Document:

ex10_2.htm

    
      

    

    
      	 	
              STERLING
                CONSTRUCTION COMPANY, INC.

            	
              EXHIBIT
                10.2

            

    

    Joseph
      P. Harper, Sr. Employment Agreement

    
      
        

      

    

    THIS
      EMPLOYMENT AGREEMENT (this "Agreement") is made to be
      effective as of  July 19, 2007 (the "Effective Date") by and
      between Joseph P. Harper, Sr. (hereinafter referred to as "Mr. Harper") and
      Sterling Construction Company, Inc. (hereinafter referred to as the "Company.")

     

    Background

     

    Mr. Harper
      has been an employee of the Company under an employment agreement that expired
      at the close of business on July 18, 2007 (the "Prior
      Agreement.")  Mr. Harper and the Company wish to enter
      into another employment agreement on the terms and conditions set forth
      herein.

     

    THEREFORE,
      for and in consideration of the mutual covenants contained herein and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, it is hereby agreed as follows:

     

    
      	
              1.

            	
              Term
&
Transition.
                

            

    

     

    
      	
            	
              1.1.

            	
              Mr. Harper's
                employment under this Agreement shall commence on the Effective Date
                and
                shall expire on the earlier to occur of (a) a termination of his
                employment pursuant to Section 8
                (Termination by the Company) or Section
                9
                (Termination by Mr. Harper) below; or (b) 5:00 p.m. Central Time on
                December 31, 2010. 

            

    

     

    
      	
            	
              1.2.

            	
              Because
                this Agreement will be in effect for only a part of calendar year
                2007,
                Mr. Harper's salary shall be pro rated as provided in Exhibit
                A,
                below. 

            

    

     

    
      	
            	
              1.3.

            	
              For
                calendar year 2007, the provisions of the Prior Agreement relating
                to
                vacation shall be superseded in their entirety by the provisions
                relating
                to vacation in this Agreement. 

            

    

     

    
      	
              2.

            	
              Title,
                Reporting Relationship,
                Responsibilities & Place of Employment.
                

            

    

     

    
      	
            	
              2.1.

            	
              So
                long as Mr. Harper is an employee of the Company under this Agreement
                — 

            

    

     

    
      	
            	
              2.1.1.

            	
              He
                shall be elected to the position or positions set forth on Exhibit
                A;
                

            

    

     

    
      	
            	
              2.1.2.

            	
              He
                shall have the reporting relationship set forth on Exhibit
                A;
                

            

    

     

    
      	
            	
              2.1.3.

            	
              He
                shall devote his full working time to diligently carrying out the
                duties
                and responsibilities set forth in Exhibit
                A to
                the best of  abilities; and

            

    

     

    
      	
            	
              2.1.4.

            	
              His
                place of employment shall be based in Houston, Texas except for required
                travel on the Company's business. 

            

    

     

    
      	
              3.

            	
              Compensation.
                

            

    

     

    
      	
            	
              3.1.

            	
              Cash
                Compensation.  Subject to the transition provisions for
                calendar year 2007 set forth in Exhibit
                A,
                below, so long as Mr. Harper is an employee of the Company under this
                Agreement, he shall be paid the Base Payroll Salary and shall be
                eligible
                to earn the Base Deferred Salary and the Incentive Bonus set forth
                in
                Exhibit
                A
                in accordance with the terms thereof.

            

    

     

    
      	
            	
              3.1.1.

            	
              Base
                Deferred Salary and Incentive Bonus if and to the extent either is
                earned
                in a given year shall be paid after January 1 and before March 15
                of the
                calendar year immediately following such year.

            

    

     

    
      	
            	
              3.1.2.

            	
              All
                cash compensation shall be subject to legally-required and any voluntary
                withholdings and deductions. 

            

    

     

    
      	
            	
              3.2.

            	
              Benefits.  Mr. Harper
                shall be entitled to the same health, life insurance, disability
                and other
                like benefits as are made available to the Company's senior managers
                generally, and on the same terms and conditions.  He shall also
                be entitled to paid vacation time as set forth on Exhibit
                A.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
              4.

            	
              Business
                Expense
                Reimbursement.  Mr. Harper shall be reimbursed in
                accordance with the Company's business expense reimbursement policy
                from
                time to time in effect for all reasonable business expenses incurred
                by
                him in the performance of his duties.

            

    

     

    
      	
              5.

            	
              Indemnification.
                

            

    

     

    
      	
            	
              5.1.

            	
              Mr. Harper
                shall be indemnified by the Company with respect to claims made against
                him as a director, officer and/or employee of the Company and of
                any
                affiliate of the Company to the fullest extent permitted by the Company's
                charter, by-laws and the laws of the State of Delaware.
                

            

    

     

    
      	
            	
              5.2.

            	
              The
                Company shall ensure that Mr. Harper is covered by a standard form
                directors and officers liability insurance policy obtained and maintained
                at no cost to Mr. Harper. 

            

    

     

    
      	
              6.

            	
              Confidential
                Information. 

            

    

     

    
      	
            	
              6.1.

            	
              During
                his employment by the Company and thereafter, Mr. Harper shall not
                disclose to any person or entity Confidential Information (as defined
                below) except in the proper performance of his duties and responsibilities
                under this Agreement, or except as may be expressly authorized by
                the
                Board of Directors of the Company. 

            

    

     

    
      	
            	
              6.2.

            	
              For
                purposes of this Agreement, "Confidential
                Information" is defined as any information of the Company or its
                affiliates that derives independent economic value from not being
                generally known or readily ascertainable by proper means and includes,
                but
                is not limited to trade secrets, customer names and lists, vendor
                names
                and lists, business plans, marketing plans, non-public financial
                data,
                product specifications and designs, inventions, discoveries, processes,
                drawings, documents, records, software, or any information of a third
                party that is held by the Company or its affiliates under an obligation
                of
                confidentiality. 

            

    

     

    
      	
              7.

            	
              Non-Compete
                Obligations.  For purposes of this Section
                7 only,
                the term "the Company" shall include the Company's
                affiliates.  Mr. Harper's obligations with respect to
                competing with the Company and soliciting its employees shall be
                as
                follows (the "Non-Compete
                Obligations"): 

            

    

     

    
      	
            	
              7.1.

            	
              Mr. Harper
                shall not render services or advice, whether for compensation or
                without
                compensation and whether as an employee, officer, director, principal
                or
                otherwise, to any person or organization with respect to any product
                or
                service that is competitive with a product or service of the Company
                in
                which he was actively engaged during his employment by the Company
                or of
                which he has detailed knowledge; or with any planned business in
                which he
                had an active part in the planning or of which he has detailed knowledge.
                

            

    

     

    
      	
            	
              7.2.

            	
              Mr. Harper
                shall not either directly or indirectly as agent or otherwise in
                any
                manner solicit, influence or encourage any customer of the Company
                to take
                away or to divert or direct its business to himself or to any person
                or
                entity by or with which he is employed, associated, affiliated or
                otherwise related (other than the Company.)

            

    

     

    
      	
            	
              7.3.

            	
              Mr. Harper
                shall not recruit or otherwise solicit or induce any employee of
                the
                Company to terminate his or her employment with or otherwise cease
                his or
                her relationship with the Company. 

            

    

     

    
      	
            	
              7.4.

            	
              The
                Non-Compete Obligations apply to the state of Texas and any other
                state in
                which the Company and its affiliates taken as a whole receives more
                than
                10% of its annual revenues. 

            

    

     

    
      	
            	
              7.5.

