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NOTICE OF GRANT OF STOCK OPTION &
STERLING CONSTRUCTION COMPANY, INC.
EXHIBIT 10.4
STOCK OPTION AGREEMENT
TAXPAYER ID #:25-1655321
 
2751 CENTERVILLE ROAD - SUITE 3131
 
WILMINGTON, DELAWARE 19803
       

 
 
Optionee:
James H. Allen

 
Grant Date:
August 7, 2007 (Option No. 521/Option Type: ISO)

 
Option Shares:
13,707

 
 
Option Price Per Share:
$18.990

 
 
Option Expiration Date:
August 7, 2012

 
 
Option Plan:
2001 Stock Incentive Plan

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Effective on the Grant Date set forth above, Sterling Construction Company, Inc.
(the "Company") has granted to you a stock option that to the extent permissible
under applicable tax laws and regulations is intended to be an Incentive Stock
Option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and any regulations thereunder (the "Code") to purchase the number of
Option Shares of the Company's common stock (par value $0.01 per share) set
forth above at the Option Price Per Share set forth above, on the condition that
you enter into this Option Agreement with the Company.

The Option Shares become exercisable (vest) in installments from and after the
vesting dates set forth below:

Number of  Option Shares

Vesting Date
4,569
August 7, 2008
4,569
August 7, 2009
4,569
August 7, 2010

You may purchase any one or more of the Option Shares that become exercisable on
a given date from that date through and including the Option Expiration Date set
forth above, unless this Option is sooner terminated or ceases to be exercisable
as provided in this Agreement or in the Option Plan.

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By signing this Option Agreement, you and the Company agree that this Option is
governed by the terms and conditions set forth on this page and on the following
Pages 2 and 3 of this Option Agreement as well as by the terms and conditions of
the Option Plan, a copy of which has been furnished to you.  An additional copy
of the Option Plan will be furnished to you on request to the Company's
Treasurer.

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Sterling Construction Company, Inc.
 
Optionee
               
By:
       
Patrick T. Manning
 
James H. Allen
 
Chairman & Chief Executive Officer
   

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ADDITIONAL STOCK OPTION AGREEMENT TERMS

1.
Exercises.  For an exercise to be effective, the Company must receive from you:

(a)
A written notice signed by you stating the Option Grant Date and the number of
Option Shares you wish to purchase; and

(b)
Payment for the Option Shares either (i) by personal, cashier's or certified
check; or (ii) by the surrender of shares of the Company's Common Stock that you
have held for at least six months and that have a fair market value (as defined
in the Plan) on the date of exercise equal to the purchase price of the Option
Shares being purchased, or a combination of both, all according to the rules and
regulations relating to the Plan.

2.
Issuance of Option Shares.

(a)
You will have no rights as a shareholder of the Company with respect to any
Option Shares purchased under this Option until a certificate representing such
shares has been issued and delivered to you.

(b)
The Company will not be obligated to deliver a certificate for any Option Shares
unless —

 
(i)
Provision acceptable to the Company has been made for the payment of any
federal, state and local taxes that are due or that are required to be withheld
by the Company because of the purchase of the Option Shares; and

 
(ii)
There has been compliance with all federal and state laws and regulations, in
particular, the Securities Act of 1933 and the Securities Exchange Act of 1934
and the regulations promulgated under those acts, that the Company deems
applicable, and all other legal matters in connection with the issuance and
delivery of the Option Shares have been approved by the Company's counsel.

3.
Non-Transferability.  During your lifetime, this Option may only be exercised by
you or in the case of your disability, by your legal representative.  In
addition, this Option may not be assigned, transferred, pledged or otherwise
encumbered, either voluntarily or by operation of law, except (a) by your will
or according to the laws of descent and distribution; or (b) to immediate family
members (as defined in the Option Plan) to the extent permitted by applicable
laws.

4.
Termination of Employment.  For purposes of this Section 4, the word “Company”
includes the Company’s subsidiaries, and the "Termination Date" means the date
that you cease to have an employment relationship with the Company.

(a)
If your employment terminates by reason of (i) your permanent disability as
defined in any employment agreement between you and the Company, or if none is
then in effect, as defined in Section 22(e)(3) of the Code;) or (ii) your death;
or if you should die within three months after the Termination Date (unless
termination was for Cause, as defined below), then this Option may nevertheless
be exercised by you, by your legal representative, by your estate, or by your
beneficiaries, as the case may be, but only to the extent it was exercisable on
the Termination Date and only on or before the earlier to occur of (x) the first
anniversary of the Termination Date and (y) the Option Expiration Date.

(b)
If your employment is terminated pursuant to a "cause" or "good reason"
provision of any employment agreement between you and the Company and/or any of
its subsidiaries, or absent such an agreement, for Cause (as defined below,)
then this Option will terminate effective upon the Termination Date.

 
(c)
If your employment terminates for any reason other than those set forth in
Sections 4(a) or 4(b), above, then this Option may nevertheless be exercised by
you, but only to the extent it was exercisable on the Termination Date and only
on or before the earlier to occur of (i) the expiration of ninety days after the
Termination Date and (ii) the Option Expiration Date.

 
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(d)
"Cause" shall mean willful misconduct by you or willful failure by you to
perform your responsibilities to the Company (including but not limited to a
breach of any material provision of any agreement between you and the Company)
as determined by the Company acting in good faith, which determination shall be
conclusive.  Your employment shall be considered to have been terminated for
Cause if the Company determines within thirty days after the Termination Date
that discharge for Cause was warranted.

5.
Not an Employment Agreement.  Nothing in this Option Agreement shall in any way
affect your right to resign from the Company's employ or the Company's right to
terminate your employment.

6.
Adjustments.  As more fully described in the Plan, the number and kind of shares
issuable under this Option and the Option Price Per Share will be adjusted to
account for any reorganization, merger, recapitalization, or the like that
affects the Company's shares.

7.
Acceleration of Vesting.  This Option shall become immediately exercisable as to
all then unvested shares thirty days prior to the effective date of a Change In
Control of the Company as that term is defined in the Option Plan.

___________________
 
 
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