8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): December 30, 2013

GRANITE CONSTRUCTION INCORPORATED

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation) 1-12911 (Commission File Number) 77-0239383 (IRS Employer Identification No.)

585 West Beach Street

Watsonville, California 95076

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (831) 724-1011

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Introduction

In accordance with information provided in its 2013 third quarter Form 10-Q and earnings release, Granite Construction Incorporated (“Granite”) is disposing of certain non-core assets pursuant to its 2010 Enterprise Improvement Plan.  In analyzing its expected results of operations for the fourth quarter of 2013, which will be negatively affected by impairment charges associated with the disposition decisions, Granite determined that it was necessary to obtain temporary waivers under its revolving credit facility and its senior notes due 2019.

Item 1.01 Entry into a Material Definitive Agreement

On December 24, 2013, Granite obtained temporary waivers from the lenders under its revolving credit facility and holders of its senior notes due 2019 pursuant to which such lenders and holders waived any testing of, or compliance by Granite with, the consolidated tangible net worth and consolidated leverage ratio covenants contained in the related credit agreement and note purchase agreement. These temporary waivers are for the period beginning October 1, 2013 through and including March 3, 2014 (the “Waiver Period”), subject to, among other things, revised consolidated tangible net worth or consolidated leverage ratio covenants as described in the temporary waivers. Granite intends to negotiate the terms of the debt instruments before the expiration of the Waiver Period. Upon expiration of the Waiver Period, the temporary waivers shall cease to be of any force or effect. The foregoing description of the waivers is qualified in its entirety by reference to the full text of documents in which they are set forth, which are filed as Exhibits 10.1 and 10.2, respectively, to this report and incorporated herein by reference.

Item 2.06 Material Impairments

On December 18, 2013, the Board of Directors of the Company authorized the Company to dispose by sale or otherwise certain assets. On December 30, 2013, management approved the plan to sell or otherwise dispose of the majority of assets remaining in its Real Estate segment as well as certain assets in its Construction Materials segment. As previously discussed in the Company’s 2013 third quarter Form 10-Q and earnings release, these actions were taken pursuant to the Company’s 2010 Enterprise Improvement Plan and resulted in restructuring charges between $39.0 million and $58.0 million in the fourth quarter of 2013, including amounts attributable to noncontrolling interests between $2.0 million and $4.0 million. These restructuring charges consist of the non-cash impairment of certain assets and accrual of lease termination costs. The carrying value of the impaired assets were adjusted to their expected fair values which was estimated by a variety of factors including, but not limited to, comparative market data, historical sales prices, broker quotes and third party valuations.

The asset impairments associated with the Company’s Real Estate segment resulted in charges between $26.0 million and $33.0 million, including amounts attributable to noncontrolling interests between $2.0 million and $4.0 million. The impaired assets consist primarily of residential and retail development projects which had a carrying value of approximately $45.0 million prior to the impairment.

The asset impairments associated with the Company’s Construction Materials segment resulted in charges between $12.0 million and $22.0 million. The impaired assets consist primarily of non-performing quarry sites which had an aggregate carrying value of approximately $23.0 million prior to the impairment. Separate from the quarry sites, but in connection with the impairment of these assets were lease termination charges between $1.0million and $3.0 million.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

10.1 Waiver to Amended and Restated Credit Agreement, dated as of December 24, 2013, among Granite Construction Incorporated, Granite Construction Company, GILC Incorporated, as borrowers, certain subsidiaries of Granite Construction Incorporated that are guarantors, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer.

10.2 Temporary Waiver and Agreement, dated as of December 24, 2013, among Granite Construction Incorporated, certain of its subsidiaries that are guarantors and the holders of it senior notes due 2019 party thereto.