            	
              Mr. Harper's
                obligations under this Section
                7 shall
                continue (a) so long as he is an employee of the Company; and (b)
                after
                his employment terminates (whether by reason of the expiration of
                this
                Agreement or pursuant to Section
                8
                (Termination by the Company) or Section 9
                (Termination by Mr. Harper)) below, or otherwise) for a period of
                twelve months; or for the period, if any, during which he is entitled
                to
                be paid his Base Payroll Salary, whichever period is longer.
                

            

    

     

    
      
        
        

      

      
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
              8.

            	
              Termination
                bythe
                Company.  Prior to the expiration of this Agreement, the
                Company may terminate Mr. Harper's employment only pursuant to the
                following terms and on the following conditions:
                

            

    

     

    
      	
            	
              8.1.

            	
              Without
                Cause.  The Company may terminate Mr. Harper's
                employment Without Cause (as defined below) by giving him ninety
                days'
                prior written notice thereof, in which event —

            

    

     

    
      	
            	
              8.1.1.

            	
              The
                Company shall continue to pay him his Base Payroll Salary then in
                effect
                through December 31, 2010 or for twelve full calendar months, whichever
                period is longer (the "Severance Period;")
                

            

    

     

    
      	
            	
              8.1.2.

            	
              During
                the Severance Period, the Company shall continue to cover Mr. Harper
                under the medical and dental plans sponsored by the Company for its
                employees with the same coverage he had immediately prior to the
                termination of his employment, provided that Mr. Harper remits to the
                Company on a timely basis an amount equal to the applicable monthly
                COBRA
                premium (less the COBRA administrative surcharge) for such continued
                coverage; and the Company shall reimburse Mr. Harper for any medical
                premium expenses incurred by him hereunder within thirty days after
                the
                date of his payment thereof.  To the extent that any medical or
                dental expense or in-kind benefits provided for under this Section 8.1.2
                are taxable to Mr. Harper in a given year, any such expense shall be
                reimbursed to Mr. Harper by the Company within thirty days of such
                expense being incurred by him, and any expenses reimbursed or in-kind
                benefits provided hereunder shall not affect the expenses eligible
                for
                reimbursement or in-kind benefits provided in any other year.
                

            

    

     

    
      	
            	
              8.1.3.

            	
              The
                Company shall pay Mr. Harper in the manner and at the time set forth
                in Exhibit
                A, a portion of any Base Deferred Salary and of any Incentive
                Bonus
                that he would have earned had he remained an employee of the Company
                through the end of the calendar year in which his employment terminated,
                such portion to be based on the number of days during such year that
                he
                was an employee of the Company; and

            

    

     

    
      	
            	
              8.1.4.

            	
              The
                Company shall permit him to purchase any insurance maintained by
                the
                Company for its own benefit on his life at its then cash surrender
                value.
                

            

    

     

    The
      foregoing severance benefits are the only benefits and payments to which
      Mr. Harper is entitled that arise out of the termination of his employment
      under this Section
      8.1.

     

    
      	
            	
              8.2.

            	
              Definition
                of Without
                Cause.  Mr. Harper's employment shall be deemed to
                have been terminated by the Company Without Cause unless termination
                is
                for one of the reasons set forth in Section
                8.5,
                below, by reason of his death or pursuant to Section
                9.1,
                below. 

            

    

     

    
      	
            	
              8.3.

            	
              Termination
                for Permanent
                Disability.  The Company may terminate Mr. Harper's
                employment if he shall become permanently
                disabled.  Mr. Harper shall be considered to have become
                permanently disabled if during any consecutive twelve-month period,
                because of ill health, or physical or mental disability, he shall
                have
                been continuously unable to perform his duties under this Agreement,
                in
                whole or in substantial part, for one hundred eighty consecutive
                days.  The phrase "substantial part" means the inability of
                Mr. Harper to perform and devote at least eight hours per work day to
                the performance of his duties and responsibilities.
                

            

    

     

    
      	
            	
              8.4.

            	
              Upon
                the Death of
                Mr. Harper.  In the event of Mr. Harper's death
                during the term of this Agreement, his employment shall thereupon
                terminate and the Company shall pay his estate —
                

            

    

     

    
      	
            	
              8.4.1.

            	
              His
                Base Payroll Salary then in effect through the date of his death
                to the
                extent not already paid; and 

            

    

     

    
      
        
        

      

      
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
            	
              8.4.2.

            	
              In
                the manner and at the time provided in Exhibit
                A, a
                portion of any Base Deferred Salary and any Incentive Bonus that
                he would
                have earned had he remained an employee through the end of the calendar
                year in which his death occurred, such portion to be based on the
                number
                of days during such year that he was an employee.
                

            

    

     

    
      	
            	
              8.5.

            	
              Termination
                for
                Cause.  The Company may terminate Mr. Harper's
                employment for Cause (as defined below) by giving him written notice
                of
                termination.  In the event of the termination of
                Mr. Harper's employment for Cause, the Company shall pay him any
                accrued but unpaid Base Payroll Salary through the date of termination
                and
                any other legally-required payments through that date.  For the
                avoidance of doubt, no Base Deferred Salary and no Incentive Bonus
                shall
                be payable to him for the year in which his employment is terminated
                for
                Cause. 

            

    

     

    
      	
            	
              8.5.1.

            	
              Definition
                of
                Cause.  For
                purposes of Section
                8.5,
                "Cause" for
                termination of Mr. Harper's employment shall mean any one or more of
                the following: 

            

    

     

    
      	
            	
              (a)

            	
              Mr. Harper’s
                gross neglect of his duties, gross negligence in the performance
                of his
                duties, or his refusal to perform his duties.

            

    

     

    
      	
            	
              (b)

            	
              Mr. Harper’s
                unsatisfactory performance of his duties that is not cured within
                thirty
                working days after written notice is given to him specifically identifying
                each reason why Mr. Harper’s performance is unsatisfactory and what
                he can do to cure such unsatisfactory performance.
                

            

    

     

    
      	
            	
              (c)

            	
              Any
                act of theft or other dishonesty by Mr. Harper, including, but not
                limited to any intentional misapplication of the Company's or its
                affiliates' funds or other property.

            

    

     

    
      	
            	
              (d)

            	
              Mr. Harper’s
                conviction of any criminal activity not described in Subsection (c),
                above, or participation in an activity involving moral turpitude
                that is
                or could reasonably be expected to be injurious to the business or
                reputation of the Company. 

            

    

     

    
      	
            	
              (e)

            	
              Mr. Harper’s
                immoderate use of alcohol and/or the use of non-prescribed narcotics
                that
                adversely and materially affects the performance of his duties.
                

            

    

     

    
      	
              9.

            	
              Termination
                by
                Mr. Harper. 

            

    

     

    
      	
            	
              9.1.

            	
              Voluntary
                Resignation.  Mr. Harper may resign his employment
                with the Company on ninety days' prior written notice to the Company
                (the
                "90-Day Notice
                Period.")  Upon receipt of a notice of resignation, the
                Company — 

            

    

     

    
      	
            	
              9.1.1.

            	
              May
                accelerate the effective date of Mr. Harper's resignation to any date
                within the 90-Day Notice Period; and/or

            

    

     

    
      	
            	
              9.1.2.

            	
              May
                deem his notice of resignation a resignation by him of (i) any one
                or more
                of the offices then held by him in the Company; and (ii) any one
                or more
                of the directorships and offices then held by him in the Company's
                affiliates, in each case to be effective on any date or dates within
                the
                90-Day Notice Period. 

