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Maarten D. Hemsley

Executive Employment Agreement



This Executive Employment Agreement (this “Agreement”) is made and entered into as of the
13th day of July, 2005 to become effective except as noted below on July 18, 2005 (the “Effective
Date”) by and between Sterling Construction Company, Inc. with a place of business in Harris
County, Texas, (the “Company”) and Maarten D. Hemsley (“Mr. Hemsley”).



In consideration of the following covenants and conditions and for other good and valuable
consideration, the parties agree as follows:





	1.	 	Prior Agreements. The term of Mr. Hemsley’s employment agreement that terminated on the date
hereof is hereby extended to the Effective Date. Upon the Effective Date, this Agreement
supersedes that agreement and any and all other employment agreements, written or oral between
the Company and Mr. Hemsley.






	2.	 	Employment. The Company hereby employs Mr. Hemsley, and Mr. Hemsley hereby accepts
employment for the term, at the salary, with the benefits and for the other consideration set
forth herein and on the conditions specified herein.
	 
	3.	 	Duties and Responsibilities.






	 	(a)	 	Mr. Hemsley agrees to perform to the best of his ability the duties of Chief Financial
Officer of a publicly traded company with such other duties relating to that position as
the Chief Executive Officer and the Board of Directors of the Company (the “Board”) may
assign from time to time.
	 
	 	(b)	 	Mr. Hemsley agrees (i) to devote such portion of his productive time, ability and
attention to the diligent prosecution of the business and affairs of the Company as is
necessary for the discharge of his duties hereunder; and (ii) to conform to, and/or comply
with, all lawful rules, regulations, instructions, personnel practices and policies of the
Company that are not inconsistent with this Agreement, whether now in force or hereafter
adopted.
	 
	 	(c)	 	The foregoing provisions shall not prevent or restrict Mr. Hemsley from undertaking
other employment, provided such other employment does not interfere with the carrying out
of his duties hereunder.






	4.	 	Term and Place of Employment.






	 	(a)	 	Term.






	 	(i)	 	The original term of this Agreement shall commence on the Effective Date and
shall expire (unless renewed) at the close of business on the second anniversary of the
Effective Date (the “Original Term”) unless sooner terminated in accordance with the
terms and provisions hereinafter set forth.
	 
	 	(ii)	 	This Agreement shall be renewed and extended for a period of twelve (12) months
on the second anniversary of the Effective Date and on each successive anniversary
thereafter if not less than ninety (90) days prior to the second anniversary (or, if
previously renewed and extended, any succeeding anniversary) of the Effective Date (the
“Renewal Notice Date”) (A) the Company pursuant to a resolution of the Board shall have
given Mr. Hemsley written notice that it has determined to renew this Agreement; and
(B) Mr. Hemsley shall not have exercised any right herein to terminate his employment
and this Agreement.






	 	(b)	 	Place of Employment. Although Mr. Hemsley will not be based at the Company’s offices
in Houston, Texas, he shall travel to the Company’s offices at such time and with such
frequency as is reasonably required to fulfill his duties.






	5.	 	Compensation and Benefits. The compensation and benefits payable hereunder shall be in
consideration of the performance by Mr. Hemsley of his responsibilities, duties and
obligations described in this Agreement for the Company.




 









 












	 	(a)	 	Base Salary. The Company shall pay Mr. Hemsley an annual base salary of $135,000
(“Base Salary”) in bi-weekly installments, subject to pro-ration as to any partial period
and to withholding and other deductions as provided in this Agreement.
	 
	 	(b)	 	Incentive Compensation.






	 	(i)	 	Bonus. In addition to his Base Salary, the Company shall pay Mr.
Hemsley a bonus of $50,000 in respect of any fiscal year during which the Company on a
consolidated basis achieves 75% or greater of the EBITDA projected in the budget for
the fiscal year in question after adjusting the same by adding to such EBITDA any
bonuses paid to employees of the Company and its Affiliates that are directly based on
the profitability of the Company or of any Affiliate. For purposes of this Section
5(b)(i), the budget for a given fiscal year shall mean the budget that has been
approved by the Board. If the Board fails to approve a budget for a fiscal year, the
“EBITDA projected in the budget” shall be the actual EBITDA for the preceding fiscal
year. For purposes of this Agreement, EBITDA shall have the meaning assigned to such
term in Schedule A hereto. In calculating EBITDA for a given year, appropriate
adjustments shall be made for any material changes in the Company’s business that occur
during such year, such as the sale of a part of the business. In the case of such a
change, the budgeted results for that part of the Company for the period following the
sale would be excluded from the budget.
	 
