or more of the obligations of any Loan Party under
any Loan Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining obligations of such Loan Party shall not in any way be
affected or impaired thereby, and such invalidity, illegally or unenforceability in one
jurisdiction shall not affect the validity, legality or enforceability of the obligations of such
Loan Party under any Loan Document in any other jurisdiction.

     8.12 Headings and Construction of Terms. The headings of the various sub-Sections
hereof are for convenience of reference only and shall in no way modify or affect any of the terms
or provisions hereof. Where the context herein requires, the singular number shall include the
plural, and any gender shall include any other gender.

     8.13 Independence of Covenants. Each covenant hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any such covenant, the fact
that it would be permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of any Default or Event of Default.

     8.14 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of any Loan Party made in any Loan Document,
or in any certificate, report, financial statement or other document furnished by or on behalf of
any Loan Party in connection with any Loan Document, shall be deemed to have been relied upon by
Bank, notwithstanding any investigation heretofore or hereafter made by Bank or on Bank’s behalf,
and those covenants and agreements of Borrowers set forth in Sections 4.8 and 4.12

25

 

hereof (together with any other indemnities of Borrowers contained elsewhere in any Loan
Document) shall survive the termination of this Agreement and the repayment in full of the
Indebtedness.

     8.15 Effective Upon Execution. This Agreement shall become effective upon the
execution hereof by Bank and Borrowers, and shall remain effective until the Indebtedness under
this Agreement and each of the Notes and the related Loan Documents shall have been repaid and
discharged in full and no commitment to extend any credit hereunder (whether optional or
obligatory) remains outstanding.

     8.16 Complete Agreement; Conflicts. The Loan Documents contain the entire
agreement of the parties thereto, and none of the parties shall be bound by anything not expressed
in writing. In the event that and to the extent that any of the terms, conditions or provisions
of any of the other Loan Documents are inconsistent with or in conflict with any of the terms,
conditions or provisions of this Agreement, the applicable terms, conditions and provisions of this
Agreement shall govern and control.

     8.17 Exhibits and Addenda. The following Addenda, Exhibits and Schedules are
attached to this Agreement and are incorporated into this Agreement by this reference and made a
part hereof for all purposes:

Addenda:

Defined Terms Addendum

Financial Covenants Addendum

Loan Terms, Conditions and Procedures Addendum

Exhibits:

Exhibit A — Form of Borrowing Base Certificate

Exhibit B — Form of Compliance Certificate

Exhibit C — Form of Request for Advance (Revolving Loan)

Exhibit D — Form of Request for Advance (Third Lien Real Estate Loan)

Schedules:

Schedule 3.14 Employee Benefit Plans

Schedule 3.17 Environmental Disclosures

Schedule 3.19 Equity Ownership 

Schedule 3.20
Intellectual Property

Schedule 5.2 Names

Schedule 5.4 Debt

Schedule 5.5 Liens

     8.18 Separate Loans. Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, to the extent the loan agreement or promissory note which
evidences a specified portion of the Indebtedness (herein referred to as a “Separate Loan”), or
any security agreement, mortgage, deed of trust or other document which specifically secures such
Separate Loan (collectively referred to as the “Separate Loan Documents”), expressly stipulates
that the Separate Loan shall only be secured by specifically identified collateral or that the
collateral described in the Separate Loan Documents shall not secure any

26

 

Indebtedness other than the Separate Loan, the applicable provisions of the Separate Loan
Documents shall control. Furthermore, to the extent any Separate Loan Document expressly
stipulates that a default or event of default under the Loan Documents shall not, unless otherwise
expressly stipulated in a Separate Loan Document, constitute a default or event of default with
respect to the Separate Loan, the applicable provisions of the Separate Loan Documents shall
control.

     8.19 No Novation, Etc.

     (a) To the extent of the commitment outstanding under the Original Credit
Agreement ($17,000,000), nothing contained herein shall be deemed a novation of or a repayment or
new advance of any obligation of the Borrowers hereunder. Only to the extent of the $18,000,000
increase in the commitment over that amount shall there be deemed to be a new advance by the Bank
to the Borrowers under this Agreement. The Indebtedness owing under the Original Credit
Agreement is renewed, rearranged, extended and carried forward by this Agreement and all of the
liens and security interests securing the “Indebtedness” as defined in the Original Credit
Agreement are carried forward and secure, without interruption or loss or priority, the
Indebtedness under this Agreement and all other Credit Documents.

     (b) Each of Parent, Sterling General and SHH previously guaranteed the Indebtedness owing
under the Original Credit Agreement and pledged certain of their assets as security for the
repayment of the guaranteed indebtedness. Each of Parent, Sterling General and SHH hereby
acknowledge and agree that any and all liens and security interests granted by them heretofore in
any of their property or assets now secure (i) the Indebtedness owing under this Agreement, whether
advanced to them as co-borrower or advanced to another co-borrower, as the same may be renewed,
rearranged and extended from time to time and (ii) Indebtedness owing by Texas Sterling in
connection with the First Lien Real Estate Note and the Second Lien Real Estate Note, as the First
Lien Real Estate Note and/or Second Lien Real Estate Note may be renewed, rearranged and extended
from time to time.

     8.19 WAIVER OF JURY TRIAL. BANK AND EACH BORROWER EACH ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. ALL OF THEM, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
BY THE LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN), OR ACTION OF EITHER OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN
MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWERS, EXCEPT BY A WRITTEN INSTRUMENT
EXECUTED BY EACH OF THEM.

     8.20
AMENDMENT, RESTATEMENT, RENEWAL AND EXTENSION. THIS AGREEMENT IS GIVEN
IN AMENDMENT, RESTATEMENT, RENEWAL AND EXTENSION OF THE ORIGINAL CREDIT AGREEMENT AND THE
INDEBTEDNESS CREATED UNDER AND PURSUANT THERETO. THIS AGREEMENT SHALL NOT CONSTITUTE A
NOVATION OF THE INDEBTEDNESS ARISING UNDER OR PURSUANT TO THE ORIGINAL CREDIT AGREEMENT
OR BE DEEMED TO HAVE

27

 

BEEN ACCEPTED IN EXTINGUISHMENT OR SATISFACTION THEREOF. THE INDEBTEDNESS CREATED UNDER AND
PURSUANT TO THE ORIGINAL CREDIT AGREEMENT, AS HEREBY RENEWED, EXTENDED AND MODIFIED SHALL
CONTINUE, AND THE EXISTING LOAN DOCUMENTS AND THE LIENS CREATED THEREBY ARE HEREBY RATIFIED AND
CONFIRMED AND SHALL CONTINUE IN FULL FORCE AND EFFECT AS TO THE PRIORITY THEREOF.

     8.21 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER “LOAN
AGREEMENTS” (AS DEFINED IN SECTION 26.02(A)(2) OF THE TEXAS BUSINESS & COMMERCE CODE,
AS AMENDED) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THIS AGREEMENT AND THE OTHER
WRITTEN LOAN AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Remainder of the Page

Left Blank Intentionally

Signature Page to Follow

28

 

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

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	STERLING CONSTRUCTION COMPANY, INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patrick T. Manning	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Patrick T. Manning	 	 
	 	 	Title: CEO	 	 
	 
	 	 	 	 	 	 
	 	 	STERLING GENERAL, INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Patrick T. Manning	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Patrick T. Manning	 	 
	 	 	Title: President/CEO	 	 
	 
	 	 	 	 	 	 
	 	 	STERLING HOUSTON HOLDINGS, INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Maarten D. Hemsley	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Maarten D. Hemsley	 	 
	 	 	Title: President	 	 

	 	 	 	 	 	 	 	 	 
	 	 	TEXAS STERLING
CONSTRUCTION L.P.,	 	 
	 	 	a Texas limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:
	 	STERLING GENERAL, INC.,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Patrick T. Manning	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Name: Patrick T. Manning	 	 
	 	 	 	 	Title: President/CEO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address for Borrowers:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	208l0 Fernbush Lane	 	 
	 	 	 	 	Houston, Texas 77073	 	 

Signature Page 1 of 2

 

	 	 	 	 	 	 	 
	 

	 	BANK	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James R. McNutt	 	 
	 

	 	 	 	 

	 	 
	 	 	James R. McNutt	 	 
	 	 	Senior Vice President-Texas Division	 	 
	 
	 	 	 	 	 	 
	 

	 	Address
	 	:	 	 
	 
	 	 	 	 	 	 
	 	 	910 Louisiana, 4th Floor	 	 
	 	 	Houston, Texas 77002	 	 

Signature Page 2 of 2

 

 

DEFINED TERMS ADDENDUM

SECTION 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings:

     “Affiliate” shall mean, when used with respect to any Person, any other Person
which, directly or indirectly, controls or is controlled by or is under common control
with such Person. For purposes of this definition, “control” (including, with correlative
meanings, the terms “controlled by” and “under common control with”), with respect to any
Person, shall mean possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

     “Agent” means Comerica, as Agent hereunder, and its successors in such capacity;
provided, however, that until such time as a Bank other than Comerica becomes a party
hereto, “Agent” shall mean Comerica, individually.

     “Agreement” shall mean this Fourth Amended and Restated Credit Agreement, including
the Defined Terms Addendum, the Financial Covenants Addendum and the Loan Terms,
Conditions and Procedures Addendum, together with all exhibits and schedules, as it may
be amended from time to time.

     “Applicable Interest Rate” shall mean, with respect to the Indebtedness from time
to time outstanding under the Revolving Credit Note the rate or rates provided in such
Revolving Credit Note as the Applicable Interest Rate.