            

    

     

    
      	
            	
              9.2.

            	
              In
                the event Mr. Harper's resignation becomes effective before the end
                of a calendar year, a portion of any Base Deferred Salary that he
                would
                have earned had he remained an employee through the end of such calendar
                year shall be paid to him in the manner and at the time set forth
                in Exhibit
                A, such
                portion to be based on the number of days during such year that he
                was an
                employee, but no Incentive Bonus shall be payable to him for such
                year.
                

            

    

     

    
      	
            	
              9.3.

            	
              In
                the event that Mr. Harper's resignation becomes effective at or after
                the end of the calendar year in which he gave notice of his resignation,
                he shall be entitled to Base Deferred Salary and Incentive Bonus
                for the
                year in which he gave notice of his resignation to the same extent
                as if
                he had not given notice of his resignation.

            

    

     

    
      
        
        

      

      
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
            	
              9.4.

            	
              No
                Incentive Bonus shall be payable to Mr. Harper with respect to the
                calendar year following the calendar year in which he gives notice
                of his
                resignation. 

            

    

     

    
      	
            	
              9.5.

            	
              Constructive
                Termination.  Mr. Harper may terminate his
                employment if (a) the Company commits a Breach (as defined below)
                of this
                Agreement; (b) Mr. Harper gives the Company detailed written notice
                of the Breach within thirty days after the occurrence thereof; and
                (c) the
                Company shall fail to cure the Breach within thirty days after the
                receipt
                of such notice or, if the nature of the Breach is such that it cannot
                practicably be cured in thirty days, if the Company shall fail to
                diligently and in good faith commence a cure of the Breach within
                such
                thirty-day period. 

            

    

     

    
      	
            	
              9.6.

            	
              In
                the event of the termination by Mr. Harper of his employment by
                reason of a Breach by the Company, the termination shall be deemed
                for
                purposes of this Agreement to be a termination by the Company Without
                Cause, and the Company shall be required to perform all of its obligations
                described in Section
                8.1,
                above. 

            

    

     

    
      	
            	
              9.7.

            	
              For
                purposes of Section
                9.5,
                above, "Breach"
                shall mean a material breach by the Company of any one or more of
                the
                material terms or conditions of this Agreement.

            

    

     

    
      	
            	
              10.

            	
              Notices.  All
                notices required or permitted under this Agreement shall be in writing
                and
                shall be deemed given by a party when hand delivered to the other
                party
                against a receipt therefor or when deposited with a delivery service
                that
                provides next-business-day delivery and proof of delivery, in either
                case
                addressed to the other party as follows:

            

    

     

    
      	
               

            	
              If
                tothe Company
                at:

              Sterling
                Construction Company, Inc.

              20810
                Fernbush Lane

              Houston,
                Texas 77073

              Attention:  Board
                of Directors

            	
              With
                a copy to:

              Roger
                M. Barzun

              60
                Hubbard Street

              Concord,
                Massachusetts 01742

            
	 	
               

              If
                to Mr. Harper,
                at his most recent home address as shown in the Company's employment
                records.

            	 

    

     

    or
      to
      such other persons or addresses as may be designated in writing by the party
      to
      receive such notice.

     

    
      	
            	
              11.

            	
              Severability.  If
                any provision or part of a provision of this Agreement is finally
                declared
                to be invalid by any tribunal of competent jurisdiction, such part
                shall
                be deemed automatically adjusted, if possible, to conform to the
                requirements for validity, but, if such adjustment is not possible,
                it
                shall be deemed deleted from this Agreement as though it had never
                been
                included herein.  In either case, the balance of any such
                provision and of this Agreement shall remain in full force and
                effect.  Notwithstanding the foregoing, however, no provision
                shall be deleted if it is clearly apparent under the circumstances
                that
                either or both of the parties would not have entered into this Agreement
                without such provision. 

            

    

     

    
      	
            	
              12.

            	
              Survival.  Notwithstanding
                the expiration or earlier termination of this Agreement or of
                Mr. Harper's employment for any reason, the terms and conditions of
                Section 6
                (Confidential Information) and Section 7
                (Non-Compete Obligations) above, and any other obligation of a party
                that
                by its terms is to be performed or is to have continued effect after
                such
                termination shall survive such expiration or termination.
                

            

    

     

    
      	
            	
              13.

            	
              Proration.  Any
                amount payable to Mr. Harper hereunder for a period shorter than the
                period for which it is provided herein shall be pro-rated on a daily
                basis
                using a 365-day year. 

            

    

     

    
      
        
        

      

      
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
              14.

            	
              Miscellaneous.
                

            

    

     

    
      	
            	
              14.1.

            	
              Entire
                Agreement.  This Agreement together with Exhibit
                A
                contains the entire understanding of the parties on the subject matter
                hereof; shall not be amended, except by written agreement of the
                parties
                signed by each of them; shall be binding upon, and inure to the benefit
                of, the parties and their successors, personal representatives and
                permitted assigns; and shall not be assignable by either party without
                the
                prior written consent of the other party, except that the Company
                may
                assign this Agreement to any entity acquiring all of the stock, business
                or assets of the Company, provided that the acquiror assumes all
                of the
                Company 's obligations hereunder. 

            

    

     

    
      	
            	
              14.2.

            	
              Construction.
                

            

    

     

    
      	
               

            	
              14.2.1.

            	
              Each
                party has read and understood this Agreement and each party has had
                an
                opportunity to review this agreement with its or his counsel. Accordingly,
                each provision of this Agreement shall be interpreted and enforced
                without
                the aid of any canon, custom or rule of law requiring or suggesting
                construction against the party drafting or causing the drafting of
                such
                provision. 

            

    

     

    
      	
               

            	
              14.2.2.

            	
              The
                words "herein," "hereof," "hereunder," "hereby," "herewith" and words
                of
                similar import when used in this Agreement shall be construed to
                refer to
                this Agreement as a whole. 

            

    

     

    
      	
               

            	
              14.2.3.

            	
              An
                "affiliate" of the Company is any entity controlling, controlled
                by, or
                under common control with the Company.

            

    

     

    
      	
            	
              14.3.

            	
              Prior
                Agreements.  No representation, affirmation of fact,
                course of prior dealings, promise or condition in connection herewith
                or
                usage of the trade not expressly incorporated herein shall be binding
                on
                the parties. 

            

    

     

    
      	
            	
              14.4.

            	
              Waiver.  The
                failure to insist upon strict compliance with any term, covenant
                or
                condition contained herein shall not be deemed a waiver of such term,
                nor
                shall any waiver or relinquishment of any right at any one or more
                times
                be deemed a waiver or relinquishment of such right at any other time
                or
                times.  No term or condition hereof shall be waived unless in
                writing by the party to be bound by such waiver;
                

            

    

     

    
      	
            	
              14.5.

            	
              Captions.  The
                captions of the paragraphs herein are for convenience only and shall
                not
                be used to construe or interpret this Agreement.
                

            

    

     

    
      	
            	
              14.6.

            	
              Counterparts
&
                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. 

            

    

     

    
      	
            	
              15.

            	
              Governing
                Law.  This Agreement shall be governed by, and construed
                in accordance with, the domestic laws of the State of Texas without
                giving
                effect to any choice of law or conflict of law provision or rule
                (whether
                of the State of Texas or of any other jurisdiction) that would cause
                the
                application hereto of the laws of any jurisdiction other than the
                State of
                Texas. 

            

    

     

    
      	
              16.