	 	(ii)	 	Additional Bonus. In addition to any amounts payable pursuant to
Section 5(b)(i), above, the Company shall pay Mr. Hemsley such additional
incentive bonus, if any, with respect to each fiscal year as the Compensation Committee
of the Board deems appropriate after taking into consideration the Company’s
consolidated financial results, the number of non-routine business transactions to
which Mr. Hemsley devoted substantial time and such other matters as the Compensation
Committee deems relevant. In no event shall such additional incentive bonus exceed
$75,000.






	 	(c)	 	Equity Compensation. On or as of each anniversary of the Effective Date, the Company
shall grant Mr. Hemsley an option to purchase 2,800 shares of the Company’s common stock at
an exercise price per share equal to the fair market value of a share of the Company’s
common stock on the date of grant. Each such option shall be an incentive stock option to
the extent permitted by applicable tax laws, shall expire five (5) years from the date of
grant, and shall become exercisable in full on July 18, 2007. Each such option shall
continue in full force and effect notwithstanding the termination of Mr. Hemsley’s
employment hereunder unless such termination is pursuant to Section 6(c) (“The
Company’s Right to Terminate for Good Cause”), below, in which event each such option shall
terminate on the date that Mr. Hemsley’s employment terminates.
	 
	 	(d)	 	Benefits; Other Compensation. Mr. Hemsley shall be entitled to participate in those
fringe benefits, benefit plans, bonus plans or programs and other compensation of the
Company and the Affiliates (“Benefit Plans”) at any time made available generally to its
employees or senior employees.
	 
	 	(e)	 	Payroll Taxes and Other Deductions. The Company shall withhold from Base Salary and
any other compensation paid to Mr. Hemsley all applicable withholding and other payroll
taxes due with respect thereto and such other deductions as shall be related to Mr.
Hemsley’s participation in the insurance or other Benefit Plans, if any, from time to time
established and maintained by the Company or the Affiliates for salaried employees.
	 
	 	(f)	 	The Company shall provide a minimum of $100,000 of term life insurance for Mr.
Hemsley’s benefit and shall continue to provide for his benefit the long-term disability
policy which is has provided heretofore.
	 
	 	(g)	 	Business Expenses. The Company shall reimburse to Mr. Hemsley his reasonable and
necessary business expenses incurred by him in the performance of his duties and
responsibilities
	 
	 	 	 	 





			
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	 	 	 	hereunder, including, without limitation, travel to the Company’s facilities, all in
accordance with applicable policies, as such may exist from time to time.
	 
	 	(h)	 	Directors and Officers Liability Insurance. The Company shall obtain and maintain, at
its sole expense, a policy or contract of insurance to insure its directors and officers
and the directors and officers of its subsidiaries against personal liability for acts or
omissions in connection with service as a director or officer of the Company or of any
Affiliate (as defined below) or service in other capacities at the request of the Company.
The insurance coverage provided to Mr. Hemsley shall be at the same limits and of the same
scope and on the same terms and conditions as the coverage provided to the other directors
and officers of the Company. The scope, terms and conditions of such coverage shall be
reasonably comparable to the directors and officers insurance coverage provided by public
companies of comparable size.
	 
	 	(i)	 	Indemnification. The Company shall defend and indemnify Mr. Hemsley against, and hold
him harmless from, any and all costs, liabilities, losses, claims and exposures for his
services as an employee, officer or director of the Company or any Affiliate to the maximum
extent permitted under applicable laws or under the Company’s charter or bylaws.






	6.	 	Termination.






	 	(a)	 	Mr. Hemsley’s Right to Terminate for Good Reason.