     “Appraisal” shall mean, until November 1, 2006 that certain appraisal dated
November 1, 2005, prepared by Valuation Technology, Inc., and covering the Borrowers’
Equipment and thereafter that certain appraisal of the Borrowers’ Equipment prepared
pursuant to Section 4.3(f).

     “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended, or
any successor act or code.

     “Banks” means each signatory hereto (other than Borrowers), including Comerica in
its capacity as a Bank hereunder rather than as Agent, and the successors of each such
party as holder of a Note.

     “Borrowing
Base Certificate” shall mean a certificate in the form of
Exhibit A.

     “Borrowing Base Limitation” shall mean the aggregate of (i) NINETY PERCENT (90%) of
the Forced Sale Value, as determined by the Appraisal, for each item of Existing Major
Equipment and which is to be curtailed or reduced each month, on the last calendar day of
each calendar month, by ONE AND TWO-TENTHS PERCENT (1.2%) of the Originally Established
Value for each item of Existing Major Equipment; and (ii) EIGHTY PERCENT (80%) of the
Cost of new or used Major Equipment acquired after the date hereof, which is to be
scheduled on

Defined Terms Addendum

1

 

a spreadsheet to be attached to the Borrowing Base Certificate, and which is to be
curtailed or reduced each month, on the last calendar day of each month, by ONE AND
TWO-TENTHS PERCENT (1.2%) of EIGHTY PERCENT (80%) of the Cost.

     “Business Day” shall mean any day, other than a Saturday, Sunday or holiday,
on which the Bank is open to carry on all or substantially all of its normal commercial
lending business in Dallas, Texas.

     “Capitalized Lease Obligation” shall mean any Debt represented by obligations under
a lease that is required to be capitalized for financial reporting purposes in accordance
with GAAP.

     “Cash Flow” shall mean for any Person for any determination period, pre-tax Net
Income, plus depreciation, plus actual interest expense, minus cash taxes owed by such
Person.

     “Cash Flow Coverage Ratio” shall mean (i) Cash Flow, divided by (ii) the sum of the
Current Maturities of Long-Term Indebtedness plus interest expense on all Debt to be paid
during the next 12 months plus twenty-five percent (25%) of the average outstanding
principal balance of the Revolving Loan for the previous twelve (12) months.

     “Collateral” shall mean all property, assets and rights in which a Lien or other
encumbrance in favor of or for the benefit of Bank is or has been granted or arises or
has arisen, or may hereafter be granted or arise, under or in connection with any Loan
Document, or otherwise, to secure the payment or performance of the Indebtedness.

     “Compliance Certificate” shall mean a certificate to be furnished by Parent to Bank,
in the form of Exhibit B, certified by the chief financial officer of Parent (or
in such officer’s absence, another responsible officer of Parent) pursuant to Section
4.3 of this Agreement, certifying that, as of the date thereof, no Default or Event
of Default shall have occurred and be continuing, or if any Default or Event of Default
shall have occurred and be continuing, specifying in detail the nature and period of
existence thereof and any action taken or proposed to be taken by Borrowers with respect
thereto, and also certifying as to whether Borrowers are in compliance with the financial
covenants contained in the Financial Covenants Addendum to this Agreement (which
certificate shall set forth, in reasonable detail, the calculations and the resultant
ratios and financial tests determined thereunder).

     “Consolidated” or “consolidated” shall mean, when used with reference to any
financial term in this Agreement, the aggregate for two or more persons of the amounts
signified by such term for all such Persons determined on a consolidated basis in
accordance with GAAP. Unless otherwise specified herein, references to “consolidated”
financial statements or data of the Parent includes consolidation with its Subsidiaries
in accordance with GAAP.

     “Cost” shall mean the purchase price and all other costs related to the purchase of
the Equipment which are eligible to be capitalized under GAAP, including taxes,
transportation, warranties, set-up charges, instructions, license fees or other
miscellaneous amounts.

     “Current Maturities of Long Term Indebtedness” shall mean, at any given time, all
principal and interest payments required to be paid during the ensuing one year period
from such given time on all Debt (including Subordinated Debt) having a maturity of
greater than one year.

Defined Terms Addendum

2

 

     “Debt” shall mean, as of any applicable date of determination thereof, all
items of indebtedness, obligation or liability of a Person, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or several,
that should be classified as liabilities in accordance with GAAP. In the case of
Borrowers, the term “Debt” shall include, without limitation, the Indebtedness.

     “Debt-to-Tangible Net Worth Ratio” shall mean, with respect to any Person, and as of
any applicable date of determination thereof, the ratio of (a) the total Debt of such
Person less the total Subordinated Debt of such Person to (b) the Tangible Net Worth of
such Person.”

     “Default” shall mean, any condition or event which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default.

     “Default Rate” shall mean, at any time of determination thereof with respect to the
applicable portion of the Indebtedness, a per annum rate of interest equal to the sum of
the contractual rate of interest which would apply to such Indebtedness if the Default
Rate was not then in effect plus three percent (3%).

     “Disbursement Date” shall mean the date upon which Bank makes a Loan under this
Agreement.

     “Distribution” shall mean any dividend on or other distribution (whether by
reduction of capital or otherwise) with respect to any shares of capital stock (or other
ownership interests), except for dividends from a Subsidiary of a Loan Party to another
of its Subsidiaries.

     “Eligible Transferee” means a Person which either (a) is a Bank or an Affiliate of a
Bank, or (b) is consented to as an Eligible Transferee by Agent (provided that no Person
organized outside the United States may be an Eligible Transferee if Borrowers would be
required to pay withholding taxes on interest or principal owed to such Person).

     “Environmental Law(s)” shall mean all laws, codes, ordinances, rules, regulations,
orders, decrees and directives issued by any federal, state, local, foreign or other
governmental or quasi governmental authority or body (or any agency, instrumentality or
political subdivision thereof) pertaining to Hazardous Materials or otherwise intended to
regulate or improve health, safety or the environment, including, without limitation, any
hazardous materials or wastes, toxic substances, flammable, explosive or radioactive
materials, asbestos, and/or other similar materials; any so-called “superfund” or
“superlien” law, pertaining to Hazardous Materials on or about any of the Collateral, or
any other property at any time owned, leased or otherwise used by any Loan Party, or any
portion thereof, including, without limitation, those relating to soil, surface,
subsurface ground water conditions and the condition of the ambient air; and any other
federal, state, foreign or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic, radioactive, flammable or dangerous waste, substance or
material, as now or at anytime hereafter in effect.

     “Equipment” shall mean equipment of the Borrowers in which the Bank has a validly
perfected first lien security interest, which is in then good working order, and is not
damaged, and which is located within the State of Texas.

Defined Terms Addendum

3

 

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.

     “Event of Default” shall mean any of those conditions or events listed in
Section 6.1 of this Agreement.

     “Existing Major Equipment” shall mean those items of the Borrowers’ equipment set
forth on the Appraisal that were acquired on or before November 1, 2005.

     “Financial Statements” shall mean all balance sheets, income statements, statements
of profit and loss, surplus reconciliation statements, statements of cash flow and other
financial data, statements and reports (whether of Parent, any Borrower, any of their
Subsidiaries, or any other Loan Party or otherwise) which are required to, have been, or
may from time to time hereafter, be furnished to Bank, for the purposes of, or in
connection with, this Agreement, the transactions contemplated hereby or any of the
Indebtedness.

     “First Lien Real Estate Loan” shall mean that certain term loan described in the
First Lien Real Estate Note dated May 28, 1998 from Texas Sterling payable to the order
of Bank, in the maximum amount of $500,000.00 bearing interest at a fixed rate of nine
and three-tenths percent (9.3%) per annum and secured by, among other things, a first
lien Deed of Trust upon the Headquarters Property, and any and all renewals, extensions,
rearrangements, amendments, modifications, and/or increases thereof. The advances under
the First Lien Real Estate Loan have been limited to the lesser of eighty-three percent
(83%) of the cost or appraised value of the headquarters and distribution center
described above.

     “First Lien Real Estate Note” shall mean the promissory note evidencing the First
Lien Real Estate Loan.

     “Forced Sale Value” shall mean the forced sale value established in the Appraisal
for each item of Existing Major Equipment.

     “GAAP” shall mean generally accepted accounting principles consistently applied.

     “Good Faith” or “good faith” shall have the meaning ascribed to the term “good
faith” in Article 1.201 (19) of the UCC on the date of this Agreement.

     “Governmental Authority” shall mean the United States, each state, each county, each
city, and each other political subdivision in which all or any portion of the Collateral
is located, and each other political subdivision, agency, or instrumentality exercising
jurisdiction over Bank, any Loan Party or any Collateral.

     “Governmental Requirements” shall mean all laws, ordinances, rules, and regulations
of any Governmental Authority applicable to any Loan Party, any of the Indebtedness or
any Collateral.

     “Hazardous Material” shall mean and include any hazardous, toxic or dangerous waste,
substance or material defined as such in, or for purposes of, any Environmental Law(s).

Defined Terms Addendum

4

 

     “Headquarters Property” shall mean the real property described in part as
that certain 7.225 acre tract improved with a 5,913 square foot service center located
at 20810 Fernbush Lane, Houston, Texas.