            	
              Compliance
                with Section 409A of
                the Code. 

            

    

     

    
      	
            	
              16.1.

            	
              To
                the extent that any payment to Mr. Harper under this Agreement is
                deemed to be deferred compensation subject to the requirements of
                Section
                409A of the Internal Revenue Code of 1986 (the "Code") this
                Agreement
                shall be operated in compliance with the applicable requirements
                of
                Section 409A of the Code ("Section 409A") and
                its
                corresponding regulations and related guidance with respect to the
                payment
                in question.  Notwithstanding anything in this Agreement to the
                contrary, any payment under this Agreement that is subject to the
                requirements of Section 409A may only be made in a manner and upon
                an
                event permitted by Section 409A.  To the extent that any
                provision of this Agreement would cause a conflict with the requirements
                of Section 409A, or would cause the administration of this Agreement
                to
                fail to satisfy the requirements of Section 409A, such provision
                shall be deemed null and void to the extent permitted by applicable
                law,
                and the Company may modify this Agreement in such a manner as to
                comply
                with such requirements without Mr. Harper's consent.
                

            

    

     

    
      
        
        

      

      
        Page
          6 of
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
            	
              16.2.

            	
              If
                Mr. Harper is a key employee (as defined in Section 416(i) of the
                Code (without regard to paragraph 5 thereof)) except to the extent
                permitted under Section 409A, no benefit or payment that is subject
                to
                Section 409A (after taking into account all applicable exceptions
                to
                Section 409A, including but not limited to the exceptions for short-term
                deferrals and for separation pay only upon an involuntary separation
                from
                service) shall be made under this Agreement on account of
                Mr. Harper's separation from service (as defined in Section 409A)
                with the Company until the later of —

            

    

     

    
      	
               

            	
              16.2.1.

            	
              The
                date prescribed for payment in this Agreement; and
                

            

    

     

    
      	
               

            	
              16.2.2.

            	
              The
                first day of the seventh calendar month that begins after the date
                of
                Mr. Harper's separation from service (or, if earlier, the date of his
                death.) 

            

    

     

    
      	
            	
              16.3.

            	
              All
                payments that were delayed by reason of the application of the date
                prescribed by Section
                16.2.2,
                above (the "Section
                16.2.2 Date") shall be aggregated and paid to Mr. Harper on
                the Section 16.2.2 Date in a lump sum together with interest computed
                from
                the date each such payment would have first been paid to him absent
                the
                application of the Section 16.2.2 Date until paid using the Non-LIBOR
                rate
                of interest the Company would have paid had it borrowed the amount
                of the
                payment under its revolving line of credit.  After the Section
                16.2.2 Date, the Company shall pay any other amounts provided for
                herein
                to the extent and in the manner provided in this Agreement.
                

            

    

     

    In
      Witness Whereof, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

     

    Sterling
      Construction Company, Inc.

    

    

    
      	By:	 	 	 
	
               

            	
              Patrick
                T. Manning

            	 	
              Joseph
                P. Harper, Sr.

            
	 	
              Chairman
                & Chief Executive Officer

            	 	 

    

     

    
      
        
        

      

      
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          7 of
          9

        
          

        

      

      
        
        

      

    

    
      Joseph P. Harper, Sr. Employment Agreement — continued

       

    

    EXHIBIT
      A

     

    
      	
              For
                purposes of this Exhibit
                A,
                "SCC" means the Company.

              
              

            
	
              Title

              
              

            	
              Mr. Harper
                shall be elected annually President and Chief Operating Officer of
                the
                Company.

              
              

            
	
              Duties
                and Responsibilities

              
              

            	
              Mr. Harper
                shall carry out the customary duties and responsibilities of a president
                and chief operating officer of a publicly-traded company.

              
              

            
	
              Reporting
                Relationship

              
              

            	
              In
                carrying out those duties and responsibilities, Mr. Harper shall
                report to SCC's Board of Directors.

              
              

            
	
              Base
                Payroll Salary

              
              

            	
              Mr. Harper's
                annualized Base Payroll Salary shall be $365,000, which shall be
                paid to
                him commencing as of July 19, 2007 in bi-weekly installments at the
                same
                time and in the same manner as other senior managers of the Company
                are
                paid their Base Payroll Salaries.

              
              

            
	
              Base
                Deferred Salary

              
              

            	
              Mr. Harper's
                annualized Base Deferred Salary shall be $162,500 and shall be paid
                to him
                if in a given calendar year SCC achieves seventy-five percent of
                the
                EBITDA budgeted for such year provided that the budget was approved
                by the
                Board of Directors of SCC.

               

              However,
                if 75% of budgeted EBITDA is achieved in 2007 —

               

              For
                the period January 1 through and including July 18, 2007, Mr. Harper
                shall be paid an amount equal to 54.25% of his "bonus" under the
                Prior
                Agreement; and

               

              For
                the period from and including the Effective Date through and including
                December 31, 2007, Mr. Harper shall be paid an amount equal to 45.75%
                of his Base Deferred Salary set forth above.

              
              

            
	
              Incentive
                Bonus

              
              

            	
              Each
                calendar year including calendar year 2007, Mr. Harper shall be
                eligible to earn an Incentive Bonus of up to $162,500.

               

              Of
                that amount —

               

              ·
                Sixty percent
                shall be paid to Mr. Harper if SCC achieves the fully-diluted
                earnings per share budgeted for such year provided that the budget
                was
                approved by the Board of Directors of SCC ("Budgeted EPS");
                and

               

              ·
                Forty percent
                will be based upon the extent to which, if at all, Mr. Harper has
                achieved the personal goals and objectives established for him for
                such
                year , provided
                however, that for calendar year 2007, the forty percent portion of
                the Incentive bonus shall be awarded, if at all, in the sole discretion
                of
                the Compensation Committee.

               

              The
                foregoing is in lieu of any "Additional Bonus" that might otherwise
                be
                payable under the Prior Agreement.

               

              In
                determining whether Budgeted EPS has been achieved in a given year,
                any
                shares of common stock of SCC issued during such year otherwise than
                out
                of a reserve therefor that had been established at or before the
                approval
                of the budget shall be ignored.

               

              Mr. Harper's
                personal goals and objectives for a given year shall be established
                in
                consultation with, shall be subject to final approval by, and the
                extent
                of their achievement shall be determined by SCC's Board of Directors
                and
                SCC's Compensation Committee.

              
              

            

    

     

     

    
      
         

      

      
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          8 of
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    Joseph P. Harper, Sr. Employment Agreement — continued

     

    
      	
              EBITDA

              
              

            	
              For
                purposes of this Agreement, EBITDA means the net income of SCC on
                a
                consolidated basis determined in accordance with generally accepted
                accounting principles for a given calendar 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 (to the extent negative) if any, for the
                period;

              Minus
                Extraordinary Items (to the extent positive) if any;

              Minus
                Interest income for the period;

              Minus
                Any fees paid to non-employee directors; and

               

              in
                calculating EBITDA for a given year, appropriate and equitable adjustment
                shall be made for any material changes in the Company’s business that
                occur during such year, such as an acquisition of a business or the
                sale
                of a part of the business.

              
              

            
	
              Vacation

              
              

            	
              Mr. Harper
                shall be eligible to take so many days vacation per year as he believes
                is
                appropriate in light of the needs of the business.

              
              

            

    

    

     

    Page
      8
      of 8ex10_3.htm

    
      

    

    
      	 	
              STERLING
                CONSTRUCTION COMPANY, INC.