Disclosure Regarding Restructuring Charges

The restructuring charges presented within this Form 8-K contain estimates that reflect the best judgment of management. Estimates related to these restructuring charges have been evaluated based on available information; however, actual results could differ from the estimates. There can be no assurance that Granite will not be required to revise these estimates.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GRANITE CONSTRUCTION INCORPORATED
By:	/s/ Laurel J. Krzeminski
	Laurel J. Krzeminski
	Senior Vice President and Chief Financial Officer

Date: December 30, 2013

EX-10.1

Exhibit 10.1

WAIVER TO AMENDED AND RESTATED

CREDIT AGREEMENT

This Waiver to Amended and Restated Credit Agreement (this “Waiver”), dated as of December 24, 2013, is made by and among GRANITE CONSTRUCTION INCORPORATED, a Delaware corporation (the “Company” and a “Borrower”), GRANITE CONSTRUCTION COMPANY,a California corporation (“GCC” and a “Borrower”), GILC INCORPORATED,a California corporation (“GILC” and a “Borrower”, and together with the Company and GCC, collectively the “Borrowers”), each of the Guarantors (as defined in the Credit Agreement (as defined below)) signatory hereto, BANK OF AMERICA, N.A., a national banking association organized and existing under the laws of the United States (“Bank of America”), in its capacity as administrative agent for the Lenders (as defined in the Credit Agreement) (in such capacity, the “Administrative Agent”), and each of the Lenders signatory hereto.

W I T N E S S E T H:

WHEREAS, each of the Borrowers, Bank of America, as Administrative Agent, and the Lenders have entered into that certain Amended and Restated Credit Agreement dated as of October 11, 2012 (as amended by that certain Amendment No. 1 to Credit Agreement, dated as of May 8, 2013, and as from time to time further amended, modified, supplemented, restated, or amended and restated, the “Credit Agreement”; capitalized terms used in this Waiver not otherwise defined herein shall have the respective meanings given thereto in the Credit Agreement), pursuant to which the Lenders have made available to the Borrowers a revolving credit facility, including a letter of credit facility and a swing line loan facility; and

WHEREAS, each of the Guarantors has entered into a Guaranty pursuant to which it has guaranteed certain or all of the obligations of the Borrowers under the Credit Agreement and the other Loan Documents; and

WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders agree to waive certain financial covenants solely for the period ending December 31, 2013, and to waive certain Defaults or potential Defaults under the Credit Agreement for such period as specifically set forth herein, which the Administrative Agent and the Lenders party hereto are willing to do on the terms and conditions contained in this Waiver;

NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.Waiver. Pursuant to Section 10.01 of the Credit Agreement and subject to the terms and conditions hereof, the Lenders hereby waive any testing of, or compliance by the Company or any of its Subsidiaries with, the financial covenants set forth in Sections 7.12(a) and (c) of the Credit Agreement during the period commencing October 1, 2013 through and including the earlier of (a) March 3, 2014and(b) the date on which any Default of Section 2 hereof occurs (the “Waiver Period”). Upon the expiration or termination of the Waiver Period, as applicable, any Event of Default that would have occurred during the Waiver Period for a failure to comply with the Leverage Ratio but for the waiver set forth in this Section 1 shall be deemed to be no longer subject to an effective waiver to the same extent as if the waiver requested herein had never been in effect.

The waivers set forth in this Waiver are limited to the extent specifically set forth above and shall in no way serve to waive compliance with (i) Sections 7.12(a) and (c) of the Credit Agreement for any other period or (ii) any other terms, covenants or provisions of the Credit Agreement or any other Loan Document, or any obligations of the Borrowers or the Guarantors, other than as expressly set forth above.

2.Financial Covenants During the Waiver Period. During the Waiver Period, the Company shall not, at any time, (a) permit Consolidated Tangible Net Worth to be less than $640,000,000or (b) permit the Consolidated Leverage Ratio to be greater than 4.50 to 1.00.

The Company shall promptly upon availability, but in any event within five Business Days after the Administrative Agent requests, provide calculations to evidence compliance with the financial covenant requirements set forth in this Section 2. Any failure to comply with the financial covenant requirements set forth in this Section 2 shall constitute an “Event of Default” under the Credit Agreement.