	 	(i)	 	Mr. Hemsley may terminate this Agreement and his employment with the Company
for Good Reason, as defined below. In the event of Mr. Hemsley’s termination of this
Agreement and his employment with the Company for Good Reason, the Company shall
continue to pay Mr. Hemsley his Base Salary through the expiration of the then
remaining term of this Agreement, but in no event for less than twelve (12) additional
months, and all stock options held by Mr. Hemsley shall thereupon become exercisable in
full.
	 
	 	(ii)	 	For purposes of Section 6(a)(i), above, “Good Reason” shall be deemed
to exist if (A) the Company fails to comply with any material provision of this
Agreement and such failure has not been cured within ten (10) days after notice of such
noncompliance has been given by Mr. Hemsley to the Board pursuant to the notice
provisions of this Agreement specifying the nature of such noncompliance in reasonable
detail; or (B) Mr. Hemsley is removed from, or is not elected to, the Board after the
Effective Date; or (C) Mr. Hemsley is assigned any duties materially inconsistent with
Mr. Hemsley’s authority, duties or responsibilities on the Effective Date, including
without limitation any action of the Company that results in Mr. Hemsley no longer
having the titles and responsibilities specified in Section 3(a), above; or (D)
the Company fails to renew the Original Term or any extended term of this Agreement in
the manner provided in Section 4(a)(ii), above, by the Renewal Notice Date.






	 	(b)	 	Mr. Hemsley’s Right to Terminate Without Good Reason. At any time, Mr. Hemsley may
terminate this Agreement and his employment with the Company for any reason not described
in Section 6(a), above, but only after at least one hundred eighty (180) days’
advance written notice is given to the Board by Mr. Hemsley pursuant to the notice
provisions hereof; provided, however, that Mr. Hemsley shall terminate his employment on
any earlier date after giving such notice if so required by the Board. If Mr. Hemsley
terminates his employment in accordance with the preceding sentence, the Company shall not
be obligated to make any further payments hereunder, except for (i) the amount of any
accrued Base Salary through the effective date of termination in the manner set forth in
Section 5(a), above; and (ii) any vested benefits, amounts or payments due Mr.
Hemsley or his beneficiaries under any Benefit Plan in which he is a participant. The
Company may deem such notice as notice of resignation by Mr. Hemsley of all offices and
directorships then held by him in the Company and in any entity controlling, controlled by,
or under common control with, the Company (each an “Affiliate”) such resignation to be
effective upon Mr. Hemsley’s termination of employment.
	 
	 	(c)	 	The Company’s Right to Terminate for Good Cause. The Company may terminate this
Agreement and Mr. Hemsley’s employment for good cause, as defined below, at any time
	 
	 	 	 	 





			
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	 	 	 	effective immediately upon giving written notice of termination to Mr. Hemsley. For the
purposes of this Section 6(c) “good cause” for termination shall mean any of the
following:






	 	(i)	 	Mr. Hemsley’s gross neglect of his duties, gross negligence in the performance
of his duties, refusal to perform his duties, or willful disobedience of a lawful order
or directive given to Mr. Hemsley by the Board and within the scope of Mr. Hemsley’s
duties.
	 
	 	(ii)	 	Mr. Hemsley’s unsatisfactory performance of his duties that is not cured within
twenty (20) working days after written notice is given to Mr. Hemsley pursuant to a
duly adopted resolution of the Board specifically identifying each reason why the
Board, in its judgment, believes that Mr. Hemsley’s performance is unsatisfactory and
what Mr. Hemsley can do to cure such unsatisfactory performance to the full
satisfaction of the Board.
	 
	 	(iii)	 	Any act of theft or other dishonesty on the part of Mr. Hemsley, including,
but not limited to any intentional misapplication of the Company’s funds or other
property that the Board has found pursuant to a duly adopted resolution, with Mr.
Hemsley not participating in such action, that Mr. Hemsley has committed.
	 
	 	(iv)	 	Mr. Hemsley’s conviction of any criminal activity not described in Section
6(c)(iii), above, or participation in an activity involving moral turpitude that
the Board has found pursuant to a duly adopted resolution, with Mr. Hemsley not
participating in such action, is or could reasonably be expected to be injurious to the
business or reputation of the Company.
	 