            	
              EXHIBIT
                10.3

            

    

    James
      H. Allen, Jr. Employment Agreement

     

    
      
        

      

    

    THIS
      EMPLOYMENT AGREEMENT (this "Agreement") is made to be
      effective as of  July 16, 2007 (the "Effective Date") by and
      between James H. Allen, Jr. (hereinafter referred to as "Mr. Allen") and Sterling
      Construction Company, Inc. (hereinafter referred to as the "Company.")

    

    Background

    

    Mr.
      Allen
      became an employee of the Company on July 16, 2007, and Mr. Allen and the
      Company wish to enter into a written employment agreement in order to
      memorialize the terms and conditions of his employment, as hereinafter set
      forth.

    

    THEREFORE,
      for and in consideration of the mutual covenants contained herein and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, it is hereby agreed as follows:

    

    
      	
              1.

            	
              Term
&
Transition.
                

            

    

    

    
      	
            	
              1.1.

            	
              Mr. Allen's
                employment under this Agreement shall commence on the Effective Date
                and
                shall expire on the earlier to occur of (a) a termination of his
                employment pursuant to Section 8
                (Termination by the Company) or Section
                9
                (Termination by Mr. Allen) below; or (b) 5:00 p.m. Central Time on
                December 31, 2010. 

            

    

    

    
      	
              2.

            	
              Title,
                Reporting Relationship,
                Responsibilities & Place of Employment.
                

            

    

    

    
      	
            	
              2.1.

            	
              So
                long as Mr. Allen is an employee of the Company under this Agreement
                — 

            

    

    

    
      	
               

            	
              2.1.1.

            	
              He
                shall be elected to the position or positions set forth on Exhibit
                A;
                

            

    

    

    
      	
               

            	
              2.1.2.

            	
              He
                shall have the reporting relationship set forth on Exhibit
                A;
                

            

    

    

    
      
        	
              	
                2.1.3.

              	
                He
                  shall devote his full working time to diligently carrying out the
                  duties
                  and responsibilities set forth in Exhibit
                  A to
                  the best of  abilities; and

              

      

    

    

    
      	
               

            	
              2.1.4.

            	
              His
                place of employment shall be based in Houston, Texas except for required
                travel on the Company's business. 

            

    

    

    
      	
            	
              2.2.

            	
              Mr. Allen's
                reporting relationship and his duties and responsibilities within
                his
                general area of expertise shall be subject to change by the Company
                in
                consultation with him as is reasonably required to meet the needs
                of the
                Company's business from time to time.

            

    

    

    
      	
              3.

            	
              Compensation.
                

            

    

    

    
      	
            	
              3.1.

            	
              Cash
                Compensation.  So long as Mr. Allen is an employee
                of the Company under this Agreement, he shall be paid the Base Payroll
                Salary and shall be eligible to earn the Base Deferred Salary and
                the
                Incentive Bonus set forth in Exhibit
                A in
                accordance with the terms thereof. 

            

    

    

    
      	
               

            	
              3.1.1.

            	
              Base
                Deferred Salary and Incentive Bonus if and to the extent either is
                earned
                in a given year shall be paid after January 1 and before March 15
                of the
                calendar year immediately following such year.

            

    

    

    
      	
               

            	
              3.1.2.

            	
              All
                cash compensation shall be subject to legally-required and any voluntary
                withholdings and deductions. 

            

    

    

    
      	
            	
              3.2.

            	
              Stock
                Incentive
                Compensation.  Mr. Allen shall be entitled to the
                stock incentive compensation set forth on Exhibit
                A.
                

            

    

    

    
      	
            	
              3.3.

            	
              Benefits.  Mr. Allen
                shall be entitled to the same life insurance, disability and other
                like
                benefits as are made available to the Company's senior managers generally,
                and on the same terms and conditions; however, Mr. Allen shall
                maintain his own health insurance plan, and the Company shall reimburse
                him for up to one thousand dollars of the monthly premiums
                thereof.  Mr. Allen shall also be entitled to paid vacation
                time as set forth on Exhibit A.
                

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

    
      	
              4.

            	
              Business
                Expense
                Reimbursement.  Mr. Allen shall be reimbursed in
                accordance with the Company's business expense reimbursement policy
                from
                time to time in effect for all reasonable business expenses incurred
                by
                him in the performance of his duties.

            

    

    

    
      	
              5.

            	
              Indemnification.
                

            

    

    

    
      	
            	
              5.1.

            	
              Mr. Allen
                shall be indemnified by the Company with respect to claims made against
                him as a director, officer and/or employee of the Company and of
                any
                affiliate of the Company to the fullest extent permitted by the Company's
                charter, by-laws and the laws of the State of Delaware.
                

            

    

    

    
      	
            	
              5.2.

            	
              The
                Company shall ensure that Mr. Allen is covered by a standard form
                directors and officers liability insurance policy obtained and maintained
                at no cost to Mr. Allen. 

            

    

    

    
      	
              6.

            	
              Confidential
                Information. 

            

    

    

    
      	
            	
              6.1.

            	
              During
                his employment by the Company and thereafter, Mr. Allen shall not
                disclose to any person or entity Confidential Information (as defined
                below) except in the proper performance of his duties and responsibilities
                under this Agreement, or except as may be expressly authorized by
                the
                Board of Directors of the Company. 

            

    

    

    
      	
            	
              6.2.

            	
              For
                purposes of this Agreement, "Confidential
                Information" is defined as any information of the Company or its
                affiliates that derives independent economic value from not being
                generally known or readily ascertainable by proper means and includes,
                but
                is not limited to trade secrets, customer names and lists, vendor
                names
                and lists, business plans, marketing plans, non-public financial
                data,
                product specifications and designs, inventions, discoveries, processes,
                drawings, documents, records, software, or any information of a third
                party that is held by the Company or its affiliates under an obligation
                of
                confidentiality. 

            

    

    

    
      	
              7.

            	
              Non-Compete
                Obligations.  For purposes of this Section
                7 only,
                the term "the Company" shall include the Company's
                affiliates.  Mr. Allen's obligations with respect to
                competing with the Company and soliciting its employees shall be
                as
                follows (the "Non-Compete
                Obligations"): 

            

    

    

    
      	
            	
              7.1.

            	
              Mr. Allen
                shall not render services or advice, whether for compensation or
                without
                compensation and whether as an employee, officer, director, principal
                or
                otherwise, to any person or organization with respect to any product
                or
                service that is competitive with a product or service of the Company
                in
                which he was actively engaged during his employment by the Company
                or of
                which he has detailed knowledge; or with any planned business in
                which he
                had an active part in the planning or of which he has detailed knowledge.
                

            

    

    

    
      	
            	
              7.2.

            	
              Mr. Allen
                shall not either directly or indirectly as agent or otherwise in
                any
                manner solicit, influence or encourage any customer of the Company
                to take
                away or to divert or direct its business to himself or to any person
                or
                entity by or with which he is employed, associated, affiliated or
                otherwise related (other than the Company.)

            

    

    

    
      	
            	
              7.3.

            	
              Mr. Allen
                shall not recruit or otherwise solicit or induce any employee of
                the
                Company to terminate his or her employment with or otherwise cease
                his or
                her relationship with the Company. 

            

    

    

    
      	
            	
              7.4.

            	
              The
                Non-Compete Obligations apply to the state of Texas and any other
                state in
                which the Company and its affiliates taken as a whole receives more
                than
                10% of its annual revenues. 