     “Indebtedness” shall mean all loans, advances, indebtedness, obligations and
liabilities of any Loan Party to Bank under any Loan Document, together with all other
indebtedness, obligations and liabilities whatsoever of Borrowers to Bank, including the
First Lien Real Estate Loan and the Second Lien Real Estate Loan, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, joint
or several, due or to become due, now existing or hereafter arising, voluntary or
involuntary, known or unknown, or originally payable to Bank or to a third party and
subsequently acquired by Bank including, without limitation, any: late charges; loan
fees or charges; overdraft indebtedness; costs incurred by Bank in establishing,
determining, continuing or defending the validity or priority of any Lien or in pursuing
any of its rights or remedies under any Loan Document or in connection with any
proceeding involving Bank as a result of any financial accommodation to Borrowers;
debts, obligations and liabilities for which Borrowers would otherwise be liable to the
Bank were it not for the invalidity or enforceability of them by reason of any
bankruptcy, insolvency or other law or for any other reason; and reasonable costs and
expenses of attorneys and paralegals, whether any suit or other action is instituted,
and to court costs if suit or action is instituted, and whether any such fees, costs or
expenses are incurred at the trial court level or on appeal, in bankruptcy, in
administrative proceedings, in probate proceedings or otherwise; provided, however, that
the term Indebtedness shall not include any consumer loan to the extent treatment of
such loan as part of the Indebtedness would violate any Governmental Requirement.

     “Letter of Credit” shall mean a letter of credit issued by the Bank for the account
of and/or upon the application of any Loan Party in accordance with this Agreement, as
such Letter of Credit may be amended, supplemented, extended or confirmed from time to
time.

     “Letter of Credit Liabilities” shall mean, at any time and in respect of all Letters
of Credit, the sum of (a) the aggregate amount available to be drawn under all such
Letters of Credit plus (b) the aggregate unpaid amount of all Reimbursement Obligations
then due and payable in respect of previous drawings under such Letters of Credit.

     “Lien” shall mean any valid and enforceable interest in any property, whether real,
personal or mixed, securing an indebtedness, obligation or liability owed to or claimed
by any Person other than the owner of such property, whether such indebtedness is based
on the common law or any statute or contract and including, but not limited to, a
security interest, pledge, mortgage, assignment, conditional sale, trust receipt, lease,
consignment or bailment for security purposes.

     “Loan Documents” shall mean collectively, this Agreement, the Original Credit
Agreement, the Revolving Credit Note, the Subordination Agreement, the First Lien Real
Estate Note, the Second Lien Real Estate Note, the Third Lien Real Estate Note, any
reimbursement agreement or other documentation executed in connection with any Letter of
Credit, and any other documents, instruments or agreements evidencing, governing,
securing, guaranteeing or otherwise relating to or executed pursuant to or in connection
with any of the Indebtedness or any Loan Document (whether executed and delivered prior
to, concurrently with or subsequent to this Agreement), as such documents may have been
or may hereafter be amended from time to time.

Defined Terms Addendum

5

 

     “Loan Party” shall mean each Borrower, each Borrower’s Subsidiaries (whether
or not a party to any Loan Document) and each other Person who or which shall be liable
for the payment or performance of all or any portion of the Indebtedness or who or which
shall own any property that is subject to (or purported to be subject to) a Lien which
secured all or any portion of the Indebtedness.

     “Loans” shall mean the Revolving Loans and the Third Lien Real Estate Loan, and
“Loan” shall mean any of them.

     “Long Term Indebtedness” shall mean, in respect of a Person and as of any applicable
date of determination thereof, all Debt (other than the aggregate outstanding principal
balance of all Revolving Loans) which should be classified as “funded indebtedness” or
“long term indebtedness” on a balance sheet of such Person as of such date in accordance
with GAAP.

     “Major Equipment” shall mean the items of Existing Major Equipment and Equipment
acquired after November 1, 2005, which the Bank agrees to allow the Borrowers to include
in the Borrowing Base Limitation.

     “Majority Banks” means Bank whose aggregate Percentage Shares equal or exceed
sixty-six and two-thirds percent (66 2/3%).

     “Material Adverse Effect” shall mean any act, event, condition or circumstance which
could materially and adversely affect the business, operations, condition (financial or
otherwise), performance or assets of any Loan Party, the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party or by which it is
bound or the enforceability of any Loan Document.

     “Maximum Legal Rate” shall mean the maximum rate of nonusurious interest per annum
permitted to be paid by Borrowers or, if applicable, another Loan Party or received by
Bank with respect to the applicable portion of the Indebtedness from time to time under
applicable state or federal law as now or as may be hereafter in effect, including, as to
Chapter 1 D of Title 79 Vernon’s Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise without limitation,
that rate based upon the “weekly ceiling rate” (as defined in §303 of the Texas
Finance Code).

     “Net Income” shall mean the net income (or loss) of a Person for any applicable
period of determination, determined in accordance with GAAP, but excluding, in any event:

	 	(a)	 	any gains or losses on the sale or other disposition, not in the
ordinary course of
business, of investments or fixed or capital assets, and any taxes on the
excluded
gains and any tax deductions or credits on account of any excluded losses;
and
	 
	 	(b)	 	in the case of any Borrower, net earnings of any Person in which such
Borrower
has an ownership interest, unless such net earnings shall have actually been
received by such Borrower in the form of cash distributions.

     “Notes” shall mean, collectively, whether one or more, the Revolving Credit Note and
the Third Lien Real Estate Note, and “Note” shall mean any of them.

Defined Terms Addendum

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     “Oakhurst” shall mean Oakhurst Management, Inc., a Texas corporation and
wholly-owned Subsidiary of Parent.

     “Originally Established Value” shall mean ninety percent (90%) of the Forced Sale
Value.

     “Other Miscellaneous Equipment” shall mean items of Equipment owned by any Borrower
which is not Existing Major Equipment and which the Bank allows to be included in the
Borrowing Base.

     “PBGC” shall mean the Pension Benefit Guaranty Corporation, or any Person succeeding
to the present powers and functions of the Pension Benefit Guaranty Corporation.

     “Pension Plan(s)” shall mean any and all employee benefit pension plans of Parent
and/or any of its Subsidiaries in effect from time to time, as such term is defined in
ERISA.

     “Percentage Share” means, with respect to any Bank when used in Section 2.1,
2.2 or 2.4, in any Request for Advance or when no Loans are outstanding hereunder, the
percentage set forth below such Bank’s name on the Bank Commitment Schedule, and when
used otherwise, the percentage obtained by dividing the sum of the unpaid principal
balance of such Bank’s Loans at the time in question, by the sum of the aggregate unpaid
principal balance of all Loans at such time.

     “Permitted Encumbrances” shall mean:

	 	(a)	 	Liens in favor of the Bank;
	 
	 	(b)	 	Liens for taxes, assessments or other governmental charges which are
not yet due and payable, incurred in the ordinary course of business and for
which no interest, late charge or penalty is attaching or which are being
contested in good faith by appropriate proceedings and, if requested by Bank,
bonded in an amount and manner satisfactory to Bank;
	 
	 	(c)	 	Liens, not delinquent, arising in the ordinary course of business and
created by statute in connection with worker’s compensation, unemployment
insurance, social security and similar statutory obligations;
	 
	 	(d)	 	Liens of mechanics, materialmen, carriers, warehousemen or other like
statutory or common law Liens securing obligations incurred in good faith in
the ordinary course of business without violation of any Loan Document that
are not yet due and payable;
	 
	 	(e)	 	encumbrances consisting of zoning restrictions, existing recorded
rights-of-way, existing recorded easements, existing recorded private
restrictions or existing or future public restrictions on the use of real
property, none of which materially impairs the use of such property in the
operation of the business for which it is used, and none of which is violated
in any material respect by any existing or proposed structure or land use and
none of which is prohibited by any other Loan Document;

Defined Terms Addendum

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	 	(f)	 	Liens granted by any Borrower in favor of any bonding
company covering such Borrower’s accounts receivable;
	 
	 	(g)	 	Liens granted by Steel City; and
	 
	 	(h)	 	Liens existing as of the date hereof as more particularly described in
Schedule 5.5 attached to this Agreement and subject to such
intercreditor or subordination agreements as the Bank shall require.

     “Person” or “person” shall mean any individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated association,
joint stock company, government, municipality, political subdivision or agency, or other
entity.

     “Reimbursement Obligations” shall mean, at any time and in respect of all Letters of
Credit, the aggregate obligations any Loan Party, then outstanding or which may
thereafter arise, to reimburse the Bank for any amount paid or incurred by the Bank in
respect of any and all drawings under such Letter of Credit, together with any and all
other Indebtedness, obligations and liabilities of any Loan Party to Bank related to such
Letter of Credit arising under this Agreement, any Letter of Credit application or any
other Loan Document.

     “Request for Advance” shall mean an oral or written request or authorization for an
advance of Loan proceeds which if made in writing shall be in the form annexed hereto as
Exhibit C, or in such other form as is acceptable to Bank.

     “Revolving Credit Maturity Date” shall mean May 10, 2009 or such earlier date on
which the entire unpaid principal amount of al Revolving Loans becomes due and payable
whether by the lapse of time, demand for payment, acceleration or otherwise; provided,
however, if any such date is not a Business Day, then the Revolving Credit Maturity Date
shall be the next succeeding Business Day.

     “Revolving Credit Maximum Amount” shall mean the lesser of (a) THIRTY-FIVE MILLION
DOLLARS ($35,000,000.00), or (b) the Borrowing Base Limitation.

     “Revolving Credit Note” shall mean the Revolving Credit Note of even date herewith
in the original principal amount of Thirty-Five Million Dollars ($35,000,000.00) made by
Borrowers payable to the order of the Bank, as the same may be renewed, extended,
modified, increased or restated from time to time.

     “Revolving Loan” shall mean an advance made, or to be made, under the revolving
credit loan facility to or for the credit of Borrowers by the Bank pursuant to the Loan
Terms, Conditions and Procedures Addendum.