	 	(v)	 	Mr. Hemsley’s immoderate use of alcohol and/or the use of non-prescribed
narcotics that the Board has found pursuant to a duly adopted resolution, with Mr.
Hemsley not participating in such action, adversely affects the performance of his
duties.






	 	(d)	 	Consequences of Termination for Good Cause. If the Company terminates this Agreement
and Mr. Hemsley’s employment for good cause, the Company shall not be obligated to make any
further payments hereunder except for (i) the amount of any accrued Base Salary due at the
time of termination in the manner set forth in Section 5(a), above; and (ii) any
vested benefits, amounts or payments due Mr. Hemsley or his beneficiaries under any Benefit
Plan in which he is a participant.
	 
	 	(e)	 	The Company’s Right to Terminate Without Good Cause. The Company may terminate this
Agreement and Mr. Hemsley’s employment at any time for any reason not described in
Section 6(c), above, but only after at least one hundred eighty (180) days’ advance
written notice is given to Mr. Hemsley pursuant to the notice provisions hereof. If Mr.
Hemsley’s employment is terminated in accordance with the preceding sentence, the Company
shall continue to be obligated to make all payments of Base Salary that would have been
payable under Section 5(a), above, during the period commencing on the date of such
termination and ending on the earlier of (i) the end of the Original Term (or, if
applicable, any renewal term) hereof; or (ii) the date Mr. Hemsley breaches or ceases to be
subject to the provisions of Section 7 (“Proprietary and Confidential Information
of the Company”) or Section 8 (“Covenant Not to Solicit or Compete”), below.
	 
	 	(f)	 	Mr. Hemsley’s Right to Terminate in the Event of a Change in Control of the Company.
For purposes of this Section 6(f), the word “Company” shall mean and include any
one or more of the Company, Sterling Houston Holdings, Inc., Sterling General, Inc. and
Texas Sterling Construction, L.P. so long as they are Affiliates.






	 	(i)	 	A “Change in Control of the Company” shall occur or be deemed to have occurred
only if one of the following events occurs.






	 	(A)	 	Any “person” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) (other than (1) the Company;
(2) any trustee or other fiduciary holding securities under an employee benefit
plan of the Company; or (3) any corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as their ownership
of stock of the Company) becomes
	 
	 	 	 	 





			
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	 	 	 	the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or
indirectly, of securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities;
	 
	 	(B)	 	During any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company together
with any new director (other than a new director designated by a person who has
entered into an agreement with the Company to effect any transaction described in
Section 6(f)(i)(A), 6(f)(i)(C) or 6(f)(i)(D)) whose election by the Board
of Directors or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
either directors at the beginning of the period or whose election or whose
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board of Directors;
	 
	 	(C)	 	the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than (1) a merger or consolidation
that would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (2) a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (as defined in Section 6(f)(i)(A),
above) acquires more than 50% of the combined voting power of the Company’s then
outstanding securities; or
	 
	 	(D)	 	the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.






	 	(1)	 	For purposes of the application of the provisions of this
Section 6(f) to Texas Sterling Construction, L.P., stockholders shall
mean the general partner or partners; securities and voting power shall refer
to general partnership interests; election shall refer to selection as a
general partner; and directors and the board shall refer to the general partner
or partners all as the context requires in order to achieve the intent of such
provisions.






	 	(ii)	 	Upon the occurrence of either a Change in Control of the Company or the
execution by the Company of any agreement that will result in a Change in Control that
is not consented to in writing by Mr. Hemsley on or before its consummation, Mr.
Hemsley shall have a period of thirty (30) days after such consummation in which to
elect by written notice to the Board to terminate this Agreement and his employment
hereunder. If such notice is timely given, Mr. Hemsley’s employment and this Agreement
shall terminate on the date such notice is given. If Mr. Hemsley terminates his
employment and this Agreement in accordance with this Section 6(f), no further
payments hereunder shall be made to Mr. Hemsley, except for (A) the amount of any
accrued Base Salary through the effective date of termination in the manner set forth
in Section 5(a), above; and (B) any vested benefits, amounts or payments due
Mr. Hemsley or his beneficiaries under any Benefit Plan in which he is a participant.
For the avoidance of doubt, any bonus earned but not yet paid shall be paid in the
event Mr. Hemsley terminates his employment pursuant to this Section 6(f) and
all stock options held by Mr. Hemsley shall become exercisable in full. Such
written notice shall be construed as a resignation by Mr. Hemsley of all offices and
directorships then held by him in the Company or Company as to which there has been a
Change In Control and in any Affiliate.
	 