3.Applicable Rate. For the avoidance of doubt, the Borrowers hereby acknowledge and confirm that (a) as of the date hereof, the Applicable Rate is currently at Pricing Level 5 (as listed in the definition of “Applicable Rate”) and (b) from the date hereof to the first Business Day immediately following the date of delivery of the Compliance Certificate for the fiscal quarter ending March 31, 2014, the Applicable Rate shall continue to be based upon Pricing Level 5.

4.Effectiveness; Conditions Precedent. The effectiveness of this Waiver and the waivers to the Credit Agreement provided in Section 1 hereof are subject to the satisfaction of the following conditions precedent:

(a)    the Administrative Agent shall have received counterparts of this Waiver, duly executed by each Borrower, the Administrative Agent, and the Required Lenders, which counterparts may be delivered by telefacsimile or other electronic means (including .pdf);

(b)    the Administrative Agent shall have received executed copies of any amendments and/or waivers to the Permitted Notes Documents, which such amendments and/or waivers shall be in form and substance reasonably satisfactory to the Administrative Agent and which shall not contain any provisions or amendments which relate to any material affirmative or negative covenants or any events of default or remedies thereunder and the effect of which is to subject the Company or any of its Subsidiaries to any more onerous or more restrictive provisions; and

(c)    both (i) a consent fee shall have been received by the Administrative Agent for the account of each Lender executing this Waiver by 5:00 p.m. (New York, New York time) on December 24, 2013 equal to seven and one-half basis points (7.5 “bps”) multipliedby each such Lender’s Commitment immediately prior to the effective date of this Waiver, and (ii) all other fees and expenses payable to the Administrative Agent and the Lenders (including the fees and expenses of counsel to the Administrative Agent to the extent due and payable under Section 10.04(a) of the Credit Agreement) estimated to date and for which invoices have been presented a reasonable period of time prior to the effectiveness hereof shall have been paid in full (without prejudice to final settling of accounts for such fees and expenses).

5.Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Waiver, the Borrowers represent and warrant to the Administrative Agent and the Lenders as follows:

(a)The representations and warranties made by the Borrowers in Article V of the Credit Agreement and in each of the other Loan Documents to which it is a party are, in each case, true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date;

(b)The Persons appearing as Guarantors on the signature pages to this Waiver constitute all Persons who are required to be Guarantors pursuant to the terms of the Credit Agreement and the other Loan Documents, including without limitation all Persons who became Subsidiaries or were otherwise required to become Guarantors after the Closing Date, and each of such Persons has become and remains a party to a Guaranty as a Guarantor;

(c)This Waiver has been duly authorized, executed and delivered by the Borrowers and the Guarantors and constitutes a legal, valid and binding obligation of such parties; and

(d)After giving effect to this Waiver, no Default or Event of Default has occurred and is continuing; and no default or event of default under the Permitted Notes Documents exists, or would result from the effectiveness of this Waiver.

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6.Consent of the Guarantors. The Guarantors hereby consent, acknowledge and agree to the waivers and other matters set forth herein and hereby confirm and ratify in all respects the Guaranty to which such Guarantor is a party (including without limitation the continuation of such Guarantor’s payment and performance obligations thereunder upon and after the effectiveness of this Waiver and the waivers and consents contemplated hereby) and the enforceability of such Guaranty against such Guarantor in accordance with its terms.

7.Entire Agreement. This Waiver, together with all the Loan Documents (collectively, the “Relevant Documents”), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other in relation to the subject matter hereof or thereof. None of the terms or conditions of this Waiver may be changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with Section 10.01 of the Credit Agreement.

8.Full Force and Effect of Credit Agreement. Except as hereby specifically waived, amended, modified or supplemented, the Credit Agreement is hereby confirmed and ratified in all respects and shall be and remain in full force and effect according to its respective terms.

9.Governing Law. This Waiver shall in all respects be governed by, and construed in accordance with, the laws of the State of California applicable to contracts executed and to be performed entirely within such State, and shall be further subject to the provisions of Sections 10.14 and 10.15 of the Credit Agreement.

10.Enforceability. Should any one or more of the provisions of this Waiver be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto.

11.References. All references in any of the Loan Documents to the “Credit Agreement” shall mean the Credit Agreement.