     “Second Lien Real Estate Loan” shall mean that certain term loan described in the
Second Lien Real Estate Note dated June 18, 2001 from Texas Sterling payable to the order
of Bank, in the maximum amount of One Million One Hundred Thousand Dollars
($1,100,000.00) secured by, among other things, a second lien Deed of Trust on the
Headquarters Property, and

Defined Terms Addendum

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any and all renewals, extensions, rearrangements, amendments, modifications,
and/or increases thereof.

     “Second Lien Real Estate Note” shall mean the promissory note evidencing the Second
Lien Real Estate Loan.

     “Steel City” shall mean Steel City Products, LLC, a Delaware limited partnership,
and a wholly-owned Subsidiary of Parent engaged in the distribution business which
Parent has determined to sell and which is reflected as a discontinued business on the
Financial Statements.

     “Subordinated Debt” shall mean any Debt of Borrowers (other than the Indebtedness)
which has been subordinated to the Indebtedness pursuant to a subordination agreement or
any other agreement in form and content satisfactory to the Bank.

     “Subsidiary” shall mean as to any particular parent entity, any corporation,
partnership, limited liability company or other entity (whether now existing or
hereafter organized or acquired) in which more than fifty percent (50%) of the
outstanding equity ownership interests having voting rights as of any applicable date of
determination, shall be owned directly, or indirectly through one or more Subsidiaries,
by such parent entity.

     “Tangible Net Worth” shall mean, with respect to any Person and as of any
applicable date of determination, (a) the net book value of all assets of such Person
(excluding patent rights, trademarks, trade names, 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), less (b) all Debt of such
Person at such time.

     “Tax Refunds” shall mean refunds or claims for refunds of any taxes at any time
paid by Borrowers to the United States of America or any state, city, county or other
governmental entity.

     “Telephone Notice Authorization” shall mean an agreement in form satisfactory
to Bank authorizing telephonic and facsimile notices of borrowing and establishing a
codeword system of identification in connection therewith.

     “Third Lien Real Estate Loan Maturity Date” shall mean May 10, 2021.

     “Third Lien Real Estate Loan” shall mean the Loans made, or to be made, by Banks to
or for the credit of Borrowers in one or more advances not to exceed ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000.00) in the aggregate pursuant to the Loan Terms,
Conditions and Procedures Addendum, secured by, among other things, a third lien Deed of
Trust upon the Headquarters Property.

     “Third Lien Real Estate Note” shall mean the promissory note evidencing the Third
Lien Real Estate Loan.

     “UCC” shall mean the Uniform Commercial Code as adopted and in force in the State of
Texas, as amended.

Defined Terms Addendum

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FINANCIAL COVENANTS ADDENDUM 

SECTION 1. FINANCIAL COVENANTS.

     1.1 Cash Flow Coverage Ratio. Maintain a Cash Flow Coverage Ratio at all
times of not less than 1.25 to 1.00.

     1.2 Consecutive Fiscal Quarter Losses. At no time have two (2) consecutive
fiscal quarters with losses aggregating in excess of Five Hundred Thousand Dollars
($500,000.00).

     1.3 Debt-to-Tangible Net Worth Ratio. Maintain a minimum Debt-to-Tangible Net
Worth Ratio at all times of not more than 2.50 to 1.0

Financial Covenants Addendum

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LOAN TERMS, CONDITIONS AND PROCEDURES ADDENDUM 

SECTION 1. REVOLVING CREDI T FACILITY

     1.1 Revolving Credit Commitment. Subject to the terms and conditions
of the Loan Documents, each Bank agrees to make Revolving Loans to Borrowers at any time
and from time to time from the effective date hereof until (but not including) the
Revolving Credit Maturity Date, provided that all Banks are requested to make Loans in
accordance with their respective Percentage Shares and as part of the same Loan, and after
giving effect to such Loans, the total outstanding balance of the Revolving Loans does not
exceed the Borrowing Base determined as of the date on which the requested Loans are to be
made. The aggregate principal amount of Revolving Loans at any time outstanding plus the
Letter of Credit Liabilities shall not exceed the Revolving Credit Maximum Amount. The
obligation of Borrowers to repay to each Bank the aggregate amount of all Loans made by
such Bank, together with interest accruing in connection therewith, shall be evidenced by
a revolving promissory note (herein called such Bank’s “Revolving Credit Note”) made by
Borrowers payable to the order of such Bank, under which advances, repayments and
re-advances may be made, subject to the terms and conditions of the Loan Documents.

     1.2 Repayment of and Interest on the Revolving Credit Note. Each Revolving
Loan evidenced by the Revolving Credit Note from time to time outstanding hereunder shall,
from and after the date of such Revolving Loan, bear interest at a per annum rate equal to
the Applicable Interest Rate until the occurrence of an Event of Default and thereafter at
the Default Rate and shall be due and payable in accordance with the terms of the
Revolving Credit Note. All unpaid principal, accrued and unpaid interest and other amounts
owing under the Revolving Credit Note shall be due and payable on the Revolving Credit
Maturity Date.

     1.3 Requests for Advances. Except as hereinafter provided, Borrowers may
request a Revolving Loan by submitting to Agent a Request for Advance by an authorized
officer or other representative of Borrowers, subject to the following:

	 	(a)	 	each such Request for Advance shall include, without limitation, the
proposed amount of such Revolving Loan and the proposed Disbursement Date,
which date must be a Business Day;
	 
	 	(b)	 	each such Request for Advance shall be communicated to Agent by 1:00
p.m. (Dallas, Texas time) on the proposed Disbursement Date;
	 
	 	(c)	 	a Request for Advance, once communicated to Agent, shall not be
revocable by Borrowers;
	 
	 	(d)	 	each Request for Advance, once communicated to Agent, shall constitute
a representation, warranty and certification by Borrowers as of the date
thereof that:

	 	(i)	 	both before and after the making of such Revolving Loan,
the obligations set forth in the Loan Documents are and shall be
valid, binding and enforceable obligations of each Loan Party, as
applicable;

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	 	(ii)	 	all terms and conditions precedent to the making of such
Revolving Loan have been satisfied, and shall remain satisfied
through the date of such Revolving Loan;
	 
	 	(iii)	 	the making of such Revolving Loan will not cause the aggregate
outstanding principal amount of all Revolving Loans plus the Letter of
Credit Liabilities to exceed the Revolving Credit Maximum Amount;
	 
	 	(iv)	 	no Default or Event of Default shall have occurred or be
in existence, and none will exist or arise upon the making of such
Revolving Loan;
	 
	 	(v)	 	the representations and warranties contained in the Loan Documents
are true and correct in all material respects and shall be true and
correct in all material respects as of the making of such Revolving
Loan; and
	 
	 	(vi)	 	the Request for Advance will not violate the terms or
conditions of any contract, indenture, agreement or other borrowing of
any Loan Party.

Agent may elect (but without any obligation to do so) to make a Revolving Loan upon the
telephonic or facsimile request of Borrowers, provided that Borrowers have first executed
and delivered to Agent a Telephone Notice Authorization. If any such Revolving Loan based
upon a telephonic or facsimile request is made by Borrowers, Agent may require Borrowers
to confirm said telephonic or facsimile request in writing by delivering to Agent, on or
before 11:00 a.m. (Dallas, Texas time) on the next Business Day following the
Disbursement Date of such Revolving Loan, a duly executed written Request for Advance,
and all other provisions of this Section 1 shall be applicable with respect to
such Revolving Loan. Upon receipt of any such Request for Advance, Agent shall give each
Bank prompt notice of the terms thereof. If all conditions precedent to such new Loans
have been met, each Bank will on the date requested promptly remit to Agent at Agent’s
office in Dallas, Texas the amount of such Bank’s new Loan in immediately available
funds, and upon receipt of such funds, unless to its actual knowledge any conditions
precedent to such Loans have been neither met nor waived as provided herein, Agent shall
promptly make such Loans available to Borrowers. Unless Agent shall have received prompt
notice from a Bank that such Bank will not make available to Agent such Bank’s new Loan,
Agent may in its discretion assume that such Bank has made such Loan available to Agent
in accordance with this section and Agent may if it chooses, in reliance upon such
assumption, make such Loan available to Borrowers. If and to the extent such Bank shall
not so make its new Loan available to Agent, such Bank and Borrowers severally agree to
pay or repay to Agent within three days after demand the amount of such Loan together
with interest thereon, for each day from the date such amount was made available to
Borrowers until the date such amount is paid or repaid to Agent, with interest at the
Federal Funds Rate, if such Bank is making such payment and the interest rate applicable
at the time to the other new Loans made on such date, if Borrowers are making such
repayment. If neither such Bank nor Borrowers pay or repay to Agent such amount within
such three-day period, Agent shall in addition to such amount be entitled to recover from
such Bank and from Borrowers, on demand, interest thereon at the Default Rate, calculated
from the date such amount was made available to Borrowers. The failure of any Bank to
make any new Loan to be made by it hereunder shall not relieve any other Bank of its
obligation hereunder, if any, to make its new Loan, but no Bank shall be responsible for
the failure of any other Bank to make any new Loan to be made by such other Bank.

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     1.4 Prepayment. Borrowers may prepay all or part of the outstanding
balance under the Revolving Credit Note at any time, without premium, penalty or prejudice
to the right of Borrowers to reborrow under the terms of this Agreement, subject to the
terms and conditions of the Loan Documents.