	 	(iii)	 	The termination of Mr. Hemsley’s employment under Section 6(f)(ii),
above, shall relieve Mr. Hemsley of his obligations set forth in Section 8
(“Covenant Not to Solicit or Compete”), below, but shall not relieve Mr. Hemsley of his
obligations set forth in Section 7 (“Proprietary and Confidential Information
of the Company”), below.
	 
	 	 	 	 





			
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	 	(g)	 	In the Event of Death. In the event of Mr. Hemsley’s death during the Original Term or
any renewal term of this Agreement, this Agreement shall be terminated automatically as of
the date of Mr. Hemsley’s death, and the Company shall have no further or continuing
obligation to Mr. Hemsley or his estate under the provisions of Section 5
(“Compensation and Benefits”), above, other than to pay any salary or benefits accrued but
not paid for the period ending on the date of Mr. Hemsley’s death. For the avoidance of
doubt, any bonus earned but not yet paid shall be paid in the event of Mr. Hemsley’s death.
	 
	 	(h)	 	In the Event of Permanent Disability. In the event Mr. Hemsley is or becomes
permanently disabled, as such term is defined below, during the Original Term or any
renewal term of this Agreement, this Agreement and Mr. Hemsley’s employment may at the
option of the Company be terminated at any time after the occurrence of such disability.
Any such termination shall be exercised by written notice to Mr. Hemsley or his personal
representative. Mr. Hemsley shall be deemed to have become permanently disabled if during
any consecutive twelve (12) month period, because of ill health, physical or mental
disability, or for other causes beyond his control, he shall have been continuously unable
or unwilling or shall have failed to have performed his duties under this Agreement, in
whole or in substantial part, for one hundred eighty (180) consecutive days.






	7.	 	Proprietary and Confidential Information.






	 	(a)	 	Nondisclosure Covenant. During the term of his employment hereunder, Mr. Hemsley shall
have access to confidential and/or proprietary information of the Company and its
Affiliates including, but not limited to, their books and records, financial information,
personnel information, lists of existing or prospective clients and customers (and their
special needs and requirements) market research, fee and pricing structures, intellectual
property, and other information (hereafter collectively called “Confidential Information.”)
Mr. Hemsley recognizes and acknowledges that Confidential Information is a valuable,
special and unique asset of the owner thereof (whether such owner is the Company, an
Affiliate or a third party) and that the owner’s business is dependent on the same. To
insure the continued secrecy of Confidential Information, and in consideration of his
employment or continued employment, Mr. Hemsley agrees and covenants, subject to the next
succeeding sentence, that during the Original Term and any renewal term of this Agreement
and at all times following the termination of this Agreement and/or his employment (whether
such termination occurs as a result of the expiration of the Original Term or any renewal
term of this Agreement or by the election of either party) Mr. Hemsley will not, except as
is reasonably believed by him to be in the best interest of, or necessary to, the conduct
of the business of the Company and/or the Affiliates —






	 	(i)	 	disclose or divulge to any person, firm, corporation, partnership, joint
venture or other business entity, or to any local, state or federal governmental agency
(collectively referred to as an “Entity”) any Confidential Information or any other
proprietary information that is used by, or becomes known to, Mr. Hemsley;
	 
	 	(ii)	 	use Confidential Information for any purpose other than the performance by Mr.
Hemsley of his obligations under this Agreement and/or the performance of his duties as
an employee of the Company; or
	 
	 	(iii)	 	disclose to any Entity any information that is not otherwise known to the
public concerning the business, customers, clients or affairs of the Company or the
Affiliates that Mr. Hemsley may acquire in the course of, or as an incident to,
employment and service hereunder.






