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                                                                   EXHIBIT 10.38

             SENIOR SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE

$25,000                                                        DECEMBER 31, 2001

FOR VALUE RECEIVED, STERLING CONSTRUCTION COMPANY, INC., (formerly known as
Oakhurst Company, Inc.) a corporation organized under the laws of the State of
Delaware (the "Maker,") hereby promises to pay to the order of MAARTEN D.
HEMSLEY (the "Holder") or assigns, the principal sum of Twenty-Five Thousand
Dollars ($25,000.)

1.       MATURITY DATE. All principal and accrued but unpaid interest shall be
         due to the Holder on the third anniversary of the original date of
         issuance of this Note (the "Maturity Date.")

2.       INTEREST. The Maker shall pay interest on the balance of the principal
         of this Note outstanding from time to time monthly, in arrears, on the
         first business day of each month, at the rate of twelve percent (12%)
         per annum, pro rated for any period of less than a full month that this
         Note is outstanding based on the number of days in such month. Any
         accrued but unpaid interest on this Note shall be added to the
         outstanding principal of this Note for the purpose of computing
         subsequent interest payments.

3.       NO SET-OFFS. All payments by the Maker under this Note shall be made
         without set-off, defense or counterclaim and free and clear and without
         any deduction or withholding for any taxes or fees of any nature
         whatever, unless the obligation to make any such deduction or
         withholding is imposed by law.

4.       SUBORDINATION.

         (a)      This Note is one of a series of notes issued by the Maker on
                  the date hereof that are identical except for the principal
                  amount and the name of the payee (the "WC Notes.") No payment
                  on account of the principal of, or interest on, the WC Notes
                  shall be made, and the WC Notes shall not be redeemed or
                  purchased directly or indirectly by the Issuer (or any of its
                  subsidiaries,) if at the time of such payment or purchase or
                  immediately after giving effect thereto, (i) there shall exist
                  a default in any payment with respect to any Senior
                  Indebtedness (as defined below;) or (ii) there shall have
                  occurred any other default or event of default as those terms
                  may be defined in the instrument under which such Senior
                  Indebtedness is outstanding (other than a default in the
                  payment of amounts due hereon) with respect to the Senior
                  Indebtedness permitting the holders thereof to accelerate the
                  maturity thereof, and such default or event of default shall
                  not have been cured or waived or shall not have ceased to
                  exist.

         (b)      Subject to payment in full of the Senior Indebtedness, the
                  holders of the WC Notes shall be subrogated to the rights of
                  the holders of Senior Indebtedness to receive payments or
                  distributions of the assets of the Issuer made on such Senior
                  Indebtedness until all principal and interest on the WC Notes
                  shall be paid in full. For purposes of such subrogation, no
                  payments or distributions to the holders of Senior
                  Indebtedness of any cash, property or securities to which any
                  holder of the WC Notes would be entitled except for the
                  subordination provisions of this Section 4 shall, as between
                  the holders of the WC Notes and the Issuer and/or its
                  creditors (other than the holders of the Senior Indebtedness)
                  be deemed to be a payment on account of the Senior
                  Indebtedness.

         (c)      The provisions of this Section 4 are and are intended solely
                  for the purposes of defining the relative rights of the
                  holders of the WC Notes and the holders of Senior
                  Indebtedness, and nothing in this Section 4 shall impair, as
                  between the Issuer and


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                  the holders of the WC Notes, the obligation of the Issuer,
                  which is unconditional and absolute, to pay to the holders of
                  the WC Notes the principal thereof and interest thereon in
                  accordance with the terms thereof; nor shall anything herein
                  prevent the holders of the WC Notes from exercising all
                  remedies otherwise permitted by applicable law or hereunder
                  upon default, subject to the rights set forth above of holders
                  of Senior Indebtedness to receive cash, property or securities
                  otherwise payable or deliverable to the holders of the WC
                  Notes.

         (d)      Upon any payment (including by redemption) which is not a
                  payment in full of all of the principal amount and accrued
                  interest of the WC Notes, the aggregate amount of the payment
                  shall be allocated to all the WC Notes then outstanding in
                  proportion to the amounts of principal and interest due
                  thereunder, so that the amount of principal paid under this
                  Note shall bear the same ratio to the aggregate principal and
                  accrued interest paid under all of the WC Notes as the then
                  outstanding principal then owed under this Note (as if the
                  same were then being prepaid pursuant to Section 6) bears to
                  the aggregate principal and accrued interest then owed under
                  all of the WC Notes then outstanding.