12.Successors and Assigns. This Waiver shall be binding upon and inure to the benefit of the Borrowers, the Administrative Agent and each of the Guarantors and Lenders, and their respective successors, legal representatives, and assignees to the extent such assignees are permitted assignees as provided in Section 10.06 of the Credit Agreement.

13.No Novation. Neither the execution and delivery of this Waiver nor the consummation of any other transaction contemplated hereunder is intended to constitute a novation of the Credit Agreement or of any of the other Loan Documents or any obligations thereunder.

[Signature pages follow.]

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made, executed and delivered by their duly authorized officers as of the day and year first above written.

BORROWERS:

GRANITE CONSTRUCTION INCORPORATED

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

GRANITE CONSTRUCTION COMPANY

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

GILC INCORPORATED

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

GUARANTORS:

GRANITE CONSTRUCTION INCORPORATED

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

GRANITE CONSTRUCTION COMPANY

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

GRANITE CONSTRUCTION NORTHEAST,

INC.

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

INTERMOUNTAIN SLURRY SEAL, INC.

By:	/s/ Kathleen Schreckengost
Name:	Kathleen Schreckengost
Title:	V.P. Treasurer

By:	/s/ Darren S. Beevor
Name:	Darren S. Beevor
Title:	V.P. Controller

GILC INCORPORATED

By:	/s/ Jigisha Desai
Name:	Jigisha Desai
Title:	V.P. Treasurer

By:	/s/ Laurel J. Krzeminski
Name:	Laurel J. Krzeminski
Title:	Sr. VP and CFO

KENNY CONSTRUCTION COMPANY

By:	/s/ Ashley M. Stinson
Name:	Ashley M. Stinson
Title:	V.P.

ADMINISTRATIVE AGENT:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:	/s/ Aamir Saleem
Name:	Aamir Saleem
Title:	Vice President

LENDERS:

BANK OF AMERICA, N.A., as a Lender, Swing

Line Lender and L/C Issuer

By:	/s/ Arthur Ng
Name:	Arthur Ng
Title:	Vice President

BANK OF THE WEST

By:	/s/ Helen Huang
Name:	Helen Huang
Title:	Vice President

COMPASS BANK

By:	/s/ Erik Velastegui
Name:	Erik Velastegui
Title:	Senior Vice President

BMO HARRIS BANK N.A.

By:	/s/ Jennifer Guidi
Name:	Jennifer Guidi
Title:	Director

COMERICA BANK

By:	/s/ Fatima Arshad
Name:	Fatima Arshad
Title:	Vice President

U.S. BANK NATIONAL ASSOCIATION

By:	/s/ Conan Schleicher
Name:	Conan Schleicher
Title:	Senior Vice President

UNION BANK, N.A.

By:	/s/ J. William Bloore
Name:	J. William Bloore
Title:	Senior Vice President

EX-10.2

Exhibit 10.2

Execution Version

Granite Construction Incorporated

_____________________________________

Temporary Waiver and Agreement

Dated as of December 24, 2013

to

Note Purchase Agreement

Dated as of December 12, 2007

_____________________________________

Re:

$200,000,000 6.11% Series 2007-A Senior Notes due December 12, 2019

Temporary Waiver and Agreement

This Temporary Waiver and Agreement dated as of December 24, 2013 (the or this “Waiver”) to that certain Note Purchase Agreement dated as of December 12, 2007 is between Granite Construction Incorporated, a Delaware corporation (the “Company”), each of the Guarantors (as defined in the hereinafter defined Note Purchase Agreement) listed on the signature pages hereto, and each of the institutional investors listed on the signature pages hereto (collectively, the “Noteholders”):

Recitals:

A.    The Company and each of the Purchasers (as defined in the hereinafter defined Note Purchase Agreement) heretofore entered into that certain Note Purchase Agreement dated as of December 12, 2007 (as amended by that certain First Amendment dated as of October 11, 2012, the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement, the Company originally issued and currently has outstanding $200,000,000 aggregate principal amount of its 6.11% Series 2007-A Senior Notes due December 12, 2019 (the“Notes”). The Noteholders are the holders of 100% of the outstanding principal amount of the Notes.