	 	(b)	 	Exceptions. Notwithstanding the immediately preceding sentence to the contrary, Mr.
Hemsley shall not be considered to have violated the requirements of such sentence if Mr.
Hemsley makes a disclosure of Confidential Information in response to a subpoena or is
ordered by a court of competent jurisdiction to do so. Confidential Information shall not
include information that (i) becomes known to the public through no fault of Mr. Hemsley;
(ii) is properly disclosed by the Company to a third party under no obligation of
confidentiality; or (iii) becomes available to
	 
	 	 	 	 





			
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	 	 	 	Mr. Hemsley on a non-confidential basis from a third party under no obligation of
confidentiality to the Company or to an Affiliate.
	 
	 	(c)	 	Work Product. Upon the termination of his employment, Mr. Hemsley shall not take from
the premises of the Company or an Affiliate or otherwise retain any records, files or other
documents, or copies thereof, relating to the business or affairs of the Company or an
Affiliate or any Confidential Information. As further consideration for his employment,
Mr. Hemsley hereby assigns and agrees to assign jointly to the Company, its successors and
assigns, all rights to documents, manuals, notes, computer programs, data bases, research
material, prospective customer lists, etc. that Mr. Hemsley may have made, conceived, or
received during the term of, and relating to his employment with the Company. Mr. Hemsley
will promptly disclose to the Company information relating to said documents, manuals,
notes, computer programs, databases, research materials, prospective customer lists, etc.
and will execute, acknowledge, and deliver all papers and perform such other acts as may be
necessary in the opinion of the Company to vest title to such material in the Company, its
successors and assigns. Without limiting the generality of the foregoing, Mr. Hemsley
covenants and agrees to assign jointly to the Company, its successors and assigns, at any
time and from time to time as may be requested by the Company, its successors and assigns,
at any time or times, any and all works, whether constituting derivative works or
improvements that he develops, invents or creates from and after the Effective Date and
during the term of, and in connection with his employment hereunder, and agrees that the
same are and will be works for hire and owned by the Company, its successors and assigns.
	 
	 	(d)	 	Remedies. In the event of a breach or threatened breach by Mr. Hemsley of the
provisions of this Section 7, the Company shall be entitled to seek an injunction
restraining Mr. Hemsley from disclosing, in whole or in part, any Confidential Information
or mandating the assignment by Mr. Hemsley of any and all such works to the Company.
Nothing herein shall be construed as prohibiting the Company from pursuing any other
remedies available to it for such breach or threatened breach, including the recovery of
damages from Mr. Hemsley.






	8.	 	Covenant Not to Solicit or Compete. Mr. Hemsley hereby agrees, covenants and warrants
subject to the terms and conditions of this Section 8 that during the Original Term
and any renewal term of this Agreement and —






	 	(a)	 	For the two (2) year period following the expiration of the Original Term or any
renewal term or following the termination of Mr. Hemsley’s employment under Section
6(b) (Mr. Hemsley’s Right to Terminate Without Good Reason”) or Section 6(c)
(“The Company’s Right to Terminate for Good Cause”), above; as the case may be, or
	 
	 	(b)	 	For the one (1) year period following the termination of Mr. Hemsley’s employment under
Section 6(a) (“Mr. Hemsley’s Right to Terminate for Good Reason”) or Section
6(e) (“The Company’s Right to Terminate Without Good Cause”), above,
	 
	 	 	 	Mr. Hemsley will not, within the State of Texas or the Commonwealth of
Pennsylvania, directly or indirectly:






	 	(i)	 	compete with the Company in any business in which it or any Affiliate is
actively engaged at the termination of Mr. Hemsley’s employment;
	 
	 	(ii)	 	solicit, contract, contact or consult with any of the Company’s or its
Affiliates’ then existing or actively prospective customers or clients for the purpose
of providing, either directly or indirectly, goods or services in competition with the
Company or any Affiliate;
	 