            

    

    

    
      	
            	
              7.5.

            	
              Mr. Allen's
                obligations under this Section
                7 shall
                continue (a) so long as he is an employee of the Company; and (b)
                after
                his employment terminates (whether by reason of the expiration of
                this
                Agreement or pursuant to Section
                8
                (Termination by the Company) or Section 9
                (Termination by Mr. Allen)) below, or otherwise) for a period of
                twelve months; or for the period, if any, during which he is entitled
                to
                be paid his Base Payroll Salary, whichever period is longer.
                

            

    

    
      
        
        

      

      
        Page
          2 of
          9

        
          

        

      

      
        
        

        
          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

    
      	
              8.

            	
              Termination
                bythe
                Company.  Prior to the expiration of this Agreement, the
                Company may terminate Mr. Allen's employment only pursuant to the
                following terms and on the following conditions:
                

            

    

    

    
      	
            	
              8.1.

            	
              Without
                Cause.  The Company may terminate Mr. Allen's
                employment Without Cause (as defined below) by giving him ninety
                days'
                prior written notice thereof, in which event —

            

    

    

    
      	
               

            	
              8.1.1.

            	
              The
                Company shall continue to pay him his Base Payroll Salary then in
                effect
                through December 31, 2010 or for twelve full calendar months, whichever
                period is longer (the "Severance Period;")
                

            

    

    

    
      	
               

            	
              8.1.2.

            	
              During
                the Severance Period, the Company shall continue to make the
                reimbursements to Mr. Allen described in Section
                3.3,
                above.  To the extent that any medical or dental expense or
                in-kind benefits provided for under this Section 8.1.2
                are taxable to Mr. Allen in a given year, any such expense shall be
                reimbursed to Mr. Allen by the Company within thirty days of such
                expense being incurred by him, and any expenses reimbursed or in-kind
                benefits provided hereunder shall not affect the expenses eligible
                for
                reimbursement or in-kind benefits provided in any other year.
                

            

    

    

    
      	
               

            	
              8.1.3.

            	
              The
                Company shall pay Mr. Allen in the manner and at the time set forth
                in Exhibit
                A, a portion of any Base Deferred Salary and of any Incentive
                Bonus
                that he would have earned had he remained an employee of the Company
                through the end of the calendar year in which his employment terminated,
                such portion to be based on the number of days during such year that
                he
                was an employee of the Company; and

            

    

    

    
      	
               

            	
              8.1.4.

            	
              The
                Company shall permit him to purchase any insurance maintained by
                the
                Company for its own benefit on his life at its then cash surrender
                value.
                

            

    

    

    
      	
            	
               

            	
              The
                foregoing severance benefits are the only benefits and payments to
                which
                Mr. Allen is entitled that arise out of the termination of his
                employment under this Section
                8.1.
                

            

    

    

    
      	
            	
              8.2.

            	
              Definition
                of Without
                Cause.  Mr. Allen's employment shall be deemed to
                have been terminated by the Company Without Cause unless termination
                is
                for one of the reasons set forth in Section
                8.5,
                below, by reason of his death or pursuant to Section
                9.1,
                below. 

            

    

    

    
      	
            	
              8.3.

            	
              Termination
                for Permanent
                Disability.  The Company may terminate Mr. Allen's
                employment if he shall become permanently
                disabled.  Mr. Allen shall be considered to have become
                permanently disabled if during any consecutive twelve-month period,
                because of ill health, or physical or mental disability, he shall
                have
                been continuously unable to perform his duties under this Agreement,
                in
                whole or in substantial part, for one hundred eighty consecutive
                days.  The phrase "substantial part" means the inability of
                Mr. Allen to perform and devote at least eight hours per work day to
                the performance of his duties and responsibilities.
                

            

    

    

    
      	
            	
              8.4.

            	
              Upon
                the Death of
                Mr. Allen.  In the event of Mr. Allen's death
                during the term of this Agreement, his employment shall thereupon
                terminate and the Company shall pay his estate —
                

            

    

    

    
      	
               

            	
              8.4.1.

            	
              His
                Base Payroll Salary then in effect through the date of his death
                to the
                extent not already paid; 

            

    

    

    
      	
               

            	
              8.4.2.

            	
              For
                any unused vacation time that had accrued in accordance with the
                Company's
                policies at the date of his death; and

            

    

    
      
        
        

      

      
        Page
          3 of
          9

        
          

        

      

      
        
        

        
          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

    
      	
               

            	
              8.4.3.

            	
              In
                the manner and at the time provided in Exhibit
                A, a
                portion of any Base Deferred Salary and any Incentive Bonus that
                he would
                have earned had he remained an employee through the end of the calendar
                year in which his death occurred, such portion to be based on the
                number
                of days during such year that he was an employee.
                

            

    

    

    
      	
            	
              8.5.

            	
              Termination
                for
                Cause.  The Company may terminate Mr. Allen's
                employment for Cause (as defined below) by giving him written notice
                of
                termination.  In the event of the termination of
                Mr. Allen's employment for Cause, the Company shall pay him any
                accrued but unpaid Base Payroll Salary through the date of termination
                and
                any other legally-required payments through that date.  For the
                avoidance of doubt, no Base Deferred Salary and no Incentive Bonus
                shall
                be payable to him for the year in which his employment is terminated
                for
                Cause. 

            

    

    

    
      	
               

            	
              8.5.1.

            	
              Definition
                of
                Cause.  For
                purposes of Section
                8.5,
                "Cause" for
                termination of Mr. Allen's employment shall mean any one or more of
                the following: 

            

    

     

    
      
        	
                 

              	
                (a)

              	
                Mr. Allen’s
                  gross neglect of his duties, gross negligence in the performance
                  of his
                  duties, or his refusal to perform his duties.

              

      

      

      
        	
                 

              	
                (b)

              	
                Mr. Allen’s
                  unsatisfactory performance of his duties that is not cured within
                  thirty
                  working days after written notice is given to him specifically
                  identifying
                  each reason why Mr. Allen’s performance is unsatisfactory and what he
                  can do to cure such unsatisfactory performance.

              

      

      

      
        	
                 

              	
                (c)

              	
                Any
                  act of theft or other dishonesty by Mr. Allen, including, but not
                  limited to any intentional misapplication of the Company's or its
                  affiliates' funds or other property.

              

      

      

      
        	
                 

              	
                (d)

              	
                Mr. Allen’s
                  conviction of any criminal activity not described in Subsection (c),
                  above, or participation in an activity involving moral turpitude
                  that is
                  or could reasonably be expected to be injurious to the business
                  or
                  reputation of the Company. 

              

      

      

      
        	
                 

              	
                (e)

              	
                Mr. Allen’s
                  immoderate use of alcohol and/or the use of non-prescribed narcotics
                  that
                  adversely and materially affects the performance of his duties.
                  

              

      

    

     

    
      	
              9.

            	
              Termination
                by
                Mr. Allen. 

            

    

    

    
      	
            	
              9.1.

            	
              Voluntary
                Resignation.  Mr. Allen may resign his employment
                with the Company on ninety days' prior written notice to the Company
                (the
                "90-Day Notice
                Period.")  Upon receipt of a notice of resignation, the
                Company — 

            

    

    

    
      	
               

            	
              9.1.1.

            	
              May
                accelerate the effective date of Mr. Allen's resignation to any date
                within the 90-Day Notice Period; and/or

            

    

    

    
      	
               

            	
              9.1.2.