B.    Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement unless herein defined or the context shall otherwise require.

C.    Each of the Guarantors has entered into the Guaranty Agreement pursuant to which it has guaranteed the obligations of the Company under the Note Purchase Agreement and the Notes.

D.    The Company has notified the Noteholders that Events of Default are about to occur as a result of the Company’s inability to maintain (1) Consolidated Tangible Net Worth as required by Section 10.2 of the Note Purchase Agreement (the “Consolidated Tangible Net Worth Covenant”) and (2) the Consolidated Leverage Ratio as required by Section 10.3(a) of the Note Purchase Agreement (the “Consolidated Leverage Ratio Covenant”) during the Waiver Period (as hereinafter defined).

E.    The Company has requested that the Noteholders waive any testing of, or compliance by the Company with, the Consolidated Tangible Net Worth Covenant and the Consolidated Leverage Ratio Covenant solely during the Waiver Period.

F.    All requirements of law have been fully complied with and all other acts and things necessary to make this Waiver a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed.

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Now, therefore, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Waiver set forth in Section 3.1 hereof, and in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as follows:

SECTION 1.Temporary Waiver and Agreement.

1.1    Pursuant to Section 17.1 of the Note Purchase Agreement and subject to the terms and conditions of this Waiver, the Noteholders agree to waive any testing of, or compliance by the Company with, the Consolidated Tangible Net Worth Covenant and the Consolidated Leverage Ratio Covenant solely during the period beginning on October 1, 2013 and ending on the earliest to occur of (a) a default by the Company in the performance or compliance with Section 1.2 hereof, (b) the occurrence of any Event of Default, (c) (i) the occurrence of any “Event of Default” under and as defined in the Bank Credit Agreement or (ii) the waiver, amendment or other modification of any provision of the Bank Credit Agreement (other than pursuant to the Bank Credit Agreement Waiver (as hereinafter defined)) without which an Event of Default under the Bank Credit Agreement would occur and (d) March 3, 2014 (the “Waiver Period”).

Upon the expiration or termination of the Waiver Period, any Event of Default that would have occurred during the Waiver Period but for the temporary waiver set forth in this Section 1.1, shall be deemed no longer subject to an effective waiver to the same extent as if the waiver requested herein had never been in effect and the Noteholders reserve the right, in their discretion, to exercise any or all of their rights and remedies under the Note Purchase Agreement as a result of any such Event of Default.

The waivers set forth in this Waiver are limited to the extent specifically set forth above and shall in no way serve to waive (1) compliance with (i) the Consolidated Tangible Net Worth Covenant and the Consolidated Leverage Ratio Covenant for any other period or (ii) any other terms, covenants or provisions of the Note Purchase Agreement or any other Transaction Document, or any obligations of the Company or the Guarantors or (2) any Events of Default that may have previously occurred or that occur after the date hereof, other than as expressly set forth above.

1.2     As consideration for the temporary waiver set forth in Section 1.1, the Company agrees that it will not, at any time during the Waiver Period, (a) permit Consolidated Tangible Net Worth to be less than $640,000,000 or (b) permit the Consolidated Leverage Ratio to exceed 4.50 to 1.00.

The Company shall promptly upon availability, but in any event within five Business Days after any Noteholder requests, provide calculations to evidence compliance with the financial covenant requirements set forth in this Section 1.2. Any failure to comply with the financial covenant requirements set forth in this Section 1.2 shall constitute an “Event of Default” under the Note Purchase Agreement.

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SECTION 2.Representations and Warranties of the Company.