	 	(iii)	 	take any action that would tend to divert from the Company or any Affiliate
any Entity that was a client or customer thereof on the date of the termination of Mr.
Hemsley’s employment or any Entity with respect to which the Company or an Affiliate
was actively seeking to establish a client relationship on the date of the termination
of Mr. Hemsley’s employment; or
	 
	 	(iv)	 	solicit for employment or employ as an employee, independent contractor or
consultant any person who is a party to an employment, independent contractor or
consulting agreement
	 
	 	 	 	 





			
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	 	 	 	with the Company or an Affiliate or was an employee, independent contractor or
consultant of the Company or an Affiliate on the date of the termination of Mr.
Hemsley’s employment to perform or provide (or aid in the providing or performing) on
behalf of any Entity any service that is the same as, or similar to, any service
performed or provided by such person in the scope of such person’s employment,
independent contractor or consulting arrangements with the Company or an Affiliate.






	 	(c)	 	As sole consideration for Mr. Hemsley’s agreement not to compete for the period
specified above following the termination of his employment, the Company shall pay and
hereby agrees to pay Mr. Hemsley one thousand dollars ($1,000) per month in advance for
each month in such period.
	 
	 	(d)	 	Notwithstanding the foregoing provisions of this Section 8, Mr. Hemsley may
elect by written notice to the Company after termination of employment by the Company other
than for good cause and prior to any breach of (i) Section 7 (“Proprietary and
Confidential Information of the Company”), above; (ii) this Section 8; or (iii) of
any other provisions hereof by Mr. Hemsley, to cease to be subject to this Section
8. Upon the giving of such notice, Mr. Hemsley shall cease to be subject to the
provisions of this Section 8 (but shall continue to be subject to the provisions of
Section 7), and the Company shall cease to have any further obligations to make any
further payments to Mr. Hemsley pursuant to Section 6(e) (“The Company’s Right to
Terminate Without Good Cause”) (if otherwise applicable) or pursuant to Section
8(c), above.
	 
	 	(e)	 	Mr. Hemsley agrees that the provisions contained in this Section 8 are of vital
importance to the Company, and that if any question shall ever arise as to whether any act
of Mr. Hemsley is prohibited by this Section 8, then, in all instances in which it
is reasonable to interpret any provision of this Section 8 to prohibit such act,
such interpretation shall be controlling, notwithstanding that it may also be reasonable to
interpret such provision not to prohibit such act.
	 
	 	(f)	 	Mr. Hemsley further agrees that such limitations as to the period of time, geographic
area and types and scopes of restriction on his activities specified herein are reasonable
and necessary for the protection of the goodwill and other business interests of the
Company and its Affiliates. However, should either the time period or the geographic area
provided herein be deemed invalid or unenforceable in any respect by a court of competent
jurisdiction, then Mr. Hemsley recognizes and agrees that, upon request of the Company, a
modification shall be made to such time period or geographic area to protect the Company
with respect to the purpose of this covenant not to compete.
	 
	 	(g)	 	Mr. Hemsley recognizes and agrees that any violation by him of any of the provisions
contained in this Section 8 will cause such damage or injury to the Company as
would be irreparable and continuing and that the exact amount of such damage might be
difficult or impossible to ascertain and that for such reason, among others, the Company
shall be entitled to seek an injunction from any court of competent jurisdiction
restraining any further violation by him of this Section 8 in addition to
recovering such damages as the Company may have sustained as a result thereof. Such right
to damages or an injunction shall be in addition to, and not in limitation of, any other
rights and remedies the Company may have under Section 15.50 et seq. of the Texas Business
and Commerce Code for breach of this Section 8 or any other provisions of this
Agreement.
	 
	 	(h)	 	The existence of any claim or cause of action of Mr. Hemsley against the Company or an
Affiliate, whether predicted on this Agreement or otherwise, shall not constitute a defense
to the enforcement of this covenant.






	9.	 	Assignment of Agreement. The Company may not assign this Agreement without the prior written
consent of Mr. Hemsley. In the event of an assignment, the rights and obligations of the
Company under this Agreement shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company. Any assignment by the Company of its rights hereunder
shall not relieve the Company of its financial obligation to Mr. Hemsley. The rights and
obligations of Mr. Hemsley under this Agreement are personal to him, and no such rights,
benefits or obligations shall be subject to voluntary or involuntary alienation, assignment or
transfer by him.
	 