     1.5
Revolving Credit Maximum Amount and Reduction of Indebtedness.
Notwithstanding anything contained in this Agreement to the contrary, the aggregate
principal amount of all Revolving Loans at any time outstanding plus the Letter of Credit
Liabilities shall not exceed the Revolving Credit Maximum Amount. If said limitations are
exceeded at anytime, Borrowers shall immediately, without demand by Bank, pay to Bank an
amount not less than such excess, or, if Bank, in its sole discretion, shall so agree,
Borrowers shall provide Bank cash collateral in an amount not less than such excess, and
Borrowers hereby pledge and grant to Bank a security interest in such cash collateral so
provided to Bank.

     1.6 Use of Proceeds of Revolving Loans. The proceeds of Revolving Loans shall
be used for equipment financing and other working capital needs of Borrowers.

     1.7 Unused Commitment Fee. Borrowers shall pay to Bank an unused commitment
fee in an amount equal to the product of (a) 0.25% multiplied by (b) the difference
between (i) the Revolving Credit Maximum Amount and (ii) the aggregate outstanding
principal balance of all Revolving Loans. Such fee shall be computed on a daily basis and
shall be payable quarterly in arrears as of the end of each of Parent’s fiscal quarters.
Bank shall invoice Borrowers for such fees, which invoice shall be due and payable within
fifteen (15) days after receipt.

     1.8 Letters of Credit.

	 	(a)	 	Letters of Credit. Subject to the terms and conditions of
this Agreement and the other Loan Documents, the Bank shall, upon request from
Borrowers from time to time prior to the Revolving Credit Maturity Date, issue
one or more Letters of Credit. The Letter of Credit Liabilities shall not
exceed Two Million Five Hundred Thousand Dollars ($2,500,000.00); and the sum
of (i) the outstanding principal balance of all Revolving Loans plus
(ii) the Letter of Credit Liabilities shall not exceed the Revolving Credit
Maximum Amount. Letters of Credit may be issued for normal and customary
business reasons. Each Letter of Credit issued pursuant to this Agreement
shall be in a minimum amount of Fifty Thousand Dollars ($50,000.00). No Letter
of Credit shall have a stated expiration date later than thirty (30) days
prior to the Revolving Credit Maturity Date.
	 
	 	(b)	 	Additional Provisions. The following additional provisions shall
apply to each Letter of Credit:

	 	(1)	 	Borrowers shall give the Bank written notice requesting
each issuance of a Letter of Credit hereunder not less than ten (10)
Business Days prior to the requested issuance date and shall furnish
such additional information regarding such transaction as Bank may
request. The issuance by Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth elsewhere in this
Agreement, be subject to the conditions precedent that (A) such Letter
of Credit shall be in form and substance satisfactory to Bank, (B)
Borrowers shall have executed and delivered such applications

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	 	 	 	and other instruments and agreements relating to such Letter
of Credit as Bank shall have requested and are not inconsistent with
the terms of this Agreement (C) each of the statements in Section
1.3(d)(i), (ii), (iv), (V) and (vi) of this Loan Terms,
Conditions and Procedures Addendum are true as of the date of
issuance of such Letter of Credit with respect to issuance of such
Letter of Credit (as opposed to making a Revolving Loan), and the
submission of an application for issuance of a Letter of Credit shall
constitute a representation, warranty and certification of Borrowers
to that effect and (D) no Letter of Credit may be issued if after
giving effect thereto, the sum of the aggregate outstanding principal
balance of all Revolving Loans plus the Letter of Credit Liabilities
would exceed the Revolving Credit Maximum Amount. With respect to the
issuance or renewal of each Letter of Credit, Borrowers shall pay to
Bank such letter of credit fees and other expenses customarily
charged by Bank in connection with the issuance or renewals of
letters of credit.

	 	(2)	 	Borrowers shall be irrevocably and unconditionally
obligated forthwith to reimburse Bank for any amount paid by Bank upon
any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind, all of which are hereby
waived. Unless Borrowers shall elect to otherwise satisfy such
Reimbursement Obligation, such reimbursement shall, subject to
satisfaction of any conditions provided herein for the making of
Revolving Loans and to the Revolving Credit Maximum Amount,
automatically be made by advancing to Borrowers a Revolving Loan in
the amount of such Reimbursement Obligation.

	 	(c)	 	Indemnification; Release. Each Borrower hereby indemnifies
and agrees to defend and hold harmless Bank and its officers, directors,
employees, agents and representatives from and against any and all claims and
damages, losses, liabilities, costs or expenses which any such indemnified
party may incur (or which may be claimed against Bank or any such indemnified
party by any Person whatsoever), REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN
PART BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, in connection with
the execution and delivery of any Letter of Credit or transfer of or payment
or failure to pay under any Letter of Credit; provided that Borrowers
shall not be required to indemnify any party seeking indemnification for any
claims, damages, losses, liabilities, costs or expenses to the extent, but
only to the extent, caused by (i) the willful misconduct or gross negligence
of the party seeking indemnification, or (ii) by the failure by the party
seeking indemnification to pay under any Letter of Credit after the
presentation to it of a request required to be paid under application law.

SECTION 2. THIRD LIEN REAL ESTATE LOAN

     2.1 Third Lien Real Estate Loan Commitment. On or before May 10, 2007,
subject to the terms and conditions of this Agreement and the other Loan Documents, the
Bank agrees to make the Third Lien Real Estate Loan to Borrowers in an amount not to
exceed ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00). At the time of
borrowing the

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Third Lien Real Estate Loan, Borrowers agree to execute and deliver to Banks the
Third Lien Real Estate Note to evidence the Indebtedness of Borrowers to Banks under and
in respect of the Third Lien Real Estate Loan.

2.2  Repayment of and Interest on Third Lien Real Estate Loan. The
Indebtedness from time to time outstanding under and evidenced by the Third Lien Real
Estate Note shall bear interest at the rate per annum specified in the Third Lien Real
Estate Note until the occurrence of an Event of Default and thereafter at the “default
rate” as specified in the Third Lien Real Estate Note and shall otherwise be repaid in
accordance with the terms of the Third Lien Real Estate Note. Borrowers shall not be
permitted to reborrow any amounts repaid under the Third Lien Real Estate Note.

2.3  Use of Proceeds of Third Lien Real Estate Loan. The proceeds of the
Third Lien Real Estate Loan shall be used to finance or refinance the expansion of
facilities located on the Headquarters Property.

2.4  Advancing Term Facility. Except as hereinafter provided, if the Third
Lien Real Estate Loan is an advancing facility, Borrowers may request an advance under
the Third Lien Real Estate Loan by submitting to Agent a Request for Advance by an
authorized officer or other representative of Borrowers, subject to the following:

	 	(a)	 	each such Request for Advance shall include, without
limitation, the proposed amount of such advance and the proposed
Disbursement Date, which date must be a Business Day;
	 
	 	(b)	 	each such Request for Advance shall be communicated to
Agent by 1:00 p.m. (Dallas, Texas time) on the proposed Disbursement
Date;
	 
	 	(c)	 	a Request for Advance, once communicated to Agent, shall
not be revocable by Borrowers;
	 
	 	(d)	 	each Request for Advance, once communicated to Agent,
shall constitute a representation, warranty and certification by
Borrowers as of the date thereof that:

	 	(1)	 	both before and after the making of such
advance, the obligations set forth in each other Loan Document
are and shall be valid, binding and enforceable obligations
of each Loan Party, as applicable;
	 
	 	(2)	 	all terms and conditions precedent to the
making of such advance have been satisfied, and shall remain
satisfied through the date of such advance;
	 
	 	(3)	 	the making of such advance will not cause
the aggregate principal amount of all advances under the Third
Lien Real Estate Note to exceed the original principal amount of
the Third Lien Real Estate Note;

Loan Terms, Conditions

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	 	(4)	 	no Default or Event of Default shall have occurred
or be in existence, and none will exist or arise upon the
making of such advance;
	 
	 	(5)	 	the representations and warranties contained
in this Agreement, and the other Loan Documents are true and
correct in all material respects and shall be true and correct in
all material respects as of the making of such advance; and
	 
	 	(6)	 	the advance will not violate the terms or
conditions of any contract, indenture, agreement or other
borrowing of any Loan Party.

Agent may elect (but without any obligation to do so) to make the requested advance upon
the telephonic or facsimile request of Borrowers, provided that Borrowers have first
executed and delivered to Agent a Telephone Notice Authorization. If any such advance
based upon a telephonic or facsimile request is made by Agent, Agent may require
Borrowers to confirm said telephonic or facsimile request in writing by delivering to
Agent, on or before 11:00 a.m. (Dallas, Texas time) on the next Business Day following
such advance, a duly executed written Request for Advance, and all other provisions of
this Section 2 shall be applicable with respect to such advance. In addition,
Borrowers may authorize the Agent to automatically make advances under the Third Lien
Real Estate Loan pursuant to such other written agreements as may be entered into by
Agent and Borrowers.

SECTION 3. INTENTIONALLY OMITTED.

SECTION 4. FUNDING LOANS, PAYMENTS, RECOVERIES AND COLLECTIONS

     4.1 Funding Loans. Subject to the satisfaction of all conditions precedent
to the making and funding of any Loan set forth in any Loan Document, including, without
limitation, those conditions precedent set forth in Section 5 of this Loan Terms,
Conditions and Procedures Addendum, Agent shall make the proceeds of any such Loan
available to Borrowers by 5:00 p.m. (Dallas, Texas time) on the Disbursement Date of such
Loan, by depositing such proceeds into such account maintained by any Borrower with Agent
as any Borrower shall designate in writing or as otherwise agreed to in writing by
Borrowers and Agent.