2.1    To induce the Noteholders to execute and deliver this Waiver (which representations shall survive the execution and delivery of this Waiver), the Company represents and warrants to the Noteholders that:

(a)this Waiver has been duly authorized by all necessary corporate action on the part of the Company, executed and delivered by the Company and this Waiver and the Note Purchase Agreement, as affected by this Waiver, constitute the legal, valid and binding obligations, contracts and agreements of the Company enforceable against it in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(b)the execution and delivery of this Waiver by the Company and the performance hereof and of the Note Purchase Agreement, as affected by this Waiver, by the Company will not (1) violate (i) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws or other charter documents, (ii) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (iii) any provision of any indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, or (2) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (1)(iii) of this Section 2.1(b);

(c)no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution and delivery of this Waiver by the Company or the performance thereof or of the Note Purchase Agreement, as affected by this Waiver, by the Company;

(d)the Persons appearing as Guarantors on the signature pages to this Waiver constitute all Persons who are required to be Guarantors pursuant to the terms of the Note Purchase Agreement, including, without limitation, all Persons who became Subsidiaries or were otherwise required to become Guarantors after the First Amendment Effective Date, and each of such Persons has become and remains a party to the Guaranty Agreement as a Guarantor;

(e)all the representations and warranties contained in Section 2.1(i) of the First Amendment dated as of October 11, 2012 to the Note Purchase Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they were true and correct in all material respects as of such earlier date); and

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(f)after giving effect to this Waiver and the Bank Credit Agreement Waiver, no Default or Event of Default has occurred which is continuing; and no default or event of default under the Bank Credit Agreement exists, or would result from the effectiveness of this Waiver.

SECTION 3.Conditions to Effectiveness of this Waiver.

3.1    This Waiver shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied:

(a)executed counterparts of this Waiver, duly executed by the Company and the Required Holders, shall have been delivered to the Noteholders;

(b)the representations and warranties of the Company set forth in Section 2 hereof are true and correct on and with respect to the date hereof;

(c)the Company shall have delivered to each Noteholder financial projections for the fiscal quarter ending December 31, 2013, which shall include a projected consolidated balance sheet and projected consolidated statements of income, stockholders’ equity and cash flow for such period, in each case prepared in a manner consistent with the financial statements previously delivered pursuant to Section 7.1(a) of the Note Purchase Agreement and the information (including detailed calculations) required to determine projected Consolidated Tangible Net Worth and the Consolidated Leverage Ratio as of December 31, 2013;

(d)the Company shall have delivered to each Noteholder evidence that the parties to the Bank Credit Agreement shall have duly executed and delivered an amendment and/or waiver to the same effect as this Waiver (the “Bank Credit Agreement Waiver”) which such amendment and/or waiver shall be in form and substance reasonably satisfactory to the Required Holders and which shall not contain any provisions or amendments which relate to any material affirmative or negative covenants or any events of default or remedies thereunder and the effect of which is to subject the Company or any of its Subsidiaries to any more onerous or more restrictive provisions;

(e)each Noteholder shall have received, by payment in immediately available funds to the account of such holder set forth in Schedule A to the Note Purchase Agreement or to such other account as such Noteholder shall have heretofore provided to the Company, the amount set forth opposite such Noteholder’s name in Schedule 1 attached hereto; and

(f)the Company shall have paid the fees and expenses of Schiff Hardin LLP, special counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Waiver.

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SECTION 4.Reaffirmation of Guaranty Agreement.

4.1By their execution and delivery hereof, the undersigned Guarantors hereby acknowledge and agree to this Waiver and reaffirm the Guaranty Agreement dated as of December 12, 2007 given in favor of each Noteholder and their respective successors and assigns.

SECTION 5.Miscellaneous.

5.1This Waiver shall be construed in connection with and as part of the Note Purchase Agreement, and except as affected by this Waiver, all terms, conditions and covenants contained in the Note Purchase Agreement and the Notes are hereby ratified and shall be and remain in full force and effect.

5.2Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Waiver may refer to the Note Purchase Agreement without making specific reference to this Waiver but nevertheless all such references shall include this Waiver unless the context otherwise requires.

5.3None of the terms or conditions of this Waiver may be changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with Section 17.1 of the Note Purchase Agreement.

5.4The descriptive headings of the various Sections or parts of this Waiver are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

5.5This Waiver shall be governed by and construed in accordance with the laws of the State of New York.

5.6The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Waiver may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.

[Remainder of page intentionally left blank.]