            	
              May
                deem his notice of resignation a resignation by him of any one or
                more of
                the directorships and offices then held by him in the Company or
                its
                affiliates to be effective on any date or dates within the 90-Day
                Notice
                Period. 

            

    

    

    
      	
            	
              9.2.

            	
              In
                the event Mr. Allen's resignation becomes effective before the end of
                a calendar year, a portion of any Base Deferred Salary that he would
                have
                earned had he remained an employee through the end of such calendar
                year
                shall be paid to him in the manner and at the time set forth in Exhibit
                A, such
                portion to be based on the number of days during such year that he
                was an
                employee, but no Incentive Bonus shall be payable to him for such
                year.
                

            

    

    

    
      	
            	
              9.3.

            	
              In
                the event that Mr. Allen's resignation becomes effective at or after
                the end of the calendar year in which he gave notice of his resignation,
                he shall be entitled to Base Deferred Salary and Incentive Bonus
                for the
                year in which he gave notice of his resignation to the same extent
                as if
                he had not given notice of his resignation.

            

    

    
      
        
        

      

      
        Page
          4 of
          9

        
          

        

      

      
        
        

        
          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

    
      	
            	
              9.4.

            	
              No
                Incentive Bonus shall be payable to Mr. Allen with respect to the
                calendar year following the calendar year in which he gives notice
                of his
                resignation. 

            

    

    

    
      	
            	
              9.5.

            	
              Constructive
                Termination.  Mr. Allen may terminate his employment
                if (a) the Company commits a Breach (as defined below) of this Agreement;
                (b) Mr. Allen gives the Company detailed written notice of the Breach
                within thirty days after the occurrence thereof; and (c) the Company
                shall
                fail to cure the Breach within thirty days after the receipt of such
                notice or, if the nature of the Breach is such that it cannot practicably
                be cured in thirty days, if the Company shall fail to diligently
                and in
                good faith commence a cure of the Breach within such thirty-day period.
                

            

    

    

    
      	
            	
              9.6.

            	
              In
                the event of the termination by Mr. Allen of his employment by reason
                of a Breach by the Company, the termination shall be deemed for purposes
                of this Agreement to be a termination by the Company Without Cause,
                and
                the Company shall be required to perform all of its obligations described
                in Section
                8.1, above. 

            

    

    

    
      	
            	
              9.7.

            	
              For
                purposes of Section
                9.5,
                above, "Breach"
                shall mean a material breach by the Company of any one or more of
                the
                material terms or conditions of this Agreement.

            

    

    

    
      	
            	
              10.

            	
              Notices.  All
                notices required or permitted under this Agreement shall be in writing
                and
                shall be deemed given by a party when hand delivered to the other
                party
                against a receipt therefor or when deposited with a delivery service
                that
                provides next-business-day delivery and proof of delivery, in either
                case
                addressed to the other party as follows:

            

    

    

    
      	
              If
                to the Company
                at:

              Sterling
                Construction Company, Inc.

              20810
                Fernbush Lane

              Houston,
                Texas 77073

              Attention:  Board
                of Directors

            	
              With
                a copy to:

              Roger
                M. Barzun

              60
                Hubbard Street

              Concord,
                Massachusetts 01742

            
	 	 
	
              If
                to Mr. Allen,
                at his most recent home address as shown in the Company's employment
                records.

            	 

    

    

    or
      to
      such other persons or addresses as may be designated in writing by the party
      to
      receive such notice.

    

    
      	
            	
              11.

            	
              Severability.  If
                any provision or part of a provision of this Agreement is finally
                declared
                to be invalid by any tribunal of competent jurisdiction, such part
                shall
                be deemed automatically adjusted, if possible, to conform to the
                requirements for validity, but, if such adjustment is not possible,
                it
                shall be deemed deleted from this Agreement as though it had never
                been
                included herein.  In either case, the balance of any such
                provision and of this Agreement shall remain in full force and
                effect.  Notwithstanding the foregoing, however, no provision
                shall be deleted if it is clearly apparent under the circumstances
                that
                either or both of the parties would not have entered into this Agreement
                without such provision. 

            

    

    

    
      	
            	
              12.

            	
              Survival.  Notwithstanding
                the expiration or earlier termination of this Agreement or of
                Mr. Allen's employment for any reason, the terms and conditions of
                Section 6
                (Confidential Information) and Section 7
                (Non-Compete Obligations) above, and any other obligation of a party
                that
                by its terms is to be performed or is to have continued effect after
                such
                termination shall survive such expiration or termination.
                

            

    

    

    
      	
            	
              13.

            	
              Proration.  Any
                amount payable to Mr. Allen hereunder for a period shorter than the
                period for which it is provided herein shall be pro-rated on a daily
                basis
                using a 365-day year. 

            

    

    
      
        
        

      

      
        
          
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          5 of 9

        
        

      

      
        
        

        
          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

     

    
      	
              14.

            	
              Miscellaneous

            

    

    

    
      	
            	
              14.1.

            	
              Entire
                Agreement.  This Agreement together with Exhibit
                A
                contains the entire understanding of the parties on the subject matter
                hereof; shall not be amended, except by written agreement of the
                parties
                signed by each of them; shall be binding upon, and inure to the benefit
                of, the parties and their successors, personal representatives and
                permitted assigns; and shall not be assignable by either party without
                the
                prior written consent of the other party, except that the Company
                may
                assign this Agreement to any entity acquiring all of the stock, business
                or assets of the Company, provided that the acquiror assumes all
                of the
                Company 's obligations hereunder. 

            

    

    

    
      	
            	
              14.2.

            	
              Construction.
                

            

    

    

    
      	
               

            	
              14.2.1.

            	
              Each
                party has read and understood this Agreement and each party has had
                an
                opportunity to review this agreement with its or his counsel. Accordingly,
                each provision of this Agreement shall be interpreted and enforced
                without
                the aid of any canon, custom or rule of law requiring or suggesting
                construction against the party drafting or causing the drafting of
                such
                provision. 

            

    

    

    
      	
               

            	
              14.2.2.

            	
              The
                words "herein," "hereof," "hereunder," "hereby," "herewith" and words
                of
                similar import when used in this Agreement shall be construed to
                refer to
                this Agreement as a whole. 

            

    

    

    
      	
               

            	
              14.2.3.

            	
              An
                "affiliate" of the Company is any entity controlling, controlled
                by, or
                under common control with the Company.

            

    

    

    
      	
            	
              14.3.

            	
              Prior
                Agreements.  No representation, affirmation of fact,
                course of prior dealings, promise or condition in connection herewith
                or
                usage of the trade not expressly incorporated herein shall be binding
                on
                the parties. 

            

    

    

    
      	
            	
              14.4.

            	
              Waiver.  The
                failure to insist upon strict compliance with any term, covenant
                or
                condition contained herein shall not be deemed a waiver of such term,
                nor
                shall any waiver or relinquishment of any right at any one or more
                times
                be deemed a waiver or relinquishment of such right at any other time
                or
                times.  No term or condition hereof shall be waived unless in
                writing by the party to be bound by such waiver;
                

            

    

    

    
      	
            	
              14.5.

            	
              Captions.  The
                captions of the paragraphs herein are for convenience only and shall
                not
                be used to construe or interpret this Agreement.
                

            

    

    

    
      	
            	
              14.6.

            	
              Counterparts
&
                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. 

            

    

    

    
      	
            	
              15.