         (e)      For purposes of this Note and all WC Notes, "Senior
                  Indebtedness" means

                  (i)      that certain promissory note, as amended, dated
                           October 18, 1999 payable to Robert M. Davies in the
                           original principal amount of $539,117;

                  (ii)     obligations of the Issuer under that certain
                           promissory note issued to KTI, Inc. on July 3, 2001
                           in the original principal amount of $1,000,000;

                  (iii)    that certain promissory note dated July 13, 2001
                           payable to Robert M. Davies in the original principal
                           amount of $250,623;

                  (iv)     that certain promissory note dated July 13, 2001
                           payable to Maarten D. Hemsley in the original
                           principal amount of $136,421;

                  (v)      those three promissory notes dated October 19, 2001
                           payable, respectively, to James D. Manning
                           ($400,000,) Joseph P. Harper, Sr. ($300,000) and
                           Anthony Colombo ($100,000);

                  (vi)     all obligations of the Issuer to Comerica Bank-Texas
                           under any guaranty by the Issuer of the obligations
                           of any affiliate of the Issuer (the "Comerica
                           Obligations;")

                  (vii)    any and all working capital financing of the Issuer
                           consummated after the date of this Note with one or
                           more lending entities (a "Working Capital
                           Financing;") and

                  (viii)   any and all replacements or refinancings of the
                           Comerica Obligations or a Working Capital Financing
                           (whether any such replacement or refinancing is for a
                           greater or lesser amount than the amount replaced or
                           refinanced) with one or more other lending
                           institutions that is guaranteed by, or is the direct
                           obligation of, the Issuer.

5.       EVENTS OF DEFAULT. At the option of the Holder, all unpaid principal
         and accrued but unpaid interest under this Note shall become
         immediately due and payable without presentment, demand, protest or
         notice of any kind if any one or more of the events described in
         clauses (a) and (b), below (each an "Event of Default") occurs:

         (a)      If the Maker--

                  (i)      fails to pay the principal on the Maturity Date;
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                  (ii)     fails to pay any accrued interest hereunder within
                           ten (10) days after the due date thereof;

                  (iii)    commences any voluntary proceeding under any
                           provision of Title 11 of the United States Code, as
                           now in effect or as or hereafter amended, or
                           commences any other proceeding under any law, now or
                           hereafter in force relating to bankruptcy,
                           insolvency, reorganization, liquidation, or otherwise
                           relating to the relief of debtors or the readjustment
                           of indebtedness,

                  (iv)     makes any assignment for the benefit of creditors or
                           a composition or similar arrangement with creditors;

                  (v)      appoints a receiver, trustee or similar judicial
                           officer or agent to take charge of, or liquidate any
                           of its property or assets; or

         (b)      If any involuntary proceeding of the kind described in clauses
                  (a)(iii), (a)(iv) or (a)(v), above, is commenced against the
                  Maker.

6.       PREPAYMENT. At the option of the Maker, this Note may be prepaid in
         whole or in part at any time without penalty or premium. Any such
         prepayment shall be applied first to the payment of accrued but unpaid
         interest as of the date of such prepayment and then to the payment of
         the principal balance hereof.

7.       CONVERSION.

         (a)      By written notice to the Issuer, the Holder shall have the
                  right, exercisable at any time or from time to time prior to
                  the close of business on the Maturity Date, to convert all or
                  any portion of the then outstanding principal balance of this
                  Note into that number of fully paid and nonassessable shares
                  of common stock, par value $0.01 per share, of the Issuer
                  ("Common Stock") that is equal to the amount of the principal
                  of this Note to be converted divided by the Conversion Price
                  (as defined below) rounded down to the nearest whole share. No
                  fractional shares of Common Stock shall be issued upon any
                  conversion of this Note.

         (b)      Any conversion shall be deemed to have been effected on the
                  date when delivery of this Note is made to the Issuer with a
                  request for conversion indicating the amount of this Note to
                  be converted (the "Conversion Date.") As promptly as
                  practicable thereafter, the Issuer shall issue and deliver to,
                  or upon the written order of, the Holder, at the place
                  designated by the Holder, a certificate or certificates for
                  the number of full shares of Common Stock to which the Holder
                  is entitled.

         (c)      The person in whose name the certificate or certificates for
                  Common Stock are to be issued shall be deemed to have become a
                  holder of record of Common Stock on the Conversion Date unless
                  the transfer books of the Issuer are closed on that date, in
                  which event, such person shall be deemed to have become a
                  stockholder of record on the next succeeding date on which the
                  transfer books are open.