     4.2 Banks’ Books and Records. The amount and date of each Loan hereunder,
the amount from time to time outstanding under each Note, the Applicable Interest Rate in
respect of each Loan, and the amount and date of any repayment hereunder or under any of
the Notes, shall be noted on each Bank’s books and records, which shall be conclusive
evidence thereof, absent manifest error; provided, however, any failure by any Bank to
make any such notation, or any error in any such notation, shall not relieve Borrowers of
their obligations to pay to such Bank all amounts owing to such Bank under or pursuant to
the Loan Documents, in each case, when due in accordance with the terms hereof or thereof.

     4.3 Payments on Non-Business Day. In the event that any payment of any
principal, interest, fees or any other amounts payable by Borrowers under or pursuant to
any Loan Document shall become due on any day which is not a Business Day, such due date
shall be extended to the next succeeding Business Day, and, to the extent applicable,
interest shall

Loan Terms, Conditions

and Procedures Addendum

6

 

continue to accrue and be payable at the Applicable Interest Rate(s) for and
during any such extension.

     4.4 Payment Procedures. Unless otherwise expressly provided in a Loan
Document, all sums payable by Borrowers to Banks under or pursuant to any Loan Document,
whether principal, interest, or otherwise, shall be paid, when due, directly to Agent at
the office of Agent identified on the signature page of this Agreement, or at such other
office of Agent as Agent may designate in writing to Borrowers from time to time, in
immediately available United States funds, and without setoff, deduction or counterclaim.
Each Bank may, in its discretion, charge any and all deposit or other accounts
(including, without limitation, any account evidenced by a certificate of deposit or time
deposit) of any Borrower maintained with such Bank for all or any part of any
Indebtedness then due and payable; provided, however, that such authorization shall not
affect Borrowers’ obligations to pay all Indebtedness, when due, whether or not any such
account balances maintained by any Borrower with such Bank are insufficient to pay any
amounts then due.

     4.5 Maximum Interest Rate. At no time shall any Applicable Interest Rate or
Default Rate under this Agreement or any Note, or otherwise in respect of any Loan or any
Indebtedness hereunder, exceed the Maximum Legal Rate, giving due consideration to the
execution of this Agreement and each Note. In the event that any interest is charged or
otherwise received by Banks in excess of the Maximum Legal Rate, each Borrower hereby
acknowledges and agrees that any such excess interest shall be the result of an
accidental and bona fide error, and any such excess shall be deemed to have been payments
of principal, and not of interest, and shall be applied, first, to reduce the principal
Indebtedness then outstanding, second, any remaining excess, if any, shall be applied to
reduce any other Indebtedness, and third, any remaining excess, if any, shall be returned
to Borrowers. Notwithstanding the foregoing or anything to the contrary contained in this
Agreement or any other Loan Document, but subject to all limitations contained in this
paragraph, if at anytime any Applicable Interest Rate or Default Rate or other rate of
interest applicable to any portion of the Indebtedness is computed on the basis of the
Maximum Legal Rate, any subsequent reduction in the Applicable Interest Rate, Default
Rate or such other rate of interest shall not reduce such interest rate thereafter
payable below the Maximum Legal Rate until the aggregate amount of interest accrued
equals the total amount of interest that would have accrued if interest had, at all
times, been computed solely on the basis of the Applicable Interest Rate, Default Rate or
such other interest rate. This paragraph shall control all agreements between the
Borrowers and the Banks.

     4.6 Receipt of Payments by Agent. Any payment by Borrowers of any of the
Indebtedness made by mail will be deemed tendered and received by Agent only upon actual
receipt thereof by Agent at the address designated for such payment, whether or not Agent
has authorized payment by mail or in any other manner, and such payment shall not be
deemed to have been made in a timely manner unless actually received by Agent on or
before the date due for such payment, time being of the essence. Each Borrower expressly
assumes all risks of loss or liability resulting from non-delivery or delay of delivery
of any item of payment transmitted by mail or in any other manner. Acceptance by Agent of
any payment in an amount less than the amount then due shall be deemed an acceptance on
account only, and any failure to pay the entire amount then due shall constitute and
continue to be an Event of Default hereunder. Agent shall be entitled to exercise any and
all rights and remedies conferred upon and otherwise available to Agent under any Loan
Document upon the occurrence and during the continuance

Loan Terms, Conditions

and Procedures Addendum

7

 

of any such Event of Default. Prior to the occurrence of any Default, Borrowers
shall have the right to direct the application of any and all payments made to Agent
hereunder to the Indebtedness evidenced by the Notes. Each Borrower waives the right to
direct the application of any and all payments received by Agent hereunder at any time or
times after the occurrence and during the continuance of any Default. Each Borrower
further agrees that after the occurrence and during the continuance of any Default, or
prior to the occurrence of any Default if Borrowers have failed to direct such
application, Agent shall have the continuing exclusive right to apply and to reapply any
and all payments received by Agent at any time or times, whether as voluntary payments,
proceeds from any Collateral, offsets, or otherwise, against the Indebtedness in such
order and in such manner as Agent may, in its sole discretion, deem advisable,
notwithstanding any entry by Agent upon any of its books and records. Each Borrower
hereby expressly agrees that, to the extent that Agent receives any payment or benefit of
or otherwise upon any of the Indebtedness, and such payment or benefit, or any part
thereof, is subsequently invalidated, declared to be fraudulent or preferential, set
aside, or required to be repaid to a trustee, receiver, or any other Person under any
bankruptcy act, state or federal law, common law, equitable cause or otherwise, then to
the extent of such payment or benefit, the Indebtedness, or part thereof, intended to be
satisfied shall be revived and continued in full force and effect as if such payment or
benefit had not been made or received by Agent, and, further, any such repayment by Agent
shall be added to and be deemed to be additional Indebtedness.

     4.7 Security. Payment and performance of the Indebtedness shall be secured
by Liens on all of the assets and properties of Borrowers and of such other Loan Parties
as Agent may require from time to time.

SECTION 5. CONDITIONS PRECEDENT

     5.1 Conditions Precedent to First Loan or First Letter of Credit. The
obligation of the Banks to issue the first Letter of Credit or to make the first
Revolving Loan under or pursuant to this Agreement shall be subject to the following
conditions precedent:

	 	(a)	 	Execution of this Agreement, Notes and other Loan Documents.
Borrowers shall have executed and delivered to Banks, or caused to have been
executed and delivered to Banks, this Agreement, the Notes and all other Loan
Documents, and this Agreement (including all addenda, schedules, exhibits,
certificates, opinions, financial statements and other documents to be
delivered pursuant hereto), such Notes, and all other Loan Documents, shall be
in full force and effect and binding and enforceable obligations of Borrowers
and, to the extent that it is a party thereto or otherwise bound thereby, of
each other Person who may be a party thereto or bound thereby.
	 
	 	(b)	 	Authority Documents. Agent shall have received: (i) copies of
resolutions of the board of directors, partners or members or managers, as
applicable, of each Loan Party evidencing approval of the borrowing hereunder
and the transactions contemplated by the Loan Documents, and authorizing the
execution, delivery and performance by each Loan Party of each Loan Document
to which it is a party or by which it is otherwise bound, which resolutions
shall have been certified by a duly authorized officer, partner or
other representative, as applicable, of each Loan Party as of the date of
this Agreement as being complete,

Loan Terms, Conditions

and Procedures Addendum

8

 

	 	 	 	accurate and in full force and effect; (ii) incumbency certifications
of a duly authorized officer, partner or other representative, as
applicable, of each Loan Party, in each case, identifying those individuals
who are authorized to execute the Loan Documents for and on behalf of such
Person(s), respectively, and to otherwise act for and on behalf of such
Person(s); (iii) certified copies of each of such Person(s)’ articles of
incorporation and bylaws, partnership agreement, certificate of limited
partnership, articles of organization, regulations or operating agreement,
as applicable, and all amendments thereto; and (iv) certificates of
existence, good standing and authority to do business, as applicable,
certified substantially contemporaneously with the date of this Agreement,
from the state or other jurisdiction of each of such Person(s)’ organization
and from every other state or jurisdiction in which such Person is required,
under applicable law, to be qualified to do business.

	 	(c)	 	Collateral Documents. As security and support for the payment
and performance of all Indebtedness of Borrowers to Banks, each Borrower shall
have furnished, executed and delivered to Agent, or shall have caused to have
been furnished, executed and delivered to Agent, prior to or concurrently with
the Disbursement Date for the initial Loan hereunder, in form satisfactory to
Agent, the following documents, and Agent shall have received proof that
appropriate security agreements, financing statements, mortgages, deeds of
trust, collateral and other documents covering the Collateral shall have been
executed and delivered by the appropriate Persons and recorded or filed in such
jurisdictions and such other steps shall have been taken as necessary to
perfect, subject only to Permitted Encumbrances, the Liens granted thereby:

	 	(i)	 	a Second Modification Agreement from Texas
Sterling;
	 
	 	(ii)	 	such other Loan Documents as the Agent
may request;
	 
	 	(iii)	 	financing statements and/or financing statement
amendments required or requested by Agent to perfect all security
interests to be conferred upon Agent under the Loan Documents and to
accord Agent a perfected security position in the Collateral, subject
only to Permitted Encumbrances;
	 
	 	(iv)	 	such additional documents or certificates as may be
required by Agent and/or required under the terms of any and every Loan
Document; and
	 
	 	(v)	 	such other documents or agreements of security and
appropriate assurances of validity, perfection and priority of Lien as
Agent may request.