	 	 	 





			
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	10.	 	Notices.






	 	(a)	 	Any notice given under this Agreement to the other parties shall be given in writing.
Any such notice shall be given by personal delivery or by registered or certified mail
(return receipt requested) postage prepaid, addressed —






	 	(i)	 	In the case of the Company to its headquarters address; and
	 
	 	(ii)	 	In the case of Mr. Hemsley, to his most recent residence address on the books
of the Company;






	 
	 	 	 	or to such other address of a party as that party may by written notice hereafter
designate.
	 
	 	(b)	 	Notice given in accordance herewith shall be effective five (5) days after the date of
the postmark if mailed via registered or certified mail and the return receipt is received
by the sender, or upon actual receipt by the party receiving the notice in the event that
(i) such return receipt is not received by the sender; or (ii) notice was given by personal
delivery.






	11.	 	Waiver of Breach. The waiver by a party of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach of the same or any other
provision of this Agreement.
	 
	12.	 	Entire Agreement. This Agreement together with Schedule A contains the entire
agreement of the parties with respect to the subject matter hereof except as otherwise
expressly provided herein.
	 
	13.	 	Amendment. This Agreement may be changed, modified or amended at any time and in any respect
by the agreement of the parties hereto without the consent of any other person; provided,
however, that no change, modification or amendment shall be binding unless the same shall have
been reduced to a writing and signed by the party against whom enforcement of the change,
modification or amendment is sought.
	 
	14.	 	Applicable Law and Venue. The parties intend and agree that the terms and provisions of
this Agreement and the performance of the parties hereunder shall be governed by the laws of
the State of Texas, excluding its conflicts of laws provisions, and all disputes hereunder are
subject exclusively to the jurisdiction of courts, state or federal, sitting in Harris County,
Texas.
	 
	15.	 	Severability. In the event that any portion of this Agreement is declared to be invalid or
illegal by final judgment of any court of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect notwithstanding the invalidity or illegality
of such portion.
	 
	16.	 	Headings and References. The headings contained in this Agreement are solely for the
convenience of the parties and have no bearing upon the interpretation and/or enforcement of
this Agreement. All references in this Agreement to sections shall refer to the sections of
this Agreement unless otherwise explicitly stated, and the words “hereof,” “herein,” and
“hereunder,” and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
	 
	17.	 	Number and Gender of Words. Whenever herein the singular number is used, the same shall
include the plural where appropriate, and words of any gender shall include each other gender
where appropriate.
	 
	18.	 	Counterparts and Execution. This Agreement may be executed in multiple counterparts, each of
which may be considered an original, but all of which together shall constitute but one and
the same instrument. This Agreement when signed by a party may be delivered by telecopier or
other facsimile transmission with the same force and effect as if the same were an executed
and delivered original manually signed counterpart.





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Executed effective as of the Effective Date.

Sterling Construction Company, Inc.




	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert W. Frickel
 

Robert W. Frickel
	 	 
	 	/s/ Maarten D. Hemsley
 

          Maarten D. Hemsley
	 	 
	 

	 	Chairman of the Compensation Committee	 	 	 	 	 	 






 






Schedule A



Definition of EBITDA



“EBITDA” shall mean the net income determined in accordance with generally accepted accounting
principles of the Company and its consolidated subsidiaries for a given fiscal year —




	 	 	 
	Plus

	 	Interest expense for the period;
	 
	 	 
	Plus

	 	Depreciation and amortization expense for the period;
	 
	 	 
	Plus

	 	Federal and state income tax expense incurred for the period;
	 
	 	 
	Plus

	 	Extraordinary Items and non-recurring items (to the extent negative) if any, for the period;
	 
	 	 
	Plus

	 	Any fees paid to non-employee directors;
	 
	 	 
	Minus

	 	Extraordinary Items and non-recurring items (to the extent positive) if any; and
	 
	 	 
	Minus

	 	Interest income for the period.






 






 




			
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