            	
              Governing
                Law.  This Agreement shall be governed by, and construed
                in accordance with, the domestic laws of the State of Texas without
                giving
                effect to any choice of law or conflict of law provision or rule
                (whether
                of the State of Texas or of any other jurisdiction) that would cause
                the
                application hereto of the laws of any jurisdiction other than the
                State of
                Texas. 

            

    

     

    
      
        	
                16.

              	
                Compliance
                  with Section 409A of
                  the Code.

              

      

       

    

    
      	
            	
              16.1.

            	
              To
                the extent that any payment to Mr. Allen under this Agreement is
                deemed to be deferred compensation subject to the requirements of
                Section
                409A of the Internal Revenue Code of 1986 (the "Code") this
                Agreement
                shall be operated in compliance with the applicable requirements
                of
                Section 409A of the Code ("Section 409A") and
                its
                corresponding regulations and related guidance with respect to the
                payment
                in question.  Notwithstanding anything in this Agreement to the
                contrary, any payment under this Agreement that is subject to the
                requirements of Section 409A may only be made in a manner and upon
                an
                event permitted by Section 409A.  To the extent that any
                provision of this Agreement would cause a conflict with the requirements
                of Section 409A, or would cause the administration of this Agreement
                to
                fail to satisfy the requirements of Section 409A, such provision
                shall be deemed null and void to the extent permitted by applicable
                law,
                and the Company may modify this Agreement in such a manner as to
                comply
                with such requirements without Mr. Allen's consent.
                

            

    

    
      
        
        

      

      
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          6 of
          9

        
          

        

      

      
        
        

        
          James
            H. Allen, Jr. Employment Agreement — continued

        

      

    

    
      	
            	
              16.2.

            	
              If
                Mr. Allen is a key employee (as defined in Section 416(i) of the Code
                (without regard to paragraph 5 thereof)) except to the extent permitted
                under Section 409A, no benefit or payment that is subject to Section
                409A
                (after taking into account all applicable exceptions to Section 409A,
                including but not limited to the exceptions for short-term deferrals
                and
                for separation pay only upon an involuntary separation from service)
                shall
                be made under this Agreement on account of Mr. Allen's separation
                from service (as defined in Section 409A) with the Company until
                the later
                of — 

            

    

    

    
      	
               

            	
              16.2.1.

            	
              The
                date prescribed for payment in this Agreement; and
                

            

    

    

    
      	
               

            	
              16.2.2.

            	
              The
                first day of the seventh calendar month that begins after the date
                of
                Mr. Allen's separation from service (or, if earlier, the date of his
                death.) 

            

    

    

    
      	
            	
              16.3.

            	
              All
                payments that were delayed by reason of the application of the date
                prescribed by Section
                16.2.2,
                above (the "Section
                16.2.2 Date") shall be aggregated and paid to Mr. Allen on the
                Section 16.2.2 Date in a lump sum together with interest computed
                from the
                date each such payment would have first been paid to him absent the
                application of the Section 16.2.2 Date until paid using the Non-LIBOR
                rate
                of interest the Company would have paid had it borrowed the amount
                of the
                payment under its revolving line of credit.  After the Section
                16.2.2 Date, the Company shall pay any other amounts provided for
                herein
                to the extent and in the manner provided in this Agreement.
                

            

    

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    

    
      	Sterling
              Construction Company, Inc.	 	 
	 	 	 	 
	 	 	 	 
	
              By:

            	 	 	 
	 	
              Patrick
                T. Manning

            	 	
              James
                H. Allen, Jr.

            
	 	
              Chairman
                & Chief Executive Officer

            	 	 

    

    
      
        
        

      

      
        Page
          7 of
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          James
            H. Allen, Jr. Employment Agreement — continued

        

      

    

    EXHIBIT
      A

    

    
      	
              For
                purposes of this Exhibit
                A,
                "SCC" means the Company.

            
	
              Title

            	
              Mr. Allen
                shall be elected annually Senior Vice President and Chief Financial
                Officer of the Company.

            
	
              Duties
                and Responsibilities

            	
              Mr. Allen
                shall carry out the customary duties and responsibilities of a chief
                financial and accounting officer of a publicly-traded
                company.

            
	
              Reporting
                Relationship

            	
              In
                carrying out those duties and responsibilities, Mr. Allen shall
                report to the Chief Executive Officer of SCC and the Audit Committee
                of
                the Board of Directors of SCC.

            
	
              Base
                Payroll Salary

            	
              Mr. Allen's
                annualized Base Payroll Salary shall be $250,000, which shall be
                paid to
                him commencing as of July 16, 2007 in bi-weekly installments at the
                same
                time and in the same manner as other senior managers of the Company
                are
                paid their Base Payroll Salaries.

            
	
              Base
                Deferred Salary

            	
              Mr. Allen's
                annualized Base Deferred Salary shall be $75,000 and shall be paid
                to him
                if in a given calendar year SCC achieves seventy-five percent of
                the
                EBITDA budgeted for such year provided that the budget was approved
                by the
                Board of Directors of SCC.

            
	
              Incentive
                Bonus

            	
              Each
                calendar year including calendar year 2007, Mr. Allen shall be
                eligible to earn an Incentive Bonus of up to $75,000.

              
              

              Of
                that amount —

               

              ·    
                Sixty percent shall be paid to Mr. Allen if SCC achieves the
                fully-diluted earnings per share budgeted for such year provided
                that the
                budget was approved by the Board of Directors of SCC ("Budgeted EPS");
                and

               

              ·    
                Forty percent will be based upon the extent to which, if at
                all,
                Mr. Allen has achieved the personal goals and objectives established
                for him for such year, provided however, that
                for calendar year 2007, the forty percent  portion
                of the Incentive bonus shall be awarded, if at all, in the sole discretion
                of the Compensation Committee.

               

              The
                foregoing is in lieu of any "Additional Bonus" that might otherwise
                be
                payable under the Prior Agreement.

               

              
              

              In
                determining whether Budgeted EPS has been achieved in a given year,
                any
                shares of common stock of SCC issued during such year otherwise than
                out
                of a reserve therefor that had been established at or before the
                approval
                of the budget shall be ignored.

               

              
              

              Mr. Allen's
                personal goals and objectives for a given year shall be established
                in
                consultation with, shall be subject to final approval by, and the
                extent
                of their achievement shall be determined by the Chief Executive Officer
                of
                SCC and the Audit Committee of the Board of Directors of
                SCC.

            

    

    
      
        
        

      

      
        Page
          8 of
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          James
            H.
            Allen, Jr. Employment Agreement — continued

        

      

    

    

    
      	
              EBITDA

            	
              For
                purposes of this Agreement, EBITDA means the net income of SCC on
                a
                consolidated basis determined in accordance with generally accepted
                accounting principles for a given calendar 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 (to the extent negative) if any, for the period;

              
              

              Minus      
                Extraordinary Items (to the extent positive) if any;

              
              

              Minus      
                Interest income for the period;

              
              

              Minus      
                Any fees paid to non-employee directors; and

               

              
              

              in
                calculating EBITDA for a given year, appropriate and equitable adjustment
                shall be made for any material changes in the Company’s business that
                occur during such year, such as an acquisition of a business or the
                sale
                of a part of the business.

            
	
              Stock
                Incentive

            	
              A
                five-year stock option having a Black-Scholes valuation of $150,000,
                exercisable in three substantially equal installments on the first
                three
                anniversaries of the grant date.

            
	
              Vacation

            	
              Mr. Allen
                shall be eligible to take five weeks of paid vacation time per year
                in
                accordance with the Company 's vacation policy from time to time
                in
                effect.

            

    

     

     

     Page
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