	 	(d)	 	Licenses, Permits, Approvals, Etc. To the extent necessary
and applicable, Borrowers shall have received any and all necessary
authorizations, approvals and consents from all applicable Governmental
Authorities in respect of the borrowing by Borrowers of the Loans
hereunder, the Loan Documents and the transactions contemplated by any Loan
Document; and Agent shall have also received copies of each authorization,
license, permit, consent, order or approval of, or registration, declaration or
filing with, any Governmental Authority or any

Loan Terms, Conditions

and Procedures Addendum

9

 

	 	 	 	securities exchange or other Person obtained or made by Borrowers or
any other Person in connection with the transactions contemplated by the
Loan Documents and which is material to the financial condition of Borrowers
or such other Person or the conduct of its business or the transactions
contemplated hereby or the Collateral.

	 	(e)	 	UCC Lien Search. Agent shall have received UCC, tax lien and
judgment lien record and copy searches, disclosing no notice of any Liens or
encumbrances filed against any of the Collateral, other than the Permitted
Encumbrances.
	 
	 	(f)	 	Casualty Insurance. Borrowers shall have furnished to Agent,
or cause to have been furnished to Agent, in form and content and in amounts
and with companies satisfactory to Agent, casualty insurance
policies, with loss payable and mortgagee clauses in favor of Agent,
relating to the assets and properties (including, but not limited to, the
Collateral) of Borrowers any applicable Loan Party.
	 
	 	(g)	 	Appraisal. Borrowers shall have furnished to Agent, or cause
to have been furnished to Agent, an appraisal covering the Existing Major
Equipment, in form and content and conducted and prepared by an appraiser
acceptable to the Agent.
	 
	 	(h)	 	Approval of Agent’s Counsel. All actions, proceedings,
instruments and documents required to carry out the borrowings and
transactions contemplated by this Agreement or any other Loan Document or
incidental thereto, and all other related legal matters, shall have been
satisfactory to and approved by legal counsel for Agent, and said counsel
shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as they shall have
requested.
	 
	 	(i)	 	Compliance with Certain Documents and Agreements. Each Loan
Party shall have each performed and complied with all agreements and
conditions contained in the Loan Documents applicable to it and which are
then in effect.
	 
	 	(j)	 	Other Documents and Instruments. Agent shall have received
such other instruments and documents (not inconsistent with the terms hereof)
as Agent may request in connection with the making of the Loans hereunder,
and all such instruments and documents shall be satisfactory in form and
substance to Agent.
	 
	 	(k)	 	Modification Fee. Agent shall have received a total
modification fee of $87,500, one half of which was paid prior to closing this
Agreement and the second half of which is payable at the closing of this
Agreement.

     5.2 Conditions Precedent to Disbursement of All Loans and All Letters of
Credit. In addition to any other terms and conditions set forth in this Agreement,
including, without limitation, those set forth in Section 5.1 above, the
obligation of Banks to make any Loan or to issue any Letter of Credit under this
Agreement, including, without limitation, the initial Loan hereunder, shall be further
subject to the satisfaction of each of the following conditions precedent on or before
the Disbursement Date for such Loan:

Loan Terms, Conditions

and Procedures Addendum

10

 

	 	(a)	 	Execution and Delivery of Note. Borrowers shall have
executed and delivered to Banks the applicable Note, with appropriate
insertions, to evidence such Loan and the Indebtedness of Borrowers in
respect thereof.
	 
	 	(b)	 	Loan Documents Binding and Enforceable. All Loan Documents
shall be in full force and effect and binding and enforceable obligations of
each Loan Party.
	 
	 	(c)	 	Representations and Warranties. Each of the representations
and warranties of each Loan Party under any Loan Document shall be true and
correct in all material respects.
	 
	 	(d)	 	No Default or Material Adverse Change. No Default or Event of
Default shall have occurred and be continuing; there shall have been no
material adverse change in the condition (financial or otherwise),
properties, business, or operations of any Loan Party since the date of
the Financial Statements most recently delivered to Agent prior to the date of
this Agreement; and no provision of law, any order of any Governmental
Authority, or any regulation, rule or interpretation thereof, shall have had
any material adverse effect on the validity or enforceability of any Loan
Document.
	 
	 	(e)	 	Equipment Documents. In the case of each Loan to finance new
Equipment: (i) Borrowers shall have delivered to Agent invoices and such other
documents as requested by Agent to evidence the applicable Borrower’s
acquisition of the respective Equipment purchased or acquired with the
proceeds of such Loan, or to be so purchased or acquired, and the cost of the
same; (ii) Borrowers shall have delivered evidence satisfactory to Agent that
such Equipment is not be subject to any Liens other than Permitted
Encumbrances; (iii) Borrowers shall have delivered evidence satisfactory
to the Agent that the Equipment is properly insured; and (iv) Borrowers shall
execute and deliver, or cause to be executed and delivered, to Agent such Loan
Documents as Agent may deem necessary or appropriate for the creation and
perfection of a purchase money Lien upon such Equipment, free and clear of all
other Liens and encumbrances except Permitted Encumbrances.

     5.3 Conditions Precedent to Disbursement of All Advances under Third Lien Real
Estate Loan. In addition to any other terms and conditions set forth in this
Agreement, including, without limitation, those set forth in Sections 5.1 and
5.2 above, the obligation of Banks to make any advance under the Third Lien Real
Estate Loan under this Agreement, including, without limitation, the initial advance to
fund a Third Lien Real Estate Loan hereunder, shall be further subject to the
satisfaction of each of the following conditions precedent on or before the Disbursement
Date for such advance under the Third Lien Real Estate Loan:

	 	(a)	 	Maximum Loan to Value. The combined loan to value ratio of the
outstanding principal balance of the First Lien Real Estate Note plus the
outstanding principal balance of the Second Lien Real Estate Note plus the
outstanding principal balance of the Third Lien Real Estate Note plus the
amount of the requested advance under the Third Lien Real Estate Note shall
not exceed 80% of the value

Loan Terms, Conditions

and Procedures Addendum

11

 

	 		 	of the Headquarters Property based on an appraisal of the
Headquarters Property satisfactory to the Agent in form and substance.

	 	(b)	 	Minimum Appraised Value. The “as completed” value of the
Headquarters Property, based on an appraisal in form and substance
satisfactory to the Agent, shall be not less than Two Million Nine Hundred
Fifty-Five Thousand Dollars ($2,955,000.00).
	 
	 	(c)	 	Environmental Site Assessment. The Agent shall have received
a Phase I Environmental Site Assessment on the Headquarters Property in form
and substance satisfactory to the Agent.

     SECTION
6. PAYMENTS TO BANKS.

     6.1 General Procedures. Each Borrower will make each payment which it owes
under the Loan Documents to Agent for the account of the Bank to whom such payment is
owed, in lawful money of the United States of America, without set-off, deduction or
counterclaim, and in immediately available funds. Each such payment must be received by
Agent not later than 11:00 a.m., Houston, Texas time, on the date such payment becomes
due and payable. Any payment received by Agent after such time will be deemed to have
been made on the next following Business Day. Should any such payment become due and
payable on a day other than a Business Day, the maturity of such payment shall be
extended to the next succeeding Business Day, and, in the case of a payment of principal
or past due interest, interest shall accrue and be payable thereon for the period of such
extension as provided in the Loan Document under which such payment is due. Each payment
under a Loan Document shall be due and payable at the place provided therein and, if no
specific place of payment is provided, shall be due and payable at the place of payment
of Agent’s Notes. When Agent collects or receives money on account of the Indebtedness,
Agent shall distribute all money so collected or received, and each Bank shall apply all
such money so distributed, as follows:

          (a) first, for the payment of all Indebtedness which are then due (and if
such money is insufficient to pay all such Indebtedness, first to any
reimbursements due Agent under Section 8.5 and then to the partial payment of all
other Indebtedness then due in proportion to the amounts thereof, or as the Banks
shall otherwise agree);

          (b) then for the prepayment of amounts owing under the Loan Documents (other
than principal on the Notes) if so specified by Borrowers;

          (c) then for the prepayment of principal on the Notes, together with accrued
and unpaid interest on the principal so prepaid; and

          (d) last, for the payment or prepayment of any other Indebtedness.

All payments applied to principal or interest on any Note shall be applied first to any
interest then due and payable, then to principal then due and payable, and last to any
prepayment of principal in compliance with Sections 2.4. All distributions of amounts
described in any of subsections (b), (c) or (d) above shall be made by Agent pro rata to
each Bank then owed Indebtedness described in such subsection in proportion to all
amounts owed to all Bank which

Loan Terms, Conditions

and Procedures Addendum

12

 

are described in such subsection; provided that if any Bank then owes payments to
Agent under Section 7.5, any amounts otherwise distributable under this section to such
Bank shall be deemed to belong to Agent, to the extent of such unpaid payments, and Agent
shall apply such amounts to make such unpaid payments rather than distribute such amounts
to such Bank.

     6.2 Capital Reimbursement. If either the introduction or implementation of
or the compliance with or any change in or in the interpretation of any Law, or the
introduction or implementation of or the compliance with any request, directive or
guideline from any central bank or other governmental authority (whether or not having
the force of law) affects or would affect the amount of capital required or expected to
be maintained by any Bank or any corporation controlling any Bank, then, upon demand by
such Bank, Borrowers will pay to Agent for the benefit of such Bank, from time to time as
specified by such Bank, such additional amount or amounts which such Bank shall determine
to be appropriate to compensate such Bank or any corporation controlling such Bank in
light of such circumstances, to the extent that such Bank reasonably determines that the
amount of any such capital would be increased or the rate of return on any such capital
would be reduced by or in whole or in part based on the existence of the face amount of
such Bank’s Loans or commitments under this Agreement.