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Granite Construction Incorporated
By	/s/ Laurel J. Krzeminski
	Laurel J. Krzeminski
	Its Sr. VP and CFO

By	/s/ Jigisha Desai
	Jigisha Desai
	Its VP Treasurer

Granite Construction Company
By	/s/ Laurel J. Krzeminski
	Laurel J. Krzeminski
	Its Sr. VP and CFO

By	/s/ Jigisha Desai
	Jigisha Desai
	Its VP Treasurer

GILC Incorporated
By	/s/ Laurel J. Krzeminski
	Laurel J. Krzeminski
	Its Sr. VP and CFO

By	/s/ Jigisha Desai
	Jigisha Desai
	Its VP Treasurer

Granite Construction Northeast, Inc.
By	/s/ Laurel J. Krzeminski
	Laurel J. Krzeminski
	Its Sr. VP and CFO

By	/s/ Jigisha Desai
	Jigisha Desai
	Its VP Treasurer

Intermountain Slurry Seal, Inc.
By	/s/ Kathleen Schreckengost
	Kathleen Schreckengost
	Its VP Treasurer

By	/s/ Darren S. Beevor
	Darren S. Beevor
	Its VP Controller

Kenny Construction Company
By	/s/ Ashley M. Stinson
	Ashley M. Stinson
	Its VP

Accepted and Agreed to:

The Prudential Life Insurance Company of America
	By:	/s/ David Levine
		Vice President

Prudential Retirement Insurance and Annuity Company
	By:	Prudential Investment Management, Inc.,
		as investment manager

By:	/s/ David Levine
	Vice President

Universal Prudential Arizona Reinsurance Company
	By:	Prudential Investment Management, Inc.,
		as investment manager

By:	/s/ David Levine
	Vice President

Zurich American Insurance Company
	By:	Prudential Private Placement Investors, L.P.
		(as Investment Advisor)

By:	Prudential Private Placement Investors, Inc.
	(as its General Partner)

By:	/s/ David Levine
	Vice President

The Variable Annuity Insurance Company
	By:	AIG Asset Management (U.S.), LLC
		Investment Advisor

By:	/s/ David Patch
Name:	David Patch
Title:	Vice President

ING Life Insurance and Annuity Company
ING USA Annuity and Life Insurance Company
ReliaStar Life Insurance Company
ReliaStar Life Insurance Company of New York
Security Life of Denver Insurance Company
	By:	ING Investment Management LLC,
		as Agent

By:	/s/ Gregory R. Addicks
	Gregory R. Addicks
	Senior Vice President

The Guardian Life Insurance Company of America
	By:	/s/ Edward J. Brennan
	Name:	Edward J. Brennan
	Title:	Senior Director

Principal Life Insurance Company
	By:	Principal Global Investors, LLC,
		a Delaware limited liability company,
		its authorized signatory

By:	/s/ Colin Pennycooke
Its:	Counsel

By:	/s/ Adrienne L. McFarland
Its:	Counsel

United of Omaha Life Insurance Company
	By:	/s/ Curtis R. Caldwell
	Name:	Curtis R. Caldwell
	Title:	Senior Vice President

Allianz Life Insurance Company of North America
	By:	/s/ Brian F. Landry
	Name:	Brian F. Landry
	Title:	Assistant Treasurer

American United Life Insurance Company
	By:	/s/ Michael Bullock
	Name:	Michael Bullock
	Title:	VP, Private Placements

The State Life Insurance Company
	By:	American United Life Insurance Company,
		its agent

By:	/s/ Michael Bullock
Name:	Michael Bullock
Title:	VP, Private Placements

Farm Bureau Life Insurance Company of Michigan
	By:	American United Life Insurance Company,
		its agent

By:	/s/ Michael Bullock
Name:	Michael Bullock
Title:	VP, Private Placements

American Family Life Insurance Company
	By:	/s/ David Voge
	Name:	David Voge
	Title:	Senior Fixed Income Analyst

Assurity Life Insurance Company
	By:	/s/ Joseph J. Mick
	Name:	Joseph J. Mick
	Title:	Senior Investment Analyst