         (d)      Upon conversion of only a portion of this Note, the Issuer
                  shall issue and deliver to, or upon the written order of, the
                  Holder a new note covering the principal balance of this Note
                  that was not converted.

         (e)      If at any time after the date of this Note, the number of
                  shares of Common Stock outstanding is increased by a stock
                  split, subdivision or split-up of shares of Common Stock, then
                  following the record date fixed for the determination of
                  holders of Common Stock entitled to receive such stock split,
                  subdivision or split-up, the Conversion Price shall each be
                  appropriately decreased so that the number of shares of Common
                  Stock issuable on conversion of this Note immediately prior to
                  such


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                  record date shall be increased in proportion to such increase
                  in the outstanding shares.

         (f)      If at any time after the date of this Note, the number of
                  shares of Common Stock outstanding is decreased by a reverse
                  stock split or combination of the outstanding shares of Common
                  Stock, then following the record date for such combination,
                  the Conversion Price shall be appropriately increased so that
                  the number of shares of Common Stock issuable on conversion of
                  this Note immediately prior to such record date shall be
                  decreased in proportion to such decrease in outstanding
                  shares.

         (g)      In the event, at any time after the date of this Note, of any
                  capital reorganization, or any reclassification of the capital
                  stock of the Issuer (other than a change in par value or from
                  par value to no par value or from no par value to par value or
                  as a result of a subdivision, split-up or combination of
                  shares,) or the consolidation or merger of the Issuer with or
                  into another person (other than consolidation or merger in
                  which the Issuer is the continuing corporation and which does
                  not result in any change in the powers, designations,
                  preferences and rights, or the qualifications, limitations or
                  restrictions, if any, of the capital stock of the Issuer) or
                  of the sale or other disposition of all or substantially all
                  the properties and assets of the Issuer as an entirety to any
                  other person (any such transaction being referred to as an
                  "Extraordinary Transaction,") then the Issuer shall provide
                  appropriate adjustment to the Conversion Price such that the
                  principal balance of this Note outstanding immediately prior
                  to the effectiveness of the Extraordinary Transaction shall be
                  convertible into the kind and number of shares of stock or
                  other securities or property of the Issuer, or of the
                  corporation resulting from or surviving such Extraordinary
                  Transaction, that a holder of the number of shares of Common
                  Stock deliverable (immediately prior to the effectiveness of
                  the Extraordinary Transaction) upon conversion of the then
                  outstanding principal balance of this Note would have been
                  entitled to receive upon such Extraordinary Transaction.

         (h)      The "Conversion Price" shall mean two dollars and fifty cents
                  ($2.50) as the same may be adjusted as provided herein.

8.       SECURITY INTEREST. The Issuer hereby grants to the Holder and has
         granted to each other holder of a WC Note a present security interest
         in that certain subordinated promissory note issued by Steel City
         Products, Inc. ("SCPI") to the Issuer in the original principal amount
         of $550,000 to secure payment and performance of the Issuer's
         obligations under this Note. This security interest is equal in right
         of payment, performance and priority to the indebtedness of the Issuer
         to the holders of the other WC Notes, and is subordinate in right of
         payment, performance and priority to any and all indebtedness of SCPI
         to National City Bank of Pennsylvania. The Issuer agrees to execute and
         deliver to the Holder such security agreements, UCC forms and other
         documents as the Holder may reasonably request to further evidence or
         perfect this security interest.

9.       GENERAL.

         (a)      None of the terms or provisions of this Note may be excluded,
                  modified or amended except by a written instrument duly
                  executed by the Holder expressly referring to this Note and
                  setting forth the provision so excluded, modified or amended;
                  provided however, no amendment to the subordination provisions
                  of this Note that benefit the Holder unless a similar
                  amendment is made to the other WC Notes.

         (b)      The Maker hereby waives presentment, demand, presentment for
                  payment, protest, notice of protest, notice of dishonor of
                  this Note and all other demands and notices in connection with
                  the delivery, acceptance, performance and enforcement of this
                  Note.
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         (c)      This Note shall be governed by, and construed in accordance
                  with, the laws of the State of Delaware applicable to
                  agreements made and performed entirely in such State, without
                  regard to conflict of laws principles thereof, and shall be
                  binding upon the successors and assigns of the Maker and shall
                  inure to the benefit of the successors and assigns of the
                  Holder.

STERLING CONSTRUCTION COMPANY, INC.



By: /s/ Patrick T. Manning
   -------------------------------------
   Patrick T. Manning
    Chairman and Chief Executive Officer