Loan Terms, Conditions

and Procedures Addendum

13

 

EXHIBIT A

FORM OF BORROWING BASE CERTIFICATE

Comerica Bank

Commercial Loan Accounting Services, Mail Code 6513

Post Office Box 650282

Dallas, Texas 75265-0282

     This
Borrowing Base Certificate for the period beginning                                          and
ending
                                        
(“Current Period”) is delivered pursuant to that certain
Fourth Amended and Restated Credit Agreement (the “Credit
Agreement”) dated May 10,
2006, by and among COMERICA BANK (“Agent”), the Banks party thereto and Sterling
Construction Company, Inc., Sterling General, Inc., Sterling Houston Holdings, Inc. and
Texas Sterling Construction, L.P. (“Borrowers”). Terms not otherwise defined herein shall
have the meanings set forth in the Credit Agreement.

     The information set forth on the Monthly Borrowing Base Report attached hereto
as Exhibit A is true and correct as of the date hereof. Based on such
information, as of the date hereof, the aggregate unpaid principal amount of all
Revolving Loans (including the Revolving Loan to be made on the date hereof) does not
exceed the Revolving Credit Maximum Amount as in effect on the date hereof.

     The undersigned hereby further certifies that no Default or Event of Default has
occurred and is continuing as of the date hereof.

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit A — Page 1

 

 

EXHIBIT B

FORM COMPLIANCE CERTIFICATE

This Compliance Certificate is executed and delivered to Comerica Bank (“Agent”) by
Sterling Construction Company, Inc., Sterling General, Inc., Sterling Houston Holdings,
Inc. and Texas
Sterling Construction, L.P. (“Borrowers”), this
day____ of ____, 200____.
All capitalized terms used but not defined herein, shall have the meanings given to such
terms in that certain Fourth Amended and Restated Credit Agreement, dated as of May 10,
2006 among Agent, the Banks party thereto and Borrowers (as renewed, extended, modified
and restated from time to time, the “Credit Agreement”). The undersigned hereby certifies
to Agent as follows:

(1) The
undersigned is the duly elected, qualified and  acting ________ of Parent and,
as such, is authorized to make and deliver this Certificate.

(2) The undersigned has reviewed the provisions of the Credit Agreement and confirms
that, as of the date hereof:

     (a) the representations and warranties contained in Section 3 of the Credit
Agreement are true and correct in all material respects on and as of the date hereof with
the same force and effect as though made on and as of the date hereof,

     (b) no Default or Event of Default has occurred and is continuing or is imminent,
and each Borrower has complied with all of the terms, covenants and conditions set forth
in the Credit Agreement; and

     (c) attached hereto as Schedule A is a report prepared by the undersigned
setting forth information and calculations that demonstrate compliance (or noncompliance)
with each of the covenants set forth in the Financial Covenants Addendum to the Credit
Agreement.

The foregoing certificate is given in my capacity as                                                              of
Parent, and not in my individual capacity.

	 	 	 	 	 	 	 
	 	 	PAREN:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit B — Page 1

 

 

SCHEDULE A TO COMPLIANCE CERTIFICATE

	 	 	 	 	 	 	 	 	 
	1 .

	 	Cash Flow Coverage Ratio.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	i. Cash Flow (pre-tax Net Income, plus depreciation, plus
actual interest expense minus cash taxes):
	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	ii. Current Maturities of Long Term Indebtedness plus
interest expense on all debt to be paid during next
12 months plus 25% of the average outstanding principal
balance of the Revolving Loan for the previous 12
months

	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	iii. Cash Flow Coverage Ratio
[(a) ) ÷ (b)]:
	 	___ to 1.0	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	iv. Financial Covenants Addendum presently requires the
Cash Flow Coverage Ratio be not less than:
	 	1.25 to 1.0	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	v. Covenant Satisfied 

Covenant Not Satisfied 

Covenant Not Tested
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	2.

	 	Debt-to-Tangible Net Worth Ratio.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	i. Debt:
	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	ii. Tangible Net Worth:
	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	iii. Ratio of (i) Debt to (ii) Tangible Net Worth
[(a)) ÷ (b)]:
	 	___ to 1.0	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	iv. Financial Covenants Addendum presently requires the
ratio of (i) Debt to (ii) Tangible Net Worth be not more
than:

	 	2.5 to 1.0	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	          Covenant Satisfied ________________	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	          Covenant Not Satisfied _____________	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	          Covenant Not Tested
______________	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	3.

	 	Consecutive Fiscal Quarter Losses.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	i. Net Income (Loss) for fiscal quarter ending
— :
	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	ii. Net Income (Loss) for fiscal quarter ending
— :
	 	 	 	 	$ ____	 
	 
	 	 	 	 	 	 	 	 
	 

	 	iii. Aggregate Loss for preceding two fiscal quarters
cannot exceed $500,000:
	 	 	 	 	$ ____	 

Schedule A to Compliance Certificate — Page 1

 

 

Covenant Satisfied                     

Covenant Not Satisfied                     

Covenant Not Tested                     ]

Schedule A to Compliance Certificate — Page 2

 

 

EXHIBIT C

FORM OF REQUEST FOR ADVANCE

(Revolving Loan)

The undersigned hereby requests COMERICA BANK (“Agent”)
to make a Revolving Loan to
the undersigned on _____,
_____ in the amount of _____
Dollars ($ _____) under the Fourth Amended and Restated Credit Agreement
dated as of May 10, 2006 by and among the undersigned, Agent and the Banks party thereto (herein called the
“Credit Agreement”).

The undersigned represents, warrants and certifies that no Default or Event of Default has
occurred and is continuing under the Credit Agreement, and none will exist upon the making of the
Revolving Loan requested hereunder. The undersigned further certifies that upon advancing the sum
requested hereunder, the aggregate principal amount outstanding under the Revolving Credit Note
plus the Letter of Credit Liabilities will not exceed the Revolving Credit Maximum Amount.

The undersigned hereby authorizes Agent to disburse the proceeds of the Revolving Loan being
requested by this Request for Advance by crediting the account of the undersigned with Agent
separately designated by the undersigned or as the undersigned and Agent may otherwise agree.

Capitalized terms used but not otherwise defined herein shall have the respective meanings given
to them in the Credit Agreement.

Dated this                      day of                                         ,    
                 .

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit C — Page 1

 

 

EXHIBIT D

FORM OF REQUEST FOR ADVANCE

(Third Lien Real Estate Loan)

The undersigned hereby requests COMERICA BANK (“Agent”) to make an advance under the
Third Lien Real Estate Loan to the undersigned on
____, ____, in the amount of ____
Dollars ($                                          ) under the Fourth Amended and Restated
Credit Agreement dated as of May 10, 2006 by and among the undersigned, Agent and the
Banks party thereto (herein called the “Credit Agreement”).

The undersigned represents, warrants and certifies that no Default or Event of Default
has occurred and is continuing under the Credit Agreement, and none will exist upon the
making of the advance requested hereunder. The undersigned further certifies that upon
advancing the sum requested hereunder, the aggregate principal amount advanced under the
Third Lien Real Estate Note will not exceed the original principal amount of the Third
Lien Real Estate Note.

The undersigned hereby authorizes Agent to disburse the proceeds of the advance being
requested by this Request for Advance by crediting the account of the undersigned with
Agent separately designated by the undersigned or as the undersigned and Agent may
otherwise agree.

Capitalized terms used but not otherwise defined herein shall have the respective
meanings given to them in the Credit Agreement.

Dated this
                    
day of                                         ,                     .

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Exhibit D
— Page 1

 

 

SCHEDULE 3.14

EMPLOYEE BENEFIT PLANS

Describe, if any.

Schedule 3.14—Page 1

 

 

SCHEDULE 3.17

ENVIRONMENTAL DISCLOSURES

Describe, if any.

Schedule 3.17—Page 1

 

 

SCHEDULE 3.19

EQUITY OWNERSHIP

	 	 	 	 	 	 	 
	 	 	Jurisdiction of	 	 
	Name	 	Organization	 	Percentage Owned
	 
	Sterling Construction Company, Inc.

	Sterling Houston Holdings, Inc.

	 	Delaware
	 	 	100	%
	Oakhurst Management Corporation

	 	Texas
	 	 	100	%
	Oakhurst Holdings, Inc.

	 	Delaware
	 	 	100	%
	Steel City Products, LLC

	 	Delaware
	 	Sole Member

	 
	 	 	 	 	 	 
	Sterling Houston Holdings, Inc.

	Sterling General, Inc.

	 	Delaware
	 	 	100	%
	 

	 	 	 	 	99	%
	 
	 	 	 	 	 	 
	Texas Sterling Construction, L.P.

	 	Texas
	 	(limited partner)

	 
	 	 	 	 	 	 
	Sterling General, Inc.

	 
	 	 	 	 	1%	 
	 
	Texas Sterling Construction, L.P.

	 	Texas
	 	(general partner)

Schedule 3.19—Page 1

 

 

SCHEDULE 3.20

INTELLECTUAL PROPERTY

Describe, if any.

Schedule 3.20—Page 1

 

 

SCHEDULE 5.2

NAMES

All names listed in Schedule 3.19 as well as—

     Sterling Construction Company

     Texas-Sterling Construction

     Steel City Products

Schedule 5.2 — Page 1

 

 

SCHEDULE 5.4

DEBT

Describe, if any.

Schedule 5.4
— Page 1

 

 

SCHEDULE 5.5

LIENS

	1.	 	Liens securing bonding companies, including Travelers Insurance Company
and its affiliates.

Schedule 5.5
— Page 1

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